<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-27064
FIRST COMMONWEALTH, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2154228
(State or other jurisdiction of (IRS employer identification number)
incorporation or organization)
444 North Wells Street, Suite 600, Chicago, IL 60610
(Address of principal executive offices)
(312) 644-1800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock, par value $.001 per share, outstanding as of April 30, 1997:
3,612,754 shares
- --------------------------------------------------------------------------------
<PAGE>
First Commonwealth, Inc.
Form 10-Q
For the quarter ended March 31, 1997
INDEX
PART I. FINANCIAL INFORMATION
--------------------------------
Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996.............................................. 3
Consolidated Statements of Income for the three months ended
March 31, 1997 and 1996............................................ 5
Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996............................................ 6
Reconciliations of Net Income to Net Cash Provided by
Operating Activities for the three months ended
March 31, 1997 and 1996............................................ 7
Notes to Consolidated Financial Statements......................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 10
PART II. OTHER INFORMATION
----------------------------
Item 4. Submission of Matters to a Vote of Security Holders............... 12
Item 6. Exhibits and Reports on Form 8-K.................................. 13
SIGNATURES................................................................. 14
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Form 10-Q
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this Form 10-Q constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance, or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, increased
competition in the markets in which the Company operates; changes in regulation
affecting the Company; changes in the utilization of services; changes in
arrangements relating to payments to providers; the level of the Company's
indemnity enrollment and the related indemnity risk of indemnity plans; the
ability to integrate and successfully operate acquired businesses and the risks
associated with such businesses; the possible need for, and ability to obtain if
needed, financing on acceptable terms to finance the Company's growth strategy;
the ability of the Company to operate within the limitations imposed by any such
financing arrangements; and other factors referenced or incorporated by
reference in this Form 10-Q.
2
<PAGE>
PART I. FINANCIAL INFORMATION
-------------------------------
Item 1. Financial Statements
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
- ------ -------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $10,094 $15,817
Investments - Short Term 515 0
Accounts receivable, net of allowance
of $350 at March 31, 1997 and $290 at
December 31, 1996 2,947 3,011
Other receivables 287 221
Deposit under reinsurance agreement 849 697
Prepaid expenses 1,370 408
Deferred tax asset 1,048 869
------- -------
Total current assets 17,110 21,023
------- -------
PROPERTY AND EQUIPMENT, at cost 3,534 3,348
Less - Accumulated depreciation (1,870) (1,725)
------- -------
Property and equipment, net 1,664 1,622
------- -------
OTHER ASSETS:
Restricted cash equivalents and government securities
on deposit, at cost which approximates market 1,252 1,222
Deposits and other 139 105
Intangible assets 10,416 10,482
------- -------
Total other assets 11,807 11,809
------- -------
TOTAL ASSETS $30,581 $34,454
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS - continued
- ------------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable - trade $ 273 $ 338
Accounts payable - dental service providers 875 348
Claims liability 1,449 1,580
Accrued payroll and related costs 579 739
Other accrued expenses 537 648
Deferred subscriber revenue 4,599 4,449
Payable under reinsurance agreement 771 628
Income taxes payable 588 101
Other current liabilities 0 5,500
------ ------
Total current liabilities 9,671 14,331
DEFERRED TAX LIABILITY - long-term 187 167
------ ------
Total liabilities 9,858 14,498
------ ------
STOCKHOLDERS' EQUITY:
Preferred stock ($.001 par value; 1,000,000
shares authorized, none issued) 0 0
Common stock ($.001 par value; 15,000,000 shares
authorized, 3,613,189 shares at March 31, 1997
and 3,600,996 shares at December 31, 1996 issued
and outstanding) 4 4
Capital in excess of par value 13,213 13,207
Less 430 shares of common stock at March 31, 1997
and 425 shares of common stock at December 31,
1996 held in treasury, at cost (12) (12)
Retained earnings 7,518 6,757
------- -------
Total stockholders' equity 20,723 19,956
------- -------
Total liabilities and stockholders' equity $30,581 $34,454
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
For the three months ended:
-------------------------------
March 31, 1997 March 31, 1996
--------------- --------------
SUBSCRIBER REVENUE (Unaudited) (Unaudited)
<S> <C> <C>
Managed Care $ 10,529 $ 7,097
Indemnity/PPO 2,732 2,492
Fee Income 202 184
---------- ----------
Total Subscriber Revenue 13,463 9,773
---------- ----------
BENEFIT COVERAGE EXPENSES
Managed Care 6,617 4,086
Indemnity/PPO 2,145 1,940
Fee Income -- --
---------- ----------
Total Benefit Coverage Expenses 8,762 6,026
---------- ----------
GROSS MARGIN
Managed Care 3,912 3,011
Indemnity/PPO 587 552
Fee Income 202 184
---------- ----------
Total Gross Margin 4,701 3,747
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 3,518 2,794
---------- ----------
Operating income 1,183 953
INTEREST INCOME, net 107 162
---------- ----------
Income before income taxes 1,290 1,115
PROVISION FOR INCOME TAXES 530 446
---------- ----------
NET INCOME $ 760 $ 669
========== ==========
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,715,212 3,496,125
EARNINGS PER SHARE $0.20 $0.19
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the three months ended:
---------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) (Unaudited)
<S> <C> <C>
Cash received from subscribers $13,006 $ 9,409
Cash paid to providers of care (5,380) (3,847)
Cash paid to employees, brokers and suppliers (4,758) (3,618)
Claims paid (2,261) (1,650)
Interest received 99 85
Income taxes paid (203) (71)
Cash transferred to restricted funds (30) (177)
------- -------
Net cash provided by operating activities 473 131
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (186) (75)
Purchase of short-term investments (517) (3,163)
Proceeds from short-term investments 0 1,007
Acquisition cost (5,500) 0
------- -------
Net cash used in investing activities (6,203) (2,231)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 7 0
Principal payments on capital leases 0 (16)
Purchase of treasury stock 0 0
Payments of preferred dividends 0 (13)
------- -------
Net cash provided (used) in financing activities 7 (29)
------- -------
Net change in cash and cash equivalents (5,723) (2,129)
CASH AND CASH EQUIVALENTS,
beginning of period 15,817 12,680
------- -------
CASH AND CASH EQUIVALENTS,
end of period $10,094 $10,551
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
First Commonwealth, Inc. and Subsidiaries
RECONCILIATIONS OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
- -----------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the three months ended:
-------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net income $ 760 $ 669
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 213 131
(Increase) decrease in assets:
Accounts receivable, net 64 (865)
Other receivables (66) (61)
Deposit under reinsurance agreement (152) (151)
Prepaid expenses (962) (27)
Deferred tax asset (179) (96)
Restricted cash equivalents and government
securities (30) (177)
Deposits and other (34) 1
Increase (decrease) in current liabilities:
Accounts payable - trade (65) 266
Accounts payable - dental service providers 527 40
Claims liability (131) 291
Accrued payroll and related costs (160) (290)
Other accrued expenses (111) (175)
Deferred subscriber revenue 150 500
Payable under reinsurance agreement 143 136
Income taxes payable 486 471
Increase in long-term liabilities:
Long-term deferred tax liability 20 0
----- -----
Net cash provided by operating activities $ 473 $ 131
===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FIRST COMMONWEALTH, INC.
Notes to Consolidated Financial Statements
March 31, 1997
1. Interim Financial Statements
The accompanying consolidated financial statements include the accounts of
First Commonwealth, Inc., together with its subsidiaries and an affiliate
(collectively, the "Company"). All material intercompany transactions and
balances have been eliminated in consolidation.
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain notes and other information normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from the interim financial
statements presented in this quarterly report on Form 10-Q in accordance with
such rules and regulations. In the opinion of the Company's management, the
accompanying consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to state fairly the
financial position of the Company as of March 31, 1997, and the results of its
operations and cash flows for the periods indicated. The results of operations
for the three months ended March 31, 1997 are not necessarily indicative of the
results to be expected for the full year. The accompanying consolidated
financial statements should be read in conjunction with the Company's financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1996.
2. Earnings Per Share
Earnings per share is calculated by dividing net income by the weighted
average number of shares of common stock outstanding during the period plus the
dilutive effect of stock options.
3. Business Combination
Effective July 18, 1996, the Company completed the acquisition of Smileage
Dental Services, Inc. ("Smileage"), a Wisconsin-based dental HMO administrator
which provides services to approximately 50,000 members and an associated
reinsurance transaction, for an aggregate purchase price (including transaction
costs) of $5.6 million. The acquisition was financed through the issuance of
231,399 shares of the Company's common stock. The acquisition resulted in the
excess of cost over fair value of net assets acquired of approximately $5.6
million.
8
<PAGE>
Effective December 31, 1996, the Company completed the acquisition of
Champion Dental Services, Inc. ("Champion"), a Missouri-based prepaid dental
plan, which provides services to approximately 60,000 members, for an aggregate
purchase price (including transaction costs) of $5.6 million. The acquisition
was financed through proceeds from the Company's initial public offering and was
paid in cash on January 2, 1997. The acquisition resulted in the excess of cost
over fair value of net assets acquired of approximately $4.9 million.
The acquisitions of Smileage and Champion were accounted for using the
purchase method of accounting with the results of operations of the businesses
acquired included from the effective date of the acquisitions. The results of
Smileage and Champion have been reflected in the results of operations of The
Company for the entire period ended March 31, 1997.
Unaudited pro forma results of operations of the Company for the three
months ended March 31, 1996 are included below. Such pro forma presentation has
been prepared assuming the acquisition of Smileage and Champion had occurred as
of January 1, 1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996
------------------
<S> <C>
Revenues (in thousands) $11,864
=======
Net Income (in thousands) $ 674
=======
Net Income per share $ 0.18
=======
</TABLE>
The pro forma results include the historical accounts of the Company and
historical accounts of the acquired businesses and pro forma adjustments
including the amortization of the excess purchase price over the fair value of
the net assets acquired, the reduction of salaries and expenses which will not
be incurred on an ongoing basis, and the applicable income tax effects of these
adjustments. The pro forma results of operations are not necessarily indicative
of actual results which may have occurred had the operations of the acquired
companies been combined in prior periods.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following discussion should be read in conjunction with the attached
consolidated financial statements and notes thereto.
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Total subscriber revenue increased by $3.7 million, or 37.8%, to $13.5
million in the three months ended March 31, 1997 from $9.8 million in the three
months ended March 31, 1996. This increase is attributable to increased
enrollment in the Company's managed care plans as well as the effect of the
acquisitions which accounted for $2.8 million of the increase. Managed care
revenue increased by $3.4 million, or 48.4%, to $10.5 million in the three
months ended March 31, 1997 from $7.1 million in the same period in 1996,
primarily due to a 50.0% increase in new members. The revenue increase was
mainly as a result of the acquisitions which accounted for $2.8 million of the
increase. Indemnity/PPO revenue increased $240,000 to $2.7 million in 1997
from $2.5 million in 1996, primarily as a result of adding new indemnity/PPO
plan members.
Total gross margin increased by $954,000, or 25.5%, to $4.7 million in the
three months ended March 31, 1997 from $3.7 million in the three months ended
March 31, 1996. Total gross margin as a percentage of revenue was 34.9% in 1997
as compared to 38.3% in 1996. This percentage decline was primarily the result
of an increasing percentage of revenue being generated by the Company's acquired
businesses which have a significantly lower gross margin percentage, at an
average of 27.3%, than the existing managed care business. Managed care gross
margin as a percentage of revenue was 37.2% in 1997 as compared to 42.4% in
1996. The indemnity/PPO gross margin as a percentage of indemnity/PPO revenue
decreased to 21.5% in 1997 from 22.2% in 1996. The change in indemnity/PPO gross
margin is the result of non-recurring favorable claims experience recorded in
the first quarter of 1996.
SG&A expenses increased by $724,000, or 25.9%, to $3.5 million for the
three months ended March 31, 1997 from $2.8 million for the three months ended
March 31, 1996. The increase of expenses is primarily from establishing offices
and staffing in Milwaukee and St. Louis as a result of the acquisitions. As a
percentage of revenue, SG&A expenses dropped to 26.1% for 1997 from 28.6% for
1996. The change is primarily the result of economies of scale in meeting the
administrative needs of increased enrollment due to the relatively fixed nature
of certain SG&A expenses as well as higher revenues relative to the SG&A
expenses associated with the managed care plans from the Wisconsin acquisition.
Operating income increased by $230,000, or 24.1%, to $1.2 million for the
three months ended March 31, 1997 from $953,000 for the three months ended March
31, 1996. As a percentage of revenue, operating income was 8.8% in 1997 as
compared to 9.8% in 1996. The decline was due primarily to the lower gross
margin, partially offset by the lower SG&A as a percentage of revenue.
Interest income decreased by $55,000 to $107,000 for the three months ended
March 31, 1997 from $162,000 for the three months ended March 31, 1996 primarily
as a result of the payment of the purchase price for Champion on January 2,
1997.
The effective tax rate for the three months ended March 31, 1997 was 41.1%
versus 40.0% for the three months ended March 31, 1996. The increase in the
effective tax rate was primarily the result of the non-deductibility of the
amortization of goodwill incurred in one of the Company's acquisitions.
10
<PAGE>
Net income increased by $91,000, or 13.6%, to $760,000 for the three months
ended March 31, 1997 from $669,000 for the three months ended March 31, 1996.
Earnings per share was $0.20 and $0.19 for the three months ended March 31, 1997
and 1996, respectively.
See Note 3 to the Notes to Consolidated Financial Statements for the pro
forma effect of acquisitions.
Liquidity and Capital Resources
The Company's operating cash requirements for the three months ended March
31, 1997 have been met principally through operating cash flows. The primary
uses of cash have been for the purchase of Champion, operating activities and
capital investments in the business. The Company believes that cash generated
from operations will be adequate to finance its anticipated operating needs for
the foreseeable future.
Cash flows from operating activities were $473,000 and $131,000 for the
three months ended March 31, 1997, and 1996, respectively. The Company
primarily receives premium payments in advance of disbursing managed care
dentist capitation payments and indemnity claims payments. Cash balances in
excess of current needs are invested in interest-bearing accounts or cash
equivalents. Cash flows from operations consist primarily of subscriber premiums
and investment income net of capitation payments to network dentists, claims
paid, brokers' commissions, general and administrative expenses and income
taxes.
Cash used in investing activities was $6.2 million and $2.2 million for the
three months ended March 31, 1997 and 1996, respectively. The primary use in
1997 was $5.5 million for the purchase of Champion paid on January 2, 1997. In
addition, the first three months of 1997 and 1996 includes a net of $517,000
and $3.2 million, respectively, used to purchase short term investment grade
securities (securities which mature between 3 months and 12 months). Capital
expenditures were $186,000 for the three months ended March 31, 1997 and $75,000
for the three months ended March 31, 1996, respectively, for furniture,
leasehold improvements, and computer equipment as the Company has expanded its
leased office space.
As of March 31, 1997, the Company had cash and cash equivalents of $10.1
million as well as short term investments of $515,000 and no long-term debt
outstanding. In addition, the Company has a $500,000 unsecured revolving line of
credit facility which expires June 30, 1997, which has not been drawn upon
during the past three years. Any outstanding indebtedness under the line of
credit will bear interest at a rate equal to the prime rate.
Under applicable insurance laws of the states in which the Company conducts
business, the Company's subsidiaries operating in the particular state are
required to maintain a minimum level of net worth and reserves. The Company may
be required from time to time to invest funds in one or more of its subsidiaries
to meet regulatory requirements, or to expand its operations into new geographic
areas. In addition, applicable laws generally limit the ability of the Company's
subsidiaries to pay dividends to the extent that required regulatory capital or
surplus would be impaired.
Impact of Inflation
The Company does not believe the impact of inflation has significantly
affected the Company's operations.
11
<PAGE>
PART II. OTHER INFORMATION
----------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders of the Company, held on April
30, 1997, the following numbers of votes were cast for the matters
indicated:
1. Election of two Class II directors of the Company.
<TABLE>
<CAPTION>
Nominee For Withhold Broker Non-Vote
--------------------- --------- -------- ---------------
<S> <C> <C> <C>
David W. Mulligan 2,832,153 3,200 - 0 -
Jackson W. Smart, Jr. 2,832,153 3,200 - 0 -
</TABLE>
2. Proposal to Approve the Amendment to the 1995 Long-Term Incentive
Plan of the Company.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Vote
--------- ------- ------- ---------------
<S> <C> <C> <C>
2,801,068 27,485 6,800 - 0 -
</TABLE>
12
<PAGE>
Item 6. Exhibits and Reports on Forms 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
3.1 Second Restated Certificate of Incorporation of the
Company, as amended, is hereby incorporated by reference
to Exhibit 3.1, as filed with the Company's Registration
Statement on Form S-1, as amended (Registration No. 33-
97426)
3.2 Restated Bylaws of the Company are hereby incorporated by
reference to Exhibit 3.2, as filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996
11 Statement Regarding Computation of Net Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended March 31, 1997:
The Company filed a Form 8-K, dated January 1, 1997, which was amended
on March 14, 1997 to report the acquisition of Champion and to file
the audited and pro forma financial statements related to Champion.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
FIRST COMMONWEALTH, INC.
(Registrant)
Date: May 14, 1997 By: /s/ Christopher C. Multhauf
----------------------------------------
Christopher C. Multhauf
Chairman and Chief Executive Officer
Date: May 14, 1997 By: /s/ David W. Mulligan
----------------------------------------
David W. Mulligan
President, Secretary and Chief
Operating Officer
Date: May 14, 1997 By: /s/ Scott B. Sanders
----------------------------------------
Scott B. Sanders
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
14
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
3.1 Second Restated Certificate of Incorporation of the Company,
as amended, is hereby incorporated by reference to Exhibit
3.1, as filed with the Company's Registration Statement on
Form S-1, as amended (Registration No. 33-97426)
3.2 Restated Bylaws of the Company are hereby incorporated by
reference to Exhibit 3.2, as filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996
11 Statement Regarding Computation of Net Earnings Per Share
27 Financial Data Schedule
15
<PAGE>
Exhibit 11
FIRST COMMONWEALTH, INC.
COMPUTATION OF PRIMARY AND FULL DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Earnings Per Share
--------------------------------
For the three months ended:
--------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
Weighted average common shares outstanding (1) (2) 3,609,699 3,365,858
Additional common share equivalents related to stock options
assumed to be exercised in accordance with the treasury stock
method (3) (4) (5) 105,513 130,267
---------- ----------
Total weighted average common and equivalent shares outstanding 3,715,212 3,496,125
========== ==========
Net income $ 760,000 $ 669,000
========== ==========
Earnings per share - Primary $ 0.20 $ 0.19
========== ==========
Earnings per share - Fully diluted $ 0.20 $ 0.19
========== ==========
</TABLE>
NOTES
(1) Amount computed for purposes of presenting fully diluted earnings per share
is the same as this amount.
(2) For March 31, 1997, includes new shares issued based on the acquisition of
Smileage Dental Services for 231,399 shares on July 18, 1996.
(3) Options with an exercise price less than the fair value of common stock
during the period presented are assumed to have been exercised with the
proceeds from the exercise, including tax benefits assumed to have been
realized, being used to purchase treasury shares. The repurchase of
treasury shares is assumed to be at the average market price for purposes
of computing primary earnings per share and the ending market price for
purposes of computing fully diluted earnings per share.
(4) Average and ending fair market values are determined by reference to the
price and date upon which stock options are granted. All such options are
granted at the fair value on the date of the grant.
These prices at the end of each quarter are as follows:
<TABLE>
<CAPTION>
Period Ended 1997 1996
------------ ------ ------
<S> <C> <C>
31-March $14.75 $25.75
30-June $27.88
30-Sept $22.25
31-Dec $19.50
</TABLE>
(5) The additional share equivalents related to stock options for purposes of
fully diluted earnings per share for the three months are 105,513 and
131,167, at March 31, 1997, and 1996 respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF FIRST COMMONWEALTH, INC. AS OF MARCH
31, 1997, AND FOR THE THREE MONTHS THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,094
<SECURITIES> 515
<RECEIVABLES> 3,297
<ALLOWANCES> 350
<INVENTORY> 0
<CURRENT-ASSETS> 17,110
<PP&E> 3,534
<DEPRECIATION> 1,870
<TOTAL-ASSETS> 30,581
<CURRENT-LIABILITIES> 9,671
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 20,719
<TOTAL-LIABILITY-AND-EQUITY> 30,581
<SALES> 0
<TOTAL-REVENUES> 13,463
<CGS> 0
<TOTAL-COSTS> 12,280
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,290
<INCOME-TAX> 530
<INCOME-CONTINUING> 760
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 760
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
