<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 November 30, 1999
Commission file number 000-29820
ARGOSY EDUCATION GROUP, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2855674
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two First National Plaza
20 South Clark Street, 3rd Floor
Chicago, Illinois 60603
Telephone: (312) 899-9900
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
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
At January 10, 2000 the registrant had 6,470,185 shares of common stock
outstanding.
<PAGE>
ARGOSY EDUCATION GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Description Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets................................. 3
Condensed Consolidated Statements of Operations....................... 4
Condensed Consolidated Statements of Cash Flows....................... 5
Notes to Condensed Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition....................................... 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk........... 12
Part II. Other Information
Item 1. Legal Proceedings................................................... 12
Item 2. Changes in Securities and Use of Proceeds........................... 12
Item 3. Defaults Upon Senior Securities..................................... 12
Item 4. Submission of Matters to a Vote of Security-Holders................. 12
Item 5. Other Information................................................... 13
Item 6. Exhibits and Reports on Form 8-K.................................... 13
</TABLE>
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
November 30, 1999 August 31, 1999
----------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,604 $ 8,980
Short-term investments 9,571 6,027
Receivables, net 2,334 1,593
Prepaid expenses and other current assets 766 1,324
------- -------
Total current assets 18,275 17,924
PROPERTY AND EQUIPMENT, net 5,976 5,617
OTHER ASSETS 3,564 3,979
INTANGIBLES, net 6,813 6,799
------- -------
TOTAL ASSETS $34,628 $34,319
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 480 $ 486
Accounts payable 1,444 1,109
Accrued payroll and other related liabilities 762 547
Accrued expenses 851 417
Deferred revenue and student deposits 2,523 2,548
------- -------
Total current liabilities 6,060 5,107
------- -------
LONG-TERM DEBT, less current maturities 2,886 2,998
DEFERRED RENT 688 610
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock - 30,000,000 shares authorized,
$.01 par value, 2,000,000 shares issued and outstanding 20 20
Class B common stock - 10,000,000 shares authorized,
$.01 par value, 4,900,000 shares issued and outstanding 49 49
Additional paid-in capital 25,092 24,871
Treasury Stock (2,131) -
Accumulated other comprehensive income 642 447
Purchase price in excess of predecessor carryover (720) (720)
Retained earnings 2,042 937
------- -------
Total stockholders' equity 24,994 25,604
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $34,628 $34,319
======= =======
</TABLE>
-3-
<PAGE>
ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 30,
------------
1999 1998
---- ----
<S> <C> <C>
Revenues:
Tuition and fees, net $10,926 $8,538
Other 688 803
------- ------
Total revenues, net 11,614 9,341
------- ------
Operating expenses:
Cost of education 5,062 4,251
Selling expenses 1,038 361
General and administrative expenses 3,825 2,487
Related party general and administrative expense - 424
------- ------
Total operating expenses 9,925 7,523
------- ------
Income from operations 1,689 1,818
Other income (expense):
Interest income 215 141
Interest expense (70) (173)
Other income (expense) 19 (4)
------- ------
Total other income (expense), net 164 (36)
------- ------
Income before provision for income taxes 1,853 1,782
Income taxes:
Income tax provision on C corporation income 748 -
Income tax provision on S corporation income - 24
------- ------
Total income taxes 748 24
------- ------
Net income $ 1,105 $1,758
======= ======
Net income per share:
Basic and diluted $ 0.17 $ 0.36
======= ======
Weighted average shares outstanding:
Basic and diluted 6,693 4,900
======= ======
</TABLE>
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<PAGE>
ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 30,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,105 $ 1,758
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 350 269
Deferred taxes (199) -
Issuance of stock performance grants 213 -
Changes in operating assets and liabilities 870 (710)
------- --------
Net cash provided by operating activities 2,339 1,317
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (604) (243)
Business acquisition, net of cash (104) (186)
(Purchase) sale of investments, net (2,236) 2,111
------- --------
Net cash (used in) provided by investing activities (2,944) 1,682
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (2,131) -
Borrowing of long-term debt - 150
Payments of long-term debt (119) (207)
Advances to related party (509) (14)
Shareholder distribution - (44)
------- --------
Net cash (used in) financing activities (2,759) (115)
------- --------
EFFECTIVE EXCHANGE RATE CHANGES ON CASH (12) -
------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(3,376) 2,884
CASH AND CASH EQUIVALENTS, beginning of period 8,980 2,712
------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,604 $ 5,596
======= ========
</TABLE>
-5-
<PAGE>
ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - The Company and Basis of Presentation
Argosy Education Group, Inc. (the "Company") is the nation's largest for-
profit provider of doctoral level programs. The Company's mission is to provide
academically oriented practitioner-focused education in fields with numerous
employment opportunities and strong student demand. The Company operates degree
and non-degree granting private, for-profit post-secondary schools devoted to
awarding doctoral and master's degrees in psychology, education and business as
well as bachelor's degrees in business, associate degrees in allied health
professions and diplomas in information technology.
The accompanying condensed unaudited consolidated financial statements
have been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
financial condition and results of operations of the Company. These consolidated
financial statements and notes thereto are unaudited and should be read in
conjunction with the Company's audited financial statements included in the
Company's report on Form 10K, as filed with the Securities and Exchange
Commission. The results of operations for the three months ended November 30,
1999 are not necessarily indicative of results that could be expected for the
entire fiscal year.
The condensed consolidated financial statements as of November 30, 1999
and the three months ended November 30, 1999 and 1998 include the accounts of
the Company and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
On March 8, 1999 the Company completed an initial public offering of
2,000,000 shares of Class A Common Stock (the "Offering"). Prior to the
Offering, the Company had one class of common stock outstanding. In connection
with the Offering, the Company's existing common stock underwent an approximate
2,941-for-one stock split which was then converted into 4,900,000 shares of
Class B Common Stock. The Company also authorized 30,000,000 shares of Class A
Common Stock and 5,000,000 shares of Preferred Stock. The effect of the stock
split has been retroactively reflected for all periods presented in the
accompanying consolidated financial statements. There was no Preferred Stock
issued or outstanding as of November 30, 1999.
Note 2 - Income Taxes
Prior to the Offering of the Company's Class A Common Shares completed on
March 8, 1999 the Company included its income and expenses with those of its
shareholders for Federal and certain state income tax purposes (an S Corporation
election). Accordingly, the consolidated statement of operations for the three
months ended November 30, 1998 does not include a provision for Federal income
taxes. In connection with the Offering, the Company terminated its S Corporation
election and recorded a deferred income tax asset and corresponding reduction of
income tax expense of $764,222, arising from a change in the Company's tax
status. Beginning March 8, 1999, the Company has provided for deferred income
taxes under the asset and liability method of accounting. This method requires
the recognition of deferred income taxes based upon the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable
-6-
<PAGE>
to future years to differences between financial statements carrying amounts and
the tax basis of existing assets and liabilities.
Note 3: PrimeTech Acquisition
On November 30, 1998, the Company acquired 100% of the outstanding stock of
PrimeTech, Canadian schools which award non-degree certificates in network
engineering and software programming. The majority shareholder of the Company
owned a one-third interest in PrimeTech. Under the acquisition agreement, the
Company was required to pay the former owners, consisting of Dr. Markovitz and
two operating managers, a total of $500,000 (Canadian Dollars) upon closing and
is obligated to issue shares of the Company's common stock, the fair value of
which is equal to 102% of PrimeTech's net income, as defined in such agreement,
in each of PrimeTech's next three fiscal years. The Company is negotiating
agreements with such persons in lieu of future payments per the acquisition
agreement. The agreements contemplate an aggregate payout of approximately
$200,000 (US Dollars) of which approximately $100,000 has been paid to date.
Note 4: Shareholders' Equity
The Company adopted a repurchase program for the Company's Class A Common
Stock of up to 500,000 shares. Shares of Class A Common Stock will be purchased
by the Company from time to time through open market purchases and private
purchase, as available. Under this program, the Company has repurchased 482,000
shares as of November 30, 1999 at a total cost of approximately $2,131,000.
Note 5: Related-Party Transactions
As of September 1, 1999 the Company entered into an agreement to manage
the John Marshall Law School of Atlanta, Georgia ("John Marshall"). The
agreement is for 10 years and includes an option to purchase John Marshall. The
right can be exercised at the Company's discretion. In addition, a line of
credit of $600,000 was established between the Company and John Marshall. As of
November 30, 1999, the Company advanced approximately $500,000 under the line of
credit and approximately $509,000 under the management agreement, the amounts
are included in other assets.
Note 6: Comprehensive Income
On September 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"),
which requires companies to report all changes in equity during a period, except
those resulting from investment by owners and distributions to owners, in a
financial statement for the period in which they are recognized. The disclosure
of comprehensive income and accumulated other comprehensive income is as
follows:
-7-
<PAGE>
<TABLE>
<CAPTION>
Comprehensive Accumulated Other
Income Comprehensive Income
------------------- -------------------------
<S> <C> <C>
Balance August 31, 1998 $ 2
Net income for the three months ended November 30, 1998 $ 1,758
Other Comprehensive Income -
Unrealized gain on investments 1 1
------------------- -------------------------
Comprehensive income for the three months
Ended November 30, 1998 $ 1,759
===================
Balance, November 30, 1998 $ 3
=========================
Balance August 31, 1999 $ 447
Net income for the three months ended November 30, 1999 $ 1,105
Other Comprehensive Income -
Unrealized gain on investments 195 195
------------------- -------------------------
Comprehensive income for the three months
Ended November 30, 1999 $ 1,300
=================== -------------------------
Balance, November 30, 1999 $ 642
=========================
</TABLE>
The accumulated other comprehensive income balance has been restated to conform
to the SFAS No. 130 requirements.
Note 7: Segment Reporting
The Company has two business segments: 1) Schools and 2) Test Preparation
Materials and Workshops ("Test Preparation"). These segments are managed as
separate strategic business units due to the distinct nature of their
operations. The Schools Segment, which represents the operations of ASPP, U of
S, MIA and PrimeTech, provides programs in psychology, education, business,
allied health professions, network engineering and software programming. All
operations of the Schools Segment are located in the United States with the
exception of PrimeTech which is located in Canada. The Test Preparation Segment
offers courses and materials for post-graduate psychology license examinations
and is located in the United States.
The following table presents financial data for the three months ended
November 30, 1999 and 1998 for these segments (dollars in thousands):
<TABLE>
<CAPTION>
Schools Test Preparation Consolidated
------- ---------------- ------------
<S> <C> <C> <C>
Three Months Ended
November 30, 1999
-----------------
Revenue $10,749 $ 865 $11,614
Income from operations 1,450 239 1,689
Net Income 970 135 1,105
Total Assets 30,690 3,938 34,628
Three Months Ended
November 30, 1998
-----------------
Revenue $ 8,444 $ 897 $ 9,341
Income from operations 1,570 248 1,818
Net Income 1,576 182 1,758
Total Assets 21,092 4,770 25,862
</TABLE>
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
This Quarterly Report on Form 10-Q contains statements that may
constitute "forward-looking statements" as defined by the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking statements can be
identified by the use of forward-looking terminology such as "believes,"
"estimates," "anticipates," "continues," "contemplates," "expects," "may,"
"will," "could," "should" or "would," or the negatives thereof. Those statements
are based on the intent, belief or expectation of the Company as of the date of
this Quarterly Report. Any such forward-looking statements are not guarantees of
future performance and may involve risks and uncertainties that are outside the
control of the Company. Results may differ materially from the forward-looking
statements contained herein as a result of changes in governmental regulations,
including those governing student financial aid, and other factors. The Company
expressly disclaims any obligation to release publicly any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based. The following discussion
of the Company's results of operations and financial condition should be read in
conjunction with the interim unaudited condensed financial statements of the
Company and the notes thereto included herein and in conjunction with the
information contained in the Form 10K as filed with the Securities and Exchange
Commission.
Results of Operations
The following table summarizes the Company's operating results as a percentage
of net revenue for the period indicated:
<TABLE>
<CAPTION>
Three Months Ended
November 30,
------------
1999 1998
---- ----
<S> <C> <C>
Total revenues, net 100% 100%
Operating expenses:
Cost of education 43.6 45.5
Selling expenses 8.9 3.9
General and administrative expenses 32.9 26.6
Related party general and administrative expense - 4.5
---- ----
Total operating expenses 85.4 80.5
---- ----
Income from operations 14.6 19.5
Total other income (expense), net 1.4 (0.4)
---- ----
Income before provision for income taxes 16.0 19.1
Provision for income taxes 6.4 0.3
---- ----
Net income 9.6% 18.8%
==== ====
</TABLE>
-9-
<PAGE>
Three Months Ended November 30, 1999 Compared to Three Months Ended November 30,
1998
Net revenues increased 24.3% from $9.3 million in the first quarter of
fiscal 1999 to $11.6 million in the first quarter of fiscal 2000, primarily due
to additional net revenue from the acquisition of PrimeTech and increased
revenue at all schools owned in both quarters. For schools owned by the Company
during fiscal 1999, revenue increased by 19.1% primarily due to internal growth.
Additional revenue was recognized from tuition increases and the addition of new
campuses and new programs.
Cost of education increased 19.1% from $4.3 million in the first quarter
of fiscal 1999 to $5.1 million in the first quarter of fiscal 2000, due to
additional teaching costs to meet the growth in the number of students attending
the schools, the development of new programs and the acquisition of PrimeTech.
As a percentage of net revenue, cost of education decreased from 45.5% in fiscal
1999 to 43.6% in fiscal 2000 due to efficiencies in the student services area.
Selling expenses increased 187.5% from $0.4 million in the first quarter
of fiscal 1999 to $1.0 million in the first quarter of fiscal 2000. As a
percentage of revenue, selling expenses increased from 3.9% to 8.9% due to the
addition of recruiters in all of the Argosy schools. This is an integral part of
our marketing strategy. In addition, the acquisition of PrimeTech requires more
costly advertising media than the other Argosy companies.
General and administrative expenses increased 53.8% from $2.5 million in
the first quarter of fiscal 1999 to $3.8 million in the first quarter of fiscal
2000 and, as a percentage of net revenue increased from 26.6% to 32.9%. The
increase is primarily due to additional expenses incurred as a public company,
additional management payroll costs, and additional costs of start up
operations.
Related party general and administrative expenses, which represents
amounts paid to a company owned by the majority shareholder that provided
management services for the Company and its schools, was $0.4 million in the
first quarter of fiscal 1999. Upon consummation of the Offering, the
relationship with the related company was terminated.
Other income (expense), net increased from $(0.04) million in the first
quarter of fiscal 1999 to $0.2 million in the first quarter of fiscal 2000.
The provision for income taxes increased from $0.02 million in the first
quarter of fiscal 1999 to $0.7 million in the first quarter of fiscal 2000, due
to the Company's change to a C Corporation on March 8, 1999. There was a
negligible tax charge for the first quarter of fiscal 1999 while the Company was
an S Corporation.
Net income decreased 37.1%, from $1.8 million in the first quarter of
fiscal 1999 to $1.1 million in the first quarter of fiscal 2000; due primarily
to start up operations at three campuses and the start up of the internet
campus, additional general and administrative expenses as relates to a public
company and higher income taxes due to a change in the tax status of the
Company. This was offset by the increased profitability at existing schools and
the elimination of related party general and administrative expenses.
-10-
<PAGE>
Seasonality and Other Factors Affecting Quarterly Results
The Company has experienced seasonality in its results of operations
primarily due to the pattern of student enrollments at most of the Company's
schools. Historically, the Company's lowest quarterly net revenue and income
have been in the fourth fiscal quarter (June through August) due to lower
student enrollment during the summer months at most of the Company's schools,
while the Company's expenses remain relatively constant over the course of a
year. The Company expects that this seasonal trend will continue and that
operating results for any quarter are not necessarily indicative of the results
for any future period.
Liquidity and Capital Resources
Since its formation, the Company has financed its operating activities
primarily through cash generated from operations. Acquisitions have been
financed primarily through debt instruments. Net cash provided by operating
activities increased from $1.3 million in the three months ended November 30,
1998 to $2.3 million in the three months ended November 30, 1999. The Company
had $12.2 million of working capital as of November 30, 1999 compared to $12.8
million of working capital as of August 31, 1999.
Capital expenditures increased from $0.2 million in the three months
ended November 30, 1998 to $0.6 million in the same period in 1999. The increase
was due to the investment in continued upgrading of school equipment and
facilities and the enhanced capabilities of the Company's computer system.
Capital expenditures are expected to continue to increase as the student
population increases and the Company continues to upgrade and expand current
facilities and equipment. The Company has no other commitments for material
capital expenditures.
Year 2000 Compliance
The "Year 2000 Problem" is the potential for computer processing errors
resulting from the use of computer programs that have been written using two
digits, rather than four, to denote a year (e.g., using the digits ''98'' to
denote 1998). Computer programs using this nomenclature can misidentify
references to dates after 1999 as meaning dates early in the twentieth century
(e.g., "1902" rather than "2002"). The Year 2000 Problem is commonly considered
to be prevalent in computer programs written as recently as the mid-1990s, and
can cause such programs to generate erroneous information, to otherwise
malfunction or to cease operations altogether.
The Company has installed a new management information system in its
corporate headquarters. In addition, the Company's schools each have stand-alone
computer systems and networks for internal use and for communication with its
students and with corporate headquarters. Based on evaluations in early January
2000, there have been no material adverse affects related to the Year 2000
problem. However, there can be no assurance that this new computer system will
not still be affected by the Year 2000 Problem and that the Company's existing
systems will not still be affected by the Year 2000 Problem, or that a failure
of any other parties, such as the DOE or other government agencies on which the
Company depends for student financial assistance or the financial institutions
involved in the processing of student loans, to address the Year 2000 Problem
will not have a material adverse effect on the Company's business, results of
operations or financial condition. In particular, there can be no assurance that
malfunctions relating to the Year 2000 Problem will not result in the
misreporting of financial information by the Company. The Company has made
inquiries of substantially all of its material vendors regarding the Year 2000
Problem and has not detected any significant issues relating to the Year 2000
Problem. However, the Company has not made a formal assessment of the computer
programs used by government agencies or other
-11-
<PAGE>
first parties with which the company interacts, or an assessment of its own
vulnerability to the failure of such programs to be free of the Year 2000
Problem. The Company does not have any formal contingency plans relating to the
Year 2000 Problem.
The Company believes that the most reasonably likely worst case scenario
for the Company regarding the Year 2000 Problem is a failure of the DOE to
adequately ensure payment of financial aid amounts. The 1998 Amendments require
the DOE to take steps to ensure that the processing, delivery and administration
of grant, loan and work assistance provided under the Title IV Programs are not
interrupted because of the Year 2000 Problem. This legislation also authorizes
the DOE to postpone certain HEA requirements to avoid overburdening institutions
and disrupting the delivery of student financial assistance as a consequence of
this problem. There can be no assurance, however, that assistance will not be
interrupted or that any DOE requirements would be postponed so that there would
be no material adverse effect on the Company's schools.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to the impact of interest rate changes, foreign
currency fluctuations and changes in the market value of its investments. The
Company does not utilize interest rate swaps, forward or option contracts on
foreign currencies or commodities, or other types of derivative financial
instruments. The Company has debt with fixed annual rates of interest ranging
from 6.25% to 9.0% totaling $3.3 million at November 30, 1999. A significant
majority of the variable interest loans were repaid with proceeds from the
Offering. The Company estimates that the fair value of each of its debt
instruments approximated its market value on November 30, 1999.
The Company is subject to fluctuations in the value of the Canadian
dollar vis-a-vis the U.S. dollar. The fair value of the assets and liabilities
of these operations approximated current market rates at November 30, 1999.
From time to time, the Company invests excess cash in marketable
securities. These investments principally consist of U.S. Treasury notes,
corporate bonds, short-term commercial paper and money market accounts, the fair
value of which approximated current market rates at November 30, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
-12-
<PAGE>
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARGOSY EDUCATION GROUP, INC.
January 12, 2000 /s/ Charles T. Gradowski
-----------------------------
Charles T. Gradowski
Chief Financial Officer
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS 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> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 5,604
<SECURITIES> 9,571
<RECEIVABLES> 2,687
<ALLOWANCES> 353
<INVENTORY> 0
<CURRENT-ASSETS> 18,275
<PP&E> 8,849
<DEPRECIATION> 2,873
<TOTAL-ASSETS> 34,628
<CURRENT-LIABILITIES> 6,060
<BONDS> 0
0
0
<COMMON> 69
<OTHER-SE> 24,925
<TOTAL-LIABILITY-AND-EQUITY> 34,628
<SALES> 0
<TOTAL-REVENUES> 11,614
<CGS> 0
<TOTAL-COSTS> 9,925
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 1,853
<INCOME-TAX> 748
<INCOME-CONTINUING> 1,105
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,105
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.17
</TABLE>
