<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: SEPTEMBER 30, 1996
Commission File Number 1-1003
NOBEL EDUCATION DYNAMICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2465204
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1400 N. PROVIDENCE ROAD, SUITE 3055, MEDIA, PA 19063
(Address of principal executive offices) (Zip Code)
(610) 891-8200
(Registrant's telephone number, including area code)
Indicate by check whether the registrant (1) has filed all report(s) 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
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,732,815 shares of Common
Stock outstanding at November 3, 1996.
<PAGE>
INDEX TO FORM 10-Q
Nobel Education Dynamics, Inc.
<TABLE>
<CAPTION>
Page
Number
------
<C> <S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets,
September 30, 1996 (unaudited) and
December 31, 1995 ......................................... 1
Consolidated Statements of Income for the
nine months ended September 30, 1996 (unaudited)
and 1995 (unaudited) ....................................... 2
Consolidated Statements of Income for the
three months ended September 30, 1996 (unaudited)
and 1995 (unaudited) ...................................... 3
Consolidated Statements of Cash Flows for the
nine months ended September 30, 1996 (unaudited)
and 1995 (unaudited) ...................................... 4
Notes to Consolidated Interim Financial Statements ........ 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .......................... 12
</TABLE>
<PAGE>
NOBEL EDUCATION DYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
- ------ ------------- ------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents $ 9,225,454 $ 3,714,560
Accounts receivable, less allowance for doubtful
accounts of $103,009 in 1996 and 1995 822,565 727,097
Other accounts receivable -- 573,237
Prepaid assets 1,437,451 1,223,185
Deferred taxes 873,962 873,962
----------- -----------
Total Current Assets 12,359,432 7,112,041
----------- -----------
Property and equipment, net 15,171,102 15,864,305
Property and equipment held for sale
(Southeast), net 1,121,338 1,307,497
Goodwill, net 22,044,684 17,273,626
Deposits and other assets 4,507,038 2,262,871
Deferred taxes 363,603 1,117,000
----------- -----------
Total Assets $55,567,197 $44,937,340
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current portion of long-term debt $ 2,672,061 $ 1,421,559
Accounts payable and other current liabilities 6,692,256 6,521,524
----------- -----------
Total Current Liabilities 9,364,317 7,943,083
----------- -----------
Long Term Debt 11,875,667 11,715,789
Deferred gain on sale/leaseback 49,319 55,312
Minority interest in consolidated subsidiary 294,407 223,881
Long-term subordinated debt 2,794,230 8,878,605
----------- -----------
Total Liabilities 24,377,940 28,816,670
----------- -----------
Stockholders' Equity:
Preferred stock, $.001 par value; 10,000,000
shares authorized, issued and outstanding
4,834,134 in 1996 and 5,505,150 in 1995 4,834 5,505
Common stock, $.001 par value, 50,000,000 shares
authorized, issued and outstanding 5,757,815
shares in 1996 and 4,095,094 in 1995 5,758 4,095
Additional paid-in capital 37,173,618 21,818,344
Common Stock issuable, 312,500 shares -- 2,000,000
Accumulated deficit (5,994,953) (7,707,274)
----------- -----------
Total Stockholders' Equity 31,189,257 16,120,670
----------- -----------
Total Liabilities and Stockholders' Equity $55,567,197 $44,937,340
=========== ===========
</TABLE>
The accompanying notes and the notes in the financial statements included in
the Registrants' Annual Report on Form 10-K are an integral part of these
financial statements.
1
<PAGE>
NOBEL EDUCATION DYNAMICS, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
for the nine months ended September 30, 1996 and 1995
-----------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues $43,208,018 $30,765,128
Operating Expenses 35,973,946 24,918,719
----------- -----------
School operating profit 7,234,072 5,846,409
General and administrative expenses 3,053,994 2,973,863
----------- -----------
Operating Profit 4,180,078 2,872,546
Interest Expense 1,566,854 1,213,746
Other Income (393,824) (92,038)
Minority interest in earnings
of consolidated subsidiary 70,527 65,330
----------- -----------
Income before income taxes 2,936,521 1,685,508
----------- -----------
Income tax expense (benefit) 1,126,281 (1,614,900)
Net income before extraordinary item $ 1,810,240 $ 3,300,408
----------- -----------
Extraordinary item $ -0- $ 62,000
----------- -----------
Net Income $ 1,810,240 $ 3,238,408
----------- -----------
Preferred stock dividends $ 98,063 $ 145,288
----------- -----------
Net income available to common stockholders $ 1,712,177 $ 3,093,120
=========== ===========
Primary earnings per share
before extraordinary items $ 0.25 $ 0.71
----------- -----------
Primary earnings per share $ 0.25 $ 0.69
----------- -----------
Fully diluted earnings per share
before extraordinary item $ 0.25 $ 0.55
----------- -----------
Fully diluted earnings per share $ 0.25 $ 0.54
----------- -----------
</TABLE>
The accompanying notes and the notes in the financial statements included in
the Registrants' Annual Report on Form 10-K are an integral part of these
financial statements.
2
<PAGE>
NOBEL EDUCATION DYNAMICS, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
for the three months ended September 30, 1996 and 1995
------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ------------
<S> <C> <C>
Revenues $13,719,005 $10,572,070
Operating Expenses 12,102,189 8,980,190
----------- -----------
School operating profit 1,616,816 1,591,880
General and administrative expenses 935,502 878,298
----------- -----------
Operating Profit 681,314 713,582
Interest Expense 458,949 511,415
Other Income (143,027) (80,657)
Minority interest in earnings of consolidated
subsidiary 21,755 22,501
----------- -----------
Income before income taxes 343,637 260,323
----------- -----------
Income tax expense 134,010 90,000
Net income before extraordinary item $ 209,627 $ 170,323
=========== ===========
Extraordinary item $ -0- $ 62,000
----------- -----------
Net Income $ 209,627 $ 108,323
=========== ===========
Preferred stock dividends $ 20,411 $ 45,916
----------- -----------
Net income available to common stockholders $ 189,216 $ 62,407
=========== ===========
Primary earnings per share before extraordinary
item $ 0.03 $ 0.03
----------- -----------
Primary earnings per share $ 0.03 $ 0.01
----------- -----------
Fully diluted earnings per share before
extraordinary item $ 0.03 $ 0.03
----------- -----------
Fully diluted earnings per share $ 0.03 $ 0.02
=========== ===========
</TABLE>
The accompanying notes and the notes in the financial statements included in
the Registrants' Annual Report on Form 10-K are an integral part of these
financial statements.
3
<PAGE>
NOBEL EDUCATION DYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1996 and 1995
-----------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ------------
<S> <C> <C>
Net Cash Provided by Operating Activities $ 3,312,260 $ 2,858,161
Cash flows from Investing Activities:
Capital expenditures (3,101,693) (1,359,107)
Proceeds from the sale of real estate 6,334,648 --
Payment for acquisitions and land for
development (5,614,909) (8,373,869)
Cash used in building new school (3,943,654) --
Cash received from note receivable 373,237 --
Payment of transaction costs related to
refinancing -- (898,000)
Cash proceeds from restructuring of debt and
preferred stock -- 15,500,000
----------- ------------
Net Cash Used in Investing Activities: (5,952,371) 4,869,024
----------- ------------
Cash Flows from Financing Activities:
Issuance of common stock 13,196,203 --
Repayment of long-term debt (6,564,334) (11,413,352)
Cash proceeds from the line of credit 1,500,000 3,000,000
Repayment of subordinated debt (6,000,000) --
Repayment of capital lease obligation (43,008) (44,416)
Payments of dividends on preferred stock (97,911) (145,288)
Proceeds from exercise of stock options 160,055 162,598
Cash proceeds from real estate mortgage -- 3,567,300
Note payable -- 3,302
Proceeds from the second Term Loan 6,000,000 --
----------- ------------
Net Cash Provided by Financing Activities: 8,151,005 (4,869,856)
----------- ------------
Net increase in cash and cash equivalents: 5,510,894 2,857,329
Cash and cash equivalents at the beginning of
year: 3,714,560 853,886
Cash and cash equivalents at end of the period: $ 9,225,454 $ 3,711,215
=========== ============
</TABLE>
The accompanying notes and the notes in the financial statements included in
the Registrants' Annual Report Form 10-K are an integral part of these
consolidated financial statements.
4
<PAGE>
NOBEL EDUCATION DYNAMICS, INC. AND SUBSIDIARIES
Notes to Consolidated Interim Financial Statements
for the nine months ended September 30, 1996 and 1995
(unaudited)
Note 1 - Basis of Presentation
- ------------------------------
The consolidated financial statements have been prepared by the Registrant
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC") and, in the opinion of management, include all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the financial
position and results of operations. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with the
generally accepted accounting principals have been condensed or omitted pursuant
to such SEC rules and regulations. It is suggested that these financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
Due to the inherent seasonal nature of the education and child care businesses,
annualization of amounts in these interim financial statements may not be
indicative of the actual operating results for the full year.
Note 2 - Earnings Per Share
- ---------------------------
The earnings per share is based upon the weighted average number of common and
common share equivalents outstanding as follows:
<TABLE>
<CAPTION>
3 months ended 3 months ended Percentage
September 30, 1996 September 30, 1995 Increase
------------------ ------------------ ----------
<S> <C> <C> <C>
Primary 7,187,716 4,596,873 56.0%
Fully Diluted 7,564,424 6,148,980 23.0%
<CAPTION>
9 months ended 9 months ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C> <C>
Primary 6,910,061 4,485,939 54.0%
Fully Diluted 7,286,769 5,984,299 22.0%
</TABLE>
5
<PAGE>
Note 3 - Sale/Leaseback of Carefree Properties
- ----------------------------------------------
In two transactions in May 1996, the Company completed the sale/leaseback
arrangements of six pre-school properties originally acquired in connection with
the acquisition of Carefree Learning Centers which occurred in May 1995. The
Company sold the land and buildings of the six pre-schools for a total of $6.1
million and simultaneously entered into operating leases for these pre-schools.
Of the $6.1 million in proceeds, $4.3 million was used to pay down the
properties' respective mortgages and approximately $1.8 million became available
for working capital purposes. There was no gain or loss on the transaction.
The minimum lease payments in relation to the leases entered into described
above total $454,125 in 1996, $778,500 in 1997, $778,500 in 1998, $808,740 in
1999, $808,740 in 2000 and $8,051,518 thereafter.
Note 4 - Commitments and Contingencies
- --------------------------------------
The Company is engaged in various legal actions arising in the ordinary course
of its business. The Company believes that the ultimate outcome of all such
matters will not have a material adverse effect on the Company's consolidated
financial position.
The Company carries fire and other casualty insurance on its centers and
liability insurance in amounts which management believes are adequate for its
operations. As is the case with other entities in the education and preschool
industry, the Company cannot effectively insure itself against certain risks
inherent in its operations. Some forms of child abuse have sublimits per claim
in the general liability coverage.
Note 5 - Refinancing of Subordinated Debt and Fourth Amendment of Loan Agreement
- --------------------------------------------------------------------------------
On April 4, 1996, the Company retired outstanding $6 million subordinated
debentures that bore interest at 14% with the proceeds of a second term loan
whose principal amount was originally $6 million. The second term loan bears
interest at 8% and requires quarterly principal payments to be made through
June, 2001 at which time the remaining balance is due.
On November 1, 1996 the Company entered into the Fourth Amendment to the Loan
Agreement which increased the Company's line of credit from $7,500,000 to
$10,000,000 and extended the maturity dates of Nobel's first term loan for one
year to September 2001 and its revolving line of credit to September 1999. In
addition, the loan amendment gives the Company greater flexibility on the number
of schools it may build and the criteria of the acquisitions it may complete
without bank approval.
Note 6 - Business Acquisitions
- ------------------------------
Pursuant to an acquisition agreement dated February 2, 1996, the Company
acquired all the assets of four Virginia corporations, each of which operates a
learning center in Virginia. The purchase price
6
<PAGE>
consisted of (i) $3,200,000 in cash, and (ii) a five-year note in the principal
amount of $336,680 bearing interest at the rate of 7% per annum. The Company
also entered into a five year non-compete agreement that requires monthly
payments of $1,667 through February, 2001. Also on February 2, 1996, the
Company acquired the assets of a fifth Virginia learning center for 96,192
shares of the Company's common stock (valued at $1,500,000 for financial
statement purposes). The agreement required the Company to pay earn outs based
on the financial results of the centers purchased for the twelve month period
following the closing date. In October 1996 the Company agreed to pay to the
Sellers an aggregate of $37,500 in lieu of the formula-based earn-out payment.
As a result of the combined transactions, the Company recorded goodwill in the
amount of approximately $4,935,000, which will be amortized over forty years.
Unaudited Pro Forma Information:
- --------------------------------
The operating results of the Virginia acquisition are included in the Company's
consolidated results of operations from the date of acquisition. The following
pro forma financial information assumes the acquisition occurred at the
beginning of each year. These results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the acquisitions been made at the beginning of 1996 and 1995, or of the
results which may occur in the future.
Pro Forma Financials
- --------------------
<TABLE>
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED 9 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995 SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues $13,719,005 $11,322,070 $43,486,018 $32,871,308
Net Income
Before Dividends 209,627 178,323 1,835,240 3,403,408
Dividends 20,411 45,916 98,063 145,288
Earnings Per Share
Primary $ 0.03 $ 0.04 $ 0.26 $ 0.76
Fully Diluted $ 0.03 $ 0.03 $ 0.25 $ 0.57
</TABLE>
7
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
- -------
Nobel Education Dynamics, Inc. is in the business of providing affordable,
quality education to over 14,000 children primarily from middle income families
from preschool through the eighth grade. The Company operates 105 for-profit
facilities in eleven states and employs 2,700 people; 2,000 are teachers.
On June 18, 1996 the Company received formal approval to be listed on the NASDAQ
National Market. Prior to this date, Nobel traded on the NASDAQ Small Cap
Market.
Results of Operations
- ---------------------
Revenues increased 30% to $13,719,005 and 40% to $43,208,018 for the three and
nine month periods ended September 30, 1996, respectively, as compared to the
same periods in 1995. The increase in net revenues for both the three and nine
month periods was due primarily to several acquisitions which occurred
throughout 1995 and in February 1996 and to a lesser extent the opening of new
schools.
School operating profits increased 1.6% to $1,616,816 and 24% to $7,234,072 for
the three and nine month periods ended September 30, 1996, respectively, as
compared to the same periods in 1995. This dollar increase for both the three
and nine month periods was primarily attributable to operating profits from the
acquisitions. As a percentage of revenue, school operating profit margins
decreased 3.27% to 11.79% and 2.26% to 16.74% for the three and nine month
periods ended September 30, 1996 as compared to the same period in 1995. The
margin decrease was due to lower margins in the newly acquired schools, losses
related to the opening of three new schools (two in April 1996 and one in
September 1996), and to a lesser extent a decrease in the summer programs in
1996. The Company believes that a period of time is required to bring both its
newly acquired and opened schools to the operating efficiencies of its existing
schools. In addition, the Company believes that, during the summer of 1996, the
demands on management of converting fourteen existing child care centers to its
preschool model resulted in insufficient marketing of the summer programs.
General and administrative expenses increased by $57,204 to $935,502 and by
$580,131 to $3,053,994 for the three and nine month periods ended September 30,
1996 as compared to the same periods ended September 30, 1995 prior to taking
into consideration the one time litigation expense of $500,000 incurred during
the second quarter of 1995. However, as a percentage of revenues and exclusive
of the litigation expense, general and administrative expense decreased 1.49% to
6.82% and 0.97% to 7.07% for the three and nine month periods, respectively. The
dollar increase was primarily attributable to the necessary increases in the
Company's corporate infrastructure to support its revenue growth and operations,
coupled with increased expenditures in corporate marketing and the amortization
of certain non-compete agreements related to acquisitions entered into
subsequent to September 30, 1995. These increases were offset in the third
quarter by the reversal of accrued compensation which the Company does not
anticipate being paid. The reduction of general and
8
<PAGE>
administrative expenses as a percentage of sales was due to the economies of
scale arising from the increased number of schools and, to a lesser extent, the
reversal of accrued compensation.
Interest expense increased by 29.1% to $1,566,854 for the nine months ended
September 30, 1996 compared to the same period in 1995. The $353,108 increase in
interest expense is primarily attributable to (1) interest at 14% on $6 million
subordinated debt entered into in August 1995 and subsequently refinanced in
April 1996 with the Company's principal lender at a lower interest of 8% and (2)
higher debt levels in 1996 as a result of the acquisitions in the third quarter
of 1995 and first quarter of 1996. Interest expense decreased 10.26% to $458,949
for the three months ended September 30, 1996 as compared to the same period in
1995. The decrease is attributable to the refinancing of the 14% subordinated
debt in April 1996, as described above, offset by higher debt levels as a result
of the acquisitions in 1995 and 1996.
Other income, which includes interest income, increased by $62,370 and $301,786
for the three month and nine month periods ended September 30, 1996 as compared
to the same periods in 1995, respectively. This increase is attributable to the
income earned on the $11.7 million net proceeds generated from the private
placement in March 1996 of one million shares of the Company's common stock. In
the third quarter of 1996, approximately $3.5 million of the proceeds was used
to build two schools. The Company expects to enter into sale leaseback
arrangements with respect to the two properties sometime in the fourth quarter
of 1996.
Income before income taxes increased 32% to $343,637 and 74% to $2,936,521 for
the three month and nine month periods ended September 30, 1996, as compared to
the same periods in 1995, respectively. For the three month period, the increase
is attributable to an increase in interest income and an increase in school
operating profits generated from the acquisitions. For the nine month period the
increase is primarily attributable to the additional profits generated from the
newly acquired schools and those internally developed and opened, and to a
lesser extent the increased interest income as described above.
Income tax expense increased $44,010 to $134,010 and $2,741,181 to $1,126,281
for the three and nine month periods ended September 30, 1996, respectively as
compared to the same period in 1995. The increase is primarily attributable to
the Company's method of accounting for income taxes in 1995 and the
corresponding $2,105,400 credit to income tax expense recorded in the second
quarter of 1995. This credit was based upon the adoption of SFAS 109 in 1992 and
the subsequent reduction of the Company's valuation allowance due to its more
recent historical profitable operating performance and its projections for the
future. Consequently, 1996 is the first year the Company will be in a fully
taxable position and the Company anticipates this trend to continue.
Net income before extraordinary item increased 23% to $209,627 for the three
months ended September 30, 1996 as compared to 1995. In the third quarter of
1995 the Company recorded a $62,000 extraordinary item related to the
refinancing of its principal credit facilities in August 1995. Net income after
the extraordinary item increased $101,304 or 93% for the third quarter of 1996
compared to 1995. Solely as a result of the one time income tax benefit recorded
in 1995 as described above, net income decreased by 44.1% to $1,810,240 for the
nine month period ended September 30, 1996.
9
<PAGE>
As shown below in the table, on a pro forma basis, 1995 income before income
taxes would have been reduced by income taxes of $640,493 for the nine month
period ended September 30, 1995, assuming comparable tax rates in 1995 and 1996.
Net income before the extraordinary item would have increased 73% to $1,810,240
for the nine month period ended September 30, 1996, respectively. This increase
is primarily attributable to operating profit generated from newly acquired and
internally developed schools which were opened in 1996 and 1995.
<TABLE>
<CAPTION>
Nine Months Ended
September 30
(unaudited)
1996 1995
---------- ----------
<S> <C> <C>
Income before income taxes $2,936,521 $1,685,508
---------- ----------
Income tax expense (pro forma 1995) 1,126,281 640,493
---------- ----------
Net Income before extraordinary (pro forma 1995) $1,810,240 $1,045,015
========== ==========
Extraordinary item -0- $ 62,000
---------- ----------
Net income $1,810,240 $ 983,015
========== ==========
</TABLE>
10
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company has historically funded its growth and cash needs through its
existing bank borrowings, cash flow from operations and periodically from the
proceeds of various equity private placements. To further fund its growth
strategy of both acquisitions and the development of new schools, the Company
raised net proceeds of $11.7 million through the private placement of one
million shares of the Company's common stock which was completed on March 5,
1996. In addition to utilizing these proceeds for acquisitions and new school
development, the Company may also utilize some of these proceeds to pay down
existing debt or for general working capital purposes.
In November 1996, the Company entered into the Fourth Amendment of its Loan and
Security Agreement with its primary lender which increased the Company's line of
credit from $7,500,000 to $10,000,000. Additionally, the bank extended the
maturity of the revolving credit one year to 1999 and both the terms loan to
mature in 2001. The bank also increased the flexibility of the Company's ability
to open new schools and complete acquisitions without bank consent. The
Company's loan and security agreements consist of a $7,500,000 term loan, of
which $6,700,000 is currently outstanding, a $10,000,000 line of credit and a
new term loan totaling $6,000,000. The term loan bears interest at 8-1/2% and
principal payments are due quarterly, $200,000 each quarter from December 1,
1995 through September 1, 1996. Thereafter, quarterly payments of $250,000 are
due each quarter from December 1, 1996 through September 1, 1999 and $300,000
each quarter from December 1, 1999 through September 1, 2001. The revolving line
of credit bears interest at a LIBOR based performance rate and matures September
1, 1999. As of September 30, 1996, $10.0 million was available to the Company
under this line of credit. The second term loan, which was extended on April 6,
1996, bears interest at 8% and requires quarterly principal payments of $200,000
through September 1, 1996. Thereafter, quarterly payments of $280,000 are due
through September 1, 1999, at which time the quarterly payments increase to
$350,000 through June 1, 2001 with the remaining balance due on September 1,
2001.
The Company anticipates that the existing principal credit facilities, cash
generated from operations and the proceeds from the $11.7 private placement will
be sufficient to satisfy its working capital needs and to fund expansion for the
near future.
Net cash provided by operations increased $454,099 or 15.9% to $3,312,260 for
the nine months ended September 30, 1996 as compared to the same period in 1995.
The net cash provided by operations in 1996 and 1995 reflects the Company's net
income for the period increased by depreciation, amortization and then reduced
by the net changes between current assets and liabilities. The increase in cash
from operations is primarily due to the increase in pretax profit for the nine
months ended September 30, 1996 as compared to 1995. At September 30, 1996 the
Company's working capital totaled $2,995,115 as compared to a deficit of
$831,042 at September 30, 1995. The increase was due to the private placement of
$11.7 million which was completed in March 1996.
11
<PAGE>
Part II
-------
Other Information
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K.
Exhibit
Number Description of Exhibit
4.2 Fourth Amendment and Modification to Loan and Security Agreement.
11 Statement re: computation of per share earnings.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBEL EDUCATION DYNAMICS, INC.
Dated: November 7, 1996 By:______________________________________
A.J. Clegg
Chairman
Dated: November 7, 1996 By:______________________________________
Yvonne DeAngelo
Vice President Finance and
Administration
13
<PAGE>
EXHIBITS
Exhibit
Number Description of Exhibit
4.2 Fourth Amendment and Modification to Loan and Security Agreement.
11 Statement re: computation of per share earnings.
27 Financial Data Schedule.
14
<PAGE>
FOURTH AMENDMENT AND MODIFICATION TO
------------------------------------
LOAN AND SECURITY AGREEMENT
---------------------------
THIS FOURTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the
"AMENDMENT") is made effective as of the 1st day of November, 1996, by and among
NOBEL EDUCATION DYNAMICS, INC. ("NOBEL"), BLUEGRASS REAL ESTATE COMPANY, INC.
("BLUEGRASS"), IMAGINE EDUCATIONAL PRODUCTS, INC. ("IMAGINE"), CHILDREN'S PARK,
INCORPORATED ("CHILDREN'S"), MERRYHILL SCHOOLS, INC. ("MERRYHILL"), ROCKING
HORSE MANAGEMENT CORPORATION ("ROCKING"), EDUCO, INC. ("EDUCO"), NEDI, INC.
("NEDI") (collectively, the "OBLIGORS") and SUMMIT BANK, formerly known as First
Valley Bank ("BANK").
BACKGROUND
----------
A. By a Loan and Security Agreement among Obligors and Bank dated August
30, 1995 (as amended by those certain amendments dated September 1, 1995, April
4, 1996, and July 23, 1996, the "LOAN AGREEMENT"), Bank agreed, inter alia, to
----- ----
extend to Obligors a (i) revolving line of credit in the original principal
amount of up to Seven Million Five Hundred Thousand Dollars ($7,500,000.00) (the
"LINE"), (ii) term loan in the original principal amount of Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) (the "TERM LOAN"), and (iii) term loan
in the original principal amount of Six Million Dollars ($6,000,000.00) (the
"NEW TERM LOAN").
B. Obligors' obligations to repay the sums advanced under the (i) Line is
evidenced by that certain Line Note from Obligors to Bank dated August 30, 1995
in the face amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00) (as amended, the "LINE NOTE"), (ii) Term Loan is evidenced by
that certain Term Note from Obligors to Bank dated August 30, 1995 in the
original principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00) (as amended, the "TERM NOTE"), and (iii) New Term Loan is
evidenced by that certain New Term Note from Obligors to Bank dated April 4,
1996 in the original principal amount of Six Million Dollars ($6,000,000.00) (as
amended, the "NEW TERM NOTE").
C. Obligors and Bank desire to further amend the Loan Agreement in
accordance with the terms and conditions hereof.
D. Capitalized terms not otherwise defined herein will have the meanings
set forth therefor in the Loan Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. THE LINE. SECTION 1.1 of the Loan Agreement is hereby amended to read,
-------- -----------
in its entirety, as follows:
"1.1 LINE OF CREDIT. Bank will establish for Obligors for and
--------------
during the period from the date hereof and until September 1,
1999 (the "CONTRACT PERIOD"), subject to
<PAGE>
the terms and conditions hereof, a revolving line of credit (the
"LINE") pursuant to which Bank will from time to time make loans
or other extensions of credit to Obligors in an aggregate amount
not exceeding at any time Ten Million Dollars ($10,000,000.00).
Obligors may borrow, repay and reborrow under the Line. The Line
shall be subject to all terms and conditions set forth in all of
the Loan Documents (as hereafter defined) which terms and
conditions are incorporated herein. Obligors' obligation to
repay the loans and extensions of credit under the Line shall be
evidenced by Obligors' promissory note (the "LINE NOTE") in the
face amount of Ten Million Dollars ($10,000,000.00), which shall
be in the form attached hereto as EXHIBIT "A", with the blanks
-----------
appropriately filled in. The Line shall be subject to review and
renewal after the expiration of the Contract Period, at the sole
discretion of Bank; provided, however, Obligors shall have the
-------- -------
right to request an extension of the Line prior to September 1,
1997 and Bank shall reply to such request on or before the later
of (a) August 31, 1997 or (b) sixty (60) days after the date of
such request."
2. NEW LINE NOTE. Coincident with the execution of this Amendment, Obligors
-------------
shall execute and deliver to Bank a new promissory note of even date herewith,
re-evidencing the existing indebtedness of Obligors to Bank under the Line and
increasing the maximum principal amount thereof, which Note shall be in the form
attached hereto as EXHIBIT "A". All references to the Line Note in the Loan
-----------
Agreement and the other Loan Documents shall be deemed to be references to such
new Line Note. EXHIBIT "A" to the Loan Agreement is hereby replaced with
-----------
EXHIBIT "A" attached hereto. The indebtedness evidenced by the previous Line
- -----------
Note remains outstanding as of the date hereof and continues to be secured by
the Collateral. The parties hereby expressly acknowledge and agree that the new
Line Note merely re-evidences the indebtedness evidenced by the previous Line
Note, and is given in substitution of, and not as payment of the previous Line
Note. Bank will stamp the existing Line Note to show that it has been
re-evidenced and succeeded.
3. USE OF PROCEEDS UNDER THE LINE. SECTION 1.3(A) of the Loan Agreement is
------------------------------ --------------
hereby amended to read, in its entirety, as follows:
"(a) USE OF PROCEEDS UNDER THE LINE. The proceeds advanced under
------------------------------
the Line shall be used for proper working capital purposes, to
fund future acquisitions of educational facilities or companies
and construction of educational facilities by the Obligors, and
for the issuance of standby letters of credit; provided,
--------
however, the sum of the outstanding amount of advances under the
-------
Line for working capital purposes and the face amount under
outstanding standby letters of credit shall not at
2
<PAGE>
any time exceed Two Million Dollars ($2,000,000.00) in the
aggregate."
4. PRINCIPAL PAYMENTS ON THE TERM LOAN. SECTION 3.1(B) of the Loan
----------------------------------- --------------
Agreement is hereby amended to read, in its entirety, as follows:
"(b) PRINCIPAL PAYMENTS ON THE TERM LOAN. Obligors will pay the
-----------------------------------
principal balance of the Term Loan in: (i) four (4) equal and
consecutive quarterly installments of Two Hundred Thousand
Dollars ($200,000.00) each, on the first day of each calendar
quarter commencing on December 1, 1995 and continuing through
and including September 1, 1996; (ii) twelve (12) equal and
consecutive quarterly installments of Two Hundred Fifty Thousand
Dollars ($250,000.00) each, on the first day of each calendar
quarter commencing on December 1, 1996 and continuing through
and including September 1, 1999; (iii) four (4) equal and
consecutive quarterly installments of Three Hundred Thousand
Dollars ($300,000.00) each, on the first day of each calendar
quarter commencing on December 1, 1999 and continuing through
and including September 1, 2000; (iv) three (3) equal and
consecutive quarterly installments of Three Hundred Fifty
Thousand Dollars ($350,000.00) each, on the first day of each
calendar quarter commencing on December 1, 2000 and continuing
through and including June 1, 2001; and (v) one (1) final
payment of the remaining principal balance of the Term Loan,
plus all accrued and unpaid interest thereon and all other sums
due and owing in connection therewith on September 1, 2001."
5. PRINCIPAL PAYMENTS ON THE LINE. SECTION 3.2(B) of the Loan Agreement is
------------------------------ --------------
hereby amended to read, in its entirety, as follows:
"(b) PRINCIPAL PAYMENTS ON THE LINE. Obligors will pay the
------------------------------
outstanding principal balance of the Line, together with any
accrued and unpaid interest thereon, and all other sums due and
owing in connection therewith on the earlier to occur of: (i)
the occurrence of an Event of Default; or (ii) September 1, 1999
(unless the Contract Period is extended by Bank in its sole
discretion)."
6. PRINCIPAL PAYMENTS ON THE NEW TERM LOAN. Notwithstanding anything to the
---------------------------------------
contrary contained in the Loan Agreement, principal on the New Term Loan shall
be paid as follows:
3
<PAGE>
(I) two (2) installments of Two Hundred Thousand Dollars ($200,000.00)
each, on June 1, 1996 and September 1, 1996;
(II) twelve (12) equal and consecutive quarterly installments of Two
Hundred Eighty Thousand Dollars ($280,000.00) each, on the first day of each
calendar quarter commencing on December 1, 1996 and continuing through and
ending September 1, 1999;
(III) six (6) equal and consecutive quarterly installments of Three
Hundred Fifty Thousand Dollars ($350,000.00) each, on the first day of each
calendar quarter commencing on December 1, 1999 and continuing through and
ending March 1, 2001; and
(IV) one (1) final payment of the remaining principal balance of the
New Term Loan, plus all accrued and unpaid interest thereon and all other sums
due and owing in connection therewith on June 1, 2001.
7. USAGE FEE. The reference to "Seven Million Five Hundred Thousand Dollars
---------
($7,500,000.00)" in SECTION 3.6 of the Loan Agreement shall be and is hereby
-----------
amended to read "Ten Million Dollars ($10,000,000.00)".
8. TERMINATION OF LINE AND TERMINATION FEE. SECTION 3.8 of the Loan
--------------------------------------- -----------
Agreement shall be deleted in its entirety.
9. PREPAYMENT OF THE TERM LOAN. Notwithstanding anything to the contrary
---------------------------
contained in the Loan Agreement, if the Fixed Treasury Rate is in effect, any
prepayment made on the Term Loan after September 1, 1999 but on or prior to
August 10, 2001 will be accompanied by a prepayment premium equal to one percent
(1%) of the principal amount prepaid.
10. PREPAYMENT OF THE NEW TERM LOAN. Notwithstanding anything to the
-------------------------------
contrary contained in the Loan Agreement, if the Fixed Treasury Rate is in
effect, any prepayment made on the New Term Loan after September 1, 1999 but on
or prior to June 1, 2001 will be accompanied by a prepayment premium equal to
one percent (1%) of the principal amount prepaid.
11. NEW FACILITIES. SECTION 6.27 of the Loan Agreement is hereby amended to
-------------- ------------
read, in its entirety, as follows:
"6.27 NEW FACILITIES. During any fiscal year, Obligors shall not
--------------
establish more than five (5) newly constructed educational
facilities which they, or any of them, will own or which will
otherwise appear as an asset on any Obligor's balance sheet
("OWNED FACILITIES"). In addition to the foregoing, Obligors may
acquire and hold from time to time up to five (5) parcels of
vacant land (the "VACANT LAND"), provided, however, the
aggregate purchase price of the Vacant Land at any time held by
Obligors shall not exceed Two Million Five Hundred Thousand
Dollars."
4
<PAGE>
12. LEASED FACILITIES. Obligors shall deliver to Bank copies of all
-----------------
agreements whereby a third party agrees to build and lease to Obligors, or any
of them, more than three (3) educational facilities.
13. CHANGES TO FINANCIAL COVENANTS. The reference to "September 1, 1998" in
------------------------------
SECTION 7.5 of the Loan Agreement shall be and is hereby amended to read
- -----------
"September 1, 1999".
14. PERMITTED ACQUISITIONS. SECTIONS 14.36 (C) AND (D) of the Loan Agreement
---------------------- --------------------------
are hereby amended to read, in their entirety, as follows:
"(c) the acquisition price does not exceed the lesser of (i) an
amount equal to six (6) times the Adjusted EBIT of the entity
being acquired, or (ii) Three Million Seven Hundred Fifty
Thousand Dollars ($3,750,000.00);
(d) for those acquisitions where the total purchase price
exceeds Two Million Dollars ($2,000,000.00), the cash portion
paid on account of such purchase price does not exceed seventy
percent (70%) of the total purchase price;"
15. INTEREST RATE CHANGE ON THE TERM LOAN AND THE NEW TERM LOAN. Obligors
-----------------------------------------------------------
shall have the right to request that interest accrue on the outstanding
principal balance of the Term Loan and the New Term Loan at either the Floating
Rate, Term LIBOR Rate or the Fixed Treasury Rate for the period after September
1, 2000 until final payment of the Term Loan and the New Term Loan, respectively
(the "INTEREST RATE ELECTION"). A request for the Interest Rate Election shall
be made by Obligors to Bank in writing on or prior to August 15, 2000. Such
Interest Rate Election shall become effective as of September 1, 2000 and shall
continue until final payment of the Term Loan and the New Term Loan,
respectively. If Obligors fail to make an Interest Rate Election within the
period provided for above, Bank may choose the interest rate to be in effect for
the Term Loan and the New Term Loan from the choices provided for above. For
purposes hereof, the term "FIXED TREASURY RATE" shall mean a rate equal to 250
basis points in excess of the average yield, determined by Bank on or about
August 15, 2000, on 1-year United States Government Treasury Notes in an amount
equal to the original principal amount of the Term Loan and the New Term Loan,
respectively.
16. SCHEDULE OF OWNED REAL ESTATE. Within forty-five (45) days of the close
-----------------------------
of each fiscal quarter of the Obligors, Obligors shall deliver to Bank a
schedule detailing the real property then owned by Obligors, or any of them,
whether legally or beneficially, which schedule shall be in form and content
acceptable to Bank.
17. AMENDMENT FEE. Coincident with the execution hereof, Obligors shall pay
-------------
to Bank an amendment fee equal to Six Thousand Two Hundred Fifty Dollars
($6,250.00) (the "AMENDMENT FEE"). Bank may deduct such Amendment Fee from any
deposit account of Obligors, or any of them, maintained with Bank.
5
<PAGE>
18. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Obligors covenant and agree to
----------------------------------------
execute and deliver to Bank, or to cause to be executed and delivered to Bank
contemporaneously herewith, at the sole cost and expense of Obligors, the New
Line Note, an Allonge to Term Note, an Allonge to New Term Note and any and all
other documents, agreements, statements, resolutions, certificates, consents and
information as Bank may require in connection with the matters or actions
described herein. Obligors further covenants and agrees to execute and deliver
to Bank or to cause to be executed and delivered at the sole cost and expense of
Obligors, from time to time, any and all other documents, agreements,
statements, certificates and information as Bank shall reasonably request to
evidence or effect the terms hereof, the Loan Agreement, as amended, or any of
the other Loan Documents, or to enforce or to protect Bank's interest in the
Collateral. All such documents, agreements, statements, etc., shall be in form
and content acceptable to Bank in its sole discretion.
19. FURTHER AGREEMENTS AND REPRESENTATIONS. Obligors do hereby:
--------------------------------------
(a) ratify, confirm and acknowledge that the Loan Agreement, as amended,
and the other Loan Documents continue to be and are valid, binding and in full
force and effect;
(b) covenant and agree to perform all obligations of Obligors contained
herein and under the Loan Agreement, as amended, and the other Loan Documents;
(c) acknowledge and agree that Obligors have no defense, set-off,
counterclaim or challenge against the payment of any sums owing under Loan
Documents, the enforcement of any of the terms of the Loan Agreement, as
amended, or the other Loan Documents;
(d) acknowledge and agree that all representations and warranties of
Obligors contained in the Loan Agreement and/or the other Loan Documents, as
amended, are true, accurate and correct on and as of the date hereof as if made
on and as of the date hereof;
(e) represent and warrant that no Event of Default (as defined in the
Loan Agreement or any of the other Loan Documents) or event which with the
giving of notice or passage of time or both would constitute such an Event of
Default exists and all information described in the foregoing Background is
true, accurate and complete;
(f) acknowledge and agree that nothing contained herein and no actions
taken pursuant to the terms hereof is intended to constitute a novation of the
Loan Agreement or any of the other Loan Documents, and does not constitute a
release, termination or waiver of any of the rights or remedies granted to the
Bank therein, which rights and remedies are hereby ratified, confirmed, extended
and continued as security for the obligations of Obligors to Bank under the Loan
Agreement and the other Loan Documents, including, without limitation, this
Amendment; and
(g) acknowledge and agree that any Obligor's failure to comply with or
perform any of its covenants, agreements or obligations contained in this
Amendment shall constitute an Event of Default under the Loan Agreement and each
of the Loan Documents.
20. COSTS AND EXPENSES. Expressly in addition to the Amendment Fee, upon
------------------
execution of this Amendment, Obligors shall pay to Bank, all costs and expenses
incurred by Bank in
6
<PAGE>
connection with the review, preparation and negotiation of this Amendment and
all documents in connection therewith, including, without limitation, all of
Bank's attorneys' fees and costs.
21. INCONSISTENCIES. To the extent of any inconsistency between the terms,
---------------
conditions and provisions of this Amendment and the terms, conditions and
provisions of the Loan Agreement or the other Loan Documents, the terms,
conditions and provisions of this Amendment shall prevail. All terms,
conditions and provisions of the Loan Agreement and the other Loan Documents not
inconsistent herewith shall remain in full force and effect and are hereby
ratified and confirmed by Obligors.
22. CONSTRUCTION. All references to the Loan Agreement therein or in any
------------
other Loan Documents shall be deemed to be a reference to the Loan Agreement as
amended hereby.
23. NO WAIVER. Nothing contained herein and no actions taken pursuant to the
---------
terms hereof are intended to nor shall they constitute a waiver by the Bank of
any rights or remedies available to Bank at law or in equity or as provided in
the Loan Agreement or the other Loan Documents.
24. BINDING EFFECT. This Amendment shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective successors and assigns.
25. GOVERNING LAW. This Amendment shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Pennsylvania.
26. HEADINGS. The headings of the sections of this Amendment are inserted
--------
for convenience only and shall not be deemed to constitute a part of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective
as of the date first above written.
NOBEL EDUCATION DYNAMICS, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
BLUEGRASS REAL ESTATE COMPANY, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
7
<PAGE>
IMAGINE EDUCATIONAL PRODUCTS, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
8
<PAGE>
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
CHILDREN'S PARK, INCORPORATED
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
MERRYHILL SCHOOLS, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
ROCKING HORSE MANAGEMENT CORPORATION
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
EDUCO, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
NEDI, INC.
By:_____________________________________
Name/Title:_____________________________
Attest:_________________________________
Name/Title:_____________________________
[SIGNATURES CONTINUED NEXT PAGE]
9
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
SUMMIT BANK, formerly known as
First Valley Bank
By:____________________________________
Brian C. Zwaan, Senior Vice President
10
<PAGE>
Exhibit 11
Net Income Per Common Share
- ---------------------------
for the nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Net Income Per Common Share Primary:
- -----------------------------------
Net income before extraordinary item $1,810,240 $3,300,408
Extraordinary item $ -0- $ 62,000
---------- ----------
Net income $1,810,240 $3,238,408
---------- ----------
Less preferred dividends 98,063 145,288
---------- ----------
Net income available to common
stockholders 1,712,177 3,093,120
Average shares outstanding 5,455,160 3,855,189
Common stock equivalents 1,454,900 630,750
---------- ----------
Adjusted average shares outstanding 6,910,060 4,485,939
Primary earnings per share before
extraordinary item $ 0.25 $ 0.71
---------- ----------
Primary earnings per share $ 0.25 $ 0.69
---------- ----------
Net Income Per Common Share Fully
- ---------------------------------
Diluted:
-------
Net income before extraordinary item $1,810,240 $3,300,408
Extraordinary item $ -0- $ 62,000
---------- ----------
Net Income $1,810,240 $3,238,408
---------- ----------
Average shares outstanding 5,455,160 3,801,442
Common Stock equivalents 1,831,609 2,182,857
---------- ----------
Average Shares outstanding assuming
full dilution 7,286,769 5,984,299
Fully diluted earnings per share
before extraordinary item $ 0.25 $ 0.55
---------- ----------
Fully diluted earnings per share $ 0.25 $ 0.54
---------- ----------
</TABLE>
<PAGE>
Exhibit 11
Net Income Per Common Share
- ---------------------------
for the three months ended September 30, 1996
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Net Income Per Common Share Primary:
- -----------------------------------
Net Income before extraordinary item $ 209,627 $ 170,323
Extraordinary item $ -0- $ 62,000
---------- ----------
Net income $ 209,627 $ 108,323
Less preferred dividends 20,411 45,916
---------- ----------
Net income available to common
shareholders 189,216 62,407
Average shares outstanding 5,732,815 3,966,123
Common stock equivalents-convertible
preferred 1,454,900 630,750
---------- ----------
Adjusted average shares outstanding 7,187,716 4,596,873
Primary earnings per common share
before extraordinary item $ 0.03 $ 0.03
---------- ----------
Primary earnings per common share $ 0.03 $ 0.01
---------- ----------
Net Income Per Common Share Fully
- ---------------------------------
Diluted:
-------
Net income before extraordinary item $ 209,627 $ 170,323
Extraordinary item $ -0- $ 62,000
---------- ----------
Net income $ 209,627 $ 108,323
Average shares outstanding 5,732,815 3,966,123
Common Stock equivalents 1,831,608 2,182,857
---------- ----------
Average Shares outstanding assuming
full dilution 7,564,424 6,148,980
Fully diluted earnings per share
before extraordinary item $ 0.03 $ 0.03
---------- ----------
Fully diluted earnings per share $ 0.03 $ 0.02
---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<CASH> 9,225 3,714
<SECURITIES> 0 0
<RECEIVABLES> 822 727
<ALLOWANCES> (103) (103)
<INVENTORY> 0 0
<CURRENT-ASSETS> 12,359 7,112
<PP&E> 15,171 15,864
<DEPRECIATION> 6 5
<TOTAL-ASSETS> 55,567 44,937
<CURRENT-LIABILITIES> 9,364 7,943
<BONDS> 0 0
0 0
5 6
<COMMON> 6 4
<OTHER-SE> 37,174 21,818
<TOTAL-LIABILITY-AND-EQUITY> 55,567 44,937
<SALES> 43,208 30,765
<TOTAL-REVENUES> 43,208 30,765
<CGS> 0 0
<TOTAL-COSTS> 39,027 27,893
<OTHER-EXPENSES> (393) (92)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,567 1,214
<INCOME-PRETAX> 2,936 1,685
<INCOME-TAX> 1,126 (1,615)
<INCOME-CONTINUING> 1,810 3,300
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 62
<CHANGES> 0 0
<NET-INCOME> 1,810 3,238
<EPS-PRIMARY> 0.25 0.69
<EPS-DILUTED> 0.25 0.54
</TABLE>
