<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997 Commission File Number 0-13617
LIFELINE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2537528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
640 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices) (Zip Code)
(617) 679-1000
(Registrant's telephone number, including area code)
__________________
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock $0.02 par value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days. Yes ___X___ No ________
Number of shares outstanding of this issuer's class of common stock as of April
30, 1997: 5,709,230
<PAGE>
LIFELINE SYSTEMS, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets-March 31, 1997
and December 31, 1996 3
Consolidated Statements of Income - Three months
ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows - Three months
ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-10
PART II. OTHER INFORMATION
ITEM 6.
Exhibits and Reports on Form 8-K 11
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<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,792 $ 3,030
Short-term investments 5,994 7,140
Accounts receivable, net 6,496 6,062
Inventories 1,616 1,450
Net investment in sales-type leases 1,315 1,278
Other current assets 1,554 1,675
Deferred income taxes 1,046 1,046
--------------- ---------------
Total current assets 20,813 21,681
Long-term investments 5,134 3,178
Property and equipment, net 7,569 7,127
Goodwill, net 2,424 2,568
Net investment in sales-type leases 3,313 3,160
Other assets 195 195
--------------- ---------------
Total assets $ 39,448 $ 37,909
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,054 $ 1,063
Accrued expenses 3,102 2,520
Accrued payroll and payroll taxes 991 1,743
Accrued income taxes 1,408 854
Deferred revenues 765 812
Product warranty 656 639
Current portion of obligations under capital lease 7 7
Other current liabilities 32 40
--------------- ---------------
Total current liabilities 8,015 7,678
Obligations under capital lease 23 25
Deferred income taxes 1,690 1,690
Deferred compensation 997 896
Commitments:
Stockholders' equity:
Common stock, $.02 par value, 10,000,000 shares authorized,
6,250,678 shares issued at March 31, 1997 and 6,217,192
shares issued at December 31, 1996 125 124
Additional paid-in capital 15,719 15,618
Retained earnings 16,106 15,151
--------------- ---------------
31,950 30,893
Less: treasury stock at cost, 542,548 shares at March 31, 1997
and 532,348 shares at December 31, 1996 (3,102) (2,923)
Notes receivable - officers (100) (350)
Cumulative translation adjustment (25) -
--------------- ---------------
Total stockholders' equity 28,723 27,620
--------------- ---------------
Total liabilities and stockholders' equity $ 39,448 $ 37,909
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except for per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------------
1997 1996
-------------- ---------------
<S> <C> <C>
Revenues
Services $ 7,349 $ 5,419
Net product sales 5,918 5,467
Finance and rental income 289 270
-------------- ---------------
Total revenues 13,556 11,156
-------------- ---------------
Costs and expenses
Cost of services 3,362 2,448
Cost of sales 1,810 1,936
Selling, general, and administrative 6,537 5,280
Research and development 429 483
-------------- ---------------
Total costs and expenses 12,138 10,147
-------------- ---------------
Income from operations 1,418 1,009
-------------- ---------------
Other income (expense)
Interest income 162 168
Interest expense (2) (2)
-------------- ---------------
Total other income, net 160 166
-------------- ---------------
Income before income taxes 1,578 1,175
Provision for income taxes 623 485
-------------- ---------------
Net income $ 955 $ 690
============== ===============
Net income per common share:
Primary $ 0.15 $ 0.11
============== ===============
Fully diluted $ 0.15 $ 0.11
============== ===============
Weighted average common and common equivalent
shares outstanding:
Primary 6,246 6,166
============== ===============
Fully diluted 6,246 6,184
============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 955 $ 690
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 967 720
Deferred compensation 101 99
Changes in operating assets and liabilities:
Accounts receivable (442) 194
Inventories (166) (24)
Net investment in sales-type leases (190) 138
Prepaid expenses, other current assets and other assets 121 42
Accrued payroll and payroll taxes (752) (1,189)
Other current liabilities 536 1,178
Income taxes payable 554 323
------------ ------------
Net cash provided by operating activities 1,684 2,171
------------ ------------
Cash flows from investing activities:
Purchases of investments (4,230) (4,597)
Sales and maturities of investments 3,420 4,205
Additions to property and equipment (1,274) (954)
------------ ------------
Net cash used in investing activities (2,084) (1,346)
------------ ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (2) (24)
Proceeds from issuance of common stock 96 108
Purchase of treasury stock (182) (709)
Issuance of treasury stock 9 18
Repayment of note receivable, officer 250 -
------------ ------------
Net cash provided by (used in) financing activities 171 (607)
------------ ------------
Effect of foreign exchange on cash (9) -
Net increase (decrease) in cash and cash equivalents (238) 218
Cash and cash equivalents at beginning of period 3,030 3,490
------------ ------------
Cash and cash equivalents at end of period $ 2,792 $ 3,708
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
<PAGE>
LIFELINE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The information furnished has been prepared from the accounts without audit.
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments necessary, consisting only of those of a
normal recurring nature, to present fairly its consolidated financial
position as of March 31, 1997 and the consolidated results of its operations
and cash flows for the three months ended March 31, 1997 and 1996.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, these statements should be read in
conjunction with the consolidated financial statements and the related notes
included in the Company's audited financial statements for the year ended
December 31, 1996.
The results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of the results expected for the full year.
2. Details of certain balance sheet captions are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Inventories:
Purchased parts and assemblies $ 944 $ 797
Work-in-process 411 392
Finished goods 261 261
--------- -----------
$ 1,616 $ 1,450
========= ===========
Property and equipment
Equipment $ 10,399 $ 9,786
Equipment leased to others 5,780 5,218
Equipment under capital leases 1,035 1,035
Leasehold improvements 732 692
Furniture and fixtures 603 574
--------- -----------
18,549 17,305
Less accumulated depreciation and amortization (10,980) (10,178)
--------- -----------
$ 7,569 $ 7,127
========= ===========
</TABLE>
3. In February, 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal
years ending after December 15, 1997, including interim periods. SFAS 128
requires the presentation of basic and diluted earnings per share (EPS).
Basic EPS, which replaces primary EPS, excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Diluted EPS is computed similarly to fully diluted EPS under the existing
rules. SFAS 128 requires restatement of all prior-period earnings per share
data presented after the effective date. The Company will adopt SFAS 128 in
1997 and has not yet determined the impact of adoption.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This and other reports, proxy statements, and other communications to
stockholders, as well as oral statements by the Company's officers or its
agents, may contain forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, with respect to, among other
things, the Company's future revenues, operating income, or earnings per share.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. There are a number of factors of which the Company is aware that
may cause the Company's actual results to vary materially from those forecast or
projected in any such forward-looking statement. These factors include, without
limitation, those set forth below under the caption "Certain Factors That May
Affect Future Results." The Company's failure to successfully address any of
these factors could have a material adverse effect on the Company's future
results of operations.
RESULTS OF OPERATIONS
Total revenues for the quarter ended March 31, 1997 were $13.6 million, an
increase of 22% compared with the total revenues of $11.2 million for the
quarter ended March 31, 1996.
Service revenues grew 36% to $7.3 million for the first quarter of 1997 from
$5.4 million for the first quarter of 1996. Service revenues comprised over 54%
of the Company's total revenues during the first quarter of 1997, as compared to
49% during the same period in 1996. The Company is now monitoring 166,000
subscribers as of March 31, 1997, 30% more than the 128,000 monitored at the end
of the first quarter of 1996. The Company's ability to sustain or increase the
current level of service revenue growth in the long run depends on its ability
to expand the market for its personal response services and convert additional
locally monitored programs to service provided by Lifeline. The Company
believes that the high quality of its services and its commitment to providing
caring and rapid response to the at-risk elderly and physically challenged will
be a factor in meeting this challenge.
Product sales for the first quarter of 1997 increased 8% to $5.9 million from
$5.5 million for the same period in 1996. Shipments of communicators for the
quarter ended March 31, 1997 rose 6% over the same period last year. In January,
1997, the Company introduced the Classic Pendant /TM/, a new personal help
button designed with particular emphasis on its fashion appeal. A 36% increase
in overall accessories sales, including personal help buttons, contributed to
the increase in product sales over prior year results. The Company expects
gradually declining product sales in future periods as it provides combined
service and hardware offerings in support of its transition to a service-
oriented business.
Finance and rental income, representing revenue earned from the Company's
portfolio of sales-type leases, rose 7% in the first quarter of 1997 to
$289,000, from $270,000 for the same period last year. The increase is a result
of the Company's internally managed and funded leasing program which has been in
effect since January, 1996. The Company's retention of new leases in its own
portfolio is expected to result in an increase in finance income for the
remainder of 1997.
Cost of services increased as a percentage of service revenues, to 46% for the
first quarter of 1997 from 45% for the first quarter of 1996. As the Company
grows its subscriber base and develops its monitoring capabilities, it expects
to continue to invest in its service infrastructure to enhance its ability to
provide caring service for its subscribers. These investments are expected to
be directed
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<PAGE>
primarily toward systems enhancements and improvements. In addition, the Company
anticipates capital expenditures on its headquarters' response center
infrastructure and systems totaling approximately $9 million, the majority of
which will be expended during 1997. These expenditures are not expected to have
an impact on 1997 results of operations as the systems are not expected to be
placed in service until 1998. However, cost of services in 1998 and beyond are
expected to be impacted by the depreciation of these investments. The Company
has established goals for productivity improvements and other cost reductions
and is exploring other opportunities to offset the impact of these investments.
Cost of sales was 31% of product sales for the three months ended March 31,
1997, compared with 35% for the same period a year ago. The decrease was due
largely to improvements in manufacturing processes, efficiencies created by
higher than expected production and a full period of utilization of new
technology which reduced product costs. Increased button production in response
to the introduction and customer acceptance of the Classic Pendant added to the
improvement in cost of sales.
Selling, general, and administrative expenses increased as a percentage of total
revenues to 48% for the first quarter of 1997 as compared to 47% during the same
period in 1996. Actual first quarter selling, general, and administrative
expenditures totaled $6.5 million during 1997, an increase of $1.2 million over
expenses of $5.3 million for the same period in 1996. The increase was largely
attributable to the inclusion of administrative costs associated with CareTel,
Inc. of Ontario, Canada which was purchased by the Company in July, 1996;
increased salaries and related fringe benefits due to the overall increase in
the Company's employee base; sales and management bonuses relating to increased
eligibility; and higher spending associated with sales and marketing strategies.
Research and development expenses were 3% of total revenues for the quarter
ended March 31, 1997 as compared to 4% for the quarter ended March 31, 1996.
Research and development efforts are focused on ongoing product improvements and
developments. The Company expects to maintain these expenses at approximately a
consistent percentage of total revenues for the remainder of 1997.
The Company's effective tax rate was 39.5% for the three months ended March 31,
1997 versus 41% for the comparable period in 1996. The Company believes that
its tax rate will increase in future periods as a result of a lower tax benefit
from tax-exempt securities due to the Company's anticipated use of cash in 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1997, cash and cash equivalents
decreased $0.2 million to $2.8 million at March 31, 1997 from $3.0 million at
December 31, 1996. The decrease in cash and cash equivalents resulted from the
continued investment of excess cash in longer-term marketable securities
consistent with the Company's investment strategy for its cash and temporary
investments. The Company's portfolio of cash, cash equivalents, and investments
grew by $.6 million in total to $13.9 million from $13.3 million at December 31,
1996. The increase was due primarily as a result of profitable operations and
the repayment of a $250,000 note by the Company's Chief Executive Officer in
February, 1997. These cash flows were in part offset by additional investments
in property and equipment and the purchase of 10,700 shares of the Company's
common stock.
In 1997, the Company expects to use a significant amount of its cash and
marketable securities as it continues to invest in its information systems
infrastructure. The Company anticipates it will spend approximately $9 million
as it develops a flexible, scaleable, and fault tolerant response center
platform at its headquarters to support its growing subscriber base. While the
new platform is
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<PAGE>
anticipated to be placed in service after 1997, the majority of the outlays will
be expended during 1997, principally pursuant to development agreements expected
to be entered into with third party vendors.
During 1996, the Company adopted a revised investment strategy for its cash and
temporary investments. The implementation of the revised policy continued
during the first quarter of 1997, as the Company lengthened the maturity
structure of its portfolio. The Company continued to increase its investment
portfolio during the first quarter of 1997, with net purchases of $0.8 million
in marketable securities.
In January, 1997, the Company's Board of Directors approved the repurchase of up
to 100,000 shares of the Company's common stock from time to time in the open
market for general corporate purposes. Of the 100,000 shares approved, the
Company has purchased 10,700 shares of treasury stock for $0.2 million during
the first quarter of 1997.
In November, 1995 the Company secured a $4.0 million line of credit effective in
January, 1996. During 1996, the term of the credit facility was extended until
December, 1997. This credit agreement contains a number of covenants, including
requirements that the Company maintain certain levels of financial performance
and capital structure, limitations on the Company's capital and other
expenditures, and restrictions on the Company's capacity to secure additional
debt financing. No amounts were outstanding as of March 31, 1997.
Given the Company's current cash, marketable securities, credit availability,
and revenue levels, funding requirements for operations and in support of future
growth are expected to be met primarily from existing liquid assets, operating
cash flow, and existing borrowing facilities. The Company expects these sources
will be sufficient to finance the requirements of its investments in its
information systems infrastructure, its internally funded lease financing
program, stock repurchases, other investments in support of its current
business, and any potential acquisitions through 1997. Additional financing
alternatives are currently being evaluated and may be pursued if deemed
appropriate to support the development of the aforementioned response center
platform.
In February, 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years
ending after December 15, 1997, including interim periods. SFAS 128 requires
the presentation of basic and diluted earnings per share (EPS). Basic EPS,
which replaces primary EPS, excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Diluted EPS is computed
similarly to fully diluted EPS under the existing rules. SFAS 128 requires
restatement of all prior-period earnings per share data presented after the
effective date. The Company will adopt SFAS 128 in 1997 and has not yet
determined the impact of adoption.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Quarterly Report on Form 10-Q and presented elsewhere by management from
time to time.
The Company's results are partially dependent on its ability to develop services
and products that keep pace with continuing technological changes, evolving
industry standards, changing client
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<PAGE>
preferences and new service and product introductions by the Company's
competitors. Lifeline's future success will depend on its ability to enhance its
existing services and products (including accessories), to introduce new service
and product offerings to meet and adapt to changing customer requirements and
emerging technologies on a timely basis and to offer such products and services
at competitive prices. There can be no assurance that Lifeline will be
successful in identifying, developing, manufacturing or marketing new services
and products or enhancing its existing services and products on a timely basis
or that Lifeline will be able to offer such services and products at competitive
prices. Also, there can be no assurance that services, products or technologies
developed by others will not render Lifeline's services or products
noncompetitive or obsolete.
The Company's growth is dependent on its ability to increase the number of
subscribers served by its monitoring centers. During the first quarter of 1996,
service revenue was $5.4 million, accounting for approximately 49% of the
Company's total revenues. For the three months ended March 31, 1997, service
revenue was $7.3 million, comprising 54% of total revenues for the year. The
Company's ability to continue to increase service revenue is a key factor in its
long-term growth, and there can be no assurance that the Company will be able to
do so. The Company's failure to increase service revenue could have a material
adverse effect on the Company's results of operations.
The Company may experience risks and uncertainties associated with the
development of new information technology. These include the risks that such
development effort may not be completed on schedule, or at all, or within
budget, or that future developments in information technology will not render
the Company's system non-competitive; the risks that the Company does not
realize the intended benefits from the new system, once completed; and the
uncertainty associated with the substantial commitment of funds to the
development effort, including the risks that the Company will have available
significantly less cash to finance its operations, other capital expenditures
and future growth, including acquisitions.
The Company may expand its operations through the acquisition of additional
businesses. There can be no assurance that the Company will be able to
identify, acquire or profitably manage additional businesses or successfully
integrate any acquired businesses into the Company without substantial expenses,
delays or other operational or financial problems. In addition, acquisitions
may involve a number of special risks, including diversion of management's
attention, failure to retain key acquired personnel, unanticipated events,
contingent liabilities and amortization of acquired intangible assets. There can
be no assurance that the acquired businesses, if any, will achieve anticipated
revenues or earnings.
The Company sells a significant portion of its products to healthcare providers
which establish their own Lifeline programs. These healthcare providers
typically lease, rather than sell, the Lifeline products to subscribers and
accordingly following such time as a product is no longer used by a subscriber,
it is returned to the healthcare provider and becomes available for lease to
another subscriber. As a result of this use and reuse of the Company's
products, sales of such products are dependent on growth in the number of
subscribers and on the ability of the Company to encourage its healthcare
provider customers to replace their existing inventory by continuing to enhance
its products with new features.
The Company's monitoring operations are concentrated principally in its
Cambridge, Massachusetts headquarters facility. Although the Company believes
that it has constructed safeguards to protect against system failures, the
disruption of service at its monitoring facility, whether due to telephone or
electrical failures, earthquakes, fire or other similar events or for any other
reason, could have a material adverse effect on the Company's results of
operations.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K-No reports on Form 8-K were filed for the three
months ended March 31, 1997.
(b) Exhibits - The Exhibit which is filed with this Report or which is
incorporated herein by reference is set forth in the Exhibit Index which
appears on page 13 hereof.
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<PAGE>
LIFELINE SYSTEMS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
May 7, 1997 LIFELINE SYSTEMS, INC.
- ----------- ----------------------
Date Registrant
/s/ Ronald Feinstein
--------------------
Ronald Feinstein
Chief Executive Officer
/s/ Dennis M. Hurley
--------------------
Dennis M. Hurley
Vice President of Finance and
Administration
Principal Financial and
Accounting Officer
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<PAGE>
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either filed
herewith or have heretofore been filed with the Securities and Exchange
Commission under the Securities Act of 1933 or the Securities and Exchange Act
of 1934 and are referred to and incorporated herein by reference to such
filings.
EXHIBIT NO. EXHIBIT SEC DOCUMENT REFERENCE
- ----------- ------- ----------------------
EXHIBIT 11. COMPUTATION RE EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1997 1996
------ ------
<S> <C> <C>
PRIMARY:
- --------
Weighted average shares outstanding 5,698 5,713
Net effect of dilutive common stock
equivalents based on the treasury method 551 472
Effect of treasury shares purchased (4) (20)
Effect of treasury shares issued 1 1
------ ------
Total 6,246 6,166
====== ======
Net income $ 955 $ 690
====== ======
Net income per common share $0.15 $0.11
====== ======
FULLY DILUTED:
- --------------
Weighted average shares outstanding 5,698 5,713
Net effect of dilutive common stock
equivalents based on the treasury method 551 490
Effect of treasury shares purchased (4) (20)
Effect of treasury shares issued 1 1
------ ------
Total 6,246 6,184
====== ======
Net income $ 955 $ 690
====== ======
Net income per common share $0.15 $0.11
====== ======
</TABLE>
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,792
<SECURITIES> 5,994
<RECEIVABLES> 6,738
<ALLOWANCES> 242
<INVENTORY> 1,616
<CURRENT-ASSETS> 20,813
<PP&E> 18,549
<DEPRECIATION> 10,980
<TOTAL-ASSETS> 39,448
<CURRENT-LIABILITIES> 8,015
<BONDS> 0
0
0
<COMMON> 125
<OTHER-SE> 31,825
<TOTAL-LIABILITY-AND-EQUITY> 39,448
<SALES> 5,918
<TOTAL-REVENUES> 13,556
<CGS> 1,810
<TOTAL-COSTS> 5,172
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 1,578
<INCOME-TAX> 623
<INCOME-CONTINUING> 955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 955
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
