<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, 1998 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 number)
incorporation or organization)
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
August 12, 1998 is 7,531,538
Total of 15 Pages
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Consolidated Balance Sheets as of 2
June 30, 1998 and December 31, 1997
Consolidated Statements of Income for the Three Months 3
Ended June 30, 1998 and 1997
Consolidated Statements of Income for the
Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the Six Months 5
ended June 30, 1998 and 1997
Notes To Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of Financial 9 - 12
Condition and Results Of Operations
Part II. OTHER INFORMATION 13
SIGNATURES 14
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,001,738 $ 17,774,219
Accounts and notes receivable, less allowance
for doubtful accounts of $3,257,000
in 1998 and $3,663,000 in 1997 42,711,202 36,560,661
Prepaid income taxes - 366,712
Inventories and supplies 7,645,122 7,339,928
Deferred income taxes 364,457 567,119
Prepaid expenses and other 2,312,882 2,859,133
------------ ------------
Total current assets 71,035,401 65,467,772
------------ ------------
PROPERTY AND EQUIPMENT:
Laundry and linen equipment installations 11,142,448 10,993,558
Housekeeping equipment and office
furniture 8,833,878 8,731,042
Autos and trucks 51,110 157,611
------------ ------------
20,027,436 19,882,211
Less accumulated depreciation 14,330,578 14,245,071
------------ ------------
5,696,858 5,637,140
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED less accumulated
amortization of $1,366,472 in 1998 and
$1,312,660 in 1997 1,989,005 2,042,817
DEFERRED INCOME TAXES 2,104,720 1,067,670
OTHER NONCURRENT ASSETS 9,933,890 10,674,340
============ ============
$ 90,759,874 $ 84,889,739
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,366,831 $ 4,275,902
Accrued payroll, accrued and withheld payroll taxes 3,755,828 3,770,310
Other accrued expenses 453,011 944,501
Income taxes payable 1,941,978
Accrued insurance claims 896,722 771,142
------------ ------------
Total current liabilities 9,414,370 9,761,855
ACCRUED INSURANCE CLAIMS 3,373,385 2,900,964
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY: (Note 2)
Common stock, $.01 par value: 15,000,000
shares authorized, 11,257,595 shares issued
and outstanding in 1998 and 7,386,863 in 1997 112,576 73,869
Additional paid in capital 27,418,995 26,005,004
Retained earnings 50,440,548 46,148,047
------------ ------------
Total stockholders' equity 77,972,119 72,226,920
============ ============
$ 90,759,874 $ 84,889,739
============ ============
</TABLE>
See accompanying notes.
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
1998 1997
------------ --------------
<S> <C> <C>
Revenues $ 49,405,821 $ 45,537,260
Operating costs and expenses:
Costs of services provided 41,863,483 38,840,378
Selling general and administrative 4,292,401 4,020,676
Other Income:
Settlement of civil litigation (Note 4) - (1,800,000)
Interest Income 380,318 359,995
Income before income taxes 3,630,255 1,236,201
Income taxes 1,438,000 1,022,000
Net Income $ 2,192,255 $ 214,201
Earnings per share of common stock (Note 2) $ .20 $ .02
Diluted earnings per common share (Note 2) $ .19 $ .02
Basic weighted average number
of common shares outstanding (Note 2) 11,213,016 11,110,167
Diluted weighted average number
of common shares outstanding (Note 2) 11,405,969 11,306,676
</TABLE>
See accompanying notes
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
1998 1997
------------ -------------
<S> <C> <C>
Revenues $ 97,172,949 $ 86,951,750
Operating costs and expenses:
Costs of services provided 82,460,328 74,111,691
Selling general and administrative 8,241,549 7,527,715
Other Income:
Settlement of civil litigation (Note 4) - (1,800,000)
Interest Income 718,429 841,220
Income before income taxes 7,189,501 4,353,564
Income taxes 2,897,000 2,287,000
Net Income $ 4,292,501 $ 2,066,564
Earnings per share of common stock (Note 2) $ .38 $ .18
Diluted earnings per common share (Note 2) $ .38 $ .18
Basic weighted average number
of common shares outstanding (Note 2) 11,174,201 11,626,908
Diluted weighted average number
of common shares outstanding (Note 2) 11,430,729 11,808,374
</TABLE>
See accompanying notes
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
1998 1997
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 4,292,501 $ 2,066,564
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 982,702 1,068,912
Bad debt provision 1,000,000 750,000
Deferred income taxes (benefits) (834,388) (502,869)
Tax benefit of stock option transactions 185,929 18,495
Changes in operating assets and liabilities:
Accounts and notes receivable (7,150,541) (3,209,758)
Prepaid income taxes 366,712
Inventories and supplies (305,194) 26,699
Changes to long term notes receivable 945,309 (1,306,582)
Accounts payable and other accrued expenses (2,400,561) 598,209
Accrued payroll, accrued and withheld payroll
taxes (14,482) 211,686
Accrued insurance claims 598,001 660,431
Income taxes payable 1,941,978 810,974
Prepaid expenses and other assets 341,392 (42,678)
------------- --------------
Net cash provided by (used in) operating activities (50,642) 1,150,083
------------- --------------
Cash flows from investing activities:
Disposals of fixed assets 20,100 316,154
Additions to property and equipment (1,008,708) (905,443)
------------- --------------
Net cash used in investing activities (988,608) (589,289)
------------- --------------
Cash flows from financing activities:
Purchase of treasury stock (9,147,680)
Proceeds from the exercise of stock options 1,266,769 550,105
------------- --------------
Net cash provided by (used in) financing activities 1,266,769 (8,597,575)
------------- --------------
Net increase (decrease) in cash and cash equivalents 227,519 (8,036,781)
Cash and cash equivalents at beginning of the year 17,774,219 22,677,290
------------- --------------
Cash and cash equivalents at end of the period $ 18,001,738 $14,640,509
============= ==============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO CONSOLIDATED 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,
1997 has been derived from, and does not include, all the disclosures contained
in the financial statements for the year ended December 31, 1997. 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, 1997. The results of operations for the three and six month periods
ended June 30, 1998 and 1997 are not necessarily indicative of the results that
may be expected for the full fiscal year.
Note 2 - Three-For-Two Stock Split
On August 5, 1998, the Board of Directors declared a three-for-two
stock split of the Company's Common Stock effected in the form of a 50% stock
dividend payable on August 27, 1998 to Common Stock stockholders of record on
August 17, 1998. An amount equal to the par value of the shares of Common Stock
to be issued (based on June 30, 1998 outstanding shares) was transferred from
additional paid in capital to the common stock account retroactively in the June
30, 1998 balance sheet.
Note 3 - Other Contingencies
The Company has a $13,000,000 bank line of credit on which it may draw
to meet short-term liquidity requirements or for other purposes, that expires on
September 30, 1998. The Company anticipates that this credit line will be
continued. Amounts drawn under the line are payable upon demand. At both June
30, 1998 and December 31, 1997, there were no borrowings under the line. At June
30, 1998 and December 31, 1997, the Company had outstanding approximately
$12,600,000 and $11,200,000, 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 $12,600,000 and $11,200,000 at June
30, 1998 and December 31, 1997, respectively.
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 4 - Settlement of Civil Litigation
On July 24, 1997, the Company and the U.S. Attorney for the Eastern
District of Pennsylvania reached a settlement of the 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 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 Company and its
officers denied all allegations, and all allegations against the Company and its
officers were dismissed with prejudice. The monetary impact of this settlement
plus estimated related legal costs of $575,000, amounting to approximately
$1,800,000 was accrued at June 30, 1997 and reduced the net income for the three
month period ended June 30, 1997 by $1,577,000 or $.14 per basic and diluted
common share (after the effect of the August 5, 1998 three-for-two stock split).
In addition, the six month period ended June 30, 1997 net income was reduced as
a result of the settlement payment by $1,577,000 or $.14 per basic and $.13 per
diluted common share (after the effect of the August 5, 1998 three-for-two stock
split). 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, respectively are in excess of the statutory rate.
<PAGE>
Note 5 - Earnings Per Common Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS No. 128) Earnings per
Share, which is effective for financial statements for periods ending after
December 15, 1997 and requires that all prior period earnings per share data be
restated. The Company's financial statements reflect this adoption. The new
standard eliminates primary and fully diluted earnings per common share and
requires presentation of basic and, if applicable, diluted earnings per 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.
Earnings per common share retroactively reflect the three-for-two stock split
described in Note 2.
Note 6 - Effect of Recently Issued Accounting Pronouncements
Reporting Comprehensive Income In June 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income", which is effective for fiscal years
beginning after December 15, 1997. The Statement addresses the reporting and
displaying of comprehensive income and its components. Adoption of SFAS No. 130
relates to disclosure within the financial statements and did not impact the
Company's financial statements.
Disclosures about Segments of an Enterprise and Related Information In
June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" which is effective for fiscal years
beginning after December 15, 1997. The Statement changes the way public
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly reports. Adoption of SFAS No. 131 is not expected to have a
material effect on the Company's financial statements.
Employers' Disclosure About Pensions and Postretirement Benefits In
February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure About
Pensions and Other Postretirement Benefits." SFAS No. 132, effective for the
year ending December 31, 1998, requires additional disclosures and eliminates
certain existing disclosures, but does not affect recognition or measurement of
net pension or postretirement benefit cost. Restatement of financial statement
disclosures for prior periods is required. Adoption of SFAS No. 132 is not
expected to have a material effect on the Company's financial statements.
<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 1998 increased by 8.5% over revenues
in the corresponding 1997 quarter. Revenues for the six months ended June 30,
1998 increased by 11.8 % over the corresponding 1997 period. The following
factors contributed to the increase in 1998 second quarter and six month period
revenues as compared to the corresponding 1997 periods: service agreements with
new clients increased revenues by 16.0 % for the second quarter and 17.1 % for
the six month period; providing new services to existing clients increased
revenues 8.9 % for the second quarter and 8.3% for the six month period; and
cancellations and other minor changes decreased revenues 16.4 % for the second
quarter and 13.6 % for the six month period.
Cost of services provided as a percentage of revenues decreased to
84.7% for the second quarter of 1998 from 85.3 % in the corresponding 1997
quarter. In addition, cost of services as a percentage of revenue decreased to
84.9% for the six month period ending June 30, 1998 from 85.2% in the same 1997
period. The primary factors affecting specific variations in the 1998 second
quarter and six month periods' cost of services provided as a percentage of
revenue and their effects on the respective .6% and .3 % decreases are as
follows: in the second quarter a decrease of .8% in labor costs and payroll
related taxes, a decrease of .3% in health insurance and employee benefits'
costs and a .3% decrease in service equipment depreciation; and offsetting these
decreases was an increase of .7% in the cost of supplies consumed in performing
services; in the six month period a decrease of 1.4% in labor costs and payroll
related taxes, a decrease of .3% in workers' compensation, general liability and
other insurance and a .3% decrease in health insurance and employee benefits;
and offsetting these decreases was an increase of 1.4% in the cost of supplies
consumed in performing services
Selling, general and administrative expenses as a percentage of revenue
decreased slightly in the second quarter of 1998 to 8.7% as compared to 8.8% in
the corresponding 1997 three month period. Additionally, during the six month
period ended June 30, 1998 selling, general and administrative expenses as a
percentage of revenue decreased to 8.5% as compared to 8.7% in the corresponding
1997 period. The three and six month decreases are primarily attributable to the
Company's ability to control certain selling, general and administrative
expenses while also comparing them to a greater revenue base.
Interest income decreased in the six month period ending June 30, 1998
compared to the same 1997 period principally due to lower average cash balances.
The lower average cash balances in the 1998 six month period as compared to 1997
primarily resulted from the Company's expenditure of approximately $10,900,000
for a common stock buy-back which occurred during 1997.
Liquidity and Capital Resources
At June 30, 1998 the Company had working capital and cash of
$61,621,031 and $18,001,738 respectively as compared to December 31, 1997
working capital and cash of $55,705,917 and $17,774,219, respectively. The
Company's current ratio at June 30, 1998 increased to 7.5 to 1 compared to 6.7
to 1 at December 31, 1997.
<PAGE>
The net cash used by the Company's operating activities was $50,642 for
the six month period ended June 30, 1998 as compared to net cash provided of
$1,150,083 in the same 1997 period. The principle sources of cash flows from
operating activities for the six month periods ended June 30, 1998 and 1997 were
net income and the timing of payments for income taxes, depreciation and
amortization and charges to operations for bad debt provisions. The operating
activity that used the largest amount of cash was a $6,205,232 and $4,516,340
net increase in accounts and current and long term notes receivable at June 30,
1998 and 1997, respectively. The increases in these amounts resulted primarily
from the growth in the Company's revenues. Additionally, operating activities'
cash flows for the six month periods ended June 30, 1998 were decreased by
$2,400,561 which resulted from the timing of payments to vendors.
The Company's principle use of cash in investing activities for the six
month periods ended June 30, 1998 and 1997 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, provide a definitive
repayment plan and 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.
The Company encounters difficulty in collecting amounts due from
certain of its clients, including those in bankruptcy, those turned over to
collection attorneys, 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 approximately
$1,000,000 in the six month period ended June 30, 1998. 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 long-term care 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, that expires on September 30, 1998. The Company anticipates that this
credit line will be continued. Amounts drawn under the line are payable on
demand. At June 30, 1998, there were no borrowings under the line. However, at
such date, the amount available under the line had been reduced by approximately
$12,600,000 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, 1998, the Company had $18,001,738 of cash and cash
equivalents, which it views as its principal measure of liquidity.
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 during calendar year 1998, it estimates that it will incur capital
expenditures of approximately $2,000,000 during this year 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.
<PAGE>
In accordance with the Company's previously announced authorizations to
purchase its outstanding common stock, the Company expended approximately
$10,900,000 to purchase 942,500 shares of its common stock during 1997 at an
average price of $11.59 per common share. The Company remains authorized to
purchase approximately 559,000 shares pursuant to previous Board of Directors'
action.
The Company's Board of Directors declared a three-for-two stock split
in the form of a 50% stock dividend payable August 27, 1998, in shares of the
Company's Common Stock to the owners of its Common Stock of record at the close
of business August 17, 1998. The effect of this action will increase shares
outstanding by approximately 3,764,231 to approximately 11,292,694. The three-
for-two stock split has been retroactively reflected in the June 30, 1998
balance sheet and earnings per common share have been retroactively adjusted
to reflect the three-for-two stock split.
Other Matters -- Year 2000 Compliance
The Company is in the process of implementing new operating and
application software which it believes will be fully operational during 1998.
The Company has been notified by the software manufacturer, as well as the firm
providing installation support, that the new applications have functionality for
the year 2000. Therefore, the Company does not believe it will incur any
material expense, beyond the new systems installation costs, with respect to
year 2000 issues. Additionally, the Company utilizes an independent service
bureau for the processing of payroll and payroll tax related operations. Many of
the Company's clients participate in programs funded by federal and state
governmental agencies which may be affected by year 2000 issue. The Company has
been notified by its payroll processing company that all of its systems will be
fully compliant with year 2000 requirements. Any failure by the Company, its
outside processing company, its clients and the federal and state governmental
agencies to effectively monitor, implement or improve the above referenced
operational, financial, management and technical support systems could have a
material adverse effect on the Company's business and consolidated results of
operations.
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.
Cautionary Statements Regarding Forward Looking Statements
Certain matters discussed 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 and credit and
collection risks associated with this industry. Additionally, the Company's
operating results would be adversely effected if unexpected increases in the
costs of labor, materials, supplies and equipment used in performing its
services could not be passed on to clients.
In addition, the Company believes that in order to improve its
financial performance it must continue to obtain service agreements with new
clients, as well as providing 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. Furthermore, 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.
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings. Not Applicable
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 Not Applicable
Holders
Item 5. Other Information.
a) The Company's Board of Directors
declared a three-for-two stock split in
the form of a 50% stock dividend payable
August 27, 1998, in shares of the
Company's Common Stock to the owners of
its Common Stock of record at the close
of business August 17, 1998. The effect
of this action will increase shares
outstanding by approximately 3,764,231
to approximately 11,292,694 shares.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits -
27 - Financial data schedule
b) Reports on Form 8-K - None
<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 12, 1998 /s/ Daniel P. McCartney
--------------------------
Date DANIEL P. McCARTNEY, Chief
Executive Officer
August 12, 1998 /s/ Thomas A. Cook
--------------------------
Date THOMAS A. COOK, President and
Chief Operating Officer
August 12, 1998 /s/ James L. DiStefano
--------------------------
Date JAMES L. DiSTEFANO, Chief Financial
Officer and Treasurer
August 12, 1998 /s/ Richard W. Hudson
--------------------------
Date RICHARD W. HUDSON, Vice
President-Finance, Secretary and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 18,001,738
<SECURITIES> 0
<RECEIVABLES> 45,968,202
<ALLOWANCES> 3,257,000
<INVENTORY> 7,645,122
<CURRENT-ASSETS> 71,035,401
<PP&E> 20,027,436
<DEPRECIATION> 14,330,578
<TOTAL-ASSETS> 90,759,874
<CURRENT-LIABILITIES> 9,414,370
<BONDS> 0
0
0
<COMMON> 112,576
<OTHER-SE> 77,897,068
<TOTAL-LIABILITY-AND-EQUITY> 90,759,874
<SALES> 0
<TOTAL-REVENUES> 97,172,949
<CGS> 82,460,328
<TOTAL-COSTS> 90,701,877
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,189,501
<INCOME-TAX> 2,897,000
<INCOME-CONTINUING> 4,292,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,292,501
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 22,677,290
<SECURITIES> 0
<RECEIVABLES> 37,130,730
<ALLOWANCES> 3,812,000
<INVENTORY> 7,392,507
<CURRENT-ASSETS> 66,110,881
<PP&E> 19,034,490
<DEPRECIATION> 12,821,500
<TOTAL-ASSETS> 86,445,647
<CURRENT-LIABILITIES> 8,676,567
<BONDS> 0
0
0
<COMMON> 80,907
<OTHER-SE> 74,857,526
<TOTAL-LIABILITY-AND-EQUITY> 86,445,647
<SALES> 0
<TOTAL-REVENUES> 162,482,169
<CGS> 139,178,736
<TOTAL-COSTS> 152,146,259
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,479,072
<INCOME-TAX> 4,590,000
<INCOME-CONTINUING> 6,889,072
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,889,072
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
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