<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
[ ] 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 1-8722
THE MACNEAL-SCHWENDLER CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-2239450
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
815 Colorado Boulevard, Los Angeles, California 90041
-----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number (213) 258-9111
--------------
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 Registrant's Common Stock, par value $.01
per share, was 13,569,530 shares at December 8, 1997.
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - October 31, 1997 (Unaudited)
and January 31, 1997. . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited)
Three and Nine Months Ended October 31, 1997 and 1996 . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended October 31, 1997 and 1996 . . . . . . . . . . . 5
Notes to Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition . . . . . . . . . . . . . . . . . . . . . 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 12
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1997 1997
------------- -------------
ASSETS (UNAUDITED)
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,880,000 $ 24,016,000
Short-term investments 10,546,000 1,052,000
Trade accounts receivable, net 37,232,000 36,328,000
Other current assets 8,182,000 8,884,000
------------- -------------
Total current assets 70,840,000 70,280,000
Property and equipment, net 9,010,000 10,242,000
Capitalized software costs, net 28,505,000 28,173,000
Goodwill and other intangibles, net 14,539,000 16,265,000
Other assets 2,982,000 2,862,000
------------- -------------
$ 125,876,000 $ 127,822,000
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,289,000 $ 2,248,000
Accrued liabilities 20,491,000 25,968,000
Deferred income 7,802,000 9,035,000
------------- -------------
Total current liabilities 29,582,000 37,251,000
Deferred income taxes 9,667,000 10,465,000
Convertible subordinated debentures 56,574,000 56,574,000
Commitments
Shareholders' equity:
Preferred stock, $0.01 par value, 10,000,000
shares authorized; no shares outstanding
at October 31, 1997 or January 31, 1997 - -
Common stock, $0.01 par value,
100,000,000 shares authorized;
13,570,000 and 13,456,000 issued and
outstanding at October 31, 1997 and
January 31, 1997, respectively 31,045,000 30,250,000
Retained earnings (deficit) 2,807,000 (4,093,000)
Accumulated translation adjustment (3,799,000) (2,625,000)
------------- -------------
Total shareholders' equity 30,053,000 23,532,000
------------- -------------
$ 125,876,000 $ 127,822,000
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
3
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31, NINE MONTHS ENDED OCTOBER 31,
------------------------------ ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 24,395,000 $ 25,193,000 $ 74,414,000 $ 78,415,000
Software maintenance and services 7,166,000 6,074,000 21,375,000 17,430,000
------------ ------------ ------------ ------------
Total revenues 31,561,000 31,267,000 95,789,000 95,845,000
Operating expenses:
Cost of revenue 6,474,000 4,612,000 18,501,000 14,321,000
Amortization of goodwill and other intangibles 567,000 567,000 1,701,000 1,701,000
Research and development 2,814,000 4,951,000 8,912,000 16,145,000
Selling, general and administrative 17,306,000 16,476,000 53,408,000 51,073,000
------------ ------------ ------------ ------------
Total operating expenses 27,161,000 26,606,000 82,522,000 83,240,000
Operating income 4,400,000 4,661,000 13,267,000 12,605,000
Debenture interest (1,114,000) (1,114,000) (3,342,000) (3,342,000)
Other income (expense), net 526,000 (74,000) 529,000 (565,000)
------------ ------------ ------------ ------------
Income before income taxes 3,812,000 3,473,000 10,454,000 8,698,000
Provision for income taxes 1,296,000 1,129,000 3,554,000 2,827,000
------------ ------------ ------------ ------------
Net income $ 2,516,000 $ 2,344,000 $ 6,900,000 $ 5,871,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Primary earnings per share $ 0.18 $ 0.17 $ 0.50 $ 0.43
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average number of
common shares outstanding 13,690,000 13,480,000 13,718,000 13,499,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
4
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31
--------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,900,000 $ 5,871,000
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation and amortization of property and equipment 4,074,000 4,780,000
Amortization of goodwill and other intangibles 1,701,000 1,701,000
Amortization of capitalized software costs 9,120,000 5,243,000
Deferred income taxes (798,000) -
Loss on disposal of property and equipment 58,000 23,000
Changes in assets and liabilities:
Accounts receivable, net (904,000) 3,061,000
Other current assets 702,000 (379,000)
Accounts payable (959,000) (953,000)
Accrued liabilities (4,704,000) (1,421,000)
Deferred income (1,233,000) 283,000
Restructuring reserve - (1,332,000)
Income taxes payable (773,000) (379,000)
------------ ------------
Net cash provided by operating activities 13,184,000 16,498,000
Cash flows from investing activities:
(Increase) decrease in short-term investments (9,494,000) 2,285,000
Acquisition of property and equipment (2,929,000) (3,754,000)
Proceeds from sale of Electronics Business Unit - 5,600,000
Purchase of subsidiary, net of cash acquired - (115,000)
Capitalized software costs (9,422,000) (6,294,000)
Increase in other assets (96,000) (238,000)
------------ ------------
Net cash (used in) provided by investing activities (21,941,000) (2,516,000)
Cash flows from financing activities:
Proceeds from capital stock issued 795,000 152,000
Payments of long-term debt - (2,000)
Cash dividends paid - (5,111,000)
------------ ------------
Net cash provided by (used in) financing activities 795,000 (4,961,000)
Effect of exchange rate changes on cash (1,174,000) 400,000
------------ ------------
Net (decrease) increase in cash and cash equivalents (9,136,000) 9,421,000
Cash and cash equivalents at beginning of period 24,016,000 7,235,000
------------ ------------
Cash and cash equivalents at end of period $ 14,880,000 $ 16,656,000
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
5
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial information is condensed
from that which would appear in the annual financial statements and should be
read in conjunction with the consolidated financial statements included in The
MacNeal-Schwendler Corporation's Annual Report on Form 10-K for the year ended
January 31, 1997.
Supplemental cash flow information for taxes paid during the nine months
ended October 31, 1997 and 1996 were $5,125,000 and $3,174,000, respectively.
Additionally, the Company paid interest of $4,454,000 on its Convertible
Subordinated Debentures due 2004 during both nine month periods ended October
31, 1997 and October 31, 1996, respectively.
Fully-diluted earnings per share calculated under the treasury method were
anti-dilutive for the three and nine months ended October 31, 1997 and for the
same periods ended October 31, 1996. Fully-diluted earnings per share under
the treasury method are calculated by dividing net income by the weighted
average number of shares of common stock outstanding during the period,
adjusted for the pro forma effects of stock option exercises and debenture
conversions.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS No. 128 establishes a different method of computing earnings per
share than is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS No. 128, the Company will be required to
present both basic earnings per share and diluted earnings per share. Basic
and diluted earnings per share for the three and nine months ended October 31,
1997 and 1996 would have been substantially the same as primary earnings per
share. The Company plans to adopt SFAS No. 128 in its fourth quarter of the
current fiscal year, and at that time all historical earnings per share data
presented will be restated to conform to the provisions of SFAS No. 128.
All interim financial data is unaudited but, in the opinion of management,
reflects all adjustments necessary for a fair presentation thereof. However,
it should be understood that accounting measurements at interim dates may be
less precise than at year end. Operating results for the nine months ended
October 31, 1997 are not necessarily indicative of the results that may be
expected for the year ended January 31, 1998.
Certain reclassifications have been made to the financial information for
the three months and nine months ended October 31, 1996 in order to conform to
the October 31, 1997 presentation.
NOTE 2: CAPITALIZED SOFTWARE
The components of net capitalized software costs were as follows:
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<C> <S> <S> <S> <S>
Software costs capitalized $(3,355,000) $(1,811,000) $(9,422,000) $(6,294,000)
Amortization of capitalized software 3,205,000 1,661,000 9,120,000 5,243,000
----------- ----------- ----------- -----------
Net capitalized software costs $ (150,000) $ (150,000) $ (302,000) $(1,051,000)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Amortization expense associated with capitalized software costs is reported
in cost of revenue, and capitalization of software costs is reported as a
reduction of research and development expense.
6
<PAGE>
NOTE 3: ACCRUED LIABILITIES
The components of accrued liabilities are as follows:
October 31, January 31,
1997 1997
---- ----
Compensation and related expenses $ 6,361,000 $ 6,845,000
Commissions payable 2,023,000 3,958,000
Debenture interest payable 574,000 1,687,000
Contribution to profit sharing plan 2,281,000 3,107,000
Post-retirement benefits 2,364,000 1,551,000
Income taxes payable 10,000 783,000
Royalties payable 664,000 911,000
Sales taxes payable 1,849,000 3,552,000
Incentive compensation 121,000 224,000
Stock purchase plan 223,000 216,000
Other 4,021,000 3,134,000
------------ ------------
$ 20,491,000 $ 25,968,000
------------ ------------
------------ ------------
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED OCTOBER 31, 1997 VS. THREE MONTHS ENDED OCTOBER 31, 1996
Consolidated revenues were $31,561,000 in the third quarter, compared to
revenues of $31,267,000 in the third quarter of the prior fiscal year.
Third quarter revenues, measured in U.S. dollars, were adversely affected by
the strengthening of the U.S. dollar against the Japanese yen and German mark
compared to the same quarter last year. Had the U.S. dollar remained at the
same foreign exchange levels as the prior year, consolidated third quarter
revenues would have been higher by approximately $2,395,000, or 8%. The
amount of service revenue was not material to total revenues for the quarters
ended October 31, 1997 and October 31, 1996.
Cost of revenue increased $1,862,000, or 40%, compared to the third
quarter of the prior fiscal year, primarily resulting from an increase in the
amortization of capitalized software costs of $1,544,000 and an increase of
$280,000 in direct material costs related to continued product releases.
Royalty expense is included in cost of revenue and paid to third parties
under various agreements. The Company does not consider any royalty expense
related to individual agreements to be material. Research and development
costs, which are reported net of capitalized software costs, decreased
$2,137,000, or 43%. Research and development costs capitalized increased by
$1,544,000 compared to the third quarter of the prior year due to the
increased level of new product development in the current quarter. Research
and development expenses, excluding capitalized software costs, decreased
$593,000, or 9%, due mostly to changes in development staffing and exchange
rate fluctuations that reduced overseas development expenses measured in
dollars. The amount of research and development costs capitalized fluctuates
from quarter to quarter, depending in part on the number of products and
their stage of development. Software capitalization consists primarily of
the costs of writing code and quality assurance testing. In the third
quarter, the amount of selling, general and administrative costs increased by
$830,000 worldwide compared to the same period of the prior year, due to
increased staffing resulting from the build-up of infrastructure and
increased related expenses from that growth. The resulting changes as
described above generated an overall increase in operating expenses of 2%, to
$27,161,000, compared to the same quarter last year.
The Company's resulting operating income for the quarter ended October
31, 1997 was $4,400,000, a 6% decrease from operating income of $4,661,000
during the third quarter last year. The net effect of the capitalization of
software development costs and the amortization of such capitalized costs was
a net benefit of $150,000 for both the three months ended October 31, 1997, and
the three months ended October 31, 1996.
Other income includes interest and investment income, foreign exchange
gain/loss and other income. The increase in other income for the quarter
ended October 31, 1997, compared to the same period last year, was
predominantly due to a reduction of foreign exchange losses of $516,000.
8
<PAGE>
Net income was $2,516,000 compared to net income of $2,344,000 in the
prior year, an increase of 7%. Primary earnings per share for the three
months ended October 31, 1997 were $0.18 compared to $0.17 for the three
months ended October 31, 1996. The stronger U.S. dollar had an adverse
effect on third quarter earnings. Had exchange rates for the three months
ended October 31, 1997 remained the same as for the three months ended
October 31, 1996, net income and primary earnings per share would have been
higher by $503,000 and $0.04, respectively.
NINE MONTHS ENDED OCTOBER 31, 1997 VS. NINE MONTHS ENDED OCTOBER 31, 1996
Consolidated revenues were $95,789,000 for the nine months ended October
31,1997 compared to revenues of $95,845,000 for the same period of the prior
fiscal year. Current year to date revenues were adversely affected by the sale
of the MSC/EMAS product line in the second quarter of the prior fiscal year.
Current year revenue was 3% higher than the prior year revenue excluding
revenue from the MSC/EMAS product line. In addition, year to date revenues,
measured in U.S. dollars, were adversely affected by the strengthening of the
U.S. dollar against the Japanese yen and German mark compared to the same
period last year. Had the U.S. dollar remained at the same foreign exchange
levels as the prior year, consolidated year to date revenues would have been
higher by approximately $6,471,000, or 7%. The amount of service revenue was
not material to total revenues for the nine months ended October 31, 1997 and
October 31, 1996.
Excluding prior year MSC/EMAS revenues, Asia Pacific and European
revenues, measured in local currency, increased by 10% and 9%, respectively,
and the Americas revenues increased by 10%. On a geographical basis, the
Americas represented 44%, Europe represented 29%, and Asia Pacific represented
27% of total revenues for the nine month period ended October 31, 1997.
Cost of revenue increased $4,180,000, or 29%, primarily resulting from
an increase in the amortization of capitalized software costs of $3,877,000
compared to the nine month period of the prior fiscal year. Royalty expense
is included in cost of revenue and paid to third parties under various
agreements. The Company does not consider any royalty expense related to
individual agreements to be material. Research and development costs, which
are reported net of capitalized software costs, decreased $7,233,000, or 45%.
Research and development costs capitalized increased by $3,128,000 compared
to the same period of the prior year, due to the increased level of new
product development in the current nine month period. Research and
development expenses, excluding software capitalization, decreased
$4,105,000, or 18%, due mostly to changes in development staffing and
exchange rate fluctuations that reduced overseas development expenses
measured in dollars. The amount of research and development costs capitalized
fluctuates from period to period, depending in part on the number of products
and their stage of development. Software capitalization consists primarily
of the costs of writing code and quality assurance testing. In the nine month
period, the amount of selling, general and administrative costs increased by
$2,335,000, or 5%, worldwide compared to the same period of the prior year,
due to increased staffing resulting from the build-up of infrastructure and
increased related expenses from that growth. The resulting changes as
described above generated an overall decrease in operating expenses of 1%, to
$82,522,000, compared to the same period last year.
The Company's resulting operating income for the nine months ended
October 31, 1997 was $13,267,000, a 5% increase from operating income of
$12,605,000 during the same period of last year. The net effect of the
capitalization of software development costs and the amortization of such
capitalized costs was a net benefit of $302,000 for the nine months ended
October 31, 1997, compared to a net benefit of $1,051,000 for the nine months
ended October 31, 1996. Excluding net software capitalization, operating
income for the nine months ended October 31, 1997 rose 12% compared to the
nine months ended October 31, 1996.
9
<PAGE>
Other income includes interest and investment income, foreign exchange
gain/loss and other income. The increase in other income for the nine months
ended October 31, 1997, compared to the same period last year, was
predominantly due to an increase in interest and investment income of
$397,000 and a reduction of foreign exchange losses of $753,000.
Net income was $6,900,000 compared to net income of $5,871,000 in the
prior year, an increase of 18%. Primary earnings per share for the nine
months ended October 31, 1997 were $0.50 compared to $0.43 for the nine months
ended October 31, 1996. The stronger U.S. dollar had an adverse effect on
earnings. Had exchange rates for the nine months ended October 31, 1997
remained the same as for the nine months ended October 31, 1996, net income
and primary earnings per share would have been higher by $1,893,000 and $0.14,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Historically, working capital needed to finance the Company's operations
and growth has been provided by cash on hand and cash flow from operations.
Management believes that cash generated from operations will continue to be
sufficient for working capital needs in the foreseeable future. Net cash
from operating activities was $13,184,000 in the nine months ended October
31, 1997, compared with $16,498,000 during the comparable period of the prior
year. Cash and short-term investments were $25,426,000 at October 31, 1997
compared to $25,068,000 at January 31, 1997. The Company's working capital
was $41,258,000 at October 31, 1997, an increase from $33,029,000 at January
31, 1997. The increase in the Company's working capital resulted from a
decrease in current liabilities including accrued liabilities as presented in
"Note 3: Accrued Liabilites." The Company has an agreement for a $15,000,000
unsecured line of credit with its principal bank at the prevailing prime
rate. No amounts were outstanding under this agreement at October 31, 1997.
The Company issued convertible subordinated debentures in connection
with the PDA acquisition in the aggregate amount of approximately
$56,608,000. The debentures bear interest at 7-7/8%, with interest payments
due semi-annually in March and September. Debenture interest payments were
made in both March 1997 and September 1997 totalling $4,454,000. The amount
of interest will decrease if the debentures are converted into common stock.
The debentures mature in August 2004.
Management expects to continue to reinvest the Company's revenues in the
research and development of new computer software products and the
enhancement of existing products. Total research and development costs were
$18,334,000 and $22,439,000 for the nine months ended October 31, 1997 and
October 31, 1996, respectively, of which $9,422,000 and $6,294,000 were
capitalized. Product development costs and the capitalization rate vary
depending in part on the number of products in process and the stage of
development of those products.
During the nine months ended October 31, 1997 and October 31, 1996, the
Company acquired $2,929,000 and $3,754,000, respectively, of new property and
equipment. Capital expenditures during the current and prior fiscal years
included upgrades to computer equipment and facilities worldwide. The
Company's capital expenditures vary from year to year as required by business
needs. The Company intends to continue to expand the capabilities of its
computer equipment, which is used in the development and support of its
proprietary software products. Management expects overall expenditures for
property and equipment in fiscal years 1998 and 1999 to be consistent with
those for the fiscal year ended January 31, 1997.
10
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information in the Management's Discussion and Analysis of
Results of Operations and Financial Condition contained in this Form 10-Q
includes information that is forward looking. Such forward-looking
statements include, among others, statements concerning the Company's
international expansion, expected trends in revenue and operating expense,
capital expenditure plans, expectations regarding future liquidity, and other
statements of expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that are not
historical fact.
The forward-looking statements in this report are based on current
expectations and are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by those
statements. The risks and uncertainties include but are not limited to: the
timely development and market acceptance of new versions of the Company's
software products; the impact of competitive products and pricing; effective
development and utilization of the Company's offshore projects (currently in
Taiwan and India); successful involvement of international and domestic
business partners in creating mechanical engineering solutions; the level of
economic activity in the U.S. and abroad; fluctuations of the U.S. dollar
versus foreign currencies; timely development of CAE technologies which, among
other things, must accommodate industry trends such as increasing computing
power and increased usage of workstations; the Company's ability to reduce
costs without adversely impacting revenues; the Company's ability to attract,
motivate and retain salespeople, programmers and other key personnel; continued
demand for the Company's products, including MSC/NASTRAN, MSC/PATRAN,
MSC/ARIES, MSC/MVISION, MSC/DYTRAN, MSC/FEA, MSC/SuperModel, MSC/FATIGUE,
MSC/NVH_Manager, MSC/DropTest, MSC/CONSTRUCT, MSC/InCheck, MSC/Super Forge,
MSC/AMS and MSC/NASTRAN FOR WINDOWS; and such risks and uncertainties as are
detailed from time to time in the Company's other Securities and Exchange
Commission reports and filings.
Subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are hereby expressly qualified in
their entirety by the cautionary statements in this section of this Form 10-Q.
11
<PAGE>
THE MACNEAL-SCHWENDLER CORPORATION
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) The Company did not file any Current Reports on Form 8-K during the quarter
ended October 31, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MACNEAL-SCHWENDLER CORPORATION
----------------------------------
(Registrant)
Date: December 12, 1997
-----------------
/s/ LOUIS A. GRECO
-----------------------------------------------
Louis A. Greco, Chief Financial Officer
(Mr. Greco is the Principal Financial and
Accounting Officer and has been duly authorized
to sign on behalf of the registrant.)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CURRENCY>U.S. DOLLARS
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<EXCHANGE-RATE> 1
<CASH> 14,880
<SECURITIES> 10,546
<RECEIVABLES> 38,805
<ALLOWANCES> 1,573
<INVENTORY> 0
<CURRENT-ASSETS> 70,840
<PP&E> 35,756
<DEPRECIATION> 26,746
<TOTAL-ASSETS> 125,876
<CURRENT-LIABILITIES> 29,582
<BONDS> 56,574
0
0
<COMMON> 31,045
<OTHER-SE> (992)
<TOTAL-LIABILITY-AND-EQUITY> 125,876
<SALES> 0
<TOTAL-REVENUES> 31,561
<CGS> 6,474
<TOTAL-COSTS> 27,161
<OTHER-EXPENSES> (526)
<LOSS-PROVISION> 236
<INTEREST-EXPENSE> 1,114
<INCOME-PRETAX> 3,812
<INCOME-TAX> 1,296
<INCOME-CONTINUING> 2,516
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,516
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
