<PAGE>
[GRAY CARY WARE & FREIDENRICH LETTERHEAD]
OUR FILE NO.
1180523-900402
May 13, 1996
VIA FEDERAL EXPRESS
- -------------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
RE: REPORT ON FORM 10-Q OF RAYTEL MEDICAL CORPORATION FOR THE PERIOD
ENDED MARCH 31, 1996
Dear Ladies and Gentlemen:
On behalf of Raytel Medical Corporation (the "Company"), enclosed
herewith for filing under the Securities Exchange Act of 1934, as amended,
are on manually signed and two conformed copies of a Report on Form 10-Q of
the Company for the Period Ended March 31, 1996 (the "Form 10-Q"), each with
all required exhibits, and five additional conformed copies of the Form 10-Q
without exhibits. One originally signed copy of the Form 10-Q with all
required exhibits, is today being transmitted to The Nasdaq Stock Market for
filing therewith.
Please acknowledge your receipt of this letter and the enclosed materials
by file-stamping the enclosed copy of this letter and then returning it to
the undersigned in the stamped, self-addressed envelope provided.
<PAGE>
GRAY CARY WARE & FREIDENRICH
Securities and Exchange Commission
Mary 13, 1996
Page 2
If you have any questions regarding the enclosed, please contact me at
(415) 833-2085 or Dennis C. Sullivan (415) 833-2243.
Very truly yours,
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
By: /s/ William R. Schreiber
-------------------------------------
William R. Schreiber
Enclosures
cc: E. Payson Smith, Jr., Raytel Medical Corporation
Michael Kokesh, Esq., Raytel Medical Corporation
Dennis C. Sullivan, Esq.
The Nasdaq Stock Market (One manually signed and two conformed copies)
Market Listing Qualifications
1735 K Street, N.W.
Washington, D.C. 20006
<PAGE>
UNITED STATES
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, 1996; 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: 0-27186
RAYTEL MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2787342
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2755 CAMPUS DRIVE, SUITE 200, SAN MATEO, CALIFORNIA 94403
(Address of principal executive offices) (Zip code)
(415) 349-0800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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.
CLASS SHARES OUTSTANDING AS OF APRIL 30, 1996
COMMON STOCK 8,165,397
($.001 PAR VALUE)
<PAGE>
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1996 and September 30, 1995 . . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Operations for the
three months and the six months ended March 31, 1996 and 1995 . . .4
Condensed Consolidated Statements of Cash Flows
for the six months ended March 31, 1996 and 1995.5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . .6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . .10
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
(UNAUDITED)
----------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $13,732 $ 4,983
Receivables, net 24,459 22,415
Prepaid expenses and other 1,604 1,286
------- -------
Total current assets 39,795 28,684
Investment in and advances to
unconsolidated entities and partnerships 202 158
Property and equipment, less accumulated
depreciation and amortization 7,936 8,598
Intangible assets, less accumulated
amortization 9,436 9,328
------- -------
Total assets $57,369 $46,768
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 291 $ 4,275
Current portion of capital lease
obligations 796 1,047
Accounts payable 2,571 2,189
Accrued liabilities 4,951 5,626
------- -------
Total current liabilities 8,609 13,137
Long-term debt, net of current portion 2,081 7,718
Capital lease obligations, net of current
portion 756 984
Redeemable warrants - 1,600
Deferred liabilities 922 749
Minority interest in consolidated entities 1,035 1,081
------- -------
Total liabilities 13,403 25,269
------- -------
Stockholders' equity:
Preferred stock - 7
Common stock 8 2
Additional paid-in capital 55,149 31,410
Accumulated deficit (11,191) (9,920)
------- -------
Total stockholders' equity 43,966 21,499
------- -------
Total liabilities and stockholders'
equity $57,369 $46,768
------- -------
------- -------
</TABLE>
3
<PAGE>
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Net patient and service revenues $17,860 $15,812 $33,443 $31,286
Other revenues 186 (14) 419 117
------- ------- ------- -------
Total revenues 18,046 15,798 33,862 31,403
------- ------- ------- -------
Costs and expenses:
Operating costs 7,089 5,338 12,180 10,664
Selling, general and administrative 6,838 6,605 13,642 13,367
Depreciation and amortization 1,302 1,458 2,633 2,902
Non-recurring tender offer expense - 400 - 750
------- ------- ------- -------
Total costs and expenses 15,229 13,801 28,455 27,683
------- ------- ------- -------
Operating income 2,817 1,997 5,407 3,720
Interest expense 76 520 434 1,093
Other expense (income) (165) (62) (297) (210)
Minority interest 172 264 423 477
------- ------- ------- -------
Income before income taxes and
extraordinary item 2,734 1,275 4,847 2,360
Provision for income taxes 1,093 395 1,938 731
------- ------- ------- -------
Income before extraordinary item 1,641 880 2,909 1,629
Extraordinary item, net of related tax benefit - - 402 -
------- ------- ------- -------
Net income $ 1,641 $ 880 $ 2,507 $ 1,629
------- ------- ------- -------
------- ------- ------- -------
Net income per share before
extraordinary item $ .19 $ .16 $ .39 $ .29
------- ------- ------- -------
------- ------- ------- -------
Net income per share $ .19 $ .16 $ .33 $ .29
------- ------- ------- -------
------- ------- ------- -------
Weighted average common shares and
dilutive equivalents outstanding 8,756 5,606 7,544 5,598
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
4
<PAGE>
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
1996 1995
------- ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,507 $ 1,629
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,633 2,902
Minority interest 423 477
Equity earnings of unconsolidated entities (14) 205
Extraordinary item, net 402 -
Other, net 134 267
Changes in operating accounts:
Receivables, net (2,034) (2,938)
Prepaid expenses and other (318) (1,035)
Accounts payable 361 (485)
Accrued liabilities and other (407) 2,121
------- ------
Net cash provided by operating activities 3,687 3,143
------- ------
Cash flows from investing activities:
Capital expenditures (917) (879)
Increase in intangible assets (7) (95)
Cash received from unconsolidated entities 7 7
Other, net (46) 8
------- ------
Net cash used in investing activities (963) (959)
------- ------
Cash flows from financing activities:
Net proceeds from initial public offering 20,400 -
Repurchase of warrants (2,101) -
Proceeds from exercise of stock options 63 -
Repurchase of Company stock - (24)
Income distributions to noncontrolling investors (464) (560)
Principal repayments of debt (11,873) (2,994)
------- ------
Net cash provided by (used in) financing activities 6,025 (3,578)
------- ------
Net increase (decrease) in cash and cash equivalents 8,749 (1,394)
Cash and cash equivalents at beginning of period 4,983 5,847
------- ------
Cash and cash equivalents at end of period $13,732 $ 4,453
------- ------
------- ------
</TABLE>
The interim financial statements furnished above reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. These interim financial statements
should be read in conjunction with the financial statements and notes included
in the Company's Form S-1 Registration Statement filed on October 6, 1995, as
amended, and included in the Company's final Prospectus dated November 30, 1995
related thereto.
The foregoing interim results are not necessarily indicative of the results
of operations for the full fiscal year ending September 30, 1996.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company generates substantially all of its revenues from the provision of
transtelephonic monitoring ("TTM") services for cardiac pacemaker patients,
cardiac event detection services ("CEDS"), diagnostic imaging services and
cardiac catheterization procedures. Beginning on February 1, 1996, revenue is
also being provided from the operation of the Raytel Heart Center at Granada
Hills (the "RHCGH"), as described below.
On March 1, 1996, an existing imaging center in Turnersville, New Jersey
began operations under Raytel management. This multi-modality facility provides
mammography, ultrasound, diagnostic X-ray and fluoroscopy procedures. The
Company expects to expand the modalities offered at the facility to include
computed tomography (CT) and magnetic resonance imaging (MRI) in the near
future.
In January 1996, the Company signed two agreements for the development of
heart centers. Under an agreement with Stanford Health Services, the Company
will provide interventional cardiac services at a cardiac catheterization center
to be developed and managed by the Company. The Company will provide the
facilities and equipment for the center and will be responsible for the day-to-
day operations of the facility, including administrative support facilities
management. The Company will also be primarily responsible for marketing and
public relations activities for the center. The second agreement, with Granada
Hills Community Hospital, became effective February 1, 1996 and provides for the
creation of the Company's first integrated heart center, RHCGH. The Company is
responsible for the day-to-day operations of RHCGH, including administrative
support and billing. The Company is also primarily responsible for all
marketing and public relations activities, as well as assisting the hospital in
the negotiation and administration of contracts with managed care organizations
and other third-party payors.
In December 1995, the Company completed the initial public offering of its
Common Stock which yielded net proceeds, after underwriting discounts and
expenses, of $20,400,000. The Company used approximately $6,000,000 of the
proceeds of the offering to pay the remaining balance of a term loan from two
banks, approximately $2,101,000 to repurchase certain outstanding redeemable
warrants and $5,000,000 to repay substantially all of a subordinated note of the
Company. The remaining proceeds will be used for working capital and general
corporate purposes.
For the three months and six months ended March 31, 1996, the Company's
operating results were slightly adversely effected by weather conditions on the
East Coast.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995.
The operations of RHCGH are included in the Company's Consolidated Statements
of Operations since February 1, 1996, the effective date of the Company's
agreement with Granada Hills Community Hospital. Accordingly, RHCGH's
operations are included for two months of the three month period ended March 31,
1996, but are not included in the three month period ended March 31, 1995.
REVENUES. Total revenues increased by $2,248,000, or 14.2%, from
$15,798,000 for the three months ended March 31, 1995 to $18,046,000 for the
three months ended March 31, 1996, due primarily to the inclusion of the
revenues of RHCGH. Revenues for TTM, diagnostic imaging services, and the
catheterization laboratories all remained relatively unchanged.
6
<PAGE>
OPERATING EXPENSES. Operating costs and selling, general and administrative
expenses increased by $1,984,000, or 16.6%, from $11,943,000 for the three
months ended March 31, 1995 to $13,927,000 for the three months ended March 31,
1996 due primarily to the inclusion of expenses related to RHCGH. Operating
costs and selling, general and administrative expenses as a percentage of total
revenues increased slightly from 75.6% for the three months ended March 31, 1995
to 77.2% for the three months ended March 31, 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased by $156,000, from $1,458,000 for the three months ended March 31, 1995
to $1,302,000 for the three months ended March 31, 1996, and declined as a
percentage of revenues from 9.2% for the three months ended March 31, 1995 to
7.2% for the three months ended March 31, 1996.
NON-RECURRING TENDER OFFER EXPENSE. During the three months ended March 31,
1995, the Company charged off costs of $400,000 relating to an unsuccessful
tender offer for a public company.
OPERATING INCOME. As a result of the foregoing factors, operating income
increased by $820,000 or 41.1% from $1,997,000 for the three months ended March
31, 1995 to $2,817,000 for the three months ended March 31, 1996.
INTEREST EXPENSE. Interest expense decreased by $444,000, or 85.4%, from
$520,000 for the three months ended March 31, 1995 to $76,000 for the three
months ended March 31, 1996 primarily due to the repayment of term debt in the
first quarter of fiscal 1996 and a reduction in the principal amount outstanding
under equipment loans and capital leases.
INCOME TAXES. The provision for income taxes increased by $698,000, or
176.7%, from $395,000 for the three months ended March 31, 1995 to $1,093,000
for the three months ended March 31, 1996 as a result of increased taxable
income and a higher effective tax rate in the current period.
NET INCOME. As a result of the foregoing factors, net income increased
by $761,000, or 86.5%, from $880,000 for the three months ended March 31, 1995
to $1,641,000 for the three months ended March 31, 1996.
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1995.
The operations of RHCGH are included in the Company's Consolidated Statements
of Operations since February 1, 1996, the effective date of the Company's
agreement with Granada Hills Community Hospital. Accordingly, the RHCGH's
operations are included for two months of the six month period ended March 31,
1996, but are not included in the six month period ended March 31, 1995.
REVENUES. Total revenues increased by $2,459,000, or 7.8%, from $31,403,000
for the six months ended March 31, 1995 to $33,862,000 for the six months ended
March 31, 1996, due primarily to the inclusion of the revenues from RHCGH.
Revenues for TTM, diagnostic imaging services, and the catheterization
laboratories all remained relatively unchanged.
OPERATING EXPENSES. Operating costs and selling, general and administrative
expenses increased by $1,791,000, or 7.5%, from $24,031,000 for the six months
ended March 31, 1995 to $25,822,000 for the six months ended March 31, 1996, due
primarily to the inclusion of expenses related to RHCGH. Operating costs and
selling, general and administrative expenses as a percentage of total revenues
remained relatively unchanged.
7
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased by $269,000, from $2,902,000 for the six months ended March 31, 1995
to $2,633,000 for the six months ended March 31, 1996, and declined as a
percentage of revenues from 9.2% for the six months ended March 31, 1995 to 7.8%
for the six months ended March 31, 1996.
NON-RECURRING TENDER OFFER EXPENSE. During the six months ended March 31,
1995, the Company charged off costs of $750,000 relating to an unsuccessful
tender offer for a public company.
OPERATING INCOME. As a result of the foregoing factors, operating income
increased by $1,687,000 or 45.3% from $3,720,000 for the six months ended March
31, 1995 to $5,407,000 for the six months ended March 31, 1996.
INTEREST EXPENSE. Interest expense decreased by $659,000, or 60.3%, from
$1,093,000 for the six months ended March 31, 1995 to $434,000 for the six
months ended March 31, 1996 primarily due to the final repayment of term debt in
the first quarter of fiscal 1996 and a reduction in the principal amount
outstanding under equipment loans and capital leases, offset by a slight
increase in applicable interest rates.
INCOME TAXES. The provision for income taxes increased by $1,207,000, or
165.1%, from $731,000 for the six months ended March 31, 1995 to $1,938,000 for
the six months ended March 31, 1996 as a result of increased taxable income and
a higher effective tax rate in the current period.
EXTRAORDINARY ITEM. An extraordinary noncash charge of $402,000, net of the
related tax benefit, for the write-off of unamortized debt discount and the
write-off of capitalized debt issuance expense was charged off in the six months
ended March 31, 1996. This charge resulted from the repayment of indebtedness
and the repurchase of certain redeemable warrants from the net proceeds of the
initial public offering.
NET INCOME. As a result of the foregoing factors, net income increased
by $878,000, or 53.9%, from $1,629,000 for the six months ended March 31, 1995
to $2,507,000 for the six months ended March 31, 1996. Excluding the
extraordinary item, net income would have increased by $1,280,000, or 78.6%, to
$2,909,000 for the six months ended March 31, 1996.
BUSINESS ENVIRONMENT AND FUTURE RESULTS
The Company's future operating results may be effected by various trends in
the healthcare industry as well as by a variety of other factors, some of which
are beyond the Company's control.
The healthcare industry is undergoing significant change as third-party
payors attempt to control the cost, utilization and delivery of healthcare
services. Substantially all of the Company's revenues are derived from
Medicare, HMOs, and commercial insurers and other third-party payors. Both
government and private payment sources have instituted cost containment measures
designed to limit payments made to healthcare providers, by reducing
reimbursement rates, limiting services covered, increasing utilization review of
services, negotiating prospective or discounted contract pricing, adopting
capitation strategies and seeking competitive bids. Although the Company's
total revenues have increased in each of the last three fiscal years, revenue
growth of the Company's TTM operations during that period has been negatively
impacted by Medicare reimbursement rate reductions in certain geographic areas.
Additional reimbursement rate reductions applicable to the Company's TTM
procedures became effective on January 1, 1996. Unless modified, these
reductions will have some negative effect on the Company's operating results for
the remainder of fiscal 1996. The Company cannot predict with any certainty
whether or when additional reductions or changes in Medicare or other third-
party reimbursement rates or policies will be implemented. There can be no
assurance that future changes, if any, will not adversely affect the amounts or
types of services that may be reimbursed to the Company, or that future
reimbursement of any service offered by the Company will be sufficient to cover
the costs and overhead allocated to such service.
8
<PAGE>
In 1995, Congress passed legislation to reduce Medicare and Medicaid
expenditures. This legislation was vetoed by the President; however, future
legislation of this type could have a material adverse effect on the Company's
business, financial condition and operating results.
A key element of the Company's long-range strategy is the development and
operation of integrated heart centers. The Company has entered into two
agreements for the development of heart centers. One of these projects is now
operating, but the other project is in the early stage of development and there
can be no assurance that the Company will be able to complete this or other
similar projects. The success of the Company's proposed heart centers will
depend upon several factors including the Company's ability to: obtain, and
operate in compliance with, appropriate licenses; control costs and realize
operating efficiencies; educate patients, referring physicians and third-party
payors about the benefits of such heart centers; and provide cost-effective
services that meet or exceed existing standards of care.
Providers of healthcare services are subject to numerous federal, state and
local laws and regulations that govern various aspects of their business. There
can be no assurance that the Company will be able to obtain regulatory approvals
that may be required to expand its services or that new laws or regulations will
not be enacted or adopted that will have a material adverse effect on the
Company's business, financial condition or operating results.
The healthcare businesses in which the Company is engaged are highly
competitive. The Company expects competition to increase as a result of ongoing
consolidations and cost-containment pressures, among other factors.
The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, shortfalls in such operating results from levels forecasted by
securities analysts and other events or factors. In addition, the stock market
has, from time to time, experienced extreme price and volume fluctuations that
have particularly affected the market prices of companies in the healthcare
service industries and that have often been unrelated to the operating
performance of the affected companies. Announcements of changes in
reimbursement policies of third-party payors, regulatory developments, economic
news and other external factors may have a significant impact on the market
price of healthcare stocks.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity was materially improved during the first six months
of fiscal 1996 as a result of the completion of the initial public offering of
its Common Stock. At March 31, 1996, the Company had working capital of
$31,186,000, compared to $15,547,000 at September 30, 1995. At March 31, 1996,
the Company had cash and temporary cash investments of $13,732,000. At March
31, 1996 the amount available under the existing $10,000,000 line of credit
totaled $5,414,000 and there was no amount outstanding.
The Company batch-bills Medicare insurance carriers for most TTM services
performed during the first five months of each calendar year. This practice
results in a temporary build-up of accounts receivable during the Company's
second and third fiscal quarters and the collection of these receivables
primarily during the subsequent fourth fiscal quarter and the first quarter of
the following fiscal year.
The Company has received a commitment from the Bank of Boston Connecticut to
provide a revolving line of credit in the amount of $7,000,000 and an additional
line of credit in the amount of $23,000,000 to fund future acquisitions of
facilities, equipment and businesses. These lines of credit will bear interest
based on a defined formula and are subject to certain covenants. These credit
facilities are subject to the completion and execution of definitive loan
documentation and approval by the Board of Directors of the Company.
The Company's long-term capital requirements will depend on numerous factors,
including the rate at which the Company develops and opens heart centers or
acquires existing heart centers or other businesses, if any. The Company
believes the proceeds of the initial public offering, together with amounts
available from bank borrowings and cash generated by its operating activities,
will be adequate to meet the Company's anticipated needs for working capital and
capital expenditures through at least the next 12 months.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS:
The following exhibits are filed as a part of this Report:
Exhibit
Number Title
------ -----
27 Financial data schedule
b. REPORTS ON FORM 8-K:
The Company filed no reports on Form 8-K during the quarter ended
March 31, 1996.
10
<PAGE>
SIGNATURE
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.
RAYTEL MEDICAL CORPORATION
Dated: May 10, 1996 By: /s/ E. Payson Smith, Jr.
---------------------------------
E. Payson Smith, Jr.
Senior Vice President, Chief
Financial Officer and Secretary
(duly authorized officer and
principal financial officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
RAYTEL MEDICAL CORPORATION AND SUBSIDIARIES FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 13,732
<SECURITIES> 0
<RECEIVABLES> 24,459
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,795
<PP&E> 21,429
<DEPRECIATION> (13,493)
<TOTAL-ASSETS> 57,369
<CURRENT-LIABILITIES> 8,609
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 43,958
<TOTAL-LIABILITY-AND-EQUITY> 57,369
<SALES> 0
<TOTAL-REVENUES> 33,862
<CGS> 0
<TOTAL-COSTS> 28,455
<OTHER-EXPENSES> 126
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 434
<INCOME-PRETAX> 4,847
<INCOME-TAX> 1,938
<INCOME-CONTINUING> 2,909
<DISCONTINUED> 0
<EXTRAORDINARY> 402
<CHANGES> 0
<NET-INCOME> 2,507
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
