SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996 Commission File Number: 0-3676
VSE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 54-0649263
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2550 Huntington Avenue
Alexandria, Virginia 22303-1499
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (703) 960-4600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.05 per share
(Title of Class)
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 [ ]
Number of shares of Common Stock outstanding as of October 1, 1996: 1,738,334.
<PAGE>
<TABLE>
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets
- ------------------------------------------------------------------------------
(in thousands, except share amounts)
<CAPTION>
September 30, December 31,
1996 1995
------ ------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . $ 403 $ 601
Accounts receivable, principally
U. S. Government, net . . . . . . . . . . . . . 24,658 16,073
Deferred tax assets . . . . . . . . . . . . . . . 948 810
Other current assets . . . . . . . . . . . . . . . 1,739 856
Net current assets of discontinued operations . . 0 476
------ ------
Total current assets . . . . . . . . . . . . . . 27,748 18,816
Property and equipment, net . . . . . . . . . . . . 4,568 4,355
Intangible assets, net . . . . . . . . . . . . . . . 3,493 3,874
Other assets . . . . . . . . . . . . . . . . . . . . 1,987 1,650
Net property, equipment, and other noncurrent
assets of discontinued operations . . . . . . . . 0 243
------ ------
Total assets . . . . . . . . . . . . . . . . . . $37,796 $28,938
====== ======
Liabilities and Stockholders' Investment
Current liabilities:
Accounts payable and other current liabilities . . $ 7,811 $ 3,097
Accrued expenses . . . . . . . . . . . . . . . . 6,377 5,684
Dividends payable . . . . . . . . . . . . . . . . 78 74
------ ------
Total current liabilities . . . . . . . . . . . 14,266 8,855
Long-term debt . . . . . . . . . . . . . . . . . . . 7,616 4,992
Deferred tax liabilities . . . . . . . . . . . . . . 98 411
Deferred compensation . . . . . . . . . . . . . . . 1,280 1,127
------ ------
Total liabilities . . . . . . . . . . . . . . . 23,260 15,385
------ ------
Commitments and contingencies
Stockholders' investment:
Common stock, par value $.05 per share, authorized
5,000,000 shares; issued 3,908,088 shares in
1996 and 1,954,044 in 1995 . . . . . . . . . . . 195 98
Paid-in surplus . . . . . . . . . . . . . . . . . 8,241 8,338
Retained earnings . . . . . . . . . . . . . . . . 22,385 21,402
Treasury stock, at cost (2,169,754 shares in 1996
and 1,084,877 in 1995) . . . . . . . . . . . . . (16,285) (16,285)
------ ------
Total stockholders' investment . . . . . . . . 14,536 13,553
------ ------
Total liabilities and stockholders' investment $37,796 $28,938
====== ======
</TABLE>
-1-
<PAGE>
<TABLE>
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Income For the three and nine months ended
- ------------------------------------------------------------------------------
(in thousands, except per share amounts)
<CAPTION>
September 30,
---------------------------------------
1996 1995
------------------- -------------------
Three Nine Three Nine
Months Months Months Months
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues, principally from
contracts . . . . . . . . . . . . . $ 29,664 $ 73,778 $ 20,892 $ 53,702
Costs and expenses of contracts . . . 28,772 70,894 19,373 51,023
-------- -------- -------- --------
Gross profit . . . . . . . . . . . . 892 2,884 1,519 2,679
Selling, general and administrative
expenses . . . . . . . . . . . . . . 331 490 657 542
Interest expense . . . . . . . . . . 108 347 15 27
-------- -------- -------- --------
Pretax income from continuing
operations . . . . . . . . . . . . . 453 2,047 847 2,110
Provision for income taxes . . . . . (25) 634 339 811
-------- -------- -------- --------
Income from continuing operations . . 478 1,413 508 1,299
Discontinued operations, net of tax:
Loss from operations (net of tax
benefit of $0 and $14 in 1996,
$19 and $45 in 1995) . . . . . . 0 (25) (49) (129)
Loss on disposal (net of tax
benefit of $118). . . . . . . . . 0 (179) 0 0
-------- -------- -------- --------
Net income . . . . . . . . . . . . . $ 478 $ 1,209 $ 459 $ 1,170
======== ======== ======== ========
Earnings per common share, based on
weighted average shares outstanding:
Income from continuing
operations . . . . . . . . . . . $ .27 $ .81 $ .29 $ .75
Loss from discontinued
operations . . . . . . . . . . . 0 (.12) (.02) (.07)
-------- -------- -------- --------
Net income $ .27 $ .69 $ .27 $ .68
======== ======== ======== ========
Weighted average shares outstanding 1,738,334 1,738,334 1,738,334 1,731,134
========= ========= ========= =========
</TABLE>
-2-
<PAGE>
<TABLE>
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Stockholders' Investment
- ------------------------------------------------------------------------------
(in thousands)
<CAPTION>
Common Stock Paid-In Retained Treasury
Shares Amount Surplus Earnings Stock
------ ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 . . 1,948 $ 97 $8,247 $20,042 $(16,285)
Net income for the year. . . . . -- -- -- 1,646 --
Dividends declared ($.325) . . . -- -- -- (286) --
Issuance of stock . . . . . . . 6 1 91 -- --
----- --- ----- ------ -------
Balance at December 31, 1995 . . 1,954 98 8,338 21,402 (16,285)
Net income for the period . . . -- -- -- 1,209 --
Dividends declared ($.1275). . . -- -- -- (226) --
Stock split effected in the
form of a 100% stock
dividend . . . . . . . . . . . 1,954 97 (97) -- --
----- --- ----- ------ -------
Balance at September 30, 1996 . 3,908 $195 $8,241 $22,385 $(16,285)
===== === ===== ====== =======
</TABLE>
-3-
<PAGE>
<TABLE>
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Cash Flows For the nine months ended September 30,
- ------------------------------------------------------------------------------
(in thousands)
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,209 $ 1,170
Adjustments to reconcile net income to net cash
provided by (used in) continuing operating activities:
Depreciation and amortization . . . . . . . . . . . . . 1,017 1,938
Discontinued operations . . . . . . . . . . . . . . . . 204 129
Deferred compensation plan expense . . . . . . . . . . 171 94
Change in assets and liabilities, net of
discontinued operations
(Increase) decrease in:
Accounts receivable . . . . . . . . . . . . . . . . . (8,585) (6,383)
Other current assets and noncurrent assets . . . . . (839) 351
Deferred tax assets, net . . . . . . . . . . . . . . (451) 640
Increase (decrease) in:
Accounts payable and other current
liabilities . . . . . . . . . . . . . . . . . . . . 4,697 1,417
Accrued expenses. . . . . . . . . . . . . . . . . . . 693 1,660
------ ------
Net cash used in continuing operating
activities . . . . . . . . . . . . . . . . . . . (1,884) 1,016
Net cash used in discontinued operating
activities . . . . . . . . . . . . . . . . . . . (25) (129)
------ ------
Net cash (used in) provided by
operating activities (1,909) 887
------ ------
Cash flows from investing activities:
Purchase of property and equipment,
(net of dispositions). . . . . . . . . . . . . . . . . . (1,230) (2,503)
Acquisition of CMstat . . . . . . . . . . . . . . . . . . 0 (970)
Acquisition of Energetics . . . . . . . . . . . . . . . . 0 (3,660)
Issuance of treasury stock . . . . . . . . . . . . . . . 0 91
Net proceeds from sale of Schmoldt Engineering . . . . . 100 0
Change in net assets of discontinued operations . . . . . 439 129
------ ------
Net cash used in investing activities (691) (6,913)
------ ------
Cash flows from financing activities:
Net proceeds from revolving term loan . . . . . . . . . . 2,624 3,651
Cash dividends paid . . . . . . . . . . . . . . . . . . . (222) (207)
------ ------
Net cash provided by financing activities 2,402 3,444
------ ------
Net decrease in cash and cash equivalents . . . . . . . . . (198) (2,582)
Cash and cash equivalents at beginning of period . . . . 601 3,096
------ ------
Cash and cash equivalents at end of period . . . . . . . $ 403 $ 514
====== ======
</TABLE>
-4-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed 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 accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information refer to the
consolidated financial statements and footnotes thereto included in the VSE
Corporation annual report on Form 10-K for the year ended December 31, 1995.
Stockholder's Investment
Stockholder's Investment and Earnings Per Share
On April 17, 1996, VSE announced a two for one stock split in the form of a 100%
stock dividend payable to stockholders of record as of May 15, 1996. The stock
dividend was made on May 22, 1996. All share and per share amounts have been
adjusted to give retroactive effect to the increased number of common shares
outstanding due to the stock split.
Stock Option Plan
In February 1996, the company's Stock Option Plan (the "Plan") was adopted by
the Board of Directors and approved by the company's stockholders on May 4,
1996. Under the plan, stock options may be granted for up to an aggregate of
218,958 shares of the common stock of the company. The maximum term of the
options granted is five years. The option price is equal to the fair market
value per share of common stock on the date of grant. The vesting period is
three years and allows for 25% vesting immediately upon date of the grant and an
additional 25% on each successive anniversary date after the grant date.
Vesting may be accelerated for shares granted to certain individuals as deter-
mined by the Board of Directors.
As of September 30, 1996, options covering 131,380 shares were granted, of
which 32,845 shares were exercisable at fair market value of $13.64 per share.
FAS 123
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensa-
tion" ("FAS 123"). The expense recognition provision encouraged by FAS 123
would require fair-value based financial accounting to recognize compensation
expense for employee stock compensation plans. The company has determined that
-5-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
it will elect the disclosure-only alternative and accordingly the company will
be required to disclose the pro forma net income or loss and per share amounts
in the notes to the financial statements using the fair value based method.
Companies are not required to include pro forma disclosures in interim financial
data. The company has not yet determined the impact of these pro forma
adjustments.
Discontinued Operation
On February 7, 1996, VSE sold its wholly owned subsidiary Schmoldt Engineering
Services Company ("Schmoldt Engineering"). Under the terms of the transaction,
VSE sold all of the outstanding capital stock of Schmoldt Engineering to certain
officers of Schmoldt Engineering in exchange for $100 thousand in cash and a
$300 thousand promissory note for which principal and interest is payable in
monthly installments between March 1, 1996 and September 1, 2001. The transac-
tion resulted in a pretax loss of approximately $293 thousand to VSE which was
recorded in the first quarter.
The consolidated financial statements of the company have been reclassified to
report separately the net assets and operating results of the discontinued
operations. Financial results for periods prior to the dates of discontinuance
have been restated to reflect continuing operations.
-6-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
<TABLE>
The following table sets forth certain items, including consolidated revenues,
pretax income, and net income, and the amount of changes of such items for the
three and nine month periods ended September 30, 1996 and 1995 (in thousands).
<CAPTION>
1996
Compared to
Three Months Nine Months 1995
Ended Ended ---------------
September 30 September 30 Three Nine
1996 1995 1996 1995 Months Months
------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues, principally
from contracts . . $29,664 $20,892 $73,778 $53,702 $ 8,772 $20,076
====== ====== ====== ====== ====== ======
Pretax income from
continuing opera-
tions . . . . . . . $ 453 $ 847 $ 2,047 $ 2,110 $ (394) $ (63)
Provision for
income taxes . . . (25) 339 634 811 (364) (177)
------ ------ ------ ------ ------ ------
Income from continu-
ing operations . . 478 508 1,413 1,299 (30) 114
Loss from discontinu-
ed operations, net
of taxes . . . . . 0 (49) (204) (129) 49 (75)
------ ------ ------ ------ ------ ------
Net income $ 478 $ 459 $ 1,209 $ 1,170 $ 19 $ 39
====== ====== ====== ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
The discussion and analysis which follows is intended to assist in understanding
and evaluating the results of continuing operations, financial condition, and
certain other matters of VSE Corporation and its wholly owned subsidiaries
("VSE" or the "company"), CMstat Corporation ("CMstat"), acquired in May 1995,
Energetics Incorporated ("Energetics"), acquired in August 1995, Human Resource
Systems, Inc. ("HRSI"), and Value Systems Services Division ("VSS") and BAV
Division ("BAV"), unincorporated divisions of VSE. The company is engaged
principally in providing engineering, software development, testing, and
management services to the U. S. Government (the "government"). Two other VSE
subsidiaries, VSE Corona, Inc. ("VCI") and VSE Services Corporation ("VSES"),
have generally been inactive after 1992. Intercompany sales are principally at
cost and have been eliminated from the consolidated financial statements.
Revenues from continuing operations for the three and nine month periods ending
September 30, 1996 increased by approximately 42% and 37%, respectively, com-
pared to the same periods of 1995. The increase in revenues is primarily due
to the new work performed by BAV in 1996 (see the discussion about the "BAV
Contract" below) and to the inclusion of full nine month revenues of CMstat and
Energetics in 1996. The increase in revenues was partially offset by the loss
of one of VSE's major contracts. (See the discussion about "VSE Navy Contract"
below).
Income from continuing operations for the nine month period ended September 30,
1996 increased by approximately 9%, compared to the same period ended September
30, 1995. The increase was primarily attributable to the inclusion of nine
month income from BAV, CMstat and Energetics in 1996 and the recording of a
-7-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
deferred tax asset from the acquisition of CMstat. The increase was partially
offset by the reduced profits associated with the loss of the VSE Navy Contract.
Net income for the nine month period ended September 30, 1996 increased by
approximately 3% compared to the same period ended September 30, 1995. The
increase was primarily attributable to the inclusion of nine month income from
BAV, CMstat and Energetics in 1996 and the recording of a deferred tax asset
from the acquisition of CMstat. The increase was partially offset by the
reduced profits associated with the loss of the VSE Navy Contract and the loss
from discontinued operations.
Income from continuing operations for the three month period ended September 30,
1996 decreased slightly by approximately 6%, compared to the same period ended
September 30, 1995. The decrease was due primarily to the timing of profits
associated with various contracts. Decreased profits from the VSE Navy Contract
were offset by increases in other new contracts, as well as the recording of a
deferred tax asset due to the acquisition of CMstat.
Net income for the three month period ended September 30, 1996 increased by
approximately 4% compared to the same period ended September 30, 1995. The
increase was due to the elimination of losses from the discontinued operations
in 1995, as well as the recording of a deferred tax asset from the acquisition
of CMstat.
The largest customer for the services rendered by the company is the U. S.
Department of Defense ("Defense"), including agencies of the U. S. Army, Navy,
and Air Force. The Defense budget has been restrained by the federal budget
deficit in recent years, resulting in increased competition for contracts for
the services performed by VSE. There can be no assurance that future reductions
in the Defense budget will not have a materially adverse impact on the company's
results of operations or financial position.
Substantially all of the company's revenues from operations depend on the award
of new contracts, on current contracts not being terminated for the convenience
of the government, and on the exercise of option periods and the satisfaction of
incremental funding requirements on current contracts. In 1996 and 1995 the
company did not experience any termination of contracts for the convenience of
the government or any non-exercise of option periods on current contracts which
were material to the company's results of operations or financial position.
BAV Contract. In August 1995, VSE's BAV Division was awarded a contract with
the U. S. Navy to provide engineering, technical and logistical support services
associated with the sale, lease, or transfer of Navy ships to foreign
governments. BAV began work on the contract in September 1995. Work on this
contract accounted for approximately 23% of total revenues for the nine month
period ended September 30, 1996. This contract has the potential, if all
options are exercised, to generate revenues in excess of one billion dollars
over a ten year period from 1995 through 2005.
VSE Navy Contract. VSE had a contract with the U. S. Navy which accounted for
approximately 18% of total revenues for the nine month period ended September
30, 1995. The Navy combined the work performed under this contract with other
related work under a new contract, and VSE was not the successful bidder for
the new contract. Substantially all work on the contract ended in September
1995.
-8-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
Discontinued Operation
On February 7, 1996, VSE sold its wholly owned subsidiary Schmoldt Engineering
Services Company ("Schmoldt Engineering"). Under the terms of the transaction,
VSE sold all of the outstanding capital stock of Schmoldt Engineering to certain
officers of Schmoldt Engineering in exchange for $100 thousand cash and a $300
thousand promissory note for which principal and interest are payable in monthly
installments between March 1, 1996 and September 1, 2001. The transaction
resulted in a pretax loss of approximately $293 thousand to VSE during the first
quarter of 1996.
Liquidity and Capital Resources
A net decrease in cash and cash equivalents of approximately $200 thousand
during the nine month period ended September 30, 1996 resulted from
approximately $2.4 million provided by financing activities, approximately $1.9
million used in operating activities and approximately $700 thousand used in
investing activities. Significant financing activities included borrowing on
the company's revolving term loan, including commitments for checks outstanding,
of approximately $2.6 million. Significant investing activities included
approximately $1.2 million net cash used to purchase property and equipment,
which was partially offset by approximately $100 thousand cash and $400 thousand
change in net assets provided by the divestiture of Schmoldt Engineering. Cash
flows from operating activities declined by approximately $2.8 million as com-
pared to the same period of 1995 primarily due to the additional accounts
receivable associated with the increasing level of work on the BAV Contract
in 1996.
A net decrease in cash and cash equivalents of approximately $2.6 million during
the nine month period ended September 30, 1995, resulted from approximately $6.9
million used in investing activities, approximately $3.4 million in cash
provided by financing activities and approximately $900 thousand provided by
operating activities. Significant investing activities included approximately
$3.7 million associated with the acquisition of Energetics, $1 million
associated with the acquisition of CMstat and approximately $2.5 million used
to purchase property and equipment. Significant financing activities included
borrowing on the company's revolving term loan, including commitments for checks
outstanding, of approximately $3.6 million.
The company's principal requirements for cash are to finance the costs of
operations pending the collection of accounts receivable, to acquire capital
assets for office and computer support, and to pay cash dividends. Performance
of work under the BAV contract is expected to substantially increase the
company's requirements for cash, however, management believes that the cash
flows from operations and the bank loan commitment are adequate to meet current
operating cash requirements.
VSE's requirements for working capital are affected significantly by its
revenues and accounts receivable, which are primarily from billings made by the
company to the government or other government prime contractors for services
rendered. Such accounts receivable generally do not present liquidity or
collection problems. Working capital requirements are also affected by (a)
contract retainages, (b) start-up and termination costs associated with new or
-9-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
completed contracts, (c) capital equipment requirements, and (d) differences
between the provisional billing rates authorized by the government and billable
costs actually incurred by the company.
Government contracts require VSE to pay for costs included in VSE's contract
billings prior to receiving payment for such costs from the government.
However, such contracts generally provide for progress payments on a monthly or
semimonthly basis, thereby reducing requirements for working capital.
Quarterly cash dividends at the rate of $.0425 per share were declared during
the three month periods ended March 31, June 30, and September 30, 1996.
Pursuant to its bank loan agreement, the payment of cash dividends by VSE is
subject to a maximum annual rate. VSE has paid cash dividends since 1973.
Inflation and Pricing Policy
Most of the contracts performed by VSE provide for estimates of future labor
costs to be escalated for any option periods provided by the contracts, while
the non-labor costs included in such contracts are normally considered
reimbursable at cost.
VSE property and equipment consists principally of computer systems equipment
and furniture and fixtures. The impact of inflation on replacement costs of
such property and equipment is expected to be insignificant.
-10-
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
PART II. Other Information
Item 5. Other Information.
On October 18, 1996, the Registrant filed a Form 11-K containing
audited financial statements for the VSE Corporation Employee ESOP/401(k) Plan
for the plan years ended December 27, 1995 and 1994.
On October 31, 1996, the Registrant filed a Form S-3 covering the
potential sale of up to 200,000 shares of VSE Common Stock ($.05 par value) to
meet employee benefit plan obligations under the VSE Corporation Employee
ESOP/401(k) Plan.
On October 31, 1996, the Registrant filed a Form S-8 covering up
to 218,996 new shares of VSE Common Stock ($.05 par value) which may be issued
on exercise of option agreements under the VSE Corporation 1996 Stock Option
Plan.
On October 31, 1996, the Registrant filed a Form S-8 covering up
to 100,000 shares of VSE Common Stock ($.05 par value) owned by the VSE
Corporation Employee ESOP/401(k) Plan.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(11) Statement regarding computation of per share earnings.
Reference is made to the "Consolidated Statements of Income" included in Part I
of this Form 10-Q on the computation of per share earnings.
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed by the Registrant during
the three month period ended September 30, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has omitted all other items contained in "Part II. Other Informa-
tion" because such other items are not applicable or are not required if the
answer is negative or because the information required to be reported therein
has been previously reported.
-11-
<PAGE>
<PAGE>
VSE CORPORATION AND SUBSIDIARIES
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.
VSE CORPORATION
/s/ C. S. WEBER
Date: November 14, 1996 _____________________________________
C. S. Weber, Senior Vice President,
Secretary and Treasurer
(Principal Financial Officer)
/s/ T. J. CORRIDON
Date: November 14, 1996 _____________________________________
T. J. Corridon, Senior Vice President
and Comptroller
(Principal Accounting Officer)
The financial information included in this report reflects all known adjustments
normally determined or settled at year-end which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods. The accompanying notes to consolidated financial statements are an
integral part of this report.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 403
<SECURITIES> 0
<RECEIVABLES> 24,658
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,687
<PP&E> 4,568
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,796
<CURRENT-LIABILITIES> 14,266
<BONDS> 0
<COMMON> 195
0
0
<OTHER-SE> 14,341
<TOTAL-LIABILITY-AND-EQUITY> 37,796
<SALES> 73,778
<TOTAL-REVENUES> 73,778
<CGS> 70,894
<TOTAL-COSTS> 70,894
<OTHER-EXPENSES> 490
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 2,047
<INCOME-TAX> 634
<INCOME-CONTINUING> 1,413
<DISCONTINUED> (204)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,209
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
