<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
......................................
FORM 10Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended September 30, 1997 Commission file number 0-15389
GROUP 1 SOFTWARE, INC.
Incorporated in Delaware IRS EI No. 52-1483562
4200 Parliament Place, Suite 600, Lanham, MD 20706-1844
Telephone Number: (301) 918-0400
Indicate by check mark whether the registrant (1) has filed 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 NO
--------- ---------
Class Shares Outstanding Effective
- ------------------------------ November 5, 1997
Common Stock, $.01 par value 4,293,697
<PAGE> 2
GROUP 1 SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
(UNAUDITED) (AUDITED)
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 736 $ 1,500
Trade and installment accounts receivable,
less allowance of $3,174 and $3,208 28,383 32,460
Deferred income taxes 2,329 2,438
Prepaid expenses and other current assets 3,595 4,047
----------- ---------
Total current assets: 35,043 40,445
Installment accounts receivable, long-term 4,812 6,170
Property and equipment, net 3,241 3,472
Computer software, net 23,653 22,185
Other assets 2,048 2,275
----------- ---------
Total assets $ 68,797 $ 74,547
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 7,883 $ 7,097
Accounts payable 2,067 2,833
Current portion of long-term debt 157 164
Accrued expenses 2,889 5,731
Accrued compensation 2,859 3,577
Current deferred revenues 15,120 16,170
Due to parent company 1,372 1,719
----------- ---------
Total current liabilities 32,347 37,291
Long-term debt, net of current portion 446 303
Deferred revenues, long-term 3,803 4,606
Deferred income taxes 3,931 3,288
----------- ---------
Total liabilities 40,527 45,488
----------- ---------
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $0.01 par value 1,000 shares
authorized - none issued and outstanding - - - - - -
Common stock, $0.01 par value 10,000 shares
authorized, 4,293 issued and outstanding 43 43
Capital contributed in excess of par value 5,189 5,189
Retained earnings 22,986 23,476
Cumulative foreign currency translation 52 351
----------- ---------
Total stockholders' equity 28,270 29,059
----------- ---------
Total liabilities and stockholders' equity $ 68,797 $ 74,547
=========== =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 3
GROUP 1 SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE THREE MONTH FOR THE SIX MONTH PERIOD
PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- ----------------------------
1997 1996 1997 1996
(FY98) (FY97) (FY98) (FY97)
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Software licenses and related revenue $ 8,374 $ 7,124 $ 13,436 $ 12,535
Maintenance and service revenue 6,991 5,935 13,799 11,245
---------- ---------- ----------- -----------
Total revenue 15,365 13,059 27,235 23,780
Costs and expenses:
Software licenses expense 2,796 1,689 4,796 3,213
Maintenance and service expense 3,290 3,326 6,620 6,159
Research, development and indirect support 629 636 1,276 1,289
Selling and marketing 5,179 4,890 10,366 9,041
General and administrative 1,615 1,509 3,355 2,871
Provision for doubtful accounts receivable 725 456 1,105 836
---------- ---------- ----------- -----------
Total costs and expenses 14,234 12,506 27,518 23,409
---------- ---------- ----------- -----------
Operating earnings (loss) 1,131 553 (283) 371
Non-operating expense, net (179) (208) (388) (217)
---------- ---------- ----------- -----------
Earnings (loss) before provision for income taxes 952 345 (671) 154
Provision (benefit) for income taxes 347 72 (181) 51
---------- ---------- ----------- -----------
Net earnings (loss) $ 605 $ 273 $ (490) $ 103
========== ========== =========== ===========
Earnings (loss) per share of common stock: $ 0.14 $ 0.06 $ (0.11) $ 0.02
========== ========== =========== ===========
Weighted average number of common and common
equivalent shares outstanding 4,296 4,329 4,294 4,326
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
GROUP 1 SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED SEPTEMBER 30,
--------------------------------
1997 1996
(FY98) (FY97)
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (490) $ 103
Adjustments to reconcile earnings (loss) from operations
to net cash from operating activities:
Amortization expense 3,442 2,784
Depreciation expense 520 466
Provision for doubtful accounts receivable 1,105 836
Deferred income taxes 752 772
Change in assets and liabilities:
(Increase) decrease in accounts receivable 4,330 (2,380)
(Increase) decrease in prepaid expenses and other current assets 465 (308)
Decrease in other assets 227 82
Increase (decrease) in accounts payable (766) 2,007
Decrease in accrued expenses and compensation (3,560) (2,950)
Decrease in due to parent company (347) (76)
Decrease in deferred revenues (1,853) (1,694)
------------ ------------
Net cash provided by (used in) operating activities 3,825 (358)
------------ ------------
Cash flows from investing activities:
Purchase and development of computer software (4,891) (5,552)
Purchase of equipment and improvements (321) (538)
Purchase of marketable securities - - - (3,984)
Sale of marketable securities - - - 5,965
------------ ------------
Net cash used in investing activities (5,212) (4,109)
------------ ------------
Cash flows from financing activities:
Proceeds from short-term borrowings 9,772 10,865
Reduction of short-term borrowings (8,986) (6,637)
Proceeds from acquisition of debt 199 - - -
Reduction of long-term debt (63) (285)
------------ ------------
Net cash provided by financing activities 922 3,943
------------ ------------
Net decrease in cash and cash equivalents (465) (524)
Effect of exchange rate changes on cash and cash equivalents (299) (13)
Cash and cash equivalents at beginning of period 1,500 1,716
------------ ------------
Cash and cash equivalents at end of period $ 736 $ 1,179
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
GROUP 1 SOFTWARE, INC.
Notes to Consolidated Financial Statements
1. The financial statements for the three and six months ended September 30,
1997 and 1996, and as of September 30, 1997, are unaudited. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Limited footnote information is presented
in accordance with quarterly reporting requirements. The results of
operations for the three and six months ended September 30, 1997, are not
necessarily indicative of the results for the year ending March 31, 1998.
The information contained in the audited financial statements and the notes
thereto for the year ended March 31, 1997, should be referred to in
connection with the unaudited interim financial information.
2. Research and development expense, before the capitalization of computer
software development costs, amounted to approximately $6,073,000 and
$5,915,000 for the six months ended September 30, 1997 and 1996,
respectively.
3. Earnings per share of common stock in the accompanying financial statements
have been computed on the net earnings to stockholders. Earnings per share
of common stock have been computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the
respective periods. Common equivalent shares result from the dilutive
effect of stock options calculated under the treasury stock method.
4. The Financial Accounting Standards Board issued SFAS No. 128 regarding
earnings per share. This statement which must be adopted by the Company for
fiscal accounting periods ending after December 15, 1997, requires earnings
per share to be calculated under newly prescribed methods. Adoption of SFAS
No. 128 is not expected to have a material impact on the company's earnings
per share.
5. Certain prior year amounts have been reclassified to conform with the
current year presentation.
4
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Any statements in this quarterly report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; together with other statements that
are not historical facts, are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to, changes in currency
exchange rates, changes and delays in new product introduction, customer
acceptance of new products, changes in government regulations, changes in
pricing or other actions by competitors and general economic conditions, as well
as other risks detailed in the Company's filings with the Securities and
Exchange Commission.
For the quarter ended September 30, 1997, the Company's revenues of $15.4
million increased 18% from the $13.1 million reported for the comparable period
the prior year. Net earnings for the quarter ended September 30, 1997, were $0.6
million or $0.14 per share compared with net earnings of $0.3 million or $0.06
per share in fiscal 1997. For the six months ended September 30, 1997, the
Company's revenue was $27.2 million, an increase of 14% over revenue of $23.8
million the prior year. The Company's net loss for the six month period was $0.5
million or $0.11 per share compared with a net income of $0.1 million or $0.02
per share the prior year. The decline in profitability for the six month period
was due to first quarter fiscal 1998 losses arising from increased sales and
marketing, general and administrative (primarily legal and accounting fees) and
maintenance and professional services costs, partially offset by an increase in
revenue. The increase in net earnings for the quarter was primarily due to
higher revenue partially offset by higher royalty, sales, marketing and bad debt
expenses.
Software license fees and related revenues of $8.4 million for the second fiscal
quarter increased 18% over the prior year. As a percent of total revenue, second
quarter software license and related revenue was 55% in both fiscal 1998 and
fiscal 1997. For the six month period, software license fees and related
revenues of $13.4 million were 7% above the prior year. For the six month
period, software license and related revenue as a percent of total revenue was
49% in fiscal 1998 compared with 53% in fiscal 1997. License fees increased in
all market areas except Electronic Document Systems.
License fees from Customer Information Management Systems software for the
fiscal second quarter increased $292,000 over the prior year and for the six
month period, were $245,000 above the comparable period in the prior year. The
increases were due to sales of NADIS offset by lower sales of the WorldTrak
product which was disposed of during the quarter (see below).
License fees from Database Marketing Systems increased 154% for the fiscal
second quarter. For the six month period ended September 30, 1997, revenues
increased 77% over the comparable period the prior year. The increase resulted
from higher sales of Model 1 and Geographic Coding products partially offset
by lower sales of our DataDesigns products.
Licensing of Electronic Document Systems decreased 35% in the fiscal second
quarter. For the six month period ended September 30, 1997, Electronic Document
Systems license fees decreased 18% over the comparable period the prior year.
5
<PAGE> 7
The Company's core Mailing Efficiency software license fees for the fiscal
second quarter increased 21% over the same period the prior year. For the six
months ended September 30, 1997, revenues increased 4% over the comparable
period in the prior year. The increases were primarily due to continued growth
of the Open Systems product suite and increased mainframe revenue.
Maintenance and other revenue of $7.0 million for the quarter increased 18% over
the prior year. For the six month period, maintenance and other revenue of $13.8
million was 23% above the comparable period in the prior year. Maintenance and
other revenue accounted for 45% and 51% of total revenue for the quarter and six
months ended September 30, 1997, compared with 45% and 47%, respectively in the
prior year. Recognized maintenance fees included in maintenance and other
revenue above, were $5.3 million and $10.5 million for the quarter and six
months ended September 30, 1997, increases of 19% and 17% over the comparable
periods of the prior year. Professional and educational service revenues of $1.7
million and $3.3 million for the quarter and six months ended September 30,
1997, were 24% and 44% over the comparable periods of the prior year.
It is anticipated that professional and educational service revenues will
continue to increase as a percentage of Group 1's total revenue, resulting from
the growth of Electronic Document Systems, and Database Marketing Systems
revenues which require more consulting and professional services than the
Company's traditional Mailing Efficiency products.
Effective September 5, 1997, Group 1 granted an exclusive license to InterTrak
Corporation for the distribution of the WorldTrak products for a period of 36
months. At the end of the 36 month period, ownership of the product will pass to
InterTrak. Group 1 will receive a 30% royalty on all sales of the WorldTrak
product during the 36 month period. In addition, Group 1 has contracted with
InterTrak for the maintenance and support of all existing WorldTrak customers
during the remaining terms of the maintenance contracts.
During the fiscal second quarter, total operating costs of $14.2 million
amounted to 93% of revenue compared with $12.5 million or 96% of revenue during
the same period the prior year. For the six months ended September 30, 1997,
total operating costs of $27.5 million were 101% of revenue as compared with
$23.4 million or 98% of revenue in the prior year.
Software license expense increased to $2.8 million for the three months ended
September 30, 1997, from $1.7 million in the comparable prior year period,
representing 33% and 24% of software license and related revenues, respectively.
For the six months ended September 30, 1997 and 1996, software license expense
represented 36% and 26% of software license and related revenue respectively.
The increased expense primarily relates to higher royalty costs from increased
sales of Database Marketing products and Customer Information Management
Systems, as well as higher amortization expense.
Maintenance and service expense was $3.3 million in both the current quarter and
the comparable period in fiscal 1997, representing 47% and 56% of maintenance
and service revenue, respectively. For the six months ended September 30, 1997
and 1996, maintenance and service expense represented 48% and 55% of maintenance
and service revenue, respectively. The decrease in expense as a percent of
revenue reflects higher margins in both maintenance and service, as described
below.
Included in maintenance and service expense above are professional and
educational service costs of $1.3 million which were 75% of professional
services revenue for the second quarter compared with $1.1 million and 79% for
the comparable quarter in the prior year. For the six months ended September 30,
1997, professional and educational service costs were $2.8 million and 84% of
professional service revenue
6
<PAGE> 8
compared with $2.3 million and 89% in the prior year. The Company expects these
margins to increase as professional services revenue grows.
Costs of maintenance was $2.0 million for the second quarter of fiscal 1998,
representing 38% of maintenance revenue compared with costs of $2.2 million and
50% of maintenance revenue in the second quarter of fiscal 1997. For the six
months ended September 30, 1997, maintenance costs of $3.9 million were 37% of
maintenance revenue compared with $4.1 million and 46% in the comparable period
of the prior year. The lower cost as a percentage of maintenance revenue
reflects economies of scale achieved with maintenance support costs spread over
a larger revenue base, as well as cost reductions.
Research, development and indirect support expenses (after capitalization of
certain development costs) totaled $0.6 million in the second quarter of fiscal
1998 and $0.6 million in the same quarter the prior year, representing 4% and 5%
of total revenue in both periods. For both the six month periods ended September
30, 1997 and 1996, research, development and indirect support expenses were 5%
of total revenue. The Company anticipates that these costs, as a percentage of
revenue, will increase due to expanded product offerings.
Selling and marketing expenses totaled $5.2 million or 34% of total revenue in
the second quarter of fiscal 1998 and $4.9 million or 37% of total revenue in
the prior year. For the six month periods ending September 30, 1997 and 1996,
selling and marketing expenses were 38% of total revenue. The Company believes
these costs, as a percentage of revenue, will remain around these levels.
General and administrative expenses were $1.6 million or 11% of total revenue
compared with $1.5 million or 12% of total revenue for the three months ended
September 30, 1997 and 1996, respectively. For the six month period ended
September 30, 1997, general and administrative expenses were $3.4 million or 12%
of total revenue compared with $2.9 million or 12% of total revenue in the prior
year.
The provision for doubtful accounts was $0.7 million and $1.1 million in fiscal
1998 as compared with $0.5 million and $0.8 million in fiscal year 1997 for the
three and six months periods ended September 30, respectively. The increase in
the current year provision is based upon the larger accounts receivable balances
at September 30, 1997 and higher revenues during the period as compared with the
same period the prior year.
Net non-operating expense was $0.2 million for the second quarter and $0.4
million for the six months ended September 30, 1997 as compared with net
non-operating expense of $0.2 million for both comparable periods in fiscal year
1997. These differences reflect a reduction in interest expense of $20,000 for
the quarter as compared with the second quarter of fiscal 1997. In addition, the
Company had no investment income in the second quarter of fiscal 1998 compared
with losses on investments of $35,000 in the second quarter of fiscal 1997. For
the six months ended September 30, 1997, the Company recognized no investment
income compared with investment gains of $34,000 in the comparable period the
prior year.
The Company's effective tax rate was 27% and 33% for the six month periods
ending September 30, 1997 and 1996, respectively. The lower rate in fiscal 1998
reflects a lower relative effect from non-deductible expenses and state taxes on
higher net taxable loss as well as less research and development credit. The
current year's rate is the net effect of a 23% effective tax rate on domestic
taxable net loss and a 33% effective tax rate on foreign taxable net loss.
7
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $2.7 million at September 30, 1997, as
compared with $3.2 million at March 31, 1997. The current ratio was 1.1 to 1 at
both September 30, 1997 and March 31, 1997.
The Company provides for its cash requirements through cash funds generated from
operations. Additionally, the Company's Group 1 subsidiary maintains a two year
$10,000,000 line of credit arrangement with Crestar Bank, expiring August 31,
1998. As amended, effective September 30, 1997, the line of credit bears
interest at the bank's prime rate, or Libor plus 175 basis points at Group 1's
option. The line of credit is secured by trade accounts receivable and
maintenance renewal accounts receivable (excluding installment accounts
receivable) and among other things, requires Group 1 to maintain an EBIT
(earnings before interest and taxes) to interest ratio of at least 1.5 to 1
through March 31, 1998, and at least 2.0 to 1 thereafter. The arrangement also
requires Group 1 to maintain a total liabilities to EBITDA (earnings before
interest, taxes, depreciation and amortization) ratio of no more than 5.0 to 1
through March 31, 1998, and no more than 4.0 to 1 thereafter. At September 30,
1997, borrowings outstanding under the line of credit were $7.9 million and at
March 31, 1997, borrowings were $7.1 million. Aggregate borrowings under the
arrangement are limited to the lesser of $10,000,000 or 85% of the trade
accounts receivable (excluding installment accounts receivable) and 50% of the
maintenance renewal accounts receivable.
For the six months ended September 30, 1997, net losses of $0.5 million plus
non-cash expenses of $5.2 million provided a total of $5.7 million cash from
operating activities. This amount was reduced by cash used for working capital
items totaling $1.9 million resulting in a net cash increase by operating
activities of $3.8 million. The cash increase from working capital items
includes a $4.3 million decrease in accounts receivable offset by a $1.9 million
decrease in deferred revenue. The decrease in accounts receivable is due to
increased cash collections along with the sale of certain receivables to a third
party financier. Investment in purchased and developed software of $4.9 million
and capital equipment of $0.3 million resulted in a $5.2 million use by
investing activities. $0.9 million was provided by financing activities,
primarily short-term borrowings under the Company's credit facility.
Group 1's practice of accepting license agreements under installment payment
arrangements substantially increases its working capital requirements.
Generally, these arrangements are for a period of one to five years after a
minimum down payment of 10% to 20% of the principal amount of the contract.
Interest currently ranges from 10% to 12%. Installment receivables included in
accounts receivable were $9.9 million and $11.9 million at September 30, 1997
and March 31, 1997, respectively. The installment receivable balance, in
addition to Group 1's policy of offering competitive trade terms for payment,
make it difficult to accurately portray a relationship between the outstanding
accounts receivable balance and the current period revenues.
Group 1 continually evaluates the credit and market risks associated with
outstanding receivables. In the course of this review, Group 1 considers many
factors specific to the individual client as well as the concentration of
receivables within industry groups. Group 1's installment receivables are
predominately with service bureau clients who provide computer services to the
direct marketing industry. Many of these clients have limited capital and
insufficient assets to secure their liability with the Company. The service
bureaus are highly dependent on Group 1's software and services to offer their
customers the economic benefits of postal discounts and mailing efficiency. To
qualify for the U.S. Postal Service and Canada Post Corporation postal
discounts, service bureaus require continuous regulatory product updates
(including the new software releases associated with the postal reclassification
regulations issued July 1, 1996) from Group 1. The service bureau industry is
also highly competitive and subject to general economic cycles as
8
<PAGE> 10
they impact advertising and direct marketing expenditures. Service bureau
clients represent approximately $6.4 million, or 65% of the installment
receivables at September 30, 1997. Group 1 is aware of no current market risk
associated with the installment receivables.
As of September 30, 1997, the Company's capital resource commitments consisted
primarily of non-cancelable operating lease commitments for office space and
equipment. The Company believes that its current debt services, minimum lease
obligations and other short-term liquidity needs can be met from cash flows
from operations and current credit facilities. The Company believes that its
long-term liquidity needs, principally for continuing investment in capitalized
software development costs, can be funded from operations and current credit
facilities. Historically, the Company has been able to negotiate capital leases
for its acquisition of equipment.
9
<PAGE> 11
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
NONE
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
NONE
ITEM 5. Other Information
NONE
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 11
No filings on Form 8-K have been made during the quarter
10
<PAGE> 12
PART IV
Listing of Exhibits
11.0 Computation of earnings per share.
---------------------------------------------------
Filed herewith
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Group 1 Software, Inc.
Date: November 14, 1997
/s/ Mark Funston
Mark Funston
Chief Financial Officer
13
<PAGE> 14
Index of Exhibits
- -----------------
Page
Number
------
11.0 Computation of earnings per share. 11
14
<PAGE> 1
EXHIBIT 11
GROUP 1 SOFTWARE, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE THREE MONTH
PERIOD FOR THE SIX MONTH PERIOD
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------- ----------------------------
1997 1996 1997 1996
(FY98) (FY97) (FY98)(1) (FY97)
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net earnings (loss) $ 605 $ 273 $ (490) $ 103
Primary earnings (loss) (A) 605 273 (490) 103
========== ========== ============ ==========
Fully diluted earnings (loss) (B) $ 605 $ 273 $ (490) $ 103
- - -
========== ========== ============ ==========
Weighted average shares outstanding 4,294 4,325 4,294 4,325
Dilutive common stock equivalents for primary
earnings per share 2 4 - - - 1
---------- ---------- ------------ ----------
Weighted average shares and common equivalent
shares outstanding for primary earnings (loss)
per share (C) 4,296 4,329 4,294 4,326
========== ========== ============ ==========
Additional equivalent shares assuming full dilution - - - - - - - - - - - -
---------- ---------- ------------ ----------
Weighted average shares and common equivalent
shares for fully diluted earnings per share (D) 4,296 4,329 4,294 4,326
========== ========== ============ ==========
Earnings (loss) per share
Primary (A)/(C)$ 0.14 $ 0.06 $ (0.11) $ 0.02
========== ========== ============ ==========
Fully Diluted (2) (B)/(D)$ 0.14 $ 0.06 $ (0.11) $ 0.02
========== ========== ============ ==========
</TABLE>
(1) Common stock equivalents are anti-dilutive for the six month period.
(2) Not presented on the Consolidated Statements of Earnings because fully
diluted earnings per share had a differential less than 3% of primary
earnings per share.
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 736
<SECURITIES> 0
<RECEIVABLES> 31,557
<ALLOWANCES> 3,174
<INVENTORY> 0
<CURRENT-ASSETS> 35,043
<PP&E> 9,018
<DEPRECIATION> 5,777
<TOTAL-ASSETS> 68,797
<CURRENT-LIABILITIES> 32,347
<BONDS> 0
0
0
<COMMON> 43
<OTHER-SE> 28,227
<TOTAL-LIABILITY-AND-EQUITY> 68,797
<SALES> 15,365
<TOTAL-REVENUES> 15,365
<CGS> 14,234
<TOTAL-COSTS> 14,413
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 725
<INTEREST-EXPENSE> 174
<INCOME-PRETAX> 952
<INCOME-TAX> 347
<INCOME-CONTINUING> 605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 605
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
