UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Form 10-Q
---------------------
/X/ Quarter report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1997 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period from __________ to ___________
Commission file number 0-5404
_____________________
HADRON, INC.
(Exact name of registrant as specified in its charter)
New York 11-2120726
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 Seminary Road, Suite 800
Alexandria, Virginia 22311
(Address of principal executive offices)
Registrant's Telephone number including area code
(703) 824-0400
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
___ ___
As of February 9, 1998, 1,686,684 shares of the Common Stock of the
registrant were outstanding.
<PAGE>
HADRON, INC.
TABLE OF CONTENTS
Part I Financial Information: Page No.
Item 1. Financial Statements
Consolidated Balance Sheets at 3
December 31, 1997 and June 30, 1997
Consolidated Statements 5
of Operations for the Three and Six
Months Ended December 31, 1997 and 1996
Consolidated Statements of 6
Cash Flows for the Six Months Ended
December 31, 1997 and 1996
Notes to Consolidated 7
Financial Statements
Item 2. Management's Discussion and Analysis 9
of Financial Condition and Results
of Operations
Part II Other Information:
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
<TABLE>
HADRON, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND JUNE 30, 1997
<CAPTION>
DEC. 31, JUNE 30,
ASSETS 1997 1997
- ------ ------------ -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 41,400 $ 24,700
Accounts receivable, net 2,412,200 2,312,100
Note receivable 54,800 90,200
Prepaid expenses and other 24,000 20,600
---------- ----------
Total current assets 2,532,400 2,447,600
---------- ----------
Fixed assets 87,300 82,800
Note receivable 8,600
Investment in PEI and related notes receivable,
net of deferred income of $2,000,000 174,300 158,400
Other 9,300 14,500
---------- ----------
Total other assets 270,900 264,300
---------- ----------
Total assets $ 2,803,300 $ 2,711,900
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
(Unaudited)
-3-
<PAGE>
<TABLE>
HADRON, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND JUNE 30, 1997
<CAPTION>
DEC. 31, JUNE 30,
LIABILITIES AND SHAREHOLDERS' DEFICIT 1997 1997
----------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Accounts payable $ 1,169,800 $ 1,402,300
Note payable - line of credit 17,300
Other current liabilities 1,998,700 1,933,800
---------- ----------
Total current liabilities 3,168,500 3,353,400
---------- ----------
Notes payable - related party 120,000 120,000
Other 51,400 49,300
---------- ----------
Total long-term liabilities 171,400 169,300
---------- ----------
Commitments and contingencies
Total liabilities 3,339,900 3,522,700
---------- ----------
Shareholders' deficit:
Common stock $.02 par; authorized 20,000,000
shares; issued and outstanding - 1,686,684 shares 33,800 33,800
Additional capital 9,302,800 9,302,800
Accumulated deficit (9,873,200) (10,147,400)
---------- ----------
Total shareholders' deficit (536,600) (810,800)
---------- ----------
Total liabilities and shareholders' deficit $ 2,803,300 $ 2,711,900
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
(Unaudited)
-4-
<PAGE>
<TABLE>
HADRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------------ ---------- ---------- -----------
<CAPTION>
<S> <C> <C> <C> <C>
Revenues $ 5,170,100 $ 4,085,000 $10,065,100 $ 7,859,500
------------ ---------- ---------- -----------
Operating costs and expenses:
Costs of revenue 4,522,900 3,568,200 8,711,500 6,800,600
Development costs of HeaTreaT 111,400 199,500
Selling, general and administrative 514,900 379,200 1,007,100 786,900
------------ ---------- ---------- -----------
Total operating costs and expenses 5,037,800 4,058,800 9,718,600 7,787,000
------------ ---------- ---------- -----------
Operating income 132,300 26,200 346,500 72,500
------------ ---------- ---------- -----------
Other expense:
Interest expense, net (18,500) (8,600) (40,000) (18,800)
Other (expense) income (1,000) 2,000 (3,800) (11,800)
------------ ---------- ---------- -----------
Total other expense (19,500) (6,600) (43,800) (30,600)
------------ ---------- ---------- -----------
Income before income taxes 112,800 19,600 302,700 41,900
Provision for income taxes 11,300 9,000 28,500 17,000
------------ ---------- ---------- -----------
Net income $ 101,500 $ 10,600 $ 274,200 $ 24,900
============ ========== ========== ===========
Per share data:
Net income per share
Basic $ .06 $ .01 $ .16 $ .02
============ ========== ========== ===========
Diluted $ .03 $ .01 $ .10 $ .02
============ ========== ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
(Unaudited)
-5-
<PAGE>
<TABLE>
HADRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
Six Months Ended
December 31,
1997 1998
---------- ----------
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net income $274,200 $24,900
---------- ----------
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 19,000 43,700
Provision for doubtful accounts, net 3,700 (39,000)
Other 700
Changes in operating assets and liabilities:
Accounts receivable (59,800) (400)
Prepaid expenses and other (3,400) (1,200)
Other assets 5,200 (9,100)
Accounts payable (232,500) (153,600)
Other current liabilities 64,900 198,300
Other long-term liabilities 2,100 2,000
---------- ----------
Total adjustments (200,800) 41,400
---------- ----------
Net cash provided by operating activities 73,400 66,300
---------- ----------
Cash flows from investing activities:
Property additions (23,500) (39,800)
Investment in PEI (15,900)
---------- ----------
Net cash used in investing activities (39,400) (39,800)
---------- ----------
Cash flows from financing activities:
Proceeds of borrowings on bank and other loans 779,400
Payments on bank and other loans (796,700) (25,000)
---------- ----------
Net cash used by financing activities (17,300) (25,000)
---------- ----------
Net increase in cash and cash equivalents 16,700 1,500
Cash and cash equivalents at beginning of period 24,700 43,900
---------- ----------
Cash and cash equivalents at end of period $41,400 $45,400
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
(Unaudited)
-6-
<PAGE>
HADRON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The interim consolidated financial statements for Hadron, Inc.
(the "Company") are unaudited, but in the opinion of management
reflect all adjustments (consisting only of normal recurring
accruals) 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. The balance
sheet at June 30, 1997 has been derived from the audited financial
statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles
for complete financial statements. These consolidated financial
statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1997 ("1997 Form
10-K") filed with the Securities and Exchange Commission.
Certain reclassifications have been made to prior year amounts
to conform to current year classifications.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which has been
adopted as of December 31, 1997. The Company was required to
change the method currently used to compute earnings per share and
to restate all prior periods. Under the new requirements for
calculating basic earnings per share, the dilutive effect of stock
options has been excluded. In calculating diluted earnings per
share, the dilutive effect of options, warrants and convertible
debt is considered.
2. Note Payable - Line of Credit
In June 1997, the Company entered into a Line of Credit
Agreement with Century National Bank pursuant to which Century
National Bank provided the Company with a $800,000 line of credit
facility through November 30, 1998, replacing a $300,000 facility
set to expire in December 1997. Borrowings under the facility are
personally guaranteed by Dr. Gilluly and his wife. The line of
credit bears interest, payable monthly, at the prime rate plus two
percent. There were no borrowings under the facility at December
31, 1997.
<PAGE>
3. Notes Payable - Related Party
Certain members of the Company's management or Board of
Directors (the "Investors"), each agreed to invest $24,000 in the
Company in the form of five separate two-year promissory notes, the
principal of which is convertible at $.60 per share at each of his
or her respective option, into restricted shares of the Company's
Common Stock. Such notes also provide that upon prepayment by the
Company of principal outstanding under the notes, the Company shall
issue to the note holder a warrant to acquire Common Stock at $.60
per share. The number of shares each warrant shall entitle the
holder thereof to acquire shall equal the principal prepaid giving
rise to the warrant divided by $.60. The Company and each of the
Investors entered into an Investment Agreement dated June 20, 1997
setting forth the terms of his or her investment in the Company.
The notes payable - related party, bearing interest, payable
quarterly, at ten percent, remain at $120,000 as of December 31,
1997.
4. Note Receivable
In December 1996, the Company obtained a $148,600 note
receivable from a commercial customer to satisfy an outstanding
accounts receivable. Principal and interest at 10% is due in
monthly installments of $8,000 with a final payment of $8,700 due
July 15, 1998. At December 31, 1997, the Company has received its
required monthly installments.
5. Concentration of Business
The Company provides a broad range of information technology
management services and products to businesses and federal
government agencies. Revenues from services performed under direct
and indirect long-term contracts and subcontracts with government
defense and intelligence agencies comprise the majority of the
Company's business. The majority of the Company's technical and
professional service business with governmental departments and
agencies is obtained through competitive procurement and through
"follow-up" services related to existing contracts. The Company
maintains a primary commitment to its direct and indirect
government clients and is also pursuing its program of business
development targeted toward commercial operations.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1997
TO THE THREE MONTHS ENDED DECEMBER 31, 1996
Revenues for the three months ended December 31, 1997 were
approximately $5,170,000, a 27% increase from the prior year
quarter. The increase was primarily attributable to growth on
existing contracts with major government and commercial customers
of both EISI and SyCom.
Costs of revenue for the quarter ended December 31, 1997
were approximately $4,523,000, an increase of approximately 23%.
The increase is due to the growth in EISI and SyCom contracts
noted above, partially offset by the elimination of the HeaTreaT
product development expenses of $111,000. Costs of revenue as a
percentage of revenues were approximately 87% and 90% for the
quarters ending December 31, 1997 and 1996, respectively. This
3% decrease is due to the elimination of the HeaTreaT
expenditures.
Selling, general and administrative expenses totaled
approximately $515,000 for the December 31, 1997 quarter,
compared with approximately $379,000 for the prior year period.
The increase is primarily due to the Company's addition of key
administrative personnel, coupled with the implementation of a
profit-based employee incentive program, partially offset by the
absence of HeaTreaT marketing costs of $88,000.
The Company had operating profit of $132,000 for the
December 31, 1997 quarter, compared with approximately $26,000
for the prior year period. This substantial increase is
primarily attributable to the growth in EISI and SyCom coupled
with the elimination of HeaTreaT expenses of $199,000, partially
offset by the Company's administrative improvements.
For the quarter ended December 31, 1997, net interest
expense increased approximately $10,000 from the prior period due
to higher outstanding borrowings.
Net income was $101,000, compared to net income of
approximately $11,000 in the prior year quarter. The increase
resulted from the improved profitability of current operations,
coupled with the elimination of HeaTreaT product costs, partially
offset by the Company's key personnel additions.
<PAGE>
COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 1997
TO THE SIX MONTHS ENDED DECEMBER 31, 1996
Revenues for the six months ended December 31, 1997 were
approximately $10,065,000, a 28% increase from the prior year
period. The increase was primarily attributable to growth on
existing contracts with major government and commercial customers
of both EISI and SyCom.
Costs of revenue for the six months ended December 31, 1997
were approximately $8,711,000, an increase of approximately 24%
from the prior year period. The increase is due to the growth in
EISI and SyCom contracts noted above, partially offset by the
elimination of the HeaTreaT product development expenses of
$199,000. Costs of revenue as a percentage of revenues were
approximately 87% and 89% for the periods ended December 31, 1997
and 1996, respectively. This 2% decrease is due to the
elimination of the HeaTreaT expenditures.
Selling, general and administrative expenses totaled
approximately $1,007,000 for the December 31, 1997 quarter,
compared with approximately $787,000 for the prior year period.
The increase is primarily due to the company's addition of key
administrative personnel, coupled with the implementation of a
profit-based employee incentive program, partially offset by the
absence of HeaTreaT marketing costs of $151,000.
The Company had an operating profit of $347,000 in the
current period, compared to an operating profit of $73,000 in the
corresponding prior period. This substantial increase is
primarily attributable to the growth in EISI and SyCom coupled
with the elimination of HeaTreaT expenses of $350,000, partially
offset by the administrative improvements noted above.
For the six months ended December 31, 1997, net interest
expense increased approximately $21,000 from the prior year
period due to higher outstanding borrowings.
Net income was $274,000, compared to net income of
approximately $25,000 in the prior year period. The increase
resulted from the improved profitability of current operations,
coupled with the elimination of HeaTreaT product costs, partially
offset by additions in administrative personnel and employee
benefits.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The working capital deficit at December 31, 1997 decreased
by approximately $270,000 from June 30, 1997. Substantial growth
in existing contracts with EISI and SyCom, coupled with the
elimination of the HeaTreaT expenditures, enabled the Company to
utilize the retained profits to reduce its accounts payable
obligations.
The Company has a Line of Credit Agreement with Century
National Bank which provides the Company with an $800,000 line of
credit facility through November 30, 1998. The line of credit
provides additional working capital availability to fund the
Company's growth.
For the six months ended December 31, 1997, the Company
earned net income of $274,000. The Company's ongoing operations
are expected to generate profits and cashflow which will be
utilized to reduce the working capital and shareholders'
deficits. The Company does not anticipate substantial capital
expenditures in the current fiscal year.
The Company's operations are highly labor driven and
profitability levels are largely determined by billable hours,
which fluctuate from quarter to quarter. The first and fourth
fiscal quarters are generally more profitable, primarily since
there are fewer holidays, two and one, respectively. In
contrast, second quarter profitability is adversely affected by
four holidays and a client's five-day holiday shutdown in
December. The third quarter results are impacted by three
holidays and higher employment taxes.
Except for the historical information contained herein, the
matters discussed in this 10-Q include forward-looking statements
that involve a number of risks and uncertainties. There are
certain important factors and risks that could cause results to
differ materially form those anticipated by the statements
contained herein. Such factors and risks include business
conditions and growth in the information services, engineering
services, software development and government contracting arenas
and in the economy in general; competitive factors, such as the
pressures toward consolidation of small government contracts into
larger contracts awarded to major, multi-national corporations;
the Company's ability to continue to recruit and retain highly
skilled technical, managerial and sales/marketing personnel; and
such other risks detailed from time to time in the Company's SEC
reports.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
No material legal proceedings are currently pending.
Item 4. Submission of Matters to a Vote of Security Holders
a) The Company's Annual Meeting of Shareholders was
held December 5, 1997.
a. At the Annual Meeting, the Company's shareholders
reelected the Company's four directors, approved an
amendment to the Company's 1994 Stock Option Plan to
increase by 300,000 the shares reserved for issuance
thereunder, approved the adoption of the Company's 1997
Employee Stock Purchase Plan, and ratified the
appointment of Ernst & Young, LLP as the Company's
independent accountants.
The following votes were cast at the Annual Meeting with
respect to each of the matters above:
Directors:
Votes Abstentions and
Director Votes For Withheld Broker Non-Votes
-------- --------- -------- ----------------
C.W. Gilluly 1,315,085 19,244 -
William J. Howard 1,263,704 70,625 -
Robert J. Lynch,Jr. 1,263,704 70,625 -
John D. Sanders 1,263,714 70,615 -
Amendment of 1994 Stock Option Plan:
Abstentions and
Votes For Votes Against Broker Non-Votes
--------- ------------- ----------------
760,627 129,223 7,824
Adoption of 1997 Employee Stock Purchase Plan:
Abstentions and
Votes For Votes Against Broker Non-Votes
--------- ------------- ----------------
839,179 47,977 10,518
Ratification of Appointment of Accountants:
Abstentions and
Votes For Votes Against Broker Non-Votes
--------- ------------- ----------------
1,316,501 11,082 6,740
<PAGE>
Item 6. Exhibits and Reports.
(a) Exhibits
Exhibit No.
10.1 Employment Agreement with Donald E. Ziegler dated
January 1, 1998.
11 Earnings per share computation.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
<PAGE>
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 there unto duly authorized.
Date: February 13, 1998 HADRON, INC.
(Registrant)
By:/S/ C.W. Gilluly By:/S/ Donald E. Ziegler
C. W. Gilluly Ed.D. Donald E. Ziegler
Chief Executive Officer Chief Financial Officer
and Chairman (Principal Financial
(Principal Executive Officer) Officer and Principal
Accounting Officer)
January 1, 1998
Mr. Donald E. Ziegler
11005 Forest Oak Lane
Great Falls, Virginia 22066
Dear Donald:
On behalf of Hadron, Inc. (the "Company"), I am pleased to renew
the offer for you to continue as the Senior Vice President and
Chief Financial Officer of the Company working for George Fowler
and me. The annual salary accompanying this position is
$80,000 per annum paid bi-weekly.
The term of your employment is for one year, subject to renewal
annually, at the Company's discretion, for two additional one-
year terms; provided, however, the Company shall have the right
to terminate your employment with no further obligation on the
part of the Company if you are convicted of a felony or a crime
of moral turpitude or if you are guilty of gross negligence or
wilful misconduct. In the event that the Company terminates your
employment or decides not to renew your employment agreement for
any reason other than those specified above, you shall receive
four months' severance pay, paid out over four months in full and
complete satisfaction of any claim you may have by virtue of such
termination of or election not to renew your agreement with the
Company.
In the event your employment agreement is renewed by January 1,
1999, you shall be entitled to an increase in annual salary which
is commensurate with the annual increase awarded to other
executive officers of the Company as determined by the Board of
Directors.
During the term of your employment, you shall be entitled to
participate, on the same terms and conditions as other executive
employees of the Company, in such major medical, dental, life
insurance, 401(k), and other employee benefits which the Company
now provides or in the future may provide to its executive
employees generally. You shall be entitled to four weeks of paid
vacation per year.
As part of the Company's Stock Option Plan, you will be provided
with options to purchase an amount of shares of Hadron stock, on
a par with the Chief Executive Officer and/or the President, and
in accordance with the Plan. These options vest over three
years, and the option price is determined as set forth in the
Plan. In addition, you shall continue to receive a car allowance
<PAGE>
Mr. Donald E. Ziegler
January 1, 1998
Page 2
in the amount of $210 per month. Furthermore, the Company will
reimburse you for all reasonable expenses incurred in the
performance of your duties in accordance with the Company's
standard policy.
As previously discussed, you are a member of the Hadron Bonus
Plan for Fiscal Year 1998 as described to you in the letter dated
July 28, 1997.
After review of the terms and conditions expressed above, sign
the agreement in the space furnished and return a copy to me. I
look forward to the opportunity to continue to work with you here
at Hadron. I believe you will continue to find the positions
challenging and worthy of your talents.
Very truly yours,
/S/C.W. GILLULY
C.W. Gilluly, Ed.D. Accepted: /S/ DONALD E. ZIEGLER
Chairman and Donald E. Ziegler
Chief Executive Officer
cc: George Fowler
Amber Gordon
<PAGE>
Exhibit 11
<TABLE>
Hadron, Inc.
Earnings per Share Computation
Basic EPS:
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Net income $101,500 $10,600 $274,200 $24,900
------------- ------------ ------------ --------------
$101,500 $10,600 $274,200 $24,900
============= ============ ============ ==============
Weighted average shares:
Shares outstanding 1,686,685 1,506,685 1,686,685 1,506,685
------------- ------------ ------------ --------------
1,686,685 1,506,685 1,686,685 1,506,685
Earnings per share $101,500 = $.06 $10,600 = $.01 $274,200 = $.16 $24,900 = $.02
------------- ==== ------------ ==== ------------ ==== -------------- ===
1,686,685 1,506,685 1,686,685 1,506,685
</TABLE>
<TABLE>
Diluted EPS:
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------------- ------------ ------------ --------------
<CAPTION>
<S> <C> <C> <C> <C>
Net income $101,500 $10,600 $274,200 $24,900
Add:
Interest expense
savings assuming
repayment of debt 3,000 7,300 6,000 14,900
------------- ------------ ------------ --------------
$104,500 $17,900 $280,200 $39,800
============= ============ ============ ==============
Weighted average shares:
Shares outstanding 1,686,685 1,506,685 1,686,685 1,506,685
CSE options 283,707 279,076 218,842 234,073
Convertible debt 140,150 106,792
Warrants 892,872 851,163 821,960 757,725
------------- ------------ ------------ --------------
3,003,414 2,636,924 2,834,279 2,498,483
Earnings per share $104,500 = $.03 $17,900 = $.01 $280,200 = $.10 $39,800 =$.02
------------- ==== ------------ ==== ------------ ==== -------------- ===
3,003,414 2,636,924 2,834,279 2,498,483
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SECOND
QUARTER 10-Q AND IT QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 41
<SECURITIES> 0
<RECEIVABLES> 2625
<ALLOWANCES> 213
<INVENTORY> 0
<CURRENT-ASSETS> 2532
<PP&E> 487
<DEPRECIATION> 400
<TOTAL-ASSETS> 2803
<CURRENT-LIABILITIES> 3168
<BONDS> 0
34
0
<COMMON> 0
<OTHER-SE> (570)
<TOTAL-LIABILITY-AND-EQUITY> 2803
<SALES> 10065
<TOTAL-REVENUES> 10065
<CGS> 8711
<TOTAL-COSTS> 9718
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> 303
<INCOME-TAX> 29
<INCOME-CONTINUING> 274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274
<EPS-PRIMARY> .16
<EPS-DILUTED> .10
</TABLE>
