<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED June 30, 1996
COMMISSION FILE NUMBER 33-80191
PACIFIC GATEWAY EXCHANGE, INC.
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3134065
(State of Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
533 Airport Blvd, Suite 505, Burlingame, California, 94010
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (415) 375 6700
--------------
None
----
(Former name, former address and former fiscal year
if changed since last report)
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 No X
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of 15 August, 1996
----------
Common Stock, par value $.001 19,317,540
(Titles of each class) (Number of Shares)
<PAGE>
PACIFIC GATEWAY EXCHANGE, INC.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - FINANCIAL INFORMATION:
Consolidated balance sheets at
June 30, 1996 and December 31, 1995 3
Statement of operations
for the three- and six-month periods ended
June 30, 1996 and 1995 4
Statement of cash flows
for the six-month periods ended
June 30, 1996 and 1995 5
Notes to financial statements 6
Management's discussion and analysis
of financial condition and results
of operations 8
Part II - OTHER INFORMATION 12
Item 1: Legal Proceedings 12
Item 2: Changes in Securities 12
Item 3: Defaults Upon Senior Securities 12
Item 4: Submission of Matters to a Vote of
Security Holders 12
Item 5: Other Information 12
Item 6: Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE>
PACIFIC GATEWAY EXCHANGE, INC.
BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,385 $ 1,792
Accounts receivable, net of allowance for doubtful accounts
of $1,094,337 in 1996 and $824,337 in 1995. 21,410 12,804
Accounts receivable, related party 3,824 3,262
Advances receivable, related party 0 175
------- -------
Total current assets 26,619 18,033
Property & Equipment:
Undersea fiber optic cables 8,646 5,826
Long distance communications equipment 8,291 6,092
Office furniture and equipment 966 749
------- -------
17,903 12,667
Less accumulated depreciation 2,519 1,656
------- -------
Total property and equipment, net 15,384 11,011
Notes receivable 45 150
Deferred income tax 302 148
Deposits and other assets 774 414
------- -------
Total assets $43,124 $29,756
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $35,278 $19,419
Accrued liabilities 202 772
Income taxes payable 287 735
Revolving line of credit 0 3,000
Other liabilities 435 519
------- -------
Total current liabilities 36,202 24,445
Revolving line of credit, related party 3,302 2,420
------- -------
Total liabilities 39,504 26,865
Stockholders' Equity:
Preferred stock, $.0001 par value, authorized
1,000,000 shares 0 0
Common stock, $.0001 par value, authorized 25,000,000
shares, issued and outstanding 14,100,000 shares 1 1
Additional paid in capital 540 941
Retained earnings 3,079 1,949
------- -------
Total stockholders' equity 3,620 2,891
------- -------
Total liabilities and stockholders' equity $43,124 $29,756
======= =======
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
PACIFIC GATEWAY EXCHANGE, INC.
STATEMENTS OF OPERATIONS
(In thousands, except net income per share)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ----------- ----------
(unaudited)
<S> <C> <C> <C> <C>
Revenues $31,310 $13,276 $58,790 $21,640
Revenues - related party 5,423 4,284 10,183 8,045
------- ------- ------- -------
Total revenues 36,733 17,560 68,973 29,685
Cost of long distance services 32,649 15,154 61,779 25,195
------- ------- ------- -------
Gross margin 4,084 2,406 7,194 4,490
Selling, general and administrative expenses 2,250 1,295 4,206 2,288
Depreciation 478 221 863 410
------- ------- ------- -------
Total operating expenses 2,728 1,516 5,069 2,698
------- ------- ------- -------
Operating income 1,356 890 2,125 1,792
Interest expense 94 117 246 228
------- ------- ------- -------
Income before income taxes 1,262 773 1,879 1,564
Provision for income taxes 500 303 750 614
------- ------- ------- -------
Net income $ 762 $ 470 $ 1,129 $ 950
======= ======= ======= =======
Net income per share $ 0.05 $ 0.03 $ 0.08 $ 0.07
======= ======= ======= =======
Weighted average number of common shares
outstanding 14,091 14,300 14,190 14,300
======= ======= ======= =======
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
PACIFIC GATEWAY EXCHANGE, INC.
STATEMENT OF CASHFLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------------------------
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
Operating Activities
Net Income $ 1,130 $ 950
Adjustments to net income:
Depreciation 863 410
Change in bad debts provision 270 -
Provision for deferred income tax (154) 34
Change in accounts receivable (9,263) (1,489)
Change in notes and advances receivable 105 (128)
Change in deposits and other assets (360) (312)
Change in accounts payable 15,859 4,259
Change in accrued liabilities (570) (72)
Change in other liabilities (84) 239
Change in income taxes recoverable (572) -
------- ------
Net cash provided by operating activities 7,224 3,891
------- ------
Investing Activities
Purchase of property and equipment (5,236) (2,589)
Repurchase of stock (401) -
------- ------
Net cash used in investing activities (5,637) (2,589)
------- ------
Financing Activities
Repayments on revolving lines of credit (2,118) (481)
------- ------
Net cash used in financing activities (2,118) (481)
------- ------
Net (decrease) increase in cash (531) 821
Cash at beginning of the period 1,792 9
------- ------
Cash at end of the period $ 1,261 $ 830
======= ======
Supplementary Information
Interest paid during period 259 75
Income taxes paid during period 1,352 809
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
PACIFIC GATEWAY EXCHANGE, INC.
NOTES TO FINANCIAL STATEMENTS
(1) GENERAL
- -----------
The financial statements included herein are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and Securities Exchange Commission ("SEC") regulations. Certain
information and 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. In the opinion of
management, the financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial position,
results of operations and cash flows for the interim periods. The results for
the three month and six month periods ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
(2) ACCOUNTING FOR INTERNATIONAL LONG DISTANCE TRAFFIC
- -------------------------------------------------------
The Company has entered into operating agreements with 27 telecommunications
carriers in 21 different countries under which international long distance
traffic is both delivered and received. Under these agreements, the foreign
carriers are contractually obligated to adhere to the policy of the Federal
Communications Commission (the "FCC"), whereby traffic from the foreign country
is routed to international carriers, such as the Company, in the same proportion
as traffic carried into the country. Mutually exchanged traffic between the
Company and foreign carriers is settled through a formal settlement policy that
generally extends over a six-month period at an agreed upon rate. The Company
records the amount due to the foreign partner as an expense in the period the
traffic is delivered. Of the 27 agreements the Company had at June 30, 1996, 12
agreements provided that the company generally must wait up to six months before
it actually receives the proportional return traffic. For these agreements, the
Company recognizes a loss in the period in which it sells to a customer because
the amount due to the foreign partner generally exceeds the amount the Company
charges its customers. As a result, a significant increase in traffic with one
or more of the carriers with which the Company must wait up to six months to
receive return traffic may cause the Company to report a net loss in the
accounting period in which such increases occurred. Historically, when the
return traffic is received in the future period, the Company generally realized
a gross margin on the return traffic that, when combined with the prior period
loss on the outbound traffic, has resulted in a gross profit on the total
transaction. Although the Company can reasonably estimate the revenue it will
receive under the FCC's proportional share policy, there is no guarantee that
there will be traffic delivered back to the United States or what impact changes
in future settlement rates will have on net payments made and revenue received.
(3) SUBSEQUENT EVENTS
- ----------------------
On July 25, 1996, the Company completed an initial public offering of 5,267,000
shares of which 4,900,000 shares were offered by the Company and 367,000 shares
were offered by certain selling shareholders. The net proceeds to the Company
(after deducting underwriting discounts and estimated offering expenses) from
the sale of the shares was approximately $54.4 million. The Company used $3.3
million of the net proceeds to repay indebtedness. The Company intends to use
$35 million of these proceeds to finance the expansion of its international
network facilities on new and existing routes and the remaining proceeds are
expected to be invested in joint ventures, strategic alliances or acquisitions
and for working capital and general corporate purposes. In connection with the
Offering, Kokusai Denshin, Denwa ("KDD"), one of Japan's leading international
telecommunications carriers, purchased 1,800,000 shares and, as a result, owns
approximately 9.5% of the Company's outstanding common stock.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
The discussion herein contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding expected future
revenue from delayed proportional return traffic from foreign partners and the
estimated impact on future income from such delayed proportional return traffic
pursuant to certain operating agreements. The Company's revenues and results of
operations are difficult to forecast and could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, without limitation, changes in international settlement rates,
changes in ratios between outgoing and incoming traffic, foreign currency
fluctuations, termination of certain operating agreements and changes in the US
tax law.
The following table sets forth income statement data as a percentage of revenues
for the period indicated.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of long distance services 88.9% 86.3% 89.6% 84.9%
----- ----- ----- -----
Gross margin 11.1% 13.7% 10.4% 15.1%
Selling, general and administrative expenses 6.1% 7.4% 6.1% 7.7%
Depreciation 1.3% 1.3% 1.3% 1.4%
----- ----- ----- -----
Total operating expenses 7.4% 8.6% 7.3% 9.1%
----- ----- ----- -----
Operating income 3.7% 5.1% 3.1% 6.0%
Interest expense 0.3% 0.7% 0.4% 0.8%
----- ----- ----- -----
Income before income taxes 3.4% 4.4% 2.7% 5.3%
Provision for income taxes 1.4% 1.7% 1.1% 2.1%
----- ----- ----- -----
Net income 2.1% 2.7% 1.6% 3.2%
===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995.
Revenues: Total revenues in the three months ended June 30, 1996, increased
109% to $36.7 million from $17.6 million in the three months ended June 30,
1995. The increase was primarily the result of both increased sales to existing
customers, due to an increase in the number of operating agreements to 27 at
June 30, 1996 from 14 at June 30, 1995 and a 97% increase in the number of
wholesale carrier customers to 61 at June 30, 1996. The Company also received
more return traffic from its foreign partners during the three months ended June
30, 1996 with return traffic increasing to $3.1 million for the three months
ended June 30, 1996 from $800,000 in the three months ended June 30, 1995.
Gross profit: Gross profit increased 69.7% to $4.1 million from $2.4 million
primarily due to increased revenues. As a percentage of revenue, gross profit
decreased from 13.7% in the prior period to 11.1% in the current period. This
percentage decrease was primarily the result of increased traffic on direct
routes where the Company must generally wait up to six months for the return
traffic. See note 2 of the Notes to the Financial Statements. The cost of long
distance services increased to $32.6 million in the three months ended June 30,
1996 from $15.2 million in the three months ended June 30, 1995. This increase
in costs represents growth in outbound traffic on new and existing
<PAGE>
routes in advance of proportional return traffic, and is expected to result in
increased delayed proportional return traffic in the following six months.
Selling General and Administrative Expenses: As a percentage of revenues,
selling, general and administrative expenses decreased from 7.4% in the prior
period to 6.1% in the current period and the actual expenses increased 73.7% to
$2.3 million from $1.3 million. This increase was due primarily to increased
personnel and sales commission expenses. The increase in personnel expenses was
directly related to the increase in employees to 40 at June 30, 1996 from 20 at
June 30, 1995. The increase in sales commission expenses was primarily due to
increased revenues.
Depreciation: Depreciation increased 116% to $478,000 from $221,000. As
a percentage of revenues, depreciation was 1.3% of revenue for both the three
months ended June 30, 1996 and 1995 . The increase in dollar amount was
primarily due to depreciation of additional transmission facilities acquired
during the quarter ended June 30, 1995.
Income Tax: Income taxes increased to $500,000 from $300,000, primarily due to
increased operating income. The effective tax rate was 39.2% in 1995 and 39.6%
in 1996.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995.
Revenues: Total revenues in the six months ended June 30, 1996, increased 132%
to $69.0 million from $29.7 million in the six months ended June 30, 1995. The
increase was primarily the result of both increased sales to existing customers,
due to an increase in the number of operating agreements to 27 at June 30, 1996
from 14 at June 30, 1995 and a 97% increase in the number of wholesale carrier
customers to 61 at June 30, 1996. The Company also received more return traffic
from its foreign partners during the six months ended June 30, 1996 with return
traffic increasing to $6.1 million for the six months ended June 30, 1996 from
$1.0 million in the six months ended June 30, 1995.
Gross profit: Gross profit increased 60.2% to $7.2 million from $4.5 million
primarily due to increased revenues. As a percentage of revenue, gross profit
decreased from 15.1% in the prior period to 10.4% in the current period. This
percentage decrease was primarily the result of increased traffic on direct
routes where the Company must generally wait to six months for the return
traffic. The cost of long distance service increased to $61.8 million in the six
months ended June 30, 1996 from $25.2 million in the six months ended June 30,
1995. This increase in costs represents growth in outbound traffic on new and
existing routes in advance of proportional return traffic, and is expected to
result in increased delayed proportional return traffic in the following six
months.
Selling General and Administrative Expenses: As a percentage of revenues,
selling, general and administrative expenses decreased from 7.7% in the prior
period to 6.1% in the current period, the actual expenses increased 83.8% to
$4.2 million from $2.3 million. This increase was due primarily to increased
personnel and sales commission expenses. The increase in personnel expenses was
directly related to the increase in employees to 40 at June 30, 1996 from 20 at
June 30, 1995. The increase in sales commission expenses was primarily due to
increased revenues.
Depreciation: Depreciation increased 110% to $863,000 from $410,000. As a
percentage of revenues, depreciation decreased from 1.4% in the prior period to
1.3% in the current period. The increase in dollar amount was primarily due to
depreciation of additional transmission facilities acquired between June 30,
1995 and June 30, 1996.
Income Tax: Income taxes increased to $750,000 from $610,000, primarily due to
increased operating income. The effective tax rate was 39.3% in 1995 and 39.9%
in 1996.
LIQUIDITY AND CAPITAL RESOURCES
<PAGE>
The Company has financed its rapid growth, including its capital expenditures,
through funds provided by operations, a revolving credit facility with a
principal stockholder, a revolving credit facility with a commercial lender and
the sale of shares of common stock. The length of the Company's accounts payable
turnover is partially due to its accounts payable with foreign partners which
generally have 180 day terms as a result of the six month lag inherent in the
international telecommunications service settlement process.
Net cash provided by operating activities was $7.2 million for the six months
ended June 30, 1996 and $3.9 million for the six months ended June 30, 1995.
This increase was primarily as a result of an increase in net income and
accounts payable which exceeded the increases in accounts receivable.
Net cash used in investing activities was $5.6 million for the six months ended
June 30, 1996 and $2.6 million for the six months ended June 30, 1995.
Substantially all of these expenditures were for the acquisition of partial
ownership interests in international fiber optic cable transmission systems and
related equipment.
Net cash used in financing activities was $2.1 million for the six months ended
June 30, 1996 and $500,000 for the six months ended June 30, 1996. The line of
credit with Bank of America was put in place in the second half of 1995, but was
repaid in the second quarter of 1996.
On July 25, 1996, the Company completed an initial public offering of 5,267,000
shares, of which 4,900,000 shares were offered by the Company, which provided
the Company with approximately $54.4 million in cash. The Company used $3.3
million to repay debt and the remaining will be used to finance investment in
international network facilities, working capital and offshore ventures,
alliances or acquisitions. The Company believes that the net proceeds of this
Offering, together with cash provided by operating activities and other existing
sources of liquidity, will be sufficient to meet its expected capital
expenditures and working capital needs through the end of 1997. At June 30,
1996, the Company had outstanding commitments of $5.5 million for the
acquisition of additional ownership in digital undersea fiber optic cables.
OTHER OPERATING DATA
- --------------------
The information set forth below illustrates management's estimate of the amount
of revenue derived from the proportional delayed return traffic which certain
carriers are contractually obligated to provide to the Company within six months
of the Company delivering certain outbound calls. See Note 2 to the Notes to the
Financial Statements. The estimated delayed return traffic revenue is based on
the anticipated ratios between the outgoing and incoming traffic and anticipated
settlement rates.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -------------------------
1996 1995 1996 1995
------ ------ ------ ------
$ $ $ $
<S> <C> <C> <C> <C>
Revenues received in current period
from delayed return traffic/(1)/ 3,100 792 6,142 986
Estimated delayed return traffic revenue
backlog at end of period/(2)/ 10,946 3,476 /(6)/ 10,946 3,476 /(6)/
Estimated delayed return traffic revenue
backlog at end of preceding period 8,400 /(3)/ 2,052 /(3)//(6)/ 6,142 /(4)//(6)/ 986 /(4)//(6)/
Increase (decrease) in estimated revenues
from delayed return traffic/(5)/ 2,546 1,424 4,804 2,490
</TABLE>
/(1)/ Represents revenue recorded in the current period from certain of the
Company's operating agreements which require the Company to wait up to
six months to receive the return traffic. See Note 2 of the Note to the
Financial Statements.
<PAGE>
/(2)/ For the three and six month periods ended June 30, 1995, the amount
reflects the revenue actually received by the Company from delayed
return traffic for the six months following the end of such period. For
the three and six month periods ended June 30, 1996, the amount reflects
management's estimate of the revenue to be received by the Company from
delayed return traffic during the six months ending December 31, 1996,
such estimate being based on the anticipated ratios between outgoing and
incoming traffic and anticipated settlement rates.
/(3)/ For the three month period ending June 30, 1995, the amount reflects the
revenue actually received by the Company from delayed return traffic
during the six months ending September 30,1995 (ie., the amount to be
earned during the ensuing six months as of March 31, 1995). For the
three month period ending June 30,1996, the amount reflects management's
estimate of the revenue to be received by the Company from delayed
return traffic during the six months ending September 30,1996 (i.e., the
estimated delayed return traffic revenue backlog at March 31, 1996),
such estimate being based on the anticipated ratios between outgoing and
incoming traffic and anticipated settlement rates.
/(4)/ For the six month period ending June 30, 1996 and 1995, the estimated
delayed return traffic revenue backlog represents the amount of revenue
actually received by the Company from delayed return traffic during the
six months ending June 30, 1996 and 1995, respectively (i.e., the amount
to be earned during the ensuing six months as of December 31, 1995 and
1994, respectively)
/(5)/ The increase (decrease) in the amount of estimated delayed return
traffic revenue earned during the three months ended June 30, 1996 and
1995, is the difference between the amount of estimated delayed return
traffic revenue backlog at June 30, 1996 and March 31 1996 and the
difference between the amount of estimated delayed return traffic
revenue backlog at June 30, 1995 and March 31, 1995, respectively. The
increase (decrease) in the amount of estimated delayed return traffic
revenue earned during the six months ended June 30, 1996 and 1995 is the
difference between the amount of estimated delayed return traffic
revenue backlog at June 30, 1996 and December 31, 1995 and the
difference between the amount of estimated delayed return traffic
revenue backlog at June 30, 1995 and December 31, 1994, respectively.
The amount of the increase (decrease) reflects management's estimate of
such revenue earned in the particular three or six month period,
although not reported on the Company's financial statements until up to
six months later, under the operating agreements which require the
Company to wait up to six months before such revenue is actually
received pursuant to the contractual obligation of foreign carriers to
deliver such return traffic. Historically the company has realized an
after tax net margin of approximately 50% on the amount of such revenues
when these are received.
/(6)/ At the end of each quarter, the Company determines the actual amount of
delayed return traffic revenue received for each preceding six month
period and uses this actual amount as the "estimated" return traffic
backlog for the period ending six months earlier. As a result, in each
current quarter and the immediately preceding quarter, the amounts
represent estimates. However, in the quarter ending six months prior to
the current quarter, the delayed return backlog represents the amount
that the Company actually received in the ensuing six months.
PART II. OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a vote of Security Holders
None
Item 5. Other Information
<PAGE>
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 11 See index to Exhibits attached hereto
B. Reports on Form 8-K
None
<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.
PACIFIC GATEWAY EXCHANGE, INC.
Dated: September 2, 1996
By: /s/ Howard A. Neckowitz
----------------------------
Howard A. Neckowitz
President and CEO
(Authorized Signature)
By: /s/ Sandra Grey
----------------------------
Sandra Grey
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
<S> <C>
11 Computation of Earnings Per Share of Common Stock.
</TABLE>
<PAGE>
PACIFIC GATEWAY EXCHANGE
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In thousands, except net income per share)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------- --------------------------
1996 1,995 1996 1,995
------------ --------- ----------- ----------
<S> <C> <C> <C> <C>
COMPUTATION OF EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE:
Average Shares Outstanding 13,992 14,100 14,028 14,100
Add:
Common stock equivalent of stock
options and warrants 99 200 162 200
------- ------- ------- -------
14,091 14,300 14,190 14,300
======= ======= ======= =======
Net Income 762 470 1,129 950
======= ======= ======= =======
Net Income per Share 0.05 0.03 0.08 0.07
======= ======= ======= =======
</TABLE>
NOTE: All share and per share amounts have been restated for the prior
period presented to reflect the nine hundred and forty to one stock
split on October 20, 1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 APR-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 1,385 1,385
<SECURITIES> 0 0
<RECEIVABLES> 26,355 26,355
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 26,619 26,619
<PP&E> 17,903 17,903
<DEPRECIATION> 2,519 2,519
<TOTAL-ASSETS> 43,124 43,124
<CURRENT-LIABILITIES> 39,504 39,504
<BONDS> 0 0
0 0
0 0
<COMMON> 541 541
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 43,124 43,124
<SALES> 68,973 36,733
<TOTAL-REVENUES> 68,973 36,733
<CGS> 61,779 32,649
<TOTAL-COSTS> 61,779 32,649
<OTHER-EXPENSES> 4,206 2,250
<LOSS-PROVISION> 863 478
<INTEREST-EXPENSE> 246 94
<INCOME-PRETAX> 1,879 1,262
<INCOME-TAX> 750 500
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,129 762
<EPS-PRIMARY> 0.08 0.05
<EPS-DILUTED> 0 0
</TABLE>
