<PAGE> 1
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 quarterly period ended June 30, 1997.
COMMISSION FILE NO.: 333-15595-01
HEALTHFIRST MEDICAL GROUP, P.C.
FORMERLY "PHYSICIAN PARTNERS HEALTHFIRST, P.C."
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OREGON 93-1221389
- --------------------------------------------- ------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER ID NO.)
OR ORGANIZATION)
1200 NW FRONT STREET
PORTLAND, OREGON 97209
- ---------------------------------------- ------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (503) 243-3525
------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
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 [ ]
As of August 15, 1997, 90 shares of the Registrant's Common Stock, no
par value, were outstanding.
<PAGE> 2
HEALTHFIRST MEDICAL GROUP, P.C.
BALANCE SHEETS - AS OF JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
(All dollar amounts are expressed in thousands)
ASSETS
------
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1 $ 895
Patient accounts receivable, net of allowances for contractual discounts and
uncollectible accounts of $0 and $2,465 at June 30, 1997 and December 31, 1996, -- 6,497
respectively
Healthcare and other receivables -- 2,956
Prepaid expenses and deposits 268 201
---------- ----------
Total current assets 269 10,549
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $0 and $5,769 at
June 30, 1997 and December 31, 1996, respectively -- 20,361
---------- ----------
Total assets $ 269 $ 30,910
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Line of credit $ -- $ 1,500
Current portion of long-term debt and capital and direct financing lease obligations -- 4,663
PPI payable 268 --
Accounts payable and accrued expenses -- 2,825
Accrued healthcare costs -- 2,936
Accrued compensation and related expenses -- 3,313
Deferred revenue -- 183
---------- ----------
Total current liabilities 268 15,420
---------- ----------
LONG-TERM DEBT, net of current portion -- 5,066
CAPITAL AND DIRECT FINANCING LEASE OBLIGATIONS, net of current portion -- 4,265
DEFERRED COMPENSATION AND OTHER LONG-TERM LIABILITIES -- 3,795
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock-
No par value; 1,000,000 shares authorized; 90 and 0 shares issued and outstanding 1 --
at June 30, 1997 and December 31, 1996, respectively
Series 1 Class A--Voting; no par value; 800,000 shares authorized; 0 and 7,000
shares issued and outstanding at June 30, 1997 and December 31, 1996, respectively -- 700
Series 2 Class A--Voting; no par value; 200,000 shares authorized; 0 and 2,200
shares issued and outstanding at June 30, 1997 and December 31, 1996, respectively -- 330
Series 3, 4 and 5 Class A--Voting; no par value; 200,000, 100,000 and 100,000
shares authorized, none issued or outstanding at June 30, 1997 and December 31, -- --
1996
Class B--Nonvoting; no par value; 300,000 shares authorized; none issued and
outstanding at June 30, 1997 and December 31, 1996 -- --
Additional paid-in capital -- 1,879
Retained earnings -- 1,149
Notes receivable from stockholders for purchase of stock -- (439)
Unamortized value of restricted stock awards -- (1,255)
---------- ----------
Total stockholders' equity 1 2,364
---------- ----------
Total liabilities and stockholders' equity $ 269 $ 30,910
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE BALANCE SHEETS.
</TABLE>
<PAGE> 3
HEALTHFIRST MEDICAL GROUP, P.C.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(All dollar amounts are expressed in thousands,
except for earnings per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------ ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Fee-for-service, net $ 9,086 $ 7,597 $ 18,393 $ 15,195
Prepaid healthcare 7,848 6,755 14,803 13,511
----------- ----------- ----------- -----------
Net revenues 16,934 14,352 33,196 28,706
Less- Provider compensation and benefits 3,856 8,163 7,800 12,426
----------- ----------- ----------- -----------
Net revenue less provider compensation
and benefits 13,078 6,189 25,396 16,280
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Clinic salaries, wages and benefits 4,587 3,873 9,171 7,747
Purchased medical services 2,835 2,066 5,123 4,131
Medical and office supplies 1,418 1,335 2,999 2,671
General and administrative expenses 1,728 1,684 3,172 3,368
Lease and rent expense 529 416 1,054 831
Provision for uncollectible accounts 503 366 987 732
Depreciation and amortization 458 384 883 768
----------- ----------- ----------- -----------
Total operating expenses 12,058 10,124 23,389 20,248
----------- ----------- ----------- -----------
Operating income (loss) 1,020 (3,935) 2,007 (3,968)
OTHER INCOME (EXPENSE):
Interest income 174 252 247 503
Interest expense (460) (215) (765) (429)
Management Fee (734) -- (1,231) --
----------- ----------- ----------- -----------
Net income (loss) before provision (benefit)
for income taxes -- (3,898) 258 (3,894)
----------- ----------- ----------- -----------
PROVISION (BENEFIT) FOR INCOME TAXES -- (1,348) -- (1,348)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ -- $ (2,550) $ 258 $ (2,546)
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE $ -- $(31,875.00) $ 2,866.66 $(33,500.00)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 90 80 90 76
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE> 4
HEALTHFIRST MEDICAL GROUP, P.C.
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(All dollar amounts are expressed in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) -- (2,550) $ 258 (2,546)
Adjustment to reconcile net income (loss) to net
cash provided by operating activities-
Deferred Taxes -- (982) -- (982)
Depreciation and amortization -- 384 148 768
Changes in operating assets and
liabilities (excluding assets and
liabilities purchased from Suburban or
assigned to Physician Partners, Inc.):
Patient accounts receivable, net -- (404) (178) (808)
Healthcare and other receivables -- 699 691 793
Related Party receivables -- 305 -- 305
Income Taxes Receivable -- 68 -- 68
Inventories of drugs and supplies -- 56 -- 251
Prepaid expenses and deposits (226) 14 (318) 27
Other assets -- (73) (169) (146)
Accounts payable and accrued expenses -- 744 (119) 1,061
PPI payable 226 -- 268 --
Drafts Payable -- (165) -- (165)
Accrued healthcare costs -- (142) (748) (284)
Accrued compensation and related
expenses -- 1,896 154 2,089
Deferred revenue -- 150 68 301
Deferred compensation and other long-
term liabilities -- 2,958 108 2,798
------- ------- ------- -------
Net cash provided by operating activities -- 2,958 163 3,530
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment -- (871) (92) (1,741)
Cash received in acquisition of Suburban -- -- -- 231
------- ------- ------- -------
Net cash used in investing activities -- (871) (92) (1,510)
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under line of credit
agreement -- -- 1,000 --
Proceeds from issuance of long-term debt -- 910 -- 1,157
Principal payments on long-term obligations -- (322) (734) (480)
Proceeds from repayments of notes receivable
from stockholders -- 26 17 31
Payments for redemption of common stock -- (9) -- (9)
Cash received from direct financing lease
obligation -- 1,000 -- 1,000
Cash contributed to Physicians Partners, Inc. in
merger -- -- (1,157) --
Costs incurred related to Physician Partners,
Inc. transaction -- (285) (91) (284)
------- ------- ------- -------
Net cash provided by (used in) financing activities -- 1,320 (965) 1,415
------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- 3,407 (894) 3,435
</TABLE>
<PAGE> 5
HEALTHFIRST MEDICAL GROUP, P.C.
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(All dollar amounts are expressed in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS, beginning of period 1 153 895 125
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 1 $ 3,560 $ 1 $ 3,560
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<S> <C> <C> <C> <C>
Cash paid for interest $ 335 $ 74 504 268
Cash paid for income taxes - 2 1 42
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Capital lease obligations with related parties totaling $3,575 were assumed
in the acquisition of Suburban in February 1996.
In 1996, HealthFirst acquired all of the outstanding stock of Suburban in
exchange for 2,200 shares of HealthFirst Series 2 Class A stock. The acquisition
was recorded under the purchase method of accounting. The fair values of
Suburban's assets, including $231 of cash, and liabilities at the date of
acquisition are presented below:
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 2,284
Property, plant and equipment 5,325
Other long-term assets 99
Current liabilities (2,833)
Long-term liabilities (4,617)
-------
Net equity acquired $ 258
=======
</TABLE>
In February 1997, HealthFirst assigned all assets and liabilities to Physician
Partners, Inc. as part of the reorganization and merger transaction. The book
value HealthFirst's assets and liabilities, including $1.2 million of cash, at
the date of the transaction are presented below:
<TABLE>
<S> <C>
Current assets $10,239
Property, plant and equipment 20,305
Other long-term assets 277
Current liabilities 11,112
Long-term liabilities 17,163
Contributed Equity 2,546
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE> 6
HEALTHFIRST MEDICAL GROUP, P.C.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial reporting
and in accordance with Rule 10-01 of Regulation S-X.
In the opinion of the management of HealthFirst Medical Group, P.C.
("HealthFirst"), the unaudited interim financial statements contained in this
report reflect all adjustments, consisting of only normal recurring accruals,
which are necessary for a fair presentation of the financial position and the
results of operations for the interim periods presented. The results of
operations for any interim period are not necessarily indicative results for the
full year.
The accompanying financial statements reflect the assets and liabilities as of
December 31, 1996 and results of operations for the three and six months ended
June 30, 1996 for the HealthFirst Medical Group, P.C. prior to the
reorganization transaction ("Old HealthFirst"). The Statement of Operations and
Cash Flows for the three and six-month period ended June 30, 1997, include
results of operations for Old HealthFirst from January 1 to January 31, 1997.
The remainder of the period represents the operations of HealthFirst Medical
Group, P.C. ("New PC") subsequent to the effective date of the reorganization
transaction, February 1, 1997.
These financial statements, footnote disclosures and other information should be
read in conjunction with the financial statements and the notes thereto included
in HealthFirst's special filing under Form 10-K for the year ended December 31,
1996.
2. REORGANIZATION AND MERGER AGREEMENT:
On February 1, 1997, certain reorganization and merger transactions (the
"Transactions") contemplated by the Amended and Restated Agreement and Plan of
Reorganization and Merger, dated as of September 19, 1996, as amended on
November 4, 1996, November 29, 1996 and December 31, 1996 (the "Reorganization
and Merger Agreement") among Medford Clinic, P.C. ("Old Medford"), HealthFirst
Medical Group, P.C. ("Old HealthFirst"), The Corvallis Clinic, P.C. ("Old
Corvallis," and, together with Old Medford and Old HealthFirst, referred to
herein, collectively as "Old PC's"), and Physician Partners, Inc. ("PPI"), were
consummated. Pursuant to the terms of the Reorganization and Merger Agreement,
each Old PC affected (a) a reorganization of its corporate structure by (i)
incorporating a wholly-owned professional corporation subsidiary ( a "New PC"),
(ii) transferring to the New PC certain assets and liabilities relating to the
provider professional services business, (iii) making a pro rata distribution to
its shareholders of all of the capital stock of the New PC, (iv) converting such
Old PC from a professional corporation to a business corporation and (v)
entering into a 40 -year management agreement (the "Management Agreement") with
PPI and (b) a merger with and into PPI, resulting in consolidation of the
operations (other than the provider professional services businesses) of Old
PC's. HealthFirst is the New PC incorporated by Old HealthFirst pursuant to the
Reorganization and Merger Agreement.
The Transactions resulted in a separation of operations of Old HealthFirst
between medical professional services activities (i.e., providers of medical
services), which were transferred to HealthFirst, and the physician practice
management activities of the business, which were transferred to PPI. In
addition, substantially all of the assets and liabilities of the three Old PC's,
i.e., cash, receivables, inventories, prepaids, property, plant and equipment,
payables, accruals, debt, and certain contractual commitments, were transferred
to PPI. As consideration, the shareholders of Old PC's received stock of PPI.
Under the management agreement, PPI provides physician practice management
services to HealthFirst. Services provided include management and administrative
services, capital resources, facilities, equipment and supplies. As
consideration, PPI is entitled to (a) reimbursement of all managerial costs and
expenses ("Manager's Expenses") incurred by PPI and (b) a management fee equal
to 16% of (i) net revenues relating to services provided by the HealthFirst less
(ii) Manager's Expenses. HealthFirst is responsible for providing medical
services and the related costs for provider compensation and benefits.
The parties to the Transactions have received an opinion from tax counsel that
for federal income tax purposes, it is more likely than not that the merger will
be a tax-free transaction. No ruling was requested from the Internal Revenue
Service ("IRS") regarding the tax consequences of the Transactions. If the IRS
or tax court were to determine that the merger was not tax free, there would be
significant adverse tax consequence to the parties to the Transactions and their
respective shareholders.
<PAGE> 7
3. INCOME TAXES:
As of June 30, 1997, the income before provision for income taxes represents
the results of operations for Old HealthFirst from January 1 to January 31,
1997. The valuation reserve against the deferred tax assets was reversed in an
amount equal to the current tax expense, resulting in no tax provision being
reflected in the 1997 Statement of Operations. The operations of the New PC for
the remainder of the period have resulted in no net income and accordingly, no
current tax expense is necessary.
4. EARNINGS PER SHARE:
All share and per share data have been retroactively restated to give effect to
the recapitalization resulting from the Transactions.
5. EQUITY ROLLFORWARD:
The Transactions resulted in Old HealthFirst's Common Stock being converted
into the right to receive PPI Common Stock and the shares of HealthFirst being
distributed by Old HealthFirst to its shareholders. In addition, Old
HealthFirst's equity at the date of the Transactions was assumed by PPI.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion includes some forward-looking statements that involve a
number of risks and uncertainties. Future results may differ materially from
historical results or from results or outcomes currently expected or sought by
HealthFirst.
OVERVIEW
HealthFirst, an Oregon professional corporation, is a multi-specialty medical
clinic. HealthFirst was founded in 1997 pursuant to certain reorganization and
merger transactions (the "Transactions") contemplated by the Amended and
Restated Agreement and Plan of Reorganization and Merger, dated as of September
19, 1996, as amended on November 4, 1996, November 29, 1996 and December 31,
1996 (the "Reorganization and Merger Agreement") among Medford Clinic, P.C.
("Old Medford"), HealthFirst Medical Group, P.C. ("Old HealthFirst"), The
Corvallis Clinic, P.C. ("Old Corvallis," and, together with Old Medford and Old
HealthFirst, referred to herein, collectively as "Old PC's"), and Physician
Partners, Inc. ("PPI"). Old HealthFirst was founded in February 1996 in a merger
between the Metropolitan Clinic, P.C. (Metropolitan), founded in 1906, and
Suburban Medical Clinic, P.C. (Suburban), founded in 1956. Pursuant to the terms
of the Reorganization and Merger Agreement, each Old PC affected (a) a
reorganization of its corporate structure by (i) incorporating a wholly-owned
professional corporation subsidiary ( a "New PC"), (ii) transferring to the New
PC certain assets and liabilities relating to the provider professional services
business, (iii) making a pro rata distribution to its shareholders of all of the
capital stock of the New PC, (iv) converting such Old PC from a professional
corporation to a business corporation and (v) entering into a 40 -year
management agreement (the "Management Agreement") with PPI and (b) a merger with
and into PPI, resulting in consolidation of the operations (other than the
provider professional services businesses) of Old PC's. HealthFirst is the New
PC incorporated by Old HealthFirst pursuant to the Reorganization and Merger
Agreement.
HealthFirst consists of 144 professional providers who offer a wide range of
primary and specialty care services including allergy, dermatology,
gastroenterology, hematology/oncology, infectious disease, pediatrics,
geriatrics, obstetrics/gynecology, podiatry, rheumatology, and surgery.
HealthFirst's operations are located in and around Portland, Oregon.
HealthFirst believes that group practice offers the best means of promoting and
maintaining the highest standard of medical care. HealthFirst's strategy is to
position itself in a competitive network as the healthcare industry develops.
HealthFirst's relationship with PPI enhances its capacity to provide a high
quality of clinical care and to compete economically in both managed care and
fee-for-service markets.
To increase revenue, HealthFirst is working with PPI to recruit additional
physicians and merge other physician groups in the area into their clinic. PPI
is working on initiatives to reduce the Manager's Expenses of HealthFirst (which
are paid by PPI and reimbursed by HealthFirst) through regional purchasing and
insurance contracts, and through the consolidation of various services.
RESULTS OF OPERATIONS
1997 Compared to 1996
Net fee-for-service revenue increased from $7.6 million for the second quarter
of 1996 to $9.1 million for the second quarter of 1997, an increase of 20%, and
increased from $15.2 million to $18.4 million for the first six months of 1996
compared to 1997, an increase of 21%. The increase was due to the addition of
several providers during the last half of 1996 who are now at higher production
levels and an increase in office hours beginning in December 1996. Prepaid
healthcare revenue increased from $6.8 million to $7.9 million for the second
quarter of 1996 compared to 1997, an increase of 16%, and increased from $13.5
million to $14.8 million for the first six months of 1996 compared to 1997, an
increase of 10%. Prepaid healthcare revenue increased due to an increase in
capitated lives and increased risk pools. Provider compensation and benefits
decreased $4.3 million for the second quarter of 1996 compared to 1997 and $4.6
million for the first six months of 1996 compared to 1997. The decreases were
due to a $5.5 million bonus compensation plan of which $3.9 million of expense
was recognized in May 1996.
<PAGE> 9
Total operating expenses increased $2.0 million, or 20%, from $10.1 million for
the second quarter of 1996 to $12.1 million for the second quarter of 1997 and
$3.2 million, or 16%, from $20.2 million to $23.4 million for the first six
months of 1996 compared to 1997. Clinic salaries, wages and benefits accounted
for $.7 million and $1.4 million of the increase in the second quarter of 1997
and the first six months of 1997, respectively, which was due to an increase in
employees of 11% to support the providers added during the last half of 1996.
Purchased medical services increased $.8 million and $1.0 million for the second
quarter of 1997 and the first six months of 1997, respectively, which was due to
higher utilization. The remaining increase is mainly attributable to the
provision for uncollectible accounts increasing as a direct result of the
increases in fee-for-service revenue.
Interest income decreased $.1 million from the second quarter of 1996 to the
second quarter of 1997 and decreased $.3 million for the first six months of
1996 compared to 1997. Interest expense increased $.2 million from the second
quarter of 1996 to the second quarter of 1997 and $.3 million for the first six
months of 1996 compared to 1997. The decrease in interest income and the
increase in interest expense are due to the use of cash and borrowings to fund
operations and to build the Tualatin facility. The management fee of $.7 million
for the second quarter of 1997 and $1.2 million for the first six months of 1997
was paid to PPI in accordance with the Management Agreement. There was no such
management fee in 1996 as the Management Agreement was not effective until
February 1, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations generated $.2 million of cash for the first six
months of 1997, compared to $3.5 million for the first six months of 1996. The
Transactions resulted in the February 1, 1997 transfer of all assets and
liabilities to PPI.
As a result of the Transactions, PPI assumed all financing activities relating
to the working capital needs of HealthFirst and will purchase the necessary
capital equipment for HealthFirst. In the Transactions, all debt of HealthFirst
became debt of PPI.
<PAGE> 10
DRAFT DATED 8/7/97
HEALTHFIRST MEDICAL GROUP, P.C.
PART II -- OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
ITEM 2: Changes in Securities
None.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Submission of Matters to a Vote of Security Holders
None.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None.
<PAGE> 11
HEALTHFIRST MEDICAL GROUP, P.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTHFIRST MEDICAL GROUP, P.C.
(Registrant)
Date: August 13, 1997 By: /s/ DAVID L. PERRY, M.D.
-------------------------------
David L. Perry, M.D.,
President
Date: August 13, 1997 By: /s/ KAREN M. SHEPARD
-------------------------------
Karen M. Shepard,
Chief Financial Officer
<PAGE> 12
EXHIBIT INDEX
EXHIBIT
- ---------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 269
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 269
<CURRENT-LIABILITIES> 268
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 269
<SALES> 0
<TOTAL-REVENUES> 33,196
<CGS> 0
<TOTAL-COSTS> 31,189
<OTHER-EXPENSES> 1,231
<LOSS-PROVISION> 987
<INTEREST-EXPENSE> 765
<INCOME-PRETAX> 258
<INCOME-TAX> 0
<INCOME-CONTINUING> 258
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 258
<EPS-PRIMARY> 2,866.66
<EPS-DILUTED> 2,866.66
</TABLE>
