U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File No. 0-27780
NEW HORIZON KIDS QUEST, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1719363
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13705 First Avenue North, Plymouth, MN 55441
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 557-1111
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ( )
As of August 13, 1998, the Registrant had outstanding 3,293,300 shares of its
Common Stock, $.01 par value.
<PAGE>
NEW HORIZON KIDS QUEST, INC.
FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
Page
----
PART I. FINANCIAL INFORMATION 3
ITEM 1. Condensed Consolidated Financial Statements
a) Condensed Consolidated Balance Sheets --
June 30, 1998, and December 31, 1997 3
b) Condensed Consolidated Statements of
Operations -- Three months and six months
ended June 30, 1998, and 1997 5
c) Condensed Consolidated Statements of
Cash Flows -- Six months ended
June 30, 1998, and 1997 6
d) Notes to Condensed Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION 11
ITEM 4. Submission of Matters to a Vote of Security Holders 11
ITEM 5. Other Matters 11
Signatures 12
2
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 319,740 $ 554,540
Accounts and notes receivable .......................... 570,116 773,120
Prepaid expenses and other current assets .............. 148,135 262,150
Current portion of notes receivable .................... 108,224 163,539
----------- -----------
Total current assets ................................. 1,146,215 1,753,349
----------- -----------
PROPERTY AND EQUIPMENT:
Furniture, fixtures, equipment and leaseholds .......... 8,346,456 6,522,416
Less--Accumulated depreciation and amortization ........ (2,369,024) (1,701,827)
----------- -----------
Property and equipment, net .......................... 5,977,432 4,820,589
OTHER ASSETS:
Goodwill (net of accumulated amortization
of $204,807 and $163,547, respectively) ............. 1,032,971 1,074,231
Notes receivable, net of current portion ............... 1,140,492 1,202,216
Other .................................................. 169,151 186,904
----------- -----------
$ 9,466,261 $ 9,037,289
=========== ===========
</TABLE>
See accompanying notes which are an integral part of
these balance sheets.
3
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt ....................... $ 1,108,158 $ 861,645
Accounts payable ........................................... 135,286 282,073
Accrued expenses ........................................... 630,223 594,266
Deferred rent .............................................. 22,666 24,666
----------- -----------
Total current liabilities ................................ 1,896,333 1,762,650
LONG-TERM DEBT, less current maturities ....................... 2,317,775 2,313,968
SHAREHOLDERS' EQUITY:
Undesignated preferred stock, 3,500,000 shares
authorized; no shares issued and outstanding ............. -- --
Series A convertible preferred stock, $.01 par value,
1,500,000 shares authorized; no shares issued and
outstanding .............................................. -- --
Common stock, $.01 par value, 20,000,000 shares
authorized; 3,293,300 shares issued and outstanding ...... 32,933 32,933
Additional paid-in capital ................................. 7,196,197 7,196,197
Accumulated deficit ........................................ (1,976,977) (2,268,459)
----------- -----------
Total shareholders' equity ............................... 5,252,153 4,960,671
----------- -----------
$ 9,466,261 $ 9,037,289
=========== ===========
</TABLE>
See accompanying notes which are an integral part of
these balance sheets.
4
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------- -------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE ................................ $ 3,955,252 $ 3,348,092 $ 7,636,131 $ 6,491,737
COSTS AND EXPENSES:
Direct Expenses ..................... 3,178,501 2,568,176 5,965,818 5,029,760
Depreciation and Amortization ....... 355,134 237,061 651,741 445,216
Pre-Opening Expenses ................ 97,805 123,917 126,169 171,060
------------ ------------ ------------ ------------
Total Costs and Expenses .......... 3,631,440 2,929,154 6,743,728 5,646,036
------------ ------------ ------------ ------------
CENTER OPERATING INCOME ................ 323,812 418,938 892,403 845,701
Selling, General and Administrative . 198,141 311,032 447,989 638,876
Depreciation and Amortization ....... 29,653 24,643 59,306 49,286
------------ ------------ ------------ ------------
OPERATING INCOME ....................... 96,018 83,263 385,108 157,539
Interest Expense .................... (97,971) (71,265) (170,035) (117,642)
Interest Income ..................... 33,151 42,355 67,505 84,401
Minority Interest ................... 9,785 12,613 8,904 27,817
------------ ------------ ------------ ------------
NET INCOME ............................. $ 40,983 $ 66,966 $ 291,482 $ 152,115
============ ============ ============ ============
INCOME PER SHARE:
Basic and Diluted ................... $ .01 $ .02 $ .09 $ .05
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and Diluted ................... 3,293,300 3,293,300 3,293,300 3,293,300
============ ============ ============ ============
</TABLE>
See accompanying notes which are an integral part of
these statements.
5
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................. $ 291,482 $ 152,115
Adjustments to reconcile net income to net cash provided
by operating activities--
Depreciation and amortization ...................... 711,047 494,502
Deferred Rent ...................................... (2,000) (2,001)
Change in operating assets and liabilities:
Accounts receivable .............................. 258,319 286,146
Prepaid expenses and other ....................... 114,015 33,622
Accounts payable ................................. (146,787) 23,482
Other assets ..................................... 15,163 (22,616)
Accrued expenses ................................. 35,957 70,692
----------- -----------
Net cash provided by operating activities ...... 1,277,196 1,035,942
----------- -----------
INVESTING ACTIVITIES:
Purchases of property and equipment .................... (1,824,040) (971,605)
Issuance of note receivable ............................ -- (500,492)
Payments received on note receivable ................... 61,724 136,149
----------- -----------
Net cash used in investing activities ................ (1,762,316) (1,335,948)
----------- -----------
FINANCING ACTIVITIES:
Payments on long-term obligations ...................... (454,681) (744,011)
Additional borrowings of long-term debt ................ 705,001 1,735,574
----------- -----------
Net cash provided by financing activities ............ 250,320 991,563
----------- -----------
Net increase (decrease) in cash and cash equivalents . (234,800) 691,557
CASH AND CASH EQUIVALENTS, beginning of period ............ 554,540 150,232
----------- -----------
CASH AND CASH EQUIVALENTS, end of period .................. $ 319,740 $ 841,789
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for--
Interest ............................................. $ 167,309 $ 113,388
=========== ===========
Taxes ................................................ $ -- $ --
=========== ===========
NON-CASH ITEMS:
Non-cash payments on notes receivable .................. 65,606 49,050
=========== ===========
</TABLE>
See accompanying notes which are an integral part of
these statements.
6
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by New Horizon Kids Quest, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Company's business is seasonal and, accordingly, interim results may not be
indicative of results for a full year. In the opinion of the Company, all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of June 30, 1998, and
the results of its operations for the six months ended June 30, 1998 and 1997,
have been reflected in the accompanying financial statements. Certain
information in footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures provided herein are adequate to make the
information presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements for
the years ended December 31, 1997 and 1996, and the footnotes thereto, included
in the Company's Form 10-KSB, filed with the Securities and Exchange Commission.
1. Basis of Presentation:
Principles of Consolidation -- The consolidated financial statements
include the accounts of New Horizon Kids Quest, Inc. and its wholly owned
subsidiaries (together, the "Company"). All intercompany balances and
transactions have been eliminated in consolidation.
During June 1996, a newly established entity owned 51% by the Company and
49% by Ameristar Casino Council Bluffs, Inc. ("Ameristar") (Kids Quest of
Council Bluffs, LLC ("Kids Quest LLC")) began operating a Kids Quest facility in
Council Bluffs, Iowa. The operating agreement governing Kids Quest LLC provides
for the owners to share in profits and losses of Kids Quest LLC.
2. Earnings Per Share:
In 1997 the Company adopted SFAS No. 128, "Earnings Per Share." The shares
used for computing basic and diluted earnings per share were the same for the
three months and six months ended June 30, 1998 and 1997. Options and warrants
were excluded from the computation of diluted earnings per share for both years
because their effect would be anti-dilutive.
3. Recently Issued Accounting Pronouncements:
During June 1997, the Financial Accounting Standards Board released SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires disclosure of business and geographic segments in the consolidated
financial statements of the Company. The Company will adopt SFAS No. 131 at the
end of 1998 and is currently analyzing the impact it will have on the
disclosures in its financial statements.
4. Reclassifications:
Certain 1997 amounts in the accompanying consolidated financial statements
have been reclassified to conform to the second quarter 1998 presentation. Such
reclassification had no effect on previously reported net loss or shareholders'
equity.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company currently operates seventeen Kids Quest centers providing
hourly child care and fifteen New Horizon Child Care centers providing
traditional child care services. The first Kids Quest center opened in May 1992
in Grand Casino Hinckley. Since that time, the Company has opened six additional
Kids Quests at locations owned or managed by Grand Casinos, Inc. in Minnesota,
Mississippi and Louisiana. In addition, the Company has opened three Kids Quests
at casinos owned by Station Casinos, Inc. in Nevada and Missouri, as well as
five additional locations with various other casino operators in Iowa,
Connecticut, Michigan and Minnesota. The Company opened its first Kids Quest
shopping mall location at Eden Prairie Center in Eden Prairie, Minnesota, in
March 1994 and recently opened its second shopping mall location at Mall of
America in Bloomington, Minnesota, in April 1998. The Kids Quest locations
opened since 1996 include the following:
Station Casino Kansas City Kansas City, MO January 1997
Sunset Station Las Vegas, NV June 1997
Treasure Island Resort and Casino
(dba New Horizon Hourly Care) Red Wing, MN June 1997
Bullwhackers Casino/Silver Hawk Casino Black Hawk, CO June 1997
Mall of America Bloomington, MN April 1998
During 1995 and 1996, the Company acquired an aggregate of twelve existing
child care centers in Boise, Idaho, which the Company now operates as New
Horizon Child Care centers. The Company opened its thirteenth New Horizon
location in August 1996 in a newly constructed facility.
In October 1996, the Company expanded its product line by opening a
supervised video entertainment center in conjunction with its Kids Quest
location at the Mohegan Sun Casino. The Company has since added supervised video
entertainment centers at its Bullwhackers, Soaring Eagle and Treasure Island
locations. In August 1997, the Company opened an employee child care center in
connection with its hourly child care location at Treasure Island Resort and
Casino. In August 1998, the Company opened its second employee child care center
in Joliet, Illinois, in connection with Empress Casino Joliet and Mobil Oil
Corporation. The Company plans to continue to seek opportunities for additional
employee child care and supervised video entertainment center locations.
The Company has experienced growth through acquisition and expansion. The
Company's business is seasonal with revenues and operating income for Kids Quest
being the highest and New Horizon Child Care being the lowest in the summer
months. Therefore, results of operations described below may not be indicative
of results to be achieved in any future period.
Results of Operations
Revenue for the three months ended June 30, 1998, increased $607,160, or
18%, to $3,955,252, from $3,348,092 for the same period in 1997. The Company
opened four new Kids Quest centers, two supervised video entertainment centers,
and an employee child care center since the beginning of the three month period
in 1997, which accounted for $431,208 of additional revenue. Revenue for the
Kids Quest centers open during both periods increased $88,410, or 4%, to
$2,290,791 for the three months ended June 30, 1998, from $2,202,381 for the
same period in 1997. Revenues for the Idaho New Horizon Child Care centers
increased $87,542, or 9%, to $1,023,758 for the three month period ended June
30, 1998, from $936,216 for the same period in 1997.
Revenues for the six month period ended June 30, 1998, increased
$1,144,394, or 18%, to $7,636,131 in 1998 compared to $6,491,737 for the same
period in 1997. This increase is due primarily to the addition of five new Kids
Quest centers, two supervised video entertainment centers and an employee child
care center added since the beginning of 1997, which accounted for $1,166,047 of
increased revenue. Revenue from existing Kids Quest centers decreased $174,761,
or 7%, to $2,406,239 for the six month period ended June 30, 1998, from
$2,581,000 for the same period in 1997. This is due primarily to a decrease in
revenue at the Company's Boulder Station location where revenues declined
$183,487 after the opening of the Company's Sunset Station location located
within five miles of the Boulder Station location. Revenue from the thirteen
Idaho New Horizon Child Care centers increased $153,108, or 8%, to $1,965,068 in
1998 from $1,811,960 for the same period in 1997.
8
<PAGE>
Costs and expenses for the three months ended June 30, 1998, increased
$702,286, or 24%, to $3,631,440 from $2,929,154 for the same period in 1997. The
increase is attributable primarily to the new locations added since the
beginning of the three month period in 1997, which accounted for $447,797 of the
increase. Costs and expenses for existing Kids Quest locations increased
$188,630, or 11%, to $1,890,256 for the three month period ended June 30, 1998,
from $1,701,626 for the same period in 1997. This increase is due in part to a
rent increase at Station Casino Kansas City, as well as various other increases
in operating costs at other locations. Costs and expenses for the Idaho New
Horizon Child Care centers increased $65,860, or 8%, between periods but
decreased as a percentage of revenue to 92% for the three period ended June 30,
1998, from 94% for the same period in 1997.
Costs and expenses for the six months ended June 30, 1998, increased
$1,097,692, or 19%, to $6,743,728 from $5,646,036 for the same period in 1997.
This increase was due primarily to new locations added during 1997, which
accounted for $1,069,999 of the increase. Costs and expenses at existing Kids
Quest locations decreased $70,782, or 4%, between periods. Costs and expenses at
the Idaho New Horizon Child Care centers increased $98,475, or 6%, between
periods. However, costs and expenses as a percentage of revenue decreased to 92%
for the six month period ended June 30, 1998, versus 94% for the same period in
1997.
Selling, general and administrative (SG&A) expenses decreased $112,891, or
36%, to $198,141 for the three month period ended June 30, 1998, from $311,032
for the same period in 1997. The decrease was due primarily to reductions of and
reimbursements for administrative salaries and development expenses. Despite the
decrease in SG&A expenses, management expects such expenses to increase with the
addition of and negotiation for new locations.
SG&A expenses for the six month period ended June 30, 1998, decreased
$190,887, or 30%, to $447,989 from $638,876 for the same period in 1997. This
decrease is due primarily to reductions of and reimbursement for administrative
salaries and development expenses.
Pursuant to the terms of the Company's contracts with casino operators,
casino operators are entitled to establish a discounted rate below the fair
market value for Kids Quest services to be charged by Kids Quest to the public
in order to attract customers to Kids Quest and ultimately to their casinos. The
casino operator must reimburse the Company for the difference of such amount
charged and the fair market value. The Company received $303,464 of
reimbursements for the three month period ended June 30, 1998, versus $285,471
for the same period in 1997, an increase of $17,993, or 6%. For the six month
period ended June 30, 1998, the Company received $592,086, an increase of
$35,471, or 6%, from $556,615 for the same period in 1997. The majority of these
rate discount reimbursements were from three casinos owned by Grand Casinos,
Inc. and four Indian casinos managed by Grand Casinos, Inc. There can be no
assurance that such discounts and reimbursements will not be modified or
discontinued altogether, or that future Kids Quest agreements with Grand Casinos
or other casinos will provide for a discounted rate to the public. In the event
that casino operators choose not to provide for a discounted hourly rate, the
Company may charge higher hourly rates. Although this may cause patronage to
decline and ultimately result in lower revenues, the Company currently has nine
locations that operate without any rate discount and has found no evidence to
conclude that higher non-discounted hourly rates to customers have a significant
impact on a location's patronage and resulting revenue.
Interest expense for the three month period ended June 30, 1998, increased
$26,706, or 37%, to $97,971 from $71,265 for the same period in 1997. Interest
expense for the six months ended June 30, 1998, increased $52,393, or 45%, to
$170,035 from $117,642 for the same period in 1997. These increases related to
debt incurred for the expansion of Kids Quest centers.
Net income for the three month period ended June 30, 1998, was $40,983
compared to $66,966 for the same period in 1997, a decrease of $25,983, or 39%.
Management attributes the decrease to a $100,220 decrease in operating income
from existing Kids Quest centers, new locations added since the beginning of
1997 which reduced operating income between periods by $16,588, offset by
improved operating results from the Idaho New Horizon Child Care centers of
$34,006 and decreases in SG&A for the quarter.
Net income for the six month period ended June 30, 1998, increased
$139,367, or 92%, to $291,482 from $152,115 for the same period in 1997. The
Company attributes this increase primarily to $96,048 of additional operating
income from centers added since the beginning of 1997, offset by a $103,979
decrease in operating income from existing Kids Quest centers, improved
operating results from Idaho centers of $75,308, and decreases in SG&A expenses.
9
<PAGE>
Liquidity and Capital Resources
During the six month period ended June 30, 1998, the Company generated
$1,277,196 from operations, invested $1,824,040 in property and equipment, and
received payments on notes receivable of $61,724. The Company made payments on
long-term debt of $454,681 and borrowed an additional $705,001 related to the
Mall of America location opened during the quarter. The Company ended the period
with a cash balance of $319,740. During the same period in 1997, the Company
generated $1,035,942 from operations, invested $971,605 in property and
equipment, and issued a note receivable to Station Casinos, Inc. for $500,492
related to the Kansas City Kids Quest location, as well as received payment on
notes receivable of $136,149. The Company borrowed $1,735,574 to fund expansion
as well as to pay off its bank line of credit of $514,509 and other principal
payments of $229,502. The Company ended the period in 1997 with a cash balance
of $841,789.
The Company's capital needs depend on the Company's expansion efforts. The
Company incurs pre-opening expenses in connection with each of its Kids Quest
and New Horizon Child Care centers, as well as acquisition or development
expenses to add traditional child care centers. The Company is actively seeking
additional Kids Quest and New Horizon Child Care contracts and is engaged in
site analysis for the construction of additional New Horizon Child Care centers.
The Company has funded its recent expansion through additional borrowings and
with cash flow from operations. As of June 30, 1998, the Company had a working
capital deficit of $750,118. The Company believes that cash flow from operations
will be sufficient to fund on-going operations. However, the Company may require
additional financing in 1998 as it adds additional Kids Quest or New Horizon
Child Care locations or if the Company were to pursue additional acquisitions
during the year. The Company currently has no arrangements for such additional
financing. The Company believes that it will be able to arrange such additional
financing to fund additional expansion.
Private Securities Litigation Reform Act
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-QSB (as well as information included in oral statements or other written
statements made or to be made by the Company) may contain statements that are
forward-looking, such as statements relating to plans for future expansion and
other business development activities, as well as other capital spending,
financial sources and the effects of regulation and competition. Such
forward-looking information involves important risks and uncertainties that
could significantly affect future results and, accordingly, such results may
differ from those expressed in any forward-looking statement made by or on
behalf of the Company. These risks and uncertainties include, but are not
limited to, those relating to development and construction activities,
dependence on existing management and third party contracts, domestic or global
economic conditions, changes in federal or state laws or the administration or
enforcement of such laws, litigation or claims, as well as all other risks and
uncertainties described in the Company's filings.
10
<PAGE>
PART II. - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to a vote of security holders at the
Company's annual meeting held on June 10, 1998.
1. The election of five directors to serve for the ensuing year and until
their successors shall be qualified and duly elected.
DIRECTOR FOR WITHHOLD BROKER
NOMINEE NAME NOMINEE AUTHORITY NON-VOTES
------------ ------- --------- ---------
William M. Dunkley 2,859,963 25,800 0
Susan K. Dunkley 2,859,963 25,800 0
Jay L. Bennett 2,859,963 25,800 0
Lyle Berman 2,859,963 25,800 0
Kenneth Brimmer 2,859,963 25,800 0
ITEM 5 - OTHER MATTERS
Discretionary Proxy Voting Authority/Shareholder Proposals
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934. The amendment to 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a shareholder proposal
which the shareholder has not sought to include in the Company's proxy
statement. The new amendment provides that if a proponent of a proposal fails to
notify the Company at least 45 days prior to the month and day of mailing of the
prior year's proxy statement, then the management proxies will be allowed to use
their discretionary voting authority when the proposal is raised that the
meeting, without any discussion of the matter in the proxy statement.
With respect to the Company's 1999 Annual Meeting of Shareholders, if the
Company is not provided notice of a shareholder proposal which the shareholder
has not previously sought to include in the Company's proxy statement by March
20, 1999, the management proxies will be allowed to use their discretionary
authority as outlined above.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEW HORIZON KIDS QUEST, INC.
By: /s/ William M. Dunkley
------------------------------------
William M. Dunkley
Chief Executive Officer
By: /s/ Kevin M. Greer
------------------------------------
Kevin M. Greer
Chief Financial Officer
Date: August 13, 1998
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 319,740
<SECURITIES> 1,414
<RECEIVABLES> 570,116
<ALLOWANCES> 34,846
<INVENTORY> 55,175
<CURRENT-ASSETS> 1,146,215
<PP&E> 8,346,456
<DEPRECIATION> 2,369,024
<TOTAL-ASSETS> 9,466,261
<CURRENT-LIABILITIES> 1,896,333
<BONDS> 0
0
0
<COMMON> 32,933
<OTHER-SE> 5,219,220
<TOTAL-LIABILITY-AND-EQUITY> 9,466,261
<SALES> 484,982
<TOTAL-REVENUES> 7,636,131
<CGS> 271,958
<TOTAL-COSTS> 271,958
<OTHER-EXPENSES> 6,970,161
<LOSS-PROVISION> (1,392)
<INTEREST-EXPENSE> 170,035
<INCOME-PRETAX> 291,482
<INCOME-TAX> 0
<INCOME-CONTINUING> 291,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291,482
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
