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 March 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 0-15512.
ALPNET, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0356708
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4444 South 700 East Suite #204
Salt Lake City, Utah 84107-3075
(Address of principal executive offices) (Zip Code)
(801) 265-3300
(Registrant's telephone number, including area code)
Not applicable
(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
The number of shares outstanding of the registrant's no par value Common Stock
as of May 8, 1995, was 15,562,223.
ALPNET, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Statements of Operations--Three months ended March 31,
1995 and 1994
Consolidated Balance Sheets--March 31, 1995 and December 31, 1994
Consolidated Statements of Cash Flows--Three months ended March 31,
1995 and 1994
Notes to Consolidated Financial Statements--March 31, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended March 31
Thousands of dollars and shares 1995 1994
<S> <C> <C>
SALES OF SERVICES $5,906 $4,338
OPERATING EXPENSES:
Cost of services sold 5,112 4,085
Selling, general and admini-
strative expenses 571 520
Development costs 43 34
Amortization of goodwill 92 84
Total operating expenses 5,818 4,723
OPERATING INCOME (LOSS) 88 (385)
Interest expense 46 71
Income (loss) before income taxes 42 (456)
Income taxes 28 20
NET INCOME (LOSS) $ 14 $ (476)
NET INCOME (LOSS) PER SHARE $ .001 $ (.031)
Weighted average shares of
Common Stock and Common
Stock equivalents outstanding 22,199 15,562
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
March 31 December 31
Thousands of dollars 1995 1994
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 427 $ 344
Trade accounts receivable less allowance of
$129 in 1995 and $108 in 1994 4,661 4,328
Work-in-process 301 227
Income taxes receivable 70 51
Prepaid expenses and other 703 660
Total current assets 6,162 5,610
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
Office facilities and leasehold improvements 148 141
Equipment 3,597 3,471
3,745 3,612
Less accumulated depreciation and
amortization 2,780 2,682
Net property, equipment and leasehold improvements 965 930
OTHER ASSETS:
Goodwill, less accumulated amortization
of $2,767 in 1995 and $2,492 in 1994 6,823 6,449
Other 228 234
Total other assets 7,051 6,683
TOTAL ASSETS $14,178 $13,223
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - continued
<CAPTION>
March 31 December 31
Thousands of dollars and shares 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>
CURRENT LIABILITIES: <C> <C>
Notes payable to banks $ 1,400 $ 1,443
Accounts payable 1,953 1,561
Accrued payroll and related benefits 460 395
Other accrued expenses 745 822
Deferred revenue 136 78
Current portion of long-term debt 93 85
Current portion of long-term debt to affiliates 44 39
Total current liabilities 4,831 4,423
Long-term debt, less current portion 134 155
Long-term debt to affiliates, less current portion 385 378
Guarantee liability (Note 3) 1,290 1,090
Commitments and contingencies (Note 3)
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock, no par value;
authorized 2,000 shares; issued and outstanding
1,044 shares in 1995 and 1994 2,891 2,894
Common Stock, no par value; authorized 40,000
shares; issued and outstanding 15,562 shares
in 1995 and 1994 37,646 37,846
Accumulated deficit (31,936) (31,950)
Equity adjustment from foreign currency
translation (1,063) (1,613)
Total shareholders equity 7,538
7,177
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,178 $13,223
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended March 31
Thousands of dollars 1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 14 $ (476)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of property, equipment
and leasehold improvements 84 80
Amortization of goodwill 92 84
Other (6) 14
Changes in operating assets and liabilities:
Trade accounts receivable (86) 142
Accounts payable and accrued expenses 156 (60)
Other 26 82
Net cash provided by (used in) operating activities 280 (134)
INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements (84) (152)
FINANCING ACTIVITIES:
Proceeds from notes payable to banks 168 286
Principal payments on notes payable to banks (272) (96)
Proceeds from long-term debt and debt to affiliates 1 47
Principal payments on long-term debt and debt to
affiliates (26)(10)
Net cash provided by (used in) financing activities (129) 227
Effect of exchange rate changes on cash 16 3
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 83 (56)
Cash and cash equivalents at beginning of period 344 1,012
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 427 $ 956
CASH PAID DURING THE PERIOD FOR:
Interest $ 51 $ 87
Income taxes 28
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Effective March 1994, the Company issued 584,257 shares of Convertible Preferred Stock in exchange for long-term debt to
affiliates.
See accompanying notes.
</TABLE>
ALPNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1995
1. BASIS OF PRESENTATION
ALPNET, Inc. and its subsidiaries (the "Company"), together with its
independent affiliates, form a worldwide network dedicated to providing
specialized language services for businesses engaged in international trade.
The Company has combined computer translation technology with experienced
human translators in its worldwide network to provide a full spectrum of
services to fulfill the language needs of customers in international
business.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnote disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the periods presented are not necessarily
indicative of the results that may be expected for the respective complete
years. For further information, refer to the Consolidated Financial
Statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
Certain amounts for the three-month period ended March 31, 1994 have been
reclassified to conform to the 1995 presentation.
2. INCOME TAXES
The Company files a consolidated U.S. Federal income tax return which
includes all domestic operations. Tax returns for states within the U.S.
and for foreign subsidiaries are filed in accordance with applicable laws.
Fluctuations in the amount of income taxes arise primarily from the varying
combinations of income and losses of the Company's subsidiaries in the
various domestic and foreign tax jurisdictions, including the utilization in
various degrees of net operating loss carryforwards in many of these
jurisdictions.
3. ACQUISITION GUARANTEE
In 1988, the Company acquired its German subsidiary for a combination of
cash and shares of the Company's Common Stock. The acquisition agreement
required the Company to give additional consideration if the value of the
shares of Common Stock did not reach an agreed-upon level within a specified
period following the acquisition, and remain at that level until the former
owner was able to sell the shares of the Company's Common Stock for an
amount equal to the purchase price stipulated in the acquisition agreement.
As a result of this requirement, the Company issued additional shares to the
former owner in 1990.
In 1993, the Company and the former owner entered into an agreement which
amended the original acquisition agreement. This agreement waives the
requirement to pay any additional consideration if the value of all shares
of Common Stock previously issued reached the stipulated purchase price on
or before September 30, 1994 (which date was subsequently extended to
September 30, 1996). If the stock value does not reach such amount, the
Company is required to pay interest on the stock value deficiency beginning
on September 30, 1996. Alternatively, the Company could settle such
deficiency by making additional payments (in cash or stock) to the former
owner.
As a result of this waiver agreement, the Company recorded a guarantee
liability in the consolidated balance sheets for the stock value deficiency
calculated based on the trading value per share of the Company's Common
Stock as compared to the guaranteed value at the balance sheet dates. A
decrease in shareholders' equity has also been recorded for the same
amounts.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction
with the Consolidated Financial Statements and notes thereto.
FOREIGN OPERATIONS
The Company serves its customers from 27 offices in 10 countries. The
operations of the Company are predominantly located outside the U.S.
Accordingly, the Company is subject to the effects of foreign currency exchange
rate fluctuations among U.S. dollars, Canadian dollars, British pounds sterling,
German marks and other European and Asian currencies. For all of the Company's
foreign subsidiaries, the functional currency has been determined to be the
local currency. Accordingly, assets and liabilities are translated at period-
end exchange rates, and operating statement items are translated at average
exchange rates prevailing during the period. The resultant cumulative foreign
currency adjustments to the assets and liabilities are recorded as a separate
component of shareholders' equity. The foreign currency equity adjustment for
the three months ended March 31, 1995 was positive $550,000 compared to a
positive adjustment of $74,000 for the three months ended March 31, 1994. As of
March 31, 1995, the cumulative net effect to the Company of the equity
adjustment from movements in foreign currency exchange rates was a reduction of
$1.1 million in shareholders' equity. A significant portion of the cumulative
foreign currency adjustment relates to changes in the recorded amount of
goodwill.
Because most of the Company's operations are located outside the U.S. and its
foreign operations' financial results must be translated into U.S. dollars, the
Company's actual and reported financial results and financial condition are
susceptible to movements in foreign currency exchange rates. Furthermore, since
the Company has relatively few long-term monetary assets and liabilities
denominated in currencies other than the U.S. dollar, it does not have any
ongoing hedging programs in place to manage currency risk.
RESULTS OF OPERATIONS
The following paragraphs discuss results of operations for the three months
ended March 31, 1995 as compared with the three months ended March 31, 1994,
including the significant effects of fluctuating foreign currency exchange
rates.
The Company recorded net income of $14,000 for the three months ended March 31,
1995 compared to a net loss of $476,000 for the first three months in 1994. If
foreign currency exchange rates for 1995 had remained unchanged from 1994, the
Company would have recorded a net loss of $4,000 instead of net income of
$14,000. Therefore currency exchange rate fluctuations did not have a material
affect on 1995 results.
Sales of services were $5.9 million for the three months ended March 31, 1995
compared to $4.3 million for the three months ended March 31, 1994. The $1.6
million increase in reported sales for 1995 consisted of an increase in sales
volume of $1.2 million and an increase of $400,000 due to currency exchange rate
fluctuations. The increases in sales volume are the result of a general
increase in demand for the Company's services in all of its primary markets,
especially in the U.S., the U.K. and in Germany. Demand was especially weak in
the U.S. and in Germany in 1994 and sales for 1995 are more representative of
historical sales levels in these locations than were the 1994 sales results.
Management also believes that international trade agreements such as the North
American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and
Trade (GATT) have had a positive effect on demand for the language services
provided by the Company. Also having a positive effect is an increasingly
global marketplace where more and more businesses are entering foreign markets
and becoming involved in worldwide trade.
The Company competes on the basis of quality, service and geographical proximity
to clients and potential clients, and has opened several new offices in recent
years, including one new office in 1995, in order to increase its market share
in what management believes has been and will continue to be an expanding
industry. Intense price competition which the Company encountered in 1994 has
persisted into 1995 and continues to severely restrict the prices the Company
can charge in the marketplace.
The following table shows a comparison of sales of services in each of the
Company's significant geographic areas for the three months ended March 31, 1995
and 1994, along with the effect of foreign currency exchange rate fluctuations
on the sales between periods. Intercompany sales are normally billed on a
profit-sharing basis. All intercompany sales are eliminated in determining the
totals.
<TABLE>
<CAPTION>
Thousands of dollars
Increase (Decrease) in
Three Months Sales of Services due to Total
Ended March 31 Sales Currency Increase
1995 1994 Volume Fluctuations (Decrease)
<S> <C> <C> <C> <C> <C>
United States $ 635 $ 298 $ 337 $ $ 337
Canada 817 817 34 (34) 0
Europe 4,864 3,405 994 465 1,459
Asia 477 339 108 30 138
Eliminations (887) (521) (296) (70) (366)
Total Sales $5,906 $4,338 $1,177 $391 $1,568
</TABLE>
As shown in the above table, all major geographical regions reported increased
sales in 1995 over 1994. In the U.S., sales can fluctuate widely from period to
period due to industry conditions which are often less predictable and stable
than those found in the Company's foreign markets. Such conditions are the
result of the inexperience of many U.S. companies in international business and
clients which may be unsophisticated in the nuances of marketing to foreign
countries and the importance of related language issues. These factors, along
with the unpredictable timing and the nonrecurring nature of most large
translation projects for U.S. companies, contribute to a deficiency of "core" or
repeat business and also have a tendency to depress the profitability of work
performed by the Company for U.S. clients. These conditions had a dramatic
affect in 1994 and while 1995 sales were also affected, the impact was not as
pronounced. It is difficult to estimate how much effect such factors will have
on future operations.
Canada's reported sales for 1995 were the same as for 1994; however, the
increase would have been 4% if currency exchange rates in 1995 had remained the
same as in 1994. The increase in sales in Canada was due in part to increased
international trading as well as ongoing marketing and sales efforts, and has
occurred despite a continuing difficult economic situation in Canada.
The U.K. and Germany contributed over 85% of the European region's total
reported sales for both 1995 and 1994 with increases of 20% for the U.K. and 81%
for Germany in 1995 over 1994 levels. While the bulk of this growth represents
actual volume increases, a significant portion is also due to currency exchange
rate fluctuations. This is also true for the overall increase in reported
European sales of 43% in 1995 over 1994.
The increase in sales in Germany from 1994 to 1995 was primarily attributable to
an improvement in the German economy and an unusually steep decline in orders
from large customers in early 1994 which did not recur in 1995. The positive
results in the U.K. were due to several factors, including enhanced sales and
marketing efforts, increased core business and more large project work, all of
which was helped by an improved economic situation. The Company expects sales
to continue to expand in Europe as the investments made in new offices and in
human and equipment resources in the past three years combine with growing
demand for language services and a generally positive economic outlook.
Nevertheless, the Company's business can be impacted dramatically by changes in
the strength of the economies of the countries in which it has a presence and
results of operations are highly dependent on general economic trends.
In Asia, 1995 sales increased 41% over 1994 levels as Hong Kong and Singapore
increased sales by a combined total of 26%. In addition, the Company's Korean
office, which was opened in July 1994, contributed to the improved sales results
in 1995. While some of the increase in reported Asian sales in 1995 was
attributable to currency exchange rate fluctuations, most of the change was due
to actual volume increases. Management expects the increased demand for Asian
language services to continue, as many Asian countries are experiencing very
high economic growth rates and the interest in Asia from the business
communities in the U.S., Europe and elsewhere is accelerating rapidly.
Cost of services sold as a percentage of sales of services has fluctuated
primarily as a result of competition in the marketplace, and the volume and
nature of direct production costs of large projects in each period. Also, the
company is continuing its programs to reduce direct and indirect production
costs.
Due to increased competition in early 1994, especially with regard to pricing,
the Company's gross margins deteriorated significantly. While the Company has
largely been able to contain the growth in cost of services sold to levels
consistent with growth in the volume of work produced and at rates at or below
inflationary increases, prices charged to clients, especially in the U.S. and
Europe, have been limited by competitive price pressures which have in turn
severely compressed margins. Management expects pressures on gross margins to
continue in 1995, but does not expect pricing pressures to intensify beyond
current levels. The Company does not expect to be able to return to pre-1994
pricing levels in the foreseeable future and is continuing its efforts to
contain costs to offset the effects of these pricing pressures.
Total operating expenses, including cost of services sold, increased by $1.1
million in 1995 from 1994. This increase resulted from a $700,000 increase in
actual expenses and an increase of $400,000 due to currency exchange rate
fluctuations. The increases in actual expenses for both years resulted
primarily from the increased volume of work produced. The increase in corporate
selling, general and administrative expenses from 1994 to 1995 is attributable
to increased marketing and sales expenses and, to a lesser extent, additional
overhead costs for existing and new offices.
Interest expense decreased approximately $25,000 in 1995 compared to 1994 and
resulted primarily from the capital restructuring completed in early 1994 which
eliminated approximately $1.8 million of long-term debt to affiliates. The
interest expense decrease was offset in part by increased borrowing costs
related to bank lines of credit used to fund working capital needs. For further
information on the 1994 capital restructuring, refer to Note 3 of the
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
Fluctuations in the amount of goodwill amortization resulted solely from foreign
currency exchange rate fluctuations from period to period.
The U.S. parent company and each of its subsidiaries are separate legal and
taxable entities subject to the domestic or foreign taxes pertaining to
operations in their respective jurisdictions. For tax purposes, the U.S. parent
company and most of its subsidiaries have unused net operating losses from prior
years which can be utilized to reduce future years taxable income of the
respective entities. The availability of these net operating losses is governed
by applicable domestic and foreign tax rules and regulations, some of which
limit the utilization of such losses due to minimum tax requirements and other
provisions.
Income tax expense as presented in the Consolidated Financial Statements
represents the combined income tax expense and income tax credits of each of the
entities of the Company. Fluctuations in the amount of income taxes result
primarily from the varying combinations of income and losses of the Company's
subsidiaries in the various domestic and foreign tax jurisdictions, including
the utilization in various degrees of net operating loss carryforwards in many
of these jurisdictions.
LIQUIDITY AND SOURCES OF CAPITAL
In 1995, the Company had a net positive cash flow from operations of
approximately $280,000 compared with a negative cash flow from operations in
1994 of $134,000. In 1995, as in prior years, the Company's investing
activities consisted primarily of the acquisition of equipment (approximately
$84,000) needed to maintain or upgrade production capability. Financing
activities for both 1995 and 1994 included fluctuations in the amounts utilized
under bank lines of credit to finance the Company's working capital needs.
At March 31, 1995, the Company's cash and cash equivalents were approximately
$427,000, representing an increase of approximately $83,000 during 1995. At
March 31, 1995, the Company had working capital of approximately $1.3 million,
which compares favorably to working capital of approximately $1.2 million at
December 31, 1994.
The Company's primary working capital requirements relate to the funding of
accounts receivable. The Company funds its working capital needs with various
bank lines of credit extended by banks in Canada, the U.K., Germany and Spain.
Most of the lines of credit are secured by accounts receivable and other assets
of the respective subsidiaries. As of March 31, 1995, the Company has unused
amounts under these lines of credit of approximately $600,000. The Company
believes the available amounts under these lines of credit are sufficient to
fund the Company's operations at current levels as well as enable the Company to
grow at a modest level without seeking significant new sources of working
capital. Most of the Company's credit facilities are subject to annual renewals
and the Company expects them to be renewed on substantially the same terms as
those which currently exist. Some of the banks, which have loaned funds to the
Company's subsidiaries under the credit facilities noted above, have placed
certain limits on the flow of cash outside the respective countries. Such
limitations have not been an undue burden to the Company in the past, nor are
they expected to be unduly burdensome in the foreseeable future.
The Company has no present significant commitments for capital expenditures,
which generally consist almost entirely of computer equipment and related
peripheral hardware and software. Such equipment purchases in future periods
are not expected to vary materially from the general levels of equipment
purchases experienced in recent periods. However, the Company does plan to
acquire and place additional translation services workstations in its offices
worldwide in connection with future orders from customers, as such orders are
received. The Company expects to finance a certain portion of future equipment
costs through bank and/or leasing sources.
While there are no material current commitments, the Company may open additional
offices in strategic locations worldwide, as customer demands dictate and
opportunities arise. For example, in March 1995, the Company opened a sales
office in the City of London in order to boost sales to companies located in
this important international financial district. The costs of opening this
office were not significant and the costs of any additional offices are not
expected to require a substantial amount of cash.
Primarily as a result of positive foreign currency adjustments, the Company's
total shareholders' equity has increased from $7.2 million at December 31, 1994
to $7.5 million at March 31, 1995. The Company believes it has the ability to
issue additional equity securities if necessary, but does not currently have
plans to do so. In past years, the Company has relied on major shareholders of
the Company to fund certain obligations, but the Company does not anticipate
using this source of capital in the foreseeable future.
Current working capital, anticipated cash flows and available lines of credit,
together with management s expectations of increased revenues and plans to
control expenses, will, in management's opinion, be adequate to meet financial
obligations during 1995. It is more difficult to assess cash flows beyond 1995
and the ability of the Company to meet its commitments without additional
sources of capital is directly related to the Company's operations providing a
positive cash flow. Should the Company's operations fail to provide adequate
funds to enable it to meet its future financial obligations, management has the
option, because of the Company's organizational structure, to cut costs by
selectively eliminating operations which are not contributing to the Company
financially.
Inflation has not been a significant factor in the Company s operations.
Competition, however, has been and is expected to remain a major factor. To the
extent permitted by competition and general economic and market conditions, the
Company will pass on increased costs from inflation and operations to customers
by increasing prices.
Due to prior years' operating losses, the Company and many of its subsidiaries
have net operating loss carryforwards available to offset future taxable income
in the various countries in which the Company operates. As a result, the
Company historically has not had significant income tax liabilities arise
requiring the expenditure of cash. Due to currently available net operating
loss carryforwards, the Company expects this general trend to continue through
1995. Substantially all of the Company's deferred tax assets at March 31, 1995
were comprised of net operating loss carryforwards for which the Company has
provided allowances. The ability of the Company to utilize these loss
carryforwards in the future is dependent on profitable operations in the various
countries in which loss carryforwards exist and the specific rules and
regulations governing the utilization of such losses, including the timeframes
in which the losses must be used.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
(11) Statement Re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) The Company filed the following report on Form 8-K during the three
months ended March 31, 1995.
Date of
Report Item Reported
03/21/95 ALPNET Announces Fourth Quarter and 1994 Results
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.
ALPNET, Inc.
Registrant
Date: May 8, 1995 \s\ Thomas F. Seal
Thomas F. Seal
President and Chief Executive Officer
Date: May 8, 1995 \s\ D. Kerry Stubbs
D. Kerry Stubbs
Chief Financial Officer
<TABLE>
E X H I B I T 1 1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Thousands of dollars and shares
Three Months Ended
March 31
1995 1994
<S> <C> <C>
Net income (loss) $14 $(476)
Weighted average shares of Common Stock
outstanding 15,562 15,562
Weighted average shares of Common Stock
issuable upon conversion of Convertible
Preferred Stock(2) 6,637 --
Total shares of Common Stock and Common Stock
equivalents 22,199 15,562
Net income (loss) per share $.001 $(.031)
<FN>
(1) Primary and fully diluted per share earnings (loss) are substantially
the same for each period presented.
(2) Common Stock issuable upon conversion of Preferred Stock was
anti-dilutive in 1994.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 427
<SECURITIES> 0
<RECEIVABLES> 4790
<ALLOWANCES> 129
<INVENTORY> 0
<CURRENT-ASSETS> 6162
<PP&E> 3745
<DEPRECIATION> 2780
<TOTAL-ASSETS> 14178
<CURRENT-LIABILITIES> 4831
<BONDS> 1809
<COMMON> 37646
0
2891
<OTHER-SE> (32999)
<TOTAL-LIABILITY-AND-EQUITY> 14178
<SALES> 5906
<TOTAL-REVENUES> 5906
<CGS> 5112
<TOTAL-COSTS> 5112
<OTHER-EXPENSES> 706
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> 42
<INCOME-TAX> 28
<INCOME-CONTINUING> 14
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
