<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, 1999 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
incorporation or organization) Identification 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 August 6, 1999 is
11,057,582.
Total of 16 Pages
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<S> <C> <C>
Consolidated Balance Sheets as of 2
June 30, 1999 and December 31, 1998
Consolidated Statements of Income for the Three Months Ended 3
June 30, 1999 and 1998
Consolidated Statements of Income for the Six Months Ended
June 30, 1999 and 1998 4
Consolidated Statements of Cash Flows for the Six Months 5
ended June 30, 1999 and 1998
Notes To Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of Financial Condition 9 - 13
and Results Of Operations
Part II. Other Information 14
Signatures 15
</TABLE>
-1-
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 14,241,278 $17,201,408
Accounts and notes receivable, less allowance
for doubtful accounts of $4,199,000 in 1999 and
$3,449,000 in 1998 48,983,647 45,066,828
Prepaid income taxes ( Note 6 11,030
Inventories and supplies 8,444,836 7,803,437
Deferred income taxes ( Note 6 655,176 324,054
Prepaid expenses and other 2,133,636 2,318,285
------------ ------------
Total current assets 74,469,603 72,714,012
PROPERTY AND EQUIPMENT:
Laundry and linen equipment installations 9,158,006 8,985,945
Housekeeping equipment and office
furniture 9,079,686 8,482,207
Autos and trucks 51,110 51,110
------------ ------------
18,288,802 17,519,262
Less accumulated depreciation 11,914,284 11,416,214
------------ ------------
6,374,518 6,103,048
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED less accumulated
amortization of $1,474,096 in 1999 and
$1,420,284 in 1998 1,881,381 1,935,193
DEFERRED INCOME TAXES (Note 6) 1,731,485 2,131,535
OTHER NONCURRENT ASSETS 10,955,629 10,225,439
------------ ------------
$95,412,616 $93,109,227
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,870,989 $ 4,366,015
Accrued payroll, accrued and withheld payroll taxes 5,051,908 5,147,634
Other accrued expenses 125,664 319,333
Income taxes payable 283,980
Accrued insurance claims 686,981 588,040
------------ ------------
Total current liabilities 7,735,542 10,705,002
ACCRUED INSURANCE CLAIMS 2,584,358 2,212,151
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY: (Note 2)
Common stock, $.01 par value: 22,500,000
shares authorized, 11,039,732 shares issued
and outstanding in 1999 and 11,034,207 in 1998 110,397 110,342
Additional paid in capital 25,099,905 25,064,832
Retained earnings 59,882,414 55,016,900
------------ ------------
Total stockholders' equity 85,092,716 80,192,074
------------ ------------
$95,412,616 $93,109,227
============ ============
</TABLE>
See accompanying notes
-2
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
For the Three Months
Ended June 30,
1999 1998
------------ ------------
Revenues $56,883,026 $49,405,821
Operating costs and expenses:
Costs of services provided 48,757,219 41,863,483
Selling, general and administrative 4,579,671 4,292,401
Other Income :
Interest Income 209,371 380,318
------------ ------------
Income before income taxes 3,755,507 3,630,255
Income taxes (Note 6 1,319,000 1,438,000
------------ ------------
Net Income $ 2,436,507 $ 2,192,255
============ ============
Earnings per share of common stock: (Note 2)
Basic earnings per common share $ 0.22 $ 0.20
============ ============
Diluted earnings per common share $ 0.22 $ 0.19
============ ============
Basic weighted average number
of common shares outstanding 11,048,495 11,213,016
============ ============
Diluted weighted average number
of common shares outstanding 11,323,505 11,557,749
============ ============
See accompanying notes
-3
<PAGE>
Healthcare Services Group, Inc.
Consolidated Income Statements
(Unaudited)
For the Six Months Ended June 30,
1999 1998
------------ ------------
Revenues $112,505,230 $ 97,172,949
Operating costs and expenses:
Costs of services provided 96,160,521 82,460,328
Selling, general and administrative 8,880,491 8,241,549
Other Income :
Interest Income 407,296 718,429
------------ ------------
Income before income taxes 7,871,514 7,189,501
Income taxes ( Note 6 3,006,000 2,897,000
------------ ------------
Net Income $ 4,865,514 $ 4,292,501
============ ============
Earnings per share of common stock: (Note 2)
Basic earnings per common share 0.44 $ 0.38
============ ============
Diluted earnings per common share 0.43 $ 0.37
============ ============
Basic weighted average number
of common shares outstanding 11,048,620 11,174,201
============ ============
Diluted weighted average number
of common shares outstanding 11,351,754 11,506,619
============ ============
See accompanying notes
-4
<PAGE>
HEALTHCARE SERVICES GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 4,865,514 $ 4,292,501
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 933,181 982,702
Bad debt provision 1,500,000 1,000,000
Deferred income taxes (benefits) ( Note 6 68,928 (834,388)
Tax benefit of stock option transactions 31,879 185,929
Changes in operating assets and liabilities:
Accounts and notes receivable (5,416,819) (7,150,541)
Prepaid income taxes ( Note 6 (11,030) 366,712
Inventories and supplies (641,399) (305,194)
Changes to long term notes receivable (562,375) 945,309
Accounts payable and other accrued expenses (2,688,694) (2,400,561)
Accrued payroll, accrued and withheld payroll
taxes (95,727) (14,482)
Accrued insurance claims 471,148 598,001
Income taxes payable ( Note 6 (283,980) 1,941,978
Prepaid expenses and other assets 16,834 341,392
------------ ------------
Net cash used by operating activities (1,812,540) (50,642)
------------ ------------
Cash flows from investing activities:
Disposals of fixed assets 1,561 20,100
Additions to property and equipment (1,152,399) (1,008,708)
------------ ------------
Net cash used in investing activities (1,150,838) (988,608)
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock (183,750)
Proceeds from the exercise of stock options 186,998 1,266,769
------------ ------------
Net cash provided by financing activities 3,248 1,266,769
------------ ------------
Net increase (decrease) in cash and cash equivalents (2,960,130) 227,519
Cash and cash equivalents at beginning of the year 17,201,408 17,774,219
------------ ------------
Cash and cash equivalents at end of the period 14,241,278 18,001,738
============ ============
</TABLE>
See accompanying notes.
-5
<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,
1998 has been derived from, and does not include, all the disclosures contained
in the financial statements for the year ended December 31, 1998. 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, 1998. The results of operations for the three and six month periods
ended June 30, 1999 and 1998 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
issued was transferred from additional paid in capital to common stock in the
December 31, 1998 balance sheet. All stock options, share and per share
disclosures have been adjusted to reflect the 3-for-2 stock split.
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, 1999. The Company anticipates that this credit line will be
continued. Amounts drawn under the line are payable upon demand. At both June
30, 1999 and December 31, 1998, there were no borrowings under the line.
However, at such dates, the line was fully utilized as a result of contingent
liabilities of the Company to the lender relating to letters of credit issued
for the Company, which relate to payment obligations under the Company's
insurance program.
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.
<PAGE>
Note 4 - Segment Information
The Company provides housekeeping, laundry, linen, facility maintenance
and food services to the healthcare industry. The Company considers its business
to consist of one reportable operating segment, based on the service business
categories, provided to a client facility, sharing similar economic
characteristics in the nature of the service provided, method of delivering
service and client base. Although the Company does provide services in Canada,
essentially all of its revenue and net income, approximately 99%, are earned in
one geographic area, the United States.
The Company earned revenue in the following service business
categories:
For the three month period ended June 30,
1999 1998
----------- -----------
Housekeeping services $35,548,000 $31,555,000
Laundry & linen services 16,300,000 12,399,000
Food services 2,991,000 3,731,000
Maintenance services &
Other 2,044,000 1,721,000
----------- -----------
$56,883,000 $49,406,000
=========== ===========
For the six month period ended June 30,
1999 1998
----------- -----------
Housekeeping services $ 70,650,000 $ 63,053,000
Laundry & linen services 32,576,000 23,907,000
Food services 5,447,000 6,761,000
Maintenance services &
Other 3,832,000 3,452,000
------------ ------------
$112,505,000 $ 97,173,000
============ ============
<PAGE>
Note 5 - Effect of Recently Issued Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
beginning after June, 2000. SFAS No. 133 requires all entities to recognize all
derivative instruments on their balance sheet as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that my be
hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.
Adoption of SFAS No. 133 is not expected have a material effect on the
Company's consolidated financial statements.
Note 6 - Income Taxes
The Internal Revenue Service has concluded its examination of the tax
years ended December 31, 1997 and December 31, 1996. Previously established
reserves are no longer required. Accordingly, the effective tax rate has been
reduced to reflect the reversal of these reserves.
<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. All share and per share data
has been adjusted for the three-for-two stock split declared by the Board of
Directors on August 5, 1998.
RESULTS OF OPERATIONS
Revenues for the second quarter of 1999 increased by 15.1% over
revenues in the corresponding 1998 quarter. Revenues for the six months ended
June 30, 1999 increased by %15.8 over the corresponding 1998 period. The
following factors contributed to the increase in 1999 second quarter and six
month period revenues as compared to the corresponding 1998 periods: service
agreements with new clients increased revenues by 36.5 % for the second quarter
and 35.9% for the six month period; new services to existing clients increased
revenues 2.1 % for both the second quarter and six month period; and
cancellations and other minor changes decreased revenues 23.5% for the second
quarter and 22.2% for the six month period.
Cost of services provided as a percentage of revenues increased to
85.7% for the second quarter of 1999 from 84.7 % in the corresponding 1998
quarter. In addition, cost of services as a percentage of revenue increased to
85.5% for the six month period ended June 30, 1999 from 84.9% in the same 1998
period. The primary factors affecting specific variations in the 1999 second
quarter and six month period's cost of services provided as a percentage of
revenue and their effects on the respective 1.0% and .6% increases are as
follows: in the second quarter an increase of 2.6% in labor costs and payroll
related taxes, an increase of .4% in the allowance for doubtful accounts, an
increase of .3% in health insurance and employee benefits costs; offsetting
these increases were a decrease of 1.6% in the cost of supplies consumed in
performing services, a decrease of .8% in workers' compensation, general
liability and other insurance; in the six month period an increase of 2.5% in
labor costs and payroll related taxes, an increase of .3% in the allowance for
doubtful accounts; offsetting these increases were decreases of 1.2% and .9% in
the cost of supplies consumed in performing services, and in workers'
compensation, general liability and other insurance expense, respectively.
Selling, general and administrative expenses as a percentage of revenue
decreased in the second quarter of 1999 to 8.1% as compared to 8.7% in the
corresponding 1998 three month period. Additionally, during the six month period
ended June 30, 1999 selling, general and administrative expenses as a percentage
of revenue decreased to 7.9% as compared to 8.5% in the corresponding 1998
period. The three and six month period decreases are primarily attributable to
the Company's ability to control certain selling, general and administrative
expenses while comparing them to a greater revenue base.
<PAGE>
Interest income decreased in the three and six month periods ended June
30, 1999 as compared to the same 1998 periods principally due to the Company's
shift from investing excess funds in taxable securities to tax exempt
securities, as well as lower average cash balances.
The effective income tax rate for the three and six month periods ended
June 30, 1999, decreased as a result of the reversal of previously established
income tax reserves no longer required as a result of the conclusion of an
Internal Revenue Service examiniation for the tax years ended December 31, 1997
and 1996.
Liquidity and Capital Resources
At June 30, 1999 the Company had working capital and cash and cash
equivalents of $66,734,061 and $14,241,278, respectively, which represents a
decrease in cash and cash equivalents of 17% and an increase of 8% in working
capital as compared to December 31, 1998 working capital and cash and cash
equivalents of $62,009,010 and $17,201,408, respectively.
The net cash used by the Company's operating activities was $1,812,540
for the six month period ended June 30, 1999 as compared to net cash used of
$50,642 in the same 1998 period. The principle sources of cash flows from
operating activities were: for the six month period ended June 30, 1999 net
income, charges to operations for bad debt provisions and depreciation and
amortization; in the six month period ended June 30, 1998 net income, the timing
of payments of income taxes, charges to operations for bad debt provisions and
depreciation and amortization. The operating activity that used the largest
amount of cash was a $5,979,194 and $6,205,232 net increase in accounts and long
term notes receivable at June 30, 1999 and 1998, 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, 1999 and 1998 were decreased by $2,688,694 and $2,400,561,
respectively, as a result of the timing of payments to vendors.
The Company's principle use of cash in investing activities in each of
the three month periods ended June 30, 1999 and 1998 was 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.
<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 recorded a
bad debt provision of $1,500,000 in the six month period ended June 30, 1999. 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, 1999. The Company anticipates that this
credit line will be continued. Amounts drawn under the line are payable on
demand. At June 30, 1999, there were no borrowings under the line. However, at
such date, the line was fully utilized as result of contingent liabilities of
the Company to the lender relating to letters of credit issued for the Company
(see Note 3 of Notes to Financial Statements).
At June 30, 1999, the Company had $14,241,278 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 1999, it estimates that it will incur capital
expenditures of approximately $2,500,000 during 1999 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 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.
In accordance with the Company's previously announced authorizations to
purchase its outstanding common stock, the Company expended $183,750 to purchase
21,000 shares of its common stock in May 1999 at an average price of $8.75 per
common share and $3,496,000 during 1998 to purchase 369,000 shares of its common
stock at an average price of $9.47 per common share. The Company remains
authorized to purchase 448,950 shares pursuant to previous Board of Directors'
action.
<PAGE>
Effect of Recently Issued Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
beginning after June, 2000. SFAS No. 133 requires all entities to recognize all
derivative instruments on their balance sheet as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that my be
hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.
Adoption of SFAS No. 133 is not expected have a material effect on the
Company's consolidated financial statements.
Other Matters -
Year 2000 Compliance
The Company has implemented new operating and application software
which became become fully operational during 1998. The Company has been notified
by its software manufacturer, as well as the firm providing installation
support, that the new applications have functionality for the year 2000. 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 and payment of
payroll and payroll related taxes. The Company has been notified by its payroll
processing company that all of its systems will be fully compliant with year
2000 requirements. Many of the Company's clients participate in programs funded
by federal and state governmental agencies which may be affected by the year
2000 issue. Any failure by the Company, its outside processing company, its
clients or 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.
<PAGE>
Government Regulation of Clients
The Company's clients are subject to governmental regulation. In August
1997, the President signed into law the Balanced Budget Act of 1997. The
legislation changes Medicare and Medicaid policy in a number of ways including
the phasing in of a Medicare prospective payment system ("PPS") for skilled
nursing facilities effective July 1, 1998. PPS will significantly change the
manner in which skilled nursing facilities are reimbursed for inpatient services
provided to Medicare beneficiaries. Unlike the old system, which relied solely
on cost reports submitted, PPS rates are based entirely on the
federally-acuity-adjusted rate. Although there can be no assurance thereof, the
Company believes that while PPS will affect how clients are paid for certain
services, the Company's business should not be adversely impacted by this
legislation, as clients determine how to adjust to PPS. The Company does not
participate in any government reimbursement programs, therefore, all of the
Company's contractual relationships with its clients continue to determine the
clients' payment obligations to the Company. At this time. The Company has not
been able to fully assess the impact of PPS on its clients, due in part to
uncertainty as to the details of implementation by 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, primarily
providers of long-term care; credit and collection risks associated with this
industry and risk factors described in the Company's Form 10-K for the year
ended December 31, 1998 in Part I thereof under "Government Regulation of
Clients", "Competition" and "Service Agreements". 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, 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. 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.
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.
Although there can be no assurance thereof, 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.
<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
Holders
(c) The Company's Annual Meeting of Shareholders was held on May 18, 1999
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"
8,220,054 10,036
(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, 1999 was approved as follows:
Shares Voted Shares Voted Shares
"FOR" "AGAINST" "ABSTAINING"
8,172,444 53,845 3,834
Item 5. Other Information.
a) None
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits -
27 - Financial data schedule
b) Reports on Form 8-K - None
-14
<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 6, 1999 /s/ Daniel P. McCartney
- ------------------------ -----------------------------------
Date DANIEL P. McCARTNEY, Chief
Executive Officer
August 6, 1999 /s/ Thomas A. Cook
- ------------------------ -----------------------------------
Date THOMAS A. COOK, President and
Chief Operating Officer
August 6, 1999 /s/ James L. DiStefano
- ------------------------ -----------------------------------
Date JAMES L. DiSTEFANO, Chief Financial
Officer and Treasurer
August 6, 1999 /s/ Richard W. Hudson
- ------------------------ -----------------------------------
Date RICHARD W. HUDSON, Vice
President-Finance, Secretary and
Chief Accounting Officer
-15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,241,278
<SECURITIES> 0
<RECEIVABLES> 53,182,647
<ALLOWANCES> 4,199,000
<INVENTORY> 8,444,836
<CURRENT-ASSETS> 74,469,603
<PP&E> 18,288,802
<DEPRECIATION> 11,914,284
<TOTAL-ASSETS> 95,412,616
<CURRENT-LIABILITIES> 7,735,542
<BONDS> 0
0
0
<COMMON> 110,397
<OTHER-SE> 84,982,319
<TOTAL-LIABILITY-AND-EQUITY> 95,412,616
<SALES> 0
<TOTAL-REVENUES> 112,505,230
<CGS> 96,160,521
<TOTAL-COSTS> 105,041,012
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,871,514
<INCOME-TAX> 3,006,000
<INCOME-CONTINUING> 4,865,514
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,865,514
<EPS-BASIC> .44
<EPS-DILUTED> .43
</TABLE>
