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, 1998
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 0-27508
SUPERIOR SERVICES, INC.
(exact name of Registrant as specified in its charter)
Wisconsin 39-1733405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10150 West National Avenue, Suite 350, West Allis, Wisconsin 53227
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (414) 328-2800
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 and
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_____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes____ No_____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The number of shares of Common Stock of the registrant, par value
$.01 per share, outstanding on May 5, 1998 was 26,718,494.
<PAGE>
SUPERIOR SERVICES, INC.
FORM 10-Q INDEX
For the Quarter Ended March 31, 1998
Page Number
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets . . . . . 3
Condensed Consolidated Statements of Income . . 4
Condensed Consolidated Statements
of Shareholders' Investment . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated
Financial Statements . . . . . . . . . . . . . . 7-12
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . . . . . 12-17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . 18
Item 5. Other Matters . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . 21
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
Superior Services, Inc.
Condensed Consolidated Balance Sheet
(In Thousands)
(Unaudited)
December 31, March 31,
1997 1998
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $42,684 $27,829
Trade accounts receivable 36,054 34,736
Prepaid expenses and other current assets 5,899 4,613
-------- --------
Total current assets 84,637 67,178
Property and equipment, net 221,346 226,876
Restricted funds held in trust 7,714 8,163
Other assets 4,387 3,663
Intangible assets, net 64,516 75,867
-------- --------
Total assets $382,600 $381,747
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $4,129 $1,800
Trade accounts payable 11,047 12,164
Accrued payroll and related expenses 4,769 3,724
Other accrued expenses 21,191 16,820
-------- --------
Total current liabilities 41,136 34,508
Long-term debt, net of current maturities 7,188 4,359
Disposal site closure and long-term
care obligations 41,281 42,213
Deferred income taxes 18,067 19,101
Other liabilities 13,606 12,022
Commitments and Contingencies
Shareholders' investment:
Common stock 263 267
Additional paid-in capital 216,694 221,668
Retained earnings 44,365 47,609
-------- --------
Total shareholders' investment 261,322 269,544
-------- --------
Total liabilities and shareholders'
investment $382,600 $381,747
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Income
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended March 31,
1997 1998
(Restated)
Revenues $33,900 $51,753
Expenses:
Cost of operations 18,073 28,709
Selling general and administrative costs 6,172 7,388
Merger costs -- 1,493
Depreciation and amortization expenses 4,965 7,474
------ ------
29,210 45,064
------ ------
Operating income 4,690 6,689
Other income (expense):
Interest expense (332) (411)
Other income 298 393
------ ------
Income before income taxes 4,656 6,671
Provision for income taxes 1,710 3,476
------ ------
Net income $2,946 $3,195
====== ======
Earnings per share - basic and diluted $0.14 $0.12
====== ======
Pro forma adjustments (note 3):
Net income, as reported $2,946 $3,195
------ ------
Adjustment for income taxes (204) 384
------ ------
Net income $2,742 $3,579
====== ======
Earnings per share as adjusted
- basic and diluted $0.13 $0.13
====== ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Shareholders' Investment
(In Thousands, Except Share Amounts)
(Unaudited)
Common Additional
Stock Paid-In Retained
Shares Amount Capital Earnings Total
Balance at
December 31,
1997, as
previously
reported 24,071,932 $241 $216,309 $42,859 $259,409
Shares issued
for pooling of
interests 2,161,526 22 385 1,506 1,913
---------- ---- -------- ------- --------
Balance at
December 31,
1997, as
restated 26,233,458 263 216,694 44,365 261,322
Net Income - - - 3,195 3,195
Issuance of
common stock:
Exercise of
stock options 187,672 2 1,397 - 1,399
Acquisitions 294,873 2 3,989 339 4,330
Subchapter S
distributions
to former
shareholders - - (407) (295) (702)
---------- ---- -------- ------- --------
Balance at
March 31, 1998 26,716,003 $267 $221,673 $47,604 $269,544
========== ==== ======== ======= ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars In Thousands)
(Unaudited)
For the three months
ended March 31,
1997 1998
(Restated)
OPERATING ACTIVITIES
Net income $2,946 $3,195
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 4,965 7,474
Deferred income taxes (232) 1,034
Gain on sale of assets 3 48
Changes in operating assets and
liabilities, net of effects of
acquired businesses:
Accounts receivable 2,298 1,922
Prepaid expenses and other current assets (735) 733
Accounts payable and accrued expenses (5,410) (4,876)
Disposal site closure and long-term
care obligation 849 932
Other 942 (26)
------- -------
Net cash provided by operating activities 5,626 10,436
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired (2,126) (12,831)
Purchases of property and equipment (4,688) (7,707)
Proceeds from sale of property and equipment 420 165
Increase in restricted funds held in trust (59) (449)
------- -------
Net cash used in investing activities (6,453) (20,822)
FINANCING ACTIVITIES
Proceeds from long-term debt 369 15
Payments of long-term debt (1,065) (5,181)
Issuance of common stock 4,989 1,399
Subchapter S distributions to former shareholders (440) (702)
------- -------
Net cash provided by (used in) financing
activities 3,853 (4,469)
------- -------
Net increase (decrease) in cash and cash
equivalents 3,026 (14,855)
Cash and cash equivalents at beginning of period 18,992 42,684
------- -------
Cash and cash equivalents at end of period $22,018 $27,829
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Basis of Presentation
Superior Services, Inc. ("Superior" or the "Company") is an
integrated waste management services company providing a range of
collection, transfer, transportation, disposal and recycling services to
generators of solid waste and special waste. The condensed consolidated
financial statement included herein have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). As applicable under such regulations,
certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company
believes that the presentations and disclosures in the financial
statements included herein are adequate to make the information not
misleading. The financial statements reflect all elimination entries and
normal adjustments which are necessary for a fair statement of the results
for the interim periods presented. The Company has also restated the
previously issued financial statements for the three months ended
March 31, 1997 and the consolidated balance sheet presented as of
December 31, 1997 to reflect the acquisition of Alabama Waste Systems,
Inc. and Acmar Regional Landfill, Inc. (collectively "AWS") completed on
March 31, 1998 and accounted for using the pooling of interests method.
Prior to the merger, AWS had elected "S" Corporation status for income tax
purposes. As a result of the merger, AWS terminated its "S" Corporation
election. Pro forma provisions for income taxes are presented for the
three months ended March 31, 1997 and 1998 and have been computed as if
AWS had been a "C" Corporation during the periods presented.
Operating results for interim periods are not necessarily indicative
of the results for full years and other interim periods. It is suggested
that the condensed consolidated financial statements included herein be
read in conjunction with the consolidated financial statements of Superior
for the year ended December 31, 1997 and the related notes thereto (the
"Financial Statements") included in the Company's Form 10-K for the year
ended December 31, 1997.
The accompanying condensed consolidated financial statements include
the accounts of Superior and its subsidiaries. All significant
intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to the 1997 financial statements to
conform to the 1998 presentation.
2. Significant Accounting Policies and Use of Estimates
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1997. For a description of
these policies, see Note 2 of Notes to Consolidated Financial Statements
in the Company's Form 10-K for the year ended December 31, 1997.
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this
Statement had no impact on the Company's net income or shareholders'
investment. SFAS No. 130 requires unrealized gains or losses on the
Company's available-for-sale securities and foreign currency translation
adjustments to be included in other comprehensive income. The Company has
no such transactions which would be accounted for as part of comprehensive
income.
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," effective January 1, 1998. SFAS No.
131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements
and requires that those enterprises report selected information about
operation segments in interim financial reports. Adoption of SFAS No. 131
has had no effect on the Company's reported segments.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. Acquisitions
In the first three months of 1998, the Company acquired ten
businesses which were accounted for as purchases. Aggregate consideration
for these acquisitions was approximately $11.9 million in cash and 115,474
shares of Common Stock issued under the Company's Form S-4 Acquisition
Shelf Registration Statement. These acquisitions have been accounted for
as purchases and, accordingly, the results of their operations have been
included in the Company's financial statements from their respective dates
of acquisition.
During the first three months of 1998, 29,399 shares of Common Stock
were issued under the Company's Form S-4 Acquisition Shelf Registration
Statement, and approximately $946,000 of cash was paid in settlement of
final valuation computations on certain acquisitions which occurred in
1997.
The Company completed its mergers with TWR, Inc. ("TWR") and AWS on
March 1, 1998 and March 31, respectively. The TWR and AWS mergers were
accounted for as pooling of interests pursuant to which the Company issued
150,000 and 2,161,526 shares of Common Stock, respectively, under the
Company's Form S-4 Registration Statement. The Company incurred
nonrecurring merger costs of approximately $1.5 million during the first
quarter of 1998 as a result of the mergers with TWR and AWS. The merger
costs incurred in connection with the mergers with TWR and AWS were
$1,236,000 net of tax (approximately $0.04 per share). The merger costs
included severance and bonuses, professional fees, and other merger
related costs. As of March 31, 1998, $1.2 million had been accrued for
merger costs expected to be paid by the end of 1998. Included in the
provision for income taxes for the three months ended March 31, 1998 is
$771,000 related to the cumulative deferred tax provision associated with
the AWS conversion from a "S" Corporation to a "C" Corporation in
connection with their merger with the Company. Periods prior to 1998 have
not been restated to include the accounts and operations of TWR as
combined results are not materially different from the results as
previously presented. Combined and separate results of operation of the
Company prior to completion of the merger with AWS for the three months
ended March 31, 1997, as restated, are as follows (in thousands, except
per share amounts):
Superior AWS/Acmar Combined
Three months ended March 31, 1997
(unaudited):
Revenue $30,683 $3,217 $33,900
Income before income taxes 4,146 510 4,656
Net income 2,436 510 2,946
Earnings per share - basic and diluted $0.13 $0.14
The unaudited pro forma results of operations below assume that 1997
and 1998 acquisitions accounted for as purchases occurred at the beginning
of 1997. In addition to combining the historical results of all such
acquired entities, the pro forma calculations include adjustments for
amortization of various intangibles acquired in conjunction with the
acquisitions. However, no adjustments have been reflected for
nonrecurring expenses as a result of the acquisition of the entities.
Three Months Ended March 31,
1997 1998
Total net revenue $51,298 $53,744
Net income 3,564 3,212
Earnings per share - basic $0.17 $0.12
Earnings per share - diluted $0.16 $0.12
The pro forma financial information does not purport to be indicative
of the results which would actually have been recognized had the purchase
transactions been completed on January 1, 1997 or which may be obtained in
the future.
4. Shareholders' Investment
On February 24, 1998, the Company granted employee stock options
exercisable for 358,774 shares of Common Stock at an exercise price of
either $25.875 or $28.457 per share (fair market value on grant date was
$25.875). The options become exercisable 25% after one year and an
additional 6.25% for each quarter thereafter.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except share amounts).
March 31, March 31,
1997 1998
Numerator
Income from continuing operations used in
computing basic and diluted earnings per share $2,946 $3,195
========== ==========
Denominator
Denominator for basic earnings per share -
weighted average common shares 21,127,700 26,447,200
Effect of dilutive securities - employee stock
options 365,100 457,500
---------- ----------
Denominator for diluted earnings per share -
adjusted weighted average common shares 21,492,800 26,904,700
========== ==========
6. Commitments and Contingencies
In connection with an acquisition in March 1993, the Company was
required to accept the transfer of an adjacent closed landfill that is
listed on the National Priorities List ("NPL"). A remedial investigation
performed by the PRPs (including the Company) has determined the scope and
nature of the contamination at the site and the PRPs have submitted a
feasibility study to the EPA and WDNR which describes the alternatives for
remediating the associated groundwater contamination. The WDNR has
formally approved the remedial alternative recommended by the PRPs which
calls for the installation of two to four additional gas extraction wells
(which would be connected to the existing gas extraction system at the
site) and continued groundwater monitoring. As of March 31, 1998, the
estimated one-time capital cost for the additional extractions wells was
$107,000. Annual operating, maintenance and monitoring costs for the new
extraction wells, the landfill cap, the existing gas extraction system and
groundwater monitoring system are estimated as $90,000. The operating
duration of the proposed remediation is uncertain, but could be 30 years
or longer. As the duration is uncertain, the accrual was not measured on
a discounted basis. The Company has entered into a settlement agreement
with certain generator PRPs which allocates the costs of the remediation.
Under the settlement agreement, certain of the generator PRPs agreed to
contribute to a total of approximately 42% of future costs for remedial
action and the annual operating, maintenance, and monitoring costs related
to the site. The seller and former owner of the closed landfill agreed to
indemnify the Company up to $2.8 million for any site liabilities,
including the annual costs of operating, maintaining and monitoring the
closed landfill and any costs the Company may incur as a PRP. The Company
has been paid $482,755 by the seller. The seller's remaining potential
indemnification obligation was collateralized as of March 31, 1998, by
$2,317,245 in cash held in escrow. The $2,317,245 recoverable from the
seller is included on the Company's balance sheet as part of "other
assets." On August 15, 1997, an engineer selected by the seller
determined that the reasonable present value of the cost of a likely
remediation plan for the closed landfill approximates $688,000.
The Company and seller are in dispute regarding the cost of a likely
remedial action plan. The seller has demanded arbitration and has filed a
declaratory judgment action in state circuit court. The state court
entered judgment on March 23, 1998 finding that the engineer's estimate is
final and binding on the parties. On April 30, 1998 the Company filed its
notice of appeal of the lower court judgment in state appellate court. If
the seller's position is accepted or upheld in the pending proceedings,
the Company may be required to return to the seller substantially all or a
substantial portion of the current amount held in escrow. This would
result in a reduction of its "other asset" and the related liability
account on its balance sheet, but would have no income statement effect.
Although the engineer's estimate of such potential costs was substantially
less than the Company's current estimate, the Company believes its
existing financial reserves, together with the amounts paid and remaining
payable by the seller and the contribution obligations of the generator
PRPs, are adequate to cover the currently anticipated remediation costs of
such landfill. As is the case with all sites on the NPL, the performance
of the selected remedy at the closed landfill will be subject to periodic
review by the WDNR and the EPA. In the event the selected remedy does not
perform adequately to meet applicable state and federal standards,
additional remedial measures beyond those currently anticipated could be
required by the WDNR or EPA. Implementation of any such additional
remedial measures may involve substantial additional costs beyond those
currently anticipated.
In connection with the formation of the Company in 1993 through the
consolidation of three groups of independent waste services companies,
certain potential environmental liabilities associated with the previously
filled portion of the Superior Valley Meadows landfill were identified.
At the time of the consolidation of these companies into the Company, a
contingent liability escrow was established to cover the then estimated
costs of redemption and monitoring with respect to the contingent
liabilities. To indemnify the Company against up to $1,308,000 of these
contingent liabilities, 130,800 shares of the Company's common stock
otherwise issuable as part of the consolidation to the individual who was
the principal shareholder of the prior owner of the site and who is now a
director, executive officer and significant shareholder of the Company,
were withheld from issuance. In order to preserve the Company's rights
under this indemnification arrangement prior to the February 24, 1997
expiration date for advancing such types of indemnification claims, the
Company formally notified the individual of the Company's claim against
the withheld shares for the entire amount of the originally established
liability escrow. The Company believes that the entire amount of such
environment liabilities will either be covered by the foregoing
indemnification arrangement or otherwise is not expected to have a
material adverse effect on the Company's results of operations or
financial condition.
In connection with the AWS merger on March 31, 1998, a landfill was
acquired which was subject to legal proceedings brought by the local
municipality. In October 1996, the municipality filed an administrative
appeal challenging the State of Alabama Department of Environmental
Management's (DEM) decision to issue a landfill permit modification. An
administrative commission appointed a judge to act as a hearing officer to
oversee the permit appeal. Based upon the hearing officer's
recommendation, the administrative commission in June 1997 unanimously
adopted the recommendation of the hearing officer that the landfill permit
modification was properly issued. Subsequently, the municipality filed an
appeal of this administrative decision in state circuit court. While the
Company believes it will be successful in defending the appeal of this
decision, there can be no assurance that this appeal will not be
determined adversely to the Company. Any such adverse decision, if
ultimately upheld, could impact the ability of such landfill to accept any
or certain volumes of waste and, in turn, could adversely effect the
Company's results of operations. Separately, the municipality in August
1996 filed in Federal district court a citizen's suit against the landfill
brought under provisions of the Clean Water Act and the Resource
Conservation and Recovery Act. The Company does not believe there is a
basis for a claim supporting the citizen's suit. In addition to the
Federal claims, the municipality has alleged certain state law claims
that, among other things, the prior owners of the landfill misrepresented
the geology and hydrogeology of an expansion portion of the landfill,
allegedly inducing the municipality to grant local approval for the
expansion of the landfill. This local approval is a prerequisite for
issuance of the DEM solid waste permit. Prior to the acquisition of this
landfill, the prior owners were engaged in settlement negotiations with
the municipality regarding these proceedings. Since the acquisition, the
Company has met with municipal officials and presented a settlement offer
which the municipality currently has under consideration. The Company
believes that the ultimate resolution of the citizen's suit and the
municipality's state law claims will not have a material adverse effect on
the Company's financial condition or results of operations.
The Company carries a range of insurance, including a commercial
general liability policy and a property damage policy. The Company
maintains a limited environmental impairment liability policy on its
landfills and transfer stations that provides coverage, on a "claims made"
basis, against certain third party off-site environmental damage. There
can be no assurance that the limited environmental impairment policy will
remain in place or provide sufficient coverage for existing, but not yet
known, third party, off-site environmental liabilities. The Company is
also a party to various legal proceedings arising in the normal course of
business. The Company believes that the ultimate resolution of these
other matters will not have a material adverse effect on the Company's
financial condition or result of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Management's Discussion and
Analysis are "forward-looking statements" intended to qualify for the safe
harbors from liability established by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally be
identified as such because the context of the statement will include words
such as the Company "believes," anticipates, "expects" or words of similar
import. Similarly, statements that describe the Company's future plans,
objectives, strategies or goals are also forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties
which are described in close proximity to such statements and are also set
forth in the Company's Form S-4 Registration Statement dated March 30,
1998 (No. 333-48887) under the caption "Risk Factors", and which could
cause actual results to differ materially from those currently
anticipated. Shareholders, potential investors and other readers are
urged to consider these factors carefully in evaluating the forward-
looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements made herein
are only made as of the date of this report and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
General
The Company provides solid waste collection, transfer,
transportation, recycling and disposal services to over 530,000
residential, commercial and industrial customers in Alabama, Illinois,
Iowa, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, West Virginia,
and Wisconsin. The Company also provides other integrated waste services,
most of which are project-based and many of which provide additional waste
volumes to the Company's landfills and recycling facilities. As of March
31, 1998, solid waste operations consisted of 15 Company-owned solid waste
landfills, four managed third party landfills, 40 solid waste collection
operations, 15 recycling facilities and 13 solid waste transfer stations.
As described more fully below, revenues for the periods presented
were comprised of fees received for the following services:
Three Months Ended
March 31,
1997 1998
Collection 56% 60%
Third party disposal 20% 16%
Recycling 12% 10%
Other integrated waste services 12% 14%
---- ----
100% 100%
==== ====
The Company's strategy for future growth anticipates the recognition
of significant revenue from acquiring additional solid waste collection
and disposal operations as well as continued internal growth. The Company
acquired or merged with businesses with estimated annualized revenues of
more than $30 million in the first three months of 1998. The percentage
of revenue obtained from collection services increased to 60% in the first
three months of 1998 compared to 56% in the first three months of 1997 due
to a greater portion of revenue being generated from collection operations
acquired. As it continues to acquire additional solid waste collection
and disposal operations, the Company believes that its revenue mix will
shift away from recycling and other integrated waste services and more
towards solid waste collections and disposal.
All financial data for the three month period ended March 31, 1997
have been restated and give retroactive effect to the Company's March 31,
1998 merger with AWS in a transaction accounted for as a pooling of
interests.
Prior to the AWS merger, AWS had elected "S" Corporation status for
federal income tax purposes. As a result of the merger, AWS's "S"
Corporation status was terminated. Accordingly, certain pro forma
information is presented in the Company's Consolidated Statements of
Income as if AWS had been a taxable entity during the periods presented.
Results of Operations
The information presented below reflects the pro forma net income
exclusive of merger costs incurred in connection with the mergers with TWR
and AWS, which were accounted for as poolings of interest. Pro forma net
income includes federal and state income tax provisions for 1997 and 1998
as if AWS had been a taxable entity, and excludes the cumulative deferred
tax provision for AWS which were Subchapter S Corporations prior to the
merger.
Summary Financial Data
(in thousands, except per share data)
Three Months Ended March 31,
1997 Per Per
(restated) Share 1998 Share
Revenue $33,900 - $51,753 -
Net income 2,946 $0.14 3,195 $0.12
Net income, as reported $2,946 $0.14 $3,195 $0.12
Pro forma adjustments:
Adjustment for income taxes (204) - 384 -
------ ----- ------ -----
Pro forma net income 2,742 $0.13 3,579 $0.13
Merger costs, net of tax - - 1,236 $0.05
------ ----- ------ -----
Pro forma net income, exclusive of
merger costs and cumulative
deferred tax provisions $2,742 $0.13 $4,815 $0.18
====== ===== ====== =====
Overview
Revenues in the 1998 first quarter of $51.8 million increased 52.7%
over the comparable period in the prior year, as restated, primarily due
to operations acquired which were accounted for under the purchase method
of accounting. Pro forma earnings per share, excluding one-time merger
costs resulting from the acquisitions of TWR and AWS and excluding
cumulative deferred tax provisions for AWS which were "S" Corporations
prior to the merger, increased 38.5% to $0.18 per share from $0.13 per
share for the first quarter of 1997. The one-time merger costs and the
cumulative deferred tax provisions totaled approximately $0.06 per share.
Net income, exclusive of these merger costs and the cumulative deferred
tax provisions, increased 75.6% to $4.8 million in the 1998 first quarter
from $2.7 million in the same period of 1997, as restated. The weighted
average of common and common equivalent shares outstanding was 26.9
million for the first quarter of 1998 and 21.5 million for the first
quarter of 1997, as restated.
The following table sets forth for the periods indicated the
percentage of revenues by the individual line items reflected in the
Company's condensed consolidated statements of income:
Three Months Ended March 31,
1997 1998
(restated)
Revenues 100.0% 100.0%
Cost of operations 53.3 55.5
Selling, general and administrative expenses 18.2 14.3
Merger costs - 2.9
Depreciation and amortization 14.7 14.4
Operating income 13.8 12.9
Interest expense (1.0) (0.8)
Other income 0.9 0.8
Income before income taxes 13.7 12.9
Income taxes 5.0 6.7
Net income 8.7% 6.2%
==== ====
Revenues
Revenues for the 1998 first quarter compared to the 1997 first
quarter, as restated, increased approximately $17.9 million due primarily
to the impact of businesses acquired which were accounted for under the
purchase method of accounting. Revenues increased $15.4 million from the
impact of operations acquired and accounted for under the purchase method.
Substantially all of the remaining increase in revenue was a result of
internal growth. Daily disposal volume at the Company's landfills rose to
an average of more than 10,700 tons per day in the 1998 first quarter
compared to an average of 6,600 tons per day in the corresponding period
last year. The higher landfill volume was primarily the result of seven
landfills acquired since the first quarter of 1996, including a landfill
owned by AWS. As anticipated, the volumes of waste received in the 1998
first quarter were lower than the volume received in the fourth quarter of
1997 reflecting typical adverse winter conditions in the Upper Midwest.
The resale prices of, and demand for, recyclable waste products,
particularly wastepaper, can be volatile and subject to changing market
conditions. However, the impact of prices for recyclable waste paper had
essentially no effect on revenues in the 1998 first quarter compared to
the 1997 first quarter, as restated. The Company's recycling operations
continued to be profitable in the 1998 first quarter due to the Company's
floor-pricing arrangement with a national paper company, coupled with the
cost effectiveness of the Company's processing facilities and fees
received for providing recyclable waste collection services to its
customers.
Cost of Operations
Cost of operations for the three months ended March 31, 1998
increased $10.6 million, or 58.9% to $28.7 million from $18.1 million for
the three months ended March 31, 1997, as restated. As a percentage of
revenues, cost of operations increased from 53.3% in the first quarter of
1997, as restated, to 55.5% in the first quarter of 1998. The increase
was due to the higher relative percentage of non-integrated collection
business resulting in a lower overall percentage of waste collected by the
Company which is disposed of at its own facilities and due to the higher
relative percentage of business from collection operations and other
integrated waste services (which have higher costs of operations than
disposal operations). Changes in this trend are dependent on the timing
and mix of potential future business acquisitions, the timing of the
opening of its landfill project under development in Wisconsin and the
seasonality of the Company's operations. See "Seasonality." The increase
in the dollar amount of cost of operations was primarily attributable to
the costs of collecting and disposing of the increased volumes of wastes
received from services provided to new customers, including the operation
of the new businesses acquired.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $1.2 million, or 19.7%, to $7.4 million for the three-
month period ended March 31, 1998 from $6.2 million for the three-month
period ended March 31, 1997, as restated. As a percentage of revenues,
SG&A decreased from 18.2% to 14.3% in the 1998 first quarter primarily due
to the significant increase in revenues acquired without a need to
correspondingly increase SG&A support functions, particularly at the home
office. This trend is expected to continue in the near term due to the
impact of spreading relatively fixed corporate SG&A costs over a larger
revenue base as the Company continues to pursue its acquisition growth
strategy and also attempts to implement further SG&A efficiencies. While
SG&A decreased as a percentage of revenues, the actual dollars increased
primarily due to increased costs for personnel necessary to service new
customers, including those associated with the business acquired.
Merger Costs
The Company incurred nonrecurring merger costs of approximately $1.5
million during the first quarter of 1998 as a result of the merger
completed with TWR and AWS March 1, 1998 and March 31, respectively. The
one-time merger costs included severance and bonuses, professional fees
and other related merger costs. As of March 31, 1998, $1.2 million had
been accrued for merger related costs expected to be paid by the end of
1998.
Depreciation and Amortization
Depreciation and amortization increased $2.5 million, or 50.5%, to
$7.5 million for the three-month period ended March 31, 1998 from $5.0
million in the three-month period ended March 31, 1997, as restated,
primarily as a result of increased depreciation costs of the additional
assets and businesses acquired.
Interest Expense
Interest expense increased $79,000, or 23.8%, to $411,000 from
$332,000 in the three-month period ended March 31, 1998 compared to the
three-month period ended March 31, 1997, as restated primarily as a result
of debt assumed in connection with its acquisition activity.
Income Tax Expense
The Company's effective tax rate, as restated, increased from 36.7%
for the three months ended March 31, 1997 to 52.1% for the three-month
period ended March 31, 1998. The increase is due to the $771,000
cumulative deferred tax provision recognized in 1998 associated with the
AWS conversion from a subchapter S corporation to a taxable entity. As a
Subchapter "S" Corporation prior to the merger, payment of AWS' income
taxes were the responsibility of its former stockholders.
Liquidity and Capital Resources
The Company's balance sheet at March 31, 1998 reflected approximately
$27.8 million in cash and cash equivalents compared to $42.7 million at
December 31, 1997. Pending specific application, the Company has invested
its excess cash in short-term interest bearing securities.
At March 31, 1998, the Company had no outstanding borrowings, and
approximately $2.4 million in letters of credit outstanding, under its
$110 million revolving credit facility. Substantially all of the $110
million facility was available at March 31, 1998. Outstanding long-term
indebtedness at March 31, 1998 consisted primarily of equipment loan
facilities. At March 31, 1998, the ratio of the Company's long-term debt
to total capitalization ratio was 1.6% compared to 2.7% at December 31,
1997, as restated. This reduction was attributable to net cash flow from
operations applied to reduce outstanding indebtedness.
The Company's principal strategy for future growth is through the
acquisition of additional solid waste disposal, transfer and collection
operations. Although there can be no assurance that the Company will be
able to complete successfully any such acquisitions, the Company intends
to fund any such future acquisitions in 1998 through the use of cash,
capital stock, assumption of indebtedness, future royalties, and/or
contingent payments. The cash required to fund any future acquisitions
will likely be provided from one or more of the following sources:
existing cash balances, cash flow from operations and/or borrowings under
the Company's revolving credit facility. The Company is currently
negotiating an increase in the size of its revolving credit facility.
Capital expenditures for the three months ended March 31, 1998 were
$7.7 million compared to $4.7 million for the three months ended March 31,
1997, as restated, primarily due to equipment purchases at collection
companies acquired since March 31, 1997. Capital expenditures for 1998
are currently expected to be approximately $44 million compared to $30.5
million in 1997, as restated. These amounts are primarily allocated to
continued spending for landfill expansions. The Company intends to fund
future capital expenditures principally through internally generated funds
and, to a lesser extent, equipment lease financing. In addition, as
described above, the Company also anticipates that it may require
substantial additional capital expenditures to facilitate its growth
strategy of acquiring additional solid waste collection and disposal
businesses. If the Company is successful in acquiring additional solid
waste collection and disposal facilities, the Company may also be required
to make significant expenditures to bring any such newly acquired disposal
facilities into compliance with applicable regulatory requirements, obtain
permits for any such newly acquired disposal facilities or expand the
available disposal capacity at any such newly acquired disposal
facilities. The amount of these expenditures cannot be currently
determined, since they will depend on the nature and extent of any
acquired landfill disposal facilities, the condition of any facilities
acquired and the permitting status of any acquired sites. In the past,
the Company has been able to obtain other types of financing arrangements,
such as equipment lease financing, to fund its various capital
requirements. The Company believes it can readily access such additional
sources of financing as necessary to facilitate the Company's growth.
Net cash provided by operations increased to $10.4 million for the
three months ended March 31, 1998 from $5.6 million in the three months
ended March 31, 1997, as restated. The increase was primarily due to an
increase in depreciation and amortization, a non-cash expense. The
decrease in prepaid and other current assets of $1.5 million provided
additional cash as did the increase in the deferred tax liability of $1.3
million.
Net cash used in investing activities for the three months ended
March 31, 1998 increased to $20.8 million from $6.5 million in the three
months ended March 31, 1997, as restated. The increase was primarily due
to $12.8 million of cash payments for businesses acquired and the increase
in purchases of property and equipment described above.
Net cash used in financing activities in the three months ended March
31, 1998 totaled $4.5 million, compared to net cash provided by financing
activities of $3.9 million in the three months ended March 31, 1997, as
restated. The increase in cash used in financing activities reflects the
increase in payment of long-term debt of $4.1 million in the first three
months of 1998 compared to the first three months of 1997, as restated.
Proceeds from the exercise of employee stock options also decreased $3.6
million between the first quarter of 1997 and the first quarter of 1998.
Seasonality
The Company's historical results of operations have tended to vary
seasonally, with the first quarter of the year typically generating the
least amount of revenues, and with revenues higher in the second and third
quarters, followed by a decline in the fourth quarter. This seasonality
reflects the lower volume of waste, as well as decreased revenues from
project-based and other integrated waste services during the fall and
winter months, as well as the operating difficulties experienced during
the protracted periods of cold and inclement weather typically experienced
during the winter in the Upper Midwest. Also, certain operating and other
fixed costs remain relatively constant throughout the calendar year,
resulting in a similar seasonality of operating income.
Year 2000 Initiative
The Company has determined that it will need to modify or replace
portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and beyond. The Company
also has initiated discussions with its significant suppliers and
financial institutions to ensure that those parties have appropriate plans
to remediate Year 2000 issues where their systems interface with the
Company's systems or otherwise impact its operations. The Company is
assessing the extent to which its operations are vulnerable should those
organizations fail to properly remediate their computer systems.
The Company's comprehensive Year 2000 initiative is being managed by
a team of internal staff. The team's activities are designed to ensure
that there is no adverse effect on the Company's core business operations
and that transactions with customers, suppliers and financial institutions
are fully supported. While the Company believes its planning efforts are
adequate to address its Year 2000 concerns, there can be no guarantee that
the systems of other companies on which the Company's systems and
operations rely will be converted on a timely basis and will not have a
material effect on the Company. The Company currently estimates that it
will cost approximately $250,000 and that it will take approximately 18
months for the Company to fully execute its Year 2000 initiative.
PART II
Item 1. Legal Proceedings
See Note 6 to Condensed Consolidated Financial Statements included in
this Form 10-Q for information regarding certain ongoing legal
proceedings.
Item 5. Other Matters
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents selected consolidated statement of
operations, balance sheet and other operating data of the Company for the
periods presented. The following selected financial and operating data
were derived from the Company's consolidated financial statements. The
selected consolidated financial data below should be read in conjunction
with the Company's consolidated financial statements. All financial data
have been restated and give retroactive effect to reflect the Company's
March 31, 1998 merger with Alabama Waste System, Inc. and Acmar Regional
Landfill, Inc. (collectively, "AWS") in a transaction accounted for as a
pooling of interests.
<TABLE>
Superior Services, Inc.
Selected Consolidated Financial and Operating Data-Restated
<CAPTION>
Years Ended December 31
(in thousands except per share data)
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $74,540 $84,542 $105,694 $129,443 $191,578
Cost of operations 43,047 51,787 55,022 66,609 103,894
Selling, general and administrative expenses 13,854 16,853 18,587 21,333 27,667
Merger costs(2) 0 0 0 0 1,035
Litigation settlement costs(3) -- -- -- -- 1,790
Depreciation and amortization 6,836 10,899 15,329 19,331 25,851
Operating income from continuing operations 10,803 5,003 16,756 22,170 31,341
Interest expense (1,868) (2,605) (3,298) (1,296) (1,857)
Other income 841 716 750 1,020 1,617
Income from continuing operations before
income taxes 9,776 3,114 14,208 21,894 31,101
Income taxes 3,343 1,389 5,733 8,540 12,706
Income from continuing operations 6,433 1,725 8,475 13,354 18,395
Income (loss) from discontinued operations,
net of income tax (1) 56 (5,735) (329) 0 0
Net income (loss) $6,489 $(4,010) $8,146 $13,354 $18,395
Earnings-(loss) per share:
Basic $0.46 $(0.26) $0.48 $0.67 $0.81
Diluted $0.45 $(0.26) $0.47 $0.66 $0.80
Years ended December 31
1993 1994 1995 1996 1997
Balance Sheet Data:
Cash and cash equivalents $4,637 $2,418 $4,008 $18,992 $42,684
Working capital 9,348 11,096 3,740 16,554 43,501
Property and equipment, net 80,757 87,891 96,597 124,591 221,346
Total assets 124,316 137,023 144,171 203,340 382,600
Long-term debt, net of current maturities 29,379 38,403 23,339 8,404 7,188
Total common shareholders' investment 35,416 31,497 41,204 109,629 261,322
_______________
(1) Includes losses on disposition of discontinued operations, net of income taxes of $5,042,000 and $329,000 for 1994 and
1995, respectively.
(2) On June 27, 1997, the Company completed its merger with Resource Recovery Transfer and Transportation, Inc. ("R2T2")
accounted for as a pooling of interest. The Company incurred nonrecurring merger costs of $1,035,000 during 1997 as a
result of the merger with R2T2.
(3) Prior to its merger with the Company, Acmar Regional Landfill, Inc. negotiated a settlement agreement with the United
States Government with respect to a "Clean Water Act" violation in 1993 resulting in fines and restitutions totaling
$1,790,000 and was placed on probation for three years. This amount was accrued for in the December 31, 1997 financial
statements. As provided in the settlement agreement, its probation was terminated as a result of the payment of the fine
and its merger with the Company on March 31, 1998. Additionally, AWS incurred legal fees included in selling, general
and administrative costs of $342,000 during 1997 in connection with this matter. These costs, together with the fine,
net of applicable income taxes, amounted to approximately $0.07 per share in 1997.
</TABLE>
Quarterly Results
The following table presents the Company's unaudited consolidated
quarterly results and the percentages of revenues represented by the
individual line items reflected in the Company's consolidated statements
of operations for each of the four quarters ended December 31, 1997, all
as restated to give retroactive effect to the acquisition of AWS in a
transaction accounted for as a pooling of interests. This information has
been presented on the same basis as the Company's audited consolidated
financial statements incorporated herein by reference and, in the
Company's opinion, contains all necessary adjustments (consisting only of
normal recurring adjustments) to present fairly the Company's unaudited
quarterly results when read in conjunction with the Company's audited
financial statements and notes thereto. Interim operating results,
however, are not necessarily indicative of the Company's results for any
future period.
<TABLE>
<CAPTION>
For the three months ended
March 31, 1997 June 30, 1997 September 30, 1997 December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $33,900 100% $48,807 100% $55,181 100% $53,690 100%
Cost of operations 18,073 53% 26,283 54% 30,509 55% 29,029 54%
Selling, general & 6,172 18% 6,930 14% 6,906 13% 7,659 14%
administrative expenses
Litigation settlement cost -- -- -- -- -- -- 1,790 3%
Merger Costs 0 0% 1,035 2% 0 0% 0 0%
Depreciation & amortization 4,965 15% 6,189 13% 7,456 14% 7,241 14%
Operating income 4,690 14% 8,370 17% 10,310 19% 7,971 15%
Interest expense (332) (1%) (513) (1%) (619) (1%) (393) (1%)
Other income (expense) 298 1% (235) (0%) 422 1% 1,132 2%
Income before taxes 4,656 14% 7,622 16% 10,113 18% 8,710 16%
Income taxes 1,710 5% 2,977 6% 3,842 7% 4,177 8%
Net income $2,946 9% $4,645 10% $6,271 11% $4,533 8%
Earnings per share-Diluted $0.14 $0.21 $0.28 $0.17
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibits filed with this Form 10-Q report are incorporated
herein by reference to the Exhibit Index accompanying this
report.
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
<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.
Superior Services, Inc.
(Registrant)
Date: May 15, 1998 /s/ George K. Farr
George K. Farr
Chief Financial Officer
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
Exhibit Number Exhibit Description
10.17 Amendment to Key Executive Employment and Severance
Agreement between Superior Services, Inc. and George
K. Farr, dated February 24, 1998
27 Financial Data Schedule
Exhibit 10.17
Executive's Name: George K. Farr
Date: February 24, 1998
AMENDMENT
TO
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AMENDMENT ("Amendment"), dated as of the date set forth
above, supplements and amends the Key Employment and Severance Agreement,
dated August 15, 1995 ("Agreement"), by and between SUPERIOR SERVICES,
INC., a Wisconsin corporation ("Company"), and the named executive set
forth above ("Executive"). All defined terms used herein and not defined
shall have the same meaning as in the Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to Section 19 of the Agreement, the Executive
and the Company desire to supplement and amend the Agreement as
specifically set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements herein set forth, and for other valuable
consideration, the parties hereto covenant and agree as follows:
1. Section 1(h) of the Agreement is hereby amended and
restated to read in its entirety as follows:
"(h) Discretionary Termination. For purposes of this
Agreement, 'Discretionary Termination' means the
determination by the Executive at any time during the
ninety (90) day period commencing on and then after the
occurrence of a Change in Control of the Company, as
evidenced by the Executive's delivery to the Company of a
Notice of Termination during such period (including
simultaneously with the occurrence of a Change in Control
of the Company), to terminate his employment hereunder for
any reason whatsoever in his sole discretion, with or
without good faith."
2. The first paragraph of Section 1(o) of the Agreement is
hereby amended and restated to read in its entirety as follows:
"(o) Termination Date. For purposes of this Agreement,
except as otherwise provided in Section 10(b) and Section
17(a) hereof or as set forth below, the term 'Termination
date' means (i) if the Executive's employment is terminated
by the Executive's death, the date of death; (ii) if the
Executive's employment is terminated by reason of voluntary
early retirement, as agreed in writing by the Company and
the Executive, the date of such early retirement which is
set forth in such written agreement; (iii) if the
Executive's employment is terminated by reason of
disability pursuant to Section 12 hereof, the earlier of
thirty (30) days after the Notice of Termination is given
or one day prior to the end of the Employment period; (iv)
if the Executive's employment is terminated by the
Executive voluntarily (other than for Good Reason), the
date the Notice of Termination is given; (v) if the
Executive's employment is terminated by the Executive
voluntarily pursuant to a Discretionary Termination, the
Termination Date for purposes of the payment of a
Termination Payment under Section 9(b) hereof shall be the
date the Notice of Termination is given to the Company, but
for any and all other purposes (including for all purposes
under all of the Executive's stock option agreements with
the Company), the effective Termination Date for employment
termination hereunder and for all other purposes shall be
such date as is specified by the Executive in his Notice of
Termination, provided that such specified date shall not be
more than ninety (90) days after the date of the Change in
Control of the Company; and (vi) if the Executive's
employment is terminated by the Company (other than by
reason of disability pursuant to Section 12 hereof) or by
the Executive for Good Reason, the earlier of thirty (30)
days after the Notice of Termination is given or one day
prior to the end of the Employment Period. Notwithstanding
the foregoing, ..." [Remainder of existing Section 1(o) to
remain as written in Agreement.]
3. The first paragraph of Section 9(b) of the Agreement shall
be amended and restated in its entirety as follows:
"(b) Termination Payment. The Termination Payment shall be
an amount equal to the average of the Executive's annual
total compensation reportable by the Company on Form W-2
(i.e., base salary plus bonus amounts and all other taxable
compensation) over the five (5) fiscal years of the Company
immediately prior to the Change in Control of the Company
(with such compensation annualized for any initial partial
year of employment) multiplied by three (3); provided that
if the Executive has been employed by the Company for less
than three (3) years, then the Termination Payment shall be
an amount equal to the highest amount of the Executive's
annual total compensation for any year during the period of
his employment by the Company prior to the Change in
Control of the Company multiplied by three (3). Except as
otherwise provided herein, the Termination Payment shall be
paid to the Executive in cash no later than ten (10)
business days after the Termination Date; provided,
however, the Termination Payment shall be paid to the
Executive immediately upon receipt by the Company of a
Notice of Termination relating to a Discretionary
Termination (regardless of any differing effective date of
the Executive's employment termination). The Executive
shall not be required to mitigate the amount of the
Termination Payment by securing other employment or
otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for
any other reason.
[Remainder of Section 9(b) shall remain as written in the
Agreement.]
4. Except as specifically set forth above, all other terms and
conditions of the Agreement shall continue in full force and effect,
unaffected by this Amendment. This Amendment shall be effective for all
purposes immediately as of the date first written above.
IN WITNESS WHEREOF, the Executive and the Company have set their
hands hereto as of the date above.
SUPERIOR SERVICES, INC.
/s/ George K. Farr By: /s/ Joseph P. Tate
Executive Joseph P. Tate, Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC.
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 27,829
<SECURITIES> 0
<RECEIVABLES> 36,421
<ALLOWANCES> (1,685)
<INVENTORY> 1,237
<CURRENT-ASSETS> 67,178
<PP&E> 315,792
<DEPRECIATION> (88,916)
<TOTAL-ASSETS> 381,747
<CURRENT-LIABILITIES> 34,508
<BONDS> 4,359
0
0
<COMMON> 267
<OTHER-SE> 269,277
<TOTAL-LIABILITY-AND-EQUITY> 381,747
<SALES> 0
<TOTAL-REVENUES> 51,753
<CGS> 0
<TOTAL-COSTS> 36,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 364
<INTEREST-EXPENSE> 411
<INCOME-PRETAX> 6,671
<INCOME-TAX> 3,476
<INCOME-CONTINUING> 3,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,195
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
