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 August 31, 1995
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 0-3997
GERIATRIC & MEDICAL COMPANIES, INC.
(Exact name of registrant as specified in the charter)
Delaware 23-1713341
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
5601 Chestnut Street, Philadelphia, Pennsylvania 19139
(Address of principal executive offices) (zip code)
(215) 476-2250
Registrant's telephone number, including area code
N/A
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
On September 29, 1995, there were 15,406,011 shares of common stock,
$.10 par value, outstanding.
GERIATRIC & MEDICAL COMPANIES,
INC. AND SUBSIDIARIES
INDEX
Part I Financial Information Page
Item 1 Financial Statements
Consolidated Balance Sheets ---
August 31, 1995 (unaudited)
and May 31, 1995 3
Consolidated Statements of
Operations (unaudited) ---
Three months ended August 31, 1995
and August 31, 1994 4
Consolidated Statements of
Cash Flows (unaudited) ---
Three months ended August 31, 1995
and August 31, 1994 5
Notes to Consolidated Financial Statements 6-9
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 10-14
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 15
Signature 16
Exhibit 27 - Article 5 FDS 17
2
PART I FINANCIAL INFORMATION
ITEM 1 GERIATRIC & MEDICAL COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PAR VALUES AND SHARES)
<TABLE>
<S> <C> <C>
August 31, May 31,
1995 1995
ASSETS (Unaudited)
Current Assets:
Cash $ 560 $ 3,368
Restricted cash 317 715
Patients' funds 1,653 1,388
Accounts receivable, net of allowance
of $8,083 at August 31, 1995 and
$7,733 at May 31, 1995 36,113 25,672
Other receivables, net of allowance
of $975 5,856 5,919
Prepaids and other assets 5,252 6,622
Inventories 4,353 5,154
Due from third-party payors, net of
allowance of $3,734 at August 31,
1995 and $3,391 at May 31, 1995 13,555 13,948
Total current assets 67,659 62,786
Property and equipment:
Land 3,702 3,702
Building and improvements 100,089 99,971
Equipment and fixtures 38,598 38,299
Construction-in-progress 6,988 5,259
149,377 147,231
Less accumulated depreciation 61,240 59,293
88,137 87,938
Other noncurrent assets:
Restricted cash 2,912 3,021
Investments in joint ventures 385 385
Goodwill net of accumulated amortization
of $394 at August 31, 1995 and
$359 at May 31, 1995 2,532 2,567
Notes and other receivables 9,680 11,132
Deferred charges and other, net of
amortization of $2,958 at August 31,
1995 and $2,891 at May 31, 1995 10,163 10,415
25,672 27,520
$ 181,468 $ 178,244
August 31 May 31,
1995 1995
LIABILITIES (Unaudited)
Current Liabilities:
Current portion of long-term debt and
subordinated debentures $ 2,924 $ 2,906
Accounts payable 25,291 25,297
Accrued expenses 11,063 10,151
Total current liabilities 39,278 38,354
Other long-term liabilities 3,090 3,090
Long-term debt 121,796 120,660
Subordinated debentures 1,000 1,000
Deferred gains 492 492
Commitments and contingencies
STOCKHOLDERS'EQUITY (DEFICIT)
Preferred stock, $.10 par, authorized
15,000,000 shares; none were issued
or outstanding - -
Common stock, $.10 par, authorized
30,000,000 shares in 1995 and 1994;
issued and outstanding 15,244,261 as of
August 31, 1995 and May 31, 1995 1,524 1,524
Capital in excess of par value 14,650 14,643
Accumulated deficit (362) (1,519)
15,812 14,648
$ 181,468 178,244
3
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per common share)
(Unaudited)
Three Months Ended
August 31,
1995 1994
Operating Revenues, net $ 49,409 $ 45,975
Expenses:
Operating expenses 41,605 39,105
Depreciation and amortization 2,241 2,078
Interest expense, net 2,982 2,720
Provision for costs on sale
of accounts receivable 1,075 1,152
47,903 45,055
Income before income taxes 1,506 920
Income taxes 349 180
Net Income $ 1,157 $ 740
Earnings per common share $ 0.08 $ 0.05
Average common shares
outstanding 15,244 15,179
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 1995 AND AUGUST 31, 1994
(IN THOUSANDS)
(UNAUDITED)
1995 1994*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,157 $ 740
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Provision for uncollectible accounts 1,164 1,085
Depreciation and amortization 2,241 2,078
Other items 195 153
Changes in assets and liabilities,
net of effects from acquisitions:
Increase in patients' funds (265) (1)
Increase in accounts receivable (11,605) (1,110)
Decrease in other receivables 63 432
(Increase) decrease in prepaids
and other assets and inventories 2,171 (244)
(Increase) decrease in net amounts due
from third party payors 393 (11)
Increase (decrease) in accounts payable
and accrued expenses 906 (2,515)
Net cash (used in) provided by
operating activities (3,580) 607
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (225) (721)
Capital expenditures financed by construction
and property improvement funds (1,809) (806)
Decrease in notes and other receivables 1,454 158
Acquisitions of ambulance companies,
net of cash acquired - (232)
Other investing activities, net - 194
Net cash used in investing activities (580) (1,407)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,809 861
Repayment of debt (794) (1,935)
Decrease in restricted cash 507 1,668
Expenditures for deferred charges (170) (446)
Proceeds from issuance of common stock - 16
Net cash provided by financing activities 1,352 164
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,808) (636)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,368 927
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 560 $ 291
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,923 $ 3,891
Income taxes $ 123 $ 37
SUPPLEMENTAL SCHEDULE OF NONCASH ITEMS:
Assets acquired under capital leases $ 140 $ -
Acquisitions of ambulance companies:
Fair value of assets acquired $ - $ 646
Cash paid and debt issued $ - $ (626)
Liabilities assumed $ - $ 20
* Reclassified for comparative purposes
GERIATRIC & MEDICAL COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principles of Consolidation and Presentation:
In the opinion of Management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present
fairly the financial position as of August 31, 1995 and May 31,
1995, and the results of operations for the three months ended
August 31, 1995 and August 31, 1994 and changes in cash flows for
the three months ended August 31, 1995 and August 31, 1994. These
financial statements should be read in conjunction with Geriatric
& Medical Companies, Inc.'s (the "Company") annual report filed
with the Securities and Exchange Commission for the year ended May
31, 1995. Results of operations for the three months ended August
31, 1995 and August 31, 1994 are not necessarily indicative of
results of operations expected for the full year.
2. Accounts Receivable:
Effective November 4, 1993, the Company entered into a three year
$25,000,000 accounts receivable sale agreement with recourse with
a financial institution, retiring its previous arrangement. The
Company may sell, on a continuing basis, up to $25,000,000 of
certain qualifying accounts receivable. The Company initially
receives, net of reserves, approximately 80% of accounts receivable
submitted. This transaction has been accounted for as a sale under
Financial Accounting Standards Board Statement No. 77 guidelines
but may be treated as a financing (borrowing) transaction for
Medicare/Medicaid purposes.
Under the terms of the agreement, the Company will pay program
costs at 9.84% on the outstanding receivables sold. During the
three month period ended August 31, 1995 and 1994, the Company sold
approximately $27,830,000 and $26,777,000, respectively, of
certain qualifying accounts receivables. As of August 31, 1995 and
1994, the balance of the receivables submitted for sale was
approximately $18,346,000 and $17,591,000 of which approximately
$14,677,000 and $14,073,000 were funded. The unfunded portion is
included in other receivables on the balance sheets.
In May 1994, the Company entered into an agreement to sell certain
long-term receivables due from third-party payors. The program
costs charged are 9.75% of the outstanding receivables sold. The
maximum amount of cash available under this agreement is
$5,000,000. During the three month period ended August 31, 1995
and 1994, the Company sold approximately $2,000,000 and $928,000
of certain qualifying accounts receivables. As of August 31, 1995
and 1994 the balance of the receivables submitted for sale was
approximately $2,150,000 and $1,555,000, respectively.
For the three months ended August 31, 1995 and 1994, the Company
has recognized a provision for costs on sale of accounts receivable
of $1,075,000 and $1,152,000 respectively. The provision for costs
on sale of accounts receivable consists of : (A) program and other
costs incurred on receivables sold and (B) servicing costs relating
to the collection of receivables sold. Under the sale agreement,
the Company continues and is required to service the accounts
receivable sold.
3. Commitments and Contingencies:
Geriatric & Medical Companies, Inc. (the "Company") was named a
defendant, together with GMS Management, Inc., and various current
and former officers of the Company, in a class action suit which
was filed in September, 1992, in the United States District Court
for the Eastern District of Pennsylvania in Philadelphia. The
plaintiff class alleged that, among other things, various reports
and press releases issued by the Company misrepresented or omitted
adverse material facts concerning various matters relating to the
Company and its affairs. The plaintiff class did not seek a
specified sum other than "to pay to plaintiff and to all members of
the class damages in an amount to be proven at trial, with interest
thereon." The jury returned a verdict on Friday, June 9, 1995,
resulting in no liability on five of the six alleged
misrepresentations or omissions set forth in the plaintiff's
complaint. The jury found in favor of the plaintiff class with
respect to the remaining alleged omission relating to the criminal
investigation conducted by the Pennsylvania Attorney General.
Based on the findings of the jury, the court entered judgment of
$.20 per share in damages for each share of the Company's common
stock purchased by a class member during the period March 1, 1992
to September 2, 1992. The Company believes that damages in the
aggregate, calculated pursuant to the judgment will not exceed
$350,000, exclusive of costs, pre and post judgment interest and
other charges which may apply.
As a result of the jury's findings, the primary insurer of the
individual defendants, which had entered into a Funding Agreement
under which the insurer had promised to pay 60% of the legal fees
and other expenses associated with the defense of this suit, after
the retention amount of $250,000 had been paid, sent a letter
stating that it was terminating the Funding Agreement.
Accordingly, the insurer has declined to participate in the payment
of any part of the judgment or additional costs and fees and
expenses to be incurred in this matter and could seek a repayment
of advances already made. The Company intends to pursue its rights
under its insurance policies and to enforce the Funding Agreement
previously entered into with the insurance company. All parties
have filed post trial motions in connection with this judgment.
Life Support Ambulance, Inc. ("LSA"), a subsidiary of the Company,
received a notice of suspension of payments relating to Medicare
billings submitted by LSA to its Medicare intermediary effective
April 6, 1995. The suspension was imposed because the intermediary
had received evidence that prior payments made to LSA may not have
been billed correctly. The intermediary has not yet quantified the
nature of the alleged deficiency in billing procedures nor the
amount for which LSA may have improperly billed Medicare. In
connection therewith, the Office of the Inspector General has
issued a search warrant and seized certain records of LSA. LSA
believes that it has operated, at all times, in substantial
compliance with all provisions required by Medicare relating to
reimbursement for services. On August 11, 1995, LSA reached an
agreement with its Medicare intermediary whereby Medicare will
retain, until resolution of the issues amounts it is currently
holding, approximately $3,100,000 and 25% of future billings
processed. In connection with the agreement, Geriatric & Medical
Companies, Inc. has agreed to guarantee the payment by LSA of up to
$5,000,000 of any finally determined overpayments. It is not
possible to determine at the present time the length of the
suspension or whether such suspension will have a material adverse
effect on the operations or the financial condition of the Company.
On May 19, 1995, the U.S. Attorney for the Eastern District of
Pennsylvania delivered a draft complaint to the Company which
alleges that Healthcare Hospitality Services, Inc. ("HCHS"), a
subsidiary of the Company, failed to recommend adequate nutritional
requirements to three residents of a nursing home facility (the
"Facility") previously managed by another subsidiary of the
Company. The draft complaint contains a further allegation that
HCHS billed Medicare and state medical assistance programs for
reimbursement for nutritional services which were not provided to
such residents. The U.S Attorney has invited the Company to
discuss a possible resolution of this matter before the filing of
such complaint in federal district court. The Company has had
preliminary discussions with the U.S. Attorney and believes that
this matter may be settled prior to the filing of such complaint by
the payment of an as of yet unspecified amount, with no admission
of wrongdoing. Although the outcome of this matter can not be
predicted, the Company denies any wrongdoing and is prepared to
vigorously defend this action should the complaint be filed. The
Company's management agreement with the Facility provides that the
Facility indemnify and hold the Company harmless with respect to
claims such as that alleged by the U.S. Attorney. However, it is
unclear whether the Facility has or would have the funds necessary
to provide such indemnification.
On or about June 6, 1995, an officer of HCHS was served with a
subpoena issued by the Attorney General of the Commonwealth of
Pennsylvania, relating to the nutritional care provided to
residents of the Facility. In addition, the Attorney General has
subpoenaed certain records of the Company. It is the belief of
counsel for the Company that such subpoena results from the same
facts surrounding the operations of the Facility as are alleged in
the draft complaint delivered to the Company by the U.S. Attorney,
as discussed above. At the present time, it is unclear as to what
action, if any, the State Attorney General intends to take with
respect to the Company's management of and other involvement with
this Facility.
The Company's subsidiary UHCS reached an agreement with the United
States Attorney for the Eastern District of Pennsylvania regarding
its joint ventures and management arrangements whereby the Company
paid $320,000 in Fiscal, 1995 and will pay $340,000 in Fiscal, 1996
and $440,000 in Fiscal, 1997. The Company has had negotiations and
anticipates settling this with the Commonwealth of Pennsylvania.
The Company is involved in routine government inquiries, audit
surveys and administrative proceedings concerning its activities
and operations. The Company is also involved in various claims and
legal actions arising in the ordinary course of business. The
Company believes that the outcome of all of these matters will not
have a material adverse effect on the Company's operations,
financial position and cash flows.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
INTRODUCTION
Geriatric & Medical Companies, Inc., Inc., (hereinafter,
together with its subsidiaries, referred to as the "Company")
is a Mid-Atlantic health care company providing support
services to hospitals, HMO's, physician groups and nursing
homes. It also is a major long-term care provider in
Pennsylvania and New Jersey. The Company operates through the
following companies:
The Operating Companies
Life Support Ambulance (LSA), provides a full range of ambulance
transportation services to hospitals, nursing homes, rehabilitation
centers, and other health care facilities throughout Pennsylvania
and New Jersey. LSA services include basic life support, advanced
life support, critical care transport and paratransit
transportation. LSA has in place a state of the art vehicle
tracking system enabling it to maximize efficiencies. This
satellite driven system allows LSA to provide in excess of 8,000
transports monthly. LSA is one of approximately 45 transportation
companies in the country fully accredited by the Commission on
Accreditation of Ambulance Services.
United Health Care Services (UHCS), provides a full range of
respiratory therapy, infusion therapy and enteral therapy (delivery
of nutrients through feeding tubes) to adult and pediatric patients
primarily in the home care setting and distributes durable medical
equipment and home medical supplies. UHCS serves its patients
through its branches located in Philadelphia, Reading, Easton, and
Pittsburgh, Pennsylvania and Clifton, New Jersey. UHCS is
accredited by the Joint Commission on the Accreditation of Health
Care Organizations ("JCAHO").
Innovative Pharmacy Services (IPS) is a full service institutional
pharmacy which provides pharmaceutical services and enteral
nutrition products to health care institutions through its full
service pharmacies located in Philadelphia, Pennsylvania and
Blackwood, New Jersey. IPS also operates a retail pharmacy in west
Philadelphia, Pennsylvania.
IPS currently fills approximately 45,000 prescriptions each month
and provides various products and services to approximately 5,900
long term care and residential beds.
Healthcare Hospitality Services (HCHS), provides contract
management services including dietary, housekeeping, laundry, pest
control, plant operations and facilities management services to
nursing homes, personal care facilities, and retirement
communities. HCHS operates with full time, on site management
which are supported by a regional team of specialists. HCHS
provides such contract services to approximately 6,700 long term
care and residential beds.
Diagnostic and Rehab Technologies (DRT) provides diagnostic and
rehabilitative management services including portable x-ray, Holter
monitoring, ultra sound, echocardiograms, and physical, speech and
occupational therapy, primarily to skilled nursing facilities. The
Diagnostics division provides portable x-ray, Holter monitoring,
ultra sound and echocardiograms to approximately 6,000 long term
care beds. The Rehab Tech Division provides comprehensive
rehabilitation programs to approximately 4,000 long term care beds
which include physical and occupational therapists, speech
pathologists and administrative personnel. The division also
manages five subacute medical specialty units, known as Rehab Tech
Units. These units provide rehabilitation, non-acute cardiac care,
wound care, infusion therapy, neurological, oncology, pulmonary and
post surgical care at units located within long term care
facilities.
Geriatric and Medical Services (GMS), provides sub-acute, rehab,
long term skilled care, residential and independent living services
to approximately 4,000 beds at 28 locations in Pennsylvania and New
Jersey. GMS operates 18 long term care, 8 residential and 2
independent living facilities. Services provided include the
prescribed type of nursing care, room and board, special diets as
needed, occupational, physical and recreational therapy and other
services as specified by the patient's physician.
The Company is focused on the development of its sub-acute and
specialized care wings. GMS now operates 18 Medicare certified
distinct part units with approximately 350 beds. This includes 5
"Rehab Tech Units" which provide lower cost alternatives as
compared to acute care settings for rehabilitative and sub-acute
services.
Results of Operations
Operating revenues were $3,434,000 higher in the three months ended
August 31, 1995 primarily as a result of bed additions placed in
service during fiscal, 1995, ($1,189,000), and revenues generated
from Medicare certified and sub-acute units, ($1,792,000). The
remaining increase was generated from higher volumes in certain of
the Company's support service businesses which includes the effect
of ambulance companies acquired during the second and third
quarters of fiscal, 1995.
Operating expenses for the three months ended August 31, 1995
increased $2,500,000 as a result of business and revenue growth.
Operating expenses improved as a percentage of revenues due to
continued cost containment and efficiencies.
Depreciation and amortization was $163,000 higher for the quarter
ended August 31, 1995 resulting from the depreciation on new beds
added, acquisition of ambulance equipment in connection with
acquisitions and amortization of goodwill.
Interest expense rose $262,000 when compared to the same period of
the prior year which is principally attributed to the debt related
to new beds opened in fiscal, 1995.
Liquidity and Capital Resources
In November 1993, the Company entered into a $25 million accounts
receivable sale agreement, with recourse. This is a three year
agreement with program costs charged at 9.84% of the outstanding
receivables sold. In May 1994, the Company entered into an
additional agreement to sell certain receivables due from third-
party payors. The program cost charged is 9.75% of outstanding
amounts sold. The maximum amount to be sold under this agreement
is $5,000,000. The amount outstanding at August 31, 1995 under
these agreements was $20,496,000. These agreements expire in
November, 1997. The Company has accounted for these transactions
as a sale but may be treated as a financing (borrowing) transaction
for Medicare/Medicaid purposes.
A substantial part of the Company's revenues consists of
reimbursements under the Pennsylvania Medicaid Program, a
retrospective cost based program that typically results in the
generation of large receivables which are periodically settled.
Pennsylvania had previously announced plans to switch to a
prospective Medicaid reimbursement system effective January, 1994
which did not occur. It is not known whether Pennsylvania has
announced that it intends to institute a prospective system
effective January 1, 1996. The proposed regulations are still
being finalized and the ultimate impact on cash flows or operations
of the Company is not known. The Company presently expects that
the State of Pennsylvania will increase its rates as of July, 1995
and also anticipates Pennsylvania will pay tentative settlements on
its fiscal 1995 cost reports during fiscal 1996.
The Company's subsidiary, Life Support Ambulance, Inc. (LSA), on
April 6, 1995 received a notice of suspension of payment pertaining
to Medicare billings submitted to its Medicare intermediary. The
Company believes the suspension was imposed because of evidence
received by the intermediary that prior payments may not have been
billed correctly. LSA believes it has operated, at all times, in
substantial compliance with all provisions required by Medicare for
reimbursement of its services. On August 11, 1995 LSA reached an
agreement with its Medicare intermediary whereby Medicare will
retain, until resolution of the issues, all amounts being held at
the time of agreement and 25% of future billings processed. (Total
being held at August 31, 1995 was $$3,323,000.) In connection with
the agreement, Geriatric & Medical Companies, Inc. has agreed to
guarantee the payment by LSA of up to $5,000,000 of any finally
determined overpayments. It is not possible to determine at the
present time the length of suspension, or whether such suspension
will have a material adverse effect on the operations or financial
condition of the Company.
The Company reached a settlement in Fiscal 1994, with the Office of
the United States Attorney for the Eastern District of Pennsylvania
regarding the joint venture and management arrangements of its
subsidiary United Health Care Services, Inc. whereby the Company is
required to pay $340,000 in Fiscal, 1996 and $440,000 in Fiscal,
1997.
The Company's trade receivables have increased $10,441,000 for the
three months ended August 31, 1995 primarily as a result of the
suspension of payments to LSA, discussed above, and a slow down in
payment for services provided to outside long term care facilities.
The outside long term care facilities are experiencing a temporary
slow down in cashflow as they await tentative payment for their
fiscal, 1995 cost reports.
As more fully discussed in Note 3, the Company is a party to
various legal and other matters asserted against the Company. The
ultimate liability resulting from the foregoing matters cannot
presently be determined. Accordingly, no provision for any
liability that may result has been made to the accompanying
consolidated financial statements.
The Company intends to meet its capital commitments and working
capital requirements in fiscal 1996 from operations, existing
financing arrangements including the $25 million and $5 million
receivable funding facilities, or the sale or refinancing of other
assets.
<PAGE>
PART II OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Article 5 FDS
(b) Reports on Form 8-K
None.
<PAGE>
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 thereunto duly authorized.
GERIATRIC & MEDICAL COMPANIES, INC.
October 2, 1995 By:
James J. O'Malley
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 560,000
<SECURITIES> 0
<RECEIVABLES> 68,316,000
<ALLOWANCES> 12,792,000
<INVENTORY> 4,353,000
<CURRENT-ASSETS> 67,659,000
<PP&E> 149,377,000
<DEPRECIATION> 61,240,000
<TOTAL-ASSETS> 181,468,000
<CURRENT-LIABILITIES> 39,278,000
<BONDS> 0
<COMMON> 1,524,000
0
0
<OTHER-SE> 14,288,000
<TOAL-LIABILITY-AND-EQUITY> 181,468,000
<SALES> 49,409,000
<TOTAL REVENUES> 49,409,000
<CGS> 0
<TOTAL COSTS> 42,682,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,239,000
<INTEREST-EXPENSE> 2,982,000
<INCOME-PRETAX> 1,506,000
<INCOME-TAX> 349,000
<INCOME-CONTINUING> 1,157,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,157,000
<EPS-PRIMARY> .08
<EPS-DILUTED> 0
</TABLE>
