<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1998
-------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
---------------------- ------------------
Commission file number 0-9950
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TEAM, INC.
------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 74-1765729
- --------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Hermann Drive, Alvin, Texas 77511
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (281) 331-6154
---------------------------
--------------------------------------
Indicate by checkmark 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
------ ------
On October 8, 1998, there were 7,495,352 shares of the Registrant's common stock
outstanding.
<PAGE> 2
TEAM, INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Consolidated Balance Sheets -- 1
August 31, 1998 and May 31, 1998
Consolidated Statements of Operations -- 2
Three Months Ended
August 31, 1998 and 1997
Consolidated Statements of Cash Flows -- 3
Three Months Ended
August 31, 1998 and 1997
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 6
of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AUGUST 31, MAY 31,
ASSETS 1998 1998
---------------- ---------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,886,000 $ 1,355,000
Accounts receivable, net of allowance for doubtful
accounts of $191,000 and $247,000 8,862,000 9,564,000
Materials and supplies 8,976,000 6,801,000
Prepaid expenses and other current assets 1,297,000 862,000
--------------- ---------------
Total Current Assets 21,021,000 18,582,000
Property, Plant and Equipment:
Land and buildings 9,032,000 6,735,000
Machinery and equipment 14,433,000 11,746,000
--------------- ---------------
23,465,000 18,481,000
Less accumulated depreciation and amortization 12,134,000 11,833,000
--------------- ---------------
11,331,000 6,648,000
Goodwill 3,420,000
Other Assets 2,341,000 1,850,000
--------------- ---------------
Total Assets $ 38,113,000 $ 27,080,000
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 294,000 $ 286,000
Accounts payable 1,248,000 1,416,000
Other accrued liabilities 4,119,000 3,483,000
Current income taxes payable 402,000 348,000
--------------- ---------------
Total Current Liabilities 6,063,000 5,533,000
Long-term Debt and Other Obligations 12,149,000 5,966,000
Stockholders' Equity:
Preferred stock, cumulative, par value $100 per share,
500,000 shares authorized, none issued -- --
Common stock, par value $.30 per share, 10,000,000 shares
authorized, 7,504,652 and 6,093,442 shares issued at
August 31, 1998 and May 31, 1998, respectively 2,251,000 1,828,000
Additional paid-in capital 30,703,000 27,098,000
Accumulated deficit (12,956,000) (13,248,000)
Treasury stock at cost, 9,700 shares (97,000) (97,000)
--------------- ---------------
Total Stockholders' Equity 19,901,000 15,581,000
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 38,113,000 $ 27,080,000
=============== ===============
</TABLE>
See notes to consolidated financial statements.
- 1 -
<PAGE> 4
<TABLE>
<CAPTION>
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
AUGUST 31,
----------------------------------
1998 1997
--------------- ----------------
<S> <C> <C>
Revenues $ 11,368,000 $ 10,229,000
Operating expenses 6,492,000 6,051,000
Selling, general and administrative expenses 4,241,000 3,784,000
Interest 95,000 131,000
--------------- ---------------
Income before income taxes 540,000 263,000
Provision for income taxes 248,000 156,000
--------------- ---------------
Net income $ 292,000 $ 107,000
=============== ===============
Net income per common share:
Basic $ 0.04 $ 0.02
=============== ===============
Diluted $ 0.04 $ 0.02
=============== ===============
Weighted average number of shares outstanding:
Basic 7,192,000 5,795,000
=============== ===============
Diluted 7,485,000 5,870,000
=============== ===============
</TABLE>
See notes to consolidated financial statements.
- 2 -
<PAGE> 5
<TABLE>
<CAPTION>
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
AUGUST 31,
-----------------------------------
1998 1997
--------------- ----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 292,000 $ 107,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 399,000 362,000
Change in assets and liabilities:
(Increase) decrease:
Accounts receivable 1,666,000 (531,000)
Materials and supplies (21,000) (90,000)
Prepaid expenses and other assets (221,000) (134,000)
Increase (decrease):
Accounts payable (359,000) (108,000)
Other accrued liabilities (193,000) 616,000
Income taxes payable 54,000 5,000
--------------- ---------------
Net cash provided by operating activities 1,617,000 227,000
Cash Flows From Investing Activities:
Capital expenditures (661,000) (218,000)
Disposal of property and equipment 5,000
Increase in other assets (319,000) (63,000)
Acquisition of Climax, net of cash and equivalents acquired (6,503,000)
Payments of Climax notes payable at acquisition date (2,897,000)
--------------- ---------------
Net cash used in investing activities (10,380,000) (276,000)
Cash Flows From Financing Activities:
Payments under debt agreements and capital lease obligations (2,629,000) (2,257,000)
Proceeds from issuance of long-term debt 8,695,000
Issuance of common stock 3,228,000 1,881,000
--------------- ---------------
Net cash provided by (used in) financing activities 9,294,000 (376,000)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 531,000 (425,000)
Cash and cash equivalents at beginning of year 1,355,000 1,672,000
--------------- ---------------
Cash and cash equivalents at end of period $ 1,886,000 $ 1,247,000
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 120,000 $ 164,000
=============== ===============
Income taxes paid $ 213,000 $ 152,000
=============== ===============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In connection with the acquisition of Climax Portable Machine Tools, Inc.,
the company issued 200,000 shares of its common stock with an assigned value
of $4.00 per share.
See notes to consolidated financial statements.
- 3 -
<PAGE> 6
TEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Method of Presentation
General
The interim financial statements are unaudited, but in the opinion of
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of results for such
periods. The results of operations for any interim period are not
necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's annual report for the fiscal year
ended May 31, 1998.
2. Dividends
No dividends were paid during the first three months of fiscal 1999 or
1998. Pursuant to the Company's Credit Agreement, the Company may not pay
quarterly dividends without the consent of its senior lender. Future
dividend payments will depend upon the Company's financial condition and
other relevant matters.
3. Sale of Stock
As previously reported, the Company completed the sale of 1,200,000
shares of Team's common stock for $2.75 per share to Houston Post Oak
Partners Ltd. ("Houston Partners") in a private placement transaction.
After the purchase, Houston Partners owned approximately 17% of the
Company's outstanding common shares on a fully diluted basis. Proceeds
from the sale were used to reduce the Company's long-term debt.
4. Acquisition
Effective August 31, 1998, the Company acquired all of the outstanding
capital stock of Climax Portable Machine Tools, Inc., an Oregon
corporation ("Climax"), in exchange for cash in the amount of $6.4 million
and 200,000 newly-issued shares of the Company's common stock, $0.30 par
value per share (the "Common Stock"). Additionally, at the acquisition
date, the Company refinanced the majority of Climax's notes payable in the
amount of $2.9 million. Pursuant to the purchase agreement and based on
the approximate market value of the Common Stock, a value of $4.00 per
share was assigned to the Common Stock issued to the former shareholders
of Climax. The Company also entered into employment agreements with three
of the former shareholders, pursuant to which such persons were granted
options to purchase up to an aggregate of 50,000 shares of Common Stock at
an exercise price of $4.125 per share.
The acquisition was accounted for using the purchase method of
accounting, and accordingly, the consolidated balance sheet as of August
31, 1998 reflects the purchase price, including transaction costs. As the
acquisition was effective August 31, 1998, the consolidated results of
operations for the Company for the three months ended August 31, 1998 do
not include any results for Climax. The purchase price was allocated to
the assets and liabilities of Climax based on their estimated fair values.
Based on preliminary purchase accounting, the goodwill associated with the
Climax acquisition approximated $3.4 million, which is being amortized on
a straight-line basis over forty years.
In order to finance the acquisition of the Climax shares, the Company
closed a credit facility with NationsBank, N.A. of Houston on August 26,
1998 in the amount of $24,000,000. See Note 5.
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<PAGE> 7
The unaudited pro forma consolidated results of operations of the
Company are shown below as if the acquisition had occurred at the
beginning of the fiscal periods indicated. These results are not
necessarily indicative of the results which would actually have occurred
if the purchase had taken place at the beginning of the periods, nor are
they necessarily indicative of future results.
<TABLE>
<CAPTION>
August 31,
-----------------------------------
1998 1997
-------------- ----------------
<S> <C> <C>
Net sales $ 13,698,000 $ 12,996,000
Net income $ 429,000 $ 230,000
Earnings per share:
Basic $ 0.06 $ 0.04
Diluted $ 0.06 $ 0.04
</TABLE>
Climax designs and manufactures portable, metal cutting machine tools
for on-site maintenance and repair purposes.
5. Long-Term Obligations
Long-term obligations consist of:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1998
--------------------------------
<S> <C> <C>
Revolving credit $ 4,000,000 $ 2,500,000
Term notes 6,366,000 1,693,000
Capital lease
obligations 329,000 340,000
Compensation
agreements 1,380,000 1,418,000
Other 368,000 301,000
----------- -----------
12,443,000 6,252,000
Less current portion 294,000 286,000
----------- -----------
Total $ 12,149,000 $ 5,966,000
============ ===========
</TABLE>
Effective August 26, 1998, the Company entered into a new credit
facility with a new primary lender in the amount of $24,000,000. This new
facility is comprised of (i) a $12,500,000 revolving loan, (ii) $9,500,000
in term loans for business acquisitions and (iii) a $2,000,000 mortgage
loan to refinance existing real estate indebtedness. Amounts borrowed
under the revolving credit loan are due August 28, 2001. Amounts borrowed
against the term loans are due August 8, 2003. The revolving credit loan
and term loans bear interest at a marginal rate over the LIBOR rate or
prime rate, depending upon the amount of funded debt to cash flow. The
effective rate on outstanding borrowings under the new agreement is
approximately 7%. At August 31, 1998, $4,000,000 in revolving loans and
$4,500,000 in term loans were outstanding under the facility. The
$2,000,000 mortgage loan to refinance existing real estate indebtedness
has not yet been finalized but is expected to close during the second
quarter. The mortgage loan will bear interest at the same terms as the
revolving credit and term loans. The existing $10,000,000 revolving credit
agreement that was due December 31, 1999, and bore interest at a rate not
to exceed the bank's prime rate plus 0.5 percent, was terminated.
- 5 -
<PAGE> 8
Loans under the Company's bank credit facility are secured by
substantially all of the assets of the Company. The terms of the agreement
require the maintenance of certain financial ratios and limit investments,
liens, leases and indebtedness, among other things. At August 31, 1998,
the Company was in compliance with all credit facility covenants.
6. Earnings Per Share
The following table is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
Three months ended August 31, 1998 Three months ended August 31, 1997
--------------------------------------- --------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net income $ 292,000 7,192,000 $ 0.04 $ 107,000 5,795,000 $ 0.02
Effect of Dilutive Securities:
Options -- 293,000 -- 75,000
---------- ---------- --------- ---------
Diluted EPS:
Net income $ 292,000 7,485,000 $ 0.04 $ 107,000 5,870,000 $ 0.02
========== ========== ========== =========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1998 COMPARED
TO THREE MONTHS ENDED AUGUST 31, 1997
For the three-month period ended August 31, 1998, revenues totaled $11.37
million, a $1.14 million improvement over revenues of $10.23 million reported in
the same period of the prior fiscal year. Four of the Company's five service
lines - hot tapping, leak repair, emissions control, and energy management
services - showed sales gains during the quarter. Emissions control service
revenues continue to exceed prior year revenues indicating further evidence of
the fact that this service line has reached the bottom of its decline.
Gross margins improved from 40.8 percent in the first quarter of fiscal
1998 to 42.9 percent in the first quarter of fiscal 1999. The increase in gross
margin is primarily the result of increased revenues and billing rate
efficiency. Selling, general and administrative expenses of $4.24 million in the
first quarter of fiscal 1999 were $457,000 or 12 percent higher than in the
prior year. This increase in SG&A expenses reflects expenses associated with
uncompleted acquisition candidates as well as an increase in compensation
expenses.
Interest expense of $95,000 in the first three months of fiscal 1999 was 27
percent lower than in the same period of 1998 due to reduced average borrowing
levels. Pre-tax earnings of $540,000 for the first quarter increased from 1998
first quarter pre-tax earnings of $263,000 as a result of the factors discussed
above.
THREE MONTHS ENDED AUGUST 31, 1997 COMPARED
TO THREE MONTHS ENDED AUGUST 31, 1996
For the three-month period ended August 31, 1997, revenues totaled $10.23
million, a modest improvement over revenues of $10.16 million reported in the
same period of the prior fiscal year. Four of the Company's five service lines
hot tapping, leak repair, concrete repair and energy management services -
showed sales gains during the quarter. The emissions control service line was
alone in showing a revenue decline. This market continues to see downward
pricing pressure and customers performing their monitoring
- 6 -
<PAGE> 9
services in-house. As discussed previously, this service line shows evidence in
fiscal 1999 that it has reached the bottom of its decline.
Gross margins declined from 43.7 percent to 40.8 percent from the first
quarter of fiscal 1997 primarily because of a 3 percent increase in operating
expenses. Ordinary compensation and insurance expenses were factors in the
increase. Selling, general and administrative expenses of $3.78 million in the
first quarter of fiscal 1998 were $386,000 or 9 percent lower than in the prior
year. The continuing impact of cost reduction programs previously implemented
has resulted in lower personnel and general expense.
Interest expense of $131,000 in the first three months of fiscal 1998 was
47 percent lower than in the same period of 1997 due to reduced average
borrowing levels. Pre-tax earnings of $263,000 for the first quarter increased
from 1997 first quarter pre-tax earnings of $24,000 as a result of reduced
interest and selling, general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1998, the Company's working capital totaled $14.96 million,
an increase of $1.91 million from working capital of $13.05 million at May 31,
1998. The Company has been able to finance its working capital requirements
primarily through its internally generated cash flow.
As of August 31, 1998, cash and cash equivalents totaled $1.89 million,
increasing $531,000 in the first quarter. This cash increase resulted mainly
from improved collections of accounts receivable. See "Consolidated Statements
of Cash Flows" for additional detail.
Effective August 31, 1998, the company acquired all of the outstanding
capital stock of Climax Portable Machine Tools, Inc., an Oregon corporation
("Climax"), in exchange for cash in the amount of $6.4 million and 200,000
newly-issued shares of the Company's common stock, $0.30 par value per share
(the "Common Stock"). Additionally, at the acquisition date, the Company
refinanced the majority of Climax's notes payable in the amount of $2.9
million. Pursuant to the purchase agreement and based on the approximate market
value of the Common Stock, a value of $4.00 per share was assigned to the
Common Stock issued to the former shareholders of Climax.
In order to finance the acquisition of the Climax shares, the Company
closed a credit facility with NationsBank, N.A. of Houston on August 26, 1998
in the amount of $24,000,000. The new facility is comprised of (i) a
$12,500,000 revolving loan, (ii) $9,500,000 in term loans for business
acquisitions and (iii) a $2,000,000 mortgage loan to refinance existing real
estate indebtedness. Amounts borrowed under the revolving credit loan are due
August 28, 2001. Amounts borrowed against the term loans are due August 8,
2003. The revolving credit loan and term loans bear interest at a marginal rate
over the LIBOR rate or prime rate, depending upon the amount of funded debt to
cash flow. The effective rate on outstanding borrowings under the new agreement
is approximately 7%. At August 31, 1998, $4,000,000 in revolving loans and
$4,500,000 in term loans were outstanding under the facility. The $2,000,000
mortgage loan to refinance existing real estate indebtedness has not yet been
finalized but is expected to close during the second quarter. The mortgage loan
will bear interest at the same terms as the revolving credit and term loans.
The existing $10,000,000 revolving credit agreement that was due December 31,
1999 and bore interest at a rate not to exceed the bank's prime rate plus 0.5
percent, was terminated.
At August 31, 1998, the Company's current and long-term debt and other
obligations were $12.44 million compared to $6.25 million at May 31, 1998. Of
this amount, $8.5 million was owed to the Company's new primary bank lender.
- 7 -
<PAGE> 10
Management expects that capital expenditures which are intended to provide
for normal replacement of assets and new assets to support planned growth will
approximate $2.0 million for fiscal 1999. All planned capital expenditures are
discretionary and will be made based on available funds.
In June 1998, the Company completed the sale of 1,200,000 shares of Team's
common stock for $2.75 per share to Houston Post Oak Partners ("Houston
Partners") in a private placement transaction. Houston Partners then owned
approximately 17% of the Company's outstanding common shares on a fully diluted
basis. Proceeds from the sale were used to reduce the Company's long-term debt.
YEAR 2000 COMPLIANCE
The Company is currently engaged in a comprehensive project to upgrade its
information, technology, and manufacturing facilities computer software to
programs that will address the Year 2000 problem. Many of the Company's systems
include new hardware and packaged software recently purchased from large
vendors who have represented that these systems are already Year 2000
compliant.
The Company will utilize both internal and external resources to reprogram
or replace and test all of its software for Year 2000 compliance, and the
Company expects to complete the project in early 1999 leaving adequate time to
assess and correct any significant issues that may materialize. The total cost
to the Company of these activities is expected to be between $500,000 and
$600,000. The cost is being funded through operating cash flows. The costs and
the date on which the Company plans to complete the Year 2000 modification and
testing processes are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third parties and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ from these plans. The Company currently does not have a
contingency plan for the Year 2000.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Certain forward-looking information contained herein is being provided in
accordance with the provisions of the Private Securities Litigation Reform Act.
Such information is subject to certain assumptions and beliefs based on current
information known to the Company and is subject to factors that could result in
actual results differing materially from those anticipated in the
forward-looking statements contained herein. Such factors include domestic and
international economic activity, interest rates, market conditions for the
Company's customers, regulatory changes and legal proceedings, and the
Company's successful implementation of its internal operating plans.
Accordingly, there can be no assurance that the forward-looking statements
contained herein will occur or that objectives will be achieved.
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
The Company filed one report on Form 8-K during the quarter ended August
31, 1998.
(i) On June 8, 1998, the Company filed a Form 8-K reporting on the
letter agreement with Houston Post Oak Partners, Ltd. providing
that Houston Post Oak Partners, Ltd. agreed to purchase 1,200,000
shares of the Company's common stock for $2.75 per share, for an
aggregate
- 8 -
<PAGE> 11
consideration of $3,300,000. In addition, in accordance with the
Company's Bylaws, the Board of Directors appointed Mr. Louis A.
Waters, the sole general partner for Houston Post Oak Partners,
Ltd., as a Director of the Company.
(ii) The Company reported the following financial information on Form
8-K:
Not applicable
- 9 -
<PAGE> 12
SIGNATURE
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 thereto duly authorized.
TEAM, INC
(Registrant)
Date: October 15, 1998
/s/ WILLIAM A. RYAN
-------------------------------------
William A. Ryan
Chief Executive Officer and Director
/s/ TED W. OWEN
------------------------------------
Ted W. Owen, Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
- 10 -
<PAGE> 13
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES OF TEAM, INC. AND
SUBSIDIARIES FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 1,886,000
<SECURITIES> 0
<RECEIVABLES> 9,053,000
<ALLOWANCES> 191,000
<INVENTORY> 8,976,000
<CURRENT-ASSETS> 21,021,000
<PP&E> 23,465,000
<DEPRECIATION> 12,134,000
<TOTAL-ASSETS> 38,113,000
<CURRENT-LIABILITIES> 6,063,000
<BONDS> 12,149,000<F1>
0
0
<COMMON> 2,251,000
<OTHER-SE> 17,650,000
<TOTAL-LIABILITY-AND-EQUITY> 38,113,000
<SALES> 0
<TOTAL-REVENUES> 11,368,000
<CGS> 0
<TOTAL-COSTS> 6,492,000
<OTHER-EXPENSES> 4,241,00
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,000
<INCOME-PRETAX> 540,000
<INCOME-TAX> 248,000
<INCOME-CONTINUING> 292,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292,000
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
<FN>
<F1>Includes $1,380,000 for compensation accruals of former employees.
</FN>
</TABLE>
