UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 Period Ended June 30, 1996 or
[] 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 0-23394
XPEDITE SYSTEMS, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-2903158
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
446 Highway 35
Eatontown, New Jersey 07724
(Address of principal executive offices) (Zip Code)
(908) 389-3900
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check 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 periods 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 _____
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes _____ No _____
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value, 8,126,057 shares as of July 31, 1996.
<PAGE>
XPEDITE SYSTEMS, INC.
- INDEX -
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements (unaudited)
Consolidated Balance Sheets - June 30, 1996 and December 31, 1995 3
Consolidated Statements of Income
- Three and six months ended June 30, 1996 and 1995 4
Consolidated Statement of Stockholders' Equity (Deficit)
- Six months ended June 30, 1996 5
Consolidated Statements of Cash Flows
- Six months ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
Page 2
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PART I
ITEM 1. Xpedite Systems, Inc.
Consolidated Balance Sheets
Assets
------
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................................................... $ 4,528,300 $ 9,076,250
Accounts receivable, net of reserve for allowances and doubtful accounts of
$1,213,000 at June 30, 1996 and $993,000 at December 31, 1995................. 20,233,510 16,567,118
Deferred income taxes ......................................................... 2,406,663 2,406,663
Other current assets ........................................................... 4,079,687 2,324,129
-------------- -------------
Total current assets .................................................... 31,248,160 30,374,160
Property, plant and equipment, net .................................................. 18,580,061 16,235,393
Customer lists, net of accumulated amortization of $1,440,000 at June 30, 1996 and
$897,000 at December 31, 1995..................................................... 7,667,919 6,935,206
Purchased software, net of accumulated amortization of $1,483,000 at June 30, 1996
and $886,000 at December 31, 1995................................................. 3,304,384 3,591,852
Costs in excess of fair value of net assets acquired, net of accumulated
amortization of $494,000 at June 30, 1996 and $78,000 at December 31, 1995....... 7,810,655 8,226,593
Investments in affiliates, at cost .................................................. 493,557 510,390
Loans to affiliate .................................................................. 3,285,777 2,525,102
Deferred income taxes................................................................ 1,815,237 1,815,237
Other assets ........................................................................ 2,492,434 2,668,838
-------------- -------------
Total.................................................................... $ 76,698,184 $ 72,882,771
============== =============
Liabilities and Stockholders' Equity (Deficit)
----------------------------------------------
Current liabilities:
Accounts payable................................................................ $ 11,082,553 $ 10,712,562
Accrued expenses ............................................................... 6,770,545 7,127,162
Current portion of long-term debt .............................................. 6,286,833 10,652,747
Current portion of capital lease obligations ................................... 291,375 307,232
Income taxes payable............................................................ 3,805,578 3,254,114
Other current liabilities....................................................... 110,003 588,115
-------------- -------------
Total current liabilities................................................ 28,346,887 32,641,932
Long-term debt ...................................................................... 32,956,050 35,763,421
Long-term portion of capital lease obligations ...................................... 468,819 559,257
Deferred income taxes ............................................................... 4,785,022 4,786,300
Other liabilities ................................................................... 902,058 247,809
Stockholders' equity (deficit):
Common Stock, $.01 par value, authorized 15,000,000; issued and outstanding
8,195,163 at June 30, 1996, and 7,773,399 shares at
December 31, 1995............................................................ 81,952 77,734
Additional paid-in capital...................................................... 54,250,143 48,921,115
Accumulated deficit............................................................. (44,876,747) (49,898,797)
Less: Treasury stock; 72,000 shares at June 30, 1996, and
December 31, 1995; at cost .................................................. (216,000) (216,000)
-------------- -------------
Total stockholders' equity (deficit)..................................... 9,239,348 (1,115,948)
-------------- -------------
Total.................................................................... $ 76,698,184 $ 72,882,771
============== =============
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE>
Xpedite Systems, Inc.
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues:
Domestic service revenues .................... $ 37,724,098 $ 21,973,506 $ 19,341,994 $ 10,994,614
International service revenues ............... 20,291,338 -- 10,414,813 --
System sales and other ....................... 3,580,555 1,861,675 1,755,574 907,775
------------ ------------ ------------ ------------
Total net revenues ......................... 61,595,991 23,835,181 31,512,381 11,902,389
Cost of sales:
Operations, line charges and
support engineering ...................... 26,677,926 8,020,868 13,755,690 4,004,986
Cost of sales of systems ..................... 1,559,618 757,951 682,275 333,868
------------ ------------ ------------ ------------
Total cost of sales ........................ 28,237,544 8,778,819 14,437,965 4,338,854
------------ ------------ ------------ ------------
Gross margin ......................................... 33,358,447 15,056,362 17,074,416 7,563,535
Operating expenses:
Selling and marketing ........................ 13,304,888 6,632,342 6,852,525 3,353,805
General and administrative ................... 4,014,502 1,611,773 1,960,382 796,295
Research and development ..................... 2,483,396 1,596,391 1,273,710 825,162
Depreciation and amortization ................ 3,498,304 1,036,729 1,810,143 537,480
------------ ------------ ------------ ------------
Total operating expenses ................... 23,301,090 10,877,235 11,896,760 5,512,742
------------ ------------ ------------ ------------
Operating income ..................................... 10,057,357 4,179,127 5,177,656 2,050,793
Interest income ...................................... 245,431 410,737 131,081 202,780
Interest expense ..................................... (2,002,891) -- (996,228) --
Other income ......................................... 130,061 -- 29,935 --
------------ ------------ ------------ ------------
Income before income taxes ........................... 8,429,958 4,589,864 4,342,444 2,253,573
Income tax expense ................................... 3,460,817 1,514,700 1,740,617 743,700
------------ ------------ ------------ ------------
Net income ........................................... $ 4,969,141 $ 3,075,164 $ 2,601,827 $ 1,509,873
============ ============ ============ ============
Net income per Common Share .......................... $ 0.61 $ 0.45 $ 0.31 $ 0.22
============ ============ ============ ============
Weighted average shares outstanding .................. 8,204,000 6,882,000 8,331,300 6,883,400
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
Page 4
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Xpedite Systems, Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
(unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock
------------------- Paid-in Accumulated ---------------------
Shares Amount Capital Deficit Shares Amount Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 7,773,399 $77,734 $ 48,921,115 $(49,898,797) (72,000) $(216,000) $ (1,115,948)
Exercise of stock options ........ 70,764 708 139,391 -- -- -- 140,099
Cumulative translation
adjustment .................... -- -- -- 52,909 -- -- 52,909
Conversion of subordinated debt... 351,000 3,510 5,189,637 -- -- -- 5,193,147
Net income ....................... -- -- -- 4,969,141 -- -- 4,969,141
--------- ------- ------------ ------------ ------- --------- ------------
BALANCE, JUNE 30, 1996 ........... 8,195,163 $81,952 $ 54,250,143 $(44,876,747) (72,000) $(216,000) $ 9,239,348
========= ======= ============ ============ ======= ========= ============
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE>
Xpedite Systems, Inc.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ....................................................................... $ 4,969,141 $ 3,075,164
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............................................. 3,925,065 1,188,378
Other non-cash losses ...................................................... 225,990 --
Deferred income taxes ...................................................... (1,278) --
Change in operating assets and liabilities:
Accounts receivable ....................................................... (3,658,969) (722,075)
Other current assets ...................................................... (1,661,542) (207,409)
Other assets .............................................................. (14,418) (134,085)
Accounts payable .......................................................... (108,716) (273,165)
Accrued expenses .......................................................... 299,361 (1,067,131)
Other liabilities ......................................................... 100,219 --
Income taxes payable ...................................................... 509,313 (274,306)
------------ ------------
Net cash provided by operating activities ........................................ 4,584,166 1,585,371
INVESTING ACTIVITIES:
Acquisition of property, equipment, computer software ......................... (4,689,966) (2,141,710)
Acquisition of businesses ..................................................... (1,275,000) --
Purchase of held-to-maturity securities ....................................... -- (5,873,990)
Investments in affiliates ..................................................... (2,352) --
Loans to affiliate ............................................................ (760,675) (713,146)
------------ ------------
Net cash used in investing activities ............................................ (6,727,993) (8,728,846)
FINANCING ACTIVITIES:
Proceeds from loans and notes payable ......................................... 700,000 --
Repayments of loans and notes payable ......................................... (2,862,197) --
Repayments of capital lease obligations ....................................... (98,002) (18,747)
Net proceeds from issuance of Common Stock .................................... 140,099 71,558
------------ ------------
Net cash provided by (used in) financing activities .............................. (2,120,100) 52,811
Effect of exchange rate changes on cash .......................................... (284,023) (184)
------------ ------------
(Decrease) in cash and cash equivalents .......................................... (4,547,950) (7,090,848)
Cash and cash equivalents at beginning of period ................................. 9,076,250 10,320,933
------------ ------------
Cash and cash equivalents at end of period ....................................... $ 4,528,300 $ 3,230,085
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 6
<PAGE>
Notes to Consolidated Financial Statements
1. General
A. The financial information included herein is unaudited; however, such
information has been prepared in accordance with generally accepted
accounting principles and reflects all adjustments, consisting solely
of normal recurring adjustments which are, in the opinion of
management, necessary for a fair statement of results for the interim
periods. Operating results for the three and six month periods ended
June 30, 1996, are not necessarily indicative of the results that may
be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Xpedite Systems, Inc. 1995 Annual
Report.
B. The consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
C. The financial statements of the Company's foreign subsidiaries have
been translated into U.S. dollars in accordance with FASB Statement
No. 52, Foreign Currency Translation. All balance sheet accounts have
been translated using the exchange rate in effect at the balance sheet
date, and income statement amounts have been translated using the
average exchange rate for the period. Gains and losses resulting from
changes in exchange rates are insignificant, and have been included as
a component of stockholders' equity.
D. In November 1995, the Company issued subordinated notes to the former
owners of ViTel International Holding Company, Inc. ("ViTel") as part
of the purchase price of the acquisition of ViTel. On June 14, 1996,
the Company issued 351,000 shares of Common Stock to prepay the
outstanding subordinated notes, and accrued interest thereon, of
approximately $5.2 million. The shares of Common Stock were placed
in escrow pending approval by the Company's stockholders of such
prepayment.
Page 7
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ITEM 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Six Months Ended June 30, 1996, Compared to Six Months Ended June 30, 1995, and
Three Months Ended June 30, 1996, Compared to Three Months Ended June 30, 1995
The Company acquired Vitel, Swift Global Communications Inc. ("Swift"), and
Comwave Communications AG ("Comwave") on November 20, 1995 (collectively "the
acquisitions"). Net revenues and results of operations for the acquisitions are
included in those of the Company for the three and six months ended June 30,
1996. As a result of the acquisitions, the Company is classifying net service
revenue as either "international" or "domestic". The Company defines domestic
service revenues as those generated by the Company's U.S. and Canadian sales
forces. All other service revenues are defined by the Company as international
service revenues.
Net revenues increased by 158.4% to $61.6 million and 164.8% to $31.5 million
for the six and three months ended June 30, 1996, respectively, as compared to
the same periods in 1995. Net service revenues increased by 164.0% to $58.0
million for the six months ended June 30, 1996, and 170.7% to $29.8 million for
the three months ended June 30, 1996. For the six month period ended June 30,
1996, the acquisitions contributed approximately $28.3 million in net service
revenues; $8.0 million in domestic service revenue and $20.3 million in
international service revenue. For the three month period ended June 30, 1996,
the acquisitions contributed approximately $14.3 million in net service
revenues; $3.9 million in domestic service revenue and $10.4 million in
international service revenue. Prior to the acquisitions, the Company had
minimal international service revenues. The remaining increases in domestic net
service revenues resulted primarily from the efforts of the Company's sales
force in penetrating new markets and exploring expanded applications in existing
markets.
Compared to the same periods in 1995, system sales and other net revenues
increased by 92.3% to $3.6 million and 93.3% to $1.8 million for the six and
three months ended June 30, 1996, respectively. The increases were primarily the
result of an increased volume of sales of system upgrades and expansion
equipment, and related royalty revenue.
The Company's gross margins were 54.2% and 63.2% for the six months ended June
30, 1996, and 1995, respectively. For the three months ended June 30, 1996, and
1995, gross margins were 54.2% and 63.5%, respectively. Service margin rates
decreased to 54.0% for the first six months of 1996, as compared to 63.5% for
the same period in 1995, and decreased to 53.8% for the three months ended June
30, 1996, as compared to 63.6% for the same period in 1995. The decline in
service margins resulted primarily from the acquisitions' international service
revenues which are sold at a lower gross margin but on average generate a higher
retained revenue per page. Partially offsetting the impact of the lower
international gross margin were lower long distance rates resulting from
favorable negotiations with the Company's primary telecommunications service
providers, completion of additional direct interconnections with local exchange
carriers, and the interconnection of the Company's systems with those acquired
in November 1995 in connection with the acquisitions. Domestic service margins
were also impacted by a reduction of approximately 15% in the average price
charged to customers to deliver a Fax Broadcast page, as compared with the first
six months of the prior year. This reduction was in response to competition in
the markets in which the Company operates. The Company expects further domestic
price reductions of approximately 10% over the next year, in response to
competitive pressures, and the Company believes that any future reduction in
pricing will be partially offset by further reductions in fax delivery costs. In
addition, the Company believes that an increase in the volume of revenues and
increased operating efficiencies will also mitigate the impact on domestic
margins of declining prices. Margin rates on system sales and other revenues
also decreased slightly to 61.1% for the three months ended June 30, 1996,
compared to 63.2% for the same period in 1995, and decreased to
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56.4% for the six months ended June 30, 1996 as compared to 59.2% for the same
period in 1995, primarily as a result of product mix.
Selling and marketing expenses increased by 100.6% to $13.3 million and by
104.3% to $6.9 million, respectively, for the six and three months ended June
30, 1996, as compared to the same periods in 1995. Selling and marketing
expenses decreased as a percentage of net revenues, to 21.6% for the six months
ended June 30, 1996, from 27.8% for the six months ended June 30, 1995. Selling
and marketing expenses also decreased as a percentage of net revenues, to 21.7%
for the three months ended June 30, 1996, from 28.2% for the three months ended
June 30, 1995. The acquisitions accounted for $5.2 million of the six month
increase, and $2.7 million of the three month increase. The remainder of the
increases are attributable primarily to the expansion of the Company's domestic
direct sales force, customer care and sales support functions, in response to
the increase in revenues. As of June 30, 1996, the Company employed 189 direct
sales employees both domestically and internationally, as compared with 120
domestically and none internationally at June 30, 1995.
General and administrative expenses increased by 149.2% to $4.0 million for the
six months ended June 30, 1996, as compared to the same period in 1995, and
increased by 146.2% to $2.0 million for the three months ended June 30, 1996, as
compared to the same period in 1995. The acquisitions accounted for $2.0 million
of the increase for the six month period and $1.0 million of the increase for
the three month period, with the remainder primarily resulting from additional
administrative overhead costs relating to the Company's growth. General and
administrative expenses as a percentage of net revenues were 6.5% and 6.2% for
the six and three months ended June 30, 1996, respectively, as compared with
6.8% and 6.7% for the six and three months ended June 30, 1995.
Research and development expenses increased by 55.6% for the six months ended
June 30, 1996, to $2.5 million, as compared to the same period in 1995. For the
three months ended June 30, 1996, research and development expenses increased by
54.3% to $1.3 million from the comparable period in 1995. The acquisitions
accounted for $0.6 million of the six month increase, and $0.3 million of the
three month increase. The remaining increases were primarily due to costs for
developing product enhancements and new services and features, and integration
of the Company's systems. Research and development expenses as a percentage of
net revenues decreased to 4.0% for the six months ended June 30, 1996, from 6.7%
for the six months ended June 30, 1995, and decreased to 4.0% for the three
months ended June 30, 1996, from 6.9% for the three months ended June 30, 1995.
Depreciation and amortization increased by 237.6% to $3.5 million and by 237.1%
to $1.8 million for the six and three months ended June 30, 1996, respectively,
as compared to the same periods in the prior year. The increases in depreciation
and amortization are attributable to additional capital equipment for expansion
of the Company's systems to support the growth in revenue, combined with
depreciation and amortization of tangible and intangible assets related to the
acquisitions.
Operating income increased by 140.7% to $10.1 million for the six months ended
June 30, 1996, as compared with the same period in 1995. For the three months
ended June 30, 1996, operating income increased by 152.5% to $5.2 million, as
compared with the three months ended June 30, 1995. The increases primarily
resulted from growth in net service revenues. Operating income as a percentage
of net revenues decreased to 16.3% and 16.4% for the six and three months ended
June 30, 1996, respectively, as compared with 17.5% and 17.2% for the six and
three months ended June 30, 1995.
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Interest income decreased to $0.2 million for the six months ended June 30,
1996, and decreased to $0.1 million for the three months ended June 30, 1996, as
compared with $0.4 million and $0.2 million for the six and three months ended
June 30, 1995, respectively. The Company utilized its available cash balances in
connection with the acquisitions. The Company also incurred interest expense of
$2.0 million for the six months ended June 30, 1996, and $1.0 million for the
three months ended June 30, 1996, primarily related to the Company's $40.0
million term loan, which was entered into in November 1995 to finance the
acquisitions.
Income tax expense for the six months ended June 30, 1996, was $3.5 million or
41% of income before income taxes, and for the three months ended June 30, 1996,
was $1.7 million or 40% of income before income taxes, compared to 33% for both
the six and three months ended June 30, 1995. The effective rate for the six
months and three months ended June 30, 1996, exclusive of amortization of costs
in excess of fair value of the net assets acquired (a non-deductible item), was
39%, and 38%, respectively.
As a result of the factors discussed above, the Company's net income increased
by 61.6% to $5.0 million for the six months ended June 30, 1996, as compared
with $3.1 million for the comparable period in 1995. Net income for the three
months ended June 30, 1996, increased by 72.3% to $2.6 million as compared with
$1.5 million for the same period in 1995. Net income per common share increased
by 35.6% to $0.61 for the six months ended June 30, 1996, from $0.45 for the six
months ended June 30, 1995, and increased by 40.9% to $0.31 for the three months
ended June 30, 1996, from $0.22 for the three months ended June 30, 1995.
Liquidity and Capital Resources
The Company entered into a credit facility in November 1995, consisting of a
$40.0 million term loan and a $5.0 million revolving loan. As of June 30, 1996,
the Company had an outstanding balance of $0.7 million on its revolving loan.
This amount was borrowed to meet short term working capital needs. The term loan
was entered into to finance the acquisitions of ViTel, Swift, and Comwave. The
term loan is payable in quarterly installments of $1.25 million increasing
periodically to $2.25 million with a final payment in November 2001. During the
six months ended June 30, 1996, the Company made principal payments on the term
loan amounting to $2.5 million. In connection with the acquisition of ViTel,
subordinated notes in the aggregate principal amount of $5.1 million were issued
to the sellers of ViTel. The notes did not accrue interest until May 20, 1996,
at which time they began to accrue interest at 17% per annum until November
1996, and thereafter at the rate of 12% per annum until maturity in January
2002. Interest on the notes is payable annually by the issuance of additional
notes in principal amount equal to the interest payment. On June 14, 1996, the
Company prepaid the notes, and related accrued interest, with 351,000 shares of
the Company's Common Stock. The Common Stock is currently being held in escrow,
pending approval by the Company's stockholders of such prepayment. The Company
also has notes payable to banks and to former owners of ViTel totaling $1.7
million at June 30, 1996, payable in monthly and quarterly payments through
September 1998.
At June 30, 1996, the Company had $4.5 million in cash and cash equivalents, and
working capital of $2.9 million. Operations generated $4.6 million in cash for
the six months ended June 30, 1996, compared to $1.6 million for the same period
in 1995.
Net cash used in investing activities for the six months ended June 30, 1996,
was $6.7 million as compared with $8.7 million for the same period in 1995. The
Company's primary capital expenditures are investments in computer systems and
equipment, and telecommunications systems. During the six months ended June 30,
1996, the Company made additional loans to
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Xpedite Systems, GmbH ("Xpedite Germany") of $0.8 million. The Company also used
$1.3 million to acquire the domestic customer base of a foreign company.
The Company has put/call agreements with each of Xpedite Germany, Xpedite
Systems, S.A. and Xpedite Systems, Ltd. The purchase prices payable in
connection with the exercise of such "call" or "put" options is based on, among
other things, certain formulas set forth in the agreements. Due to the
uncertainties as to the ability of these companies to achieve certain financial
results and as to whether the conditions set forth in the put/call agreements
will be met, the Company believes that the put/call agreements will not
become exercisable in the next twelve months.
The Company believes that its sources of capital, including internally generated
funds, and cash available on the revolving credit agreement will be adequate to
satisfy its debt requirements and anticipated capital needs for the next twelve
months. However, the Company may nevertheless elect to finance its future
capital requirements through additional equity or debt financing.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
10.1 Employment Agreement, dated as of June 27, 1996,
between the Registrant and Robert S. Vaters.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
Amendment No. 3 on Form 8-K/A to the Registrant's Current Report
on Form 8-K, filed on May 3, 1996, amending information reported
under Item 7.
Amendment No. 4 on Form 8-K/A to the Registrant's Current Report
on Form 8-K, filed on June 28, 1996, amending information reported
under Item 7.
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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 thereunto duly authorized.
XPEDITE SYSTEMS, INC.
(Registrant)
DATE: August 12, 1996 /s/ ROY B. ANDERSEN, JR.
--------------------------
Roy B. Andersen, Jr.
President, Chief Executive
Officer and Director
(Principal Executive Officer)
DATE: August 12, 1996 /s/ ROBERT S. VATERS
----------------------
Robert S. Vaters
Executive Vice President, Finance
and Chief Financial Officer
(Principal Accounting and Financial Officer)
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Employment Agreement, dated as of June 27, 1996,
between the Registrant and Robert S. Vaters.
27.1 Financial Data Schedule.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 27th day of June, 1996, by and between
XPEDITE SYSTEMS, INC., a Delaware corporation (the "Company"), and Robert S.
Vaters ("Executive").
WHEREAS, the Company wishes to assure itself of the services of Executive
for the period provided in this Agreement, and Executive is willing to provide
such services to the Company for said period, upon the terms and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto hereby agree as follows:
1. Services Provided. The Company agrees to utilize the services of
Executive, and Executive agrees to provide such services, for the period stated
in Paragraph 2 hereof and upon the other terms and conditions herein provided.
2. Term and Duties.
(a) Term of Agreement. The term of this Agreement will commence as of
June 27, 1996, and will continue through June 26, 1997. On June 27 of each
year (the "Anniversary Date") commencing with June 27, 1997, this Agreement
will be automatically renewed for a new one-year term commencing on such
Anniversary Date unless either the Company or Executive notifies the other
in writing, no later than ninety (90) days prior to the Anniversary Date,
that it does not intend to renew this Agreement. If the Company notifies
Executive that it does not intend to renew this Agreement, such notice will
be considered an Event of Termination as defined in Paragraph 5 herein, and
benefits will be payable to Executive as specified in such Paragraph 5.
(b) Termination Prior to Expiration of the Term. This Agreement may
also be terminated prior to the end of the initial term or any renewal term
hereof. However, benefits may be payable to Executive as specified in
Paragraph 5 upon such termination.
<PAGE>
(c) Duties. During the period of his employment hereunder, Executive
shall serve as Chief Financial Officer, Executive Vice President-Finance
and Secretary of the Company, or as otherwise directed by the Board of
Directors or the Chief Executive Officer of the Company (in a manner
consistent with Executive's senior executive position with the Company).
Except for illness, vacation periods, and reasonable leaves of absence,
Executive shall devote all of his business time, attention, skill, and
efforts to the faithful performance of his duties in said offices, and will
use his best efforts to further the Company's business interests; provided,
that Executive shall be entitled to serve as a member of the board of
directors of Rockford Industries, Inc., and any committee thereof, as long
as such service does not materially interfere with the performance of
Executive's duties hereunder.
3. Compensation and Reimbursement of Expenses.
(a) Compensation. For all services rendered by Executive to the
Company during the term of this Agreement, the Company shall pay Executive
a base salary of $175,000 per year (the "Base Salary"); plus a
discretionary annual bonus of up to 35% of the Base Salary (the "Bonus"),
which in any case shall be calculated taking into account criteria
substantially identical to those considered in calculating the bonus of the
Chief Executive Officer of the Company. The amount of the Bonus shall be
determined by the Board of Directors of the Company (or by a committee
designated by the Board of Directors), taking into account the performance
of Executive and the Company during the year in respect of which the Bonus
is payable. The Base Salary shall be paid in accordance with the Company's
normal payroll procedures. The Bonus shall be payable at or as soon as
practicable after the end of each calendar year (generally after completion
of the annual audit), in cash. The Base Salary shall be reviewed annually
to determine any appropriate increases thereto, based on Executive's
performance in carrying out his responsibilities under this Agreement.
(b) Reimbursement of Expenses and Administrative Support. The Company
shall pay or reimburse Executive, upon the presentation of appropriate
documentation of such expenses, for all reasonable travel and other
expenses incurred by Executive in performing his obligations under this
Agreement, consistent with Executive's senior executive position with the
Company. The Company further agrees to furnish Executive with office space
and administrative support, and any other assistance and accommodations as
shall
-2-
<PAGE>
be reasonably required by Executive in the performance of his duties under
this Agreement.
(c) Automobile Allowance. The Company agrees to pay to Executive an
automobile allowance of $1200 monthly plus reimbursement for gasoline,
automobile maintenance and reasonable and customary automobile casualty and
liability insurance expenses (the "Car Allowance") during the term of this
Agreement.
(d) Other Compensation. The compensation and stock options detailed in
Paragraphs 3(a) and 3(e) hereof (collectively, the "Compensation"), may be
enhanced at the discretion of the Company under the following conditions:
(i) Exceptional performance by Executive which significantly
contributes to the success of the Company may be compensated by a
special bonus and/or a special grant of stock or stock options.
(ii) Executive may be able to participate in future employee
stock option and other benefit and welfare plans.
(e) Stock Options. Executive has been granted on the date hereof
options under the Company's 1996 Incentive Stock Option Plan (the "1996
Plan") to purchase 80,000 shares of the Company's common stock. In respect
of such options, the provisions of Section 6.7 of the 1996 Plan are hereby
incorporated herein by reference, as if such provisions were set forth
herein at length, and Executive shall be entitled to the benefits and
subject to the terms of such Section 6.7. Executive shall be entitled to be
issued an additional 20,000 shares of the Company's common stock pursuant
to the Company's 1996 Contingent Stock Plan under the circumstances set
forth in such Contingent Stock Plan; provided, that, subject to changes in
such Contingent Stock Plan which effect all participants therein, such
Contingent Stock Plan shall contain the terms set forth in Exhibit A
attached hereto.
(f) Vacation. Executive shall be entitled to vacation of at least
three (3) weeks per calendar year during the first ten (10) years of this
Agreement and four (4) weeks per calendar year thereafter.
(g) Deductions. All payments made under this Agreement shall be
subject to such deductions at the source as from time to time may be
required to be made pursuant to any law, rule, regulation or order.
-3-
<PAGE>
4. Participation in Benefit Plans.
(a) In addition to the payments provided in Paragraphs 3 and 5 hereof,
Executive shall be entitled to participate, during the term of this
Agreement, in the Company's benefit programs, including but not limited to
group hospitalization, health, dental care, retirement or pension plan,
life insurance, disability, 401(k), or other present or future group
employee benefit plans or programs of the Company for which key executives
are or shall become eligible (collectively, the "Benefit Plans"), on the
same terms as other key executives of the Company. The Company further
agrees to supplement any life insurance otherwise provided under the
foregoing provisions with a "split-dollar" life insurance policy for the
benefit of Executive's named beneficiaries in a face amount equal to
$500,000, on the same terms as such life insurance is provided for other
senior executives of the Company.
(b) In the event that Executive shall, by reasons of illness or mental
or physical disability or incapacity, be unable to perform the duties and
responsibilities required to be performed by him on behalf of the Company,
the payments of Base Salary specified in Paragraph 3(a) hereof shall
continue for a period of one hundred eighty (180) days (the "Continuation
Period"), after the date (the "Cessation Date") on which Executive ceases
to perform his duties and responsibilities required to be performed by him
on behalf of the Company pursuant hereto. Such payments of Base Salary, and
the Company's obligation to pay Executive the Base Salary, shall terminate
at the end of the Continuation Period; provided, however, that such
payments shall be resumed upon the resumption by Executive of his
activities on behalf of the Company pursuant hereto.
5. Payments to Executive Upon Termination of Agreement.
(a) Termination. Upon the occurrence of an Event of Termination (as
hereinafter defined) during the term of this Agreement, the provisions of
this Paragraph 5 shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following:
(i) The termination by the Company of this Agreement for any
reason (including, but not limited to, the Company's election pursuant
to Paragraph 2(a) hereof not to renew this Agreement) other than a
breach
-4-
<PAGE>
by Executive of this Agreement as described in Paragraph 6 hereof;
(ii) Executive's termination of this Agreement, pursuant to:
A. A material adverse change by the Company of the then
applicable Base Salary, Car Allowance and Benefits payable to
Executive or the then applicable opportunity to be paid a Bonus
hereunder (other than in connection with such a change which is
applicable to all members of the Company's senior management),
and any such material change shall be deemed a continuing breach
of this Agreement;
B. A merger (other than a merger in which the Company is the
surviving corporation) or consolidation of the Company with or
into another entity; a sale of all or substantially all of the
assets of the Company; or a liquidation or dissolution of the
Company, but only to the extent Executive is not offered
comparable or superior employment and compensation by the
purchaser or surviving corporation (in the case of a merger,
consolidation or sale); or
C. Any breach in any material respect of this Agreement by
the Company.
Upon the occurrence of any event described in clauses A, B, or C above,
Executive shall have the right to elect to terminate this Agreement, upon not
less than thirty (30) days prior written notice to the Company given within a
reasonable period of time not to exceed, except in case of a continuing breach,
three (3) calendar months after the event giving rise to Executive's right to
terminate this Agreement.
(b) Continuation of Payments. Upon the occurrence of a termination of
this Agreement pursuant to an Event of Termination, the Company shall pay
to Executive the Base Salary and Car Allowance described in Paragraph 3
hereof (collectively, the "Severance Payments"). Such payments shall
commence on the first day of the month following the month in which such
termination occurs and shall continue for twelve (12) months thereafter
(the "Severance Period"). Upon the occurrence of a termination of this
Agreement pursuant to an Event of Termination, Executive shall continue to
participate,
-5-
<PAGE>
at the expense of the Company, in the Benefit Plans during the Severance
Period.
(c) Reduction in Severance Payments for New Employment. If Executive
becomes employed, other than with the Company, after a termination of this
Agreement pursuant to an Event of Termination, but prior to the end of the
Severance Period, any salary received by Executive as a result of such
employment will be subtracted from any payments due to Executive from the
Company under Paragraph 5(b) hereunder; provided, that (i) no such
subtraction shall be made for any compensation paid to Executive in
connection with (A) Executive's service as a director of Rockford
Industries, Inc. or (B) consulting services provided by Executive in his
individual capacity and (ii) any such subtraction shall be reduced by the
amount of out-of-pocket expenses incurred by Executive in his job search.
Executive shall promptly notify the Company of any such employment and the
compensation payable to Executive pursuant thereto. Executive shall be
under no duty or obligation to mitigate the Company's obligations to him
hereunder.
6. Termination for Breach by Executive.
(a) Executive shall be considered in breach of this Agreement, and the
Agreement shall be subject to termination by the Company, in the following
circumstances:
(i) Willful disobedience of lawful instructions (which
instructions are consistent with the terms of this Agreement) of the
Chief Executive Officer of the Company or its Board of Directors by
Executive which continues after the Executive has been given written
notice of and a reasonable opportunity to cure such disobedience; or
(ii) Executive shall be grossly negligent or engage in willful
misconduct in the performance of his duties hereunder; or
(iii) Conviction of Executive of any illegal act made or
undertaken in carrying out his duties on behalf of the Company, any
crime involving the property of the Company or any felony; or
(iv) If Executive shall die.
(b) In the event the Company elects to terminate this Agreement
pursuant to Paragraph 6(a), the
-6-
<PAGE>
Company shall give a thirty (30) day written notice of termination to
Executive setting out, in detail, the reasons for such termination. Upon
the expiration of such thirty (30) day notice period this Agreement shall
be wholly terminated subject to the payment to Executive of any
Compensation or other amounts owing as at the date of such termination.
7. Ownership.
(a) Executive hereby covenants and agrees that, during the continuance
of his employment hereunder, all rights, title and interest in and to any
intellectual or industrial property, including without limitation, all
works, ideas, processes, systems, and improvements to or relating to the
Company's operations (collectively, the "Improvements"), that are created
or suggested by Executive in connection with his duties at the Company, and
each of them, together with all patents and trademarks therein, if any,
shall be and remain the exclusive property of the Company and of the
Company's assignees and successors.
(b) Executive hereby covenants and agrees to fully disclose all such
Improvements, as and when such are created and shall promptly upon the
Company's request, and without further consideration other than that
provided for herein, but at no expense to Executive, make all such
applications, execute all such papers, and do all such things as may be
necessary or desirable so that the property rights with respect to such
Improvements shall vest in the Company and so that the Company may obtain,
own and exploit, for its own benefit, letters patent and other property
rights with respect to such Improvements in all and any countries.
8. Confidential Information.
(a) Executive shall not, either during the term of this Agreement or
at any time thereafter, disclose any confidential or proprietary
information of the Company or any of its affiliates to any person or entity
other than the employees, officers and directors of the Company, and the
Company's auditors and counsel, and shall not use for his own purposes or
for any purpose other than the purposes of the Company any confidential or
proprietary information of the Company or any of its affiliates which
Executive may possess. "Confidential or proprietary information" shall mean
business or customer information (including, without limitation, customer
lists, pricing information, commission arrangements, system designs and
computer programs) and other information
-7-
<PAGE>
which is not known or generally available from sources outside the Company
or its affiliates.
(b) Upon termination of this Agreement, all documents, records,
notebooks and similar repositories of confidential or proprietary
information, including all copies thereof, then in Executive's possession,
whether prepared by Executive or others, will be left with the Company.
9. Non-Competition.
(a) During the term of this Agreement and during the Severance Period,
Executive shall not, without the written permission of the Company, alone
or with others, directly or indirectly, solicit or hire the services of any
employee, consultant or director of the Company for Executive's own
purposes or for any other person or persons, partnership, firm,
association, syndicate, company or corporation engaged in or concerned with
or interested in a business similar to or competitive with that conducted
by the Company or any of its affiliates now or at any time during the term
of this Agreement. Executive also shall not, without the express prior
written permission of the Company, during the term of this Agreement or
during the Severance Period, alone or with others, directly or indirectly,
engage in any such business for his own account or become interested
therein (excluding any passive investment in less than 2% of the
outstanding securities of any publicly traded company), directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, lender, trustee or in any relation or capacity
whatsoever. Executive also shall not, without the express prior written
permission of the Company, during the term of this Agreement or during the
Severance Period, alone or with others, directly or indirectly, solicit (on
behalf of any organization which is competitive with the Company) any
customer of the Company that was a customer of the Company during the term
of this Agreement or during the Severance Period, it being understood and
agreed that each of the above combinations of time and area shall be
severable.
(b) The Company and Executive agree that if a court of competent
jurisdiction shall limit, restrict or otherwise change the scope,
geographical area or time period referred to in Paragraph 9(a) hereof, that
the limited, restricted or changed scope, geographical area or time period
determined by such court shall, for the purposes of such Paragraph, be
deemed to be the scope, geographical area and/or time period referred to in
such Paragraph as if they were the
-8-
<PAGE>
original scope, geographical area and time period set out therein.
(c) Notwithstanding the provisions of Paragraph 9(a) herein, the
provisions of such Paragraph 9(a) shall be considered voided upon a
termination of this Agreement pursuant to the provisions of Paragraph 5(a),
except if such termination is as a result of notice by the Company not to
renew this Agreement pursuant to Paragraph 2(a) herein, in which case the
provisions of Paragraph 9(a) shall apply.
10. Arbitration. Any disputes, differences or controversies arising under
this Agreement shall be settled and finally determined by arbitration before a
panel of three arbitrators in New York, New York, chosen and otherwise acting in
accordance with the rules of the American Arbitration Association in force and
hereafter adopted. The arbitrators shall be requested to settle such dispute not
later than 30 days following their appointment. The arbitrators shall make their
award (which shall be binding on the parties) in accordance with and based upon
all the provisions of this Agreement and judgment upon any award rendered by the
arbitrators shall be entered in any court having jurisdiction thereof. It is
understood and agreed, however, that the arbitrators are not authorized or
entitled to include as part of any award rendered by them, special, exemplary or
punitive damages or amounts in the nature of special, exemplary or punitive
damages regardless of the nature or form of the claim or grievance that has been
submitted to arbitration. In the event of any arbitration relating to this
Agreement, in addition to all other sums either party may be required to pay,
the unsuccessful party will be required to pay the reasonable attorneys' fees
and other costs of the successful party incurred in connection with such
arbitration.
11. Effect of Prior Agreements. This Agreement sets forth the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes any prior agreement between the Company or any
predecessor of the Company and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to Executive of
any kind elsewhere provided and not expressly provided in this Agreement.
12. Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, Executive and the Company and their respective heirs, executors,
personal representatives, permitted successors and assigns.
-9-
<PAGE>
13. Modification and Waiver.
(a) Amendment of Agreement. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto.
(b) Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for the future
or as to any act other than that specifically waived.
14. Governing Law. This Agreement has been executed and delivered in the
State of New Jersey, and its validity, interpretation, performance and
enforcement shall be governed by the laws of said state.
15. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the addressee or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive:
Robert S. Vaters
56 Great Oak Drive
Short Hills, New Jersey 07078
If to the Company:
Xpedite Systems, Inc.
446 Highway 35
Eatontown, New Jersey 07724
Attention: President
or at such other address as either party shall have informed the other in
writing in accordance herewith. Notice shall be effective when actually received
by the addressed.
16. Conflicts. To the extent any provision of Section 8 or Section 9 hereof
is in conflict with any provision of an option agreement entered into by the
Company
-10-
<PAGE>
and Executive in connection with the grant to Executive of options under the
1996 Plan, the provisions of such Section 8 or Section 9 shall control and
supersede the provisions thereof.
-11-
<PAGE>
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the day and year first above written.
XPEDITE SYSTEMS, INC.
By: /s/ Roy B. Andersen, Jr.
-----------------------------------
Name: Roy B. Andersen, Jr.
Title: President and Chief
Executive Officer
/s/ Robert S. Vaters
----------------------------
Robert S. Vaters
-12-
<PAGE>
EXHIBIT A
Terms of 1996 Contingent Stock Plan Award
to Robert S. Vaters
o Shares will be issued if the Company's stock price for any 90-day
period averages more than $30/share before March 31, 1998.
o Four-year vesting on issued shares; vesting accelerates on death,
disability, dismissal without cause or sale of the Company (if
Executive is not hired or is fired without cause by acquiror).
o Exercise price is $0 (i.e., shares issued for no consideration).
o In the event of a sale of the Company, at or above $30 per share any
time before December 31, 1997, all shares will vest immediately upon
closing of the sale.
o In the event of a sale of the company at a price between $28.00 and
$29.99 per share (inclusive), then one-half of the shares shall vest
immediately upon closing and the second half of the options will be
cancelled upon closing.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,528,300
<SECURITIES> 0
<RECEIVABLES> 21,446,510
<ALLOWANCES> 1,213,000
<INVENTORY> 0
<CURRENT-ASSETS> 31,248,160
<PP&E> 25,053,348
<DEPRECIATION> 6,473,287
<TOTAL-ASSETS> 76,698,184
<CURRENT-LIABILITIES> 28,346,887
<BONDS> 33,424,869
0
0
<COMMON> 81,952
<OTHER-SE> 9,157,396
<TOTAL-LIABILITY-AND-EQUITY> 76,698,184
<SALES> 61,595,991
<TOTAL-REVENUES> 61,595,991
<CGS> 28,237,544
<TOTAL-COSTS> 51,538,634
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,002,891
<INCOME-PRETAX> 8,429,958
<INCOME-TAX> 3,460,817
<INCOME-CONTINUING> 4,969,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,969,141
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 23,835,181
<TOTAL-REVENUES> 23,835,181
<CGS> 8,778,819
<TOTAL-COSTS> 19,656,054
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,589,864
<INCOME-TAX> 1,514,700
<INCOME-CONTINUING> 3,075,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,075,164
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 31,512,381
<TOTAL-REVENUES> 31,512,381
<CGS> 14,437,965
<TOTAL-COSTS> 26,334,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 996,228
<INCOME-PRETAX> 4,342,444
<INCOME-TAX> 1,740,617
<INCOME-CONTINUING> 2,601,827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,601,827
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 11,902,389
<TOTAL-REVENUES> 11,902,389
<CGS> 4,338,854
<TOTAL-COSTS> 9,851,596
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,253,573
<INCOME-TAX> 743,700
<INCOME-CONTINUING> 1,509,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,509,873
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,076,250
<SECURITIES> 0
<RECEIVABLES> 17,560,118
<ALLOWANCES> 993,000
<INVENTORY> 0
<CURRENT-ASSETS> 30,374,160
<PP&E> 20,627,153
<DEPRECIATION> 4,391,760
<TOTAL-ASSETS> 72,882,771
<CURRENT-LIABILITIES> 32,641,932
<BONDS> 36,332,678
0
0
<COMMON> 77,734
<OTHER-SE> (1,193,682)
<TOTAL-LIABILITY-AND-EQUITY> 72,882,771
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
