<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1997 Commission File Number 0-12015
HEALTHCARE SERVICES GROUP, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2018365
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) number)
2643 Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006
-----------------------------------------------------------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 215-938-1661
------------
Indicate 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 past 90 days.
YES X NO
----- -----
Number of shares of common stock, issued and outstanding as of July 31, 1997 is
7,357,793 shares.
Total of 15 Pages
<PAGE>
INDEX
-----
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Balance Sheets as of June 30, 1997 and
December 31, 1996 2
Statements of Income for the Three Months
Ended June 30, 1997 and 1996 3
Statements of Income for the Six Months
Ended June 30, 1997 and 1996 4
Statements of Cash Flows for the Six Months
ended June 30, 1997 and 1996 5
Notes to Financial Statements 6 to 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9 to 12
PART II. OTHER INFORMATION 13
-----------------
SIGNATURES 14
- 1 -
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited) (Audited)
---------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,640,509 $ 22,677,290
Accounts and notes receivable, less allowance
for doubtful accounts of $3,812,000
in 1997 and in 1996 35,778,488 33,318,730
Inventories and supplies 7,365,808 7,392,507
Deferred income taxes 676,332 620,024
Prepaid expenses and other 2,298,078 2,102,330
------------ ------------
Total current assets 60,759,215 66,110,881
PROPERTY AND EQUIPMENT:
Laundry and linen equipment installations 10,867,360 11,322,459
Housekeeping equipment and office
furniture 8,121,609 7,534,025
Autos and trucks 178,006 178,006
------------ ------------
19,166,975 19,034,490
Less accumulated depreciation 13,379,795 12,821,500
------------ ------------
5,787,180 6,212,990
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED less accumulated
amortization of $1,258,848 in 1997 and
$1,205,036 in 1996 2,096,628 2,150,440
DEFERRED INCOME TAXES 1,719,326 1,272,765
OTHER NONCURRENT ASSETS 11,852,082 10,698,571
------------ ------------
$ 82,214,431 $ 86,445,647
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,445,368 $ 4,106,094
Accrued payroll, accrued and withheld payroll taxes 3,165,786 2,954,099
Other accrued expenses (Note 3) 2,069,721 810,785
Income taxes payable 864,113 53,139
Accrued insurance claims 891,141 752,450
------------ ------------
Total current liabilities 10,436,129 8,676,567
ACCRUED INSURANCE CLAIMS 3,352,387 2,830,647
COMMITMENTS AND CONTINGENCIES (Notes 2 and 3)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: 15,000,000
shares authorized, 7,350,493 shares
issued in 1997 and 8,090,663 in 1996 73,505 80,907
Additional paid in capital 26,032,133 34,603,813
Retained earnings 42,320,277 40,253,713
------------ ------------
Total stockholders' equity 68,425,915 74,938,433
------------ ------------
$ 82,214,431 $ 86,445,647
============ ============
</TABLE>
See accompanying notes.
-2-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Income Statements
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
-------------------------------------
1997 1996
------------------- ----------------
<S> <C> <C>
Revenues $ 45,537,260 40,836,772
Operating costs and expenses:
Cost of services provided 38,840,378 34,564,205
Selling, general and administrative 4,020,676 3,327,828
Other income (expense):
Settlement of civil litigation (Note 3) (1,800,000)
Interest income 359,995 205,168
------------- -----------
Income before income taxes 1,236,201 3,149,907
Income taxes 1,022,000 1,293,000
------------- -----------
Net income $ 214,201 $ 1,856,907
============= ============
Earnings per common share (Note 4) $ 0.03 $ 0.23
============= ============
Weighted average number of common
shares outstanding 7,537,784 8,118,793
============= ============
</TABLE>
See accompanying notes.
-3-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-------------------------------------
1997 1996
------------------- ----------------
<S> <C> <C>
Revenues $ 86,951,750 80,247,424
Operating costs and expenses:
Cost of services provided 74,111,691 68,134,897
Selling, general and administrative 7,527,715 6,341,176
Other income (expense):
Settlement of civil litigation (Note 3) (1,800,000)
Interest income 841,220 396,332
------------ ------------
Income before income taxes 4,353,564 6,167,683
Income taxes 2,287,000 2,530,000
------------ ------------
Net income $ 2,066,564 $ 3,637,683
============ ============
Earnings per common share $ 0.26 0.45
============ ============
Weighted average number of common
shares outstanding 7,872,811 $ 8,141,777
============ ============
</TABLE>
See accompanying notes.
-4-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
--------------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 2,066,564 $ 3,637,683
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,068,912 1,082,264
Bad debt provision 750,000 1,275,000
Deferred income taxes (benefits) (502,869) (126,166)
Tax benefit of stock option transactions 18,495
Changes in operating assets and liabilities:
Accounts and notes receivable (3,209,758) (5,727,818)
Prepaid income taxes 1,466,294
Inventories and supplies 26,699 131,066
Changes to long term notes receivable (1,306,582) 942,140
Accounts payable and other accrued expenses (Note 3) 598,209 (1,366,216)
Accrued payroll, accrued and withheld payroll
taxes 211,686 31,650
Accrued insurance claims 660,431 321,982
Income taxes payable 810,974 942,013
Prepaid expenses and other assets (42,678) (144,807)
------------ ------------
Net cash provided by operating activities 1,150,083 2,465,085
------------ ------------
Cash flows from investing activities:
Disposals of fixed assets 316,154
Additions to property and equipment (905,443) (1,194,109)
------------ ------------
Net cash used in investing activities (589,289) (1,194,109)
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock (9,147,680) (528,975)
Proceeds from the exercise of stock options 550,105 4,425
------------ ------------
Net cash used in financing activities (8,597,575) (524,550)
------------ ------------
Net increase (decrease) in cash and cash equivalents (8,036,781) 746,426
Cash and cash equivalents at beginning of the year 22,677,290 16,335,886
------------ ------------
Cash and cash equivalents at end of the period $ 14,640,509 $ 17,082,312
============ ============
</TABLE>
See accompanying notes.
-5-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Reporting
The accompanying financial statements are unaudited and do not include
certain information and note disclosures required by generally accepted
accounting principles for complete financial statements. However, in the opinion
of the Company, all adjustments considered necessary for a fair presentation
have been included. The balance sheet shown in this report as of December 31,
1996 has been derived from, and does not include, all the disclosures contained
in the financial statements for the year ended December 31, 1996. The financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The results of operations for the three and six month periods
ended June 30, 1997 and 1996 are not necessarily indicative of the results that
may be expected for the full fiscal year.
Note 2 - Other Contingencies
The Company has a $13,000,000 bank line of credit on which it may draw
to meet short-term liquidity requirements in excess of internally generated cash
flow. This line expires on September 30, 1997. The Company anticipates that this
credit line will be continued. Amounts drawn under the line are payable upon
demand. At both June 30, 1997 and December 31, 1996, there were no borrowings
under the line. However at June 30, 1997 and December 31, 1996, the Company had
outstanding approximately $11,200,000 and $8,000,000, respectively of
irrevocable standby letters of credit, which primarily relate to payment
obligations under the Company's insurance program. As a result of letters of
credit issued, the amount available under the line was reduced by approximately
$11,200,000 at June 30, 1997 and $8,000,000 December 31, 1996.. The Company is
also involved in miscellaneous claims and litigation arising in the ordinary
course of business. The Company believes that these matters, taken individually
or in the aggregate, would not have a material adverse impact on the Company's
financial position or results of operations.
Note 3 - Provision for Estimated Cost Related to SEC Inquiry and Other Matters
On July 24, 1997 the Company and the U.S. Attorney for the Eastern
District of Pennsylvania reached a settlement of the pending civil litigation
commenced by the United States Attorney on or about May 24, 1996. This
litigation was a result of and arose from (1) payments made by the Company for
supplies which were allegedly furnished to clients of the Company and the
actions of the Company after the payments were made and (2) payments made to
certain clients of the Company in connection with the purchase of laundry
- 6 -
<PAGE>
installations from those clients. All claims described in the complaint were
settled through the payment in July, 1997 of $1,225,000 to the United States
government. The monetary impact of this settlement plus estimated related legal
costs of $575,000, amounting to approximately $1,800,000 has been accrued at
June 30, 1997 and reduced the net income for the three and six month periods
ended June 30, 1997 by $1,577,000 or $.21 per common share. The Company has not
recorded an income tax benefit in the accompanying financial statements for the
settlement payment of $1,225,000 and therefore the effective tax rates of 82.7%
and 52.5% for the three and six month periods ended June 30, 1997 and 1996,
respectively are in excess of the statutory rate. The Company and its officers
denied all allegations, and all allegations against the Company and its officers
were dismissed with prejudice.
On March 21, 1996 the Staff of the SEC informed the Company that the
SEC had accepted a settlement pertaining to certain allegations of violations of
the Federal securities laws by the Company and certain of its officers with
respect to periods ended on or before March 31, 1992. A settlement was concluded
on October 16, 1996 when a final judgment, upon consent, was entered in the
United States District Court for the Eastern District of Pennsylvania (96
Civ.6464) based on a complaint filed by the Securities and Exchange Commission
against the Company, two of its executive officers and one former officer,
without admission or denial of the allegations of the complaint by any parties.
The action had alleged violations of certain Federal securities laws, including
anti-fraud, reporting, internal controls and books and records provisions
thereof by the Company and such officers. The claims included alleged violations
of Section 10b of the Exchange Act, Rule 10b-5 thereunder, Section 13a of the
Exchange Act and Rules 13a-1, 13a-13 and 12b-20. The Company and such officers
are permanently enjoined from violating certain provisions of the Federal
Securities laws, and the Company and these individuals were required to pay
civil penalties aggregating approximately $850,000, which was paid in December,
1996. The Company agreed to indemnify its officers with respect to their payment
obligations. The estimated monetary impact of this settlement plus related legal
costs have been reflected in the December 31, 1995 financial statements.
During 1995, the Company anticipated that it would incur a significant
amount of legal and related costs in connection with these matters. The Company
incurred approximately $950,000 of costs in 1995 and estimated that the
additional costs which may be incurred in connection with these matters would be
in a range of approximately $2,150,000 to $3,500,000 and accordingly accrued as
of December 31, 1995 the estimated low range of this liability. The result of
this $3,100,000 provision was to reduce 1995 net income by approximately
$2,321,000 or $.28 per common share.
-7-
<PAGE>
Note 4 - New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share, which
is effective for financial statements for both interim and annual periods ending
after December 15, 1997. The new standard eliminates primary and fully diluted
earnings per common share and requires presentation of basic and, if applicable,
diluted earnings pre common share. Basic earnings per common share is computed
by dividing income available to common shareholders by the weighted-average
common shares outstanding for the period. Diluted earnings per common share
reflects the weighted-average common shares outstanding and dilutive potential
common shares, such as stock options. The adoption of this new standard is not
expected to have a material impact on the disclosure of earnings per common
share in the financial statements.
-8-
<PAGE>
PART I.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto.
RESULTS OF OPERATIONS
Revenues for the second quarter of 1997 increased by 11.5% over
revenues in the corresponding 1996 quarter. Revenues for the six months ended
June 30, 1997 increased by 8.4% over the corresponding 1996 period. The
following factors contributed to the increase in revenues: service agreements
with new clients in existing geographic areas increased revenues by 20.2 % for
the second quarter and 13.1 % for the six month period; providing new services
to existing clients increased revenues 6.5% for the second quarter and 3.3% for
the six month period; and cancellations and other minor changes decreased
revenues 15.2% for the second quarter and 8% for the six month period.
Cost of services provided as a percentage of revenues increased to
85.3% for the second quarter of 1997 from 84.6% in the corresponding 1996
quarter. In addition, cost of services as a percentage of revenue increased
slightly to 85.2% for the six month period ending June 30, 1997 from 84.9% in
the same 1996 period. The primary factors affecting specific variations in the
1997 second quarter and six month periods' cost of services provided as a
percentage of revenue and their effects on the respective .7% and .3% increases
are as follows: in the second quarter an increase of 1.4% in supplies expense,
an increase of .6% in the cost of labor and a .4% increase in workers'
compensation, general liability and other insurance costs; and offsetting these
increases was a 1.2% decrease in the allowance for doubtful accounts and other
reserves; in the six month period an increase of .7% in the cost of labor, a .6%
increase in supplies expense and an increase of .6% in workers' compensation,
general liability and other insurance costs; and offsetting these increases was
a decrease of 1.1% in the allowance for doubtful accounts and other reserves.
-9-
<PAGE>
Selling, general and administrative expenses as a percentage of revenue
increased in the second quarter of 1997 to 8.8% as compared to 8.1% in the
corresponding 1996 three month period. During the six month period ending June
30, 1997 selling general & administrative expenses as a percentage of revenue
increased to 8.7% as compared to 7.9% in the corresponding 1996 period. The
three and six month increases are primarily attributable to additional costs
associated with the expansion of the divisional and regional staffs, as well as
the costs of installing a new computerized financial reporting system.
The Company presently estimates that it will incur approximately
$1,800,000 of additional legal and related costs in connection with the
settlement of the previously pending governmental civil lawsuit and accordingly
has established a provision in this amount for this purpose (see Note 3 -
Provision for Estimated Cost Related to SEC Inquiry and Other Matters). The
Company has not recorded an income tax benefit in the accompanying financial
statements for the settlement payment of $1,225,000 and therefore the effective
tax rates of 82.7% and 52.5% for the three and six month periods ended June 30,
1997 and 1996, respectively are in excess of the statutory rate.
Interest income increased during the three and six month periods ended
June 30, 1997 due to higher average cash balances, as well as higher rates when
compared to the corresponding 1996 periods.
Liquidity and Capital Resources
At June 30, 1997 the Company had working capital and cash of
$50,323,086 and $14,640,509 respectively which represents a 12% and 35% decrease
as compared to December 31, 1996 working capital and cash of $57,434,314 and
$22,677,290 respectively. The decline is primarily a result of the Company's
expending approximately $9,100,000 for open market purchases of 802,000 shares
of its common stock. As a result of the decline, the Company's current ratio at
June 30, 1997 decreased to 5.8 to 1 compared to 7.6 to 1 atDecember 31, 1996.
The net cash provided by the Company's operating activities was
$1,150,083 and $2,465,085 for the six month periods ended June 30, 1997 and
1996, respectively. The principle source of cash flows from operating activities
for the six months ended June 30, 1997 and 1996 was net income, depreciation and
amortization and charges to operations for bad debt provisions, as well as a
reduction in prepaid income taxes in 1996. The operating activity that used the
largest amount of cash was a $4,516,340 and $4,785,678 increase in accounts and
notes receivable at June 30, 1997 and 1996, respectively. The increase in
accounts and notes receivable resulted primarily from the growth in the
Company's revenues.
The Company's principle use of cash in investing activities for the
six month periods ended June 30, 1997 and 1996 is the purchase of housekeeping
equipment and laundry equipment installations.
The Company expends considerable effort to collect the amounts due for
its services on the terms agreed upon with its clients. Many of the Company's
clients participate in programs funded by federal and state governmental
agencies which historically have encountered delays in making payments to its
program participants. Whenever possible, when a client falls behind in making
agreed-upon payments, the Company converts the unpaid accounts receivable to
interest bearing promissory notes. The promissory notes receivable provide a
means by which to further evidence the amounts owed and provide a definitive
repayment plan, which therefore may enhance the ultimate collectibility of the
amounts due. In some instances the Company obtains a security interest in
certain of the debtors' assets.
-10-
<PAGE>
The Company encounters difficulty in collecting amounts due from
certain of its clients, including those in bankruptcy, those which have
terminated service agreements and slow payers experiencing financial
difficulties. In order to provide for these collection problems and the general
risk associated with the granting of credit terms, the Company has increased its
bad debt provision by $750,000 in the six month period ending June 30, 1997. In
making its evaluation, in addition to analyzing and anticipating, where
possible, the specific cases described above, management considers the general
collection risk associated with trends in the healthcare industry.
The Company has a $13,000,000 bank line of credit on which it may draw
to meet short-term liquidity requirements in excess of internally generated cash
flow. The bank line expires on September 30, 1997. The Company anticipates that
this credit line will be continued. Amounts drawn under the line are payable on
demand. At June 30, 1997, there were no borrowings under the line. However, at
such date, the amount available under the line had been reduced by approximately
$11,200,000 as a result of contingent liabilities of the Company to the lender
relating to letters of credit issued for the Company (See Note 2 of Notes to
Financial Statements).
At June 30, 1997, the Company had $14,640,509 of cash and cash
equivalents, which it views as its principal measure of liquidity.
In accordance with the Company's previously announced authorizations to
purchase its outstanding common stock, the Company expended approximately
$9,100,000 to purchase 802,000 shares of its common stock between March 6, 1997
and April 25, 1997 at an average price of $11.41 per share. The Company remains
authorized by the Board of Directors to purchase an additional 100,000 shares.
The level of capital expenditures by the Company is generally dependent
on the number of new clients obtained. Such capital expenditures primarily
consist of housekeeping equipment and laundry and linen equipment installations.
Although the Company has no specific material commitments for capital
expenditures through the end of calendar year 1997, it estimates that it will
incur capital expenditures of approximately $2,000,000 during this period in
connection with housekeeping equipment and laundry and linen equipment
installations in its clients' facilities, as well as hardware and software
expenditures relating to the implementation of a new computerized financial
reporting system. The Company believes that its cash from operations, existing
balances and available credit line will be adequate for the foreseeable future
to satisfy the needs of its operations and to fund its continued growth.
However, if the need arose, the Company would seek to obtain capital from such
sources as long-term debt or equity financing.
-11-
<PAGE>
Forward Looking Statements/Risk Factors
Certain matters discussed in this report may include forward-looking
statements that are subject to risks and uncertainties that could cause actual
results or objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, risks arising from the Company
providing its services exclusively to the healthcare industry, credit and
collection risks associated with this industry, unexpected increases in the
costs of labor, materials, supplies and equipment used in performing its
services.
In addition, the Company believes that in order to improve its
financial performance it must continue to obtain service agreements with new
clients, provide new services to existing clients, achieve modest price
increases on current service agreements with existing clients and maintain
internal cost reduction strategies at the various operational levels of the
Company. Additionally, the Company believes that its ability to sustain the
internal development of managerial personnel is an important factor impacting
future operating results and successfully executing projected growth strategies.
Effects of Inflation
All of the Company's service agreements allow it to pass through to its
clients increases in the cost of labor resulting from new wage agreements. The
Company believes that it will be able to recover increases in costs attributable
to inflation by continuing to pass through cost increases to its clients.
- 12 -
<PAGE>
PART II. Other Information
-----------------
Item 1. Legal Proceedings.
(a) On July 24, 1997 the Company settled pending civil litigation which
had been commenced by the United States Attorney for the Eastern District of
Pennsylvania in the U.S. District Court (96 Civ.3940). Although the Company and
its officers denied all allegations of the amended complaint, it determined that
it was in the best interests of the Company to settle all claims described in
the complaint through the payment to the U. S. government of $1,225,000. All
allegations against the Company and its officers were dismissed with prejudice.
Item 2. Changes in Securities. Not Applicable
Item 3. Defaults under Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security
(c) The Company's Annual Meeting of Shareholders was held on May 13,
1997 for the purpose of electing a board of directors and
approving the appointment of auditors.
(1) All of management's nominees for directors were elected
as follows:
Shares Voted Withheld
"FOR"
7,191,729 13,260
(2) Proposal to ratify selection of Grant Thornton LLP as the
independent public accountants of the Company for its current
fiscal year ending December 31, 1997 was approved as follows:
Shares Voted Shares Voted Shares
"FOR" "AGAINST" "ABSTAINING"
7,180,947 20,751 3,803
Item 5. Other Information.
a) None
Item 6. Exhibits and Reports on Form 8-K.
a) (27) Financial Data Schedule
b) Reports on Form 8-K - None
- 13 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTHCARE SERVICES GROUP, INC.
August 7, 1997 /s/ Daniel P. McCartney
- ------------------------- --------------------------------------
Date DANIEL P. McCARTNEY, Chief
Executive Officer
August 7, 1997 /s/ Thomas A. Cook
- ------------------------- --------------------------------------
Date THOMAS A. COOK, President and
Chief Operating Officer
August 7, 1997 /s/ James L. DiStefano
- ------------------------- --------------------------------------
Date JAMES L. DiSTEFANO, Chief Financial
Officer and Treasurer
August 7, 1997 /s/ Richard W. Hudson
- ------------------------- --------------------------------------
Date RICHARD W. HUDSON, Vice
President-Finance, Secretary and Chief
Accounting Officer
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,640,509
<SECURITIES> 0
<RECEIVABLES> 39,590,488
<ALLOWANCES> 3,812,000
<INVENTORY> 7,365,808
<CURRENT-ASSETS> 60,759,215
<PP&E> 19,166,975
<DEPRECIATION> 13,379,795
<TOTAL-ASSETS> 82,214,431
<CURRENT-LIABILITIES> 10,436,129
<BONDS> 0
0
0
<COMMON> 73,505
<OTHER-SE> 68,352,410
<TOTAL-LIABILITY-AND-EQUITY> 82,214,431
<SALES> 0
<TOTAL-REVENUES> 86,951,750
<CGS> 74,111,691
<TOTAL-COSTS> 81,639,406
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,800,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,353,564
<INCOME-TAX> 2,287,000
<INCOME-CONTINUING> 2,066,564
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,066,564
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
