UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-29466
National Research Corporation
(Exact name of Registrant as specified in its charter)
Wisconsin 47-0634000
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1033 "O" Street, Lincoln, Nebraska 68508
(Address of principal executive offices) (Zip Code)
(402) 475-2525
(Registrant's telephone number, including area code)
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 _____ No X
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.001 par value, outstanding as of November 20, 1997:
7,305,000 shares
<PAGE>
NATIONAL RESEARCH CORPORATION
FORM 10-Q INDEX
For the Quarter Ended September 30, 1997
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Income 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 11
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
<PAGE>
PART I - Financial Information
ITEM 1 Financial Statements
NATIONAL RESEARCH CORPORATION
CONDENSED BALANCE SHEETS
December 31, September 30,
1996 1997
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $2,782,212 $4,390,495
Investments in marketable debt securities 1,476,965 50,928
Trade accounts receivable less allowance
for doubtful accounts of $45,000 in
1996 and $60,000 in 1997 1,216,812 2,099,379
Unbilled revenues 282,358 456,403
Prepaid expenses and other 46,022 406,661
--------- ---------
Total current assets 5,804,369 7,403,866
--------- ---------
Property and equipment, net of accumulated
depreciation and amortization 337,632 501,453
--------- ---------
Other 10,657 12,482
--------- ---------
Total assets $6,152,658 $7,917,801
========== =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses 494,614 247,402
Accrued wages, bonuses and profit sharing 764,784 1,234,625
Dividends payable 359,384 --
Billings in excess of revenues earned 2,168,026 2,154,388
---------- ---------
Total current liabilities 3,786,808 3,636,415
Bonuses and profit sharing accruals 286,443 447,528
---------- ---------
Total liabilities 4,073,251 4,083,943
---------- ---------
Shareholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued and outstanding
6,055,000 shares 6,055 6,055
Preferred stock, $.01 par value; authorized
2,000,000 shares, no shares issued and
outstanding -- --
Additional paid-in capital -- --
Retained earnings 2,073,352 3,827,803
--------- ---------
Total shareholders' equity 2,079,407 3,833,858
--------- ---------
Total liabilities and shareholders'
equity $6,152,658 $7,917,801
========= =========
See accompanying notes to condensed financial statements.
<PAGE>
<TABLE>
NATIONAL RESEARCH CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues:
Renewable performance tracking
services $2,319,758 $3,433,310 $6,631,505 $9,387,460
Renewable syndicate service 923,441 852,493 1,025,117 1,296,805
Custom and other research 397,315 445,503 1,296,619 997,619
---------- ---------- ---------- ----------
Total revenues 3,640,514 4,731,306 8,953,241 11,681,884
---------- ---------- ---------- ----------
Operating expenses:
Direct expenses 1,926,006 2,326,750 4,253,464 5,337,475
Selling general and administrative 677,348 995,258 1,995,665 2,832,678
Depreciation and amortization 40,998 43,032 112,994 122,600
--------- --------- --------- ---------
Total operating expenses 2,644,352 3,365,040 6,362,123 8,292,753
--------- --------- --------- ---------
Operating income 996,162 1,366,266 2,591,118 3,389,131
Interest and other income, net 31,531 55,001 106,828 152,031
Net income $1,027,693 $1,421,267 $2,697,946 $3,541,162
========== ========== ========== ==========
Pro forma income taxes 411,077 568,507 1,079,178 1,416,465
---------- ---------- ---------- ----------
Pro forma net income $616,616 $ 852,760 $1,618,768 $2,124,697
========== ========== ========== ==========
Pro forma net income per share $0.10 $0.14 $0.26 $0.34
========== ========== ========== ==========
Weighted average shares outstanding 6,184,812 6,184,812 6,184,812 6,184,812
========== ========== ========== ==========
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
NATIONAL RESEARCH CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION> Nine Months Ended
September 30
1996 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $2,697,946 $3,541,160
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 112,994 122,600
Changes in assets and liabilities:
Trade accounts receivable 1,457,500 (882,567)
Unbilled revenues (222,325) (174,045)
Other current assets 4,206 (362,472)
Accounts payable and accrued expenses (156,213) (247,212)
Accrued wages, bonuses and profit sharing 139,607 630,926
Billings in excess of revenues earned 318,216 (13,638)
----------- ----------
Net cash provided by operating activities 4,351,931 2,614,752
----------- ----------
Cash flows from investing activities:
Purchases of property and equipment (121,397) (286,414)
Purchases of securities available-for-sale (996,506) (334,019)
Proceeds from the maturities of securities
available-for-sale 600,052 1,760,057
----------- ----------
Net cash provided by (used in) investing
activities (517,851) 1,139,624
----------- ----------
Cash flows from financing activities:
Dividends paid (3,182,038) (2,146,093)
Payments on capital leases (2,911) --
----------- ----------
Net cash used in financing activities (3,184,949) (2,146,093)
----------- ----------
Net increase in cash and cash equivalents 649,131 1,608,283
Cash and cash equivalents at beginning of period 934,800 2,782,212
----------- ----------
Cash and cash equivalents at end of period $1,583,931 $4,390,495
=========== ==========
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
NATIONAL RESEARCH CORPORATION
Notes to Condensed Financial Statements
1. INTERIM FINANCIAL REPORTING
The condensed balance sheet of National Research Corporation (the
"Company") at December 31, 1996 was derived from the Company's
audited balance sheet as of that date. All other financial
statements contained herein are unaudited and, in the opinion of
management, include all adjustments (consisting only of normal
recurring adjustments) the Company considers necessary for a fair
presentation of financial position, results of operations and cash
flows in accordance with generally accepted accounting principles.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
condensed financial statements should be read in conjunction with
the financial statements and notes thereto that are included in the
Company's Registration Statement on Form S-1, as amended
(Registration No. 333-33273), filed with the Securities and
Exchange Commission, which became effective October 9, 1997.
2. S CORPORATION STATUS
From August 1, 1994 through October 13, 1997 (three days prior to
the Company's initial public offering), the Company was an S
Corporation and, accordingly, was not subject to Federal and state
income taxes for the three months or nine months ended September
30, 1996 and 1997. Pro forma net income reflects a pro forma tax
provision at a combined Federal and state rate of 40% for the
periods the Company was an S Corporation as if it had been a C
Corporation. Since October 14, 1997, the Company has been a C
Corporation.
3. EQUITY INCENTIVE PLAN
In August 1997, the Board of Directors and shareholders adopted the
National Research Corporation 1997 Equity Incentive Plan (the
"Equity Incentive Plan") pursuant to which employees of the Company
may be granted stock options, stock appreciation rights, restricted
stock, performance shares and other stock-based awards and
benefits. The maximum number of shares of common stock, $.001 par
value, of the Company ("Common Stock") that may be issued and sold
under the Equity Incentive Plan is 730,000 shares.
On October 3, 1997, but effective as of October 9, 1997, the
Company's Board of Directors granted options to purchase 168,843
shares of Common Stock under the Equity Incentive Plan. The
exercise price for these options is $15 per share, the initial
public offering price for the Common Stock. Because the options
vest in equal annual increments over a two or three year period,
none of such options will be exercisable until October 1998.
4. SUBSEQUENT EVENTS
On October 3, 1997, the Board of Directors and shareholders adopted
the National Research Corporation Director Stock Plan (the
"Director Plan") and reserved 30,000 shares of Common Stock for
issuance thereunder. Only members of the Board of Directors who
are not employees of the Company are eligible to receive shares of
Common Stock under the Director Plan. The Director Plan provides
that each eligible director will receive 60% of his or her annual
retainer earned in each calendar year in the form of Common Stock,
and will receive an annual grant of a stock option to purchase
1,000 shares of Common Stock. The options will have an exercise
price equal to the fair market value of the Common Stock on the
date of grant and will vest one year after the date of grant.
On October 16, 1997, the Company sold 1,250,000 shares of Common
Stock in an initial public offering resulting in net proceeds to
the Company of approximately $16.9 million. The proceeds of this
offering, which are not reflected in the September 30, 1997
condensed financial statements, will be available for general
corporate purposes, including the replenishment of working capital,
or to acquire or invest in complimentary businesses, products,
services or technologies and have been invested in United States
government securities.
In connection with, but prior to, the Company's initial public
offering and the concurrent termination of the Company's S
Corporation status, the Company paid special cash bonuses of $1.7
million, which will be recognized by the Company as a compensation
charge in the fourth quarter of 1997, and paid an S Corporation
distribution of $2.2 million to the Company's shareholders. The
termination of the Company's S Corporation status created a
deferred tax benefit of approximately $250,000, which will be
reflected as a deferred tax asset and as a reduction to income tax
expense in the Company's Statement of Income in the fourth quarter
of 1997.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth, for the periods indicated, selected
financial information derived from the Company's condensed financial
statements, expressed as a percentage of total revenues. The trends
illustrated in the following table may not necessarily be indicative of
future results. The discussion that follows the table should be read in
conjunction with the condensed financial statements.
<TABLE>
<CAPTION>
Percentage of Total Revenues
Three months ended Nine months ended
September 30, September 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues:
Renewable performance tracking services 63.7% 72.6% 74.1% 80.4%
Renewable syndicated service 25.4 18.0 11.4 11.1
Custom and other research 10.9 9.4 14.5 8.5
------- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
======= ===== ===== =====
Operating expenses:
Direct expenses 52.9 49.2 47.5 45.7
Selling, general and administrative 18.6 21.0 22.2 24.3
Depreciation and amortization 1.1 1.0 1.3 1.0
------ ----- ----- ------
Total operating expenses 72.6 71.2 71.0 71.0
------ ----- ----- ------
Operating income 27.4% 28.8% 29.0% 29.0%
====== ===== ===== ======
</TABLE>
Three Months Ended September 30, 1997 Compared to Three Months Ended
September 30, 1996
Total revenues. Total revenues increased 30.0% in the three month period
ended September 30, 1997 to $4.7 million from $3.6 million in the three
month period ended September 30, 1996. Revenues from the Company's
renewable performance tracking services increased 48.0% to $3.4 million in
the three month period ended September 30, 1997 from $2.3 million in the
same period during 1996 primarily due to the addition of new clients and,
to a lesser extent, an increase in the scope of existing tracking
projects. Revenues for the Company's renewable syndicated service
decreased 7.7% to $852,000 in the three month period ended September 30,
1997 compared to $923,000 in the same three month period in 1996. Such a
decrease reflects the fact that 1997 was the first year an annual edition
of the NRC Healthcare Market Guide was released following the release of a
new edition in the prior year. Consequently, there was a shorter
marketing period for the 1997 edition. The Company's custom research
revenue increased 12.1% to $446,000 in the three month period ended
September 30, 1997 from $397,000 in the same period of 1996 primarily due
to the timing of the start and completion of projects during the quarter.
Direct expenses. Direct expenses increased 20.8% to $2.3 million in the
three month period ended September 30, 1997 from $1.9 million in the same
period during 1996. The increase in direct expenses in the 1997 period
was due to an increase in postage and printing expenses of $227,000 and
labor and payroll expenses of $170,000 due to increased revenues. Direct
expenses decreased as a percentage of total revenues to 49.2% in the three
month period ended September 30, 1997 from 52.9% during the same period of
1996. The decrease in direct expenses as a percentage of total revenues
in the 1997 period was due to the Company's ability to leverage the
overall expenses over a higher revenue base.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 46.9% to $995,000 for the three month
period ended September 30, 1997 from $677,000 for the same period in 1996.
This increase was primarily due to an increase of $314,000 associated
with the expansion of the Company's sales and marketing workforce. Sales,
general and administrative expenses increased as a percentage of total
revenues to 21.0% for the three month period ended September 30, 1997 from
18.6% for the same period in 1996.
Depreciation and amortization. Depreciation and amortization expenses
increased 4.9% to $43,000 in the three month period ended September 30,
1997 from $41,000 in the same period of 1996. Depreciation and
amortization expenses decreased as a percentage of total revenues to 1.0%
in the three month period ended September 30, 1997 from 1.1% in the same
period of 1996.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended
September 30, 1996
Total revenues. Total revenues increased 30.5% in the first nine months
of 1997 to $11.7 million from $9.0 million in the first nine months of
1996. Revenues from Company's renewable performance tracking services
increased 41.6% to $9.4 million in the first nine months of 1997 from $6.6
million in the same period of 1996 primarily due to the addition of new
clients and, to a lesser extent, an increase in the scope of exiting
tracking projects. Revenues from the Company's renewable syndicated
service increased 26.5% to $1.3 million in the first nine months of 1997
from $1.0 million in the same period of 1996. Such increase reflects the
addition of new syndicated service clients. The Company's custom research
revenue decreased 23.1% to $1.0 million in the first nine months of 1997
from $1.3 million in the same period of 1996 primarily due to the start
and completion of one large project during the first quarter of 1996.
Direct expenses. Direct expenses increased 25.5% to $5.3 million in the
first nine months of 1997 from $4.3 million in the first nine months of
1996. The increase in direct expenses in the 1997 period was due to
increases in postage expenses of $478,000 and labor and payroll expenses
of $485,000 due to increased revenues. Direct expenses decreased as a
percentage of total revenues to 45.7% in the first nine months of 1997
from 47.5% during the first nine months of 1996. The decrease in direct
expenses as a percentage of total revenues was due partially to incidental
sales of the 1996 edition of the NRC Healthcare Market Guide in the first
nine months of 1997 while the majority of the direct expenses related to
this edition of the Market Guide were expensed upon its completion in the
third quarter of 1996.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 41.9% to $2.8 million for the first nine
months of 1997 from $2.0 million for the first nine months of 1996. This
increase was primarily due to an increase of $477,000 associated with the
expansion of the Company's sales and marketing workforce, an increase of
$149,000 in expenses related to enhancements to the Company's dynamic
questionnaire production software and an increase of $154,000 in profit
sharing expense. Selling, general and administrative expenses increased
as a percentage of total revenues to 24.3% for the first nine months of
1997 from 22.2% for the first nine months of 1996.
Depreciation and amortization. Depreciation and amortization expenses
increased 8.5% to $123,000 in the first nine months of 1997 from $113,000
in the first nine months of 1996. Depreciation and amortization expenses
decreased as a percentage of total revenues to 1.0% in the first nine
months of 1997 from 1.3% in the first nine months of 1996.
Liquidity and Capital Resources
The Company's principal source of funds historically has been cash flow
from its operations. The Company's cash flow has been sufficient to
provide funds for working capital and capital expenditures.
As of September 30, 1997, the Company had cash and cash equivalents of
$4.4 million and working capital of $3.8 million. Subsequent to September
30, 1997, in connection with the termination of the Company's S
Corporation status, the Company distributed dividends to shareholders and
paid special bonuses aggregating approximately $3.9 million. Cash and
working capital was replenished from the proceeds of the Company's initial
public offering.
During the nine months ended September 30, 1997, the Company generated
$2.6 million of net cash from operating activities as compared to $4.4
million of net cash generated during the same period in the prior year.
The decrease in cash flow was mainly due to the timing of the collection
of a $1.3 million account receivable in January 1996 and the timing of
costs incurred in advance of billings on certain projects, combined with
growth in accounts receivable, unbilled revenues and billings in excess of
cost.
For the nine months ended September 30, 1997, net cash provided by
investing activities was $ 1.1 million as compared to net cash used of
$518,000 during the same period in the prior year. The 1997 increase in
cash provided was primarily due to the maturing of investments available-
for-sale, which was partially offset by an investment of $286,000 in
furniture, computer equipment and production equipment to meet the
expansion of the Company's business. The 1996 use of cash was primarily a
result of an increase in investments available for sale and an investment
of $121,000 in furniture, computer equipment and production equipment.
The Company's investments available-for-sale consist principally of United
States government securities with maturities of twelve months or less.
Net cash used in financing activities was $2.1 million and $3.2 million
for the nine months ended September 1997 and 1996, respectively. Net cash
used in financing activities for these periods was primarily the result of
S Corporation distributions to shareholders.
The Company typically bills clients for projects before they have been
completed. Billed amounts are recorded as billings in excess of costs or
deferred revenue on the Company's financial statements and are recognized
as income when earned. As of September 30, 1997 and as of December 31,
1996, the Company had $2.2 million of deferred revenues. In addition,
when work is performed in advance of billing, the Company records this
work as a cost in excess of billings or unbilled revenue. At September
30, 1997 and December 31, 1996, the Company had $456,000 and $282,000 of
unbilled revenues, respectively. Substantially all deferred and unbilled
revenues will be earned and billed, respectively, within 12 months of the
respective period ends.
On October 16, 1997, the Company completed an initial public offering
resulting in net proceeds to the Company of approximately $16.9 million.
The net proceeds of this offering, which are not reflected in the
September 30, 1997 condensed financial statements, will be available for
general corporate purposes, including the replenishment of working
capital, or to acquire or invest in complimentary businesses, products,
services or technologies and have been invested in United States
government securities with maturities of twelve months or less.
PART II - Other Information
ITEM 2 Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) In connection with the reincorporation of the Company in the
State of Wisconsin in September 1997, the Company (a) was
formed as a wholly-owned subsidiary of its predecessor
Nebraska corporation and (b) issued an aggregate of 6,055,000
shares (on a post-share dividend basis), on a one-for-one
basis, to the two shareholders of its predecessor corporation,
Michael D. Hays and Jona S. Raasch. No underwriters were
engaged in connection with the foregoing issuances. Such
issuances were effected in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of
1933 for transactions not involving a public offering.
(d) The Company's Registration Statement on Form S-1 (Registration
No. 333-33273) (the "Registration Statement") relating to the
offer and sale (the "Offering") of an aggregate of 2,415,000
shares of Common Stock was declared effective by the
Securities and Exchange Commission on October 9, 1997. Of the
2,415,000 shares of Common Stock registered under the
Registration Statement, 1,250,000 shares were sold by the
Company and 1,165,000 shares (including 315,000 shares sold
pursuant to the exercise of an over-allotment option granted
to the underwriters) were sold by a certain shareholder of the
Company, Michael D. Hays (the "Selling Shareholder").
The Offering commenced on October 10, 1997 and the sale of
2,415,000 shares of Common Stock (including those sold by the
Selling Shareholder upon exercise of the over-allotment option
granted to the underwriters) closed on October 16, 1997. All
of the shares of Common Stock registered were sold in the
Offering at a price of $15.00 per share, for an aggregate
price of $18,750,000 and $17,475,000 for the shares of Common
Stock sold by the Company and the Selling Shareholder,
respectively.
After deducting the underwriting discount of $1.05 per share,
the Selling Shareholder received net proceeds equal to
$16,251,750 and the Company received net proceeds equal to
$17,437,500 less expenses estimated to be $500,000 incurred in
connection with the Offering (all of which were paid or are
payable by the Company). The Registration Statement became
effective on October 9, 1997, after the September 30, 1997
ending date for the period covered by this Quarterly Report on
Form 10-Q. The amount of expenses incurred by the Company in
connection with the Offering, and the application by the
Company of the net proceeds received by the Company in the
Offering, will be disclosed as required by Rule 463 of the
Securities Act of 1933, as amended, in the Company's Annual
Report on Form 10-K for the fiscal year ending December 31,
1997 and, to the extent necessary, in subsequent periodic
reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended.
The managing underwriters for the Offering were William Blair
& Company, L.L.C. and Robert W. Baird & Co. Incorporated.
ITEM 4 Submission of Matters to a Vote of Security Holders
On September 10, 1997, the sole shareholder of the Company (which
was, at that time, the Company's predecessor Nebraska corporation),
by written consent action in lieu of a special meeting, approved
the following matters:
(a) A reincorporation merger whereby National Research
Corporation, a Nebraska corporation, was merged with and into
the Company; and
(b) The issuance of shares of Common Stock to the shareholders of
the Company's predecessor corporation in connection with the
reincorporation merger.
On September 15, 1997, the shareholders of the Company, by
unanimous written consent action in lieu of an annual meeting,
approved the following matters:
(a) Certain amendments to the Company's Articles of Incorporation
(the "Articles") and By-Laws in connection with the initial
public offering of shares of Common Stock (the "IPO");
(b) The election of Michael D. Hays and Patrick E. Beans as
directors of the Company; and
(c) The National Research Corporation 1997 Equity Incentive Plan.
On September 16, 1997, the shareholders of the Company, by
unanimous written consent action in lieu of a special meeting,
approved certain amendments to the Articles in connection with the
IPO.
On October 3, 1997, the shareholders of the Company, by unanimous
written consent action in lieu of a special meeting, approved the
National Research Corporation Director Stock Plan.
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibit Number Description
(27) Financial Data Schedule (EDGAR
version only)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
quarter ended September 30, 1997.
<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 thereunto duly authorized.
NATIONAL RESEARCH CORPORATION
(Registrant)
Date: November 21, 1997 By: /s/ Michael D. Hays
Michael D. Hays
President and Chief Executive
Officer
Date: November 21, 1997 By: /s/ Patrick E. Beans
Patrick E. Beans
Vice President, Treasurer,
Secretary and Chief Financial Officer
(Principal Financial and Accounting
Officer)
<PAGE>
NATIONAL RESEARCH CORPORATION
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
for the Quarterly Period ended September 30, 1997
Exhibit
(27) Financial Data Schedule (EDGAR version only)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,390
<SECURITIES> 51
<RECEIVABLES> 2,159
<ALLOWANCES> 60
<INVENTORY> 0
<CURRENT-ASSETS> 7,404
<PP&E> 1,059
<DEPRECIATION> 558
<TOTAL-ASSETS> 7,918
<CURRENT-LIABILITIES> 3,636
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 3,828
<TOTAL-LIABILITY-AND-EQUITY> 7,918
<SALES> 0
<TOTAL-REVENUES> 11,682
<CGS> 0
<TOTAL-COSTS> 5,337
<OTHER-EXPENSES> 2,955
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,389
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,389
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,389
<EPS-PRIMARY> 0 <F1>
<EPS-DILUTED> 0
<FN>
<F1> The Statement of Income only reflects
pro forma earnings per share.
</FN>
</TABLE>
