SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 NO. 0-19666
PHYSICIAN COMPUTER NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 22-2485688
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
(I.R.S. EMPLOYER IDENTIFICATION NO.)
1200 THE AMERICAN ROAD
MORRIS PLAINS, N.J. 07950
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(201) 490-3100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 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 [ ]
THE NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK, $.01 PAR
VALUE, AS OF AUGUST 14, 1997 IS 51,437,754.
PAGE 1 OF 24 PAGES
EXHIBIT INDEX PAGE 23
<PAGE>
PHYSICIAN COMPUTER NETWORK, INC.
1997 FORM 10-Q
TABLE OF CONTENTS
-----------------
Page
----
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS 3
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Earnings
Three Months Ended June 30, 1997 and 1996 4
Six Months Ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 11
Results of Operations 14
Financial Condition and Liquidity 18
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. Legal Proceedings 21
ITEM 2. Changes in Securities 21
ITEM 3. Defaults upon Senior Securities 21
ITEM 4. Submission of Matters to a Vote of Security Holders 21
ITEM 5. Other Information 21
ITEM 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
INDEX TO EXHIBITS 23
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
PHYSICIAN COMPUTER NETWORK, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,004,414 $ 34,291,166
Accounts receivable, net of allowance for doubtful
accounts of $3,387,000 at June 30, 1997, and
$3,428,000 at December 31, 1996 29,673,424 21,102,878
Inventories 7,767,753 5,798,153
Prepaid expenses and other 4,778,392 2,974,490
Deferred tax asset 2,933,000 2,933,000
Total current assets 51,156,983 67,099,687
Intangible assets, net of accumulated amortization
of $18,864,000 at June 30, 1997
and $14,826,000 at December 31, 1996 73,014,941 69,076,020
Property and equipment, net 7,399,889 6,234,295
Investment in minority interest 2,200,000 -
Investment in joint venture 2,365,929 2,015,888
Other assets 5,495,814 5,739,428
------------- -------------
Total assets $141,633,556 $150,165,318
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 7,479,043 $ 7,934,518
Current portion of long term-debt 3,918,745 1,153,413
Current portion of obligations under capital leases 527,300 289,229
Accounts payable 6,717,840 6,183,103
Accrued expenses and other liabilities 5,267,369 6,301,576
Customer deposits 710,341 1,043,072
Unearned income 8,550,102 13,068,726
------------- -------------
Total current liabilities 33,170,740 35,973,637
Long-term debt, net of current portion 1,908,308 4,672,118
Obligations under capital leases, net of
current portion 1,002,222 612,650
------------- -------------
Total liabilities 36,081,270 41,258,405
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares authorized:
Series A convertible preferred stock 1,000 shares
outstanding at June 30, 1997 and December 31,1996 10 10
Common stock, $0.01 par value, 75,000,000 shares authorized,
53,761,154 shares issued and outstanding at
June 30, 1997 and 52,982,484 shares issued and
outstanding at December 31, 1996 537,612 529,825
Additional paid-in capital 193,069,875 193,281,643
Accumulated deficit (77,360,211) (84,904,565)
Treasury stock, at cost 2,325,000 shares (10,695,000) -
------------- -------------
Shareholders' equity 105,552,286 108,906,913
------------- -------------
Total liabilities and shareholders' equity $141,633,556 $150,165,318
============= =============
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PHYSICIAN COMPUTER NETWORK, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Software license fees $ 7,838,082 $ 7,275,346
Hardware revenue 6,383,835 5,982,791
Maintenance, communication fees, and other 11,598,090 8,610,123
------------ ------------
25,820,007 21,868,260
Cost of Revenues:
Hardware 4,166,786 3,998,293
Software, maintenance, communication fees,
and other 6,144,584 4,640,016
10,311,370 8,638,309
------------ ------------
Gross margin 15,508,637 13,229,951
Operating expenses:
Research and development 2,081,033 1,111,389
Selling and marketing 2,588,762 1,950,791
General and administrative 3,324,251 2,876,156
Amortization of acquired intangible assets 1,837,312 1,628,608
------------ ------------
9,831,358 7,566,944
------------ ------------
Interest (income) expense:
Interest income (47,594) (158,202)
Interest expense 247,500 643,289
------------ ------------
199,906 485,087
------------ ------------
Income before income tax expense, loss on equity
investment, and extraordinary item 5,477,373
Income tax expense 1,150,000 1,087,363
------------ ------------
Income before loss on equity investment and
extraordinary item 4,327,373
Loss on equity investment, net of income tax benefit (456,186) (422,650)
------------ ------------
Income before extraordinary item 3,871,187 3,667,907
Extraordinary item:
Gain on extinguishment of debt, net of taxes 353,439 -
------------ ------------
Net income available to common shareholders 4,224,626 3,667,907
============ ============
Primary and fully diluted earnings per common share:
- ----------------------------------------------------
Before extraordinary item $ 0.07 $ 0.07
Extraordinary item $ 0.01 -
------------ ------------
After extraordinary item $ 0.08 $ 0.07
Primary weighted average number
of common shares outstanding 53,997,130 53,539,693
============ ============
Fully diluted weighted average number
of common shares outstanding 54,593,205 53,630,705
============ ============
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PHYSICIAN COMPUTER NETWORK, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Six Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Software license fees $14,718,348 $13,193,068
Hardware revenue 11,877,039 11,883,698
Maintenance, communication fees, and other 23,306,855 17,818,442
------------ ------------
49,902,242 42,895,208
Cost of Revenues:
Hardware 7,734,364 7,754,832
Software, maintenance, communication fees,
and other 12,270,419 9,678,369
20,004,783 17,433,201
------------ ------------
Gross margin 29,897,459 25,462,007
Operating expenses:
Research and development 4,187,766 2,222,876
Selling and marketing 5,057,363 3,655,560
General and administrative 6,416,347 5,272,216
Amortization of acquired intangible assets 3,591,660 3,317,079
------------ ------------
19,253,136 14,467,731
------------ ------------
Interest (income) expense:
Interest income (222,909) (217,710)
Interest expense 546,621 1,338,407
------------ ------------
323,712 1,120,697
------------ ------------
Income before income tax expense, loss on equity
investment, and extraordinary item 10,320,611
Income tax expense 2,167,120 2,073,363
------------ ------------
Income before loss on equity investment and extraordinary
item 8,153,491
Loss on equity investment, net of income tax benefit (962,576) (817,650)
------------ ------------
Income before extraordinary item 7,190,915 6,982,566
Extraordinary item:
Gain on extinguishment of debt, net of taxes 353,439 -
------------ ------------
Net income available to common shareholders 7,544,354 6,982,566
============ ============
Primary and fully diluted earnings per common share:
- ---------------------------------------------------------
Before extraordinary item $ 0.13 $ 0.14
Extraordinary item $ 0.01 -
------------ ------------
After extraordinary item $ 0.14 $ 0.14
Primary weighted average number
of common shares outstanding 55,648,081 51,703,221
============ ============
Fully diluted weighted average number
of common shares outstanding 55,648,081 51,710,586
============ ============
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PHYSICIAN COMPUTER NETWORK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income $ 7,544,354 $ 6,982,566
Adjustments to reconcile net income to net cash provided by
(used) in operating activities:
Depreciation and amortization 5,150,134 4,463,836
Provision for inventory obsolescence 421,998 -
Gain on sale of assets (6,597) (3,524)
Provision for doubtful accounts 300,000 300,000
Extraordinary gain on extinguishment of debt (353,439) -
Non-cash provision for income tax 1,928,737 1,777,156
Loss on equity investment 962,576 817,650
(Increase) decrease in assets:
Accounts receivable (8,634,891) (3,615,224)
Inventories (2,308,923) 497,526
Prepaid expenses and other assets (640,232) 284,586
Increase (decrease) in liabilities, net
Accounts payable trade 534,737 (1,012,875)
Accrued expenses and other liabilities (1,600,210) (5,726,317)
Customer deposits and unearned income (5,019,337) (3,229,349)
------------- ------------
Net cash provided by (used in) operating activities (1,721,093) 1,536,031
------------- ------------
Cash flows provided by (used in) investing activities:
Purchase of equipment (3,271,611) (1,106,003)
Proceeds from disposal of equipment 7,077 3,524
Acquisition of licensing rights
and other intangible assets (3,079,094) (1,801,120)
Purchase of business, net of cash acquired (4,701,925) (2,095,871)
Investment in minority interest (2,200,000) -
Investment in joint venture and related costs (1,568,492) (3,533,390)
------------- ------------
Net cash used in investing activities (14,814,045) (8,532,860)
------------- ------------
Cash flows provided by (used in) financing activities:
Principal payments of long-term debt (223,041) (1,353,301)
Principal payments of notes payable (452,036) (3,699,523)
Net proceeds from issuance
of notes payable and long-term debt - 204,359
Principal payments under capital lease obligations (398,783) (211,029)
Purchase of treasury stock (10,695,000) -
Net proceeds from issuance
of common stock, preferred stock, and warrants 17,246 42,960,446
------------- ------------
Net cash provided by (used in) financing activities (11,751,614) 37,900,952
------------- ------------
Net increase (decrease) in cash and cash equivalents (28,286,752) 30,904,123
Cash and cash equivalents,
beginning of period 34,291,166 15,516,883
------------- ------------
Cash and cash equivalents,
end of period $ 6,004,414 $46,421,006
============= ============
<FN>
See Note 8 for supplemental disclosure of cash flow information.
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
PHYSICIAN COMPUTER NETWORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The information presented at June 30, 1997 and 1996 and for the periods
then ended is unaudited, but includes all adjustments (consisting only of
normal recurring accruals) which the management of Physician Computer Network,
Inc. ("PCN" and together with PCN's subsidiaries, the "Company") believes to
be necessary for the fair presentation of results for the periods presented.
The results for the three and six month periods ended June 30, 1997 may not
necessarily be indicative of results to be expected for the full year. It is
suggested that these consolidated financial statements, note disclosures and
other information be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
Beginning in 1993, the Company instituted a strategy of developing and
expanding its business by acquiring practice management software businesses
having an installed base of physician practice customers and by acquiring and
developing a common software platform to which such customers could migrate
over time. In execution of this strategy, the Company acquired ten practice
management software entities over the period from September 1993 to June 1997.
Two of the ten acquisitions were completed in 1996 and two were completed in
1997. On July 2, 1996, the Company acquired substantially all of the assets
of the medical practice management software business and certain other
software businesses of CUSA Technologies, Inc. (the "CTI Business") (see Note
3). On September 10, 1996, the Company acquired Wismer-Martin, Inc.
("Wismer-Martin"), through a merger of a wholly-owned subsidiary of the
Company with and into Wismer-Martin, with Wismer-Martin as the surviving
corporation of such merger (See Note 3). On April 1, 1997, the Company
acquired the assets of the Healthcare Division of Data Systems of Texas, (the
"DST Business") (see note 3). On April 29, 1997, the Company acquired the
assets of the medical practice management software business of Software Banc,
Inc. (the "SBI Business") (see Note 3). The Consolidated Balance Sheets and
the Consolidated Statements of Earnings for the six months ended June 30, 1997
are inclusive of the CTI Business and Wismer-Martin for the entire period, the
DST Business from April 1, 1997, and the SBI Business from April 29, 1997.
Any significant intercompany transactions have been eliminated.
2. EARNINGS PER COMMON SHARE
Net income per common share for the three and six month periods ended
June 30, 1997 and 1996 is determined by dividing net income by the weighted
average number of shares of the Company's common stock, par value $0.01 per
share ("Common Stock"), outstanding during the period. The assumed exercise
of dilutive stock options and warrants and the assumed conversion of
outstanding shares of the Company's Series A convertible non-dividend paying
preferred stock (the "Convertible Preferred Stock") have been included in the
calculation of weighted average number of common shares outstanding.
On March 31, 1997, the Company exercised an option it held and purchased
from IBM Credit Corporation ("ICC") 2,325,000 shares of its Common Stock at a
price of $4.60 per share. The repurchase of the shares from ICC is considered
in the weighted average number of common shares outstanding for the three and
six month periods ended June 30, 1997 (see Note 7).
3. ACQUISITIONS
Purchase of the CTI Business - On July 2, 1996, pursuant to an asset
purchase agreement, the Company, through a wholly-owned subsidiary, purchased
the CTI Business from CUSA Technologies, Inc. for: (i) $9,200,000 in cash;
and, (ii) the assumption of $4,130,526 in liabilities and cancellation of debt
owed by from CUSA Technologies, Inc. to PCN.
Purchase of Wismer-Martin, Inc. - On September 10, 1996, the Company
acquired Wismer-Martin, a provider of practice management systems and
healthcare information systems located in Mead, Washington, pursuant to a
merger agreement, for: (i) $1,980,000 in cash; (ii) 935,000 shares of PCN
Common Stock valued at $9,365,895; and, (iii) the assumption of $4,733,154 in
liabilities.
Purchase of the DST Business - On April 1, 1997, the Company acquired the
assets of the DST Business from Data Systems of Texas, a reseller of the
Company's hardware and software products with offices in Waco and Austin,
Texas, for: (i) $1,070,000 in cash; (ii) $600,000 in notes payable; and, (iii)
the assumption of $167,982 in liabilities.
Purchase of the SBI Business - On April 29, 1997, the Company acquired
the SBI Business from Software Banc, Inc. of Milwaukee, Wisconsin for
$2,613,222 in cash and the assumption of $75,000 in liabilities.
The acquisitions of the CTI Business, Wismer-Martin, the DST Business and
the SBI Business were accounted for by the purchase method of accounting and,
accordingly, the acquired assets and liabilities have been recorded at their
fair values at the date of purchase.
The following unaudited pro forma financial information represents the
combined results of operations of the Company, the CTI Business, and
Wismer-Martin as if those acquisitions had occurred as of January 1, 1996
after giving effect to certain financing transactions completed in 1996. The
unaudited pro forma financial information does not necessarily reflect the
results of operations that would have occurred had the Company, the CTI
Business, and Wismer-Martin constituted a single entity during such periods
nor does it represent a basis for assessing future performance.
Had both the DST Business and the SBI Business acquisitions been
consummated on January 1, 1996, the Company's results of operations would not
have been materially affected for the purpose of pro forma disclosures.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996:
<S> <C>
Operating Revenues $52,829,862
Net Income $ 5,304,587
Earnings per Common Share $ 0.09
</TABLE>
4. INVENTORIES
Inventories were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Computer hardware and peripherals $5,433,261 $3,377,694
Customer maintenance parts 2,334,492 2,420,459
$7,767,753 $5,798,153
========== ==========
</TABLE>
5. INVESTMENT IN MINORITY INTEREST
On June 13, 1997, the Company invested $2,200,000, including expenses, in
the convertible preferred stock of HCC Communications, Inc. (Healthcare
Communications, Inc. or "HCC"), a practice management software provider
located in Lincoln, Nebraska. The investment represents 19.9% of the voting
securities of HCC and is, therefore, accounted for using the cost method of
accounting for investments. The Company reviewed the investment for
impairment as of June 30, 1997 and determined that no impairment had occurred
during the period from the date of investment until June 30, 1997.
6. RESTRUCTURING PLAN UPDATE
<TABLE>
<CAPTION>
<PAGE>
1995 RESTRUCTURING PLAN
- -----------------------
<S> <C>
Balance at December 31, 1996 86,156
1997 Activity:
Cash outflows from reduction in workforce and lease
termination costs 60,515
=======
Balance at June 30, 1997 $25,641
=======
</TABLE>
7. SHAREHOLDERS' EQUITY
On March 31, 1997, the Company exercised an option it held and purchased
from IBM Credit Corporation ("ICC") 2,325,000 shares of its Common Stock at a
price of $4.60 per share.
On February 11, 1997, options to purchase 894,000 shares of Common Stock
at an exercise price of $9.188 per share were granted pursuant to the
Company's 1993 Incentive and Non-Incentive Stock Option Plan. In addition,
30,000 shares of Common Stock at an exercise price of $11.25 per share were
granted and 92,400 stock options were forfeited due to expiration or
termination. During the first six months of 1997, a total of 3,670 stock
options were exercised. There were no other stock warrants excercised during
the period. As a result, the cumulative number of stock options and warrants
outstanding as of June 30, 1997 was 10,056,516.
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
---- ----
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for interest $216,000 $1,651,000
Cash paid for income taxes $426,000 $ 261,000
</TABLE>
Supplemental non-cash operating, investing, and financing activities were
as follows:
Capital lease obligations of $1,026,426 were incurred during the six
months ended June 30, 1997 and none were incurred for the six months ended
June 30, 1996.
In connection with the Data Systems of Texas acquisition in April 1997,
the Company issued $600,000 in notes payable and assumed liabilities in the
aggregate of $167,982 (See Note 3).
In connection with the Software Banc, Inc. acquisition in April 1997, the
Company assumed liabilities in the aggregate of $75,000 (See Note 3).
The Company realized an extraordinary gain, net of taxes, of $353,439 on
the extinguishment of a note payable to a supplier of inventory that was
assumed as part of its acquisition of Versyss Incorporated. The terms of the
note called for principal to be forgiven, and a credit against interest
payments provided, if the Company exceeded certain annual purchase
requirements with the supplier according to provisions of the master agreement
with the supplier.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements, related notes and other financial
information included elsewhere in this Quarterly Report on Form 10-Q and the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
The following discussion and analysis includes certain forward-looking
statements. Forward-looking statements in this report are made pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of
1995. Persons reading this report are cautioned that such forward-looking
statements involve risks and uncertainties that could cause the Company's
actual results to differ materially from the forward-looking statements.
Factors that could cause actual results to differ materially from the
forward-looking statements include, without limitation, the effect of the
Company's acquisition strategy on future operation results; the availability
of financing for future acquisitions; the uncertainty of acceptance of the
Company's new product and migration strategy; the Company's relationship with
HealthPoint G.P.; the effects of government regulation on the Company's
business; competition; and the matters referred to in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
Company Overview
- -----------------
The Company is a leader in developing, marketing and supporting
practice management software products for physician practices. The Company's
overall business objective is to become the leading provider of integrated
practice management and clinical information software products to office-based
physicians, thereby becoming a major link for the electronic exchange of
information between physician practices and other health care providers and
organizations. In furtherance of this objective, since September 1993, the
Company has acquired ten practice management software businesses which, along
with new system sales, has increased the number of physicians associated with
sites which have purchased the Company's practice management software products
from approximately 2,000 to approximately 98,000, making the Company one of
the largest providers of practice management software products in the United
States. The Company plans to migrate a substantial majority of its customers
to its most advanced practice management software product, the PCN Health
Network Information System, during the next several years. In an effort to
rapidly and cost-effectively supplement its practice management software
product offerings with knowledge-based clinical products and services, in
January 1996, the Company and Glaxo Wellcome, Inc. ("Glaxo Wellcome") formed a
joint venture. The joint venture, HealthPoint G.P. ("HealthPoint"), was formed
to develop and market clinical information technology products and services
that will provide the clinical information needed at the point of patient care
and assist physicians and other health care providers practice medicine more
efficiently. In December 1996, HealthPoint made commercially available its
first product, HealthPoint ACS, a product developed for medical offices to
enable physicians to, among other things, manage the clinical information
required for treatment at the point of care.
The Company's practice management software products, which, among other
things, automate physician scheduling and generate patient billings, insurance
claims billings and other financial reports, include interactive communication
software that links physician practices with hospitals, Medicare/Medicaid
carriers, commercial insurance carriers, claims clearinghouses, clinical
laboratories, pharmacies, HMOs and other health care organizations who have
established electronic communication links under agreement with the Company
(collectively, "Connecting Service Providers"). The PCN Health Network
Information System is designed to become the common practice management
software platform used by a substantial majority of the Company's physician
practice customers and, as an integrated unit with HealthPoint's products, is
expected to provide physicians with comprehensive financial, administrative
and clinical applications. The PCN Health Network Information System will
primarily manage the business elements of the physician's practice and
HealthPoint's software products and services will primarily provide physicians
with clinical applications and functionality intended to assist physicians in
the clinical aspects of their practices.
Strategy. The Company's objective is to establish a large installed base of
physician practice customers who use the PCN Health Network Information System
integrated with HealthPoint's clinical information products, thereby becoming
an important link for the electronic exchange of information between physician
practices and other health care providers and organizations. The Company's
strategy for achieving its objective has and will continue to include: (i)
increasing the usage of the PCN Health Network Information System by
continuing to acquire practice management software businesses having an
installed base of physician practice customers; (ii) migrating both the
Company's existing and newly acquired practice management software customers
to the PCN Health Network Information System during the next several years;
(iii) marketing and licensing the PCN Health Network Information System, both
directly and through independent resellers, to additional physician customers,
in particular, large group practices; (iv) marketing HealthPoint's clinical
information system products and other services to the Company's installed base
of PCN Health Network Information System customers, as well as customers of
the Company's other practice management software products; and (v) providing
new and enhanced services, including new Connecting Service Providers, through
the PCN Health Network Information System and HealthPoint's clinical
information technology products.
Acquisition History. The Company has completed the acquisition of ten (10)
practice management software entities since September 1993. The most recent
include the following:
On July 2, 1996, the Company acquired the CTI Business , a reseller of
the Company's hardware and software products and a direct provider of certain
other practice management systems and equipment to sites having an aggregate
of approximately 4,000 physicians, for $9,200,000 in cash, the assumption of
approximately $4,130,000 in liabilities and the cancellation of debt owed by
CUSA Technologies, Inc. to PCN.
On September 10, 1996, the Company, acquired Wismer-Martin, a provider,
through a direct sales force, of practice management and healthcare
information systems, and related equipment, to sites having an aggregate of
approximately 4,000 physicians for $1,980,000 in cash, 935,000 shares of PCN
Common Stock valued at approximately $9,366,000 and the assumption of
approximately $4,737,000 in liabilities.
On April 1, 1997, the Company acquired the assets of the Healthcare
Division of Data Systems of Texas, a reseller of the Company's hardware and
software products with offices in Waco and Austin, Texas, for: (i) $1,070,000
in cash; (ii) $600,000 in notes payable; and, (iii) the assumption of
approximately $168,000 in liabilities.
On April 29, 1997, the Company acquired the assets of the medical
practice management software business of Software Banc, Inc. of Milwaukee,
Wisconsin for $2,613,222 in cash and the assumption of approximately $75,000
in liabilities. SBI is a regional provider, through a direct sales force, of
practice management systems and related equipment to sites having an aggregate
of approximately 3,000 physicians.
Investment in Minority Interest. On June 13, 1997, the Company invested
$2,200,000, including expenses, in the convertible preferred stock of HCC, a
practice management software provider located in Lincoln, Nebraska. The
investment represents 19.9% of the voting securities of HCC and is, therefore,
accounted for using the cost method of accounting for investments. HCC's
software products primarily utilize an Apple/Macintosh operating system. The
Company has an option to purchase 100% of the common stock of HCC at any time
between June 13, 2000 and June 13, 2002 at a price derived from a formula
based on revenues. In conjunction with the Company's investment in HCC, HCC
became a value-added reseller of PCN's Health Network and HealthPoint products
on an exclusive basis.
HealthPoint Overview. In January 1996, the Company and Glaxo Wellcome,
through wholly-owned subsidiaries, formed HealthPoint., a joint venture
partnership, to design and market clinical information technology products and
services. These products and services consist of computerized patient records
software products, clinical network capabilities and data analysis.
HealthPoint is a general partnership owned equally by a wholly-owned
subsidiary of the Company and a wholly-owned subsidiary of Glaxo Wellcome and
operates independently of the partners' operations. A management committee
comprised of management of the wholly-owned subsidiaries of Glaxo Wellcome and
the Company, as well as a representative of HealthPoint's management, oversees
the venture's operations. The Company has agreed to, generally, use its best
efforts to distribute HealthPoint's products and services to the Company's
customers on an exclusive basis. Both the Company and Glaxo Wellcome have
contributed product and development assets to HealthPoint and will contribute
at least $50 million in cash to the venture, of which $43 million will be
contributed by Glaxo Wellcome and $7 million will be contributed by the
Company. Of such amounts, as of June 30, 1997, the Company had contributed
approximately $6.3 million, with the remainder to be contributed
proportionately by the partners in semi-annual installments as needed by the
venture through December 31, 1998. Any losses incurred by HealthPoint will be
allocated between Glaxo Wellcome and the Company in proportion to their
respective cash contributions (approximately 85% to Glaxo Wellcome and 15% to
the Company), while profits will, generally, be shared equally by the
partners.
In December 1996, HealthPoint made commercially available its first
product, HealthPoint ACS. HealthPoint ACS, which interfaces (and is expected
to be integrated) with the PCN Health Network Information System, enables
physicians to, among other things, manage the clinical information required
for treatment at the point of care.
RESULTS OF OPERATIONS
- -----------------------
THREE MONTHS ENDED JUNE 30, 1997
COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1996
Revenues - Revenues for the three months ended June 30, 1997 were
$--25,820,007 an increase of $3,951,747 or 18% over revenues of $21,868,260
for the three months ended June 30, 1996.
The Company's software license fees are derived primarily from the sale
of licenses for the PCN Health Network Information System and the Company's
other practice management software products. Revenues from software license
fees increased by $562,736 or 8% from $7,275,346 in the second quarter of 1996
to $7,838,082 in the second quarter of 1997 as a result of increased sales of
licenses for the PCN Health Network Information System from both migrations
and new system sales and, to a lesser extent, increased software license sales
related to the acquisition of the CTI Business and Wismer-Martin during the
second half of 1996. Hardware revenues increased by $401,044 or 7% from
$5,982,791 for the quarter ended June 30, 1996 to $6,383,835 for the quarter
ended June 30, 1997 due to an increase in system sales experienced in the
second quarter of 1997.
Maintenance, communication fees and other revenue increased by $2,987,967
or 35% from $8,610,123 in the second quarter of 1996 to $11,598,090 in the
second quarter of 1997 primarily due to the acquisition of the more hardware
and software maintenance-intensive CTI Business, Wismer-Martin, DST Business
and SBI Business.
Cost of revenues - Cost of revenues as a percentage of total revenues
remained at 40% during both periods.
Cost of software, maintenance, communication fees and other revenue,
which includes the costs of labor for software support, hardware maintenance
and training,
increased by $1,504,568 or 32% from $4,640,016 in the second quarter of 1996
to $6,144,584 in the second quarter of 1997 primarily as a result of the
increased sales of the PCN Health Network Information System and higher
maintenance revenue related to the acquisitions of the CTI Business,
Wismer-Martin, the DST Business and the SBI Business.
Cost of hardware, including installation costs, increased by $168,493 or
4% from $3,998,293 for the three months ended June 30, 1996 to $4,166,786 for
the three months ended June 30, 1997 as a result of an increase in hardware
sales in the second quarter of 1997.
Operating Expenses - Operating expenses increased $2,264,414 or 30% from
$7,566,944 for the three months ended June 30 1996 to $9,831,358 for the three
months ended June 30, 1997. The increase in operating expenses can be
attributed to the following:
Research and development costs increased by $969,644 or 87% from
$1,111,389 in the second quarter of 1996 to $2,081,033 in the second quarter
of 1997 primarily due to (i) the investment in new technology and product
development, and in particular, development with respect to the integration of
HealthPoint ACS and the PCN Health Network Information System; (ii) the
acquisitions of the CTI Business and Wismer-Martin during the second half of
1996; and, (iii) the acquisitions of the DST Business and the SBI Business in
the second quarter of 1997. Increases in expenditures related to core
products were partially offset by savings realized from the elimination of
development charges associated with non-core products.
Selling and marketing expenses increased by $637,971 or 33% from
$1,950,791 in the second quarter of 1996 to $2,588,762 in the second quarter
of 1997 primarily as a result of increased headcount attributable to the CTI
Business, Wismer-Martin, the DST Business and the SBI Business acquisitions,
all of which employ a direct sales force, partially offset by continued
efficiency savings realized from the elimination of duplicate marketing
program costs.
General and administrative expenses increased by $448,095 or 16% from
$2,876,156 in the second quarter of 1996 to $3,324,251 in the second quarter
of 1997 due to additional headcount and increased facility and occupancy costs
attributable to the acquisitions of the CTI Business and Wismer-Martin during
the second half of 1996 and the DST Business and the SBI Business in 1997,
partially offset by savings resulting from the centralization of certain
operations, the elimination of duplicate responsibilities and other functional
downsizing.
Amortization of acquired intangible assets increased by $208,704 or 13%
as a result of $629,236 in additional amortization expense related to the CTI
Business , Wismer-Martin, the DST Business , and the SBI Business
acquisitions, partially reduced by $420,532 of amortization expense incurred
in the second quarter of 1996 related to other previously acquired intangible
assets that were fully amortized prior to the beginning of 1997.
Interest income decreased by $110,608 or 70% from $158,202 in the second
quarter of 1996 to $47,594 in the second quarter of 1997, primarily due to the
Company's use of its cash resources for acquisitions, capital expenditures and
to buy back 2,325,000 shares of its own common stock.
Interest expense decreased by $395,789 or 62% from $643,289 in the second
quarter of 1996 to $247,500 in the second quarter of 1997 primarily as a
result of the decrease in debt service due to the conversion of a $10,000,000
prinicipal amount five year promissory note of the Company purchased by
Equifax, Inc. (the "Equifax Note"), which bore interest at a rate of 6% per
annum, into Common Stock at the time of the Company's public offering of
shares of its Common Stock in May of 1996 (the "1996 Public Offering") and the
payment of debt associated with its earlier acquisitions, partially offset by
debt service assumed as part of the CTI Business, Wismer-Martin, the DST
Business and the SBI Business acquisitions.
The Company recorded a provision for income taxes of $1,150,000 for the
quarter ended June 30, 1997, an increase of $62,637 or 6% from the $1,087,363
provision recorded in the second quarter of 1996, reflecting an estimated
annual effective tax rate of 21% for both periods. On a cash basis, the
Company expects to pay at a rate substantially less than the 21% estimated
annual effective rate.
The loss, net of income taxes, on the equity investment in HealthPoint,
which represents the Company's share of the loss incurred by the joint
venture, consisting primarily of start-up and development costs, increased by
$33,536 or 8% from a loss of $422,650 in the second quarter of 1996 to a loss
of $456,186 in the second quarter of 1997.
The Company realized an extraordinary gain, net of taxes, of $353,439 on
the extinguishment of a note payable to a supplier of inventory that was
assumed as part of its acquisition of Versyss Incorporated. The terms of the
note called for principal to be forgiven, and a credit against interest
payments provided, if the Company exceeded certain annual purchase
requirements with the supplier according to provisions of the master agreement
with the supplier.
SIX MONTHS ENDED JUNE 30, 1997
COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996
Revenues for the six months ended June 30, 1997 were $49,902,242 an
increase of $7,007,034 or 16% over revenues of $42,895,208 for the six months
ended June 30, 1996. Revenues from software license fees, which are derived
primarily from the sale of licenses for the PCN Health Network Information
System product and the Company's other practice management software products,
increased by $1,525,280 or 12% from $13,193,068 for the six months ended June
30, 1996 to $14,718,348 for the six months ended June 30, 1997. Hardware
revenue decreased $6,659 from $11,883,698 for the six months ended June 30,
1996 to $11,877,039 for the six months ended June 30, 1997 primarily as a
result of an increase in software only sales experienced in early 1997.
Maintenance, communication fees and other revenue increased by $5,488,413 or
31% from $17,818,442 for the six months ended June 30, 1996 to
$------23,306,855 for the six months ended June 30, 1997 due primarily to the
increase in software license sales and the acquisition of the more hardware
and software maintenance-intensive CTI Business, Wismer-Martin, DST Business
and SBI Business.
Cost of revenues increased $2,571,582 or 15% from $17,433,201 for the six
months ended June 30, 1996 to $20,004,783 for the six months ended June 30,
1997. Cost of hardware, including installation costs, decreased $20,468 or
0.3% from $7,754,832 to $7,734,364, primarily due to the decreased computer
hardware sales. Software, maintenance, communication fees and other costs of
revenue, which include the costs of labor for software support, hardware
maintenance and training, increased $2,592,050 or 27% from $9,678,369 to
$12,270,419 primarily as a result of the increased software and maintenance
sales.
Operating expenses increased $4,785,405 or 33% from $14,467,731 for the
six months ended June 30, 1996 to $19,253,136 for the six months ended June
30, 1997. Research and development, selling and marketing, and general and
administrative expenses increased by $1,964,890, $1,401,803, and $1,144,131,
respectively. The increase in operating expenses is primarily due to
additional headcount, as well as increased facilities and occupancy costs,
attributable to the acquisitions of the CTI Business, Wismer-Martin, the DST
Business and the SBI Business, partially offset by savings resulting from the
centralization of certain operations, the elimination of duplicate
responsibilities and other functional downsizing.
Amortization of acquired intangible assets increased by $274,581 or 8% as
a result of $1,175,511 in additional amortization expense related to the CTI
Business , Wismer-Martin, the DST Business , and the SBI Business
acquisitions, partially reduced by $900,930 of amortization expense incurred
in the first six months of 1996 related to other previously acquired
intangible assets that were fully amortized prior to the beginning of 1997.
Interest income increased $5,199 or 2% from $217,710 for the six months
ended June 30, 1996 to $222,909 for the six months ended June 30, 1997,
primarily as a result of investing the net proceeds from the 1996 Public
Offering. Interest expense decreased $791,786 or 59%, from $1,338,407 for the
six months ended June 30, 1996 to $546,621 for the six months ended June 30,
1997, primarily as a result of the decrease in debt service due to conversion
of the Equifax Note offset by debt services assumed as part of the CTI
Business, Wismer-Martin, the DST Business and the SBI Business acquisitions.
The Company's provision for income taxes increased by $93,757, or 5%,
from $2,073,363 for six months ended June 30, 1996 to $2,167,120 for the six
months ended June 30, 1997 reflecting an estimated annual effective tax rate
of 21% for both periods. On a cash basis, the Company expects to pay at a
rate substantially less than the 21% estimated effective rate.
The Company recorded a loss on its equity investment in HealthPoint of
$962,576, net of taxes, for the six months ended June 30, 1997 representing
the Company's share of the loss incurred by the joint venture, primarily as a
result of start-up and development costs.
Financial Condition & Liquidity
- ----------------------------------
At June 30, 1997 the Company had available cash and cash equivalents
of $6,004,414 and working capital of $17,986,243 compared to cash and cash
equivalents of $34,291,166 and a working capital of $31,126,050 at December
31, 1996. The decrease in cash and cash equivalents can be attributed to the
following:
Net cash used in operating activities was $1,721,093 for the six
months ended June 30, 1997 compared to net cash provided by operating
activities of $1,536,031 for the six months ended June 30, 1996 primarily due
to: (i) an increase in accounts receivable related to the timing of sales
orders and cash collections in the second quarter of 1997; (ii) an increase
in inventory position in support of anticipated PCN Health Network Information
System and HealthPoint ACS sales; and (iii) payment of accrued expenses and
other liabilities. Accounts receivable are typically collected within sixty
days of the date of sale. The Company believes that cash will be provided
from operations in the remaining two quarters of 1997.
Cash used in investing activities was $14,814,045 in the second
quarter of 1997 and primarily consisted of: (i) $4,701,925 used for
acquisitions; (ii) $3,271,611 in capital investment in equipment; (iii)
$3,079,094 used to acquire licensing rights and other intangible assets; (iv)
$2,200,000 used to acquire a minority interest in HCC; and, (v) a $1,568,492
scheduled cash investment in HealthPoint.
Cash used in financing activities in the second quarter of 1997 was
$11,751,614 primarily related to the payment by the Company of $10,695,000 to
ICC for the repurchase of 2,325,000 shares of the Company's Common Stock at a
price of $4.60 per share.
Significant payment obligations of the Company during the remainder
of 1997 include: (i) the payment in October 1997 of $5,875,000 in
principal amount under the promissory note issued in connection with the
Versyss acquisition, together with accrued and unpaid interest thereon; and
(ii) capital contributions required to be made by the Company to HealthPoint.
On June 4, 1997, the Company entered into an agreement with Fleet Bank,
N.A. ("Fleet") to provide a revolving bank credit facility pursuant to which
the Company has the ability to borrow funds from Fleet for working capital and
general corporate purposes in an amount, subject to customary restrictions, of
up to $15 million. In addition, the Company may in the future seek to obtain
a revolving credit facility in connection with financing its acquisition
strategy. The Company expects that its operating cash flow, combined with the
availability of funds under the Fleet credit facility, will be sufficient to
fund the Company's working capital requirements (including research and
development) through at least 1998 and permit the Company to continue its
acquisition strategy. However, the Company's ability to continue to pursue
its acquisition strategy will be affected by the extent and pace at which the
Company utilizes its available resources for acquisitions. Accordingly, the
Company may in the future be required to seek additional sources of financing,
including borrowing and/or the sale of equity securities. If additional funds
are raised by issuing equity securities, further dilution to shareholders may
result. No assurances can be given that any such additional sources of
financing will be available on acceptable terms or at all.
At June 30, 1997, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $66,000,000 which expire in 1999
through 2009. This includes approximately $15,000,000 of net operating loss
carryforwards from Versyss and $4,500,000 from Wismer-Martin which are subject
to separate return limitation year rules. The Company believes it has
previously experienced ownership changes, which under the provisions of
Section 382 of the Internal Revenue Code of 1986, as amended, have resulted in
a significant annual limitation on the Company's ability to utilize its net
operating losses in the future. As a result, the Company is limited each year
as to the amount of pre-ownership change net operating losses that can be
utilized. However, it is the opinion of management that the losses will be
fully utilized prior to expiration of the carryforward period.
Impact of New Accounting Pronouncements In February 1997, the Financial
Accounting Standards Board issued SFAS No. 128 , Earnings Per Share ("SFAS
128"). This statement is effective for financial statements issued for periods
ending after December 15, 1997 and will require companies to change the way
they calculate earnings per share ("EPS"). Primary EPS will be replaced by
Basic EPS which excludes dilution and is calculated by dividing income
available to common shareholders by the weighted average number of common
shares outstanding for the period. Fully Diluted EPS will be replaced by
Diluted EPS which reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. In addition, SFAS 128 also
requires dual presentation of Basic and Diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the Basic EPS computation
to the numerator and denominator of the Diluted EPS computation.
If SFAS 128 was adopted as of June 30, 1997, EPS would have been as
follows:
<TABLE>
<CAPTION>
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
3 Months:
- -----------
Basic EPS $0.09 $0.07
Diluted EPS $0.08 $0.07
6 Months:
- -----------
Basic EPS $0.15 $0.14
Diluted EPS $0.14 $0.14
</TABLE>
<PAGE>
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 -
On June 25, 1997, the Company held an annual meeting of its shareholders
(the "Meeting") to consider (i) the re-election of its eight (8) directors;
(ii) the approval of the amendment to the Company's 1993 Incentive and
Non-Incentive Stock Option Plan (the "Employee Plan"); and, (iii) the
ratification of the appointment of KPMG Peat Marwick, LLP to continue as
independent auditors of the Company for the year ending December 31, 1997.
At the meeting, the Company's shareholders re-elected the Company's
eight (8) directors. The Company's Employee Plan was amended to increase the
maximum aggregate number of shares of Common Stock that may be issued under
the Employee Plan from 3,300,000 to 4,300,000 shares of Common Stock.
34,565,333 shares voted in favor of the amendment to the Employee Plan,
10,004,584 shares voted against and 173,347 shares abstained from voting.
KPMG Peat Marwick, LLP was re-appointed as independent auditors of the
Company for the year ending December 31, 1997.
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - None
A. Exhibits - See Index to Exhibits on page 23.
<PAGE>
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 of the
undersigned thereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
(Registrant)
Date: August 14, 1997 By: /s/ John F. Mortell
---------------------
John F. Mortell
Executive Vice President and
Chief Operating Officer
Date: August 14, 1997 By: /s/ Thomas F. Wraback
-----------------------
Thomas F. Wraback
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
-----------------
All exhibits listed below are filed with this Quarterly Report on Form
10-Q:
EXHIBIT NO. PAGE
- ----------- ----
11 Computation of Income Per Share. 24
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
PHYSICIAN COMPUTER NETWORK, INC.
COMPUTATION OF INCOME PER SHARE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
- --------------------------------------------
Net Income before extraordinary item $ 3,871,187 $ 3,667,907 $ 7,190,915 $ 6,982,566
Extraordinary gain 353,439 -- 353,439 --
----------- ----------- ----------- -----------
Primary and fully diluted net income $ 4,224,626 $ 3,667,907 $ 7,544,354 $ 6,982,566
=========== =========== =========== ===========
PRIMARY SHARES
- --------------------------------------------
Weighted average Common Stock outstanding 51,569,647 49,031,443 52,326,584 46,635,522
Common Stock issuable upon the exercise
of outstanding options and warrants 2,229,504 4,285,407 3,157,928 4,481,541
Common Stock issuable upon the
conversion of Preferred Stock 197,979 222,843 163,569 586,158
----------- ----------- ----------- -----------
Weighted average Common Stock
outstanding as adjusted 53,997,130 53,539,693 55,648,081 51,703,221
=========== =========== =========== ===========
FULLY DILUTED SHARES
- --------------------------------------------
Weighted average Common Stock outstanding 51,569,647 49,031,443 52,326,584 46,635,522
Common Stock issuable upon the exercise
of outstanding options and warrants 2,849,266 4,376,419 3,157,928 4,488,906
Common Stock issuable upon the
conversion of Preferred Stock 174,292 222,843 163,569 586,158
----------- ----------- ----------- -----------
Weighted average Common Stock
outstanding as adjusted 54,593,205 53,630,705 55,648,081 51,710,586
=========== =========== =========== ===========
PRIMARY:
- --------------------------------------------
Income before extraordinary item per share $ 0.07 $ 0.07 $ 0.13 $ 0.14
Gain from extraordinary item per share 0.01 -- 0.01 --
----------- ----------- ----------- -----------
Net income per share $ 0.08 $ 0.07 $ 0.14 $ 0.14
=========== =========== =========== ===========
FULLY DILUTED:
- --------------------------------------------
Income before extraordinary item per share $ 0.07 $ 0.07 $ 0.13 $ 0.14
Gain from extraordinary item per share 0.01 -- 0.01 --
----------- ----------- ----------- -----------
Net income per share $ 0.08 $ 0.07 $ 0.14 $ 0.14
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,004,414
<SECURITIES> 0
<RECEIVABLES> 33,060,424
<ALLOWANCES> 3,387,000
<INVENTORY> 7,767,753
<CURRENT-ASSETS> 51,156,983
<PP&E> 35,294,669
<DEPRECIATION> 27,894,780
<TOTAL-ASSETS> 141,633,556
<CURRENT-LIABILITIES> 33,170,740
<BONDS> 13,306,096
0
10
<COMMON> 537,612
<OTHER-SE> 105,014,664
<TOTAL-LIABILITY-AND-EQUITY> 141,633,556
<SALES> 49,902,242
<TOTAL-REVENUES> 49,902,242
<CGS> 20,004,783
<TOTAL-COSTS> 20,004,783
<OTHER-EXPENSES> 19,253,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 546,621
<INCOME-PRETAX> 10,320,611
<INCOME-TAX> 2,167,120
<INCOME-CONTINUING> 8,153,491
<DISCONTINUED> 0
<EXTRAORDINARY> 353,439
<CHANGES> 0
<NET-INCOME> 7,544,354
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
