<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 0-21399
PEERLESS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2275966
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1212 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
(972) 497-5500
(Address, including zip code, and telephone number,
including area code, of issuer's principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
On August 1, 1998, there were 4,920,915 outstanding shares of Common Stock,
$0.01 par value per share.
<PAGE> 2
PEERLESS GROUP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION Number
- ------ ----------------------------------------------------------------------
<S> <C> <C>
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997 1
CONSOLIDATED STATEMENTS OF INCOME
Three and six months ended June 30, 1998 and June 30, 1997 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1998 and June 30, 1997 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 8
</TABLE>
<PAGE> 3
PART 1
ITEM 1. FINANCIAL STATEMENTS
PEERLESS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
--------- -----------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 1,377 $ 2,845
Trade accounts receivable.................................................... 5,789 9,346
Finished goods inventory..................................................... 1,441 409
Prepaid expenses and other current assets.................................... 944 743
--------- -----------
Total current assets....................................................... 9,551 13,343
Computer and other equipment, at cost........................................... 5,608 4,337
Less accumulated depreciation................................................... 1,545 1,135
--------- -----------
4,063 3,202
Computer software, maintenance contracts, and other assets, net of accumulated
amortization of $511 and $396 at June 30, 1998 and December 31, 1997,
respectively................................................................. 778 897
Investment in preferred stock, at cost.......................................... 2,500 2,500
--------- -----------
Total assets............................................................... $ 16,892 $ 19,942
========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 1,265 $ 3,014
Accrued liabilities.......................................................... 1,248 1,002
Sales tax payable............................................................ 418 646
Unearned revenues............................................................ 4,849 7,121
--------- -----------
Total current liabilities.................................................. 7,780 11,783
Commitments
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares--5,000
Issued shares--none
Common stock, $.01 par value:
Authorized shares--10,000
Issued shares--4,977 and 4,948 at June 30, 1998 and December 31, 1997,
respectively............................................................ 50 49
Additional paid-in capital................................................... 8,018 7,958
Retained earnings............................................................ 1,496 649
Treasury stock, at cost--74 and 73 at June 30, 1998 and December 31, 1997,
respectively............................................................... (382) (379)
Unearned compensation........................................................ (70) (118)
--------- -----------
Total stockholders' equity................................................. 9,112 8,159
--------- -----------
Total liabilities and stockholders' equity................................. $ 16,892 $ 19,942
========= ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE> 4
PEERLESS GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Software license and installation ............................... $ 3,041 $ 3,254 $ 5,475 $ 6,042
Hardware and equipment .......................................... 1,204 3,408 3,960 6,294
Maintenance and services ........................................ 2,650 2,046 5,066 3,923
-------- -------- -------- --------
Total revenues ............................................. 6,895 8,708 14,501 16,259
Cost of revenues:
Hardware and equipment .......................................... 939 2,683 3,037 4,779
Software license and installation, maintenance and services ..... 3,428 3,231 6,513 5,821
-------- -------- -------- --------
Total cost of revenues ..................................... 4,367 5,914 9,550 10,600
-------- -------- -------- --------
Gross margin ......................................................... 2,528 2,794 4,951 5,659
Operating costs and expenses:
Research and development ........................................ 546 524 990 1,007
Selling and marketing ........................................... 652 892 1,464 1,899
General and administrative ...................................... 586 599 1,170 1,311
-------- -------- -------- --------
Total operating costs and expenses ......................... 1,784 2,015 3,624 4,217
-------- -------- -------- --------
Income from operations ............................................... 744 779 1,327 1,442
Other income:
Interest expense ................................................ (4) (5) (8) (10)
Interest income ................................................. 25 95 66 231
-------- -------- -------- --------
Total other income ......................................... 21 90 58 221
-------- -------- -------- --------
Income before income taxes ........................................... 765 869 1,385 1,663
Provision for income taxes ........................................... 300 326 538 626
-------- -------- -------- --------
Net income ........................................................... $ 465 $ 543 $ 847 $ 1,037
======== ======== ======== ========
Basic earnings per share ............................................. $ 0.09 $ 0.11 $ 0.17 $ 0.22
======== ======== ======== ========
Diluted earnings per share ........................................... $ 0.09 $ 0.11 $ 0.17 $ 0.20
======== ======== ======== ========
Shares used in computing basic earnings per share .................... 4,903 4,745 4,895 4,695
Shares used in computing diluted earnings per share .................. 5,102 5,161 5,088 5,150
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 5
PEERLESS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
-------- --------
OPERATING ACTIVITIES
<S> <C> <C>
Net income ..................................................................... $ 847 $ 1,037
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization ............................................. 604 525
Compensation expense ...................................................... 48 42
Changes in operating assets and liabilities:
Trade accounts receivable ............................................ 3,557 430
Prepaid expenses and other current assets ............................ (197) (144)
Inventory ............................................................ (1,032) (115)
Accounts payable and accrued liabilities ............................. (1,646) 666
Unearned revenues .................................................... (2,272) (3,650)
-------- --------
Net cash used in operating activities .......................................... (91) (1,209)
INVESTING ACTIVITIES
Additions to computer and other equipment ...................................... (1,353) (1,439)
Investment in preferred stock .................................................. -- (2,500)
Other .......................................................................... -- (120)
-------- --------
Net cash used in investing activities .......................................... (1,353) (4,059)
FINANCING ACTIVITIES
Issuance of common stock ....................................................... 12 108
Purchase of treasury stock ..................................................... (36) (50)
Other .......................................................................... -- (8)
-------- --------
Net cash provided by (used in) financing activities ............................ (24) 50
-------- --------
Net decrease in cash and cash equivalents ...................................... (1,468) (5,218)
Cash and cash equivalents at beginning of period ............................... 2,845 8,378
-------- --------
Cash and cash equivalents at end of period ..................................... $ 1,377 $ 3,160
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 6
PEERLESS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
DESCRIPTION OF THE COMPANY
Peerless Group, Inc. (the "Company") designs, develops, installs and
supports integrated information systems, including proprietary computer
software and third-party software and hardware, for community banks and credit
unions. The Company was incorporated in 1989 when a group of management
executives from Electronic Data Systems Corporation ("EDS") purchased EDS's
turnkey community bank data processing systems division, which EDS had acquired
in 1980. In 1992, the Company acquired and began offering a credit union
information software system. In 1994, the Company began marketing a check and
statement imaging system that is fully integrated with Peerless21(R), the
Company's flagship banking product. In 1996, the Company began an outsourcing
service bureau. On October 3, 1996, the Company completed an initial public
offering of its Common Stock.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the three-
and six-month periods ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Peerless Group, Inc. Annual Report on Form 10-K for the
year ended December 31, 1997.
The consolidated financial statements of the Company include the accounts
of the Company and all its subsidiaries. All significant intercompany
transactions and balances are eliminated. Certain prior year amounts have been
reclassified to conform to current year presentation.
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (amounts in thousands except for earnings per share
amounts):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings per share ......... $ 465 $ 543 $ 847 $ 1,037
======== ======== ======== ========
Denominator:
Denominator for basic earnings per share -
weighted average shares................................. 4,903 4,745 4,895 4,695
Effect of dilutive securities:
Stock options ............................................ 35 61 31 101
Warrants ................................................. 181 381 181 379
Employee stock purchase plan ............................. 1 1 2 4
Non-vested stock ......................................... (18) (27) (21) (29)
-------- -------- -------- --------
Dilutive potential common shares ........................... 199 416 193 455
Denominator for diluted earnings per share-adjusted
weighted average shares and assumed conversions .......... 5,102 5,161 5,088 5,150
======== ======== ======== ========
Basic earnings per share ................................... $ 0.09 $ 0.11 $ 0.17 $ 0.22
Diluted earnings per share ................................. $ 0.09 $ 0.11 $ 0.17 $ 0.20
</TABLE>
4
<PAGE> 7
RECENTLY ISSUED ACCOUNTING STANDARDS
Statement of Position 97-2. As of January 1, 1998, the Company adopted
AICPA Statement of Position (SOP) 97-2, Software Revenue Recognition, which was
effective for transactions that the Company entered into beginning on that date
and retroactive application to years prior to adoption was prohibited. The
effect of adopting SOP 97-2 has not had a material impact on the Company's
results of operations.
Statement of Financial Accounting Standards No. 131. In June 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information, which is effective for years beginning after December 15, 1997.
Statement 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 operating segments in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic
areas, and major customers. The Company will adopt the new requirements
retroactively in 1998. Management anticipates that the adoption of Statement
131 will not affect results of operations or financial position, but will
affect the disclosure of segment information.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Revenues. Revenues for the three months ended June 30, 1998 decreased $1.8
million, or 20.8% from those in the same period of the prior year. Decreases of
$213,000 in software license and installation revenues and $2,204,000 in
hardware and equipment revenues were offset by an increase of $604,000 in
maintenance and services revenues.
The decreases in software license and installation and hardware and
equipment revenues were due primarily to a lower amount of revenues from
implementations of check and statement imaging systems during the quarter.
Management believes the implementations of check and statement imaging systems
were negatively impacted by the delays of customers in the purchasing of new
technologies because of the customers' focus on their own Year 2000 compliance
issues. In total, revenues from check and statement imaging system
implementations accounted for 7.6% of revenues during the period compared to
37.5% of revenues in the same period of the prior year. The decrease in check
and statement imaging revenues was partially offset by revenues associated with
the introduction of Year 2000 consulting services.
The primary reason for the increase of maintenance and services revenues
was the additional revenues from the Company's outsourcing service bureau,
which contributed 9.6% of total revenues during the three months ended June 30,
1998 compared to 3.2% of total revenues during the same period of the prior
year. This revenue increase is due to an increase in customers in the
outsourcing service bureau to fourteen at June 30, 1998, compared to six at
June 30, 1997. Management continues to expect that the outsourcing service
bureau will reach profitability at some point in 1998; however, there can be no
assurance that the Company will be successful in this business.
Revenues for the six months ended June 30, 1998 decreased $1.8 million, or
10.8% from those in the same period of the prior year. Decreases of $567,000 in
software license and installation revenues and $2,334,000 in hardware and
equipment revenues were offset by an increase of $1,143,000 in maintenance and
services revenues. These changes were due to the factors influencing the three
month period ended June 30, 1998 discussed above as well as an overall decrease
in revenues from installations of Peerless21. Revenues from installations of
Peerless21 were $2.1 million for the first six months of 1998 compared to $2.7
million for the same period of the prior year. This decrease was due to a
decrease in the average size of Peerless21 implementations during the first
three months of 1998. The Company typically recognizes lower revenues from a
Peerless21 implementation for a smaller financial institution than for a larger
financial institution.
5
<PAGE> 8
Gross Margin. Gross margin for the three months ended June 30, 1998
increased to 36.7% of total revenues from 32.1% for the same period of the
prior year. The increase in gross margin was directly related to lower revenues
from check and statement imaging systems, which generally have lower margins
than the Company's other products, as well as increased margins realized from
Year 2000 consulting services. Gross margin for the six months ended June 30,
1998 decreased to 34.1% of total revenues from 34.8% for the same period of the
prior year. This decrease was a result of lower revenues from Peerless21
installations as discussed above as well as the impact of the service bureau
operations.
Shifts in the mix of the sources of the Company's revenues, including
software license and installation fees, check and statement imaging systems and
processing fees, may cause significant fluctuations in total revenue and gross
margin. In addition, the Company manages its expenses based on anticipated
revenue levels, and a high percentage of these expenses are relatively fixed.
Therefore, variations in the amount and timing of revenue may cause significant
variations in operating results from period to period. Further, in response to
a changing competitive environment, the Company may elect to make certain
pricing, product or marketing decisions that could have a material adverse
effect on the Company's results of operations.
Selling and Marketing. Selling and marketing expenses for the three and
six months ended June 30, 1998 decreased $240,000, or 26.9%, and $435,000, or
22.9%, respectively, from the same periods of the prior year. These decreases
primarily resulted from a reduction in headcount as compared to the same
periods of the prior year and the implementation of certain cost saving
initiatives by management.
Interest Income. Interest income for the three and six months ended June
30, 1998 decreased $70,000, or 73.7%, and $165,000, or 71.4% from the same
periods of the prior year. These decreases were a result of the lower amount of
cash and cash equivalents held by the Company during these periods as compared
to the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 1998 were $1.4 million, down from
$2.8 million at December 31, 1997. During the six months ended June 30, 1998,
cash used in operating activities was $91,000, compared to $1.2 million for the
same period of the prior year, primarily due to decreases in trade accounts
payable, purchases of inventory and a decrease in unearned revenues, offset by
a decrease in trade accounts receivable resulting from the collection of
amounts due from customers for annual maintenance fees, which are typically
billed at the end of each year and collected during the first quarter of the
following year. Capital expenditures were $1.4 million, related primarily to
additions to the Company's service bureau operations and purchases of furniture
and equipment to be used in the Company's new facility in Allen, Texas. The
Company will move to this facility during the third quarter of 1998 and
anticipates that capital expenditures in the second half of 1998 may
approximate the amount incurred in the first half of 1998. The Company has a
$2.5 million line of credit (the "Credit Agreement") with State Street Bank and
Trust ("State Street") that expires on February 1, 1999. Borrowings under the
Credit Agreement bear interest at State Street's prime rate (8.5% at June 30,
1998) plus 1/2% and are secured by the assets and stock of the Company's wholly
owned subsidiaries. Amounts available under the Credit Agreement are reduced by
the value of outstanding letters of credit issued by State Street on behalf of
the Company. As of June 30, 1998, no amounts were outstanding under the Credit
Agreement, and State Street had issued a letter of credit with a value of
$600,000 on behalf of the Company. The Company believes that its cash and cash
equivalents at June 30, 1998, amounts available under the Credit Agreement and
operating cash flows will be sufficient to meet its anticipated capital
expenditure requirements at least through the next twelve months.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements
relating to such matters as anticipated financial performance and business
prospects. When used in this Quarterly Report, the words "anticipates"
"expects," "may," "believes," and "will" and similar expressions are intended
to be among the statements that identify forward-looking
6
<PAGE> 9
statements. From time to time, the Company may also publish forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. In order to comply with the terms
of the safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. These factors include, but are not limited to,
competition, risks associated with introducing new services, the ability of the
Company to control costs and expenses, installation scheduling, potential loss
of customers, reliance on third party vendors for certain technology updates
and the possibility of delays in buying decisions. Additional information on
these and other factors which could affect the Company's financial results are
contained in the Company's other SEC filings, including its Annual Report on
Form 10-K for 1997.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Statement of Position 97-2. In October 1997, the Accounting Standards
Executive Committee of the American Institute of Public Accountants issued
Statement of Position (SOP) 97-2, Software Revenue Recognition, which
supersedes SOP 91-1. The Company was required to adopt SOP 97-2 for software
transactions entered into beginning January 1, 1998, and retroactive
application to years prior to adoption was prohibited. SOP 97-2 generally
requires revenue earned on software arrangements involving multiple elements
(i.e., software products, upgrades/enhancements, postcontract customer support,
installation, training, etc.) to be allocated to each element based on the
relative fair values of the elements. The fair value of an element must be
based on evidence which is specific to the vendor. The revenue allocated to
software products (including specified upgrades/enhancements) generally is
recognized upon delivery of the products. The revenue allocated to postcontract
customer support generally is recognized ratably over the term of the support
and revenue allocated to service elements (such as training and installation)
generally is recognized as the services are performed. If a vendor does not
have evidence of the fair value for all elements in a multiple-element
arrangement, all revenue from the arrangement is deferred until such evidence
exists or until all elements are delivered. The adoption of SOP 97-2 has not
had and the Company's management anticipates that it will not have a material
impact on the Company's results of operations.
Statement of Financial Accounting Standards No. 131. In June 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information, which is effective for years beginning after December 15, 1997.
Statement 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 operating segments in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic
areas, and major customers. The Company will adopt the new requirements
retroactively in 1998. Management anticipates that the adoption of Statement
131 will not affect results of operations or financial position, but will
affect the disclosure of segment information.
7
<PAGE> 10
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Except as otherwise specifically noted, the following documents are
incorporated by reference as exhibits hereto pursuant to Rule 12b-32:
3.1 Certificate of Incorporation of the Company filed as Exhibit
3.1 to the Company's Registration Statement No. 333-5058-D on
Form SB-2, declared effective October 3, 1996 (the
"Registration Statement").
3.2 Bylaws of the Company filed as Exhibit 3.2 to the Registration
Statement.
27.1 Financial Data Schedule (filed herewith).
27.2 Restated Financial Data Schedule (filed herewith).
(b) REPORTS ON FORM 8-K
None.
8
<PAGE> 11
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.
PEERLESS GROUP, INC.
By: /s/ Rodney L. Armstrong, Jr.
-------------------------------
Rodney L. Armstrong, Jr.
Chairman of the Board and Chief
Executive Officer
(Principal Financial Officer)
By: /s/ Douglas K. Hansen
-------------------------------
Douglas K. Hansen
Treasurer and Controller
(Principal Accounting Officer)
Date: August 11, 1998
<PAGE> 12
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,377
<SECURITIES> 0
<RECEIVABLES> 5,789
<ALLOWANCES> 0
<INVENTORY> 1,441
<CURRENT-ASSETS> 9,551
<PP&E> 5,608
<DEPRECIATION> 1,545
<TOTAL-ASSETS> 16,892
<CURRENT-LIABILITIES> 7,780
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 9,062
<TOTAL-LIABILITY-AND-EQUITY> 16,892
<SALES> 9,435
<TOTAL-REVENUES> 14,501
<CGS> 3,037
<TOTAL-COSTS> 9,550
<OTHER-EXPENSES> 990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 1,385
<INCOME-TAX> 538
<INCOME-CONTINUING> 847
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 847
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,160
<SECURITIES> 0
<RECEIVABLES> 5,282
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,242
<PP&E> 3,522
<DEPRECIATION> 764
<TOTAL-ASSETS> 15,512
<CURRENT-LIABILITIES> 8,063
<BONDS> 0
0
0
<COMMON> 48
<OTHER-SE> 7,401
<TOTAL-LIABILITY-AND-EQUITY> 15,512
<SALES> 12,336
<TOTAL-REVENUES> 16,259
<CGS> 4,779
<TOTAL-COSTS> 10,600
<OTHER-EXPENSES> 1,007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 1,663
<INCOME-TAX> 626
<INCOME-CONTINUING> 1,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,037
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.20
</TABLE>
