U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______.
Commission File Number 0-16376
TIMBERLINE SOFTWARE CORPORATION
(Name of small business issuer in its charter)
Oregon 93-0748489
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9600 S.W. Nimbus Avenue, Beaverton, Oregon 97008
(Address of principal executive offices) (Zip code)
(503) 626-6775
Issuer's telephone number
Check whether the issuer (1) 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 November 7, 1997, approximately 6,977,345 shares of common
stock of the registrant were outstanding after giving effect to a
five-for-four stock split declared by the registrant's Board of
Directors to shareholders of record on October 31, 1997.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [x]
TIMBERLINE SOFTWARE CORPORATION
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheets, September 30, 1997 and
December 31, 1996 .............................. 3
Condensed statements of operations for the three
months ended September 30, 1997 and 1996 ....... 4
Condensed statements of operations for the nine
months ended September 30, 1997 and 1996 ....... 5
Condensed statements of cash flows for the nine
months ended September 30, 1997 and 1996 ....... 6
Notes to condensed financial statements .......... 7
Item 2. Management's Discussion and Analysis or
Plan of Operation .............................. 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ..................15
SIGNATURES ..................................................16
EXHIBIT INDEX ...............................................17
PART I. Financial Information
Item 1. Financial Statements
TIMBERLINE SOFTWARE CORPORATION
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
- ----------------------------------------------------------------
<TABLE><CAPTION>
September 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 1,480,268 $ 3,128,703
Temporary investments 6,893,510 1,447,521
Accounts receivable, less allowance
for doubtful accounts
(September 30, 1997, $161,139;
December 31, 1996, $178,674) 3,993,981 3,693,679
Other receivables 284,873 156,839
Inventories 250,416 308,751
Other current assets 869,219 905,545
----------- -----------
Total current assets 13,772,267 9,641,038
----------- -----------
Property and equipment 10,897,293 7,236,600
Less accumulated depreciation
and amortization 4,785,656 3,969,984
----------- -----------
Property and equipment - net 6,111,637 3,266,616
----------- -----------
Capitalized software costs - net 1,473,822 1,110,023
Purchased software - net 703,527 602,774
Investments - 3,319,147
Other assets 99,743 102,629
----------- -----------
Total $22,160,996 $18,042,227
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 702,552 $ 763,645
Accrued commissions/royalties 91,054 193,915
Deferred revenues 7,198,234 5,962,047
Accrued employee expenses 1,399,801 1,143,052
Other current liabilities 303,964 253,627
----------- -----------
Total current liabilities 9,695,605 8,316,286
----------- -----------
Accrued rent expense 50,481 65,124
Deferred income taxes 963,000 746,000
Shareholders' equity:
Common stock, without par value
authorized, 8,000,000 shares;
issued:
September 30, 1997; 6,957,376 shares
December 31, 1996; 6,831,907 shares 371,060 364,368
Additional paid in capital 2,783,965 2,282,129
Retained earnings 8,267,606 6,268,320
Unrealized holding gain on
investments 29,279 -
----------- -----------
Total shareholders' equity 11,451,910 8,914,817
----------- -----------
Total $22,160,996 $18,042,227
=========== ===========
</TABLE>
See notes to condensed financial statements.
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net revenue $8,795,292 $6,945,025
---------- ----------
Cost and expenses:
Cost of revenue 840,466 875,833
Customer support 1,784,575 1,743,707
Product development 1,855,321 1,574,278
Sales and marketing 1,508,713 1,546,550
General and administrative 1,169,296 970,609
---------- ----------
Total cost and expenses 7,158,371 6,710,977
---------- ----------
Income from operations 1,636,921 234,048
Other income 114,365 105,967
---------- ----------
Income before income taxes 1,751,286 340,015
Provision for income taxes 514,000 2,000
---------- ----------
Net income $1,237,286 $ 338,015
========== ==========
Earnings per share $ .17 $ .05
========== ==========
Weighted average common shares
outstanding 7,238,901 7,115,259
========== ==========
See notes to condensed financial statements.
</TABLE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net revenue $24,527,956 $20,436,348
----------- -----------
Cost and expenses:
Cost of revenue 2,671,372 2,540,034
Customer support 4,939,315 4,737,419
Product development 5,397,504 3,881,096
Sales and marketing 4,577,334 4,644,596
General and administrative 3,426,424 2,973,835
----------- -----------
Total cost and expenses 21,011,949 18,776,980
----------- -----------
Income from operations 3,516,007 1,659,368
Other income 322,034 301,055
----------- -----------
Income before income taxes 3,838,041 1,960,423
Provision for income taxes 1,286,000 627,000
----------- -----------
Net income $ 2,552,041 $ 1,333,423
=========== ===========
Earnings per share $ .36 $ .19
=========== ===========
Weighted average common shares
outstanding 7,176,284 7,041,504
=========== ===========
See notes to condensed financial statements.
</TABLE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net cash provided by
operating activities $4,960,107 $2,424,605
---------- ----------
Cash flows from investing
activities:
Payments for property,
equipment and purchased software (3,810,660) (1,520,056)
Capitalized software costs (663,680) (918,619)
Proceeds from investments 2,410,000 4,600,000
Purchase of investments (4,507,562) (7,576,726)
Other 7,587 1,050
---------- ----------
Net cash used in
investing activities (6,564,315) (5,414,351)
---------- ----------
Cash flows from financing
activities:
Proceeds from issuance of
common stock 508,528 789,119
Dividends paid (552,755) (461,277)
---------- ----------
Net cash provided by (used in)
financing activities (44,227) 327,842
---------- ----------
Net decrease in cash
and cash equivalents (1,648,435) (2,661,904)
Cash and cash equivalents,
beginning of the year 3,128,703 3,856,533
---------- ----------
Cash and cash equivalents,
end of period $1,480,268 $1,194,629
========== ==========
Supplemental information:
Cash paid during the period for
income taxes $1,044,567 $1,069,502
========== ==========
See notes to condensed financial statements.
</TABLE>
TIMBERLINE SOFTWARE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ----------------------------------------------------------------
1. Condensed financial statements
Certain information and note disclosures normally included
in financial statements prepared in accordance with
generally accepted accounting principles have been omitted
from these condensed financial statements. These condensed
financial statements should be read in conjunction with the
financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1996.
The balance sheet at December 31, 1996 has been condensed
from the audited balance sheet as of that date. The results
of operations for the three and nine month periods ended
September 30, 1997 and 1996 are not necessarily indicative
of the operating results for the full year.
In the opinion of management, all adjustments, consisting of
normal recurring adjustments, have been made to present
fairly the Company's financial position at September 30,
1997 and the results of its operations and its cash flows
for the three and nine month periods ended September 30,
1997 and 1996.
2. Recent accounting pronouncements
In February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share," which establishes new
standards for computing and presenting earnings per share
(EPS) to entities having publicly held common stock or
potential common stock. SFAS No. 128 replaces the
presentation of a primary EPS with a basic EPS, requires
dual presentation of basic and diluted EPS on the face of
the income statement for entities with complex capital
structures, and requires additional disclosures regarding
the computation of EPS.
SFAS No. 128 will require changes in the computation and
presentation of the Company's EPS commencing with the
financial statements for the year ending December 31, 1997.
Earlier application of this Statement is not permitted.
However, if the Company computed its EPS for the three and
nine month periods ended September 30, 1997 and 1996 in a
manner consistent with SFAS No. 128, the pro forma amounts
would not be materially different from the EPS presently
reported.
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," which established standards for
reporting comprehensive income and its components. This
additional reporting requirement will become effective for
the Company during the year ending December 31, 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information,"
which established standards for disclosure about operating
segments in annual financial statements and selected
information about those operating segments in interim
financial statements. It also established standards for
related disclosures about products and services, geographic
areas, and major customers. The new standard will become
effective for the Company during the year ending
December 31, 1998. The Company believes that any segment
information required to be disclosed under SFAS No. 131 will
provide expanded disclosure of operating statement and
balance sheet items. The Company had not yet completed its
analysis on the specific additional information that will be
required under this new standard.
3. Investments
During the second quarter of 1997, the Company transferred
its investments from the held-to-maturity category to the
available-for-sale category because these investments may
not be held to maturity. The Company intends to use these
investments to finance a portion of its new corporate
offices and for other purposes as additional funds are
needed.
4. Income taxes
In August 1997, legislation was enacted which extended the
federal research and development tax credit from June 1,
1997 through June 30, 1998. Also in 1997, the state of
Oregon reduced its corporate excise tax for 1997 due to a
state budget surplus. As a result, the Company lowered its
estimate of the effective income tax rate for 1997 from 37
percent to 34 percent. This reduction is reflected in the
income tax provision for the three and nine month periods
ended September 30, 1997.
In August 1996, legislation was enacted which renewed the
federal research and development tax credit for the period
July 1, 1996 through May 31, 1997. As a result of this
legislation and the recording of research and development
tax credits which were not previously recognized, the
Company revised its estimated effective income rate for 1996
from 39 percent to 32 percent. The effect of this revision
was reflected in the income tax provision for the three
months ended September 30, 1996 which virtually eliminated
the income tax expense for that interim period.
5. Subsequent event - stock split
On October 21, 1997, the Company's Board of Directors
approved a five-for-four stock split to shareholders of
record on October 31, 1997. All common shares and per share
amounts in these condensed financial statements have been
retroactively adjusted to reflect this change.
6. Reclassifications
Certain reclassifications have been made in the 1996
financial statements to conform to the 1997 presentation.
Item 2. Management's Discussion and Analysis or Plan of
Operation
TIMBERLINE SOFTWARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ----------------------------------------------------------------
Results of Operations
- ---------------------
NET REVENUE. Net revenue increased 27 percent to $8,795,000 in
the three months ended September 30, 1997 compared to $6,945,000
for the comparable period in 1996. A major component of net
revenue, software sales, increased 51 percent to $4,715,000 in
the 1997 period compared to $3,126,000 in the 1996 period.
Software sales increased in all of the Company's current product
lines. Construction software sales increased 59 percent in 1997
over the same period in 1996, primarily due to the continuing
increase in sales of Construction Gold Extended and Construction
Gold Standard. Estimating software sales increased 43 percent
due to increased sales of Precision Estimating Standard and the
initial release of Precision Estimating Extended at the end of
September 1997. Property management software sales increased 80
percent due to sales of Gold Collection for Property Management,
which was released at the end of March 1997. Total software
sales represented 54 percent of net revenue for the three months
ended September 30, 1997 compared to 45 percent for the same
period in 1996. The Company believes that software sales, as a
percentage of net revenue, will remain at the current 1997 level
for the last three months of 1997.
Service fees from maintenance, support, training and consulting,
which represented 45 percent and 50 percent of net revenue for
the three months ended September 30, 1997 and 1996, respectively,
increased 14 percent to $3,933,000 in the 1997 period from
$3,452,000 for the comparable period in 1996. The increase in
service fees was principally due to a significant increase in
maintenance, support, and consulting fees as a result of
increased software sales of Construction Gold Extended and
Construction Gold Standard. This increase was partially offset
by a reduction in classroom training fees. The Company
anticipates that service fees will continue to represent a
significant, but not necessarily an increasing, percentage of net
revenue.
Net revenue increased 20 percent to $24,528,000 in the nine
months ended September 30, 1997 compared to $20,436,000 for the
comparable period in 1996. Software sales increased 27 percent
to $12,766,000 in the 1997 period compared to $10,061,000 in the
1996 period. Software sales increased in all of the Company's
current product lines. Construction software sales increased 33
percent in 1997 over the same period in 1996, primarily due to
the continuing increase in sales of Construction Gold Extended
and Construction Gold Standard. Estimating software sales
increased 27 percent due to increased sales of Precision
Estimating Standard and the initial release of Precision
Estimating Extended at the end of September 1997. Property
management software sales increased 52 percent due to sales of
Gold Collection for Property Management, which was released at
the end of March 1997. Total software sales represented 52
percent of net revenue for the nine months ended September 30,
1997 compared to 49 percent for the comparable period in 1996.
Service fees from maintenance, support, training and consulting,
which represented 46 percent and 48 percent of net revenue for
the nine months ended September 30, 1997 and 1996, respectively,
increased 15 percent to $11,180,000 in the 1997 period from
$9,762,000 for the comparable period in 1996. The increase in
service fees was principally due to a significant increase in
maintenance and support fees as a result of increased software
sales of Construction Gold Extended and Construction Gold
Standard.
COST OF REVENUE. Cost of revenue, as a percentage of net
revenue, was 10 percent for the three months ended September 30,
1997 compared to 13 percent for the comparable period in 1996.
For the nine months ended September 30, 1997 and 1996, cost of
revenue, as a percentage of net revenue, was 11 percent and 12
percent, respectively. The decrease in this percentage was
primarily due to lower costs associated with software sales.
OPERATING EXPENSES. Operating expenses increased eight percent
to $6,318,000 for the three months ended September 30, 1997 from
$5,835,000 for the comparable period in 1996. For the nine
months ended September 30, 1997, operating expenses increased 13
percent to $18,341,000 from $16,237,000 for the same period in
1996.
Customer support expenses increased two percent to $1,785,000 for
the three months ended September 30, 1997 from $1,743,000 for the
same period in 1996. For the nine months ended September 30,
1997, customer support expenses increased four percent to
$4,939,000 from $4,737,000 for the comparable period in 1996.
The increase was primarily due to increased personnel and
equipment costs required to handle the increased demand for
support and consulting services resulting from the increased
sales of Construction Gold Extended and Construction Gold
Standard. The Company anticipates customer support expenses to
continue to increase for the remainder of 1997 in order to meet
the demands of its customers and to maintain a high quality level
of service.
Product development expenses increased 18 percent to $1,855,000
for the three months ended September 30, 1997 from $1,574,000 for
the comparable period in 1996. The increase was primarily due to
increased personnel costs, additional personnel to develop on-
line help and training materials for the new software products,
and an increase in outside developers' costs. This was partially
offset by an increase in the amount of capitalized software
development costs. Capitalized software development costs, which
reduces the amount of product development expenses recognized,
amounted to $318,000 for the three months ended September 30,
1997 compared to $47,000 for the same period in 1996. For the
nine months ended September 30, 1997, product development costs
increased 39 percent to $5,398,000 from $3,881,000 for the same
period in 1996. The increase in product development expenses
resulted from a combination of the same factors noted above for
the three month period and a reduction in the amount of
capitalized software development costs as compared to the same
period in 1996. Capitalized software development costs declined
to $664,000 in 1997 from $919,000 in the comparable period in
1996. The Company anticipates some additional capitalized
software development costs during the last three months of 1997.
Sales and marketing expenses decreased two percent to $1,509,000
in the three months ended September 30, 1997 from $1,547,000 for
the comparable period in 1996. For the nine months ended
September 30, 1997, sales and marketing expenses decreased one
percent to $4,577,000 from $4,645,000 in the same period for
1996. As a percentage of net revenue, sales and marketing
expenses decreased to 17 percent for the three months ended
September 30, 1997 from 22 percent in the same period in 1996.
For the nine months ended September 30, 1997 and 1996, the
percentages were 19 percent and 23 percent, respectively. The
decrease in expenses was primarily due to lower trade show
expenses, travel costs, and dealer-related expenses.
General and administrative expenses increased 20 percent to
$1,169,000 for the three months ended September 30, 1997 from
$971,000 for the comparable period in 1996. For the nine months
ended September 30, 1997, general and administrative expenses
increased 15 percent to $3,426,000 from $2,974,000 for the same
period in 1996. As a percentage of net revenue, these expenses
remained constant at approximately 14 percent for the three month
and nine month periods ended September 30, 1997 and 1996. The
increase in expenses was primarily due to an increase in
equipment-related costs.
PROVISION FOR INCOME TAXES. As a percentage of income before
income taxes, the provision for income taxes was 29 percent and
less than one percent for the three months ended September 30,
1997 and 1996, respectively. The tax provision in the 1996
period was virtually eliminated due to the enactment by Congress
of legislation which reinstated the federal research and
development credit from July 1, 1996 through May 31, 1997 and the
recording of previously unrecognized research and development tax
credits. Congress subsequently enacted legislation which
extended the federal research and development credit from June 1,
1997 through June 30, 1998. Also in 1997, the state of Oregon
decreased the corporate excise rate for 1997 due to a state
budget surplus. The effect of these events was to reduce the
Company's estimated effective income tax rate for both years from
the Company's previous estimate.
For the nine months ended September 30, 1997 and 1996, the
provison for income taxes, as a percentage of income before
income taxes, was 34 percent and 32 percent, respectively. These
provisions represent the Company's revised estimated income tax
rate for the respective years, based on the factors noted above.
Capital Resources and Liquidity
- -------------------------------
During the nine months ended September 30, 1997, net cash
provided by operations was $4,960,000 compared to $2,425,000 for
the same period in 1996. Working capital has increased to
$4,077,000 at September 30, 1997 from $1,325,000 at December 31,
1996, primarily due to the increase in cash, cash equivalents,
and temporary investments. Cash, cash equivalents, and temporary
investments, which represented 38 percent of total assets at
September 30, 1997, increased $3,798,000 since December 31, 1996,
primarily due to cash provided by operations and a
reclassification of investments from long-term to short-term.
Investments were previously classified in the held-to-maturity
category, and accordingly, many of the investments were
classified as long-term investments, based on their maturity
date. However, the investments have been transferred into the
available-for-sale category and have been classified as current
assets. Net accounts receivable at September 30, 1997 increased
$300,000 since December 31, 1996. This increase was primarily
due to an increase in billings for service fees in September 1997
compared to December 1996 and an increase in amounts owed from a
national account and a software distributor.
Net property and equipment and purchased software increased
$2,946,000 since December 31, 1996. Exclusive of depreciation
and amortization expense, which amounted to $1,024,000, property
and software purchases amounted to $3,811,000 during the nine
months ended September 30, 1997. Of this amount, over $3,000,000
was expended for acquisition of land for the site of the
Company's new corporate offices and initial planning, design and
excavation costs for such offices. The remaining costs were
primarily for the purchase of new computer equipment, and the
upgrade of the telecommunication system. Expenditures for
equipment and software are expected to be funded through current
cash balances and cash provided by operations. The construction
of the new corporate offices will be funded through a combination
of existing cash and investment balances, and construction loans.
Net capitalized software costs increased $364,000 since
December 31, 1996 due primarily to the capitalization of software
development costs related to the Gold Collection for Property
Management software released in March 1997, Precision Estimating
Extended software products released at the end of September 1997
and new construction software products expected to be released in
the fourth quarter of 1997.
Deferred revenues increased $1,236,000 since December 31, 1996
primarily due to increased billings for annual maintenance and
support services. Revenue from annual maintenance and support
service billings are recognized monthly over the term of the
contracts. Accrued employee expenses increased $257,000 since
December 31, 1996 primarily due to accrued profit sharing
expenses.
For the first nine months of 1997, the Company has declared three
regular quarterly cash dividends totaling $553,000, or $.08 per
share, after giving effect to the subsequent five-for-four stock
split (see Note 5 of Notes to Condensed Financial Statements).
All common shares and per share amounts in this report have been
retroactively adjusted to reflect this change. In October 1997,
the Company's Board of Directors declared a regular quarterly
dividend amounting to $.04 per share on a post-split basis. The
Company anticipates continuing to pay quarterly cash dividends.
Forward-Looking Statements
- --------------------------
From time to time, the Company or its representatives have made
or may make forward-looking statements, orally or in writing,
including in this Report. Such forward-looking statements may be
included in, without limitation, press releases, oral statements
made with the approval of an authorized executive officer of the
Company and filings with the Securities and Exchange Commission.
The words or phrases "anticipates," "believes," "expects," "will
continue," "estimates," "projects," or similar expressions are
intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company's forward-looking statements are subject to certain
risks, trends, and uncertainties that could cause actual results
to vary materially from anticipated results, including, without
limitation, the following: delays in new product releases, delays
in acceptance of the Company's products in the marketplace,
failures by the Company's outside vendors to perform as promised,
changes in the software operating systems for which the Company's
products are written or increased competition and changes in
general market conditions.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Form 8-K was filed during the three months ended
September 30, 1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TIMBERLINE SOFTWARE CORPORATION
-------------------------------
(Registrant)
/s/ Thomas P. Cox
Date November 10, 1997 _____________________________
Thomas P. Cox, Senior Vice
President-Finance
(Chief Financial Officer)
16
FORM 10-QSB
Exhibit Index
Exhibit Page
- ------- ----
(27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM TIMBERLINE SOFTWARE CORPORATION'S CONDENSED
FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON
FORM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,480,628
<SECURITIES> 6,893,510
<RECEIVABLES> 4,155,120
<ALLOWANCES> 161,139
<INVENTORY> 250,416
<CURRENT-ASSETS> 13,772,267
<PP&E> 10,897,293
<DEPRECIATION> 4,785,656
<TOTAL-ASSETS> 22,160,996
<CURRENT-LIABILITIES> 9,695,605
<BONDS> 0
<COMMON> 371,060
0
0
<OTHER-SE> 11,080,850
<TOTAL-LIABILITY-AND-EQUITY> 22,160,996
<SALES> 24,527,956 <F1>
<TOTAL-REVENUES> 24,527,956
<CGS> 2,671,372
<TOTAL-COSTS> 13,008,191
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,838,041
<INCOME-TAX> 1,286,000
<INCOME-CONTINUING> 2,552,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,552,041
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
<FN>
<F1> Amount includes revenue from services which is not
separately presented for interim reports.
</FN>
</TABLE>
