FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 0-18902
Health Risk Management, Inc.
(Exact name of registrant as specified in its charter)
Minnesota 41-1407404
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
8000 West 78th Street, Minneapolis, Minnesota 55439
(Address of principal executive offices, Zip Code)
(612) 829-3500
(Registrant's telephone number, including area code)
--------
(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 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, par value $.01 per share,
outstanding on February 10, 1997 was 4,260,226.
<PAGE>
HEALTH RISK MANAGEMENT, INC.
INDEX
Part I. Financial Information Page Number
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- at December 31, 1996 and
June 30, 1996.................................................... 3
Consolidated Statements of Net Income for the three months
ended December 31, 1996 and 1995 and the six months
ended December 31, 1996 and 1995................................. 4
Consolidated Statements of Cash Flows for the six months
ended December 31, 1996 and 1995................................. 5
Notes to Consolidated Financial Statements........................ 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 8-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K......................... 12
Signatures........................................................... 13
Exhibit Index........................................................ 14
Exhibit 11........................................................... 15
<PAGE>
PART I. FINANCIAL INFORMATION
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
December 31,
1996 June 30,
(Unaudited) 1996
--------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,991 $ 3,347
Accounts receivable-net of allowance for doubtful accounts of $210
and $200 at December 31, 1996 and June 30, 1996, respectively 3,882 5,134
Unbilled receivables 7,346 4,642
Deferred income taxes 290 235
Other 1,758 1,394
--------------- --------------
Total current assets 16,267 14,752
Computer software and database development costs, net of
amortization of $11,738 and $9,816 at December 31, 1996,
and June 30, 1996, respectively 18,398 17,132
Property and equipment less accumulated depreciation of $9,813
and $9,272 at December 31, 1996, and June 30, 1996, respectively 8,915 9,788
Contract rights, net of amortization of $829 and $748 at
December 31, 1996 and June 30, 1996, respectively 973 1,030
Other assets 2,218 2,120
--------------- --------------
$ 46,771 $ 44,822
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,609 $ 1,863
Accrued expenses 2,889 2,638
Unearned revenues 3,133 2,578
Current maturities of notes payable 1,262 1,076
Current portion of capitalized equipment leases 961 1,351
--------------- --------------
Total current liabilities 9,854 9,506
Deferred income taxes 3,054 2,292
Long-term portion of notes payable 2,706 2,152
Long-term portion of capitalized equipment leases 1,237 2,398
Commitments
Shareholders' equity:
Undesignated shares, $.01 par value, 9,750,000 authorized, none issued
Common shares, $.01 par value, 20,000,000 shares authorized,
4,222,226 and 4,180,476 shares issued and outstanding at
December 31, 1996 and June 30, 1996, respectively 42 42
Additional paid-in capital 27,930 27,619
Retained earnings 1,948 813
--------------- --------------
Total shareholders' equity 29,920 28,474
--------------- --------------
$ 46,771 $ 44,822
=============== ==============
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 15,597 $ 13,689 $ 29,992 $ 27,060
------------- ------------- ------------- -------------
Operating expenses:
Cost of services 9,159 7,851 17,807 15,731
Depreciation and amortization,
principally cost of services 1,851 1,685 3,577 3,264
Selling and marketing 1,948 1,576 3,856 3,134
Administration 1,422 1,437 2,713 2,795
Total operating expenses 14,380 12,549 27,953 24,924
------------- ------------- ------------- -------------
Operating income 1,217 1,140 2,039 2,136
Other income (expense):
Interest income 31 20 75 64
Interest expense (116) (163) (262) (349)
------------- ------------- ------------- -------------
Total other income (expense) (85) (143) (187) (285)
Income before income taxes 1,132 997 1,852 1,851
Provision for income taxes:
Current 6 10 10 13
Deferred 429 375 707 697
------------- ------------- ------------- -------------
Total income taxes 435 385 717 710
------------- ------------- ------------- -------------
Net income $ 697 $ 612 $ 1,135 $ 1,141
============= ============= ============= =============
Net income per common
and common equivalent share $ 0.16 $ 0.15 $ 0.26 $ 0.28
============= ============= ============= =============
Weighted average common and 4,431,000 4,107,000 4,393,000 4,123,000
common equivalent shares
============= ============= ============= =============
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six months Ended
December 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,135 $ 1,141
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,323 1,329
Amortization 2,254 1,935
Provision for deferred income tax 707 697
Changes in operating assets and liabilities:
Accounts receivable 1,286 (1,074)
Unbilled receivables (2,704) (296)
Other assets (530) (648)
Accounts payable (474) (233)
Accrued expenses 253 (53)
Unearned revenues 555 211
-------------- ---------------
Net cash provided by operating activities 3,805 3,009
Cash flows from investing activities:
Acquisitions of assets, net of cash acquired (139) --
Property and equipment (1,294) (1,249)
Capitalized software and database development costs (3,188) (2,528)
-------------- ---------------
Net cash used in investing activities (4,621) (3,777)
Cash flows from financing activities:
Proceeds from notes payable 1,275 1,500
Principal payments on notes payable (610) (374)
Principal payments on capital leases (516) (563)
Issuance of common shares 311 9
-------------- ---------------
Net cash provided by financing activities 460 572
-------------- ---------------
Decrease in cash (356) (196)
Cash and cash equivalents at beginning of period 3,347 3,348
-------------- ---------------
Cash and cash equivalents at end of period $ 2,991 $ 3,152
============== ===============
Supplemental disclosures:
Interest paid $ 262 $ 349
Income taxes paid 11 21
Equipment acquired under capital lease 0 230
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited interim consolidated financial statements herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. The accompanying interim financial
statements have been prepared under the presumption that users of the
interim financial information have either read or have access to the
audited financial statements for the latest fiscal year ended June 30,
1996. Accordingly, footnote disclosures which would substantially duplicate
the disclosures contained in the June 30, 1996 audited financial statements
have been omitted from these interim financial statements. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These interim financial statements should be read in
conjunction with the annual financial statements and the notes thereto.
Certain items in the December 31, 1995 financial statements have been
reclassified to conform to the December 31, 1996 presentation.
2. Computer software and database development costs
<TABLE>
<CAPTION>
December 31,
1996 June 30,
(Unaudited) 1996
--------------- -----------------
(in thousands)
<S> <C> <C>
Computer software and database development costs consist of the following:
Computer Software (AutoPILOT)
Cost $ 11,720 $ 10,347
Less accumulated amortization 5,118 4,307
--------------- ----------------
Net book value 6,602 6,040
Claim Administration Software
Cost 7,146 6,705
Less accumulated amortization 2,534 2,178
--------------- ----------------
Net book value 4,612 4,527
Guidelines, Protocols and Medical Analysis Software
Cost 11,270 9,896
Less accumulated amortization 4,086 3,331
--------------- ----------------
Net book value 7,184 6,565
--------------- ----------------
Computer Software and Database Development Costs $ 18,398 $ 17,132
=============== =================
</TABLE>
Amortization of these costs was as follows for the six month period
ended December 31, 1996 and the year ended June 30, 1996:
<TABLE>
<CAPTION>
Six months Ended
December 31, 1996 Year Ended
(Unaudited) June 30, 1996
--------------------- ----------------
(in thousands)
<S> <C> <C>
Computer Software (AutoPILOT) $ 811 $ 1,485
Claim Administration Software 356 645
Guidelines, Protocols and Medical Analysis Software 755 1,279
-------------------- ---------------
Amortization Expense $ 1,922 $ 3,409
==================== ===============
</TABLE>
<PAGE>
3. Merger Update
On September 12, 1996, HRM signed a merger agreement with HealthPlan
Services Corporation (HPS) whereby HPS would acquire HRM for consideration
consisting of cash and shares of HPS stock. Under terms of the merger
agreement, each share of HRM stock will be exchanged for $9.68603 in cash
plus 0.360208 of a share of HPS stock. The 0.360208 share exchange ratio is
subject to possible increase or decrease, depending on the market price of
HPS stock during the five trading days preceding consummation of the
merger. The merger is subject to regulatory approval, as well as HRM
shareholder approval. HPS is continuing to work with the SEC to clear
comments relating to its filings and no HRM shareholders meeting date will
be set until such filings are cleared. Pursuant to the terms of the
existing merger agreement, either party may terminate the agreement if the
transaction contemplated thereby are not consummated by February 28, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
A majority of the Company's revenues consist of fees for services provided under
contracts obligating clients to pay a fixed monthly charge for each covered
employee or member based on anticipated case volume experience, a percentage of
savings, a transaction or case fee, or on an hourly basis. In addition, each new
client is typically charged a one-time set-up fee to cover the related set-up
costs incurred by the Company. Such revenue is recognized as services are
rendered under each contract.
The Company's expenses are comprised of its cost of services (consisting
primarily of compensation of personnel, including nurses and physicians,
telephone expenses, rent, costs related to the Company's computer operations,
costs related to customer service, and costs related to development of new
services), selling and marketing expenses (including sales commissions,
advertising, and account management personnel), general and administration
expenses (including bad debts and compensation of personnel in the corporate,
finance, human resources, and general administration departments) and
depreciation and amortization (primarily capitalized leased equipment and
software costs).
Certain items in the financial statements ending December 31, 1995 have been
reclassified to conform to the presentation for December 31, 1996 financials.
Results of Operations
The following table sets forth certain consolidated financial data as a
percentage of total revenue for the three months and the six months ended
December 31, 1996 and 1995 and the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
--------------------- ---------------------
1996 1995 1996 1995 1996
-------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
======== ========= ========= ========= ===========
Operating expenses:
Cost of services 58.7% 57.4% 59.4% 58.1% 58.3%
Depreciation and amortization, principally
cost of services 11.9% 12.3% 11.9% 12.1% 12.7%
Selling and marketing 12.5% 11.5% 12.9% 11.6% 12.4%
Administration 9.1% 10.5% 9.0% 10.3% 9.6%
-------- --------- --------- --------- -----------
Total operating expenses: 92.2% 91.7% 93.2% 92.1% 93.0%
-------- --------- --------- --------- -----------
Operating income 7.8% 8.3% 6.8% 7.9% 7.0%
Other income (expense):
Interest income 0.2% 0.2% 0.3% 0.2% 0.3%
Interest expense (0.7)% (1.2)% (0.9)% (1.3)% (1.3)%
-------- --------- --------- --------- -----------
Total other income (expense) (0.5)% (1.0)% (0.6)% (1.1)% (1.0)%
Income before taxes 7.3% 7.3% 6.2% 6.8% 6.0%
Income taxes 2.8% 2.8% 2.4% 2.6% 2.3%
-------- --------- --------- --------- -----------
Net income 4.5% 4.5% 3.8% 4.2% 3.7%
======== ========= ========= ========= ===========
</TABLE>
<PAGE>
Revenues: Revenues for the three months and the six months ended December 31,
1996 increased $1,908,000 (14%) and $2,932,000 (11%), respectively, over the
corresponding periods of the prior year. This increase is primarily attributable
to net increases in the number of clients and covered participants enrolled in
the Company's healthcare management services, sales of additional services to
existing clients, and increased sales of the QualityFIRST(R) healthcare practice
guidelines.
Following is the approximate breakout of revenue by class of similar service
categories:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, Change December 31, Change
-------------------- ------------------ --------------------- --------------------
1996 1995 Amt. % 1996 1995 Amt. %
--------- --------- --------- ------ --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Care review and
case management $ 6,130 $ 5,588 $ 542 10% $ 11,891 $ 11,458 $ 433 4%
Price control 1,124 972 152 16% 2,240 1,948 292 15%
Claim administration
services 6,243 5,950 293 5% 11,973 11,461 512 4%
Information
management 2,100 1,179 921 78% 3,888 2,193 1,695 77%
--------- --------- --------- ----- --------- --------- --------- --------
$ 15,597 $ 13,689 $ 1,908 14% $ 29,992 $ 27,060 $ 2,932 11%
========= ========= ========= ====== ========= ========= ========= ========
</TABLE>
There are variations in revenue by class because clients purchasing services may
choose all or a portion of these services, and this varies from client to client
and period to period.
Revenues for care review and case management services increased 10%, or
$542,000, from the second quarter of fiscal 1996 to fiscal 1997 (from $5,588,000
to $6,130,000), and increased 4%, or $433,000, from the first six months of
fiscal 1996 to fiscal 1997 (from $11,458,000 to $11,891,000). The increase in
fiscal 1997 was mainly the result of adding a large customer.
Revenues for price control services increased 16%, or $152,000, from the second
quarter of fiscal 1996 to fiscal 1997 (from $972,000 to $1,124,000), and
increased 15%, or $292,000, from the first six months of fiscal 1996 to fiscal
1997 (from $1,948,000 to $2,240,000). The increase in fiscal 1997 was mainly the
result of an increase in the CarePASS(R) customer base.
Claim administration services revenues increased 5%, or $293,000, from the
second quarter of fiscal 1996 to fiscal 1997 (from $5,950,000 to $6,243,000),
and increased 4%, or $512,000 from the first six months of fiscal 1996 to fiscal
1997 (from $11,461,000 to $11,973,000) because of an increase in the customer
base.
Information management revenues increased 78%, or $921,000, from the second
quarter of fiscal 1996 to fiscal 1997 (from $1,179,000 to $2,100,000), and
increased 77%, or $1,695,000, from the first six months of fiscal 1996 to fiscal
1997 (from $2,193,000 to $3,888,000). In fiscal 1994, fiscal 1995, fiscal 1996
and the first six months of fiscal 1996 and 1997, revenues of $1,363,000,
$2,628,000, $4,910,000, $2,006,000 and $3,623,000, respectively, were related to
QualityFIRST(R) software and system licensing.
Cost of Services: Cost of services increased 17% from the second quarter of
fiscal 1996 to fiscal 1997 (from $7,851,000 to $9,159,000) and increased as a
percentage of revenues from 57% to 59%. Cost of services increased 13% from the
first six months of fiscal 1996 to fiscal 1997 (from $15,731,000 to $17,807,000)
and increased as a percentage of revenues from 58% to 59%. The increases in cost
of services were due to additional costs related to payroll and expenses for
increased business.
Depreciation and Amortization: Depreciation and amortization expenses increased
10% from the second quarter of fiscal 1996 to fiscal 1997 (from $1,685,000 to
$1,851,000), but remained unchanged as a percentage of revenues at 12%.
Depreciation and amortization expenses increased 10% from the first six months
of fiscal 1996 to fiscal 1997 (from $3,264,000 to $3,577,000), but remained
unchanged as a percentage of revenues at 12%. The increase was primarily the
result of depreciation on additional computer, telephone and office equipment,
and amortization of additional software and contract costs. Approximately 92% of
depreciation and amortization expenses are related to cost of services.
<PAGE>
Selling and Marketing: Selling and marketing expenses increased 24% from the
second quarter of fiscal 1996 to fiscal 1997 (from $1,576,000 to $1,948,000) and
increased as a percentage of revenues from 12% to 13%. Selling and marketing
expenses increased 23% from the first six months of fiscal 1996 to fiscal 1997
(from $3,134,000 to $3,856,000) and increased as a percentage of revenues from
12% to 13%. The increase in fiscal 1997 was due primarily to increased
marketing, sales and account management personnel, sales commissions and travel
expenses.
Administration: Administration expenses decreased 1% from the second quarter of
fiscal 1996 to fiscal 1997 (from $1,437,000 to $1,422,000) and decreased as a
percentage of revenues from 10% to 9%. Administration expenses decreased 3% from
the first six months of fiscal 1996 to fiscal 1997 (from $2,795,000 to
$2,713,000) and decreased as a percentage of revenues from 10% to 9%. The
administration expenses in fiscal 1996 and fiscal 1997 are due to the expense of
staff, and other expenses, including salaries, bad debts, training programs and
insurance.
Interest: Interest income was $31,000 and $20,000 for the second quarter of
fiscal 1997 and fiscal 1996, respectively, and remained unchanged as a
percentage of revenues at 0.2%. Interest income was $75,000 and $64,000 for the
first six months of fiscal 1997 and fiscal 1996, respectively, and decreased as
percentage of revenues from 0.3% to 0.2%. Interest income varies with funds
available to be invested in short-term investments.
Interest expense decreased 29% from the second quarter of fiscal 1996 to fiscal
1997 (from $163,000 to $116,000) and decreased as a percentage of revenues from
1.2% to 0.7%. Interest expense decreased 25% from the first six months of fiscal
1996 to fiscal 1997 (from $349,000 to $262,000) and decreased as a percentage of
revenues from 1.3% to 0.9%. Interest expense was impacted in fiscal 1997 by
lower interest rates and lower average principal balances outstanding.
Income Taxes: Income taxes increased in the second quarter of fiscal 1997 from
fiscal 1996 by $50,000, and increased in the first six months of fiscal 1997
from fiscal 1996 by $7,000. The increases are due to higher income before income
taxes. It is expected that the fiscal year 1997 effective tax rate will
approximate the 39% rate of fiscal 1996.
Liquidity and Capital Resources
The Company's cash flow from operations was $3,009,000 and $3,805,000 for the
first six months of fiscal 1996 and 1997, respectively. Cash flow from operating
activities was greater than net income because non-cash charges such as
depreciation, amortization and deferred income taxes exceeded the net changes in
operating assets and liabilities for the first six months of fiscal 1996 and
fiscal 1997. Cash has been used to invest in software and program enhancements
($2,528,000 and $3,188,000 in the first six months of fiscal 1996 and fiscal
1997, respectively). In addition, the Company acquired property and equipment,
including acquired assets, of $1,249,000 and $1,433,000 for the first six months
of fiscal 1996 and 1997, respectively. The Company expects to continue its
expansion and will acquire property and equipment, enhance software and
products, and develop products.
The Company had a net operating loss carryforward for income tax purposes in
excess of $13,000,000 as of June 30, 1996, which can be used to reduce the cash
flow necessary to pay taxes.
The Company's cash position at December 31, 1996 was $2,991,000 as compared to
$3,347,000 at June 30, 1996. The Company also used approximately $937,000 and
$1,126,000 for the first six months of fiscal 1996 and 1997, respectively, to
repay principal on notes payable and capital leases, but borrowed $1,500,000 and
$1,275,000, respectively. The Company received $311,000 during the first six
months of fiscal 1997 from stock option exercises for common stock by current
employees. The Company's current ratio was approximately 1.7 and 1.6 at December
31, 1996 and June 30, 1996, respectively. The Company's working capital was
$6,413,000 and $5,246,000 at December 31, 1996 and June 30, 1996, respectively.
The Company believes that its cash and cash flow from operations, together with
credit facilities which the Company has obtained, will be sufficient to finance
the Company's anticipated, normal expansion in fiscal 1997. The Company has a
term loan (principal balance of $1,310,000 as of December 31, 1996) with its
bank due June 30, 1999 and a revolving credit facility expiring January 31,
1998, under which the Company may borrow up to $3,750,000. The Company has a
principal balance of $2,475,000 as of December 31, 1996 under the revolving
credit facility. The revolving credit and term loan are secured by liens on the
assets of the Company.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 -- Computation of Earnings Per Common Share
Exhibit 27 -- Financial Data Schedule (filed in electronic format only)
(b) During the three months ended December 31, 1996, there was no report
filed on Form 8-K.
<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 by the
undersigned thereunto duly authorized.
Health Risk Management, Inc.
Dated: February 12, 1997 By /s/ Gary McIlroy
Gary T. McIlroy, M.D.
Chief Executive Officer
Dated: February 12, 1997 By /s/ T. P. Clark
Thomas P. Clark
Chief Financial Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBIT INDEX
to
FORM 10-Q
For Quarter Ended December 31, 1996
HEALTH RISK MANAGEMENT, INC.
(SEC File No. 0-18902)
- ---------------------------------------------------------------------------
Exhibit
Number Exhibit Description
11 Computation of Earnings Per Share
27 Financial Data Schedule (filed in electronic format only)
EXHIBIT 11
HEALTH RISK MANAGEMENT, INC.
COMPUTATION OF EARNINGS PER SHARE (EPS)
(Unaudited)
<TABLE>
<CAPTION>
Primary EPS Fully Diluted EPS
----------------------------------------------------- ----------------------------------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
------------------------- ------------------------- ------------------------- -------------------------
1996 1995 1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings
(in thousands)
Earnings for
period indicated $ 697 $ 612 $ 1,135 $ 1,141 $ 697 $ 612 $ 1,135 $ 1,141
=========== =========== =========== =========== =========== =========== ============ ==========
Number of Shares:
Weighted average
number of shares
of common stock
outstanding 4,221,669 4,030,732 4,202,391 4,030,216 4,221,669 4,030,732 4,202,391 4,030,216
Weighted average
number of shares
of common stock
equivalents 208,845 75,804 190,672 93,062 226,301 112,506 227,947 111,609
----------- ---------- ---------- ---------- ---------- ---------- ----------- ---------
Number of shares
included in per
share computation
for the period
indicated 4,430,514 4,106,536 4,393,063 4,123,278 4,447,970 4,143,238 4,430,338 4,141,825
=========== =========== =========== =========== =========== =========== ============ ===========
Net earnings
per share $ 0.16 $ 0.15 $ 0.26 $ .28 $ 0.16 $ 0.15 $ 0.26 $ .28
=========== =========== =========== =========== =========== =========== ============ ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FROM THE REGISTRANTS FORM 10-Q FOR THE QUARTER
ENDED 12-31-96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 2,991
<SECURITIES> 0
<RECEIVABLES> 11,228
<ALLOWANCES> 210
<INVENTORY> 0
<CURRENT-ASSETS> 16,267
<PP&E> 27,313
<DEPRECIATION> 21,551
<TOTAL-ASSETS> 46,771
<CURRENT-LIABILITIES> 9,854
<BONDS> 3,943
0
0
<COMMON> 42
<OTHER-SE> 29,878
<TOTAL-LIABILITY-AND-EQUITY> 46,771
<SALES> 29,992
<TOTAL-REVENUES> 29,992
<CGS> 17,807
<TOTAL-COSTS> 17,807
<OTHER-EXPENSES> 10,146
<LOSS-PROVISION> 72
<INTEREST-EXPENSE> 262
<INCOME-PRETAX> 1,852
<INCOME-TAX> 717
<INCOME-CONTINUING> 1,135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,135
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
