Securities and Exchange Commission
Washington, DC 20549
--------------------
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended January 31, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____________ to _______________
Commission file number 0-16235
PHP Healthcare Corporation
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 54-1023168
_________________________________________________________________
State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
11440 Commerce Park Drive, Reston, VA 22091
_________________________________________________________________
(Address of principal executive offices)
Registrant's telephone number including area code
(703) 758-3600
_________________________________________________________________
_________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check whether registrant (i) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] Non [ ].
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, par value $.01 per share, outstanding as of
January 31, 1996, 10,888,218 shares.
<PAGE>
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Report of Independent Accountants 2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10
PART II - OTHER INFORMATION 20
SIGNATURES 21
EXHIBIT INDEX 22
1
<PAGE>
Report of Independent Accountants
[COOPERS & LYBRAND L.L.P. LETTERHEAD]
To the Board of Directors of PHP Healthcare Corporation:
We have reviewed the accompanying Condensed Consolidated Statement of
Operations, Balance Sheet and Statement of Cash Flows of PHP Healthcare
Corporation and consolidated subsidiaries as of January 31, 1996,
and for the three-month and nine-month periods then ended, included
on pages 3 through 9 of this Form 10-Q. These condensed consolidated
financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially less
in scope than an audit conducted in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
March 5, 1996
2
<PAGE>
PHP HEALTHCARE CORPORATION
Condensed Consolidated Statements of Operations
Three Months and Nine Months ended January 31, 1995 and 1996
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
------------ -----------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue............................ $57,004 $52,886 $148,822 $147,934
Direct costs....................... 52,078 42,305 132,945 119,100
_______ _______ ________ ________
Gross profit.................... 4,926 10,581 15,877 28,834
General and administrative
expenses.......................... 4,294 7,039 13,887 20,971
_______ _______ ________ ________
Operating income................ 632 3,542 1,990 7,863
Other income (expense):
Interest expense.............. (376) (979) (1,760) (2,076)
Interest income............... 106 482 315 885
Miscellaneous income (expense) 22 (20) 393 49
Gain on sale of stock of
subsidiary................... --- 2,247 --- 2,247
Minority interest in earnings
of subsidiaries.............. --- --- (159) ---
_______ _______ ________ ________
Earnings before income taxes.... 384 5,272 779 8,968
Income tax expense................. 139 1,112 281 2,554
_______ _______ ________ ________
Net earnings.................... $ 245 $ 4,160 $ 498 $ 6,414
======= ======= ======== ========
Net earnings per share............. $ 0.02 $ 0.31 $ 0.04 $ 0.48
======= ======= ======== ========
Weighted average number of common
and common equivalent shares
outstanding....................... 11,562 13,603 11,020 13,280
======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PHP HEALTHCARE CORPORATION
Condensed Consolidated Balance Sheets
As of April 30, 1995 and January 31, 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
April 30, January 31,
1995 1996
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 1,178 $ 41,657
Accounts receivable, net (note 2)............. 24,537 38,036
Contract settlement receivable, net (note 2).. 8,022 8,022
Pharmaceutical and medical supplies........... 1,089 990
Receivables from officers..................... 2,912 3,171
Other current assets.......................... 2,691 3,659
_______ ________
Total current assets........................ 40,429 95,535
Property and equipment, net...................... 23,096 22,417
Excess of cost over fair value of assets acquired,
net of accumulated amortization of $810 in April
and $923 in January............................. 3,092 2,979
Deferred income taxes............................ 1,125 1,125
Receivables from officers, net................... 885 885
Other assets..................................... 2,523 3,147
_______ ________
$71,150 $126,088
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable to bank
(note 3)..................................... $ 1,368 $ ---
Current maturities of notes payable - other
(note 3)..................................... 879 670
Accounts payable.............................. 6,405 6,756
Claims payable - medical services............. 6,000 6,675
Accrued salaries and benefits................. 8,129 10,074
Deferred income taxes......................... 1,507 3,389
Billings in excess of costs................... 719 907
_______ ________
Total current liabilities................... 25,007 28,471
Notes payable to bank, net of current maturities
(note 3)........................................ 23,280 ---
Notes payable - other, net of current maturities
(note 3)........................................ 1,174 2,074
Convertible subordinated debentures (note 4)..... --- 65,831
Deferred gain on sale of building................ 1,085 1,024
Other liabilities................................ 272 472
_______ ________
Total liabilities........................... 50,818 97,872
_______ ________
Minority interest (note 7)....................... 4 757
_______ ________
Stockholders' equity (note 5):
Preferred stock, $.01 par value, 500,000
shares authorized, none issued............... --- ---
Common stock, $.01 par value, 25,000,000
shares authorized, 14,146,702 shares issued
in April and January......................... 141 141
Additional paid-in-capital.................... 29,373 29,945
Note receivable from sale of stock............ (900) (900)
Retained earnings (deficit)................... (1,570) 4,844
Treasury stock, 3,330,020 common shares in
April and 3,258,484 common shares in
January, at cost............................. (6,716) (6,571)
_______ ________
Total stockholders' equity.................. 20,328 27,459
Contingencies (notes 2 and 6).................... _______ ________
$71,150 $126,088
======= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PHP HEALTHCARE CORPORATION
Condensed Consolidated Statements of Cash Flows
Nine Months Ended January 31, 1995 and 1996
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Net cash provided by (used in) operating activities... $ 983 $ (2,062)
_______ ________
Cash flows from investing activities:
Acquisition of property and equipment............... (5,545) (2,331)
Sale of stock of subsidiary, net of cash............ --- 2,927
Disposition of property and equipment............... 151 ---
Net proceeds from sale of property and equipment.... 14,040 ---
Acquisition of subsidiaries, net of cash acquired... (694) ---
Disposition of subsidiaries, net.................... 10,826 ---
_______ ________
Net cash provided by investing activities........ 18,778 596
_______ ________
Cash flows from financing activities:
Proceeds from issuance of convertible
subordinated debentures............................ --- 65,831
Net repayments under revolving promissory notes..... (1,173) (20,546)
Borrowings on notes payable......................... 504 1,918
Repayments on notes payable......................... (19,792) (5,329)
Increase in receivables from officers............... --- (259)
Proceeds from the exercise of stock options......... --- 330
Distributions paid to limited partners.............. (133) ---
Net cash provided by (used in) _______ _______
financing activities............................ (20,594) 41,945
_______ ________
Net increase (decrease) in cash and cash
equivalents..................................... (833) 40,479
Cash and cash equivalents, beginning of period........ 2,370 1,178
_______ ________
Cash and cash equivalents, end of period.............. $ 1,537 $ 41,657
======= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PHP HEALTHCARE CORPORATION
Notes to Condensed Consolidated Financial Statements
January 31, 1996
(Unaudited)
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
In the opinion of the Company, the interim condensed consolidated
financial statements include all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the results
for the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
The interim condensed consolidated financial statements should be read
in conjunction with the Company's April 30, 1994 and 1995 audited
consolidated financial statements. The year-end condensed consolidated
balance sheet data was derived from audited consolidated financial
statements but does not include all disclosures required by generally
accepted accounting principles. The interim operating results are
not necessarily indicative of the operating results for the full fiscal
year. Certain amounts in the fiscal year 1995 condensed consolidated
financial statements have been reclassified to conform with the fiscal
year 1996 presentation.
(b) Sales of Subsidiary Stock
Gains or losses related to the sales of stock by a subsidiary
are included in the statement of operations.
(c) New Accounting Pronouncement
In October 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123, "Accounting for Stock-Based Compensation". As
permitted by the Standard, the Company does not intend to adopt the
provisions for recognizing compensation expense for grants to employees
of stock, stock options, and other equity instruments based on a new fair
value method. Accordingly, this Standard is not expected to have any
impact on amounts recorded in the Company's consolidated financial
statements. However, beginning with fiscal year 1997, the Standard
will require the Company to disclose additional information in the
footnotes to its annual consolidated financial statements, including
pro forma net income and earnings per share under the new fair value method.
(2) Accounts Receivable
(a) Contract Claim
In April 1994, the Company submitted a Request for Equitable
Adjustment (REA) under a contract with the Department of the Army for
material changes in the nature of the contract requirements from those
represented during the contract proposal process. The REA was denied
by the Army and the Company subsequently submitted a claim for its
increased costs of performance under the contract pursuant to the
Contracts Dispute Act of 1978. Billed accounts receivable of $1.9
million as of April 30, 1995 were fully reserved pending further
actions by the Board of Contract Appeals. In September 1995, the
Company reached a settlement with the Department of the Army in the
amount of $300,000. Accordingly, the Company recognized $300,000 of
revenue.
6
<PAGE>
PHP HEALTHCARE CORPORATION
Notes to Condensed Consolidated Financial Statements
(continued)
(b) Contract Settlement Receivable
D.C. Chartered Health Plans ("CHP"), the Company's wholly owned
health maintenance organization, earns substantially all of its revenue
under a prepaid Medicaid contract with the D.C. Department of Human
Services (DCDHS) to provide health care services to the Medicaid
recipients of the District of Columbia. The Medicaid program is jointly
funded by the District of Columbia and the Health Care Finance
Administration (HCFA) of the United States Department of Health and
Human Services (HHS).
Under a three-year contract ended September 30, 1994, interim
payments were provided on an enrollment basis with a final settlement
at the end of the contract period, subject to a defined upper payment
limit as determined by HCFA of HHS. Final settlement with DCDHS and
HCFA is subject to an audit of CHP's activities. The Company believes
final settlement should result in amounts due the Company at April 30,
1995 in excess of $20 million, which is expected to be lower than the
actual upper payment limit. Due to the complexity inherent in the
contract and the definition of the settlement process as provided for
in the contract, the Company has recorded amounts due under the contract
of $8.0 million at April 30, 1995 and January 31, 1996, which represents
the Company's conservative interpretation of amounts due under the contract.
The Company believes that final settlement will occur during early fiscal
1997. In addition, proposed congressional legislation is pending which
upon passage would in management's opinion result in a retroactive
entitlement of the full recovery of the settlement receivable.
Effective October 1, 1994, CHP entered into a new contract with
DCDHS. CHP receives capitation payments for the inpatient services under
the risk portion of the contract. Additionally, CHP receives interim
payments with an annual final settlement for the other services under
the non-risk portion of the contract. At April 30, 1995 and January 31,
1996, CHP recorded accounts receivable of $1.9 million and $4.8 million,
respectively, for the difference between what was due under the contract
and what had been received. Final settlement of amounts due under this
contract is subject to an audit of the Company's activities by DCDHS.
Also, at January 31, 1996, an additional $4.5 million of premiums due
January 1, 1996, were outstanding. Payment for this premium was received
on February 26, 1996.
(3) Notes Payable
(a) Notes Payable to Bank
The notes payable to bank consists of the following (in thousands):
<TABLE>
<CAPTION>
April 30, January 31,
1995 1996
---- ----
<S> <C> <C>
Term note of $15 million collateralized by all
assets, interest due monthly at 1% above bank
prime, principal due in quarterly installments
of $342,000 with final payment due in April
1998, repaid in December 1995 (note 4)......... $ 4,102 $ ---
Revolving promissory note, collateralized by
all assets, with a maximum credit line of $22
million, interest due monthly at 1% above
bank prime, due November 1996, repaid in
December 1995 (note 4)......................... 20,546 ---
________ ________
Total notes payable to bank................ 24,648 ---
Less current maturities.................. (1,368) ---
________ ________
Notes payable to bank, net of current
maturities................................ $ 23,280 $ ---
======== ========
</TABLE>
7
<PAGE>
PHP HEALTHCARE CORPORATION
Notes to Condensed Consolidated Financial Statements
(continued)
On November 27, 1995, the Company extended the revolving
promissory note until November 30, 1996 under similar terms. On
December 19, 1995, the Company repaid in full both the term note and
the revolving promissory note with the proceeds of the convertible
subordinated debt issuance.
(b) Notes Payable - Other
The notes payable - other consists of the following (in thousands):
<TABLE>
<CAPTION>
April 30, January 31,
1995 1996
---- ----
<S> <C> <C>
Various collateralized term notes of $1,495,000,
interest from 10.4% to 10.9% with various
installment payments due October 2000........... $ 393 $ 1,394
Insurance note of $485,000, monthly installments
of principal and interest, interest at 7.6% due
April 1996...................................... 166 132
Obligations under capital leases, for certain
equipment and fixtures, monthly installments
of principal and interest of $27,000, interest
at 4.1%, due May 1998........................... 935 718
Convertible promissory notes of $500,000,
interest due annually on April 30 at 7%,
convertible into common stock at $4.50 per share
commencing September 1995, due September 1999... 500 500
Promissory notes of $417,000, interest at 7%,
repaid in August 1995........................... 59 ---
_______ _______
Total notes payable - other................. 2,053 2,744
Less current maturities.................. (879) (670)
_______ _______
Notes payable - other, net of current
maturities................................. $ 1,174 $ 2,074
======= =======
</TABLE>
(4) Convertible Debt
On December 18, 1995, the Company completed the sale of $69 million
in convertible subordinated debentures due December 15, 2002. The
debentures bear interest at a rate of 6.5%, payable on June 15 and
December 15, and are convertible into PHP common stock at a conversion
price of $27.25 per share.
The Debentures are redeemable at the option of the Company, in
whole or in part, at the redemption prices set forth in the Indenture,
together with accrued interest, except that no redemption may be made
prior to December 17, 1998. Upon a Repurchase Event, each holder of
Debentures shall have the right, at the holder's option, to require the
Company to repurchase such holder's Debenture at a purchase price equal
to 100% of the principal amount thereof, plus accrued interest. The
Debentures are unsecured obligations of the Company and are subordinated
to all present and future senior indebtedness of the Company.
(5) Stock Split
On October 16, 1995, the Board of Directors of the Company
declared a two-for-one stock split of its Common Stock payable on
November 20, 1995. This was effected in the form of a 100 percent
stock dividend of 7,073,351 shares to shareholders of record as of
November 1, 1995. Stockholders' equity has been restated to give
retroactive recognition to the stock split for all periods
8
<PAGE>
PHP HEALTHCARE CORPORATION
Notes to Condensed Consolidated Financial Statements
(continued)
presented by reclassifying from additional paid in capital to common
stock the par value of the additional shares arising from the split.
In addition, for all periods presented, all references in the consolidated
financial statements and footnotes thereto to number of shares, earnings
per share amounts, and weighted average shares outstanding, have been
restated to give retroactive effect to the two-for-one stock split
effected on November 20, 1995.
(6) Contingencies
The Company is a defendant in various legal actions. The
principal actions allege or involve claims under contractual arrangements,
employment matters, and medical malpractice with an estimated possible
range of loss between approximately $50,000 and $1.5 million in excess
of insurance coverage. The Company has not recorded any reserves related
to these actions at January 31, 1996. In the opinion of management,
after consultation with legal counsel, the possible additional losses
related to these actions, if any, will not result in any material adverse
effect on the Company's consolidated financial position, results of
operations, or cash flows. The Company maintains medical malpractice
insurance coverage which provides for reimbursement of any claim amounts
in excess of $250,000 and $50,000 per incident for government and
commercial business, respectively.
(7) Sale of Minority Interest in Virginia Chartered Health Plan, Inc.
Effective January 31, 1996, the Company completed the sale of a
30% interest in its wholly owned subsidiary, Virginia Chartered Health
Plan, Inc. to University Health Services, Inc. ("UHS"), an affiliate of
the Medical College of Virginia, for $3 million in cash. The Company
recognized a gain of $2.2 million related to this sale, which is presented
separately in the condensed consolidated statements of operations for
the three and nine months ended January 31, 1996. Since this was a sale
of unissued VaCHP shares, the gain recognized is not taxable; accordingly
no corresponding provision for income taxes has been made. Additionally,
VaCHP entered into a five year Network Agreement with UHS for the
provision of inpatient services. Under the Shareholder Agreement at the
termination of the five year Network Agreement, if not renewed or
terminated due to breach, UHS may put or VaCHP may call the shares
purchased at the then fair market value.
9
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
GENERAL
In response to the industry shift to manage the disparate
components of the health care delivery system, PHP has transitioned to a
managed care solutions company. Over the past three years, the Company
has altered its focus from a historic dependence on government contracts
to a focus on commercial managed care markets. Prior to 1993, over 98%
of PHP's revenue came from government-related contracts. PHP's government
service contracts required the Company to manage health care providers in
a variety of delivery settings. In 1992, management realized that the
knowledge, expertise and skills the Company had acquired in managing
health care providers for government agencies could also be applied to
serve the commercial managed care market. At the same time, management
supplemented the Company's existing competencies with additional skills
and capabilities in order to take full advantage of the opportunities
available in commercial managed care. The Company added to existing
capabilities by making several key acquisitions, investing in information
systems, and recruiting experienced managed care executives. With this
added expertise, PHP has expanded its commercial business so that, in
fiscal 1995, its commercial business accounted for 50% of PHP's total
revenue.
Revenue in the Commercial Managed Health Care Services division
has grown, in part as a result of acquisitions, to $102.2 million or 50%
of total revenue in fiscal year 1995 from $1.3 million or 1% of total
revenue in fiscal year 1992. Operations in this division consist of the
Company's integrated system of care applied in whole or in part to: (i)
the Company's project with Blue Cross Blue Shield of New Jersey ("BCBSNJ")
to operate ten Integrated Systems of Care ("ISOC") in the State of New
Jersey, (ii) health centers which are operated on a contract basis for
large employers, and (iii) the Company's wholly-owned HMO in the District
of Columbia, D.C. Chartered Health Plan, Inc. ("CHP"), primarily serving
the government-assisted Medicaid population in that area. In these
operations, the Company undertakes to provide specified health care
benefits to the participating populations. The Company is compensated
for these services through a combination of capitation fees, management
fees, cost reimbursements, incentive fees related to cost savings, and
profits from equity participation. In November 1995, the Company's
subsidiary, Virginia Chartered Health Plan, Inc. ("VaCHP"), commenced
operations in Virginia. VaCHP will operate as a Medicaid HMO, similar
to CHP. Most recently, the Company has begun to form strategic alliances
with hospitals and physicians in selected markets to develop independent
ISOC programs that will be marketed to HMO's, insurance companies and
large employers.
Revenue from the Government Managed Health Care Services division
has decreased from a peak of $116.4 million in fiscal year 1992 to $101.5
million in fiscal year 1995. Operations in this division consist of health
care services provided to government agencies across a diverse scope of
service groups including ambulatory care, medical staffing, mental health,
long-term care, and total managed care. The Company generally performs
these services under unit-price, fixed-price, cost-reimbursement-plus-fee,
and fixed-rate-labor hour contracts.
The Company's revenue has increased from $118.0 million in fiscal
year 1992 to $204.1 million in fiscal year 1995. Gross profit margins
decreased to 7% and 6% in 1993 and 1994, respectively, from 14% in fiscal
year 1992. In fiscal year 1995, the gross profit margin was 11%. The
Company earned net income of $952,000 in 1995 after net losses of $3.8
million and $9.3
10
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
million in fiscal years 1993 and 1994, respectively. The 1993 and 1994
losses were due to increased business development costs related to
commercial business efforts, increased corporate support staff costs,
government contract proposal activity costs, increased interest expense
resulting from various acquisitions and capital expenditures to meet
operational needs, and write-offs of receivables under certain contracts.
In late January 1996, Connecticut Health Enterprise (CHE), an
Integrated System of Care (ISOC) developed by the Company and St. Vincent's
Health Services, Inc. of Connecticut, received a $4 million equity
investment for a 35% non-voting common interest from S.S. Cooper, an
affiliate corporation of the Daughters of Charity National Health System.
In addition, S.S. Cooper is providing a $16 million long-term, unsecured
line of credit. As a result of the S.S. Cooper's 35% ownership investment
in CHE, PHP/CHE, Inc., a wholly owned subsidiary of PHP Healthcare, and
Vincentures, Inc., a wholly owned subsidiary of St. Vincent's Health
Services Corporation, each hold a 32.5% interest in CHE.
In early February 1996, St. Mary's Health Care System, Inc. of
Athens, Georgia, signed a letter of intent to develop a physician and
hospital-based Integrated System of Care in the 12 county area of
Northeast Georgia. This regional ISOC, Georgia Health Enterprise (GHE),
will be jointly owned by affiliates of the Company and St. Mary's Health
Care System. GHE will function similarily to CHE, wherein the Company
will manage GHE and provide the infrastructure necessary to create a
competitive integrated delivery network, including practice management
systems, quality and utilization management systems, network development
and management, state-of-the-art information systems, and effective sales
and marketing services.
The following table sets forth, for the periods indicated, certain
items in the Company's Condensed Consolidated Statements of Operations
expressed as a percentage of revenue:
<TABLE>
<CAPTION>
Three Months Nine Months
ended January 31, ended January 31,
----------------- -----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue....................... 100.0% 100.0% 100.0% 100.0%
Direct costs.................. 91.4 80.0 89.3 80.5
_____ _____ _____ _____
Gross profit.................. 8.6 20.0 10.7 19.5
General and administrative
expenses..................... 7.5 13.3 9.3 14.2
_____ _____ _____ _____
Operating income.............. 1.1 6.7 1.4 5.3
Other income/(expense)........ (0.4) 3.3 (0.8) 0.7
_____ _____ _____ _____
Earnings before income taxes.. 0.7 10.0 0.6 6.0
Income tax expense............ 0.3 2.1 0.2 1.7
_____ _____ _____ _____
Net earnings.................. 0.4 7.9 0.4 4.3
===== ===== ===== =====
</TABLE>
11
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS
The Three Months Ended January 31, 1995 Compared To
The Three Months Ended January 31, 1996
The following table indicates revenue by the Company's service
divisions and the related percentage of total revenue:
<TABLE>
<CAPTION>
January 31, 1995 January 31, 1996
---------------- ----------------
Revenue % of Revenue % of
Division (000's) Total (000's) Total
- -------- ------- ----- ------- -----
<S> <C> <C> <C> <C>
Government Managed Health Care Services $25,208 44.2 $24,403 46.1
Commercial Managed Health Care Services 31,796 55.8 28,483 53.9
_______ _____ _______ _____
Total $57,004 100.0 $52,886 100.0
======= ===== ======= =====
</TABLE>
The Company's revenue decreased by $4.1 million to $52.9 million
for the quarter ended January 31, 1996 compared to $57.0 million for the
prior year third quarter. The prior year third quarter Commercial Managed
Health Care Services division revenue included $13.3 million of non-
recurring construction and pre-operational revenues on the BCBSNJ ISOC
project.
Exclusive of the non-recurring construction and pre-operational
revenue earned on the BCBSNJ ISOC project in fiscal year 1995, Commercial
Managed Health Care Services division revenue increased by $10.0 million
or 54.1%, to $28.5 million for the quarter ended January 31, 1996 compared
to $18.5 million for the quarter ended January 31, 1995. The largest
increase was due to increased revenue at the Company's Medicaid HMO,
CHP, resulting from an expanded enrollment and an increase in the contract
premium rate. Commercial Managed Health Care Service division revenue
also increased due to increased revenue from operations on the BCBSNJ
ISOC project which became operational in January 1995 and therefore, was
operational only one month during the prior year third quarter compared
to three months in the current quarter. Additionally, the Company
recognized cost savings revenue on the BCBSNJ ISOC project for the first
full year of operations, calendar year 1995, during the quarter ended
January 31, 1996. Other Commercial Managed Care Service division revenue
increases resulted from revenue earned during the current period from the
commencement of operations on several ISOC ventures in Connecticut,
Georgia, and other markets, and revenues earned from the commencement of
operations at the Company's subsidiary, Virginia Chartered Health Plan,
Inc., which is a newly formed Medicaid HMO operating in selected markets
in the Commonwealth of Virginia.
12
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
Government Managed Health Care Service division revenue decreased
slightly by $800,000 to $24.4 million for the quarter ended January 31,
1996, compared to $25.2 million for the quarter ended January 31, 1995.
This decrease is primarily related to the completion of five ambulatory
care projects and one mental health project. These revenue decreases
were partially offset by revenue increases resulting from the commencement
of operations on two new long-term care nursing home projects, one
ambulatory care project, and one medical staffing project.
The Company's gross profit more than doubled, increasing by $5.7
million, to $10.6 million for the quarter ended January 31, 1996 compared
to $4.9 million for the prior year third quarter. As a percentage of
revenue, gross profit increased to 20.0% for the current year third quarter
compared to 8.6% for the same period in the prior year. This overall gross
profit improvement resulted from an increase in both the Commercial Managed
Health Care Service division and the Government Managed Health Care Service
division.
The Commercial Managed Health Care Service division gross profit
increase was primarily attributable to: (1) an expanded enrollment and
increased contract premium rate at the Company's Medicaid HMO, CHP, and
(2) gross profit earned from operating activity and the cost savings
revenue on the BCBSNJ ISOC project which became operational in January 1995.
Government Managed Health Care Service division gross profit
increased due to: (1) an increased contract rate at a long-term care
nursing home project and at the Company's total managed care correctional
facility project, and (2) increased utilization, improved cost control,
and higher award fee revenues at three ambulatory care projects with the
Navy. These gross profit increases were partially offset by decreases
resulting from the completion of five ambulatory care projects and one
mental health project.
General and administrative expenses increased 64% or $2.7 million,
to $7.0 million for the quarter ended January 31, 1996 from $4.3 million
for the prior year third quarter. As a percentage of revenue, general and
administrative expenses increased to 13.3% for the current year third
quarter compared to 7.5% during the prior year third quarter. The increase
is primarily a function of the Company's Commercial Managed Health Care
initiatives and is due to: (1) additional general and administrative
expenses related to the new Virginia Chartered Health Plan, Inc. subsidiary,
(2) increased general and administrative expenses related to CHP and its
growing enrollment, (3) increased corporate compensation costs related to
the hiring and retention of existing and additional management personnel,
and (4) increased travel and consulting expenses related to commercial
business development efforts.
Operating income more than quadrupled, increasing by $2.9 million
to $3.5 million for the quarter ended January 31, 1996 from $600,000 for
the quarter ended January 31, 1995. Operating margin increased to 6.7%
from 1.1%. This increase was primarily due to the expanded gross profit
margins, offset in part, by increased general and administrative expenses.
13
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
Interest expense increased by $603,000 from $376,000 for the
quarter ended January 31, 1995 to $979,000 for the quarter ended January 31,
1996. This increase in interest expense is due to the increase in the
Company's long term debt resulting from the issuance of $69.0 million
in convertible subordinated debentures on December 18, 1995.
Interest income increased by $376,000 from $106,000 for the
quarter ended January 31, 1995 to $482,000 for the quarter ended January 31,
1996. This increase is due to the interest earned on the approximately
$40 million in cash and cash equivalents currently available to the Company
resulting from the sale of $69 million in convertible subordinated
debentures in December 1995.
For the quarter ended January 31, 1996 the Company recognized
a gain of $2.2 million related to the sale of a 30% interest in a wholly
owned subsidiary, Virginia Chartered Health Plan, Inc., for $3 million
in cash.
The effective income tax rates of 21.1% in the third quarter of
fiscal 1996 and 36.2% in the third quarter of fiscal 1995 represent the
combined federal and state income tax rates adjusted as necessary. The
gain resulting from the sale of a 30% interest in Virginia Chartered
Health Plan, Inc., to University Health Services, is a non-taxable
transaction and therefore no provision for income taxes was included in
the Company's results of operations for the quarter ended January 31, 1996.
Exclusive of this gain, the combined effective income tax rate for the
quarter would have been 36.8%.
Net earnings increased by $3.9 million, from $245,000 or $0.02
per share, to $4.2 million or $0.31 per share, for the quarters ended
January 31, 1995 and 1996, respectively.
14
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS
The Nine Months Ended January 31, 1995 Compared To
The Nine Months Ended January 31, 1996
The following table indicates revenue by the Company's service
divisions and the related percentage of total revenue:
<TABLE>
<CAPTION>
January 31, 1995 January 31, 1996
---------------- ----------------
Revenue % of Revenue % of
Division (000's) Total (000's) Total
- -------- ------- ----- ------- -----
<S> <C> <C> <C> <C>
Government Managed Health Care Services $ 77,042 51.8 $ 72,507 49.0
Commercial Managed Health Care Services 71,324 47.9 75,427 51.0
Other Revenue 456 0.3 --- ---
________ ____ ________ ____
Total $148,822 100.0 $147,934 100.0
======== ===== ======== =====
</TABLE>
The Company's revenue decreased by 0.6% or $900,000 to $147.9
million for the nine months ended January 31, 1996 compared to $148.8
million for the prior year nine month period. The prior year nine month
Commercial Managed Health Care Services division revenues included $19.6
million of non-recurring construction and pre-operational revenue on the
BCBSNJ ISOC project.
Exclusive of the non-recurring construction and pre-operational
revenue earned on the BCBSNJ ISOC project in fiscal year 1995, Commercial
Managed Health Care Services division revenue increased by $23.7 million
or 45.8% to $75.4 million for the nine months ending January 31, 1996
compared to $51.7 million for the nine months ended January 31, 1995.
This net increase is the result of several increases and decreases. The
largest increase in Commercial Managed Health Care Service division revenue
was due to an increase in operational revenue on the BCBSNJ ISOC project
which commenced operations in January 1995 and was therefore operating all
nine months during fiscal 1996 but only one month during the same nine
month period in fiscal 1995. Additionally, the Company recognized cost
savings revenue on the BCBSNJ ISOC project for the first full year of
operations, calendar year 1995, during the nine months ended January 31,
1996. The second largest increase in Commercial Managed Health Care
Service division revenue was provided by the Company's Medicaid HMO and
resulted from an expanded enrollment and a new contract at a higher
premium rate. Additional revenue increases also resulted from: (1)
revenue earned during the current period for ISOC development efforts
related to strategic ventures in Connecticut, Georgia, and other markets,
(2) increased utilization at two existing ISOC projects for large
employers, (3) increased software sales at the Company's wholly owned
subsidiary, Health Cost Consultants ("HCC"), a case management and
utilization review services company, (4) the commencement of operations
at a new ISOC project for a large employer in January 1995,
15
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
and (5) revenue resulting from the commencement of operations at the
Company's subsidiary, Virginia Chartered Health Plan, Inc., a Medicaid
HMO operating in selected markets in the Commonwealth of Virginia.
In addition to the Commercial Managed Health Care Service
division revenue decrease related to the construction and pre-operational
phases of the BCBSNJ ISOC project, other revenue decreases resulted from:
(1) the sale of two outpatient surgery centers in September 1994, (2) the
non-recurrence of construction and pre-operational revenues earned in the
prior year related to an ISOC project for a large employer which became
operational in January 1995, and (3) the completion of several small
consulting projects, most of which had been serviced by East West Research
Corporation, a wholly owned subsidiary of the Company which provided
network management and development services and which has since been
merged into the core operations of the Company.
Government Managed Health Care Service division revenue decreased
by $4.5 million to $72.5 million for the nine months ended January 31, 1996
compared to $77.0 million for the nine month period ended January 31, 1995.
This decrease is primarily related to the completion of seven ambulatory
care projects, two mental health projects, and two medical staffing
projects. Offsetting these revenue decreases were revenue increases
resulting from: (1) the commencement of operations on two new long-term
care nursing home projects in June 1995, (2) the commencement of operations
on a new ambulatory care project in October 1995, (3) the commencement of
operations on a new medical staffing project in January 1995, (4) the
expansion of services and a corresponding increase in contract rate on
one PRIMUS project, and (5) an expanded inmate population and an increase
in the contract rate on a total managed care correctional facilities project.
The Company's gross profit increased by 81.6% or $12.9 million, to
$28.8 million for the nine months ended January 31, 1996 compared with
$15.9 million during the prior year period. As a percentage of revenue,
gross profit increased to 19.5% for the current nine month period compared
to 10.7% during the prior year. This overall gross profit improvement
resulted from a significant increase in the Commercial Managed Health
Care Service division as well as an increase in the Government Managed
Health Care Service division.
The Commercial Managed Health Care Service division gross profit
increase was primarily attributable to an expanded enrollment and a new
contract at a higher premium rate at the Company's Medicaid HMO. A gross
profit increase also resulted from the commencement of activity on the
operating portion of the BCBSNJ ISOC project in January 1995, and the
cost savings revenue recognized during the nine months ended January 31,
1996, for the first full year of operations, calendar year 1995. These
Commercial Managed Health Care Service division gross profit increases
were tempered by a decrease resulting from the sale of the remaining two
outpatient surgery centers in September 1994.
16
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
The Government Managed Health Care Service division gross profit
increase was due to: (1) an expanded inmate population and an increased
contract rate on a total managed care correctional facilities project,
(2) increased contract rates on two long-term care nursing home projects,
(3) increased utilization, improved cost control, and higher award fee
revenue at three ambulatory care projects with the Navy, (4) an expansion
of services and a corresponding increase in the contract rate on one
PRIMUS project, and (5) the $300,000 settlement of the Company's outstanding
claim with the Department of the Army related to a former PRIMUS project.
Government Managed Health Care Service division gross profits decreased
due to the completion of certain projects as cited above for causing
revenues to decrease, and due to a decrease in utilization and the
contract rate at one NAVCARE project which was completed in September 1995.
General and administrative expenses increased 51.0% or $7.1 million,
to $21.0 million for the nine months ended January 31, 1996 from $13.9
million for the same period in the prior year. As a percentage of revenue,
general and administrative expenses increased to 14.2% for the current year
nine month period compared to 9.3% during the prior year. The increase is
primarily a function of the Company's Commercial Managed Health Care
initiatives and is due to: (1) increased general and administrative
expenses associated with CHP and its growing enrollment, (2) additional
general and administrative expenses associated with the new Virginia
Chartered Health Plan, Inc. subsidiary, (3) increased corporate compensation
costs related to the hiring and retention of existing and additional
management personnel and support staff, (4) increased travel and consulting
expenses related to commercial business development efforts, and (5)
increased facility expenses resulting from the Company's new expanded
Corporate headquarters office space.
Operating income nearly quadrupled, increasing by $5.9 million
to $7.9 million for the nine months ended January 31, 1996 from $2.0
million for the nine months ended January 31, 1995. Operating margin
increased to 5.3% from 1.4%. This increase was primarily due to the
increased gross profit margins, reduced by increased general and
administrative expenses.
Interest expense increased 18.0%, or $316,000, to $2,076,000
for the nine months ended January 31, 1996 from $1,760,000 for the
prior year nine months. This increase is primarily a result of the
$69.0 million in convertible subordinated debentures sold by the
Company on December 18, 1995. Partially offsetting this increase,
is a decrease in interest expense resulting from a decrease in the
average outstanding long-term debt of the Company resulting from the
sale of the Reston office building in July 1994, and the sale of the
remaining two outpatient surgery centers in September 1994.
Interest income increased by $570,000 from $315,000 for the
nine months ended January 31, 1995 to $885,000 for the nine months
ended January 31, 1996. This increase is due to the interest earned
on the approximately $40 million in cash and cash equivalents currently
available to the Company resulting from the sale of $69 million in
convertible subordinated debentures in December 1995.
17
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
For the nine months ended January 31, 1996 the Company recognized
a gain of $2.2 million related to the sale of a 30% interest in a wholly
owned subsidiary, Virginia Chartered Health Plan, Inc., for $3 million
in cash.
The effective income tax rates of 28.5% and 36.1% for the nine
months ended January 31, 1996 and 1995, respectively, represent the
combined federal and state income tax rates adjusted as necessary. The
gain resulting from the sale of a 30% interest in Virginia Chartered
Health Plan, Inc., to University Health Services, Inc., is a non-taxable
transaction and therefore no provision for income taxes was included in
the Company's results of operations for the nine months ended January 31,
1996. Exclusive of this gain, the combined effective income tax rate
for the period ended January 31, 1996, would have been 38.0%.
Net earnings increased by $5.9 million, from $498,000 or $0.04
per share, to $6.4 million or $0.48 per share, for the nine months ended
January 31, 1995 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Typically, the Company's principal sources of funds are operations
and bank borrowings. In December 1995, however, the Company issued $69
million of convertible subordinated debentures resulting in net proceeds
of $65.8 million. The Company used these proceeds to extinguish all
outstanding bank debt and will use the remaining amount to fund expansion
of its Commercial Managed Care Service division.
During the nine months ended January 31, 1996 operations used
$2.1 million in cash. This represents a $3.1 million change from the $1.0
million in cash provided by operations in the prior year nine month period.
In general, this decrease in cash provided by operations is primarily due
to an increase in accounts receivable of $7.8 million, and a decrease in
accounts payable of $5.6 million, offset by an increase in net earnings
of $5.9 million.
The Company's number of days revenue in average outstanding
receivables was 51 days for the nine months ended January 31, 1996
compared to 38 days for the prior year nine month period. This increase
is due to the difference between the payment and revenue processes on
the BCBSNJ project, particularly the construction and pre-operational
phases that the Company was engaged in during the prior year nine month
period, and an increase of $7.4 million in amounts due from the District
of Columbia since April 30, 1995, related to the Company's Medicaid HMO,
of which $4.5 million of premiums due January 1, 1996, were received
on February 26, 1996. The delay in payment of current premiums is due
to the current federal budget and the District of Columbia's fiscal
difficulties.
18
<PAGE>
PHP HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
Investing activities provided $600,000 in cash during the nine
months ended January 31, 1996 compared to $18.8 million provided during
the nine months ended January 31, 1995. The cash provided during the
current nine month period is due to the sale of a minority interest
in a subsidiary, reduced by the acquisition of property and equipment.
During the prior year nine month period the Company generated net cash
from investing activities, principally through the sale of its office
building in Reston, Virginia and the sale of two of its outpatient
surgery centers.
Financing activities provided $41.9 million in cash during the
nine months ended January 31, 1996 compared to $20.6 million used in
financing activities during the nine months ended January 31, 1995.
In December 1995 the Company sold $69 million of convertible subordinated
debentures resulting in net proceeds of $65.8 million. With these
proceeds the Company completely repaid all outstanding bank debt.
During the prior year nine months, the Company's use of cash as a result
of financing activities was due to: (1) the repayment in full of non-
recourse notes and certain prepayments of term notes as a result of the
sale of its office building in Reston, Virginia and, (2) certain
repayments of revolving promissory notes and term notes as a result of
the sale of two of its outpatient surgery centers.
The Company believes that the current cash and cash equivalents,
anticipated cash flow generated by operations and its borrowing capabilities
will be sufficient for known future capital needs of the Company. There
may be, however, further expansion opportunities which require additional
external financing and the Company may, from time to time, consider
obtaining such funds through the public and private issuance of equity
or debt securities.
19
<PAGE>
PHP HEALTHCARE CORPORATION
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11.0 Statement re: Computation of per share earnings for the
three months and nine months ended January 31, 1995 and 1996
15.0 Letter of Coopers & Lybrand L.L.P. regarding Unaudited
Interim Financial Statements
b) Reports on Form 8-K
On December 1, 1995, December 22, 1995, and January 11, 1996,
the Company filed Forms 8-K relating to its private offering of $69
million in aggregate principal amount of convertible subordinated
debentures due 2002.
20
<PAGE>
PHP HEALTHCARE CORPORATION
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 duly authorized.
PHP HEALTHCARE CORPORATION
(Registrant)
By: /s/ Anthony M. Picini
ANTHONY M. PICINI
Senior Vice President of
Finance and Chief Financial
Officer
Date: March 18, 1996
21
<PAGE>
PHP HEALTHCARE CORPORATION
EXHIBIT INDEX
EXHIBIT ITEM PAGE
11.0 Statement re: Computation of per share earnings for 23
the three months and nine months ended January 31,
1995 and 1996
15.1 Letter of Coopers & Lybrand L.L.P. regarding Unaudited 24
Interim Financial Statements
22
PHP HEALTHCARE CORPORATION
EXHIBIT 11
Statement Re: Computation of per Share Earnings
Three Months and Nine Months ended
January 31, 1995 and 1996
<TABLE>
<CAPTION>
Three Months Nine Months
ended January 31, ended January 31,
----------------- -----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary
Net Earnings.............. $ 245,000 $4,160,000 $ 498,000 $6,414,000
========== ========== ========== ==========
Weighted average number of
common shares outstanding... 10,874,476 10,949,439 10,472,886 10,930,272
Add common share equivalents
(determined using the
"treasury stock method")
representing shares issuable
upon exercise of stock
options and warrants....... 776,274 2,741,879 586,742 2,438,759
Shares held in escrow....... (88,572) (88,572) (39,366) (88,572)
__________ __________ __________ __________
Weighted average number of
shares used in calculation
of primary earnings per
share...................... 11,562,178 13,602,746 11,020,262 13,280,459
========== ========== ========== ==========
Primary earnings per common
share...................... $ 0.02 $ 0.31 $ 0.04 $ 0.48
========== ========== ========== ==========
Fully diluted
Net earnings.............. $ 245,000 $4,160,000 $ 498,000 $6,414,000
Net interest expense
related to convertible
debt..................... 6,000 357,000 7,000 362,000
__________ __________ __________ __________
Net earnings as adjusted.. $ 251,000 $4,517,000 $ 505,000 6,776,000
========== ========== ========== ==========
Weighted average number of
common shares outstanding.. 10,874,476 10,949,439 10,472,886 10,930,272
Add common share equivalents
(determined using the
"treasury stock" method)
representing shares issuable
upon exercise of stock
options, warrants, and
convertible notes payable.. 609,066 2,848,082 505,258 2,867,806
Assumed conversion of
convertible debt........... 111,111 1,353,111 49,384 525,111
Shares held in escrow....... (88,572) (88,572) (39,366) (88,572)
__________ __________ __________ __________
Weighted average number of
shares used in calculation
of fully diluted earnings
per share.................. 11,506,081 15,062,060 10,988,162 14,234,617
========== ========== ========== ==========
Fully diluted earnings per
common share $ 0.02 $ 0.30 $ 0.04 $ 0.48
========== ========== ========== ==========
</TABLE>
23
[COOPERS & LYBRAND L.L.P. LETTERHEAD]
Exhibit 15.1
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: PHP Healthcare Corporation
Registration on Form S-3
We are aware that our report dated March 6, 1996 on our review of interim
financial information of PHP Healthcare Corporation and consolidated
subsidiaries as of January 31, 1996 and for the three-month and
nine-month periods then ended and included in the Company's quarterly
report on Form 10-Q for the quarter then ended is incorporated by
reference in this Registration Statement No. 33-301101. Pursuant to Rule
436(c) under the Securities Act of 1933, this report should not be considered
a part of the prospectus and registration statement prepared or certified
by us within the meaning of Section 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
Washington, D.C.
March 18, 1996
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements for PHP Healthcare Corporation and is qualified
in it entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CIK> 0000803568
<NAME> PHP Healthcare Corporation
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Apr-30-1996
<PERIOD-START> May-01-1995
<PERIOD-END> Jan-31-1996
<CASH> 41,657
<SECURITIES> 0
<RECEIVABLES> 46,198
<ALLOWANCES> 140
<INVENTORY> 990
<CURRENT-ASSETS> 95,535
<PP&E> 37,814
<DEPRECIATION> 15,397
<TOTAL-ASSETS> 126,088
<CURRENT-LIABILITIES> 28,471
<BONDS> 65,831
<COMMON> 141
0
0
<OTHER-SE> 33,889
<TOTAL-LIABILITY-AND-EQUITY> 126,088
<SALES> 0
<TOTAL-REVENUES> 147,934
<CGS> 0
<TOTAL-COSTS> 119,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,076
<INCOME-PRETAX> 8,968
<INCOME-TAX> 2,554
<INCOME-CONTINUING> 6,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,414
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
</TABLE>
