<PAGE> 1
Page 1 of 14
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the nine months ended June 30, 1998 Commission file no. 0-11527
MPSI SYSTEMS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 73-1064024
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4343 South 118th East Avenue, Tulsa Oklahoma 74146
- --------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (918) 877-6774
----------------------------
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
---- ----
Number of shares of common stock outstanding at June 30, 1998 - 2,842,454
-----------------
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
Part I. FINANCIAL INFORMATION:
<S> <C>
Financial Statements:
Consolidated Balance Sheets - June 30, 1998 and September 30, 1997 ........................ 3
Consolidated Statements of Operations - Three Months and Nine Months
Ended June 30, 1998 and 1997 ......................................................... 5
Consolidated Statement of Stockholders' Equity - Nine Months
Ended June 30, 1998 .................................................................. 6
Consolidated Statements of Cash Flow -
Nine Months Ended June 30, 1998 and 1997 ............................................. 7
Notes To Consolidated Financial Statements ................................................ 8
Management's Discussion and Analysis of Financial Condition and
Quarterly Results of Operations ........................................................... 9
Part II. OTHER INFORMATION (Including Index to Exhibits) ............................................ 11
SIGNATURES ...................................................................................... 12
</TABLE>
2
<PAGE> 3
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
JUNE 30, SEPTEMBER 30,
1998 1997
----------- -----------
(UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 575,000 $ 1,599,000
Short-term investments, at cost 3,000 3,000
Receivables:
Trade 4,650,000 4,210,000
Current portion of long-term receivables 1,865,000 1,122,000
Inventories 209,000 197,000
Prepayments 117,000 161,000
----------- -----------
Total current assets 7,419,000 7,292,000
Property and equipment, net 906,000 1,165,000
Long-term receivables, net of current portion
and unamortized discount 2,129,000 2,642,000
Software products, net 211,000 393,000
Other assets 149,000 146,000
----------- -----------
Total assets $10,814,000 $11,638,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT'D)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
------------ ------------
JUNE 30, SEPTEMBER 30,
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,174,000 $ 882,000
Accrued liabilities 1,149,000 1,390,000
Notes payable - Line of Credit 500,000 147,000
Deferred revenue 2,322,000 1,837,000
Deferred net tax liability - current portion -- --
------------ ------------
Total current liabilities 5,145,000 4,256,000
Noncurrent deferred revenue 1,489,000 1,634,000
Noncurrent deferred income taxes 84,000 442,000
Other noncurrent liabilities 17,000 37,000
------------ ------------
Total liabilities 6,735,000 6,369,000
------------ ------------
Commitments and contingencies -- --
Stockholders' Equity:
Preferred Stock, $.10 par value, 1,000,000 shares
authorized, none issued or outstanding -- --
Common Stock, $.05 par value, 20,000,000 shares authorized, 2,842,000 and
2,832,000 shares issued and outstanding at
June 30, 1998 and September 30, 1997, respectively 142,000 142,000
Junior Common Stock, $.05 par value, 500,000 shares
authorized, none issued or outstanding -- --
Additional paid-in capital 13,058,000 13,030,000
Deficit (9,793,000) (8,860,000)
Foreign currency translation adjustment 672,000 957,000
------------ ------------
Total stockholders' equity 4,079,000 5,269,000
------------ ------------
Total liabilities and stockholders' equity $ 10,814,000 $ 11,638,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
----------------------------- -----------------------------
1998 1997 1998 1997
----------- ------------ ----------- -------------
Revenues:
<S> <C> <C> <C> <C>
Software maintenance/information services $ 4,984,000 $ 5,384,000 $13,857,000 $15,267,000
Software licensing 240,000 1,168,000 540,000 1,701,000
----------- ------------ ----------- -------------
Total revenues 5,224,000 6,552,000 14,397,000 16,968,000
----------- ------------ ----------- -------------
Cost of Sales:
Software maintenance/information services 2,331,000 2,479,000 6,134,000 6,363,000
Software licensing 52,000 196,000 288,000 391,000
----------- ------------ ----------- -------------
Total cost of sales 2,383,000 2,675,000 6,422,000 6,754,000
----------- ------------ ----------- -------------
Gross profit 2,841,000 3,877,000 7,975,000 10,214,000
Operating expenses:
General and administrative 848,000 790,000 2,438,000 2,534,000
Marketing 1,731,000 1,800,000 5,252,000 5,053,000
Research and development 470,000 450,000 1,448,000 1,233,000
----------- ------------ ----------- -------------
Total operating expenses 3,049,000 3,040,000 9,138,000 8,820,000
----------- ------------ ----------- -------------
Operating income (loss) (208,000) 837,000 (1,163,000) 1,394,000
Other income (expense):
Interest income 81,000 38,000 220,000 107,000
Interest expense (35,000) (85,000) (81,000) (193,000)
Foreign exchange (96,000) (45,000) (150,000) (3,000)
Other, net (6,000) 26,000 (1,000) 112,000
----------- ------------ ----------- -------------
Income (loss) before income taxes (264,000) 771,000 (1,175,000) 1,417,000
Provision for income taxes 44,000 474,000 (242,000) 521,000
----------- ------------ ----------- -------------
Net income (loss) $ (308,000) $ 297,000 $ (933,000) $ 896,000
=========== ============ =========== =============
Income (loss) per share $ (.11) $ .11 $ (.33) $ .31
=========== ============ =========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
FOREIGN
COMMON STOCK ADDITIONAL CURRENCY TOTAL
--------------------- PAID-IN TRANSLATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT EQUITY
--------- -------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
September 30,
1997 2,832,000 $142,000 $13,030,000 $(8,860,000) $ 957,000 $ 5,269,000
Net loss - - - (933,000) - (933,000)
Exercised
stock options 10,000 - 28,000 - - 28,000
Foreign currency
translation
adjustment - - - - (285,000) (285,000)
--------- -------- ----------- ----------- ---------- -------------
Balance,
June 30, 1998 2,842,000 $142,000 $13,058,000 $(9,793,000) $ 672,000 $ 4,079,000
========= ======== =========== =========== ========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (NOTE 2)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
------------------------------
1998 1997
----------- -------------
<S> <C> <C>
Net income (loss) $ (933,000) $ 896,000
Adjustments to reconcile net income (loss) to cash provided by operations:
Depreciation 307,000 317,000
Amortization 269,000 438,000
Loss on sale or abandonment of equipment 5,000 --
Deferred income taxes -- 449,000
Changes in assets and liabilities:
Decrease (increase) in assets:
Receivables (665,000) (4,564,000)
Inventories (12,000) (57,000)
Other assets 41,000 (112,000)
Increase (decrease) in liabilities:
Trade payables and accruals (185,000) (376,000)
Taxes payable (425,000) 423,000
Deferred revenue 342,000 1,894,000
----------- -----------
Net cash used by operating activities (1,256,000) (692,000)
----------- -----------
Cash flows from investing activities:
Decrease in short-term investment -- 46,000
Proceeds from asset dispositions 23,000 5,000
Purchase equipment (85,000) (76,000)
Software development (87,000) (157,000)
----------- -----------
Net cash used by investing activities (149,000) (182,000)
----------- -----------
Proceeds from bank line of credit 353,000 300,000
Exercised stock options 28,000 7,000
----------- -----------
Net cash provided by financing activities 381,000 307,000
----------- -----------
Decrease in cash and cash equivalents (1,024,000) (567,000)
Cash and cash equivalents at beginning of period 1,599,000 951,000
----------- -----------
Cash and cash equivalents at end of period $ 575,000 $ 384,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. GENERAL NOTES:
Certain notes to the September 30, 1997 audited consolidated financial
statements filed with Form 10-K are applicable to the unaudited
consolidated financial statements for the nine months ended June 30, 1998.
Accordingly, reference should be made to the audited financial statements
at September 30, 1997.
In the opinion of the Company, the unaudited consolidated financial
statements as of June 30, 1998 contain all adjustments (including normal
recurring accruals) necessary to fairly present the financial position and
the results of operations of the Company. The timing of market study
orders and software license agreements can significantly impact quarterly
results of operations.
- --------------------------------------------------------------------------------
2. SUPPLEMENTAL CASH FLOW INFORMATION:
The Company paid interest of $35,000 and $123,000 during the three months
ended June 30, 1998 and 1997, respectively. Net income taxes of $49,000
and $27,000 were paid during the same respective periods.
- --------------------------------------------------------------------------------
3. INCOME TAXES
In March 1996, the Internal Revenue Service initiated an examination of
tax years 1993 through 1995. The Company has not yet received a final
report of the results but believes that the financial statements reflect
the estimated impact resulting from revenue timing matters at issue and
pending IRS technical review.
- --------------------------------------------------------------------------------
4. DEBT
Effective June 28, 1998, the Company obtained a $1,500,000 line of credit
with NationsBank, N. A. The agreement is for a twelve-month period and
bears interest on any outstanding balances at New York prime plus 1%. The
line is secured by substantially all of MPSI's accounts and contracts
receivable, together with general intangible assets. At June 30, 1998,
$500,000 has been advanced under the line of credit. The agreement
restricts the Company's external financing during the commitment period as
described below:
* The Company must not permit to exist any borrowings except (a)
borrowings under this agreement, (b) borrowings in connection with the
purchase or leasing of assets in the normal course of business, (c)
obligations related to trade payables incurred in the ordinary course of
business, or (d) obligations under existing leases.
* The Company's "Stockholders' Equity" must be in excess of $3,500,000
during the commitment period.
The Company is in compliance with these restrictions, and management is of
the opinion that these restrictions will not adversely affect the
Company's operations as they allow sufficient flexibility to meet
anticipated operating requirements.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND QUARTERLY RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
MPSI reported a net loss of $308,000 or $.11 per share on revenues of $5.2
million for its third fiscal quarter ended June 30, 1998 which compared with net
income of $297,000 or $.11 per share on revenues of $6.6 million for the June
30, 1997 quarter. For the nine months ended June 30, 1998, MPSI reported a net
loss of $933,000 or $.33 per share on revenues of $14.4 million. This compared
with net income of $896,000 or $.31 per share on revenues of $17.0 million for
the nine months last year on the strength of substantial new business in the
Pacific Rim.
These results reflect the effects of lower profitability in the retail petroleum
industry in several geographic regions which MPSI serves, combined with
incremental net start-up costs of approximately $214,000 for the nine months
versus last year related to certain new business ventures. Traditionally, the
petroleum industry, lead by the United States, Japan and the Pacific Rim,
generates over 90% of MPSI's revenues. Lower petroleum industry profitability
has caused several petroleum clients to implement cost containment programs and
delay their retail marketing spending during these unsettled times. While MPSI's
revenues were up in the North American region by $374,000 (6%) over the nine
months last year, margins declined approximately $434,000 (14%) as a result of
pricing pressures and lower leveraging due to fewer number of participants on
studies. Revenues in the European region were flat as compared to last fiscal
year but margins were up significantly ($518,000 or 58%) due to increased
business in South Africa, which included leveraged studies. Due to the
realignment of the Bristol, England office during fiscal year 1998, operating
expenses in the European region decreased $321,000 (15%) as compared to the nine
months of last fiscal year. Management anticipates further cost containment
actions and sales efforts aimed at returning this region to profitability. The
impact of deregulation in Japan and the turmoil in many Pacific Rim countries
resulting from the recent crisis in the international banking system in the
region has adversely affected operations in this region. Revenues from
Asia/Japan were down approximately 43% compared with last year ($1.5 million for
the quarter and $3.2 million for the nine months).
While the reported results and the levels of the petroleum industry
profitability present significant short-term challenges to MPSI's management,
the situation offers significant opportunities for MPSI to accelerate its
consultancy build up. MPSI has traditionally provided consulting services to its
clients, primarily in areas affecting retail site selection and operations. The
confluence of current petroleum industry economics and recent trends involving
more robust product and service offerings at the retail level provides MPSI the
opportunity to fill a gap in client expertise caused by staff reductions. Having
provided consultancy services on a worldwide basis and having developed an
unparalleled database of retail marketing information, MPSI is uniquely
qualified to provide integrated solutions based upon previous experiences to
clients who must now squeeze every ounce of profitability from their networks
while at the same time trimming costs and battling competition from new sources.
MPSI's ability to take advantage of these consultancy opportunities in the near
term is dependent in part upon successful commercial strategic alliance
discussions, which are ongoing.
During the nine months ended June 30, 1998, MPSI experienced an increase in
operating expenses of approximately $316,000 (4%) compared with the same period
last year. However, in line with the trend of revenues, MPSI implemented cost
containment measures during March 1998 including limitations on new personnel
and travel restrictions which resulted in expenses for the quarter being flat as
compared with the same quarter last year. For the long term, MPSI has recently
completed phase one of its internal process evaluation, a project which was
initiated in mid-1997 and was designed to identify opportunities to refine or
change both software development/maintenance and database production processes.
MPSI has identified opportunities for substantial reductions in future costs and
database delivery timelines. Phase two has now begun with the formulation of a
new product vision, which will be the basis for implementation of changes not
only to data management, but also to software development. Management has
analyzed present processes and developed interim cost reduction measures
designed to account for lower but profitable business in spite of the Asian
downturn. MPSI expects to roll out its first version of the new technology in
mid 1999.
General and administrative expenses are up $58,000 (7%), as compared with the
third quarter last year, due to the relocation of our corporate headquarters,
but are down approximately $96,000 (4%) for the nine months due primarily to
lower employee incentive costs. Decreased marketing expenses of $69,000 (4%) for
the quarter compared with the same period last year are the result of cost
cutting measures implemented during March 1998. The increase in marketing
expense of $199,000 (4%) for the nine months compared with last year is
principally attributable to additional sales personnel and the associated
sales-oriented travel. Research and development expenses are up approximately
$20,000 (4%) and $215,000 (17%) for the quarter and nine months, respectively,
compared with the similar periods last year. Although there has been no
substantial change in personnel levels, more resources are presently allocated
to software
9
<PAGE> 10
maintenance and research activities (expensed), whereas last year such resources
were dedicated to development of regional software/upgrades and were therefore
capitalized. As MPSI anticipates significant software product improvements
during fiscal year 1999, management anticipates that more of the costs of this
group will again be capitalized in future financial statements.
Other income is up approximately $10,000 in the quarter but down approximately
$35,000 for the nine months compared with last year. MPSI has reported higher
interest income relative to multi-year software license agreements renewed late
last fiscal year. Additionally, MPSI has experienced lower vendor financing
charges thus far in fiscal year 1998 with improved working capital financing
through its principal bank line of credit which only came into existence during
the third quarter last year. Currency losses were experienced during both the
June 1998 and 1997 quarters of $96,000 and $45,000, respectively. For the nine
months ended June 30, 1998, MPSI reported aggregate currency losses of
approximately $150,000 compared with currency losses of approximately $3,000 for
the similar period last year. These losses are primarily due to the downturn in
the Asian markets, which adversely affect the conversion of MPSI contracts
billed in foreign currency. Management anticipates that, particularly with
respect to clients in the Pacific Rim, MPSI can anticipate further currency
losses throughout the remainder of fiscal year 1998 as clients pressure MPSI to
bill partially in their local currencies.
Income taxes are composed of foreign withholding taxes on certain international
sales ($86,000) and foreign taxes on foreign operations ($22,000) offset by
utilization of domestic losses to reduce previously recorded deferred income
taxes of $350,000.
FINANCIAL CONDITION AND LIQUIDITY
Working capital of $2.4 million at June 30, 1998 increased approximately
$217,000 during the quarter. Cash resources were $167,000 (14%) higher and trade
payables/accruals decreased approximately $310,000 due to increased cash
receipts from clients. Trade receivables (net of the unearned portions reported
in the current portion of deferred revenue) decreased about $773,000 reflecting
an increased effort in collections. Backlog of approximately $15 million remains
strong. Although the economic uncertainties in the Pacific Rim have not resulted
in substantive receivables collection issues to date, management anticipates
additional pressure on cash resources from (1) longer client payment cycles and
(2) at least partial billing for future products and services in certain local
currencies. This may have the effect of exposing MPSI to additional currency
fluctuation risks in future periods.
Effective June 29, 1998, MPSI negotiated an increase in its bank line of credit
to $1,500,000. The twelve-month credit line is secured by substantially all of
MPSI's accounts and contracts receivable, together with general intangible
assets and bears interest as New York prime plus 1%. See note 4 to the
Consolidated Financial Statements for information about additional terms and
financial covenants.
MPSI's net investment in equipment declined approximately $96,000 during the
quarter ended June 30, 1998 due principally to depreciation. During the quarter
and nine months ended June 30, 1998, the Company purchased $37,000 and $85,000,
respectively, of new computer equipment, in addition to leasing approximately
$8,000 and $150,000 respectively, under a $400,000 equipment lease line from a
commercial leasing agent. Management anticipates that the available lease
funding will be sufficient for computer equipment requirements through the end
of calendar year 1998.
The net increase in capitalized software development costs of $42,000 during the
June 1998 quarter resulted from capitalization of $87,000 on the new CAPS model
for Japan offset by amortization of $45,000 on existing products. Substantial
research activities (expensed) are in process relative to a new generation of
MPSI products anticipated for rollout during mid-1999.
Other non-current liabilities declined $218,000 during the nine months ended
June 30, 1998 due to the utilization of current year operating losses against
previously recorded deferred tax liabilities offset by an increase to deferred
rent liability of approximately $160,000 related to the lease of our new
corporate headquarters.
Changes in stockholder's equity since September 30, 1998 are the result of
losses for the year, the exercise of certain stock options as set forth in the
Consolidated Statement of Stockholder's Equity, and variation in the foreign
currency translation adjustment relating to the consolidation of foreign
subsidiaries, particularly in the Pacific Rim.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 1 -- Legal Proceedings - None.
Item 2 -- Changes in Securities - None.
Item 3 -- Defaults Upon Senior Securities - None.
Item 4 -- Submission of Matters to a Vote of Security Holders - None.
Item 5 -- Other Information - None
Item 6 -- Exhibits and Reports on Form 8-K. Page
----
(a) Exhibits:
11.1 Earnings per share computation 14
27.1 Financial Data Schedule 15
(b) Reports on Form 8-K - None -
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned hereunto duly authorized.
MPSI SYSTEMS INC.
Date August 10, 1998 By /s/ Ronald G. Harper
----------------- ----------------------------
Ronald G. Harper, President
(Chief Executive Officer) and
Director
Date August 10, 1998 By /s/ James C. Auten
----------------- ----------------------------
James C. Auten
Vice President
(Chief Financial Officer)
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
11.1 Earnings Per Share Computation 14
27.1 Financial Data Schedule 15
</TABLE>
13
<PAGE> 1
EXHIBIT 11.1
EARNINGS PER SHARE COMPUTATION
Earnings per share calculations may be affected by the granting of stock options
under the provisions of MPSI Systems Inc. Stock Option Plans. The granting of
these options may have a dilutive effect on earnings per common and common
equivalent share. Following is a summary computation of the weighted average
number of shares outstanding and earnings per share using the treasury-stock
method. All computations give effect to a reverse stock split effective November
16, 1993 as if the transaction had occurred retroactively. Primary and fully
diluted earnings per share are the same for each period presented.
<TABLE>
<CAPTION>
Three Months Ended June 30, Nine Months Ended June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common stock outstanding throughout the period 2,801,000 2,794,000 2,793,164 2,794,000
Exercised options -- 3,000 3,000 3,000
Dilutive unexercised stock options:
Shares presumed issued at exercise
($2.25 to $3.00 per share in 1998 and 1997) 4,000 10,000 24,000 53,000
--------- --------- --------- ---------
Weighted average shares outstanding 2,805,000 2,807,000 2,820,000 2,850,000
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
(a) (b)
Weighted
Results of Average
Operations Shares Per Share (a / b)
---------- --------- ------------------
<S> <C> <C> <C> <C> <C>
Net loss - Three Months Ended June 30, 1998 $(308,000) 2,805,000 $(.11)
Nine Months Ended June 30, 1998 $(933,000) 2,820,000 $(.33)
Net income - Three Months Ended June 30, 1997 $ 297,000 2,807,000 $.11
Nine Months Ended June 30, 1997 $ 896,000 2,850,000 $.31
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 575
<SECURITIES> 3
<RECEIVABLES> 6,515
<ALLOWANCES> 0
<INVENTORY> 209
<CURRENT-ASSETS> 7,419
<PP&E> 7,450
<DEPRECIATION> (6,544)
<TOTAL-ASSETS> 10,814
<CURRENT-LIABILITIES> 5,145
<BONDS> 0
0
0
<COMMON> 142
<OTHER-SE> 3,937
<TOTAL-LIABILITY-AND-EQUITY> 10,814
<SALES> 5,224
<TOTAL-REVENUES> 5,224
<CGS> 2,383
<TOTAL-COSTS> 3,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (35)
<INCOME-PRETAX> (264)
<INCOME-TAX> 44
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (308)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
