<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the quarterly period ended June 30, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the transition period from ____________ to ____________
Commission file number 0-27444
F.Y.I. INCORPORATED
-------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2560895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3232 McKinney Avenue, Suite 900, Dallas, Texas 75204
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (214) 953-7555
2911 Turtle Creek Boulevard, Suite 300, Dallas Texas 75219
(Former address)
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
------- -------
As of July 31, 1996, 5,523,147 shares of the registrant's Common
Stock, $.01 par value per share, were outstanding.
1
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F.Y.I. INCORPORATED AND SUBSIDIARIES
FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
---------------------
<S> <C> <C>
Item 1 Financial Statements 3
Consolidated Balance Sheets - December 31, 1995 and June 30, 1996 4
(unaudited)
Consolidated Statements of Operations - Three months and six months
ended June 30, 1995 and 1996 (unaudited) 5
Consolidated Statements of Cash Flows - Six months ended June 30,
1995 and 1996 (unaudited) 6
Notes to Consolidated Financial Statements - June 30, 1996 (unaudited) 7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 13
PART II. OTHER INFORMATION
-----------------
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
SIGNATURES 20
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3
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F.Y.I. Incorporated and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 52 $ 2,521
Accounts receivable and notes receivable, less allowance - 12,107
Accounts receivable, officers and employees - 12
Inventory - 536
Prepaid expenses and other current assets 52 678
--------- --------
Total current assets 104 15,854
PROPERTY, PLANT AND EQUIPMENT, net 15 8,995
GOODWILL, DEFERRED OFFERING COSTS AND
OTHER INTANGIBLES 2,190 18,516
ACCOUNTS RECEIVABLE, OFFICER - LONG TERM - 570
OTHER NONCURRENT ASSETS 6 1,760
--------- --------
Total assets $ 2,315 $ 45,695
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,101 $ 10,263
Short-term obligations - 1,049
Current maturities of long-term obligations - 282
--------- -------
Total current liabilities 1,101 11,594
LONG-TERM OBLIGATIONS,
net of current maturities - 11,071
DEFERRED INCOME TAXES,
net of current portion - 114
--------- --------
Total liabilities 1,101 22,779
--------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $.01 par value, 1,000,000 and 0 shares authorized,
9,000 and 0 shares issued and outstanding at December 31, 1995
and June 30, 1996, respectively - -
Preferred stock, $.01 par value, 1,000,000 shares authorized,
0 shares issued and outstanding - -
Common stock, $.01 par value, 26,000,000 shares authorized,
663,125 and 5,522,867 shares issued and outstanding at
December 31, 1995 and June 30, 1996, respectively 7 55
Additional paid-in-capital 1,207 21,488
Retained earnings - 1,373
--------- --------
Total stockholders' equity 1,214 22,916
--------- --------
Total liabilities and stockholders' equity $ 2,315 $ 45,695
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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F.Y.I. Incorporated and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
(see Note 1)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
---------------------------- ---------------------------
1995 1996 1995 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Service revenue $ - $ 14,307 $ - $ 21,714
Product revenue - 1,727 - 2,640
Other revenue - 204 - 297
------------ ----------- ----------- -----------
Total revenue - 16,238 - 24,651
COST OF SERVICES - 8,929 - 13,630
COST OF PRODUCTS SOLD - 1,255 - 1,974
DEPRECIATION - 421 - 633
------------ ----------- ----------- -----------
Gross profit - 5,633 - 8,414
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES - 3,925 - 6,169
AMORTIZATION - 63 - 72
------------ ----------- ----------- -----------
Operating income - 1,645 - 2,173
OTHER (INCOME) EXPENSE:
Interest expense - 104 - 117
Interest income - (74) - (180)
Other income, net - (21) - (60)
------------ ----------- ----------- -----------
Income before income taxes - 1,636 - 2,296
PROVISION FOR INCOME TAXES - 661 - 923
------------ ----------- ----------- -----------
NET INCOME $ - $ 975 $ - $ 1,373
============ =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - 5,454 - 5,335
============ =========== =========== ===========
NET INCOME PER COMMON SHARE $ - $ 0.18 $ - $ 0.26
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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F.Y.I. Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
(see Note 1)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------
June 30, June 30,
1995 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ - $ 1,373
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization - 705
Change in operating assets and liabilities:
Accounts receivable - 104
Inventory - (20)
Prepaid expenses and other assets - 100
Accounts payable and accrued liabilities - (578)
--------- --------
Net cash provided by operating activities - 1,684
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1) (1,078)
Cash paid for acquisitions, net of cash received - (20,749)
--------- --------
Net cash used for investing activities (1) (21,827)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance, net of underwriting
discounts and other costs (280) 23,088
Proceeds from preferred stock issuance 135 -
Proceeds from short-term obligations - 1,000
Proceeds from long-term obligations - 8,150
Cash paid for debt issuance costs - (1,487)
Principal payments on short-term obligations - (1,857)
Principal payments on long-term obligations - (6,282)
--------- --------
Net cash (used in) provided by financing activities (145) 22,612
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (146) 2,469
CASH AND CASH EQUIVALENTS, beginning of period 669 52
--------- --------
CASH AND CASH EQUIVALENTS, end of period $ 523 $ 2,521
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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F.Y.I. Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
F.Y.I. Incorporated (the "Company" or "F.Y.I.") was founded in
September 1994 to create a national, single-source provider of document
management services to three primary client segments: healthcare institutions,
professional services firms and financial institutions. In January 1996, F.Y.I.
acquired (the "Acquisitions"), simultaneously with the closing of its initial
public offering (the "Offering") on January 23, 1996, seven document management
services businesses (the "Founding Companies"). The Founding Companies are
headquartered in San Francisco (2), San Jose, Fort Worth, Detroit, Malvern
(Philadelphia) and Baltimore, and operate in over 23 states. The consideration
for the Founding Companies consisted of a combination of cash and common stock
(the "Common Stock") of F.Y.I.
Between September 1994 and the consummation of the Offering and the
Acquisitions, F.Y.I. did not conduct any significant operations. For accounting
purposes and for the purposes of the presentation of the financial statements
herein, January 31, 1996 has been used as the effective date of the
Acquisitions. Accordingly, the actual operating results of the Company
included in the Statement of Operations for the six months ended June 30, 1996,
represent the five months of operations subsequent to the consummation of the
Acquisitions. Supplemental Statement of Operations Data for the six months
ended June 30, 1996 is presented in Note 2 herein.
In the opinion of F.Y.I.'s management, the accompanying consolidated
financial statements include the accounts of the Company and all adjustments
necessary to present fairly the Company's financial position at June 30, 1996,
its results of operations for the three and six months ended June 30, 1995 and
1996, and its cash flows for the six months ended June 30, 1995 and 1996. All
significant intercompany accounts have been eliminated. Although the Company
believes that the disclosures are adequate to make the information presented
not misleading, certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission").
These consolidated financial statements should be read in conjunction with the
combined financial statements of the Founding Companies and the related notes
thereto in F.Y.I.'s Annual Report on Form 10-K filed with the Commission on
April 10, 1996, as amended by F.Y.I.'s Annual Report on Form 10-K/A filed with
the Commission on April 29, 1996, and the Company's Current Report on Form 8-K
filed June 14, 1996, as amended by the Current Report on Form 8-K/A filed July
5, 1996. The results of operations for the interim periods ended June 30, 1996
and 1995, may not be indicative of the results for the full year.
7
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2. INITIAL PUBLIC OFFERING OF COMMON STOCK AND THE ACQUISITIONS
Initial Public Offering
On January 26, 1996, the Company completed the Offering of 2,185,000
shares of Common Stock (including the exercise of the underwriters'
over-allotment option) at $13.00 per share. Proceeds from the Offering, net of
underwriter commissions and offering costs, were approximately $23.1 million.
Of these net proceeds, approximately $7.1 million was used to pay a portion of
the consideration for the Acquisitions, approximately $7.7 million was used to
retire certain indebtedness of the Founding Companies, approximately $8.0
million was used for acquisitions subsequent to the Offering, and $0.3 million
was used as working capital.
Upon the closing of the Offering, the Company converted the 9,000
shares of Series A Preferred Stock then outstanding into 542,557 shares of
Common Stock.
Acquisitions of the Founding Companies
Simultaneously with the closing of the Offering, the Company acquired
the Founding Companies. The aggregate consideration paid by F.Y.I. to acquire
the Founding Companies was approximately $35 million, consisting of: (i)
$7,059,000 in cash; (ii) 1,878,933 shares of Common Stock; (iii) the assumption
and repayment of approximately $191,000 of indebtedness owed by a Founding
Company stockholder; and (iv) the distribution of cash and certain receivables
to certain Founding Company stockholders of S corporations in the amount of
$3,450,000, representing the undistributed retained earnings of S corporations,
upon which taxes have been paid by the stockholders.
The Acquisitions have been accounted for in accordance with generally
accepted accounting principles ("GAAP") as a combination of F.Y.I. and the
Founding Companies at historical cost, because: (i) the Founding Companies'
stockholders transferred assets to F.Y.I. in exchange for Common Stock and cash
simultaneously, with the Offering; (ii) the nature of future operations of the
Company will be substantially identical to the combined operations of the
Founding Companies; and (iii) no former stockholder group of any of the
Founding Companies obtained a majority of the outstanding voting shares of the
Company.
Supplemental Data
Statement of Operations - Supplemental Data
The Statement of Operations Data for the six months ended June 30,
1995 represent the audited combined statement of operations of the Founding
Companies for the period adjusted to give effect to: (i) compensation levels
the officers and owners have agreed to receive subsequent to the Offering; and
(ii) provision for income taxes as if all entities had been subject to federal
and state income taxes for the period. The Supplemental Statement of Operations
Data for the six months ended June 30, 1996 represent a combination of: (i) the
unaudited results of the combined Founding Companies for the one month of
operations prior to the consummation of the Acquisitions; and (ii) the
unaudited results of F.Y.I. Incorporated and Subsidiaries for the five
8
<PAGE> 9
months subsequent to the consummation of the Acquisitions (which includes
acquisitions subsequent to the Offering from the date of their respective
acquisition). The Supplemental Data are provided for information purposes only
and do not purport to present the results of operations of the Company had the
transactions assumed therein occurred on or as of the dates indicated, nor are
they necessarily indicative of the results of operations which may be achieved
in the future.
<TABLE>
<CAPTION>
Supplemental Data
Six Months Six Months
Ended Ended
June 30, June 30,
1995 1996
----------------- -----------------
(In thousands, except per share data)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenue $20,207 $ 25,201
Product revenue 3,187 3,035
Other revenue 435 331
------- ---------
Total revenue 23,829 28,567
Cost of services 12,729 15,826
Cost of products sold 2,604 2,281
Depreciation 584 723
------- ---------
Gross profit 7,912 9,737
Selling, general and administrative expenses (a) 5,053 6,983
Amortization 32 78
------- ---------
Operating income 2,827 2,676
Interest and other expenses (income),net 99 (168)
------- ---------
Income before income taxes 2,728 2,844
Provision for income taxes (b) 1,024 1,144
------- ---------
Net income $ 1,704 $ 1,700
======= =========
Net income per share $ 0.32
=========
Weighted average shares outstanding 5,335
</TABLE>
(a) Adjusted for Founding Company pro forma Compensation Differential of $897
for 1995 and $683 for 1996.
(b) Adjusted for pro forma provision for taxes of $887 for 1995 and $351 for
1996.
9
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Weighted Average Shares Outstanding
The number of shares (in thousands) used in calculating net income per
share was determined as follows:
<TABLE>
<CAPTION>
Three Six
Months Months
Ended Ended
June 30, June 30,
1996 1996
---- ----
<S> <C> <C>
Outstanding F.Y.I. shares after the Offering and the acquisitions
of the Operating Companies 5,438 5,319
Warrants to purchase stock under the treasury stock method 16 16
------ ------
Number of shares used in net income
per share calculation 5,454 5,335
===== ======
</TABLE>
3. BUSINESS COMBINATIONS
Since the Offering, the Company has acquired six additional businesses
(together with the Founding Companies, the "Operating Companies") which provide
document management services and are headquartered in Washington, D.C.,
Baltimore (2), San Jose, Sacramento, and Seattle. All of the acquisitions are
accounted for under the purchase method of accounting.
In May 1996, the Company acquired the stock of B&B Information and Image
Management, Inc. ("B&B") and Premier Document Management, Inc. and PDM
Services, Inc. ("Premier"). In June 1996, the Company acquired all of the
non-cash assets of Robert A. Cook and Staff, Inc. and RAC Services, Inc.
("Cook"). B&B, Premier and Cook are considered significant subsidiaries of the
Company. The aggregate consideration paid for B&B, Premier and Cook consisted
of $15,522,000 in cash and 253,252 shares of Common Stock. The preliminary
allocation of the purchase price is set forth below:
<TABLE>
<S> <C>
Consideration Paid $18,979,000
Estimated Fair Value of Tangible Assets 8,133,000
Estimated Fair Value of Liabilities 5,739,000
Goodwill 16,585,000
</TABLE>
The fair market value of the shares of Common Stock used in calculating the
consideration paid was $13.65, which represents a 35% discount from the average
trading price of the Common Stock based on the length and type of restrictions
in the purchase agreements.
The Company acquired substantially all of the assets of Sacramento Valley
Records Management Co. ("Sacramento") in February 1996; Microfilm Associated,
Ltd. ("Microfilm") in February 1996 and Octo, Incorporated ("Octo") in June
1996. The aggregate consideration paid for Sacramento, Microfilm and Octo
consisted of $1,567,000 in cash. The preliminary allocation of the purchase
price is set forth below:
10
<PAGE> 11
<TABLE>
<S> <C>
Consideration Paid $1,567,000
Estimated Fair Value of Tangible Assets 637,000
Estimated Fair Value of Liabilities 318,000
Goodwill 1,248,000
</TABLE>
The estimated fair market values reflected above are based on preliminary
estimates and assumptions and are subject to revision. In management's
opinion, the preliminary allocation is not expected to be materially different
than the final allocation.
All intangibles are considered enterprise goodwill. Based on the historical
profitability of the purchased companies and trends in the legal, healthcare
and other industries to outsource document management functions in the
foreseeable future, the enterprise goodwill will be amortized over a period of
30 years. Management continually evaluates whether events and circumstances
indicate that the remaining estimated useful life of intangible assets may
warrant revisions or that the remaining balance of intangibles or other
long-lived assets may not be recoverable. To make this evaluation, management
uses an estimate of undiscounted net income over the remaining life of the
intangibles or other long-lived assets. The goodwill associated with the B&B
and Premier acquisitions is not deductible for income tax purposes.
Set forth below is a pro forma income statement for the six months ended June
30, 1996 and for the year ended December 31, 1995. The unaudited pro forma
data gives effect to: (i) the acquisitions of B&B, Premier and Cook; (ii) the
acquisitions of the Founding Companies; and (iii) compensation and tax
adjustments for all transactions as if the transactions had occurred on January
1, 1995. The acquisitions of Sacramento, Microfilm and Octo have not been
included in the pro forma financial statements for periods prior to their
acquisition date as the effect is immaterial.
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Year Ended Six Months Ended
December 31, 1995 June 30, 1996
----------------- -------------
<S> <C> <C>
Revenue $ 70,681 $ 38,330
Income before income taxes 7,667 4,514
Net income 4,737 2,702
Net income per common share $ 0.86 $ 0.49
Average shares outstanding 5,539 5,539
========= =========
</TABLE>
4. CREDIT FACILITY
In April 1996, the Company and its subsidiaries entered into a credit
agreement, as amended (the "Line of Credit"), with Banque Paribas, as agent,
and the lenders named therein. Under the Line of Credit, the Company and its
subsidiaries may borrow on a revolving credit basis, loans in an aggregate
outstanding principal amount up to $35.0 million from time to time under the
secured revolving credit and acquisition facility, subject to certain customary
borrowing capacity requirements. The Company and its subsidiaries may borrow up
to an aggregate $30.0 million of term loans under the Credit Agreement for
acquisitions under prescribed conditions.
11
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The Company and its subsidiaries may borrow revolving credit loans up to an
aggregate $5.0 million under the Credit Agreement for working capital and
general corporate purposes. The commitment to fund revolving credit loans
expires April 14, 2001. The commitment to fund term loans expires October 15,
1997. The annual interest rate applicable to borrowings under this facility
is, at the option of the Company, (i) 1.50% plus the prime rate or (ii) 3.00%
plus the Eurodollar rate.
The Credit Agreement requires mandatory prepayments in certain circumstances.
The outstanding principal balance of term loans as of October 15, 1997, shall
thereafter be due and payable in 14 equal quarterly payments beginning
January 15, 1998, and ending April 15, 2001. The outstanding principal balance
of revolving credit loans shall be due and payable on April 15, 2001. The
Company has $1.0 million in borrowings outstanding under this facility for
working capital and corporate purposes, and $8.2 million in borrowings
outstanding under the term loans for acquisitions.
12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
As discussed more fully in Item 1, the Company effected the
Acquisitions of the Founding Companies simultaneously with the Offering on
January 23, 1996. Prior to the consummation of the Offering, the Company had
not conducted any operations and all activities related to completing the
Offering and the Acquisitions. The Company incurred various legal, accounting,
marketing and travel costs in connection with the Offering and the
Acquisitions, which were funded by issuance of shares of Common Stock and
Preferred Stock. Additional costs associated with the Offering and the
Acquisitions were paid with proceeds of the Offering.
The Acquisitions have been accounted for in accordance with generally
accepted accounting principles as a combination of the Founding Companies at
historical cost. For accounting purposes, January 31, 1996 has been used as
the effective date of the Acquisitions. Accordingly, the actual operating
results of the Company included in the Statement of Operations for the six
months ended June 30, 1996 represents the five months of operations subsequent
to the consummation of the Acquisitions.
Since the Offering and the Acquisitions, the Company has acquired six
additional document management businesses. All of these acquisitions have been
accounted for using the purchase method of accounting. The results of
operations for these acquisitions are reflected in the Company's financial
statements based upon their individual acquisition dates.
Supplemental statement of operations data are presented in the
footnotes to the financial statements and discussed herein in order to present
the results of the Company since the consummation of the Acquisitions compared
to the results of the combined Founding Companies for periods prior to the
Acquisitions. The Supplemental Data are provided for information purposes only
and do not purport to present the results of operations of the Company had the
transactions assumed therein occurred on or as of the dates indicated. The
Founding Companies were not under common control or management. Accordingly,
such historical combined results may not be comparable to, or indicative of,
future performance.
The Company's revenue is classified as service revenue, product
revenue and other revenue. Service revenue relates to: (i) micrographics; (ii)
electronic imaging; (iii) active document storage; (iv) archival storage of
inactive documents; (v) information and data base management; (vi) litigation
support services; (vii) medical records release services; and (viii) remittance
processing. Product revenue represents sales of micrographic and business
imaging supplies and equipment, primarily in conjunction with film processing
and other micrographic services. Other revenue consists of commissions on the
sales of imaging systems and equipment and franchising fees.
Cost of services consists primarily of salaries and benefits,
equipment costs, supplies and occupancy costs and also includes the costs
associated with other revenue discussed above. Cost of products sold relates
to micrographics and business imaging supplies and equipment.
13
<PAGE> 14
Selling, general and administrative expenses ("SG&A") includes the
SG&A cost at all of the individual Operating Companies and the corporate
overhead cost required to: (i) execute the acquisition program; (ii) manage the
operations; and (iii) comply with all regulatory, legal and accounting issues
of a public company. The Company expects to realize benefits from consolidating
certain general and administrative functions, including reductions in
accounting, audit, insurance and benefit plan expenses. The Company is in the
process of evaluating the consolidation of certain of these functions. No
significant savings have been realized in the results of operations as of June
30, 1996.
Statements throughout this quarterly report that state the Company's
or management's intentions, hopes, beliefs, anticipations, expectations or
predictions of the future are forward looking statements. It is important to
note that the Company's actual results could differ materially from those
projected in such forward-looking statements. Additional information
concerning factors that could cause results to differ materially from those in
the forward-looking statements is contained under the "Risk Factors" section
of the Company's Registration Statements on Form S-1 (Registration Nos.
33-98608 and 333-1084).
Results of Operations - The Company
The Company had conducted no significant operations from its inception
through the Offering and the Acquisitions. For accounting purposes and the
presentation of the actual financial results herein, January 31, 1996, has been
used as the effective date of the Acquisitions.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
- -- F.Y.I. INCORPORATED
For the three months ended June 30, 1996, revenue was $16.2 million,
gross profit was $5.6 million, operating income was $1.6 million, and net
income was $1.0 million. As previously mentioned, F.Y.I. had no operations
until February 1996.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995 --
F.Y.I. INCORPORATED
For the six months ended June 30, 1996, revenue was $24.7 million,
gross profit was $8.4 million, operating income was $2.2 million, and net
income was $1.4 million. As previously mentioned, F.Y.I. had no operations
until February 1996. For further discussion of supplemental operations for the
six months ended June 30, 1996 and 1995, see "Results of Operations -
Supplemental Data."
14
<PAGE> 15
Liquidity and Capital Resources - The Company
As of June 30, 1996, the Company had $4.3 million of working capital
and $2.5 million of cash. Cash flows provided by operating activities for the
six months ended June 30, 1996 were $1.7 million. Cash used for investing
activities was $21.8 million, as the Company paid $20.7 million for
acquisitions, net of cash acquired. Cash provided by financing activities was
$22.6 million. The Company raised $23.1 million in the Offering, net of
underwriting discounts and other costs associated with the Offering. The
Company assumed $8.5 million of debt in the Acquisitions and subsequently
retired all of this debt with the proceeds of the Offering, with the exception
of approximately $0.4 million of debt with favorable interest rates and capital
lease obligations of approximately $0.4 million. In April 1996, the Company
negotiated a $35.0 million line of credit ("Line of Credit") (see Note 4 in the
Notes to Financial Statements). The Company paid $1.5 million in costs to
secure this financing. In June, the Company borrowed $9.2 million through the
Line of Credit to help fund the acquisition program. The Company assumed $2.8
million of debt in the acquisitions subsequent to the Offering and retired $0.4
million. The assumed debt remaining has interest rates more favorable than the
Company's credit facility.
The Company anticipates that cash from operations, and additional bank
financing available under the Line of Credit will be sufficient to meet the
Company's liquidity requirements for its operations for the next twelve months.
The availability under the Line of Credit is $3.0 million for working capital
and general corporate purposes, and approximately $21.8 million for
acquisitions. The Company expects that additional funds may be required in the
future to successfully continue the acquisition program. Additionally, the
Company has filed a Registration Statement on Form S-1 (Registration No.
333-1084) to register 2,000,000 shares of Common Stock for issuance in its
acquisition program.
Results of Operations - Supplemental Data
The Statement of Operations Data for the six months ended June 30,
1995 represent the audited combined statement of operations of the Founding
Companies for the period adjusted to give effect to: (i) compensation levels
the officers and owners of the Operating Companies have agreed to receive
subsequent to the Offering; and (ii) provision for income taxes as if all
entities had been subject to federal and state income taxes for the period. The
Supplemental Statement of Operations Data for the six months ended June 30,
1996 represent a combination of: (i) the unaudited results of the combined
Founding Companies for the one month of operations prior to the consummation of
the Acquisitions; and (ii) the unaudited results of F.Y.I. Incorporated and
Subsidiaries for the five months subsequent to the consummation of the
Acquisitions (which includes acquisitions subsequent to the Offering from the
date of their respective acquisition). The Supplemental Data are provided for
information purposes only and do not purport to present the results of
operations of the Company had the transactions assumed therein occurred on or
as of the dates indicated, nor are they necessarily indicative of the results
of operations which may be achieved in the future.
15
<PAGE> 16
<TABLE>
<CAPTION>
Supplemental Data
Six Months Six Months
Ended Ended
June 30, June 30,
1995 1996
----------------- -----------------
(In thousands, except per share data)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenue $20,207 $25,201
Product revenue 3,187 3,035
Other revenue 435 331
------- -------
Total revenue 23,829 28,567
Cost of services 12,729 15,826
Cost of products sold 2,604 2,281
Depreciation 584 723
------- -------
Gross profit 7,912 9,737
Selling, general and administrative expenses (a) 5,053 6,983
Amortization 32 78
------- -------
Operating income 2,827 2,676
Interest and other expenses (income),net 99 (168)
------- -------
Income before income taxes 2,728 2,844
Provision for income taxes (b) 1,024 1,144
------- -------
Net income $ 1,704 $ 1,700
======= =======
Net income per share $ 0.32
=======
Weighted average shares outstanding 5,335
</TABLE>
(a) Adjusted for Founding Company pro forma Compensation Differential of $897
for 1995 and $683 for 1996.
(b) Adjusted for pro forma provision for taxes of $887 for 1995 and $351 for
1996.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995 --
F.Y.I. INCORPORATED COMBINED WITH FOUNDING COMPANIES
The $4,738,000 or 20% increase in revenue was attributable to a 25%
increase in service revenue of $4,994,000. The increase in service revenue is
offset by a $256,000 or 7% decrease in product and other revenue.
The increase in service revenue was largely due to: (i) an increase in
scanning and microfilming revenue of approximately $1,751,000, primarily due to
the purchase of B&B in May 1996, the purchase of Microfilm in February 1996 and
an overall increase in microfilming projects; (ii) an increase in medical
records release revenue of $1,758,000, primarily attributable to the expansion
into additional healthcare institutions in the U.S. during 1995 and 1996 and
the purchase of Premier in May 1996; (iii) an increase in litigation support
revenue of $1,133,000, primarily due to the purchase of Cook in June 1996; and
(iv) an increase in records storage and retrieval revenue of $537,000
attributable to the purchase of Sacramento in February 1996 and increases in
volume in 1996. These increases were offset by a slight decline in data input
and fulfillment revenue. The decrease in product revenue primarily resulted
from a decline in one major customer's film purchases in the first quarter of
1996, caused by a business interruption at
16
<PAGE> 17
that customer. This decline is not expected to be permanent as the
interruption was attributable to the federal government shutdown in late 1995.
Film sales to this customer have resumed at levels greater than the prior year
during the second quarter of 1996. This decline in product revenue was offset
by increased product revenue associated with the purchase of B&B in May 1996.
Gross profit increased $1,825,000 or 23% largely due to the increases
in revenues discussed above. The gross profit margin increased from 33% for
the six months ended June 30, 1995 to 34% for the six months ended June 30,
1996, primarily due to the change in the mix of revenues associated with
acquisitions subsequent to the Offering in 1996.
Selling, general and administrative expenses increased $1,930,000 or
38%, primarily due to the establishment of corporate overhead required to
execute the acquisition program and to manage the consolidated group of
companies and due to the SG&A expenses associated with acquisitions subsequent
to the Offering.
Earnings before taxes increased $116,000 to $2,844,000 and net income
remained flat at $1,700,000 largely attributable to the factors discussed
above. Net income was impacted by a higher effective tax rate attributable to
the elimination of graduated tax rates as the Operating Companies are now taxed
on a consolidated basis and due to the impact of nondeductible goodwill
associated with the B&B and Premier acquisitions.
17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In June 1996, the Company hired Margot T. Lebenberg as Vice President,
Secretary and General Counsel to oversee its legal matters.
Effective July 22, 1996, the Company's then Executive Vice President
and Chief Financial Officer resigned. Under the terms of the
separation agreement, the Company will pay the former Executive Vice
President and Chief Financial Officer an aggregate of $195,000 payable
as follows: $120,000 on August 19, 1996, $50,000 on January 30, 1997
and $25,000 on August 19, 1997. Furthermore, in addition to the
options for 8,000 shares that vested, additional options for 22,000
shares were accelerated and vested and such options shall terminate on
October 22, 1996, if they are not exercised. David Lowenstein,
co-founder of the Company, Executive Vice President and a Director of
the Company, is reassuming the responsibility of Chief Financial
Officer, the position he held prior to the Offering in January 1996.
Additionally, Timothy J. Barker was promoted to the position of Vice
President and Chief Accounting Officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.23 Separation Agreement, dated July 17, 1996, by and between F.Y.I.
Incorporated and Robert C. Irvine
10.24 Warrant issued to Timothy J. Barker
27.1 Financial data schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K filed with the
Commission on June 14, 1996, as amended by a Current Report on Form 8-K/A filed
with the Commission on July 5, 1996, reporting under Items 2 and 7 thereto
the consummation of the acquisitions by the Company of B&B, Premier and Cook
and which included the following historical restated and pro forma financial
information of the Company reflecting recently completed significant
acquisitions:
18
<PAGE> 19
FINANCIAL STATEMENTS
Cook and Staff, Inc. and Related Company
Report of Independent Public Accountants
Balance Sheets
Statements of Operations
Statements of Stockholder's Equity
Statements of Cash Flows
Notes to Financial Statements
B&B Information and Image Management, Inc.
Report of Independent Public Accountants
Balance Sheets
Statements of Operations
Statements of Stockholder's Equity
Statements of Cash Flows
Notes to Financial Statements
Premier Document Management, Inc.
Report of Independent Public Accountants
Balance Sheets
Statements of Operations
Statements of Stockholder's Equity
Statements of Cash Flows
Notes to Financial Statements
PRO FORMA FINANCIAL STATEMENTS
F.Y.I. Incorporated and Subsidiaries
Pro Forma Balance Sheet - March 31, 1996 (unaudited)
Pro Forma Statement of Operations for the Year Ended December 31, 1995
(unaudited)
Pro Forma Statement of Operations for the Three Months Ended March 31,
1996 (unaudited)
Notes to Pro Forma Financial Statements (unaudited)
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized.
F.Y.I. Incorporated
Date: August 12, 1996 By: /s/ Ed H. Bowman, Jr.
----------------------------------
Ed H. Bowman, Jr.
Chief Executive Officer
Date: August 12, 1996 By: /s/ David Lowenstein
----------------------------------
David Lowenstein
Chief Financial Officer
(Principal Financial Officer)
Date: August 12, 1996 By: /s/ Timothy J. Barker
----------------------------------
Timothy J. Barker
Chief Accounting Officer
(Principal Accounting Officer)
20
<PAGE> 21
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
10.23 Separation Agreement, dated July 17, 1996, by and between F.Y.I.
Incorporated and Robert C. Irvine
10.24 Warrant issued to Timothy J. Barker
27.1 Financial data schedule
21
<PAGE> 1
EXHIBIT 10.23
July 17, 1996
Robert C. Irvine
5105 Mustang Trail
Plano, TX 75093
Re: Separation Agreement
Dear Bob:
The purpose of this letter (this "Agreement") is to document our
agreement regarding your separation from employment with F.Y.I. Incorporated
(the "Company"). Both the Company and you desire that your separation be on a
friendly basis and want to avoid any disputes and controversies concerning your
employment with the Company and separation therefrom. Consequently, we have
agreed as follows:
1. Your employment with the Company ends effective July 22, 1996
(the "Separation Date"). You hereby confirm your resignation as Executive Vice
President and Chief Financial Officer effective July 22, 1996. The Employment
Agreement effective January 26, 1996 between you and the Company is
incorporated in and is a part of this Agreement. Your post-termination
obligations continue under the Employment Agreement, including but not limited
to paragraphs 3, 6, 7, 8, 9, 10 and 16, unless we expressly provide to the
contrary in this Agreement.
2. The Company will pay you the gross amount of $195,000 in cash,
less appropriate payroll withholding, as separation pay. This payment will be
made in three payments . The first payment of $120,000 will be paid on August
19, 1996, the second payment of $50,000 will be paid on January 30, 1997 and
the third payment of $25,000 will be made on August 19, 1997 (the "Final
Payment Date"). In addition, on July 22, 1996 you will receive: (i) $5,769,
less appropriate payroll withholding for your accrued vacation; and (ii) an
option grant certificate to purchase 30,000 shares of the Company's Common
Stock (the "Option") at $13.00 per share which expire three months from the
Separation Date and may not be exercised until August 19, 1996.
3. The Company agrees that, except as provided above, Employee
shall be permitted to exercise the Options following August 19, 1996 and prior
to the expiration of the Options, subject to the following:
(a) The Company (i) is unaware of any legal requirement
that would prohibit the exercise of the Options, (ii)
will use its best efforts to ensure that, at all
<PAGE> 2
Robert C. Irvine
July 17, 1996
Page 2
times that the Options are exercisable, they lawfully
can be exercised by you, and (iii) will take no
action to interfere with or prevent the exercise of
the Options or the issuance and delivery of shares
("Option Shares"), upon such exercise or any lawful
disposition of the Option Shares by you, provided
that you have complied with applicable obligations as
described in (b) below.
(b) You shall file all forms or other documents required
to be filed under federal securities laws in
connection with or to report the exercise of the
Options and any disposition of the shares acquired
upon such exercise, including Forms 4 or 5 required
to be filed under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act").
(c) The Company represents to you that (i), upon the
effectiveness of your resignation as Executive Vice
President and Chief Financial Officer, you will no
longer be an "officer" of the Company for purposes of
Section 16 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), although your transactions
after termination will potentially remain subject to
reporting under Section 16(a) and Rule 16a-2
thereunder for up to six months after your last
reportable transaction prior to your resignation; and
(ii) the exercise of the Options at a time that the
exercise price is less than the market price of the
Company's Common Stock will be exempt under Rule
16b-6(b) and therefore will not give rise to Section
16(b) liability and the sale of the Option Shares
though not exempt, will not give rise to Section
16(b) liability if you have had no open-market or
other non-exempt purchase of the Company's Common
Stock at a time less than six months before such sale
and prior to such resignation. The Company is not,
however, legally permitted to waive any liability you
may have under Section 16(b) of the 1934 Act.
4. You will have the option to elect up to eighteen (18) months
of your current Company health insurance coverage at your expense, as provided
by law.
5. You agree to surrender immediately to the Company all
information, papers, documents, writings, computer diskettes, and all other
Company property (including credit cards, telephone card, access card, office
key, laptop computer, portable printer, etc.) in your possession or control,
and all copies thereof. All such information, papers, documents, writings, and
property and all copies shall at all times remain the property of the Company.
<PAGE> 3
Robert C. Irvine
July 17, 1996
Page 3
6. Except as specifically provided in this Agreement, you
understand and agree that you are not entitled to any further salary, vacation
pay, sick pay, bonus, severance pay, compensation of any kind, retirement,
health insurance, long-term disability, AD&D, life insurance, or any other
perquisites or benefits of any kind. All warrants previously issued to you are
cancelled. All such compensation and benefits shall cease as of the Separation
Date except as expressly agreed in this letter.
7. You acknowledge and agree that the above-referenced separation
pay under Section 2 is not otherwise due you and is consideration sufficient
for your promises and agreements in this Agreement.
8. You voluntarily and knowingly waive, release, and discharge
the Company, its parents, subsidiaries, licensors, licensees and sublicensees,
predecessors, successors, affiliates, employees, officers, directors,
contractors, subcontractors, vendors, franchisees, franchise operations,
stockholders, partners, assigns, employee retirement, health and welfare
benefit plans and the fiduciaries thereof, and agents from all claims,
liabilities, demands, and causes of action, known or unknown, fixed or
contingent, which you may have or claim to have against any of them as a result
of your employment and/or separation from employment, excluding breach of this
Agreement by the Company. You agree not to file a lawsuit to assert such
claims. This includes, but is not limited to:
(a) claims concerning your employment and/or separation
therefrom;
(b) claims arising under federal, state, or local laws
prohibiting employment discrimination such as,
without limitation, Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act of
1967 (for all claims arising through the date you
sign this Agreement), the Americans with Disabilities
Act, the Equal Pay Act, the Texas Commission on Human
Rights Act, and the Family and Medical Leave Act, and
their amendments and all comparable Federal, state
and local laws;
(c) claims for breach of contract, excluding breach of
this Agreement by the Company;
(d) claims for personal injury, harm, or damages (whether
intentional or unintentional);
<PAGE> 4
Robert C. Irvine
July 17, 1996
Page 4
(e) claims arising out of any legal restrictions on the
Company's right to terminate its employees;
(f) claims arising under the Employee Retirement Income
Security Act of 1974, as amended; and
(g) claims for salary, vacation pay, sick pay, bonus,
severance pay, future pay, compensation of any kind,
retirement, health insurance, long-term disability,
AD&D, life insurance, or any other employee benefit.
9. You agree that until the Final Payment Date you will provide a
reasonable amount of your time to the Company, at no charge, to discuss issues
with and answer questions from officers and directors of the Company with
respect to anything related to the document management services business, with
reasonable notice and at such reasonable times as the Company may request.
10. You agree to keep the terms of this Agreement wholly
confidential and not to disclose the terms to anyone except your spouse,
attorney, or accountant and except as required by law unless you obtain the
prior written consent of the Company. Should you violate the terms of this
provision or any other provisions in this Agreement, you understand and agree
that in addition to any other remedies available to the Company, the Company's
duty to pay any payments under Section 2 shall immediately cease, but all other
provisions in this Agreement shall continue in full force and effect. The
Company agrees to keep the terms of this Agreement wholly confidential and not
discuss the terms with anyone except as may be provided by law or because of
reasonable business requirements.
11. (a) You agree that, except as required by law, from the
Separation Date, and continuing thereafter, you shall not make use of or
disclose, directly, or indirectly, any confidential information obtained by you
while in the employ of the Company with respect to the Company's business,
products, services, systems, organization, business plans, financial data,
marketing plans, suppliers, customers, pricing, rates, employment practices,
trade secrets, or proprietary information. You recognize and agree that the
protection of this confidential business information against unauthorized
disclosure and use is of critical importance to the Company in maintaining its
competitive position.
(b) You further agree not to solicit the Company's
employees to leave the Company's employ.
<PAGE> 5
Robert C. Irvine
July 17, 1996
Page 5
(c) In addition, you agree not to induce, encourage,
assist, solicit, or entice, directly or indirectly, any person(s) or
entity(ies) in any meeting or discussion, whether oral or written, to take any
adverse action against, or to institute or participate in, any proceeding
against the Company and also agree not to participate yourself in any such
proceeding unless required by law to do so.
(d) In consideration for the separation pay provided in
Section 2 above, as a means to aid in the performance and enforcement of the
terms of this Section 10, and to protect the good will of the Company, you
agree that for a period of two years following the Separation Date, you will
not, directly or indirectly, as an owner, director, principal, agent, officer,
employee, partner, consultant, servant, or otherwise, carry on, operate,
manage, control, or become involved in any manner with any business, operation,
corporation, partnership, association, agency, or other person or entity that
is primarily engaged in the business of providing document management services.
Any alleged breach of other provisions of this Agreement asserted by you will
not be a defense to claims arising from the Company's enforcement of the
provisions of this paragraph. Should you violate the provisions of this
paragraph, then the period of time for this covenant shall automatically be
extended for the period of time from which you began such violation until you
permanently cease such violation. You agree that you continue to be bound by
the Non-Competition Agreement in your Employment Agreement, Section 3 and its
subparts, dated as of January 26, 1996. Passive investments in a document
management service company through a mutual fund or stock investment will not
be deemed a violation of the non-compete, provided that you do not or will not
for a period of two years from the Separation Date beneficially own more than
3% of the capital stock of a competing business whose stock is traded on a
national securities exchange or over the counter.
(e) The Company shall announce the separation of your
employment relationship with the Company by issuing a press release which shall
state that you will be leaving to pursue other business interests.
(f) You agree that you will not engage in any conduct
that is injurious to the Company or any of its successors, affiliates,
employees, officers, directors, franchisees, franchise operations,
stockholders, partners, assigns or agents, including but not limited to
disparaging (or encouraging others to disparage). For purposes of this
Separation Agreement, the term "disparage" includes, without limitation,
comments or statements to the press, to past, present and/or future employees
of the Company or to any individual or entity with whom the Company has a
business relationship that would adversely affect in any manner (i) the conduct
of the business of the Company or (ii) the reputation of the Company or any of
its employees, owners, officers or directors.
<PAGE> 6
Robert C. Irvine
July 17, 1996
Page 6
12. You agree not to seek re-employment or future employment with
the Company.
13. You acknowledge and agree that you have the right to discuss
all aspects of this Agreement with a private attorney, have been encouraged to
do so by the Company, and have done so to the extent you desire. Further, you
understand that you have twenty-one (21) days to sign this Agreement after
receipt of it in order to consider all of its terms fully and if you elect to
execute this Agreement prior thereto, you hereby waive the remainder of such
period. This Agreement may be revoked by you in writing to the Company within
seven (7) days after you sign it, and it shall not become effective or
enforceable until the revocation period has expired. If you do not agree with
and sign this Agreement within twenty-one (21) days after receipt of this
Agreement, this Agreement is automatically withdrawn and is null and void.
14. This Agreement is binding on you and your representatives,
heirs, and assigns and on the Company and its successors and assigns.
15. This Agreement contains all of the terms, provisions, and
understandings between the Company and you. No modification of this Agreement
can be made except in writing and signed by both parties.
16. This Agreement shall be governed by and interpreted under the
laws of the State of Texas, without regard to conflict of laws.
17. The Company is not aware of any claim that it has against you
at this time.
18. Any dispute or controversy arising under or related to this
Separation Agreement is subject to arbitration as provided in Section 16 of
your Employment Agreement.
19. This Separation Agreement is a legal document. You represent
and agree that you have thoroughly and carefully read this Agreement in its
entirety, that you have had a reasonable time to consider its terms, that you
fully understand all of its terms, and that you have not relied upon any
representations or statements, whether written or oral, not set forth in this
Agreement.
<PAGE> 7
Robert C. Irvine
July 17, 1996
Page 7
If the foregoing accurately reflects all of the terms of our
agreement, please sign and date in the space provided.
Sincerely,
F.Y.I. INCORPORATED
By: /s/ ED H. BOWMAN, JR.
-----------------------------------
Title: Chief Executive Officer and
President
AGREED TO AND ACCEPTED this 22nd day of July, 1996.
/s/ ROBERT C. IRVINE
--------------------------------------
Robert C. Irvine
<PAGE> 1
EXHIBIT 10.24
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, [5 YEARS FROM THE INITIAL EXERCISE
DATE]
****************************************
No. 2
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to Tim
Barker or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company, at
$10.00 per share (the "Exercise Price"), Fifteen Thousand (15,000) shares, of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
subject to the provisions and upon the terms and conditions herein set forth.
The Exercise Price and the number of Warrant Shares are subject to adjustment
from time to time as provided in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation Exercise
Payment of Taxes.
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase 50% of the
underlying shares from and after 9:00 A.M. New York City time on [2 years from
closing of the initial public offering of shares offered to the public pursuant
to Registration Statement 33-98608 (the "Initial Public Offering")] (the
"Initial Exercise Date") and the remaining 50% of the underlying shares on [3
years from closing of the Initial Public Offering (the "Second Exercise Date"),
the Initial Exercise Date or the Second Exercise Date, as applicable (the
"Exercise Date") and to and including 5:00 P.M. New York City time on [5 years
from closing of the Initial Exercise Date] (the "Expiration Date"). In
addition, in the event of a Change in Control of the Company, the right to
exercise 100% of the underlying shares shall immediately vest. A "Change in
Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities and Exchange
Act of 1934, as amended (the" Exchange Act")) of any voting security
of the Company and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board and whose election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election) (such individuals being the "Continuing
Directors"), cease for any reason to constitute a majority of the
members of the Board;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation
of any such transaction if stockholder approval is not sought or
obtained, other than any such transaction which would result in at
least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately
-2-
<PAGE> 3
prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
(b) The rights represented by this Warrant may be
exercised by the Warrantholder of record, in whole, or from time to time in
part, by (a) surrender of this Warrant, accompanied by the Exercise Form
annexed hereto (the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be purchased, to the
Company at the office of the Company located at 2911 Turtle Creek Boulevard,
Suite 300, Dallas, Texas 75219 (or such other office or agency of the Company
as it may designate by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during normal business
hours on any day (a "Business Day") other than a Saturday, Sunday or a day on
which the New York Stock Exchange is authorized to close or on which the
Company is otherwise closed for business (a "Nonbusiness Day") on or after 9:00
A.M. New York City time on the Exercise Date but not later than 5:00 P.M. on
the Expiration Date (or 5:00 P.M. on the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), (b) delivery of payment to the Company
in cash or by certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares specified in the
Exercise Form and (c) such documentation as to the identity and authority of
the Warrantholder as the Company may reasonably request. Such Warrant Shares
shall be deemed by the Company to be issued to the Warrantholder as the record
holder of such Warrant Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for the Warrant
Shares as aforesaid. Certificates for the Warrant Shares specified in the
Exercise Form shall be delivered to the Warrantholder as promptly as
practicable, and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000 shares
each or such other denomination as may be specified by the Warrantholder and
agreed upon by the Company, and shall be issued in the name of the
Warrantholder or, if permitted by subsection 1.5 and in accordance with the
provisions thereof, such other name as shall be designated in the Exercise
Form. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder a new Warrant evidencing the rights to purchase
the remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant. No adjustments or payments shall be made on or in
respect of Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to the
date as of which the Warrantholder shall be deemed to be the record holder of
such Warrant Shares.
-3-
<PAGE> 4
1.2 Limitation on Exercise. This Warrant may only be
vested if, at the time of such vesting, Mr. Barker is an Employee of the
Company, except as provided in Section 1.3. If this Warrant is not exercised
prior to 5:00 P.M. on the Expiration Date (or the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant
issued pursuant to Section 1.1, shall cease to be exercisable and shall become
void and all rights of the Warrantholder hereunder shall cease. This Warrant
shall not be exercisable and no Warrant Shares shall be issued hereunder, prior
to 9:00 A.M. New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Mr.
Barker's employment with the Company, this Warrant may be exercised during the
three month period following such termination of employment, but only to the
extent that this Warrant was exercisable immediately prior to such termination
of employment. Notwithstanding the foregoing, if such termination is for
cause, the right to exercise this Warrant shall terminate upon such
termination. In no event shall this Warrant be exercisable for more than the
maximum number of shares that the Warrantholder was entitled to purchase at the
date of termination of the relationship with the Company. Subject to the
foregoing, in the event of Mr. Barker's death, this Warrant may be exercised
by Mr. Barker's legal representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for
Warrant Shares shall be made without charge to the Warrantholder for any stock
transfer or other issuance tax in respect thereto; provided, however, that the
Warrantholder shall be required to pay any and all taxes which may be payable
in respect to any transfer involved in the issuance and delivery of any
certificates for Warrant Shares in a name other than that of the then
Warrantholder as reflected upon the books of the Company.
1.5 Transfer Restriction and Legend. (a) Neither this
Warrant nor any interest or participation therein may be in any manner
transferred or disposed of, in whole or in part, at any time, without the
consent of the Company, except by will or pursuant to the laws of descent and
distribution or otherwise by operation of law.
(b) Without limiting the generality of the foregoing,
neither this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of, in
whole or in part, except in compliance with applicable United States federal
and state securities laws. This limitation shall be in addition to the
limitation set forth in Section 1.5(a) above.
Each certificate for Warrant Shares and any Warrant issued at
any time in exchange or substitution for any Warrant bearing such a legend
shall bear a legend similar in effect to the foregoing paragraph unless, in the
opinion of counsel for the Company, the Warrant need no longer be subject to
the restriction contained herein. The provisions of this subsection 1.5 shall
be binding upon all subsequent holders of this Warrant, if any. Warrant
-4-
<PAGE> 5
Shares transferred to the public as expressly permitted by, and in accordance
with, the provisions of this Warrant shall thereafter cease to be deemed to be
"Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided
into warrants representing one Warrant Share or multiples thereof, upon
surrender at the principal office of the Company on any Business Day, without
charge to any Warrantholder, except as provided below. The Warrantholder will
be charged for reasonable out-of-pocket costs incurred by the Company in
connection with the division of this Warrant into Warrants representing fewer
than one thousand (1,000) Warrant Shares. Upon any such division, and, if
permitted by subsection 1.5 and in accordance with the provisions thereof, the
Warrants may be transferred of record to a name other than that of the
Warrantholder of record; provided, however, that the Warrantholder shall be
required to pay any and all transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc.
All Warrant Shares which are issued upon the exercise of the
rights represented by this Warrant shall, upon issuance and payment of the
Exercise Price, be validly issued, fully paid and nonassessable and free from
all taxes, liens, security interests, charges and other encumbrances with
respect to the issue thereof other than taxes in respect of any transfer
occurring contemporaneously with such issue. During the period within which
this Warrant may be exercised, the Company shall at all times have authorized
and reserved, and keep available free from preemptive rights, a sufficient
number of shares of Common Stock to provide for the exercise of this Warrant,
and shall at its expense use its best efforts to procure such listing thereof
(subject to official notice of issuance) as then may be required on all stock
exchanges on which the Common Stock is then listed. The Company shall, from
time to time, take all such action as may be required to assure that the par
value per share of the Warrant Shares is at all times equal to or less than the
then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant.
If permitted by subsection 1.5 or 1.6 and in accordance with
the provisions thereof, upon surrender of this Warrant to the Company with a
duly executed instrument of assignment and funds sufficient to pay any transfer
tax, the Company shall, without charge, execute and deliver a new Warrant of
like tenor in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be cancelled. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this
Warrant.
-5-
<PAGE> 6
4. Ownership of Warrant.
The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments.
The Exercise Price at which Warrant Shares may be purchased
hereunder, and the number of Warrant Shares to be purchased upon exercise
hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
as follows:
(a) In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common
Stock (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which
the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of this Warrant shall be adjusted so
that the Warrantholder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive after the happening
of any of the events described above, had this Warrant been exercised
immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge
to such holders, entitling them to subscribe for or
purchase shares of Common Stock at a price per share
which is lower at the record date for the
determination of stockholders entitled to receive
such rights, options or warrants than the then
current market price per share of Common Stock, or
-6-
<PAGE> 7
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable
out of consolidated earnings or earned surplus and
dividends or distributions referred to in paragraph
(a) of this subsection 5.1) or rights, options or
warrants, or convertible or exchangeable securities
containing the right to subscribe for or purchase
shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant Shares
purchasable upon the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the Warrantholders, such
adjustments to be made by the good faith determination of the Board of
Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company
may, at its option, at any time during the term of the Warrants, reduce the
then current Exercise Price to any amount, consistent with applicable law,
deemed appropriate by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price of such Warrant Shares is adjusted, as herein
provided, the Company shall promptly mail first class, postage prepaid, to all
Warrantholders, notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all of the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrantholders an agreement that the
Warrantholders shall have the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon exercise of
this Warrant the kind and amount of shares and other securities and property
which such holder would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action; provided, however,
that no adjustment in respect of cash dividends, interest or other income on or
from such shares or other securities and property shall be made during the term
of this Warrant or upon the exercise of this Warrant. Such agreement shall
provide for adjustments, which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 5. The provisions of this
subsection 5.5 shall apply similarly to successive consolidations, mergers,
sales, transfers or leases.
-7-
<PAGE> 8
6. Registration Rights
6.1 Piggy-Back Registration Rights.
At any time following the closing of the Initial Public
Offering, whenever the Company proposes to register any Company Stock for its
own or others account under the Securities Act of 1933, as amended (the
"Securities Act"), for a public offering for cash, but other than a
registration relating to employee benefit plans, the Company will give each
Warrantholder prompt written notice of its intent to do so. Upon the written
request of any Warrantholder given within 30 days after receipt of such notice,
the Company will use its best efforts to cause to be included in such
registration all of the Company Stock which such Warrantholder requests,
provided that the Company shall have the right to reduce the number of shares
included in such registration if the Company is advised in writing in good
faith by any managing underwriter of the securities being offered pursuant to
any registration statement under this Section 6.1 that the number of shares to
be sold by persons other than the Company is greater than the number of such
shares which can be offered without adversely affecting the offering, the
Company may reduce pro rata the number of shares offered for the accounts of
such persons (based upon the number of shares held by such person) to a number
deemed satisfactory by such managing underwriter.
6.2 Other Arrangements. In connection with the
registration of Warrant Shares in accordance with subsections 6.1, the holders
who elect to have their Warrant Shares included therein shall so notify the
Company and furnish the Company with such appropriate information (including,
but not limited to, the manner in which such shares are to be sold) in
connection therewith as the Company shall reasonably request. Such
notification shall be made, and such information furnished, in writing within
ten (10) calendar days of receipt of the notices specified in subsections 6.1.
In connection with any such registration, the Company agrees to:
(a) Use its best efforts to register or qualify the
Warrant Shares for offer or sale under state securities or "blue sky"
laws of such jurisdictions in which the holders thereof shall
reasonably designate, and use its best efforts to do any and all other
acts and things which may be necessary or advisable to enable the
holders to consummate the sale, transfer or other disposition of such
Warrant Shares in any jurisdiction; provided, however, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now qualified or to take any other action
which would subject it to general service of process in any
jurisdiction where it is not then so subject or subject itself to
taxation in any such jurisdiction;
(b) Furnish to the holders requesting registration of the
Warrant Shares (i) at least three (3) calendar days before the filing
thereof with the Securities and Exchange Commission (the "Commission")
a proof of the latest draft of the registration statement and, if
requested, to extend invitations to the holders of the Piggy-Back
Shares to
-8-
<PAGE> 9
attend all meetings at which the Company and the underwriter of such
offering are present at which such registration statement is
discussed, and (ii) promptly after the filing thereof, a copy of the
registration statement as filed and any amendment to such registration
statement and all exhibits thereto and consents of experts filed or to
be filed therewith;
(c) Furnish to the holders requesting registration of the
Warrant Shares at the Company's expense such number of copies of such
registration statement and all amendments thereto and of such
prospectuses (including each preliminary, amended, or supplemental
prospectus) as such persons may reasonably request in order to
facilitate the sale or transfer of his or its Warrant Shares;
(d) Make available to the Company's security holders, not
later than forty-five (45) calendar days after the end of the
Company's first fiscal quarter in which the first anniversary of the
effective date of the registration statement occurs (or ninety (90)
calendar days if the end of the first fiscal quarter in which the
first anniversary of the effective date occurs coincides with the end
of the Company's fiscal year), an earnings statement covering a period
of at least twelve (12) consecutive months, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 promulgated under the Securities Act;
(e) Use its best efforts to list the Warrant Shares on
any securities exchange on which other shares of Common Stock are
listed;
(f) Afford to the persons requesting registration an
opportunity to make such examination and inquiry into the financial
position, business and affairs of the Company and its subsidiaries as
such persons or their counsel may reasonably deem necessary so as to
satisfy themselves as to the accuracy and completeness of the
registration statement; and
(g) Pay all costs incident to such registration other
than the cost of any counsel or other advisers to the holder
requesting registration and any brokerage or underwriting commissions
in connection with the sale of the Warrant Shares so registered.
The Company shall have sole control in connection with the preparation, filing,
amending and supplementing of any registration statement, including the right
to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue
burden upon the ability of the Company to proceed with any other material
financing for its own account or any material corporate transaction, including,
but not limited to, a reorganization, recapitalization, merger, consolidation
or material acquisition of the securities or assets of another firm or
corporation; and the Company shall be required to file a
-9-
<PAGE> 10
new registration statement or to proceed with such actions as reasonably may be
required to cause the registration statement to become effective within a
reasonable time after the consummation of the event or transaction which
required such withdrawal or delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the
entire agreement between the Company and the Warrantholder with respect to this
Warrant and Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure
to the benefit of and shall be binding upon the Company, the Warrantholder and
holders of Warrant Shares and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Company, the
Warrantholders and holders of Warrant Shares, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be
modified or amended except by an instrument in writing signed by the Company
and Warrantholders that hold Warrants entitling them to purchase at least 50%
of the Warrant Shares. The Company, any Warrantholder or holders of Warrant
Shares may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Warrant on the part of such other party
hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Warrant shall not be construed as a
waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other
headings contained in this Warrant are for reference purposes only and shall
not be deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
7.5 Further Assurances. Each of the Company, the
Warrantholders and holders of Warrant Shares shall do and perform all such
further acts and things and execute and deliver all such other certificates,
instruments and/or documents (including without limitation, such proxies and/or
powers of attorney as may be necessary or appropriate) as any party hereto may,
at any time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other
communications required or permitted to be given under this Warrant shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by United States certified or registered first class mail, postage
prepaid, to the parties hereto at the following addresses or at such other
address as any party hereto shall hereafter specify by notice to the other
party hereto:
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<PAGE> 11
(a) if to the Company, addressed to:
F.Y.I. Incorporated
2911 Turtle Creek Boulevard
Suite 300
Dallas, Texas 75219
Attention: Chairman and Chief Development Officer
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands,
requests, notices and other communications shall be deemed to have been
received on the date of personal delivery thereof or on the third Business Day
after the mailing thereof.
7.7 Separability. Any term or provision of this Warrant
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable any other term or
provision of this Warrant or affecting the validity or enforceability of any of
the terms or provisions of this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Warrantholder an amount in cash equal to
such fraction multiplied by the current market price (as determined as of the
date of exercise, and with reference to the applicable trading market, in
accordance with paragraph (d) of subsection 5.1) of a share of such stock as of
the date of such exercise.
7.9 Rights of the Holder. The Warrantholder shall not,
solely by virtue of this Warrant, be entitled to any rights of a stockholder of
the Company, either at law or in equity.
7.10 Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights
under this Agreement are available only when at least a specified minimum
number of Warrant Shares is involved, such number shall be appropriately
adjusted to reflect any stock split, stock dividend, combination of securities
into a smaller number of securities or reclassification of stock.
-11-
<PAGE> 12
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ THOMAS C. WALKER
-----------------------------------
Name: Thomas C. Walker
Title: Chairman and
Chief Development Officer
Dated: November 16, 1995
-12-
<PAGE> 13
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______
in accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is
______________________________________________.
Date _________________ Signature _________________________
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from consolidated
financial statements of F.Y.I. Incorporated and subsidiaries, as of June 30,
1996, and is qualified in its entirety by reference to such Report on Form 10-Q
for the quarterly period ended June 30, 1996
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,521
<SECURITIES> 0
<RECEIVABLES> 13,321
<ALLOWANCES> 1,214
<INVENTORY> 536
<CURRENT-ASSETS> 15,854
<PP&E> 19,456
<DEPRECIATION> 10,461
<TOTAL-ASSETS> 45,695
<CURRENT-LIABILITIES> 11,594
<BONDS> 12,402
<COMMON> 55
0
0
<OTHER-SE> 22,861
<TOTAL-LIABILITY-AND-EQUITY> 45,695
<SALES> 2,640
<TOTAL-REVENUES> 24,651
<CGS> 1,974
<TOTAL-COSTS> 16,237
<OTHER-EXPENSES> 6,241
<LOSS-PROVISION> 298
<INTEREST-EXPENSE> 117
<INCOME-PRETAX> 2,296
<INCOME-TAX> 923
<INCOME-CONTINUING> 1,373
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,373
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
