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 June 30, 1996
---------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period ended from to
----------- -----------
Commission file number 0-28148
---------
THE VINCAM GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2452823
------------------------------ ----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2850 Douglas Road, Miami FL 33134 (305) 460-2350
------------------------------------ -------------------------------
(Registrant's address) (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 of common stock Outstanding as of August 13, 1996
----------------------- -----------------------------------
$.001 par value 7,999,999
Page 1 of 25
<PAGE>
THE VINCAM GROUP, INC.
INDEX
Page
------
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31,
1995, and June 30, 1996 (Unaudited)............. 3
Unaudited Consolidated Statements of Income
for the three and the six months ended
June 30, 1995 and 1996.......................... 5
Unaudited Consolidated Statement of Changes
in Stockholders' (Deficit) Equity for the
six months ended June 30, 1996.................. 6
Unaudited Consolidated Statements of Cash
Flows for the six months ended June 30, 1995
and 1996........................................ 7
Notes to Consolidated Financial Statements
(Unaudited)..................................... 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 15
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.......................... 23
Item 5. Other Information.......................... 23
Item 6. Exhibits and Reports on Form 8-K .......... 24
SIGNATURES.......................................... 25
Page 2 of 25
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE VINCAM GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
(Audited) (Unaudited)
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 912,272 $ 26,474,521
Restricted cash 4,064,040 4,064,040
Accounts receivable, net 8,289,556 11,225,159
Due from affiliates 101,095 108,655
Deferred taxes 774,783 877,555
Prepaid expenses and other
current assets 378,686 997,461
------------- -------------
Total current assets 14,520,432 43,747,391
Property and equipment, net 2,507,025 3,000,811
Deferred taxes 451,529 503,215
Contract acquisition costs and
other assets 339,805 324,679
------------- -------------
$ 17,818,791 $ 47,576,096
============= =============
</TABLE>
Page 3 of 25
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
(Audited) (Unaudited)
------------- -------------
<S> <C> <C>
Liabilities and Stockholders'
(Deficit) Equity
Current liabilities:
Accounts payable and accrued
expenses $ 1,302,665 $ 1,259,835
Accrued salaries, wages and
payroll taxes 6,618,291 8,587,870
Reserve for claims 2,137,149 2,731,035
Income taxes payable 141,987 1,667,128
Current portion of long term
borrowings 1,305,362 106,656
Distribution payable 700,000 --
Deferred compensation 263,000 242,013
------------- -------------
Total current liabilities 12,468,454 14,594,537
Long term borrowings, less
current portion 1,100,972 1,050,685
Reserve for claims 1,010,792 1,208,317
Income taxes payable 1,386,323 672,818
Deferred compensation 294,300 41,200
Other liabilities 45,338 45,338
------------- -------------
Total liabilities 16,306,179 17,612,895
------------- -------------
Commitments and contingencies (Note 11) -- --
------------- -------------
Preferred stock, $.01 par value,
20,000,000 shares authorized 6,263,610 --
------------- -------------
Stockholders'(deficit) equity:
Common stock, $.001 par value,
60,000,000 shares authorized,
7,999,999 shares issued and
outstanding 4,956 8,000
Additional paid in capital -- 33,301,881
Accumulated deficit (4,755,954) (3,346,680)
------------- -------------
Total stockholders' (deficit) equity (4,750,998) 29,963,201
------------- -------------
$ 17,818,791 $ 47,576,096
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 25
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
1995 1996 1995 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 57,165,127 $ 89,179,755 $112,476,620 $169,070,199
------------- ------------- ------------- -------------
Direct costs:
Salaries, wages and employment taxes
of worksite employees 50,558,816 78,468,086 99,552,212 148,770,453
Health care and workers' compensation 3,139,414 4,225,161 5,763,492 7,844,433
State unemployment taxes and other 461,973 785,057 951,391 1,665,148
------------- ------------- ------------- -------------
Total direct costs 54,160,203 83,478,304 106,267,095 158,280,034
------------- ------------- ------------- -------------
Gross profit 3,004,924 5,701,451 6,209,525 10,790,165
------------- ------------- ------------- -------------
Operating expenses:
Administrative personnel 1,516,633 2,442,253 2,987,716 4,795,652
Other general and administrative 799,447 1,196,579 1,525,561 2,204,549
Sales and marketing 438,705 741,363 838,703 1,277,324
Provision for doubtful accounts 45,000 69,000 85,000 213,000
Depreciation and amortization 73,013 143,027 140,790 259,190
------------- ------------- ------------- -------------
Total operating expenses 2,872,798 4,592,222 5,577,770 8,749,715
------------- ------------- ------------- -------------
Operating income 132,126 1,109,229 631,755 2,040,450
Interest income (expense), net 913 164,671 9,963 161,824
------------- ------------- ------------- -------------
Income before taxes 133,039 1,273,900 641,718 2,202,274
Provision for income taxes (48,805) (458,000) (235,614) (793,000)
------------- ------------- ------------- -------------
Net income $ 84,234 $ 815,900 $ 406,104 $ 1,409,274
============= ============= ============= =============
Net income per common and common
equivalent share $ 0.01 $ 0.11 $ 0.06 $ 0.20
============= ============= ============= =============
Weighted average number of shares
outstanding used in earnings per
share calculation 6,462,207 7,680,964 6,489,759 7,074,800
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5 of 25
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' (DEFICIT) EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional Accumulated
Common Stock paid in (deficit)
Shares Par value capital equity Total
------------ --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 4,956,066 $ 4,956 $ (4,755,954) $ (4,750,998)
Issuance of common stock, net
of transaction costs of
$2,958,685 charged to paid
in capital 2,000,000 2,000 $ 27,039,315 -- 27,041,315
Conversion of preferred stock
into common stock 1,043,933 1,044 6,262,566 -- 6,263,610
Net income for the period -- -- -- 1,409,274 1,409,274
------------ --------- ------------- ------------- -------------
Balance at June 30, 1996 7,999,999 $ 8,000 $ 33,301,881 $ (3,346,680) $ 29,963,201
============ ========= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 6 of 25
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------
1995 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 406,104 $ 1,409,274
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 140,790 259,188
Provision for doubtful accounts 85,000 213,000
Deferred income tax benefit -- (154,458)
Changes in assets and liabilities:
Decrease in restricted cash 186,918 --
Increase in accounts receivable (617,659) (3,148,603)
Increase in due from affiliates (1,863) (7,560)
Increase in prepaid expenses and
other current assets (242,970) (618,775)
Decrease (increase) in other assets 160,404 (5,889)
Increase (decrease) in accounts payable and
accrued expenses 134,959 (42,830)
Increase in accrued salaries, wages, and
payroll taxes 1,344,554 1,969,579
Increase in reserve for claims 453,417 791,411
(Decrease) increase in income taxes payable (589,762) 811,636
Decrease in deferred compensation -- (274,087)
------------- -------------
Net cash provided by operating activities 1,459,892 1,201,886
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (171,012) (731,959)
Collection of notes receivable from stockholders 123,078 --
------------- -------------
Net cash used in investing activities (47,934) (731,959)
------------- -------------
Cash flows from financing activities:
Principal payments on borrowings (20,832) (1,248,993)
Recapitalization costs (445,150) --
Cash paid in connection with acquisition of stock (300,000) --
Issuance of common stock, net of transaction costs of
$2,958,685 -- 27,041,315
Payment of distribution payable -- (700,000)
------------- -------------
Net cash (used in) provided by financing activities (765,982) 25,092,322
------------- -------------
Net increase in cash and cash equivalents 645,976 25,562,249
Cash and cash equivalents, beginning of period 736,420 912,272
------------- -------------
Cash and cash equivalents, end of period $ 1,382,396 $ 26,474,521
============= =============
</TABLE>
Page 7 of 25
<PAGE>
Supplemental disclosure of non cash financing activities:
- --------------------------------------------------------
In January 1995, the Company issued a subordinated note payable for $1,200,000
as partial consideration for shares reacquired by the Company.
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged a portion of their shares of common stock for approximately 166
shares of mandatorily redeemable Series A Participating Convertible Preferred
Stock valued at approximately $6,264,000.
In May 1996, the Company's mandatorily redeemable Series A Participating
Convertible Preferred Stock was converted into 1,043,933 shares of the
Company's common stock.
The accompanying notes are an integral part of these consolidated financial
statements.
Page 8 of 25
<PAGE>
THE VINCAM GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND JUNE 30, 1996
(Unaudited)
NOTE 1 - BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of The Vincam
Group, Inc. have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions for Form 10-Q and Rule 10-01 of Regulation S-X. They do not
include all information and notes required by generally accepted accounting
principles for complete financial statements and should be read in conjunction
with the audited consolidated financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's Registration Statement
on Form S-1 (File No. 333-1594), as amended. The financial information
furnished reflects all adjustments, consisting of only normal recurring
accruals which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and of cash
flows for the interim periods presented. The results of operations for the
periods presented are not necessarily indicative of the results for the entire
year.
Certain reclassifications have been made to the consolidated financial
statements of prior periods to conform to the current period presentation.
The accompanying unaudited financial statements include the accounts of The
Vincam Group, Inc. and its subsidiaries (the Company). All material
intercompany balances and transactions have been eliminated.
NOTE 2 - INITIAL PUBLIC OFFERING
In May 1996, the Company completed its initial public offering and received
proceeds of approximately $27,900,000, net of $2,100,000 underwriting
discounts and commissions, from the sale of 2,000,000 shares of common stock
of the Company. The Company used a portion of the proceeds to retire a
subordinated promissory note in the amount of $1,200,000 (see Note 6) and to
pay a $700,000 distribution payable related to the Company's repurchase of an
option to purchase the Company's headquarters. In addition, the Company
incurred approximately $860,000 in other costs in connection with the
offering. Simultaneously with the completion of the initial public offering,
the Company's mandatorily redeemable Series A Participating Convertible
Preferred Stock (Series A Preferred Stock) was converted into 1,043,933 shares
of the Company's common stock (see Note 7).
Also in connection with the completion of the Company's initial public
offering, the Company amended and restated its Articles of Incorporation to
increase the authorized number of shares of the Company's common stock from
39,500,000 to 60,000,000, and to increase the authorized number of shares of
preferred stock from 500,000 to 20,000,000.
NOTE 3 - RESTRICTED CASH
The Company had cash deposits at December 31, 1995 and June 30, 1996 in the
amount of $4,000,000 which serve as collateral on certain standby letters of
Page 9 of 25
<PAGE>
credit issued in connection with the Company's workers' compensation insurance
plan. These cash deposits have been classified as restricted cash in the
accompanying consolidated balance sheets.
At December 31, 1995 and June 30, 1996, the Company had deposited in escrow
$64,040 as collateral to guarantee the payment of workers' compensation claims
under its prior workers' compensation insurance plan and has classified these
amounts as restricted cash in the accompanying balance sheets.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Estimated
DECEMBER 31, JUNE 30, useful lives
1995 1996 (in years)
------------ ------------ ------------
Land $ 284,374 $ 284,374
Building 775,158 775,158 30
Building improvements 510,232 510,232 7
Furniture and fixtures 308,924 454,328 5
Office and computer equipment 1,353,926 1,940,357 3-5
Vehicles 20,249 20,249 3
------------ ------------
3,252,863 3,984,698
Less: accumulated depreciation
and amortization (745,838) (983,887)
------------ ------------
$ 2,507,025 $ 3,000,811
============ ============
At December 31, 1995 and June 30, 1996, gross fixed assets included $346,690
of office and computer equipment under capital lease obligations (see Note 6).
NOTE 5 - RESERVE FOR CLAIMS
The Company's reserves for claims costs consist of the following:
DECEMBER 31, JUNE 30,
1995 1996
------------ ------------
Accrued workers' compensation claims $ 2,197,374 $ 2,626,785
Accrued health care claims 654,182 745,972
Reserve for behavioral health care claims 296,385 566,595
------------ ------------
3,147,941 3,939,352
Less: workers' compensation claims
expected to be settled in more than
one year (1,010,792) (1,208,317)
------------ ------------
Reserve for claims - current $ 2,137,149 $ 2,731,035
============ ============
Page 10 of 25
<PAGE>
NOTE 6 - BORROWINGS
Borrowings are summarized as follows:
DECEMBER 31, JUNE 30,
1995 1996
------------ ------------
Subordinated note payable, repaid in May 1996
(see Note 2) $ 1,200,000 $ --
Note payable to bank, original amount of
$1 million, repayable in monthly installments
of $4,167, plus interest at 8.5% per annum,
through November 1998 when a balloon
payment of $750,000 is due, secured by land
and building and the personal guarantees of
the Company's principal stockholders 895,732 870,730
Capital lease obligation for computer hardware
and software, payable in monthly installments
of $7,479 through May 2000, interest imputed
at 12.3% per annum 310,602 286,611
------------ ------------
2,406,334 1,157,341
Less: current portion (1,305,362) (106,656)
------------ ------------
$ 1,100,972 $ 1,050,685
============ ============
The Company completed an initial public offering during May 1996 and used a
portion of the net proceeds to repay the subordinated note payable of
$1,200,000. Accordingly, this obligation has been classified as current in the
accompanying balance sheet at December 31, 1995.
In December 1995, the Company entered into a credit agreement with a bank
which was amended on June 5, 1996 (the Credit Agreement). The Credit Agreement
provides for a revolving credit facility with a sublimit of $8,000,000 to fund
working capital advances and standby letters of credit. Working capital
advances under the revolving credit facility are limited to the lesser of
$1,000,000 or the Borrowing Base, primarily composed of current accounts
receivable from unrelated parties. Amounts outstanding under the revolving
credit facility mature June 5, 1997.
The Credit Agreement also has an acquisition loan facility with a sublimit of
$5,000,000. Draws under the acquisition loan facility are available through
June 5, 1998 and are repayable in 36 equal monthly installments commencing on
June 5, 1998. The Company is charged a commitment fee ranging from .25% to
.375% per annum, depending on certain financial ratios, on the unused portion
of the revolving credit facility and the acquisition loan facility.
The Credit Agreement is collateralized by $4,000,000 in cash deposits and
substantially all of the assets of the Company, excluding the Company's
headquarters building. The Credit Agreement contains customary events of
Page 11 of 25
<PAGE>
default and covenants which prohibit the Company from, among other things,
incurring additional indebtedness in excess of a specified amount, paying
dividends, creating liens and engaging in certain mergers or combinations
without the prior written consent of the lender. The Credit Agreement also
contains certain financial covenants relating to debt and interest coverage,
net worth and other financial ratios.
Interest under the Credit Agreement accrues at rates based on the prime rate
(Prime) plus a margin of as much as .25%, or the Eurodollar rate (as defined
in the Credit Agreement) plus a margin ranging from 1.50% to 2.00%, depending
on certain financial ratios, at the Company's option.
Under the revolving credit facility, the Company had outstanding approximately
$4,981,000 in standby letters of credit at June 30, 1996 which guarantee the
payment of claims to the Company's workers' compensation insurance carrier.
As of that date, there were no amounts outstanding for working capital
advances or under the acquisition loan facility, and all amounts under these
facilities were available at June 30, 1996.
NOTE 7 - MANDATORILY REDEEMABLE PREFERRED STOCK
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged 1,043,933 shares of common stock for 165.376 shares of Series A
Preferred Stock. As a result of the Company's initial public offering in
May 1996, the Series A Preferred Stock was automatically converted into
1,043,933 shares of common stock (see Note 2).
NOTE 8 - EARNINGS PER SHARE
Net income per common and common equivalent share has been computed based on
the weighted average number of shares of common stock and common stock
equivalents outstanding during each of the periods presented. For purposes of
the calculation of net income per common and common equivalent share, the
mandatorily redeemable preferred stock is also considered a common stock
equivalent.
NOTE 9 - INCOME TAXES
The Company records income tax expense using the liability method of
accounting for deferred income taxes. Under the liability method, deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial statement and income tax bases
of the Company's assets and liabilities. An allowance is recorded when it is
more likely than not that any or all of a deferred tax asset will not be
realized. The provision for income taxes includes taxes currently payable plus
the net change during the year in deferred tax assets and liabilities recorded
by the Company.
The Company is subject to certain state taxes based on gross receipts, payroll
and before tax income within that state. Taxes based on gross receipts and
payroll are included as salaries, wages and employment taxes of worksite
employees in the accompanying consolidated statements of income, while taxes
Page 12 of 25
<PAGE>
based on income are included within the provision for income taxes.
Subsequent to December 31, 1994, the Company requested and obtained a change,
for income tax purposes, in the method of accounting for its workers'
compensation loss reserves. As a result, the Company recorded a deferred tax
asset relating to the reserves and an increase in income taxes payable of
approximately $1,386,000. Under the provisions of the Internal Revenue Code
(IRC), the Company can amortize over three years the payment of taxes due for
changes of accounting methods resulting in taxable income and can recognize
currently deductions resulting from the change in method. The Company has
classified as long term those taxes resulting from this change which it
expects to pay in more than one year.
Realization of the amounts recorded as deferred tax assets is dependent on
generating sufficient taxable income in the future to offset the deductible
temporary differences generating the deferred tax assets. Although realization
is not assured, management believes that it is more likely than not that all
of the deferred tax asset will be realized. The amount of the deferred tax
asset considered realizable, however, could be reduced if estimates of future
taxable income are reduced.
NOTE 10 - EMPLOYEE BENEFIT PLANS
No deferred compensation expense was recognized during the six months ended
June 30, 1996 or during the same period in 1995.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company is a defendant in a lawsuit related to a wrongful death and
premises liability claim involving a worksite employee. The plaintiff's
original complaint sought damages in excess of $10,000,000; however, such
complaint was dismissed in part and amended to seek damages in excess of
$15,000. The court has sustained plaintiff's amended complaint alleging
premises liability against both the Company and its client as a result of a
worksite accident at client's premises. The Company is asserting that its
liability under this claim, if any, should be limited to the State of
Florida's workers' compensation limit of $100,000 involving worksite deaths.
Initial discovery in the proceeding has begun. While there can be no assurance
that the ultimate outcome of this lawsuit will not have a material adverse
effect on the Company's financial condition or results of operations,
management believes, based on consultations with the Company's counsel,
that the ultimate outcome of this lawsuit will not have such an effect.
The Company is a defendant in a lawsuit brought in Dade County Circuit Court
in November 1995 by an individual who alleges that he was injured by an
employee of the Company assigned to work for a client of the Company, which owns
and operates a hotel and is a co-defendant in the litigation. The plaintiff
alleges that the employee, while he was working as a valet parking attendant,
drove negligently and severely and permanently injured the plaintiff in a
motor vehicle collision. The plaintiff has alleged damages in excess of
$50,000 in his amended complaint for, among other things, bodily injury,
medical costs, pain and suffering, and lost ability to earn income. Based on
consultations with the Company's counsel, management of the Company believes
Page 13 of 25
<PAGE>
that it has meritorious defenses to the plaintiff's claims and that if the
lawsuit is adversely determined, the Company will be entitled to
indemnification from its client and/or its liability insurance carrier.
Although management believes that the Company's ultimate liability in this
matter should not be material, there can be no assurance that the Company
will prevail in the litigation, in a related claim for indemnification, or
that the liability of the Company, if any, would not have a material adverse
effect on the Company's financial condition and results of operations.
* * * * *
Page 14 of 25
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto contained herein and Management's Discussion
and Analysis of Financial Condition and Results of Operations appearing in the
Company's Registration Statement on Form S-1, as amended. The results of
operations for an interim period are not necessarily indicative of the results
for the entire year.
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes", "anticipates", "plans",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such known and unknown risks, uncertainties
and other factors include, among others, the following: (i) potential for
unfavorable interpretation of government regulations relating to labor, taxes,
insurance, employment matters and the provision of managed care services;
(ii) the Company's ability to obtain or maintain all required licenses or
certifications required to further expand the range of specialized managed
care services offered by the Company; (iii) potential increases in the
Company's costs, such as health care costs, that the Company may not be able
to reflect immediately in its service fees; (iv) the Company's ability to
offer its services to prospective clients in additional states where
it has less or no market penetration; (v) higher than expected workers'
compensation claims under the Company's large deductible workers' compensation
insurance policies; (vi) the level of acquisition opportunities available
to the Company; (vii) the financial condition of the Company's clients;
(viii) additional regulatory requirements affecting the Company; and (ix) the
impact of competition from existing and new PEO companies and other factors
which are described in further detail in the Company's filings with the
Securities and Exchange Commission.
OVERVIEW
Vincam, one of the largest professional employer organizations (PEOs) in the
industry, provides small and medium-sized businesses with an outsourcing
solution to the complexities and costs related to employment and human
resources. The Company's continuum of integrated employment-related services
consists of human resource administration, employment regulatory compliance
management, workers' compensation coverage, health care and other employee
benefits. The Company establishes a co-employer relationship with its clients
and contractually assumes substantial employer responsibilities with respect
to worksite employees. In addition, the Company offers certain specialty
managed care services on a stand-alone basis to health and workers'
compensation insurance companies, HMOs, managed care providers and large,
self-insured employers.
Page 15 of 25
<PAGE>
The Company's revenues include all amounts billed to clients for gross
salaries and wages, related employment taxes, and health care and workers'
compensation coverage of worksite employees. The Company is obligated, as a
principal, to pay the gross salaries and wages, related employment taxes and
health care and workers' compensation costs of its worksite employees whether
or not the Company's clients pay the Company on a timely basis or at all.
The Company believes that including such amounts as revenues appropriately
reflects the responsibility which the Company bears for such amounts and is
consistent with industry practice.
The Company's primary direct costs are (i) salaries, wages, the employer's
portion of social security (FICA-O), Medicare premiums (FICA-M), federal
unemployment taxes (FUTA) and the Michigan Single Business Tax, (ii) health
care and workers' compensation costs, and (iii) state unemployment taxes and
other direct costs. The Company can significantly impact its gross profit
margin by actively managing the direct costs described in clauses (ii)
and (iii).
The Company's primary operating expenses are administrative personnel
expenses, other general and administrative expenses, and sales and marketing
expenses. Administrative personnel expenses include compensation, fringe
benefits and other personnel expenses related to internal administrative
employees. Other general and administrative expenses include rent, office
supplies and expenses, legal and accounting fees, insurance and other
operating expenses. Sales and marketing expenses include compensation of sales
executives and the marketing staff, as well as marketing and advertising
expenses.
The Company's profitability is largely dependent upon its success in managing
its controllable direct costs. The Company manages its controllable direct
costs through its use of (i) its proprietary managed care system, which
includes provider networks, utilization review and case management,
(ii) educational programs designed to reduce the severity and frequency of
workplace accidents, and (iii) a variety of other techniques, including
drug-free workplace programs, involvement in hiring, disciplinary and
termination decisions, adjudication of unemployment claims, and reassignment
of laid off workers.
Page 16 of 25
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth statements of operations data expressed as a
percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1995 1996 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Direct costs:
Salaries, wages and employment taxes
of worksite employees 88.4% 88.0% 88.5% 88.0%
Health care and workers' compensation 5.5% 4.7% 5.1% 4.6%
State unemployment taxes and other 0.8% 0.9% 0.9% 1.0%
------ ------ ------ ------
Total direct costs 94.7% 93.6% 94.5% 93.6%
------ ------ ------ ------
Gross profit 5.3% 6.4% 5.5% 6.4%
------ ------ ------ ------
Operating expenses:
Administrative personnel 2.7% 2.8% 2.7% 2.8%
Other general and administrative 1.5% 1.4% 1.4% 1.4%
Sales and marketing 0.8% 0.8% 0.8% 0.8%
Depreciation and amortization 0.1% 0.2% 0.1% 0.2%
------ ------ ------ ------
Total operating expenses 5.1% 5.2% 5.0% 5.2%
------ ------ ------ ------
Operating income 0.2% 1.2% 0.5% 1.2%
Interest (expense) income 0.0% 0.2% 0.1% 0.1%
------ ------ ------ ------
Income before taxes 0.2% 1.4% 0.6% 1.3%
Provision for income taxes 0.1% 0.5% 0.2% 0.5%
------ ------ ------ ------
Net income 0.1% 0.9% 0.4% 0.8%
====== ====== ====== ======
</TABLE>
Six Months Ended June 30, 1996 compared to Six Months Ended June 30, 1995
- -------------------------------------------------------------------------
The Company's revenues were $169.1 million for the six months ended June 30,
1996, compared to $112.5 million for the same period in 1995, representing an
increase of $56.6 million, or 50.3%. This increase was due primarily to an
increased number of PEO clients and worksite employees. At June 30, 1996, the
number of PEO clients was 408, compared to 290 on the same date last year,
representing an increase of 118, or 40.7%. The number of worksite employees
was 14,315 at June 30, 1996, compared to 9,565 on the same date last year,
representing an increase of 4,750, or 49.7%. In addition, the Company
earned approximately $1.6 million of revenues from its workers' compensation
Page 17 of 25
<PAGE>
managed care services during the six months ended June 30, 1996, compared to
$0.2 million during the comparable period of 1995. This increase in workers'
compensation managed care service revenues from period to period resulted from
an increased number of workers' compensation managed care service clients.
Salaries, wages and employment taxes of worksite employees were $148.8 million
for the six months ended June 30, 1996, compared to $99.6 million for the
same period in 1995, representing an increase of $49.2 million, or 49.4%.
Salaries, wages and employment taxes of worksite employees were 88.0% of
revenues for the six months ended June 30, 1996, compared to 88.5% for the
same period in 1995. The decrease of salaries, wages and employment taxes of
worksite employees as a percentage of revenues was mainly due to incremental
revenues from the Company's workers' compensation managed care services.
Health care and workers' compensation costs were $7.8 million for the six
months ended June 30, 1996, compared to $5.8 million for the same period in
1995, representing an increase of $2.1 million, or 36.1%. This increase was
mainly due to the higher volume of health care and workers' compensation
claims paid and/or reserved during the 1996 period which was a direct function
of the increase of PEO clients and worksite employees. Health care and
workers' compensation costs were 4.6% of revenues for the six months ended
June 30, 1996, compared to 5.1% for the same period in 1995. The decrease of
health care and workers' compensation costs as a percentage of revenues was
mainly due to incremental revenues from the Company's workers' compensation
managed care services.
State unemployment taxes and other direct costs were $1.7 million for the
six months ended June 30, 1996, compared to $1.0 million for the same
period in 1995, representing an increase of $0.7 million or 75.0%.
This increase was mainly due to the higher volume of salaries and wages paid
during the period which was a direct function of the increase of PEO clients
and worksite employees, as well as an increase in other direct costs related
to the Company's managed behavioral care services. State unemployment taxes
and other direct costs were 1.0% of revenues for the six months ended June 30,
1996, compared to 0.9% for the same period in 1995.
Gross profit was $10.8 million for the six months ended June 30, 1996,
compared to $6.2 million for the same period in 1995, representing an increase
of $4.6 million, or 73.8%. Gross profit was 6.4% of revenues for the six
months ended June 30, 1996, compared to 5.5% for the same period in 1995.
This increase was mainly due to the increase in revenues resulting from an
increase of PEO clients and worksite employees, and from the increase in
revenues from the Company's workers' compensation managed care services which
carry a higher margin than the Company's PEO services.
Administrative personnel expenses were $4.8 million for the six months ended
June 30, 1996, compared to $3.0 million for the same period in 1995,
representing an increase of $1.8 million, or 60.5%. This increase was
primarily attributable to increased staffing for the Company's workers'
compensation managed care services, which the Company began to make available
to external clients for the first time in 1995. Also, such increase in
administrative personnel expense was attributable to an increase in corporate
management personnel and other general and administrative expenses related to
the growth described above. Administrative personnel expenses were 2.8% of
revenues for the six months ended June 30, 1996, compared to 2.7% for the
same period in 1995.
Page 18 of 25
<PAGE>
Other general and administrative expenses, including the provision for
doubtful accounts, were $2.4 million for the six months ended June 30,
1996, compared to $1.6 million for the same period in 1995, representing an
increase of $0.8 million, or 50.1%. This increase in other general and
administrative expenses was primarily attributable to the growth of the
Company's business and the addition of workers' compensation managed care
services, which the Company began to make available to external clients for
the first time in 1995. Other general and administrative expenses, including
the provision for doubtful accounts, were 1.4% of revenues for the six months
ended June 30, 1996, compared to 1.4% for the same period in 1995.
Sales and marketing costs were $1.3 million for the six months ended
June 30, 1996, compared to $0.8 million for the same period in 1995,
representing an increase of $0.4 million, or 52.3%, but as a percentage of
revenue remained at 0.8%. The increase reflects the addition of sales
executives and a senior vice president of sales and marketing, consistent
with the Company's strategy to increase its client base in its existing
markets in part by hiring additional sales personnel.
Three Months Ended June 30, 1996 compared to Three Months Ended June 30, 1995
- -----------------------------------------------------------------------------
The Company's revenues were $89.2 million for the three months ended June 30,
1996, compared to $57.2 million for the same period in 1995, representing an
increase of $32.0 million, or 56.0%. This increase was due primarily to an
increased number of PEO clients and worksite employees. At June 30, 1996, the
number of PEO clients was 408, compared to 290 on the same date last year,
representing an increase of 118, or 40.7%. The number of worksite employees
was 14,315 at June 30, 1996, compared to 9,565 on the same date last year,
representing an increase of 4,750, or 49.7%. In addition, the Company
earned approximately $0.9 million of revenues from its workers' compensation
managed care services during the three months ended June 30, 1996, compared to
$0.1 million during the comparable period of 1995. This increase in workers'
compensation managed care service revenues from period to period resulted from
an increased number of workers' compensation managed care service clients.
Salaries, wages and employment taxes of worksite employees were $78.5 million
for the three months ended June 30, 1996, compared to $50.6 million for the
same period in 1995, representing an increase of $27.9 million, or 55.2%.
Salaries, wages and employment taxes of worksite employees were 88.0% of
revenues for the three months ended June 30, 1996, compared to 88.4% for the
same period in 1995. The decrease of salaries, wages and employment taxes of
worksite employees as a percentage of revenues was mainly due to incremental
revenues from the Company's workers' compensation managed care services.
Health care and workers' compensation costs were $4.2 million for the three
months ended June 30, 1996, compared to $3.1 million for the same period in
1995, representing an increase of $1.1 million, or 34.6%. This increase was
mainly due to the higher volume of health care and workers' compensation
claims paid and/or reserved during the 1996 period which was a direct function
of the increase of PEO clients and worksite employees. Health care and
workers' compensation costs were 4.7% of revenues for the three months ended
June 30, 1996, compared to 5.5% for the same period in 1995. The decrease of
Page 19 of 25
<PAGE>
health care and workers' compensation costs as a percentage of revenues was
mainly due to incremental revenues from the Company's workers' compensation
managed care services.
State unemployment taxes and other direct costs were $0.8 million for the
three months ended June 30, 1996, compared to $0.5 million for the same
period in 1995, representing an increase of $0.3 million or 69.9%. This
increase was mainly due to the higher volume of salaries and wages paid during
the period which was a direct function of the increase of PEO clients
and worksite employees. State unemployment taxes and other direct costs were
0.9% of revenues for the three months ended June 30, 1996, compared to 0.8%
for the same period in 1995.
Gross profit was $5.7 million for the three months ended June 30, 1996,
compared to $3.0 million for the same period in 1995, representing an increase
of $2.7 million, or 89.7%. Gross profit was 6.4% of revenues for the three
months ended June 30, 1996, compared to 5.3% for the same period in 1995.
This increase was mainly due to the increase in revenues resulting from an
increase of PEO clients and worksite employees, and from the increase in
revenues from the Company's workers' compensation managed care services which
carry a higher margin than the Company's PEO services.
Administrative personnel expenses were $2.4 million for the three months ended
June 30, 1996, compared to $1.5 million for the same period in 1995,
representing an increase of $0.9 million, or 61.0%. This increase was
primarily attributable to increased staffing for the Company's workers'
compensation managed care services, which the Company began to make available
to external clients for the first time in 1995. Also, such increase in
administrative personnel expense was attributable to an increase in corporate
management personnel and other general and administrative expenses related to
the growth described above. Administrative personnel expenses were 2.7% of
revenues for the three months ended June 30, 1996, compared to 2.7% for the
same period in 1995.
Other general and administrative expenses, including the provision for
doubtful accounts, were $1.3 million for the three months ended June 30,
1996, compared to $0.8 million for the same period in 1995, representing an
increase of $0.4 million, or 49.9%. This increase in other general and
administrative expenses was primarily attributable to the growth of the
Company's business and the addition of workers' compensation managed care
services, which the Company began to make available to external clients for
the first time in 1995. Other general and administrative expenses, including
the provision for doubtful accounts, were 1.4% of revenues for the three
months ended June 30, 1996, compared to 1.5% for the same period in 1995.
Sales and marketing costs were $0.7 million for the three months ended
June 30, 1996, compared to $0.4 million for the same period in 1995,
representing an increase of $0.3 million, or 69.0%, but as a percentage of
revenue remained at 0.8%. The increase reflects the addition of sales
executivesand a senior vice president of sales and marketing, consistent with
the Company's strategy to increase its client base in its existing markets
in part by hiring additional sales personnel.
Page 20 of 25
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Liquidity Requirements and/or Commitments
- -----------------------------------------
The Company's primary short-term liquidity requirements relate to the
Company's letter of credit requirements under its workers' compensation
policies, acquisition of office and computer equipment to support its growth,
and the payment of current tax obligations. The Company had $4.1 million in
cash at June 30, 1996 which was restricted under the terms of the Company's
revolving credit facility and letters of credit thereunder (which letters of
credit secure payment of workers' compensation claims) or escrowed in
connection with the Company's workers' compensation insurance policy. The
Company has no significant long-term debt repayment requirements.
Although the Company currently has no significant capital commitments, the
Company currently anticipates approximately $1.0 million of capital
expenditures in 1996, primarily for computer and office equipment. The
Company's long-term liquidity needs are currently limited to debt service on
the Company's outstanding long-term obligations, including capital leases, and
income taxes.
The Company intends to expand in current markets and to enter selected new
markets by acquiring established quality PEOs to provide a platform for future
regional consolidation. In this regard, the Company may from time to time
evaluate potential acquisitions which, if consummated, could require a
significant capital commitment by the Company.
Sources and Uses of Cash
- ------------------------
Net cash provided by operating activities was $1.2 million for the six
months ended June 30, 1996, compared to a cash provided by operating
activities of $1.5 million for the same period in 1995. This decrease of
approximately $258,000 was mainly due to increases in accounts receivable,
and prepaid expenses and other current assets partially off-set by a slight
increase in accrued salaries, wages, and payroll taxes during the
six months ended June 30, 1996 when compared to the same period in 1995. The
increase in prepaid expenses and other current assets was mainly due to the
prepayment of various insurance policies and to an increase in prepaid
marketing expenses. The increase in accounts receivable resulted from both
a higher number of PEO clients and worksite employees served during the six
months ended June 30, 1996, and the fact that the closing date of the
reporting period occurred immediately prior to the closing date of the
payroll cycle. The Company's accounts receivable and accrued salaries, wages,
and payroll taxes are subject to fluctuations depending on the proximity of
the closing date of the reporting period to that of the payroll cycle.
The collateral requirements of the Company's workers' compensation policies
are an integral part of the Company's liquidity from operating activities.
Under the terms of its revolving credit facility, the Company was able to
obtain an additional $3.0 million of letters of credit without an additional
cash collateral requirement. This contributed to a small decrease in
restricted cash of $0.2 million during the six months ended June 30, 1995,
increasing cash provided by operations during such period.
Page 21 of 25
<PAGE>
Net cash used in investing activities, consisting mainly of purchases of
property and equipment to support the Company's growth, was $0.7 million for
the six months ended June 30, 1996, compared to $48,000 for the same period in
1995. During the six months ended June 30, 1995, the Company collected
$123,078 from notes receivable from stockholders.
Net cash provided by financing activities was $25.1 million for the six months
ended June 30, 1996, compared to $0.8 million used in financing activities for
the same period in 1995. In May 1996, the Company completed its initial public
offering and received proceeds of $27.9 million, net of $2.1 million of
underwriting discounts and commissions, from the sale of 2,000,000 shares of
common stock of the Company. The Company used a portion of its proceeds to
retire a subordinated promissory note in the amount of $1.2 million
(see Note 6 of Notes to Consolidated Financial Statements) and to pay a
$700,000 distribution payable related to the Company's repurchase of an
option to purchase the Company's headquarters. In addition the Company
incurred approximately $860,000 in other costs in connection with the
offering. Management of the Company expects to use the remaining proceeds for
working capital, general corporate purposes, and expansion of the Company's
operations including potential acquisitions. Pending such uses, the Company
has invested the net proceeds of the offering in high-quality short-term,
interest bearing investment-grade debt securities, certificates of deposit or
direct or guaranteed obligations of the United States.
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged a portion of their shares of common stock for Series A Preferred
Stock, incurring $445,150 of transaction costs. In January 1995, the Company
also acquired 249,342 shares of its common stock from a minority shareholder
through a cash payment of $300,000 and the issuance of a $1.2 million
subordinated promissory note, which was subsequently paid in May 1996 with a
portion of the proceeds from the Company's initial public offering.
Funding Sources
- ---------------
After the completion of the Company's initial public offering and pursuant to
a commitment from Fleet National Bank ("Fleet Bank") the Company entered into
an Amended and Restated Credit Agreement providing for a $13.0 million
revolving line of credit of which (i) an aggregate of $8.0 million is
available for standby letters of credit and revolving credit loans for working
capital purposes (which working capital loans are limited to the lesser of
$1.0 million or the Borrowing Base, primarily composed of current accounts
receivable from unrelated parties) and (ii) $5.0 million is available to
finance acquisitions. The Company uses letters of credit primarily to secure
its obligations to reimburse its workers' compensation insurance carrier for
workers' compensation payments subject to the policy deductible. Borrowings
bear interest at rates based on Fleet Bank's Prime Rate plus a margin of as
much as .25% or its Eurodollar Rate (as defined in the Amended and Restated
Credit Agreement) plus a margin of 1.50% to 2.00%, depending on certain
financial covenants, at the Company's option. The facility is secured by
substantially all of the Company's assets other than the Company's
headquarters building. Revolving credit loans and standby letters of credit
mature June 5, 1997 and acquisition loans are repayable in 36 equal monthly
installments commencing June 5, 1998. Draws against the acquisition line of
Page 22 of 25
<PAGE>
credit can be made through June 5, 1998 and mature not later than
June 5, 2001. The credit facility contains covenants that, among other things,
limit the amount of total consolidated debt and liens, require the maintenance
of certain consolidated financial ratios, prohibit dividends and similar
payments, and restrict capital expenditures, mergers, dispositions of assets
and certain business acquisitions. The Company is required to pay an unused
facility fee ranging from .25% to .375% per annum on the facilities, depending
on certain financial ratios. Under the revolving credit facility, the Company
had outstanding approximately $4,981,000 in standby letters of credit at
June 30, 1996 which guarantee the payment of claims to the Company's workers'
compensation insurance carrier. As of that date there were no amounts
outstanding for working capital advances or under the acquisition loan
facility, and all amounts under these facilities were available at
June 30, 1996.
The Company anticipates that the proceeds from the initial public
offering, cash flows from operations and borrowing availability under the
Amended and Restated Credit Agreement will be sufficient to satisfy the
Company's liquidity and working capital requirements for the foreseeable
future. To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under its revolving line of credit or its acquisition loan facility, the
Company believes that it will be able to secure such financing through
alternate sources, such as financing from banks, or through the offering of
debt and/or equity securities in the public or private markets.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Refer to the description of pending legal proceedings found in Note 11 of the
Notes to Consolidated Financial Statements under Part I, Item 1, which
description is incorporated herein by reference. Reference is made to
Part II, Item 1 of the Company's Form 10-Q for the quarter ended
March 31, 1996.
Item 5. Other Information
On Agust 12, 1996, the Company received a favorable determination letter from
the Internal Revenue Services (IRS) regarding the qualified status of its
defined contribution plan under Section 401(k) of the IRC.
Page 23 of 25
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No.
- --------
11 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule.
Page 24 of 25
<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.
THE VINCAM GROUP, INC.
----------------------
Registrant
Dated: August 13, 1996 BY /s/ CARLOS A. SALADRIGAS
-----------------------------
Carlos A. Saladrigas
Chairman of the Board,
President and Chief
Executive Officer
Dated: August 13, 1996 BY /s/ MARTINIANO J. PEREZ
-----------------------------
Martiniano J. Perez
Vice President and
Controller
Page 25 of 25
<PAGE>
THE VINCAM GROUP, INC.
INDEX TO PART II, ITEM 6(A)
EXHIBITS
Exhibit
No.
- --------
11 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule.
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THE VINCAM GROUP, INC.
CALCULATION OF NET INCOME PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1995 1996
------------ ------------
<S> <C> <C>
Net income $ 406,104 $ 1,409,274
============ ============
Weighted average number of common shares
outstanding during the period 5,220,089 5,674,355
Assumed exercise of stock options, net of
treasury shares acquired 462,208 489,166
Issuance of mandatorily redeemable preferred
stock deemed a common stock equivalent 807,462 911,279
------------ ------------
Weighted average number of shares used in
earnings per share calculation 6,489,759 7,074,800
============ ============
Net income per common and common
equivalent share $ .06 $ .20
============ ============
Fully diluted net income per common
and common equivalent share * $ .06 $ .20
============ ============
</TABLE>
- ------------------------------
* In accordance with the provisions of the Accounting Principles Board
No. 15, Earnings per Share, fully diluted net income per common and common
equivalent share is not presented in the Company's consolidated statements
of income due to the fact that the aggregated dilution from the Company's
common stock equivalents outstanding during each of the periods presented
is less than 3%.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE VINCAM GROUP, INC. FOR THE SIX
MONTHS ENDED JUNE 30, 1996 INCLUDED IN FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 30,538,561
<SECURITIES> 0
<RECEIVABLES> 11,609,934
<ALLOWANCES> 384,775
<INVENTORY> 0
<CURRENT-ASSETS> 43,747,391
<PP&E> 3,984,698
<DEPRECIATION> 983,887
<TOTAL-ASSETS> 47,576,096
<CURRENT-LIABILITIES> 14,594,537
<BONDS> 0
0
0
<COMMON> 8,000
<OTHER-SE> 29,955,201
<TOTAL-LIABILITY-AND-EQUITY> 47,576,096
<SALES> 169,070,199
<TOTAL-REVENUES> 169,070,199
<CGS> 0
<TOTAL-COSTS> 158,280,034
<OTHER-EXPENSES> 8,749,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,610
<INCOME-PRETAX> 2,202,274
<INCOME-TAX> 793,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,409,274
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
