<PAGE>
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 March 31, 1999
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 1-12145
SNYDER COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1983617
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
Two Democracy Center
6903 Rockledge Drive
15/th/ Floor
Bethesda, Maryland 20817
(Address of principal (Zip Code)
executive office)
(301) 468-1010
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether 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.
Common Stock, $0.001 Par Value, 75,049,282 shares outstanding as of April 26,
1999.
<PAGE>
SNYDER COMMUNICATIONS, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of March 31, 1999 and
December 31, 1998 3
Condensed Consolidated Statement of Income for the three months ended
March 31, 1999 and 1998 4
Condensed Consolidated Statement of Cash Flows for the three months ended
March 31, 1999 and 1998 5
Condensed Consolidated Statement of Equity and Comprehensive Income for
the three months ended March 31, 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
PART II. OTHER INFORMATION
Item 2. Change in Securities 19
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---------------- ---------------
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 80,692 $ 81,344
Marketable securities - 612
Accounts receivable, net of allowance for doubtful accounts of $8,866
and $10,380 at March 31, 1999 and December 31, 1998, respectively 145,459 127,953
Receivables from pass through costs 97,675 89,256
Unbilled services 34,478 35,748
Receivables from related parties 190 742
Deferred tax asset 18,535 19,546
Other current assets 28,435 26,674
---------------- ---------------
Total current assets 405,464 381,875
---------------- ---------------
Property and equipment, net 83,083 80,873
Goodwill and other intangible assets,net 154,078 153,016
Deferred tax asset 100,027 93,349
Deposits and other assets 6,221 9,743
---------------- ---------------
Total assets $ 748,873 $ 718,856
================ ===============
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit $ 2,133 $ 2,023
Current maturities of long-term debt 1,063 1,085
Accrued payroll 28,600 27,997
Accounts payable 123,516 126,754
Accrued expenses 137,074 133,466
Client advances 12,023 14,384
Unearned revenue 28,538 23,387
---------------- ---------------
Total current liabilities 332,947 329,096
---------------- ---------------
Related party borrowings, net of current maturities 8,628 8,924
Long-term obligations under capital leases 1,570 1,750
Long-term debt, net of current maturities 2,776 3,089
Other liabilities 7,492 7,686
---------------- ---------------
Total liabilities 353,413 350,545
---------------- ---------------
Commitments and contingencies:
Redeemable ESOP stock, 88 shares outstanding as of March 31, 1999
and December 31, 1998, respectively 2,425 2,960
Equity:
Preferred stock, $.001 par value, 5,000 shares authorized, none issued
and outstanding at March 31, 1999 and December 31, 1998, respectively - -
Common stock, $.001 par value, 400,000 shares authorized,
74,985 and 74,516 shares issued and oustanding at
March 31, 1999 and December 31, 1998, respectively 75 75
Additional paid-in capital 394,231 375,706
Accumulated other comprehensive income (loss) (1,714) 1,828
Retained earnings (deficit) 443 (12,258)
---------------- ---------------
Total equity 393,035 365,351
---------------- ---------------
Total liabilities and equity $ 748,873 $ 718,856
================ ===============
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
3
<PAGE>
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------
1999 1998
(in thousands, except per share data)
<S> <C> <C>
Net revenues $ 241,326 $ 187,359
Operating expenses:
Cost of services 167,289 126,864
Selling, general, and administrative expenses 38,073 34,808
Compensation to stockholders - 596
Acquisition and related costs 9,554 33,953
----------------------------
Income (loss) from operations 26,410 (8,862)
Interest income, net 663 213
----------------------------
Income (loss) before income taxes 27,073 (8,649)
Income tax provision (benefit) 10,905 (1,646)
----------------------------
Net income (loss) $ 16,168 $ (7,003)
============================
Historical net income (loss) per share:
Basic net income (loss) per share $ 0.22 $ (0.10)
============================
Diluted net income (loss) per share $ 0.21 $ (0.10)
============================
Pro forma net income (loss) per share (Note 6):
Basic net income (loss) per share $ 0.19 $ (0.14)
============================
Diluted net income (loss) per share $ 0.19 $ (0.14)
============================
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
statement of income.
4
<PAGE>
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1999 1998
------------- -----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 16,168 $ (7,003)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 7,156 4,689
Deferred taxes 2,024 (6,798)
(Gain) loss on disposal of assets 167 130
Other (11) 47
Changes in assets and liabilities:
Accounts receivable (17,506) (14,847)
Accounts receivable, related party - (392)
Receivables from pass through costs (8,419) (9,616)
Unbilled services 1,270 5,946
Deposits and other non current assets 3,522 497
Other current assets (1,761) 452
Accrued payroll, accounts payable and accrued expenses 1,076 28,337
Unearned revenue 5,151 (4,638)
Client advances (2,361) (7,773)
------------- -----------
Net cash provided by (used in) operating activities 6,476 (10,969)
------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of subsidiaries, net of cash acquired (4,171) (4,045)
Purchases of property and equipment (8,470) (10,618)
Net sales of marketable securities 612 354
Purchase of intangibles (600) (702)
Note and net advances to stockholders - 276
------------- -----------
Net cash used in investing activities (12,629) (14,735)
------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) on long-term note payable to related parties (70) (904)
Distributions and dividends (3,450) (3,263)
Purchase and retirement of treasury stock - (2,209)
Net proceeds (repayments) of long term debt (1,052) 3,658
Net borrowings (repayments) of line of credit 110 (7,370)
Payments on capital lease obligations (571) (527)
Proceeds from exercise of options 10,940 7,172
Proceeds from issuance of common stock - 6,952
------------- -----------
Net cash provided by financing activities 5,907 3,509
------------- -----------
Effect of exchange rate changes (406) (94)
Net decrease in cash and equivalents (652) (22,289)
Cash and equivalents, beginning of period 81,344 92,734
------------- -----------
Cash and equivalents, end of period $ 80,692 $ 70,445
------------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 360 $ 700
Cash paid for income taxes 4,260 2,338
Supplemental disclosure of noncash activities:
Equipment purchased under capital leases - 201
Issuance of shares of common stock for purchase of subsidiaries 500 50,717
Issuance of common stock related to stock appreciation rights - 3,703
Tax benefit from the exercise of stock options 1,781 1,829
Acquisition of property and assumption of debt for common stock 204 -
Issuance of notes for purchase of subsidiary - 1,350
Tax benefit from taxable merger transactions 5,100 44,348
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
statement of cash flows.
5
<PAGE>
SNYDER COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL RETAINED
STOCK STOCK PAR PAID-IN EARNINGS
SHARES VALUE CAPTIAL (DEFICIT)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998, as previously
restated for poolings 74,515,527 $75 $375,706 $(12,258)
Distribution and dividends - - (4,002)
Exercise of stock options and subsidiary
stock appreciation rights 436,748 - 12,721 -
Issuance of shares for purchase of
subsidiaries and property 32,855 - 704 -
Foreign currency translation adjustment - - - -
Unrealized loss on marketable securities - - - -
Reclassification of redeemable ESOP stock - - - 535
Tax benefit from taxable merger
transaction - - 5,100 -
Net income - - - 16,168
----------------------------------------------------------------
Comprehensive income - - - -
================================================================
Balance, March 31, 1999 74,985,130 $75 $394,231 $ 443
================================================================
<CAPTION>
ACCUMULATED
OTHER
COMPHREHENSIVE COMPREHENSIVE
INCOME (LOSS) TOTAL INCOME
<S> <C> <C> <C>
Balance, December 31, 1998, as previously
restated for poolings $ 1,828 $ 365,351 -
Distribution and dividends - (4,002) -
Net proceeds from secondary stock offering - - -
Exercise of stock options and subsidiary
stock appreciation rights - 12,721 -
Issuance of shares for purchase of
subsidiaries and property - 704 -
Foreign currency translation adjustment (3,531) (3,531) (3,531)
Unrealized loss on marketable securities (11) (11) (11)
Reclassification of redeemable ESOP stock - 535 -
Tax benefit from taxable merger
transaction - 5,100 -
Net income - 16,168 16,168
----------------------------------------------
Comprehensive income - - $ 12,626
==============================================
Balance, March 31, 1999 $ (1,714) $ 393,035
==============================
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
statement of equity and comprehensive income.
6
<PAGE>
SNYDER COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS:
On October 19, 1988, Collegiate Marketing and Communications, Inc., a Delaware
corporation (the "General Partner"), and a Delaware limited partnership
beneficially owned by Mortimer B. Zuckerman and Fred Drasner (the "Original
Limited Partner") entered into a partnership agreement (the "Partnership
Agreement") under the name Collegiate Marketing and Communications, L.P. (the
"Partnership"). On September 1, 1989, the name of the Partnership was changed to
Snyder Communications, L.P., and the name of the General Partner was changed to
Snyder Communications, Inc. On May 18, 1995, the Partnership Agreement was
amended to admit several new limited partners into the Partnership. On June 25,
1996, the name of the General Partner was changed to Snyder Marketing Services,
Inc. ("SMS").
Snyder Communications, Inc., a Delaware corporation, was incorporated on June
25, 1996, to continue the business operations of the Partnership. Snyder
Communications, Inc., in conjunction with all of the existing partners in the
Partnership, reorganized on September 24, 1996 (the "Reorganization"), upon the
effectiveness of the initial public offering of its common stock. After
consummation of the Reorganization, Snyder Communications, Inc. owned 100
percent of the stock of SMS and, directly and indirectly (through its ownership
of SMS), 100 percent of the interests in the Partnership (the consolidated
entity will be referred to herein as "SNC" or "Snyder Communications").
During the first quarter of 1999, SNC issued 3,035,622 shares in pooling of
interests transactions (the "1999 Mergers"). The transactions include the
acquisitions of PromoTech Research Associates and Media Syndication Global.
PromoTech Research Associates is a pharmaceutical marketing communications firm
that distributes product samples and educational materials to pharmaceutical
sales representatives and physicians. Media Syndication Global is a marketing
and media services company that provides broad-reaching alternative media
solutions.
The accompanying condensed consolidated financial statements have been
retroactively restated to reflect the combined financial position and combined
results of operations and cash flows of the 1999 Mergers, giving effect to these
acquisitions as if they had occurred at the beginning of the earliest period
presented (the combined entity will be referred to herein as the "Company"). The
condensed consolidated balance sheet for all periods presented gives effect to
the conversion of the common stock of entities acquired in the 1999 Mergers to
3,035,622 shares of SNC common stock. Certain amounts previously presented have
been reclassified to conform to the March 31, 1999 presentation.
Snyder Communications provides integrated outsourced marketing solutions and
operates in three main areas: Direct, Healthcare and Creative Services. Snyder
Communications' Direct companies operate primarily under the Brann Worldwide
brand, offering comprehensive direct marketing, database modeling, data
warehousing, e-commerce, interactive marketing and other technology solutions.
Direct also includes targeted product sampling, media services and data
compilation. Snyder Healthcare companies provide full-scale marketing services,
including strategic consulting, ROI-based pharmaceutical detailing and
educational content to pharmaceutical companies. The Creative group operates
advertising agencies under the Arnold Communications brand and interactive
agencies under the Circle Interactive brand.
The accompanying unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. As a result, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes that
the disclosures made are adequate to make the information presented not
misleading. The condensed consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) which, in the
opinion of management, are necessary to present fairly the financial position,
results of operations and cash flows of the Company as of March 31, 1999 and for
the
7
<PAGE>
three months ended March 31, 1999 and 1998. Operating results for the three
month period ended March 31, 1999 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1999. The unaudited
condensed consolidated financial statements should be read in conjunction with
the financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, as filed with
the Securities and Exchange Commission.
2. SEGMENT INFORMATION:
Snyder Communications provides sales and marketing solutions for its clients and
strives to integrate its service capabilities within as well as across its three
operating groups: Direct Services, Healthcare Services and Creative Services.
Direct Services provides services centered on marketing and sales programs
designed to reach certain, sometimes targeted, consumer groups through strategic
planning and consulting services, direct marketing, proprietary sampling
programs, field sales, teleservices, database mailings, information displays and
interactive services. Healthcare Services focuses on providing outsourced
pharmaceutical detailing, sales force training, marketing plan design and
evaluation services, and healthcare educational, marketing and publishing
services. Creative Services establishes brand awareness for clients through
advertising, creative design, public relations, media placement and interactive
services.
The Company evaluates performance based on earnings before interest and taxes
(EBIT) from the combined subsidiaries in each operating group, excluding
nonrecurring acquisition and related costs, and compensation to stockholders.
Sales between operating groups are accounted for at fair value as if the sales
were to third parties. All activity between the operating groups has been
eliminated with respect to revenue and EBIT.
The Company's operating groups are strategic business units that offer different
services. They are managed separately because each business requires different
marketing, service and pricing strategies. The operating groups are primarily
an aggregate of businesses acquired as separate units over the course of time.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
---------- ---------
(in thousands)
<S> <C> <C>
Revenues:
Direct Services $123,913 $ 93,873
Healthcare Services 88,866 68,201
Creative Services 28,547 25,285
-------- --------
Total $241,326 $187,359
======== ========
EBIT:
Direct Services $ 25,003 $ 16,213
Healthcare Services 10,511 10,240
Creative Services 3,621 3,765
Corporate and Other (3,171) (4,531)
-------- --------
Total $ 35,964 $ 25,687
======== ========
Reconciliation of EBIT to Income (Loss) from Operations
Total EBIT for operating groups $ 35,964 $ 25,687
Compensation to stockholders - (596)
Acquisition and related costs (9,554) (33,953)
-------- --------
Income (loss) from operations $ 26,410 $ (8,862)
======== ========
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Total Assets:
Direct Services $327,655 $311,760
Healthcare Services 216,544 207,722
Creative Services 185,164 189,804
Corporate and Other 19,510 9,570
-------- --------
Total $748,873 $718,856
======== ========
</TABLE>
3. BUSINESS COMBINATIONS:
The following details revenues and net income (loss) for each of the three
months ended March 31, 1999 and 1998 of SNC and all entities acquired by SNC
through pooling of interests combinations ("Pooled Entities") through the dates
of their respective mergers. The SNC amounts include the financial results of
the original operations of SNC for the entire period and the financial results
of the Pooled Entities for the period subsequent to the dates of their
respective mergers.
For the Three Months
Ended March 31,
1999 1998
---- ----
(in thousands)
Revenues:
SNC $225,649 $107,216
Pooled Entities 15,677 80,143
-------- --------
$241,326 $187,359
======== ========
Net income (loss):
SNC $ 16,172 $ (1,105)
Pooled Entities (4) (5,898)
-------- --------
$ 16,168 $ (7,003)
======== ========
During the three months ended March 31, 1999, SNC and the Pooled Entities
recorded $6.6 million and $3.0 million, respectively, in nonrecurring
acquisition and related costs. Excluding the nonrecurring acquisition and
related costs and assuming that all of the Pooled Entities had been taxed
similarly to C corporations, SNC and the Pooled Entities would have recorded
approximately $21.1 million and $1.6 million, respectively in net income for the
three months ended March 31, 1999 for a combined basic and diluted net income
excluding non-recurring costs per share of $0.30.
During the three months ended March 31, 1998, SNC and the Pooled Entities
recorded $16.9 million and $17.0 million in nonrecurring acquisition and related
costs. Additionally for the three months ended March 31, 1998, the Pooled
Entities recorded $0.6 million of nonrecurring compensation to stockholders.
Excluding the nonrecurring costs and assuming that all of the Pooled Entities
had been taxed similarly to C corporations, SNC would have recorded
approximately $8.3 million in net income for the three months ended March 31,
1998 and the Pooled Entities would have recorded approximately $7.7 million in
net income for the same period for a combined basic and diluted net income
excluding nonrecurring costs per share of $0.23 and $0.22, respectively.
During the first quarter of 1998 SNC acquired CLI Pharma (March 25, 1998) and
HealthCare Promotions ("HCP") (February 13, 1998) in transactions which have
been accounted for as purchase business combinations. The total consideration
paid for first quarter 1998 purchase business combinations was approximately
$78.9 million consisting of 1,223,688 shares of SNC common stock and $9.4
million in net cash.
9
<PAGE>
The purchase business combinations have resulted in additional goodwill of
approximately $70.9 million.
The following table presents pro forma financial information as if the Company's
1998 purchase business combinations had been consummated at the beginning of
each of the periods presented and all of the Company's operations had been taxed
similarly to a C corporation:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Pro forma revenues $241,326 $197,421
Pro forma net income (loss) 14,491 (9,301)
Pro forma basic net income (loss) per share $ 0.19 $ (0.13)
Pro forma diluted net income (loss) per share $ 0.19 $ (0.13)
</TABLE>
During the three months ended March 31, 1999, the Company recorded $9.6 million
in nonrecurring acquisition and related costs in conjunction with the
consummation of the Company's mergers with the Pooled Entities. Excluding the
nonrecurring acquisition and related costs, the Company would have recorded
$22.7 million in pro forma net income for the three months ended March 31, 1999
and pro forma basic and diluted net income per share of $0.30 for the period.
During the three months ended March 31, 1998, the Company recorded $34.5 million
in nonrecurring acquisition and related costs and compensation to stockholders
in conjunction with the consummation of the Company's mergers with the Pooled
Entities. Excluding these nonrecurring costs, the Company would have recorded
$16.0 million in pro forma net income for the three months ended March 31, 1998
and pro forma basic and diluted net income per share of $0.23 and $0.22,
respectively, for the period.
4. ACQUISITION AND RELATED COSTS:
The Company recorded $9.6 million in nonrecurring acquisition and related costs
during the three months ended March 31, 1999. These costs are primarily related
to the consummation of the 1999 Mergers and consist of investment banking fees,
other professional service fees, and other contractual payments. In addition,
this amount includes a charge of approximately $2.3 million for costs necessary
to consolidate and integrate certain of the Company's acquired operations in the
U.S. and the U.K. The Company is integrating acquired subsidiaries that provide
similar services within the same geographic regions. Under the Company's plan
initiated in the fourth quarter of 1998, approximately thirteen locations have
been consolidated into six, and the efforts will not have a significant impact
on the Company's workforce. The Company expects these integration activities to
be substantially complete by the third quarter of 1999. The charge recorded in
the first quarter of 1999 consists of $1.3 million of severance and other costs
associated with the termination of 24 employees, and $1.0 million of fees
incurred for consulting services and other costs related to these integration
activities. In 1998, the Company recorded approximately $13.3 million of costs
to consolidate and integrate certain of the Company's operations, including
costs associated with the termination of 239 employees. As of March 31, 1999,
128 employees had terminated employment with the Company and $7.0 million had
been charged against the total liability of $15.6 million, including $3.1
million in severance and related payments.
The Company recorded $34.0 million in nonrecurring acquisition and related costs
during the three months ended March 31, 1998. These costs are primarily related
to the consummation of pooling of interests transactions in the first quarter of
1998 and consist primarily of investment banking fees, other professional
service fees and other contractual payments. In addition, this amount includes a
charge of approximately $4.8 million for costs necessary to consolidate and
integrate certain of the Company's acquired operations in the U.S. and the U.K.
10
<PAGE>
5. INCOME TAXES:
The Company's effective tax rate for the three months ended March 31, 1999 and
1998 differs from the federal statutory rate due primarily to the
nondeductibility of certain nonrecurring acquisition costs, state income taxes,
the different tax status of certain of the Pooled Entities prior to their merger
with SNC and different statutory rates for the Company's international
operations.
6. PRO FORMA INCOME DATA:
The pro forma net income (loss) per share amounts include a provision for
federal and state income taxes as if the Company had been a taxable C
corporation for all periods presented. The pro forma income tax rate on the
Company's recurring operations reflects the combined federal, state, and foreign
income taxes of approximately 38.00 percent and 38.39 percent for the three
months ended March 31, 1999 and 1998, respectively. The pro forma income tax
rates in the table below differ from the pro forma income tax rates on the
Company's recurring operations due to the nondeductibility of certain of the
acquisition and related costs. The Company's March 31, 1999 and 1998 tax
provisions exceed the Company's statutory rate due to the recognition of certain
acquisition and related costs which are not deductible for income tax purposes.
The table below presents this pro forma calculation of net income (loss):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
---- ----
<S> <C> <C>
Pro forma net income (loss) data: (in thousands)
Historical income (loss) before income taxes $ 27,073 $(8,649)
Pro forma provision for income taxes (12,582) (1,086)
-------- -------
Pro forma net income (loss) $ 14,491 $(9,735)
======== =======
</TABLE>
7. DEBT - LINE OF CREDIT:
In April 1999, the Company entered into a $25 million, one-year unsecured
revolving credit facility (the "Credit Facility") with a bank (the "Lending
Bank"). Availability under the Credit Facility is subject to the Company's
compliance with various financial ratios, operating covenants and other
customary conditions. Interest on amounts borrowed under the Credit Facility is
based on either the London Interbank Offered Rate, the Lending Bank's base rate
of interest or the federal funds rate. On April 28, 1999, there were no
outstanding borrowings under the Credit Facility.
11
<PAGE>
8. ACCUMULATED OTHER COMPREHENSIVE INCOME:
Accumulated other comprehensive income includes the cumulative amounts for
foreign currency translation adjustments and unrealized gains and losses on
marketable securities. The cumulative foreign currency translation adjustment
was ($1,713,494) and $1,817,697 as of March 31, 1999 and December 31, 1998,
respectively. The cumulative gain on marketable securities was $0 and $10,849 as
of March 31, 1999 and December 31, 1998, respectively.
9. NET INCOME PER SHARE:
A reconciliation of the shares used to compute basic and diluted earnings per
share follows. For each of the periods presented, the same net income used to
compute basic earnings per share was used to compute diluted earnings per share.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Weighted average shares outstanding for the period
used in computation of basic net income per share.... 74,806 70,749
Dilutive impact of stock options....................... 1,828 --
------ ------
Shares used in computation of diluted net income per
share................................................ 76,634 70,749
</TABLE>
For the three months ended March 31, 1999 and 1998, weighted average common
stock equivalents of 40,700 and 2,396,202, respectively, are not included in the
calculation of diluted net income per share because they were antidilutive for
the period.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's results of operations and of its
liquidity and capital resources is based upon the Company's condensed
consolidated financial statements. The entities with which the Company has
entered into mergers accounted for as poolings of interests for financial
reporting purposes will be collectively referred to as the "Pooled Entities" and
their mergers will be referred to herein as the "Acquisitions". The condensed
consolidated financial statements have been retroactively restated to reflect
the combined financial position and the combined results of operations and cash
flows of the Pooled Entities for all periods presented, giving effect to the
Acquisitions as if they had occurred at the beginning of the earliest period
presented. The following discussion should be read in conjunction with the
condensed consolidated financial statements of the Company and related notes
thereto included elsewhere in this Quarterly Report on Form 10-Q.
OVERVIEW
Since completing its initial public offering in September 1996, the Company has
significantly expanded the range of marketing and sales services it is able to
offer its clients. This expansion has been accomplished by building and
initiating new programs or service offerings and by acquiring businesses that
offer complementary services. The Company's strategy is to facilitate the growth
of its acquirees with improved sales and marketing resources and to integrate
the sales and marketing efforts of its acquirees with those of the existing
operating groups within the Company. The Company expects that the synergies
created by its acquisitions will increase its opportunities and strengthen its
client relationships. The Company strives to integrate its service capabilities
within as well as across its three operating groups to provide sales and
marketing solutions for its clients. The service offerings of acquired companies
have been combined with those previously offered by the Company to create three
operating groups: Direct Services, Healthcare Services and Creative Services.
Direct services are marketing and sales programs designed to directly reach
certain, sometimes targeted, consumer groups. Healthcare services are designed
to establish and monitor marketing plans, to provide face-to-face interaction
with physicians and to conduct educational research and communication services.
Creative services are designed to create the right kind of advertising for
clients.
The Company increased the scope of services and the geographic presence of the
Direct Services group with the completion of strategic acquisitions. During the
first quarter of 1999, the Company issued 2,470,341 shares in a pooling of
interests transaction with Media Syndication Global. Throughout 1997 and 1998,
the Company issued 16,070,615 shares in pooling of interests transactions with
companies that provide direct services. In the first quarter of 1999, Brann
Worldwide was created through the combination of Brann, Ltd., Blau Marketing
Technologies, Response Marketing Group, Snyder Direct Services and National
Retail Services. Brann Worldwide provides full-scale direct marketing and sales
solutions. The broad range of services provided by Brann Worldwide includes
traditional direct marketing, interactive, e-commerce, database management, data
modeling, response tracking, field sales and marketing, and teleservices. Direct
Services also includes targeted product sampling, proprietary publications,
comprehensive databases, media services and cooperative mailings.
The Company created its Healthcare Services group in January 1997 in a merger
transaction with a U.S. provider of pharmaceutical sales and marketing services.
During the first quarter of 1999, the Company issued 565,281 shares in a pooling
of interests transaction with PromoTech Research Associates. Throughout 1997 and
1998, the Company issued 11,375,420 shares in pooling of interests transactions
with companies that provide healthcare services. Snyder Healthcare Sales - U.S.
offers the services of over 2,850 account executives and managers in the U.S.
and provides outsourced pharmaceutical sales and marketing services to some of
the world's premier pharmaceutical companies. Snyder Healthcare Services - U.K.
retains the services of over 630 account executives and managers and provides
outsourced pharmaceutical sales and marketing services to many leading
pharmaceutical manufacturers. Snyder Healthcare Services - France utilizes over
850 account executives and managers to provide pharmaceutical sales and
marketing services in France. MKM provides outsourced pharmaceutical sales and
marketing services in Germany with a network of 485 technically trained
representatives. Snyder Healthcare Communications, which includes the recent
acquisition of PromoTech, provides a complete range of healthcare
13
<PAGE>
educational services with specialties in educational research, marketing and
publishing for the pharmaceutical industry. Health Products Research provides
strategic and tactical sales force market planning and evaluation services,
including sales marketing resource allocation, sales force planning and the
integration and evaluation of sales and marketing promotions to many leading
pharmaceutical and medical device manufacturers.
The creative services offered by the Company were established with its March
1998 acquisition of Arnold Communications, Inc. ("Arnold") and were further
expanded with the acquisition of Partners BDDH ("BDDH"). The Company issued
3,572,497 shares in the pooling of interests transactions with Arnold and BDDH.
Arnold operates primarily in the U.S. and is a full-service marketing
communications firm that provides creative services, new media marketing,
interactive services, database management services and full-service public
relations to a roster of recognized national and international corporations.
Circle Interactive, the Company's interactive services unit, is the primary
provider of interactive services. BDDH operates primarily in the U.K. and is a
full-service advertising agency that provides creative services and new media
marketing.
RESULTS OF OPERATIONS
In the Direct Services group, net revenues are recognized when services are
completed in accordance with the terms of the contracts. On certain contracts,
revenues from field sales and teleservices are based on both the number of
accepted customers and the type of services sold. The Company typically receives
a fixed dollar amount per customer. Revenues related to such sales are
recognized on the date that the application for service is accepted by the
Company's clients. For WallBoard(R) information display and sample pack programs
within the Direct Services group, the Company is paid by the program sponsors in
installments, generally quarterly or semiannually, over the term of the contract
under which services are rendered, which is generally one year or less. Revenues
are recognized upon shipment of lists from the Direct Services group to
customers for a one-time usage. In the Healthcare Services group, revenues and
associated costs on pharmaceutical detailing contracts are recognized when
services have been performed by account executives. For educational marketing
programs within the Healthcare Services group, the Company recognizes revenues
and associated costs as services are performed. In the Creative Services group,
net revenues are recognized when services are rendered in accordance with the
terms of the contracts.
Cost of services consists of all costs specifically associated with client
programs, such as salary, commissions and benefits paid to personnel, including
senior management associated with specific service groups, inventory, payments
to third-party vendors and systems and other support facilities specifically
associated with client programs.
Selling, general and administrative expenses consist primarily of costs
associated with administrative functions, such as finance, accounting and human
resources, as well as personnel costs of senior management not specifically
associated with client services.
Compensation to stockholders consists of excess compensation paid to certain
stockholders of acquired companies prior to their respective mergers with the
Company. The amount by which the historical compensation of these stockholders
exceeds that provided in their employment contracts with the Company has been
classified as compensation to stockholders.
Acquisition and related costs consist primarily of investment banking fees,
other professional service fees, certain tax payments and other contractual
payments resulting from the consummation of the Company's pooling of interests
transactions, as well as the costs of integrating certain of the Company's
acquired operations.
The following sets forth, for the periods indicated, certain components of the
Company's income statement data, including such data as a percentage of
revenues. Pro forma net income includes a provision for income taxes as if all
operations of the Company had been taxed as a C corporation for all periods
presented. Pro forma net income excluding nonrecurring costs represents net
income adjusted to reflect a provision for income taxes as if the Company had
been taxed similarly to a C corporation for all periods presented and the
elimination of compensation to stockholders and acquisition and related costs.
Compensation to stockholders and acquisition and related costs are
14
<PAGE>
considered to be nonrecurring by the Company, because the Company's current
operations will not result in any compensation to stockholders or acquisition
and related costs in future periods.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
------------------------------------------------
1999 1998
---------------------- ----------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net revenues $ 241,326 100.0% $ 187,359 100.0%
Cost of services 167,289 69.3 126,864 67.7
Selling, general, and administrative expenses 38,073 15.8 34,808 18.6
Compensation to stockholders - - 596 0.3
Acquisition and related costs 9,554 4.0 33,953 18.1
--------- --------- --------- ---------
Income (loss) from operations $ 26,410 10.9 $ (8,862) (4.7)
Interest income, net 663 0.3 213 0.1
Income tax provision (benefit) 10,905 4.5 (1,646) (0.9)
--------- --------- --------- ---------
Net income (loss) $ 16,168 6.7% $ (7,003) (3.70)%
========= ========= ========= =========
Pro forma net income (loss) $ 14,491 6.0% $ (9,735) (5.20)%
========= ========= ========= =========
Pro forma net income excluding non-recurring costs $ 22,709 9.4% $ 15,957 8.5%
========= ========= ========= =========
</TABLE>
Revenues. Revenues increased $53.9 million, or 28.8%, to $241.3 million in the
first quarter of 1999 from $187.4 million in the first quarter of 1998. The
increase in revenues for the quarter ended March 31, 1999 was due primarily to
increased sales volumes within the Direct Services and Healthcare Services
operating groups.
Revenues in the Direct Services group increased $30.0 million, or 32.0%, to
$123.9 million in the first quarter of 1999 and accounted for 56% of the
Company's total increase in revenues for the first quarter of 1999. The Direct
Services group experienced growth in the services provided primarily to existing
customers during the three months ended March 31, 1999. Services increased most
to customers for which the Direct Services group provides full-scale direct
marketing and sales solutions.
Revenues in the Healthcare Services group increased $20.7 million, or 30.4%, to
$88.9 million in the first quarter of 1999 and accounted for 38% of the
Company's total increase in revenues for the first quarter of 1999. Nearly all
of the revenue growth was achieved at the Company's US and France Healthcare
Sales organizations. This includes revenue growth resulting from the
acquisitions of Healthcare Promotions and CLI Pharma. Healthcare Promotions has
been integrated into Snyder Healthcare Sales - U.S., and CLI Pharma has been
integrated into Snyder Healthcare Services - France.
Revenues in the Creative Services group increased $3.3 million, or 12.9%, to
$28.6 million in the first quarter of 1999 and accounted for 6% of the Company's
total increase in revenues for the first quarter of 1999. Revenue growth was due
primarily to an increase in services provided to existing customers.
Cost of Services. Cost of services increased $40.4 million, or 31.8%, to $167.3
million in the first quarter of 1999 from $126.9 million in the first quarter of
1998. Cost of services as a percentage of revenues increased to 69.3% in the
first quarter of 1999 from 67.7% in the first quarter of 1998 due primarily to
increases within the Healthcare and Creative Services groups.
15
<PAGE>
Cost of services in the Direct Services group increased $19.2 million, or 31.9%,
to $79.4 million in the first quarter of 1999 and accounted for 48% of the
Company's total increase in cost of services. Cost of services as a percentage
of revenues was 64.1% in both the first quarter of 1999 and the first quarter of
1998. In the first quarter of 1999, cost of services as a percentage of revenues
was favorably impacted by a fee of $3.8 million, net of related expenses, that
was received for termination of certain services under an existing contract.
Cost of services in the Healthcare Services group increased $18.4 million, or
37.3%, to $67.8 million in the first quarter of 1999 and accounted for 45% of
the Company's total increase in cost of services. Cost of services as a
percentage of revenues increased to 76.3% in the first quarter of 1999 from
72.4% in the first quarter of 1998. Cost of sales as a percentage of revenues
increased in both the healthcare sales and strategy components of the Healthcare
Services group due in part to start-up costs.
Cost of services in the Creative Services group increased $2.8 million, or
16.2%, to $20.1 million in the first quarter of 1999 and accounted for 7% of the
Company's total increase in cost of services. Cost of services as a percentage
of revenues increased to 70.3% in the first quarter of 1999 from 68.4% in the
first quarter of 1998. The increase in cost of services as a percentage of
revenues is due to variations in the overall mix of services provided.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $3.3 million, or 9.5%, to $38.1 million in the
first quarter of 1999 from $34.8 million in the first quarter of 1998. Selling,
general and administrative expenses as a percentage of revenues decreased to
15.8% in the first quarter of 1999 from 18.6% in the first quarter of 1998.
Overhead costs have been closely monitored in all areas of the Company, and
selling, general and administrative expenses as a percentage of revenues
decreased in each of the service groups as well as at corporate.
Selling, general and administrative expenses in the Direct Services group
increased $2.0 million, or 11.4%, to $19.5 million in the first quarter of 1999.
Selling, general and administrative expenses as a percentage of revenues
decreased to 15.7% in the first quarter of 1999 from 18.6% in the first quarter
of 1998 and is attributed primarily to U.S. operations.
Selling, general and administrative expenses in the Healthcare Services group
increased $2.0 million, or 23.5%, to $10.5 million in the first quarter of 1999.
Selling, general and administrative expenses as a percentage of revenues
remained fairly constant at 11.8% in the first quarter of 1999 and 12.6% in the
first quarter of 1998.
Selling, general and administrative expenses in the Creative Services group
increased $0.6 million, or 14.3%, to $4.8 million in the first quarter of 1999.
Selling, general and administrative expenses as a percentage of revenues
remained fairly constant at 16.8% in the first quarter of 1999 and 16.6% in the
first quarter of 1998.
Corporate selling, general and administrative expenses decreased $1.3 million,
or 28.9%, to $3.2 million. Corporate selling, general and administrative
expenses as a percentage of revenues decreased to 1.3% in the first quarter of
1999 from 2.4% in the first quarter of 1998. The Company's operations have been
decentralized since the first quarter of 1998.
Compensation to Stockholders. No compensation to stockholders was recorded in
the three months ended March 31, 1999. Compensation to stockholders was $0.6
million in the three months ended March 31, 1998. Compensation to stockholders
reflects compensation paid to certain stockholders of acquired companies prior
to their respective mergers with the Company that is in excess of the
compensation provided for in their employment contracts with the Company. No
compensation to stockholders is recorded subsequent to an acquisition by the
Company.
Acquisition and Related Costs. The Company recorded $9.6 million in acquisition
and related costs during the three months ended March 31, 1999. These costs
include $7.3 million related to the consummation of pooling of interests
transactions during the quarter and $2.3 million related to the consolidation
and integration of certain of the Company's acquired operations. The Company
recorded $34.0 million in acquisition and related costs during the three months
ended March 31, 1998, and these costs were related to the consummation of
pooling of interests transactions during the three months ended March 31, 1998.
The Company completed two pooling of interests
16
<PAGE>
transactions valued at approximately $93 million during the three months ended
March 31, 1999 and completed six pooling of interests transactions valued at
approximately $299 million during the three months ended March 31, 1998.
Interest Income, net. The Company recorded net interest income of $0.7 million
and $0.2 million in the three months ended March 31, 1999 and 1998,
respectively. Actual interest income was $1.0 million and $1.2 million for the
three months ended March 31, 1999 and 1998, respectively. Net interest income
increased due to a decrease in interest expense during the three months ended
March 31, 1999. Interest expense during the three months ended March 31, 1998
includes interest on debt at acquired companies prior to their acquisition by
the Company which was repaid by the Company subsequent to the acquisitions.
Income Tax Provision. The Company recorded a tax provision of $10.9 million in
the three months ended March 31, 1999. The Company's effective tax rate on its
recurring operations is approximately 38% for the three months ended March 31,
1999. The actual tax provision recorded differs from the effective rate due to
the nondeductibility of certain of the nonrecurring costs recorded during the
period as well as the tax status of certain of the acquired companies prior to
their mergers with the Company.
Net Income (Loss). Net income increased $23.2 million, or 331%, to $16.2 million
in the first quarter of 1999 from a loss of $7.0 million in the first quarter of
1998 due primarily to the Company's overall growth and the decrease in
nonrecurring acquisition and related costs.
Pro forma net income excluding nonrecurring costs increased $6.7 million, or
41.9%, to $22.7 million in the first quarter of 1999 from $16.0 million in the
first quarter of 1998. Pro forma diluted net income excluding nonrecurring costs
per share increased $0.08, or 36.4%, to $0.30 in the first quarter of 1999 from
$0.22 in the first quarter of 1998. The increase in pro forma net income
excluding nonrecurring costs is due primarily to the growth in revenues and the
reduced overhead costs, offset by the decrease in gross margins.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had $80.7 million in cash and equivalents. Cash
and equivalents decreased $0.6 million during the three months ended March 31,
1999, due to the $6.5 million provided by operating activities, and the $5.9
million provided by financing activities offset by the $12.6 million used in
investing activities and the $0.4 million effect of changes in the exchange
rate. The $5.9 million in cash provided by financing activities consists
primarily of the proceeds received from the exercise of stock options offset by
distributions at acquired companies prior to their merger with the Company and
net repayments of debt. The $12.6 million in cash used in investing activities
consists primarily of capital expenditures and the purchases of subsidiaries.
The Company expects to continue to grow through both internal expansion and
complementary acquisitions. The Company believes that its cash and equivalents,
as well as the cash provided by operations, will be sufficient to fund its
current operations and planned capital expenditures. To the extent that the
consideration paid for future acquisitions does not include securities of the
Company, acquisitions will initially be financed using excess cash and
equivalents, but depending on the amount necessary to complete an acquisition,
additional financing may be required. Effective April 1999, the Company has an
additional $25 million line of credit available.
The Company is undergoing an assessment of its current systems and equipment and
is in the process of making the modifications necessary to address the issues
presented by the Year 2000. The Company has identified certain systems within
its Direct Services and Healthcare Services groups that are not yet compliant
with the Year 2000. Modifications have already begun on all of these systems.
The Company expects to incur no more than $3.0 million in capital expenditures
on system upgrades which are designed in part to address specific Year 2000
requirements. Approximately $2.4 million was incurred through March 31, 1999.
The Company began testing its systems for compliance with the Year 2000 in 1997
and expects testing to be completed on its current systems by the middle of
1999. Although the Company believes that it will achieve Year 2000 compliance
for its systems prior to January 1, 2000 without incurring significant
additional costs, there can be no assurance that such compliance will be
achieved or that it will be achieved without additional significant costs. If
Year 2000 compliance cannot be confirmed
17
<PAGE>
subsequent to making the necessary modifications, the Company intends to seek
other compliant systems for itself or to develop other contingency arrangements.
To the extent that additional acquisitions are consummated, the Company will
need to evaluate how the Year 2000 will impact its future acquirees.
The Company is subject to the impact of foreign currency fluctuations,
specifically that of the British pound and French franc. To date, changes in the
British pound and French franc exchange rates have not had a material impact on
the Company's liquidity or results of operations. The Company continually
evaluates its exposure to exchange rate risk but does not currently hedge such
risk.
Given the extent of the Company's services currently provided in continental
Europe and the nature of those services, the Company does not expect the
introduction of the EURO to have a material impact on its operations or cash
flows. The Company will continue to evaluate the impact of the introduction of
the EURO as it continues to expand the services offered and the European
locations in which it operates.
18
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
At March 31, 1999, the Company had approximately $13.0 million of
long-term debt. Based upon the relative insignificance of long-term debt to the
Company's financial position, the Company does not believe that it has
significant exposure to the volatility of interest rates. Approximately 33% of
the Company's revenues are earned outside of the United States, with the
majority earned in the United Kingdom and the remainder earned largely in France
and Germany. All foreign operations incur both income and expenses in their
local currency, and accordingly, the Company does not believe it has significant
economic exposure to fluctuations in foreign exchange rates. Because the Company
is required to report its foreign operations as if they had been incurred in
U.S. dollars, fluctuations in foreign exchange rates could have a detrimental
impact on the reported financial results under Generally Accepted Accounting
Principles. The Company does not currently engage in hedging or other market
risk management tools.
PART II. OTHER INFORMATION
Item 2. Changes in Securities.
(c) In March 1999, the Company issued 3,053,772 shares of its common stock
in connection with the acquisitions of privately held companies. All
of the entities acquired became wholly owned subsidiaries of the
Company. The shares were restricted and contained a legend against
transfer. The issuance of the shares was effected without registration
in reliance upon the exemption available under Section 4 (2) of the
Securities Act.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 Pursuant to Regulation S-K Item 601 (b) (iii), the Company by
this filing agrees, upon request, to furnish to the Securities and
Exchange Commission a copy of other instruments defining the rights of
holders of long-term debt of the Company
27.1 Financial Data Schedule
(b) Reports on Form 8-K
(1) Current Report on Form 8-K, Item 5, filed on March 2, 1999
(2) Current Report on Form 8-K, Item 5, filed on March 19, 1999,
including financial statements as of and for the three years
ended December 31, 1998
19
<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.
SNYDER COMMUNICATIONS, INC.
(Registrant)
Date: April 28, 1999 /s/ Michele D. Snyder
__________________________ _________________________________
Michele D. Snyder
Vice Chairman, President and
Chief Operating Officer
(Duly Authorized Officer)
Date: April 28, 1999 /s/ A. Clayton Perfall
__________________________ _________________________________
A. Clayton Perfall
Chief Financial Officer
(Principal Financial Officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 80,692
<SECURITIES> 0
<RECEIVABLES> 253,303
<ALLOWANCES> 8,866
<INVENTORY> 0
<CURRENT-ASSETS> 405,464
<PP&E> 139,537
<DEPRECIATION> 56,454
<TOTAL-ASSETS> 748,873
<CURRENT-LIABILITIES> 334,250
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 392,960
<TOTAL-LIABILITY-AND-EQUITY> 748,873
<SALES> 241,326
<TOTAL-REVENUES> 241,326
<CGS> 167,289
<TOTAL-COSTS> 167,289
<OTHER-EXPENSES> 47,627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (663)
<INCOME-PRETAX> 27,073
<INCOME-TAX> 10,905
<INCOME-CONTINUING> 16,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,168
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.21
</TABLE>
