<PAGE> 1
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, 1997 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 0-28182
-------
TRANSITION SYSTEMS, INC.
------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2887598
------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
ONE BOSTON PLACE, BOSTON, MASSACHUSETTS 02108
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 723-4222
--------------
(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.
OUTSTANDING AT
CLASS MAY 2, 1997
----- -----------
COMMON STOCK, 17,076,416
$.01 PAR VALUE SHARES
NON-VOTING COMMON STOCK, 356,262
$.01 PAR VALUE SHARES
<PAGE> 2
TRANSITION SYSTEMS, INC.
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
------------
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of
March 31, 1997 (unaudited) and September 30, 1996 ....................... 3
Consolidated Statements of Operations for the Three Months and
Six Months Ended March 31, 1997 (unaudited) and
March 30, 1996 (unaudited) .............................................. 4
Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 1997 (unaudited) and March 30, 1996 (unaudited) ......... 5
Notes to Interim Consolidated Financial Statements ...................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................................... 7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................... 11
SIGNATURES ........................................................................... 12
</TABLE>
2
<PAGE> 3
TRANSITION SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $50,080,000 $51,505,000
Short term investments 250,000 --
Accounts receivable, net 15,269,000 13,419,000
Other current assets 2,210,000 1,831,000
Deferred income taxes 653,000 2,062,000
----------- -----------
Total current assets 68,462,000 68,817,000
----------- -----------
Property and equipment, net 1,240,000 1,108,000
Capitalized software costs, net 1,404,000 1,399,000
Purchased technology, net 1,494,000 1,612,000
Intangible assets, net 262,000 120,000
Long-term deferred income taxes 1,228,000 1,228,000
Equity investment 6,000,000 --
----------- -----------
Total assets $80,090,000 $74,284,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 442,000 $ 595,000
Accrued expenses 5,154,000 4,280,000
Income taxes payable 864,000 2,015,000
Deferred revenue 6,620,000 6,255,000
----------- -----------
Total current liabilities 13,080,000 13,145,000
----------- -----------
Notes payable 17,000 21,000
Deferred income taxes 485,000 485,000
----------- -----------
Total liabilities $13,582,000 $13,651,000
----------- -----------
Commitments
Stockholders' equity:
Common stock 171,000 166,000
Non-voting common stock 4,000 4,000
Non-voting common stock warrant 395,000 395,000
Additional paid-in capital 41,065,000 39,161,000
Retained earnings 24,873,000 20,907,000
----------- -----------
Total stockholders' equity 66,508,000 60,633,000
----------- -----------
Total liabilities
and stockholders' equity $80,090,000 $74,284,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
3
<PAGE> 4
TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
March 31, March 30, March 31, March 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Software and implementation $ 7,026,000 $ 5,223,000 $12,886,000 $ 9,630,000
Maintenance 2,793,000 2,295,000 5,419,000 4,446,000
----------- ----------- ----------- -----------
Total revenues 9,819,000 7,518,000 18,305,000 14,076,000
----------- ----------- ----------- -----------
Cost of Revenues:
Software and implementation 2,465,000 1,852,000 4,670,000 3,508,000
Maintenance 677,000 714,000 1,336,000 1,522,000
Research and development 883,000 820,000 1,761,000 1,628,000
Sales and marketing 1,680,000 1,133,000 3,044,000 2,021,000
General and administrative 1,050,000 679,000 2,031,000 1,226,000
Compensation charge -- 3,024,000 -- 3,024,000
----------- ----------- ----------- -----------
Total operating expenses 6,755,000 8,222,000 12,842,000 12,929,000
----------- ----------- ----------- -----------
Income (loss) from operations 3,064,000 (704,000) 5,463,000 1,147,000
Interest income 581,000 61,000 1,147,000 209,000
Interest expense -- (899,000) -- (899,000)
----------- ----------- ----------- -----------
Income (loss) before income taxes 3,645,000 (1,542,000) 6,610,000 457,000
Provision (benefit) for income taxes 1,458,000 (632,000) 2,644,000 188,000
=========== =========== =========== ===========
Net income (loss) $ 2,187,000 $ (910,000) $ 3,966,000 $ 269,000
=========== =========== =========== ===========
Net income (loss) per share $ 0.11 $ (0.07) $ 0.19 $ 0.02
Weighted average common shares
outstanding (1) 20,506,000 13,886,000 20,702,000 13,886,000
</TABLE>
(1) See note 2 of notes to interim consolidated financial statements.
The accompanying notes are an integral part of the consolidated financial
statements
4
<PAGE> 5
TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
March 31, March 30,
1997 1996
----------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,966,000 $ 269,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred income taxes -- 107,000
Depreciation and amortization 786,000 711,000
Compensation charge in connection with the recapitalization -- 3,024,000
Other (91,000) 6,000
Tax benefit from stock option exercises 1,492,000 --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (1,850,000) 684,000
Increase in other current assets (379,000) (1,050,000)
Decrease in deferred tax asset 1,409,000 --
(Decrease) increase in accounts payable (153,000) 152,000
Increase in accrued expenses 874,000 1,410,000
Decrease in taxes payable (1,151,000) (1,185,000)
Increase in deferred revenue 365,000 211,000
----------- -------------
Net cash provided by operating activities 5,268,000 4,339,000
Cash flows provided by (used by) investing activities:
Purchases of investments (250,000) --
Sales and maturities of investments -- 7,324,000
Purchases of property and equipment (432,000) (264,000)
Additions to capitalized software costs (355,000) (350,000)
Additions to intangible assets (159,000) (2,000)
Equity investment (6,000,000) --
----------- -------------
Net cash provided by (used by) investing activities (7,196,000) 6,708,000
Cash flows provided by (used by) financing activities:
Proceeds from issuance of debt -- 49,605,000
Payment of principal on term loan -- (1,000,000)
Net proceeds from issuance of preferred stock -- 53,158,000
Purchase of common stock -- (111,410,000)
Payment of fees related to recapitalization -- (3,336,000)
Exercise of options 513,000 767,000
Proceeds from warrants issued -- 395,000
Other (10,000) (121,000)
----------- -------------
Net cash provided by (used by) financing activities 503,000 (11,942,000)
Net decrease in cash and cash equivalents (1,425,000) (895,000)
Cash and cash equivalents - beginning of period 51,505,000 3,844,000
=========== =============
Cash and cash equivalents - end of period $50,080,000 $ 2,949,000
=========== =============
Supplemental information:
Income taxes paid $ 896,000 $ 455,000
Interest paid -- --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
5
<PAGE> 6
TRANSITION SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, and have been prepared by the Company
without audit. In the opinion of management, the accompanying consolidated
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, except for the effects of the Recapitalization effected
by the Company in January 1996 and the Company's initial public offering in
April 1996, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows at the dates and for the periods
indicated. While the Company believes that the disclosures presented are
adequate to make the information not misleading, these financial statements
should be read in conjunction with the audited consolidated financial statements
for the fiscal year ended September 30, 1996 which are contained in the
Company's Annual Report on Form 10-K for such fiscal year. The results of
operations for the three and six months ended March 31, 1997 are not necessarily
indicative of the results to be expected for the entire fiscal year ending
September 30, 1997.
2. COMPUTATION OF PRO FORMA EARNINGS PER SHARE
Net income per common share is computed based upon the weighted average number
of common shares and common equivalent shares outstanding during each period.
Common equivalent shares are included in the per share calculations where the
effect of their inclusion would be dilutive. Net income per share for the three
and six month periods ended March 30, 1996, on a pro forma basis, gives effect
to the Company's Recapitalization, and the issuance of common stock in the
initial public offering. In accordance with the Securities and Exchange
Commissions Staff Accounting Bulletin No. 83 ("SAB 83") all common and common
equivalent shares and other potentially dilutive instruments, including stock
options, warrants and preferred stock issued during the twelve-month period
prior to the filing date (April 18, 1996) of the Company's Registration
Statement for its initial public offering have been included in the calculation
as if they were outstanding for all periods presented.
3. EQUITY INVESTMENT
On January 31, 1997, the Company acquired a 19.5% equity interest in
HealthVISION, Inc. for $6 million in cash. HealthVISION is a provider of
electronic medical record software based in Santa Rosa, California. This
investment is being accounted for on the cost basis.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board ("FASB") released the
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per
Share". SFAS 128 simplifies the standards for computing earnings per share
("EPS") and makes them comparable to international EPS standards. It replaces
the presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation. SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. SFAS 128 requires restatement of all
prior-period EPS data presented. Management has not yet determined the impact
of SFAS 128 on the Company's financial statements.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
--------------------------------------------------------------------------
OPERATIONS
----------
This document contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that may contribute
to such differences include those listed under "Risk Factors" in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1996, File
No. 0-28182.
The following information should be read in conjunction with the consolidated
financial statements included herein and the notes thereto as well as the
consolidated financial statements and notes included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996.
OVERVIEW
- --------
The Company provides integrated clinical and financial decision support systems
to hospitals, integrated delivery systems and other health care institutions.
The Company was founded in 1985 to apply management control techniques to the
health care delivery process, with the objective of improving quality and
lowering costs.
The Company has experienced a seasonal pattern in its operating results, in
which the first quarter of each fiscal year typically has the lowest revenue and
net income, frequently lower than the last quarter of the previous fiscal year,
and the fourth quarter typically has the highest revenue and net income. While
the Company has taken steps to moderate this seasonal pattern, there can be no
assurance that it will be able to eliminate the seasonality of its operating
results.
RESULTS OF OPERATIONS
- ---------------------
REVENUES
The Company's total revenues increased 31% to $9.8 million for the three months
ended March 31, 1997 from $7.5 million for the same period in the prior year.
For the six months ended March 31, 1997, total revenues increased 30% to $18.3
million from $14.1 million for the same six month period in the prior year.
Software and implementation revenue increased 35% to $7.0 million for the three
months ended March 31, 1997 from $5.2 million for the same period in the prior
year and increased 34% to $12.9 million for the six months ended March 31, 1997
from $9.6 million for the same period in the prior year. The increase in
software and implementation revenue was due primarily to continued market
penetration of the Company's products and increased add-on software sales to its
existing customer base, as well as increased efficiency of system
implementations resulting in additional revenue generated from backlog.
Maintenance revenue increased 22% to $2.8 million for the three months ended
March 31, 1997 from $2.3 million for the same period in the prior year, and
increased 22% to $5.4 million for the six months ended March 31, 1997 from $4.4
million for the same period in the prior year. The growth in maintenance revenue
is attributable to the growth in the Company's installed base.
7
<PAGE> 8
COST OF REVENUE
Cost of software and implementation revenue consists primarily of the cost of
third-party software that is resold by the Company or included in the Company's
products, personnel costs, the cost of related benefits, travel and living
expenses, costs of materials and other costs related to the installation and
implementation of the Company's products, and amortization of capitalized
software development costs. Cost of maintenance revenue consists primarily of
maintenance costs associated with the third-party software included in the
Company's products and personnel costs incurred in providing maintenance and
technical support services to the Company's customers.
Cost of software and implementation revenue increased 33% to $2.5 million for
the three months ended March 31, 1997 from $1.9 million for the same period in
the prior year. For the six months ended March 31, 1997, cost of software and
implementation revenue increased 33% to $4.7 million from $3.5 million for the
same period last year. As a percentage of software and implementation revenue,
cost of software and implementation revenue remained constant at 35% for the
three months ended March 31, 1997 and March 30, 1996, and remained constant at
36% for the six months ended March 31, 1997 and March 30, 1996. The increase in
spending was primarily due to a net increase of eighteen persons in the
Company's implementation staff, as well as higher third-party software costs.
Cost of maintenance revenue was essentially unchanged at $0.7 million for the
three months ended March 31, 1997 and 1996, and decreased 12% to $1.3 million
for the six months ended March 31, 1997 from $1.5 million for the same period in
the prior year. As a percentage of maintenance revenue, cost of maintenance
revenue decreased to 24% from 31% for the three months ended March 31, 1997 and
March 30, 1996, respectively, and decreased to 25% from 34% for the six months
ended March 31, 1997 and March 30, 1996, respectively. The decrease was
primarily due to the reorganization of the Company's technical support
department. Several employees in the technical support department were
reassigned to research and development due to the maturation of the Company's
midrange product, reducing support needs.
RESEARCH AND DEVELOPMENT
Research and development expense increased 8% to $0.9 million for the three
months ended March 31, 1997 from $0.8 million for the same period in the prior
year. For the six months ended March 31, 1997, research and development expenses
increased 8% to $1.8 million from $1.6 million for the same period in the prior
year. As a percentage of revenues, research and development expense decreased to
9% from 11% for the three months ended March 31, 1997 and March 30, 1996,
respectively, and decreased to 10% from 12% for the six months ended March 31,
1997 and March 30, 1996, respectively. The increase in spending was mainly due
to the reorganization of the Company's technical support department. This
increase was partly offset by the transfer of certain personnel in the product
planning group from a research and development role in fiscal 1996 to a
marketing role in 1997. The decrease as a percentage of revenues was mainly due
to the Company's investment in technology and development tools in prior years,
resulting in increased productivity and less rapid growth in research and
development expenditures. The Company expects that research and development
expenses will increase as a percentage of revenue in future periods as new
development projects are undertaken.
8
<PAGE> 9
SALES AND MARKETING
Sales and marketing expense increased 48% to $1.7 million for the three months
ended March 31, 1997 from $1.1 million for the same period in the prior year,
and increased 51% to $3.0 million for the six months ended March 31, 1997 from
$2.0 million for the same period in the prior year. As a percentage of revenues,
sales and marketing expense increased to 17% for the three months ended March
31, 1997 from 15% for the three months ended March 30, 1996 and increased to 17%
from 14% for the six months ended March 31, 1997 and March 30, 1996
respectively. The increase was primarily due to a net increase of fifteen new
sales and sales support personnel. Sales commissions also increased over last
year due to increased sales volume.
GENERAL AND ADMINISTRATIVE
General and administrative expense increased 55% to $1.0 million for the three
months ended March 31, 1997 from $0.7 million for the same period in the prior
year, and increased 66% to $2.0 million for the six months ended March 31, 1997
from $1.2 million for the same period in the prior year. As a percentage of
revenues, general and administrative expense increased to 11% from 9% for the
three months ended March 31, 1997 and March 30, 1996, respectively, and
increased to 11% from 9% for the six months ended March 31, 1997 and March 30,
1996, respectively. The increase was primarily due to increased costs related to
becoming a publicly-traded company, and expenses related to Enterprising
HealthCare, Inc., which the Company acquired in July 1996.
OTHER OPERATING EXPENSES
Other operating expenses for the three and six months ended March 30, 1996
included a compensation charge of $3.0 million arising from the acquisition by
the Company, in connection with the January 1996 Recapitalization, of shares of
Common Stock issued to certain executive officers pursuant to the exercise of
options.
INTEREST INCOME (EXPENSE)
Interest income for the three months ended March 31, 1997 was $0.6 million,
compared to $0.1 million in interest income and $0.9 million in interest expense
for the same period in the prior year. During the six months ended March 31,
1997, the Company had $1.1 million in interest income compared to $0.2 million
in interest income and $0.9 million in interest expense for the same period in
the prior year. The increase in interest income, and the decrease in interest
expense is related to the extinguishment in April 1996 of the debt related to
the January 1996 Recapitalization, as well as the interest income earned on the
cash balances that the Company generated from operations and the proceeds of the
Company's April 1996 initial public offering.
PROVISION FOR INCOME TAXES
The Company's effective income tax rate decreased to 40% for the six months
ended March 31, 1997 from 41% for the same period in the prior year. The
decrease was primarily attributable to the tax benefit obtained by the Company's
investing a portion of its cash in tax exempt securities during the current
year. For the three months ended March 30, 1996, the Company recorded an income
tax benefit resulting from the loss before taxes due to the compensation charge
related to the January 1996 recapitalization.
9
<PAGE> 10
RECENT ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board ("FASB") released the
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per
Share". SFAS 128 simplifies the standards for computing earnings per share
("EPS") and makes them comparable to international EPS standards. It replaces
the presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation. SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. SFAS 128 requires restatement of all
prior-period EPS data presented. Management has not yet determined the impact
of SFAS 128 on the Company's financial statements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash equivalents decreased to $50.1 million at March 31, 1997 from
$51.5 million at September 30, 1996. The decrease is attributable primarily to
the Company's January 1997 acquisition of a 19.5% equity interest in
HealthVISION for $6 million in cash, which was partially offset by cash provided
by operating activities during the six month period ended March 31, 1997.
The Company believes that available funds, cash generated from operations and
its unused line of credit of $15 million, will be sufficient to finance the
Company's operations and planned capital expenditures for at least the next
twelve months. There can be no assurance, however, that the Company will not
require additional financing during that time or thereafter.
10
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
At the Annual Meeting of Stockholders of the Company
on February 11, 1997 the shareholders elected Robert S.
Hillas and Allen F. Wise to three-year terms as Class I
directors of the Company, and ratified the appointment of
Coopers & Lybrand L.L.P. as the Company's independent public
accountants for the 1997 fiscal year. The number of votes
cast with respect to each nominee or proposal were as
follows:
<TABLE>
<CAPTION>
Authority Abstentions and
1. Election of Directors For Withheld Broker Non-Votes
------------------------ --- -------- ----------------
<S> <C> <C>
Robert S. Hillas 15,305,717 33,800 -
Allen F. Wise 15,305,717 33,800 -
Abstentions and
2. Proposal to Ratify For Against Broker Non-Votes
Appointment of --- ------- ----------------
Coopers & Lybrand 15,338,182 1,335 -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
*3.2 Amended and Restated Articles of Organization
*3.4 Amended and Restated By-Laws
*3.5 Articles of Amendment to the Articles of Organization, as
filed with the Secretary of State of the Commonwealth of
Massachusetts on April 3, 1996.
*4.1 Specimen Certificate for Common Stock
11.1 Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
* Incorporated herein by reference to the similarly-numbered exhibit included
in the company registration statement on Form S-1, File No. 333-01758.
(b) REPORTS ON FORM 8-K
none
11
<PAGE> 12
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.
Transition Systems, Inc.
(Registrant)
Dated: May 9, 1997 /s/ Robert F. Raco
------------------------------------------------
Robert F. Raco
President, Chief Executive Officer and Director
(principal executive officer)
Dated: May 9, 1997 /s/ Paula J. Malzone
------------------------------------------------
Paula J. Malzone
Treasurer and Controller
(principal financial and accounting officer)
12
<PAGE> 1
Exhibit 11.1
TRANSITION SYSTEMS, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the three month period ended: March 31, 1997 March 30, 1996
-------------- --------------
<S> <C> <C>
Net income (loss)....... ................. ............ ......... ... $ 2,187,000 $ (910,000)
Pro forma common stock outstanding (1).... ............ ......... ... -- 10,087,776
Common stock outstanding ................. ............ ......... ... 17,293,619
Cheap stock (2)....................... ... ............ ......... ... -- 3,500,425
Warrants ........ ............. ... ............ ......... ... -- 297,928
Common stock equivalents............................... ......... ... 3,211,911 --
Weighted average number of common shares
and common equivalent shares outstanding ... ........ ......... ... 20,505,530 13,886,129
Net income (loss) per share............... ............ ......... ... $ 0.11 $ (0.07)
For the six month period ended:
Net income.............. ................. ............ ......... ... $ 3,966,000 $ 269,000
Pro forma common stock outstanding (1) ... ............ ......... ... -- 10,087,776
Common stock outstanding ................. ............ ......... ... 17,384,879
Cheap stock (2)......... ................. ............ ......... ... -- 3,500,425
Warrants ........ ................. ............ ......... ... -- 297,928
Common stock equivalents.................. ............ ......... ... 3,317,105 --
Weighted average number of common shares
and common equivalent shares outstanding ............ ......... ... 20,701,984 13,886,129
Net income per share.... ................. ............ ......... ... $ 0.19 $ 0.02
</TABLE>
(1) Gives effect to the Recapitalization. See Note 9 of Notes to Consolidated
Financial Statements for the fiscal year ended September 30, 1996 which
are contained in the Company's Annual Report on Form 10-K for such fiscal
year, File No. 0-28182.
(2) Calculated in accordance with the Securities and Exchange Commission
Staff Accounting Bulletin No. 83 ("SAB 83"), except that common stock
issuable upon conversion of the preferred stock is included in pro forma
common stock outstanding and excluded from cheap stock.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 50,080
<SECURITIES> 250
<RECEIVABLES> 16,638
<ALLOWANCES> 1,369
<INVENTORY> 0
<CURRENT-ASSETS> 68,462
<PP&E> 4,516
<DEPRECIATION> 3,276
<TOTAL-ASSETS> 80,090
<CURRENT-LIABILITIES> 13,080
<BONDS> 0
0
0
<COMMON> 171
<OTHER-SE> 66,337
<TOTAL-LIABILITY-AND-EQUITY> 80,090
<SALES> 0
<TOTAL-REVENUES> 9,819
<CGS> 0
<TOTAL-COSTS> 3,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 68
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,645
<INCOME-TAX> 1,458
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,187
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
