<PAGE>
UNITED STATES
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 QUARTERLY PERIOD ENDED AUGUST 31, 1998
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 0-19393
MANAGED CARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3338328
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
7600 NORTH 16TH STREET
SUITE 150
PHOENIX, ARIZONA 85020
(Address of principal executive offices)
(Zip Code)
602-331-5100
(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 _______
There were 4,705,237 shares of common stock outstanding as of September 25,
1998.
<PAGE>
TABLE OF CONTENTS
PAGE
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets.......................................3
Consolidated Statements of Income.................................4
Consolidated Statements of Cash Flows.............................5
Notes to Unaudited Consolidated Financial Statements..............6
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.................................11
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
AUGUST 31, MAY 31,
1998 1998
-------------- -------------
<S> <C> <C>
(UNAUDITED)
ASSETS
- ------
Current Assets:
Cash and cash equivalents, including restricted cash of
$9,971,000 and $9,007,000 $ 12,130,000 $ 12,764,000
Short-term investments 1,507,000 1,510,000
Accounts and notes receivable and unbilled services, net 4,623,000 3,169,000
Prepaid expenses and other current assets 538,000 483,000
Deferred income taxes, net 1,087,000 1,066,000
------------- -------------
Total current assets 19,885,000 18,992,000
Related party notes receivable 563,000 694,000
Property and equipment, net 4,383,000 4,609,000
Performance bonds 3,894,000 3,794,000
Goodwill, net 2,735,000 2,826,000
Other assets 942,000 808,000
------------- -------------
$ 32,402,000 $ 31,723,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 117,000 $ 447,000
Accrued medical claims 8,624,000 7,799,000
Risk pool payable 1,519,000 1,540,000
Related party risk pool payable 146,000 152,000
Accrued compensation 1,648,000 1,862,000
Other accrued expenses 2,139,000 2,153,000
Current portion of long-term debt 17,000 67,000
------------- -------------
Total current liabilities 14,210,000 14,020,000
Related party long-term debt 3,895,000 3,961,000
Deferred income taxes, net 261,000 239,000
------------- -------------
Total liabilities 18,366,000 18,220,000
------------- -------------
Commitments - -
Stockholders' Equity:
Common stock, $0.01 par value
Authorized - 10,000,000 shares
Issued and outstanding - 4,705,000 and 4,671,000 shares 47,000 47,000
Capital in excess of par value 15,813,000 15,702,000
Accumulated deficit (1,824,000) (2,246,000)
------------- -------------
Total stockholders' equity 14,036,000 13,503,000
------------- -------------
$ 32,402,000 $ 31,723,000
============= =============
3
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
<S> <C> <C>
Revenues $ 19,244,000 $ 14,742,000
------------- -------------
Direct cost of operations 14,300,000 11,780,000
Marketing, sales and administrative 4,387,000 2,757,000
------------- -------------
Total costs and expenses 18,687,000 14,537,000
------------- -------------
Operating income 557,000 205,000
------------- -------------
Interest income 253,000 191,000
Interest expense (90,000) (91,000)
------------- -------------
Net interest income 163,000 100,000
------------- -------------
Income before income taxes 720,000 305,000
Provision for income taxes 298,000 117,000
------------- -------------
Net income $ 422,000 $ 188,000
============= =============
Net income per share - basic $ 0.09 $ 0.04
============= =============
Weighted average common shares outstanding 4,694,000 4,394,000
============= =============
Net income per share - assuming dilution $ 0.08 $ 0.04
============= =============
Weighted average common and common
equivalent shares outstanding 6,044,000 4,506,000
============= =============
</TABLE>
4
The accompanying notes are an integral part of these statements.
<PAGE>
MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
AUGUST 31, AUGUST 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 422,000 $ 188,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 560,000 422,000
Loss on sale of property and equipment - 4,000
Deferred income taxes 1,000 38,000
Interest on long-term debt 41,000 69,000
Changes in assets and liabilities:
Accounts receivable and unbilled services (1,454,000) (775,000)
Prepaid expenses and other current assets (55,000) 247,000
Other assets (134,000) 47,000
Accounts payable (330,000) 93,000
Accrued medical claims 825,000 (458,000)
Risk pool payable (21,000) 218,000
Related party risk pool payable (6,000) (10,000)
Accrued compensation (214,000) 468,000
Accrued expenses (14,000) (52,000)
------------ -----------
Net cash provided by (used in) operating activities (379,000) 499,000
------------ -----------
Cash flows from investing activities:
Purchase of property and equipment (265,000) (680,000)
Proceeds from sale of property and equipment 32,000 1,000
Proceeds from maturity/sale of short-term investments 3,000 1,000
Net payments on notes receivable 131,000 300,000
Increases in assets securing performance bond (100,000) (1,000)
------------ -----------
Net cash used in investing activities (199,000) (379,000)
------------ -----------
Cash flows from financing activities:
Net decrease in long-term debt (167,000) (39,000)
Proceeds from common stock issuance 111,000 -
------------ -----------
Net cash used in financing activities (56,000) (39,000)
------------ -----------
Net increase (decrease) in cash and cash equivalents (634,000) 81,000
Cash and cash equivalents, beginning of period 12,764,000 7,212,000
------------ -----------
Cash and cash equivalents, end of period $ 12,130,000 $ 7,293,000
============ ===========
</TABLE>
5
The accompanying notes are an integral part of these statements.
<PAGE>
MANAGED CARE SOLUTIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
In management's opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) considered necessary for a fair statement of the results for the
interim periods presented. The results of operations for the period ended
August 31, 1998 are not necessarily indicative of the results to be expected
for the full fiscal year. The interim consolidated financial statements should
be read in conjunction with Managed Care Solutions, Inc. ("MCS" or "Company")
consolidated financial statements and notes thereto included in the Company's
Form 10-K for the fiscal year ended May 31, 1998.
NOTE 2 - NET INCOME PER SHARE
Basic net income per share is computed by dividing net income by the weighted
average number of common shares outstanding during each period. Net income per
share assuming dilution is computed by dividing net income by the weighted
average number of common shares outstanding during the period after giving
effect to dilutive stock options and warrants and adjusted for dilutive common
shares assumed to be issued on conversion of the Company's convertible loans.
The following is the computation of the reconciliation of the numerators and
denominators of net income per common share - basic and net income per common
share - assuming dilution in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share".
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
AUGUST 31, 1998 AUGUST 31, 1997
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income per share -- basic:
Income available to common
stockholders $ 422,000 4,694,000 $ 0.09 $ 188,000 4,394,000 $ 0.04
Effect of dilutive securities:
Stock options and warrants - 494,000 - 112,000
Convertible notes 40,000 856,000 - -
----------- --------- ----------- ---------
Net income per share --
assuming dilution:
Income available to common
stockholders and assumed
conversions $ 462,000 6,044,000 $ 0.08 $ 188,000 4,506,000 $ 0.04
=========== ========= ====== =========== ========= ======
</TABLE>
At August 31, 1998, no shares of common stock had been issued upon conversion of
the two convertible notes issued in October 1996. These notes are convertible
into an aggregate of 857,000 shares of common stock.
6
<PAGE>
NOTE 3 - RESTRICTIONS ON FUND TRANSFERS
Certain of the Company's operating subsidiaries are subject to state
regulations, which require compliance with certain net worth, reserve and
deposit requirements. To the extent the operating subsidiaries must comply with
these regulations, they may not have the financial flexibility to transfer funds
to the parent organization, MCS. Net assets of subsidiaries (after inter-company
eliminations) which, at August 31, 1998, may not be transferred to MCS by
subsidiaries in the form of loans, advances or cash dividends without the
consent of a third party are referred to as "Restricted Net Assets". Total
Restricted Net Assets of these operating subsidiaries were $9,638,000 at
August 31, 1998, with deposit and reserve requirements (performance bonds)
representing $3,894,000 of the Restricted Net Assets and net worth requirements,
in excess of deposit and reserve requirements, representing the remaining
$5,744,000.
NOTE 4 - BUSINESS SEGMENTS
The Company's business segments consist of management services, long-term care
health services and acute care health services. The management services segment
is engaged in the business of administering risk-based managed care plans and
programs in seven states. Long-term care health services is comprised of Ventana
Health Systems, Inc. ("Ventana"), which is a long-term care Medicaid health plan
operating in seven counties in Arizona and Community Health USA, Inc. ("CHUSA"),
which provides in-home personal, respite, companionship and homemaking services
to recipients in Arizona. Acute care health services consists of Arizona Health
Concepts, Inc. ("AHC"), an acute care Medicaid health plan currently operating
in two counties in Arizona.
Information concerning operations by business segment follows:
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 1998
------------------------------------------------------------
Management Long-Term Care Acute Care
Services Health Services Health Services Totals
-------- --------------- --------------- ------
<S> <C> <C> <C> <C>
Total revenues from reportable segments $ 9,855,000 $ 6,880,000 $ 3,931,000 $20,666,000
Intersegment revenues (1,152,000) (270,000) - (1,422,000)
----------- ----------- ----------- -----------
Total consolidated revenues 8,703,000 6,610,000 3,931,000 19,244,000
=========== =========== =========== ===========
Interest income 49,000 121,000 93,000 263,000
Intersegment interest income - (10,000) - (10,000)
Interest expense (100,000) - - (100,000)
Intersegment interest expense 10,000 - - 10,000
----------- ----------- ----------- -----------
Net interest income (expense) (41,000) 111,000 93,000 163,000
=========== =========== =========== ===========
Depreciation and amortization 560,000 - - 560,000
Segment income (loss) before taxes 99,000 552,000 69,000 720,000
Income tax expense (57,000) (214,000) (27,000) (298,000)
----------- ----------- ----------- -----------
Net income (loss) 42,000 338,000 42,000 422,000
=========== =========== =========== ===========
Expenditures for capital assets 265,000 - - 265,000
Segment total assets 21,953,000 11,008,000 7,947,000 40,908,000
Intersegment assets (7,901,000) (572,000) (33,000) (8,506,000)
----------- ----------- ----------- -----------
Total assets $14,052,000 $10,436,000 $ 7,914,000 $32,402,000
=========== =========== =========== ===========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 1997
------------------------------------------------------------
Management Long-Term Care Acute Care
Services Health Services Health Services Totals
-------- --------------- --------------- ------
<S> <C> <C> <C> <C>
Total revenues from reportable segments $ 6,493,000 $ 6,179,000 $ 3,363,000 $16,035,000
Intersegment revenues (1,058,000) (235,000) - (1,293,000)
----------- ----------- ----------- -----------
Total consolidated revenues 5,435,000 5,944,000 3,363,000 14,742,000
=========== =========== =========== ===========
Interest income 35,000 108,000 64,000 207,000
Intersegment interest income - (16,000) - (16,000)
Interest expense (107,000) - - (107,000)
Intersegment interest expense 16,000 - - 16,000
----------- ----------- ----------- -----------
Net interest income (expense) (56,000) 92,000 64,000 100,000
=========== =========== =========== ===========
Depreciation and amortization 422,000 - - 422,000
Segment income (loss) before taxes (217,000) 356,000 166,000 305,000
Income tax (expense) benefit 96,000 (148,000) (65,000) (117,000)
----------- ----------- ----------- -----------
Net income (loss) (121,000) 208,000 101,000 188,000
=========== =========== =========== ===========
Expenditures for capital assets 680,000 - - 680,000
Segment total assets 19,424,000 8,709,000 6,909,000 35,042,000
Intersegment assets (5,847,000) (816,000) 115,000 (6,548,000)
----------- ----------- ----------- -----------
Total assets $13,577,000 $ 7,893,000 $ 7,024,000 $28,494,000
=========== =========== =========== ===========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
MCS is involved in a variety of health care programs, many of which serve
indigent and Medicaid populations. The Company's operations include a long-term
care Arizona based health plan, Ventana; an Arizona based primary and acute care
health plan, AHC; management contracts pursuant to which the Company administers
privately owned health plans located in Hawaii, Michigan, New Mexico, and Texas;
the management of healthcare services for an indigent population for the County
of San Diego; a contractual arrangement with the State of Indiana Medicaid
Agency; and a subsidiary providing home healthcare and community worker
services; CHUSA.
RESULTS OF OPERATIONS
Revenues for the three-month period ended August 31, 1998 increased $4,502,000
to $19,244,000 as compared to the same period of the prior fiscal year. For the
three-month period ended August 31, 1998, revenues generated from fees for
management of health plans not owned by the Company increased 60% to $8,702,000
from $5,435,000 for the same period of the previous fiscal year. The increase is
primarily due to the addition of two new plans, Rio Grande HMO and Lovelace
Community Health Plan, during fiscal year 1998. Capitation revenue for Ventana
and AHC for the three-month period ending August 31, 1998 increased 13% to
$10,542,000 versus $9,307,000 for the comparable period in the prior fiscal year
due to growth in membership and an increase in capitation rates.
8
<PAGE>
Direct costs of operations increased to $14,300,000 for the three-month period
ended August 31, 1998 from $11,780,000 for the corresponding period of the prior
fiscal year. Direct costs of operations for the periods August 31, 1998 and 1997
consisted of $5,345,000 and $3,937,000, respectively, related to fees generated
from management of health plans not owned by the Company and $8,955,000 and
$7,843,000, respectively, from operating expenses of Ventana and AHC. The direct
costs of operations to manage plans as a percentage of related revenue decreased
from 72% to 61% for the period ended August 31, 1998 versus the same period of
the prior fiscal year. The decrease is primarily due to additional costs
incurred during the period ended August 31, 1997 related to start up of an
additional plan in New Mexico which became operational in October 1997. Direct
costs as a percentage of related revenue for the three-month period ended
August 31, 1998 and 1997 were 82% and 84%, respectively, for Ventana and 91% and
85%, respectively, for AHC. The increase is due to AHC experiencing higher
utilization in the new counties it services as a result of a new contract
effective October 1, 1997.
Marketing, sales and administrative expenses as a percent of revenues increased
from 19% to 23% for the three-month periods ended August 31, 1997 and 1998,
respectively. The increase is primarily due to separation agreement accruals
related to the resignation of James Burns, the Company's former President, the
addition of a new Chief Executive Officer and expenses related to a management
contract.
Net interest income for the three-month period ended August 31, 1998 was
$163,000 versus $100,000 for the same period of the prior fiscal year. Interest
income is primarily related to investments held by Ventana and AHC, which is
partially offset by interest expense on the Company's outstanding convertible
debt. The increase is due to growth in cash and cash equivalents.
Net income was $422,000 and $188,000 for the three-month periods ended
August 31, 1998 and 1997, respectively. The primary reason for the change was
the addition of two management contracts in Texas and New Mexico, as well as
growth in membership in plans managed by the Company.
LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended August 31, 1998, the Company's cash and cash
equivalents decreased $634,000 to $12,130,000. Operating activities used
$379,000 for the three-month period ended August 31, 1998, versus providing
$499,000 during the three-month period ended August 31, 1997. The primary use of
cash during the three-month period ended August 31, 1998 was an increase in
accounts receivable primarily as a result of the delay in receipt of June, July
and August management fees from the State of Indiana. Additional uses include a
decrease in accounts payable and other accrued liabilities principally due to
the payment of fiscal year 1998 bonuses, partially offset by an increase in
accrued medical claims. During the comparable period of the prior fiscal year,
cash was provided from income from operations and growth in risk pool payables
partially offset by an increase in accounts receivable.
Investing activities used $199,000 for the three-month period ended
August 31, 1998 as compared to $379,000 for the same period of the prior
fiscal year. During the three-month period ended August 31, 1998, cash was
used to purchase $265,000 of fixed assets and $100,000 was used to increase
performance bonds, partially offset by payments received on notes receivable of
$131,000.
Financing activities used $56,000 for the three-month period ended
August 31, 1998 versus $39,000 in the same period of the prior fiscal year.
Principal payments on long-term debt were the primary uses of funds.
During the three-month period ended August 31, 1998, the payments on long-term
debt of $167,000 were partially offset by $111,000 of proceeds received from
common stock issuance related to stock option exercises.
9
<PAGE>
Certain of the Company's operating subsidiaries are subject to state
regulations, which require compliance with net worth, reserve and deposit
requirements. To the extent the operating subsidiaries must comply with these
regulations, they may not have the financial flexibility to transfer funds to
MCS. Net assets of subsidiaries (after inter-company eliminations) which, at
August 31, 1998, may not be transferred to MCS by subsidiaries in the form of
loans, advances or cash dividends without the consent of a third party are
referred to as "Restricted Net Assets". Total Restricted Net Assets of these
operating subsidiaries was $9,638,000 at August 31, 1998, with deposit and
reserve requirements (performance bonds) representing $3,894,000 of the
Restricted Net Assets and net worth requirements, in excess of deposit and
reserve requirements, representing the remaining $5,744,000. Funds provided by
Ventana to MCS under loan agreements totaled $423,000 at August 31, 1998. VHS
provided these loans in the normal course of operations. All such agreements
were pre-approved as required by the Arizona Health Care Cost Containment System
Administration.
The Company believes that its existing capital resources and cash flow generated
from future operations will enable it to maintain its current level of
operations and its planned operations, including capital expenditures, in fiscal
year 1999.
YEAR 2000 ISSUES
Many existing computer systems do not properly recognize and process dates after
December 31, 1999. Therefore, certain hardware and software, including that
utilized by the Company, may have to be modified and/or reprogrammed to properly
function in year 2000 and beyond. The Company has created an internal year 2000
committee to manage the project of addressing year 2000 related issues. In
May 1998, the Committee began to assess its internal-use hardware,
software, non-information systems equipment, procedures and business processes.
The Company also began communicating with State agencies, clients and vendors
about year 2000 issues. The phases of the year 2000 project consist of
awareness, inventory analysis, assessment, project management, conversion and
testing. Different aspects of the Company operations are in various stages of
the project and overall completion date is targeted for August 1999.
The Company's operations are highly dependent on automated systems and systems
applications. Currently, the Company utilizes an internally developed software
("MC1") to process claims and pay providers, and considers the software critical
to its operations. The current version of the MC1 software is based on
Oracle v. 7.3.3.0.0 which was announced by Oracle Corporation to be year 2000
compliant. The Company is also in the process of deciding whether to enhance or
replace MC1 with other software. The vendors currently being reviewed all have
represented that their software is year 2000 compliant. The Company plans to
further test hardware and software to assess these representations of Oracle
Corporation and other vendors.
The Company also realizes that there are outside influences relative to its year
2000 efforts, over which it has little or no control. The year 2000 committee
has begun to communicate with State agencies to assess their year 2000
readiness. The Company has been notified by the State of Hawaii that the State
may not address all of its year 2000 problems prior to December 31, 1999.
However, the Company will attempt to reduce the impact of other parties' failure
to resolve year 2000 problems.
Based on the Company's analysis to date, year 2000 problems and costs are not
expected to have a materially adverse effect on the Company's business, results
of operations or financial condition. The Company has spent approximately
$23,000 to date preparing and analyzing year 2000 issues. There can be no
assurances that the Company's current systems or those acquired in the future do
not or will not contain undetected defects associated with year 2000 issues that
may result in material costs to the Company. The Company is currently developing
contingency plans to recover from any undetected defects and expects to have a
plan in place by the end of January 1999.
10
<PAGE>
FORWARD LOOKING INFORMATION
This report contains statements that may be considered forward-looking, such as
the discussion of the Company's strategic goals, new contracts and cash flow.
These statements speak of the Company's plans, goals or expectations, refer to
estimates, or use similar terms. Actual results could differ materially from the
results indicated by these statements because the realization of those results
is subject to many uncertainties.
Some of these uncertainties that may affect future results are discussed in more
detail above. All forward-looking statements included in this document are based
upon information presently available, and the Company assumes no obligation to
update any forward-looking statement.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial data schedule.
(b) Reports on Form 8-K
None
11
<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.
MANAGED CARE SOLUTIONS, INC.
By: /s/ Michael D. Hernandez
-------------------------------------------
Michael D. Hernandez, Chairman and Chief
Executive Officer
By: /s/ Micheal J. Kennedy
-------------------------------------------
Michael J. Kennedy, Chief Financial Officer
Dated: October 14, 1998
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1998
<EXCHANGE-RATE> 1
<CASH> 12,130,000
<SECURITIES> 1,507,000
<RECEIVABLES> 5,158,000
<ALLOWANCES> 535,000
<INVENTORY> 0
<CURRENT-ASSETS> 19,885,000
<PP&E> 8,032,000
<DEPRECIATION> 3,649,000
<TOTAL-ASSETS> 32,402,000
<CURRENT-LIABILITIES> 14,210,000
<BONDS> 0
0
0
<COMMON> 47,000
<OTHER-SE> 13,989,000
<TOTAL-LIABILITY-AND-EQUITY> 32,402,000
<SALES> 19,244,000
<TOTAL-REVENUES> 19,244,000
<CGS> 0
<TOTAL-COSTS> 18,687,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,000
<INCOME-PRETAX> 720,000
<INCOME-TAX> 298,000
<INCOME-CONTINUING> 422,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 422,000
<EPS-PRIMARY> 0.09 <F1>
<EPS-DILUTED> 0.08
<FN>
<F1>Item consists of basic earnings per share
</FN>
</TABLE>
