<PAGE> 1
UNITED STATES 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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from___________ to___________
Commission file number 0-5118
SYSTEMED INC.
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 95-2544661
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
970 West 190th Street, Suite 400
Torrance, California 90502
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 538-5300
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
---------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 22,324,773 shares of common
stock, $.001 par value, outstanding at March 31, 1996.
<PAGE> 2
SYSTEMED INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - Financial information
Item 1. Financial statements
Consolidated balance sheets - as of March 31, 1996 (unaudited)
and December 31, 1995 3
Consolidated statements of operations (unaudited) - three months ended
March 31, 1996 and 1995 4
Consolidated statements of cash flows (unaudited) - three months ended
March 31, 1996 and 1995 5
Notes to unaudited consolidated financial statements 6-7
Item 2. Management's discussion and analysis of financial condition and results
of operations 8-9
PART II - Other information
Item 6. Exhibits and reports on Form 8-K 10
SIGNATURES 11
</TABLE>
2
<PAGE> 3
Part I. Item 1.
SYSTEMED INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $12,628,000 $13,237,000
Accounts receivable, less allowance of $359,000 at
March 31, 1996 and $268,000 at December 31, 1995 15,193,000 16,697,000
Inventories 4,948,000 5,665,000
Prepaid expenses and other 4,143,000 4,078,000
------------- -------------
Total current assets 36,912,000 39,677,000
Property, plant and equipment, net 8,276,000 8,758,000
Goodwill, less accumulated amortization of $1,894,000 at
March 31, 1996 and $1,845,000 at December 31, 1995 6,149,000 6,198,000
Other, including deferred debt offering costs, less related
accumulated amortization of $559,000 at March 31, 1996
and $548,000 at December 31, 1995 2,869,000 3,337,000
------------- -------------
$54,206,000 $57,970,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,234,000 $4,795,000
Other accrued liabilities 5,207,000 6,659,000
Accrued restructuring and other charges 1,150,000 311,000
------------- -------------
Total current liabilities 10,591,000 11,765,000
Long-term debt 6,300,000 6,300,000
Other liabilities 17,000 17,000
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, $.001 par value; 2,000,000 shares
authorized; 8% cumulative and convertible;
161,325 shares issued and outstanding at March 31, 1996
and December 31, 1995; (liquidation preference
of $1,613,000 at March 31, 1996 and December 31, 1995) - -
Common stock, $.001 par value; 30,000,000 shares
authorized; 22,324,773 shares issued and outstanding
at March 31, 1996 and December 31, 1995 22,000 22,000
Additional paid-in capital 73,771,000 73,803,000
Accumulated deficit (36,495,000) (33,937,000)
------------- -------------
Total stockholders' equity 37,298,000 39,888,000
------------- -------------
$ 54,206,000 $ 57,970,000
============= =============
</TABLE>
See accompanying notes
3
<PAGE> 4
SYSTEMED INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
March 31, March 31,
1996 1995
---------------- ---------------
<S> <C> <C>
Net operating revenues $33,192,000 $38,366,000
Operating costs and expenses:
Cost of sales 29,576,000 31,786,000
Selling, marketing and customer service 2,680,000 2,936,000
General and administrative 2,101,000 2,465,000
Restructuring 1,612,000 -
------------ ------------
Total operating costs and expenses 35,969,000 37,187,000
------------ ------------
Operating income (loss) (2,777,000) 1,179,000
Other income (expense):
Interest income 118,000 162,000
Interest expense (163,000) (164,000)
Other non-operating, net (20,000) 3,000
----------- ------------
Total other income (expense) (65,000) 1,000
----------- ------------
Income (loss) before (provision) benefit for income taxes (2,842,000) 1,180,000
(Provision) benefit for income taxes 284,000 (106,000)
------------ ------------
Net income (loss) $(2,558,000) $ 1,074,000
============ ============
Per common share information:
- -----------------------------
Net income (loss) per common and common equivalent share $ (.12) $ .05
============ ============
Weighted average number of common and common equivalent shares 22,325,000 23,054,000
============ =============
</TABLE>
See accompanying notes
4
<PAGE> 5
SYSTEMED INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
March 31, March 31,
1996 1995
------------------ --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (2,558,000) $ 1,074,000
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 605,000 430,000
Provision for losses on accounts receivable 91,000 -
Restructuring expenses not affecting cash 1,132,000 -
Other - 7,000
Changes in assets and liabilities:
Decrease in accounts receivable 1,413,000 251,000
(Increase) decrease in inventory 717,000 (2,366,000)
Increase in prepaid expenses and other (65,000) (97,000)
Net increase (decrease) in accounts payable and other accruals (2,045,000) 1,178,000
Decrease in accrued restructuring and other charges (29,000) (112,000)
----------- -----------
Net cash provided by (used in) operating activities (739,000) 365,000
INVESTING ACTIVITIES:
Capital expenditures (327,000) (941,000)
Net cash transferred on sale - (409,000)
Repayment of note receivable 448,000 -
Other 9,000 6,000
----------- -----------
Net cash provided by (used in) investing activities 130,000 (1,344,000)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from sales of common stock - 523,000
----------- -----------
Net cash provided by financing activities - 523,000
----------- -----------
Net decrease in cash and cash equivalents (609,000) (456,000)
Cash and cash equivalents at beginning of period 13,237,000 12,849,000
----------- -----------
Cash and cash equivalents at end of period $12,628,000 $12,393,000
=========== ===========
</TABLE>
See accompanying notes
5
<PAGE> 6
SYSTEMED INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
1. Basis of presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the consolidated
financial position of Systemed Inc. and subsidiaries (the Company) and the
consolidated results of its operations and its cash flows for the three
month periods ended March 31, 1996 and 1995. Although the Company believes
that the disclosures in these financial statements are adequate to make the
information presented not misleading, certain information normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. Results of
operations for the periods presented are not necessarily indicative of
results to be expected for the full year. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
The Private Litigation Reform Act of 1995 provides a "safe harbor" for
forward looking statements. Certain information included in this Quarterly
Report on Form 10-Q is forward looking, such as information relating to
competition, pricing, trends in the industry and potential for growth.
Investors are cautioned that all forward looking statements involve risks
and uncertainties, including but not limited to the ability to obtain new
or retain existing accounts, the timely availability and acceptance of new
products, the impact of competitive pricing and products and other risks
detailed in the Quarterly Report and in the Company's other filings with the
Securities and Exchange Commission.
Systemed Inc. is a Delaware corporation with substantially all of its
business derived from activities in the pharmacy benefits management (PBM)
industry, through its mail service pharmacy and retail pharmacy claims
processing subsidiaries. In addition, approximately 3% of consolidated net
operating revenues are generated by the distribution of pharmaceutical
products through its subsidiary, Newport Pharmaceuticals de Costa Rica
(NPCR).
The consolidated financial statements include the accounts of the Company
and its domestic and foreign subsidiaries, all of which are wholly-owned.
Significant intercompany accounts and transactions have been eliminated in
consolidation.
2. Inventories
<TABLE>
<CAPTION>
Inventories consisted of the following: March 31, December 31,
1996 1995
---------- -------------
<S> <C> <C>
Raw materials $ 354,000 $ 366,000
Work in progress 95,000 109,000
Finished goods 4,499,000 5,190,000
---------- ----------
$4,948,000 $5,665,000
========== ==========
</TABLE>
Finished goods inventory included $3,899,000 and $4,574,000 of
pharmaceutical drugs at the Company's mail service pharmacy at March 31,
1996 and December 31, 1995, respectively.
3. Long-term debt
<TABLE>
<CAPTION>
Long-term debt consisted of the following at: March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
10% senior secured convertible notes $6,300,000 $6,300,000
</TABLE>
At March 31, 1996, the Company was in compliance with all covenants of the
above debt agreement.
4. Statements of cash flows
During the three months ended March 31, 1996 and 1995, cash payments for
interest were $315,000 and $321,000, respectively. Cash payments for income
taxes were $14,000 in 1996 and $50,000 in 1995.
6
<PAGE> 7
SYSTEMED INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
5. Per share data
Per share data have been computed by dividing the net income (loss), after
reduction for preferred stock dividend requirements in periods when assumed
conversion of the preferred stock would have been antidilutive, by the
weighted average number of common and common equivalent shares outstanding
during the period. Common stock equivalents include dilutive stock
options and warrants and the dilutive effects of preferred stock
conversions. Fully diluted per share calculations are not presented in
the financial statements because the assumed conversion of convertible
debt and any additional incremental issuance of stock options or warrants
would be antidilutive.
6. Restructuring
During the annual renewal process used by many of the Company's customers,
the Company learned that certain accounts would not be renewing their
contracts with the Company for 1996 primarily due to competitive pricing
conditions in the pharmacy benefits management marketplace. The effect of
this is a negative impact to current and future quarterly revenues of
approximately $6 to $8 million for the current fiscal year. As a result
of the expectation of lower revenues, the Company incurred restructuring
charges of $1,612,000 in the first quarter of 1996, which will be utilized
for the following purposes:
<TABLE>
<S> <C>
Employee separation $ 849,000
Loss on disposal of property 313,000
Loss on abandonment of facilities 174,000
Facility closing and transition costs 195,000
Other 81,000
-----------
$ 1,612,000
===========
</TABLE>
7. Subsequent events
Agreement and plan of merger
In April 1996, the Company entered into an Agreement and Plan of Merger
("Agreement") by and among the Company, Merck & Co., Inc. ("Merck"),
Merck-Medco Managed Care, Inc. ("MEDCO") and S Acquisition Corp.
("Subsidiary"). Subject to the approval of the Company's shareholders and
the appropriate government agencies as well as other conditions, the Company
will merge with and into Subsidiary, with the Company being the surviving
corporation. Subsidiary is a wholly owned subsidiary of MEDCO.
The Agreement provides that upon consummation of the merger, each share of
the Company's Common Stock, issued and outstanding shall be converted into
the right to receive $3.00 cash. It is anticipated that the transaction
could be closed within approximately the next two to five months.
Legal proceedings
In April and May 1996, two shareholders of the Company filed class action
lawsuits in Los Angeles County Superior Court in the State of California
against the Company and certain of its directors. The first action
is Slomovics v. Systemed Inc., et al., Case No. NC019070, and the second
case is Lemmer v. Systemed Inc., et al., Case No. BC149290 (which has not
yet been served). The suits allege that the defendants breached their
fiduciary and other common law duties to the shareholders by virtue of
entering into the Agreement and thereby allegedly failed to obtain the
maximum realizable value of the Company's common stock. The suits seek to
enjoin and rescind the transaction, and seek damages in an unspecified
amount. The Company believes that the suits are not well founded and that
it has meritorious defenses to the suits and the Company intends to defend
the actions vigorously.
7
<PAGE> 8
SYSTEMED INC.
March 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Private Litigation Reform Act of 1995 provides a "safe harbor" for forward
looking statements. Certain information included in this Quarterly Report
on Form 10-Q is forward looking, such as information relating to competition,
pricing, trends in the industry and potential for growth. Investors are
cautioned that all forward looking statements involve risks and uncertainties,
including but not limited to the ability to obtain new or retain existing
accounts, the timely availability and acceptance of new products, the impact of
competitive pricing and products and other risks detailed in the Quarterly
Report and in the Company's other filings with the Securities and Exchange
Commission.
The following table summarizes, by segment, the operations of the Company for
the periods indicated (amounts in 000's):
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
Net operating revenues:
Pharmacy benefits management $32,160 $37,350
Other 1,032 1,016
------- -------
Total net operating revenues $33,192 $38,366
======= =======
Operating income (loss):
Pharmacy benefits management $ (457) $ 2,169
Corporate and other (708) (990)
Restructuring (1,612) -
------- -------
Total operating income (loss) (2,777) 1,179
Non-operating income (expense) (65) 1
(Provision) benefit for income taxes 284 (106)
------- -------
Net income (loss) $(2,558) $ 1,074
======= =======
</TABLE>
The following table sets forth certain financial data as a percentage of
consolidated net operating revenues of the Company for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, March 31,
1996 1995
---------- ---------
<S> <C> <C>
Net operating revenues:
Pharmacy benefits management 96.9% 97.4%
Other 3.1 2.6
------- ------
Total net operating revenues 100.0 100.0
Cost of sales 89.1 82.8
Selling, marketing and customer service 8.1 7.7
General and administrative 6.3 6.4
Restructuring 4.9 -
------ -------
Operating income (loss) (8.4) 3.1
Non-operating income (expense) (.2) -
-------- -------
Income (loss) before (provision) benefit for income taxes (8.6) 3.1
(Provision) benefit for income taxes .9 (.3)
------- -----
Net income (loss) (7.7)% 2.8%
====== ====
</TABLE>
8
<PAGE> 9
SYSTEMED INC.
March 31, 1996
Results of Operations (Cont'd)
- ------------------------------
Consolidated net operating revenues for the three months ended March 31, 1996
decreased 13 percent from the same period of the prior year. The Company
incurred a consolidated operating loss of $2,777,000 for the current year
quarter, versus operating income of $1,179,000 for the similar prior year
period. On a net basis, the Company reported a consolidated loss for the
current quarter of $2,558,000 as compared to net income of $1,074,000 for the
same quarter last year.
The pharmacy benefits management segment revenues, which comprised 97 percent
of the Company's consolidated net operating revenues, declined 14 percent for
the quarter compared with the first quarter of the prior year. Mail service
pharmacy revenues decreased 15 percent in relation to the prior year as a
result of certain clients electing not to renew their contracts with the
Company due primarily to competitive pricing conditions in the marketplace.
Claims processing revenues for the first quarter decreased 3 percent from the
prior year initial quarter mostly as a result of changes in the product mix. A
larger portion of the Company's retail pharmacy claims processing customer
base now utilizes lower revenue per transaction electronic claims processing
products as compared with the first quarter of last year. The Company was
recently informed by two of its three largest claims processing clients, one of
which also utilizes the Company's mail service pharmacy benefits programs, that
they would be terminating their contracts later on in 1996. These clients
represented approximately $7.6 million of claims processing and mail service
revenues in 1995. The Company believes that the larger of the two customers has
decided to in-source its volume of transactions to a wholly owned claims
processing subsidiary over approximately the next one and one-half years, while
the second customer's departure was primarily attributable to competitive
pricing factors.
Other net operating revenues represents sales by the Company's pharmaceutical
distribution subsidiary, Newport Pharmaceuticals de Costa Rica. The Company
anticipates disposing of its operations in Costa Rica in the near future.
Cost of sales as a percentage of consolidated net operating revenues increased
over the prior year quarter as a result of increases in branded drug costs,
continued competitive pricing pressure, reduced volume as a result of the non-
renewal of certain clients, reduced market performance discounts and additional
start-up costs associated with the implementation of the new automated
dispensing technology at the Iowa mail service pharmacy. The Company continues
to seek ways to counter the adverse events which have contributed to the rise in
the costs of sales percentage by restructuring and consolidating operating
activities, the further implementation of drug procurement strategies, which
includes opportunities for higher purchase and market performance discounts, and
on-going process and quality improvements at both the mail service pharmacy and
claims processing operations. Management anticipates that the pharmacy benefits
management industry will continue to experience competitive pricing pressure
consistent with what has been experienced over the last year, which could
lead to future reductions in the gross margin. These pricing trends in the
industry will add to the difficulty of obtaining new large accounts.
Selling, marketing and customer service expense declined 9 percent from the
prior year quarter as a result of staffing reductions, consolidation of
responsibilities and relocation of activities.
General and administration expense for the first quarter of 1996 declined 15
percent from the comparable prior year amount due to reduced expenditure levels
and staff reductions.
In the first quarter of 1996, the Company recorded a restructuring charge for
the reorganization of certain of its operations. This restructuring was
implemented in order to appropriately size the Company's overhead structure to
match the anticipated lower volume of revenues, thus minimizing, to the extent
possible, the reduction in future profits. The restructuring resulted in the
elimination of positions brought about by the consolidation and relocation of
certain activities and facilities. Included in the restructuring charge are
estimated costs for separation compensation, write off of related assets and
contractual obligations costs associated therewith. Future cash payments
relating to this restructuring charge are approximately $650,000 for 1996 and
$200,000 for 1997. The Company anticipates funding this obligation from
internal cash resources.
Interest income for the three months ended March 31, 1996 declined due to lower
levels of invested cash. Interest expense was consistent with the prior year
amount. Other non-operating expenses reflects a nominal foreign exchange loss.
Income taxes are comprised of a benefit for Federal income taxes (due to the
loss incurred) offset by amounts provided for state income taxes.
Recent Event
On April 28, 1996, the Company entered into an Agreement and Plan of Merger
(Agreement) with Merck & Co., Inc. and certain of its subsidiaries. This
Agreement is subject to the approval of the Company's shareholders and the
appropriate government agencies, as well as certain other conditions. The
Agreement provides that upon consummation of the merger, each share of the
Company's Common Stock, par value $.001 per share, issued and outstanding
shall be converted into the right to receive $3.00 cash. It is anticipated
that the transaction could be closed within approximately the next two to five
months.
Liquidity and Capital Resources
At March 31, 1996, the Company had cash and cash equivalents of $12.6 million
which is sufficient to meet anticipated operating and other cash needs. The
Company funds its operational and capital expenditure requirements primarily
through cash flows from operations.
Working capital at the end of the quarter was $26.3 million, a decrease of $1.6
million from the prior year end amount. The decrease in working capital was
primarily due to the reduced sales which resulted in lower levels of cash and
cash equivalents, accounts receivable, inventory and accounts payable and other
accruals, and the recording of the restructuring liabilities. Cash used by
operations was $739,000 and was comprised of a loss from operations, net of
restructuring costs, offset by depreciation and amortization expense.
In the first quarter, the Company spent $327,000 in capital expenditures
primarily to further automate and increase its capacity at the mail service
pharmacy. As of March 31, 1996, the Company had no material commitments for
capital expenditures. Additionally, at the close of the first quarter, the
Company received its initial payment on the note receivable pertaining to the
sale of its former Irish subsidiary. The $448,000 collected also included a
prepayment of approximately $200,000 against future principal due on the note.
The Company's cash requirements for 1996 are expected to be financed through
internally generated cash flows.
9
<PAGE> 10
SYSTEMED INC.
March 31, 1996
Part II.
Item 1. Legal Proceedings
Reference is made to Note 7 of Notes to Unaudited Consolidated
Financial Statements.
Item 6. Exhibits and reports on Form 8-K
(a) Computation of earnings per share - see Exhibit 11.
(b) Financial Data Schedule - see Exhibit 27.
(c) Current report on Form 8-K, filed May 3,1996, reporting agreement
and plan of merger by and among MERCK & Co., Inc., Merck-Medco
Managed Care, Inc., S Acquisition Corp., and Systemed Inc.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSTEMED INC.
Date: May 14, 1996 By: /s/ KENNETH J. KAY
-----------------------------------------
Kenneth J. Kay, Senior Vice President,
Finance & Administration,
and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
11
<PAGE> 1
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
SYSTEMED INC.
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, March 31,
1996 1995
------------ ------------
<S> <C> <C>
PRIMARY
- -------
Average common shares outstanding 22,325 21,772
Net effect of dilutive stock options and warrants -
based on the treasury stock method - 1,064
Assumed conversion of 8% preferred stock - 218
-------- -------
Total 22,325 23,054
======== =======
Net income (loss) $(2,558) $ 1,074
Dividends on preferred stock (32) -
------- -------
Net income (loss) applicable to common stock $(2,590) $ 1,074
======= =======
Net income (loss) per common and common equivalent share $ (.12) $ .05
======= ========
FULLY DILUTED
- -------------
Average common shares outstanding 22,325 21,772
Net effect of dilutive stock options and warrants -
based on the treasury stock method - 1,137
Assumed conversion of 8% preferred stock - 218
-------- -------
Total 22,325 23,127
======== =======
Net income (loss) $(2,558) $ 1,074
Dividends on preferred stock (32) -
------- -------
Net income (loss) applicable to common stock $(2,590) $ 1,074
======= =======
Net income (loss) per common and
common equivalent share
assuming issuance of all dilutive
contingent shares $ (.12) $ .05
======= ========
</TABLE>
Income (loss) per common and common equivalent share was calculated by
dividing net income (loss), after adjusting for preferred stock dividends when
the preferred stock was assumed not to be converted, by the weighted average
number of common and common equivalent shares outstanding during the period.
Common stock equivalents include dilutive stock options and warrants and the
dilutive effects of preferred stock conversions.
Income (loss) per common and common equivalent share - assuming full dilution
is not presented in the financial statements because the assumed conversion of
convertible debt and any additional incremental issuance of stock options or
warrants would be antidilutive.
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 12628
<SECURITIES> 0
<RECEIVABLES> 15552
<ALLOWANCES> 359
<INVENTORY> 4948
<CURRENT-ASSETS> 36912
<PP&E> 15842
<DEPRECIATION> 7566
<TOTAL-ASSETS> 54206
<CURRENT-LIABILITIES> 10591
<BONDS> 6300
0
0
<COMMON> 22
<OTHER-SE> 37276
<TOTAL-LIABILITY-AND-EQUITY> 54206
<SALES> 33192
<TOTAL-REVENUES> 33192
<CGS> 29576
<TOTAL-COSTS> 35969
<OTHER-EXPENSES> 65
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> (2842)
<INCOME-TAX> (284)
<INCOME-CONTINUING> (2558)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2558)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> 0
</TABLE>
