<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 THE QUARTERLY PERIOD
ENDED MARCH 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 No.: 0-25256
ORTHODONTIC CENTERS OF AMERICA, INC.
- - -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 72-1278948
----------------------- ----------------------------------------
(Sate or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
13000 Sawgrass Village, Suite 41
Ponte Vedra Beach, Florida 32082
--------------------------------- ----------------------------------
(Address of principal executive (Zip Code)
offices)
(904) 273-0004
- - --------------------------------------------------------------------------------
(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 ___
----
At May 6, 1996, there were 21,102,198 outstanding shares of the Registrant's
Common Stock, $.01 par value per share.
<PAGE>
ORTHODONTIC CENTERS OF AMERICA, INC.
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995.............. 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1996
and 1995.......................................... 4
Condensed Consolidated Statements of Cash Flow -
Three Months Ended March 31, 1996 and 1995........ 5
Notes to Condensed Consolidated Financial
Statements - March 31, 1996....................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................... 14
2
<PAGE>
Part 1. Financial Information
Item 1. Consolidated Financial Statements
Orthodontic Centers of America, Inc.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31 December 31
1996 1995 (1)
--------- ----------
(Unaudited)
(in thousands)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 13,254 $18,779
Investments 13,458 14,804
Patient receivables, net 4,562 3,860
Unbilled patient receivables, net 13,225 12,265
Amounts receivable from
orthodontic entities 2,021 2,260
Supplies inventory, prepaid expenses
and other assets 3,621 2,476
-------- -------
Total current assets 50,141 54,444
Property, equipment & improvements, net 15,505 14,014
Investments 13,971 13,089
Amounts receivable from orthodontic
entities, less current portion 5,991 4,903
Intangible assets 6,143 5,928
Other assets 351 195
-------- -------
Total assets $ 92,104 $92,573
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other current
liabilities $ 4,506 $ 7,056
Deferred income taxes 2,706 2,468
Current portion of long-term debt 1,132 1,142
-------- -------
Total current liabilities 8,344 10,666
Deferred income taxes 540 1,246
Long-term debt, less current portion 3,002 3,348
Stockholders' Equity:
Preferred stock --- ---
Common stock, $.01 par value per share,
30,000,000 shares authorized, 20,906,764
shares outstanding at March 31, 1996 and
20,889,764 shares outstanding
at December 31, 1995 209 209
Additional paid-in capital 69,523 69,352
Retained earnings 10,486 7,752
-------- -------
Total stockholders' equity 80,218 77,313
-------- -------
Total liabilities and
stockholders' equity $ 92,104 $92,573
======== =======
</TABLE>
(1) The consolidated balance sheet at December 31, 1995 has been derived from
the audited consolidated financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See notes to condensed consolidated financial statements.
3
<PAGE>
Orthodontic Centers of America, Inc.
Condensed Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------
1996 1995
----------------------------------
(in thousands, except
per share data)
<S> <C> <C>
Net revenue $13,719 $8,465
Direct expenses:
Employee costs 3,985 2,341
Orthodontic supplies 1,099 606
Rent 1,191 639
Advertising and marketing 1,302 801
------- ------
7,577 4,387
General and administrative 1,740 1,080
Depreciation and amortization 488 280
------- ------
Operating profit 3,914 2,718
Interest expense (104) (115)
Interest income 672 284
------- ------
Income before income taxes 4,482 2,887
Provision for income taxes 1,748 1,097
-----------------------------
Net income $ 2,734 $ 1,790
=============================
Earnings per common and
common equivalent share $ 0.13 $ 0.11
======= =======
Earnings per common share -
assuming full dilution $ 0.13 $ 0.10
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
Orthodontic Centers of America, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31
-----------------------------
1996 1995
-----------------------------
(in thousands)
Cash used in operations $ (3,609) $ (308)
Investing Activities:
Purchase of property, equipment
and improvements (1,918) (1,989)
Net proceeds from
available-for-sale investments 464 ---
Intangible assets acquired (276) (449)
------------------------------
Cash used in investing activities (1,730) (2,438)
Financing activities:
Issuance of common stock 170 2,755
Repayment of long-term debt (356) (532)
------------------------------
Cash provided by (used in)
financing activities (186) 2,223
------------------------------
Decrease in cash and cash
equivalents (5,523) (523)
Cash & cash equivalents at
beginning of period 18,779 17,108
-------------------------------
Cash & cash equivalents at
end of period $ 13,254 $ 16,585
===============================
Supplemental cash flow information
Interest $ 104 $ 119
===============================
Income taxes $ 4,622 $ 880
===============================
Supplemental disclosures of
non-cash investing and financing
activities:
Long term debt and common stock
issued to acquire intangible and
other assets $ 170 $ 1,882
================================
See notes to condensed consolidated financial statements.
5
<PAGE>
Orthodontic Centers of America, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 1996
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Orthodontic Centers of America, Inc. (the "Company") manages orthodontic
centers on a national basis. The Company managed 153 orthodontic centers
located in 24 states as of March 31, 1996.
The accompanying audited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals and adjustments
necessary to convert the Company's cash basis accounting records to the
accrual basis) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1996
are not necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in
Orthodontic Centers of America, Inc.'s annual report on Form 10-K for the
year ended December 31, 1995.
During the three-month period ended March 31, 1996, the Company adopted FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." The adoption of the Statements had
no effect on the Company's financial statements.
2. REVENUE RECOGNITION
The Company's services are provided under service, management and consulting
agreements with the orthodontic entities ("management agreements"). These
management agreements are for terms of 20 years. The practicing
orthodontists own the orthodontic entity.
Net revenue earned by the Company under the management agreements with
orthodontic entities is equal to approximately 24% of new patient contract
balances in the first month of new contracts plus a portion of existing
contract balances, less amounts retained by the orthodontic entities. The
Company's management fee also includes a $25,000 annual fee paid to the
Company for certain free-standing centers. The orthodontic entities retain
all orthodontic center revenue not paid to the Company as the management
fee. The amounts retained by the orthodontic entities are dependent on their
financial performance, based
6
<PAGE>
Orthodontic Centers of America, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
2. REVENUE RECOGNITION (CONTINUED)
in significant part on the orthodontic entities' cash receipts and
disbursements. Under the terms of the management agreements, the orthodontic
entities assign their receivables (billed and unbilled) to the Company in
payment of their management fees. The Company is responsible for
collections.
3. EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per share are based on the weighted
average number of shares of common stock and common equivalent shares (stock
options) outstanding during the period. All earnings per share numbers
reported have been adjusted for the Company's 2-for-1 stock split, effected
in the form of a 100% stock dividend, effective December, 1995. The weighted
average number of primary and fully diluted shares for the three months ended
March 31, 1996 were 20,900,973 and 21,647,667, respectively. The weighted
average number of primary and fully diluted shares outstanding for the three
months ended March 31, 1995 were 17,050,456 and 17,314,040, respectively.
4. CONTINGENCIES
On March 4 1996, the Company was served with a complaint filed against the
Company, Dr. Lazzara and Mr. Palmisano on February 20, 1996 in the United
States District Court for the Southern District of California. The complaint
alleges that the Company breached the terms of an agreement with the
plaintiff whereby the plaintiff was granted the right to be the exclusive
recruiter of orthodontists to affiliate with the Company in the states of
California, Nevada and Utah. The complaint further alleges that the Company
interfered with the plaintiff's business advantage by entering into direct
negotiations with orthodontists in those states, and that the Company
breached a duty to the plaintiff of good faith and fair dealing. A specific
amount of damages was not indicated in the complaint. Due to the recent
filing of the complaint, the Company, as of March 31, 1996, had not yet filed
an answer in response; however, management believes that the action lacks
merit and that the Company has fully performed its obligations under the
agreement to date, including the payment of all fees required thereunder.
Further, management believes that the Company has meritorious claims that it
may assert against the plaintiff. Management intends to defend the action
vigorously and does not believe that this action will have a material adverse
effect on the Company's results of operations or financial condition.
7
<PAGE>
Orthodontic Centers of America, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
5. SUBSEQUENT EVENTS
On April 3, 1996, the Company issued 195,434 shares of common stock upon the
exercise of stock options. This issuance resulted in net proceeds of
$1,089,000 to the Company.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company's business was established in 1989 by Dr. Gasper Lazzara, Jr.
and Bartholomew F. Palmisano, Sr. The Company managed 157 orthodontic centers
(the "Orthodontic Centers") in 24 states at May 6, 1996.
The following table sets forth certain information relating to the growth
in the number of Orthodontic Centers for the periods shown:
<TABLE>
<CAPTION>
Three
months ended
Year ended December 31, March 31,
1991 1992 1993 1994 1995 1996
----- ----- ----- ---- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Number of centers at
beginning of period 18 31 47 55 75 145
Number of centers
developed during period 9 5 4 22 44 8
Number of centers
acquired during period 5 17 5 1 29 0
Number of centers
consolidated during period (1) (6) (1) (3) (3) 0
---- ---- ---- ---- ---- ----
Number of centers
at end of period 31 47 55 75 145 153
==== ==== ==== ==== ==== ====
</TABLE>
- - ---------------------
* Since March 31, 1996, the Company had developed two additional Orthodontic
Centers and acquired two management agreements for two Orthodontic Centers,
resulting in a total of 157 Orthodontic Centers at May 6, 1996.
At May 6, 1996, 17 Orthodontic Centers, including 15 Orthodontic Centers
added in August 1995 in connection with the affiliation of an existing practice
with the Company, were located in a general dentist's office. The Company
intends to relocate these 17 Orthodontic Centers to free-standing locations as
soon as practicable. In developing additional Orthodontic Centers, the Company
intends to locate the Orthodontic Centers only in free-standing locations. By
locating in free-standing locations, Orthodontic Centers are able to increase
available operating days and thereby enhance their revenue producing capability.
Of the 157 Orthodontic Centers at May 6, 1996, 96 were developed by the
Company and 61 were existing orthodontic practices whose assets were acquired by
the Company. The Company expects that future growth in Orthodontic Centers will
come from both developing Orthodontic Centers with existing and newly recruited
orthodontists affiliated with the Company ("Affiliated Orthodontists") and
acquiring the assets of, and entering into long-term agreements with, existing
practices. The average cost of developing a new Orthodontic Center is
approximately $230,000 including the cost of equipment, leasehold improvements,
working capital and funding of losses associated with the initial operations of
the Orthodontic Center. Of this amount, approximately $45,000 is financed by
the Company to fund the Affiliated Orthodontist's professional entities'
("Affiliated Orthodontic Entities") share of operating losses as an unsecured
advance repayable over a five-year period with interest at 1.5% per annum above
the prime rate. Repayment commences upon the Orthodontic Center realizing
positive cash flow from operations, which generally occurs approximately 12
months after the Orthodontic Center has begun operations. In addition, the
Company makes advances of approximately $20,000 to new Affiliated Orthodontic
Entities during the first year of an Orthodontic Center's operations which bear
no interest and are typically repaid during the second year of the Orthodontic
Center's operations.
9
<PAGE>
Typically, when the Company develops a new Orthodontic Center, all patients
treated at the Orthodontic Center are new patients and, in the first several
months after commencing operations, the Orthodontic Center is open only for a
limited number of days each month as new patients are added. The Orthodontic
Center becomes increasingly more productive and profitable as more new patients
are added and existing patients return for monthly follow-up visits. The
Company's experience has generally been that after 26 months of operations, the
Orthodontic Center's growth in patient base begins to stabilize as patients
complete treatment. An Orthodontic Center can increase the number of patients
treated through improved efficiency of the clinical staff and additional
operating days for the Affiliated Orthodontists. Established practices whose
assets were acquired by the Company have typically increased their revenue by
applying the Company's operating strategies, including increased advertising and
efficient patient scheduling.
The Company earns its revenue from long-term service, management or
consulting agreements entered into with Affiliated Orthodontic Entities.
Pursuant to the service and management agreements, Affiliated Orthodontic
Entities pay a fee to the Company equal to approximately 24% of new patient
contract balances of the Affiliated Orthodontic Entities in the first month of
treatment plus the balance ratably over the remainder of the patient contract,
less amounts retained by the Affiliated Orthodontic Entity. In addition, a
$25,000 annual fee is earned by the Company for 42 free-standing Orthodontic
Centers with respect to which long-term agreements were entered into with the
Company in the Combination Transaction.
The amounts retained by an Affiliated Orthodontic Entity are dependent on
its financial performance, based in significant part on its profitability on a
cash basis, as provided in the service and management agreements. In exchange
for its fee, the Company provides capital for the development and growth of
Orthodontic Centers and manages the business and marketing aspects of
Orthodontic Centers, including implementing advertising and marketing programs,
preparing budgets, purchasing inventory, providing patient scheduling systems,
billing and collecting fees and maintaining records. Operating expenses of the
Orthodontic Centers are expenses of the Company and are recognized as incurred.
The terms of consulting agreements differ significantly from the terms of
service and management agreements and vary depending upon the regulatory
requirements of the particular state in which an Orthodontic Center is located.
Generally, in those states, the Company may only provide consulting services to
the orthodontists and may not manage the orthodontist's practice. The
consulting fee payable to the Company is determined at the time of affiliation,
is limited to the consulting services performed and is based on criteria such as
the number of hours of operations of the applicable Orthodontic Centers.
Employee costs consist of wages, salaries and benefits paid to all
employees of the Company, including orthodontic assistants, business staff and
management personnel. General and administrative expenses consist of provision
for losses of patient contracts and receivables, professional service fees,
maintenance and utility costs, office supply expense, telephone expense, taxes,
license fees, and printing and shipping expense.
Patient contracts are for terms averaging 26 months and are payable in
equal monthly installments throughout the term of treatment, except for the last
month when a final payment is made. During 1996, the Orthodontic Centers are
expected to implement a price increase from $89 per month with a final payment
of $356 to $98 per month with a final payment of $398.
10
<PAGE>
SEASONALITY
An Orthodontic Center experiences its highest volume of new cases in the
summer and certain other periods when schools are not typically in session.
During these periods, children have a greater opportunity to visit an
orthodontist to commence treatment. Consequently, an Orthodontic Center
experiences higher revenue during the first and third quarters of the year as a
result of increased patient starts. During the Thanksgiving and Christmas
seasons, an Orthodontic Center experiences reduced volume and fourth quarter
revenue for an Orthodontic Center is generally lower as compared to other
periods. Seasonality in recent periods has been mitigated by the impact of
additional Orthodontic Centers.
RESULTS OF OPERATIONS
The following table sets forth the percentages of net revenue represented
by certain items in the Company's condensed consolidated statements of income.
Three Months Ended
March 31,
1996 1995
------ ------
Net revenue 100.0% 100.0%
------ -----
Direct expenses
Employee cost 29.0 27.7
Orthodontic supplies 8.0 7.1
Rent 8.7 7.5
Advertising and marketing 9.5 9.5
----- -----
Total direct expenses 55.2 51.8
General and administrative 12.7 12.8
Depreciation and amortization 3.6 3.3
----- -----
Operating profit 28.5 32.1
Interest (income) expense (4.1) (2.0)
----- -----
Income before income taxes 32.6 34.1
Provision for income taxes 12.7 13.0
----- -----
Net income 19.9% 21.1%
===== =====
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
NET REVENUE. Net revenue increased 62.1% from $8.5 million for the three
months ended March 31, 1995 to $13.7 million for the three months ended March
31, 1996. Approximately $3.4 million of this increase was attributable to the
78 (net of consolidations) Orthodontic Centers opened since January 1, 1995,
approximately $1.3 million to the growth in net revenue of the 75 Orthodontic
Centers open throughout both periods, and approximately $500,000 related to the
affiliated Orthodontic Entities' share of the operating losses of newly-
developed Orthodontic Centers, which amounts were advanced by the Company. The
number of patient contracts increased from approximately 35,000 at March 31,
1995 to approximately 57,000 at March 31, 1996.
EMPLOYEE COSTS. Employee costs increased 70.2% from $2.3 million for the
three months ended March 31, 1995 to $4.0 million for the three months ended
March 31, 1996. As a percentage of net revenue, employee costs increased from
27.7% for the three months ended March 31, 1995 to 29.0% for the three months
ended March 31, 1996. This increase was caused primarily by an increased
percentage of new patient treatment days, which require additional staff time
per patient, associated with the opening of additional Orthodontic Centers.
ORTHODONTIC SUPPLIES. Orthodontic supplies expense increased 81.4% from
$610,000 for the three months ended March 31, 1995 to $1.1 million for the three
months ended March 31, 1996. As a percentage of net revenue,
11
<PAGE>
orthodontic supplies increased from 7.1% for the three months ended March 31,
1995 to 8.0% for the three months ended March 31, 1996. Cost improvements
attained through bulk purchasing were offset by increased expense associated
with an increased percentage of new patient treatment days, which require
greater orthodontic supplies per patient, associated with the opening of
additional Orthodontic Centers.
RENT. Rent expense increased 86.3% from $640,000 for the three months
ended March 31, 1995 to $1.2 million for the three months ended March 31, 1996.
As a percentage of net revenue, rent expense increased from 7.5% to 8.7%. The
increase in this expense as a percentage of net revenue was attributable to the
relatively fixed nature of the expense in conjunction with the opening of
additional Orthodontic Centers, which typically generate less net revenue during
their initial operations.
ADVERTISING AND MARKETING. Advertising and marketing expense increased
62.5% from $800,000 for the three months ended March 31, 1995 to $1.3 million
for the three months ended March 31, 1996. Advertising and marketing expense
remained constant as a percentage of net revenue at 9.5%. The increase in this
expense resulted primarily from the addition of Orthodontic Centers after March
31, 1995.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
61.1% from $1.1 million for the three months ended March 31, 1995 to $1.7
million for the three months ended March 31, 1996. As a percentage of net
revenue, however, general and administrative expense decreased from 12.8% to
12.7%. The increase in general and administrative expense resulted primarily
from the addition of Orthodontic Centers after March 31, 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 72.2% from $280,000 for the three months ended March 31, 1995 to
$490,000 for the three months ended March 31, 1996. As a percentage of net
revenue, depreciation and amortization expense increased from 3.3% to 3.6%. The
increase in this expense is a result of the fixed assets acquired for
Orthodontic Centers developed or relocated after March 31, 1995.
OPERATING PROFIT. Operating profit increased 44.0% from $2.7 million for
the three months ended March 31, 1995 to $3.9 million for the three months ended
March 31, 1996. As a percentage of net revenue, however, operating profit
decreased from 32.1% to 28.5% for the same periods, respectively, as a result of
the factors discussed above.
INTEREST. Net interest income increased 236.1% from $170,000 for the three
months ended March 31, 1995 to $570,000 for the three months ended March 31,
1996. The increase in interest income resulted from the investment of the
unexpended proceeds from the Company's public offering after March 31, 1995.
PROVISION FOR INCOME TAXES. Provision for income taxes increased 59.3%
from $1.1 million for the three months ended March 31, 1995 to $1.7 million for
the three months ended March 31, 1996. As a percentage of net revenue, however,
provision for income taxes decreased from 13.0% to 12.7%. in 1996, the Company's
effective income tax rate increased from 38.0% to 39.0% as a result of higher
net income which increased the Company's effective federal income tax rate.
12
<PAGE>
LIQUIDITY AND SOURCES OF CAPITAL. Cash used by operations was $3.4 million
for the three month period ended March 31, 1996 as compared to the cash used by
operations of $310,000 in the comparable period for 1995. Included in net cash
used by operations for the 3 months ended March 31, 1996, were estimated tax
payments of $4.6 million which exceeded the current quarterly tax provision by
$2.9 million. The Company was able to use the cash basis of accounting for
income tax purposes for through its tax year ended September 30, 1995.
Beginning with the tax year ending September 30, 1996, the Company is required
to use the accrual basis of accounting for income tax purposes. All deferred
tax liabilities and assets related to differences between the cash and accrual
basis of accounting which existed on October 1, 1995 will reverse over the two
year period ending September 30, 1997. As a result, the Company estimates that
its cash outlays for income taxes will exceed its provision for income taxes in
1996 and 1997 by approximately $5.0 million. In addition, the $2.7 million in
net income for the period was offset by increases in working capital accounts
required to fund the Company's growth. Net billed and unbilled patient
receivables at March 31, 1996 increased $1.5 million over December 31, 1995
levels as a result of the increase in the number of patients. The Company
expects that available cash and existing short-term lines of credit will be
sufficient to meet its normal operating requirements, including acquisitions of
management and consulting contracts, over the near term.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit number Description
-------------- -----------
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K for the three months ended March
31, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Orthodontic Centers of America, Inc.
------------------------------------
(Registrant)
Date: May 10, 1996 /s/ Bartholomew F. Palmisano, Sr.
---------------------------------
Bartholomew F. Palmisano, Sr.
Chief Financial Officer, Senior Vice President
Treasurer and Secretary
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 13,254
<SECURITIES> 27,429
<RECEIVABLES> 19,739
<ALLOWANCES> 1,952
<INVENTORY> 1,621
<CURRENT-ASSETS> 50,141
<PP&E> 18,222
<DEPRECIATION> 2,716
<TOTAL-ASSETS> 92,104
<CURRENT-LIABILITIES> 8,113
<BONDS> 0
0
0
<COMMON> 209
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 92,104
<SALES> 0
<TOTAL-REVENUES> 13,719
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,805
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (568)
<INCOME-PRETAX> 4,482
<INCOME-TAX> 1,748
<INCOME-CONTINUING> 2,734
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,734
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
