<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, 1998 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 Identification
incorporation or organization) 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
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, 1998, 11,961,300 shares of the registrant's Common
Stock, $.01 par value per share, were outstanding.
<PAGE> 2
F.Y.I. INCORPORATED AND SUBSIDIARIES
FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements 3
Consolidated Balance Sheets - December 31, 1997 and June 30, 1998
(unaudited) 4
Consolidated Statements of Operations - Three months and six months ended
June 30, 1997 and 1998 (unaudited) 5
Consolidated Statements of Cash Flows - Six months ended
June 30, 1997 and 1998 (unaudited) 6
Notes to Consolidated Financial Statements - June 30, 1998 7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 10
Item 3 Quantitative and Qualitative Disclosures about Market Risk 13
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders II-1
Item 5 Other Information II-1
Item 6 Exhibits and Reports on Form 8-K II-2
SIGNATURES II-3
</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)
(SEE NOTE 1)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ ------------
ASSETS (unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 6,926 $ 4,834
Accounts receivable, less allowance of $3,122 and $3,598,
respectively 29,468 38,239
Inventory 1,675 1,363
Notes receivable, shareholders - short term 351 480
Prepaid expenses and other current assets 2,134 2,244
------------ ------------
Total current assets 40,554 47,160
PROPERTY, PLANT AND EQUIPMENT, net 19,888 25,588
GOODWILL AND OTHER INTANGIBLES 64,278 90,256
NOTES RECEIVABLE, STOCKHOLDER - LONG TERM 321 --
OTHER NONCURRENT ASSETS 1,197 2,682
------------ ------------
Total assets $ 126,238 $ 165,686
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 12,962 $ 17,064
Current maturities of long-term obligations 856 549
Income taxes payable 1,660 1,035
Current portion of deferred income taxes 980 980
Other current liabilities 1,991 2,550
------------ ------------
Total current liabilities 18,449 22,178
LONG-TERM OBLIGATIONS, net of current maturities 5,692 22,545
DEFERRED INCOME TAXES, net of current portion 874 706
OTHER LONG-TERM OBLIGATIONS 707 807
------------ ------------
Total liabilities 25,722 46,236
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
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,
10,946,286 and 11,900,770 shares issued and outstanding at
December 31, 1997 and June 30, 1998, respectively 109 119
Additional paid-in-capital 89,541 103,618
Retained earnings 11,367 16,214
------------ ------------
101,017 119,951
Less - Treasury stock, $.01 par value, 36,670 shares
at December 31, 1997 and June 30, 1998, respectively (501) (501)
------------ ------------
Total stockholders' equity 100,516 119,450
------------ ------------
Total liabilities and stockholders' equity $ 126,238 $ 165,686
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(SEE NOTE 1)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUE $ 35,896 $ 53,637 $ 69,384 $ 104,243
COST OF SERVICES 22,844 33,401 44,270 64,915
DEPRECIATION 736 1,263 1,415 2,420
--------- --------- --------- ---------
Gross profit 12,316 18,973 23,699 36,908
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 7,753 11,917 15,164 23,158
AMORTIZATION 438 787 853 1,495
--------- --------- --------- ---------
Operating income 4,125 6,269 7,682 12,255
OTHER (INCOME) EXPENSE:
Interest expense 183 347 380 534
Interest income (165) (40) (412) (86)
Other (income) expense, net 7 (17) 37 17
--------- --------- --------- ---------
Income before income taxes 4,100 5,979 7,677 11,790
PROVISION FOR INCOME TAXES 1,720 2,393 3,134 4,715
--------- --------- --------- ---------
NET INCOME $ 2,380 $ 3,586 $ 4,543 $ 7,075
========= ========= ========= =========
PRO FORMA DATA:
Historical net income $ 2,380 $ 3,586 $ 4,543 $ 7,075
Pro forma compensation differential 27 -- 270 --
Pro forma provision for income taxes 11 -- 161 --
--------- --------- --------- ---------
PRO FORMA NET INCOME $ 2,396 $ 3,586 $ 4,652 $ 7,075
========= ========= ========= =========
NET INCOME PER COMMON SHARE
BASIC $ 0.23 $ 0.30 $ 0.45 $ 0.60
========= ========= ========= =========
DILUTED $ 0.23 $ 0.30 0.44 $ 0.59
========= ========= ========= =========
PRO FORMA NET INCOME PER COMMON SHARE
BASIC $ 0.23 $ 0.30 $ 0.46 $ 0.60
========= ========= ========= =========
DILUTED $ 0.23 $ 0.30 $ 0.45 $ 0.59
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
BASIC 10,281 11,805 10,205 11,707
========= ========= ========= =========
DILUTED
10,424 12,137 10,359 12,017
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
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F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
--------------------
June 30, June 30,
1997 1998
-------- --------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,543 $ 7,075
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization 2,268 3,915
Change in operating assets and liabilities:
Accounts receivable (3,742) (4,583)
Inventory (342) 268
Prepaid expenses and other assets (261) (982)
Accounts payable and other current liabilities (4,041) (341)
-------- --------
Net cash (used in) provided by operating activities (1,575) 5,352
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,387) (6,511)
Distribution from partnership 60 --
Cash paid for acquisitions, net of cash received (7,777) (17,426)
-------- --------
Net cash used in investing activities (10,104) (23,937)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance, net of underwriting
discounts and other costs 295 756
Distribution to shareholders of pooled companies (100) --
Proceeds from short-term obligations 220 --
Proceeds from long-term obligations -- 22,000
Principal payments on short-term obligations (306) --
Principal payments on long-term obligations (1,641) (6,263)
-------- --------
Net cash (used in) provided by financing activities (1,532) 16,493
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (13,211) (2,092)
CASH AND CASH EQUIVALENTS, beginning of period 22,014 6,926
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 8,803 $ 4,834
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
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F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying consolidated financial statements and related notes to
consolidated financial statements include the accounts of F.Y.I. Incorporated
and its subsidiaries (the "Company" or "F.Y.I."), which consist of: (i) the
companies acquired in business combinations accounted for under the purchase
method of accounting from their respective acquisition dates; and (ii) the
companies acquired in business combinations accounted for under the
pooling-of-interests method of accounting either for all periods presented or
from the date of acquisition, based upon their financial materiality.
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, 1998,
its results of operations for the three months and six months ended June 30,
1997 and 1998, and its cash flows for the six months ended June 30, 1997 and
1998. All significant intercompany transactions 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 consolidated financial statements of the Company and the
related notes thereto in F.Y.I.'s Annual Report on Form 10-K filed with the
Commission on March 11, 1998. The results of operations for the interim periods
ended June 30, 1998 and 1997 may not be indicative of the results for the full
year.
Certain prior period amounts have been reclassified to make their
presentation consistent with the current year.
2. PRO FORMA NET INCOME
The Company acquired MAVRICC Management Systems, Inc. and a related
company, MMS Escrow and Transfer Agency, Inc., in March 1997; Input of Texas,
Inc. in March 1997 and Micro Publishing Systems, Inc. in December 1997, all in
transactions that were accounted for as poolings-of-interests. These companies
were managed prior to their acquisition dates as independent private companies
and represent a variety of tax structures. Therefore, selling, general and
administrative expenses for the historical periods reflect compensation and
related benefits that the former owners have received from the businesses during
those periods. In connection with the acquisitions, the owners have entered into
employment agreements that provide for compensation and benefits at levels lower
than the historical amounts (the "Compensation Differential"). The pro forma
data present compensation at the level the owners have agreed to receive
subsequent to the acquisitions. In addition, the pro forma data present the
incremental provision for income taxes as if all entities had been subject to
federal and state
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income taxes and the related income tax impact of the Compensation Differential
discussed above.
3. WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted net income per common share were computed in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
The differences between basic weighted average common shares and diluted
weighted average common shares and common stock equivalents are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
1997 1998 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic weighted average common shares 10,281 11,805 10,205 11,707
Weighted average options and warrants 143 332 154 310
-------- -------- -------- --------
Diluted weighted average common shares 10,424 12,137 10,359 12,017
======== ======== ======== ========
</TABLE>
4. BUSINESS COMBINATIONS
F.Y.I. acquired seven document management services businesses
simultaneously with the closing of its initial public offering (the "IPO") on
January 26, 1996. Since the IPO and through December 31, 1997, the Company
acquired 29 additional document management businesses, of which 25 were
accounted for as purchases and four were accounted for as poolings-of-interests.
During the first six months of 1998, the Company acquired six additional
document management businesses, five of which were accounted for as purchases
(the "Purchased Companies") and one of which was accounted for as a
pooling-of-interests. The five acquisitions accounted for as purchases were
Medicopy, Inc., Associate Record Technician Services, Inc., DeBari Associates,
Inc., ACT Medical Record Services, Inc. and Eagle Legal Services, Inc. The
aggregate consideration paid for the Purchased Companies consisted of $12.4
million in cash and 582,385 shares of Common Stock. The preliminary allocation
of the purchase price is set forth below (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Consideration Paid $ 23,996
Estimated Fair Value of Tangible Assets 5,781
Estimated Fair Value of Liabilities 5,742
Goodwill 23,957
</TABLE>
The weighted average fair market value of the shares of Common Stock used
in calculating the consideration paid was $19.95, which represents a 20%
discount from the average trading price of the Common Stock based on the length
and type of restrictions in the purchase agreements.
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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 allocations are not expected to be materially different than the
final allocations. Certain of the acquisitions are subject to additional
consideration based upon the achievement of specified earnings targets over one
to three year periods.
The acquisition of Lifo Systems, Inc. ("Lifo") in February 1998 for 326,659
shares of Common Stock was accounted for as a pooling-of-interests. The
consolidated financial statements of the Company were not restated for periods
prior to January 1, 1998 due to the financial immateriality of Lifo.
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 is being 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 a majority of the acquisitions
is not deductible for income tax purposes.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements of the Company and the related notes thereto appearing elsewhere in
this Report on Form 10-Q. Additional information concerning factors that could
cause results to differ materially from those in the forward-looking statements
is contained under "Item 5. Other Information."
Introduction
The Company's revenue relates to the following document and information
outsourcing services: (i) document and data conversion services; (ii) data
capture services; (iii) direct marketing services; (iv) records management
services; (v) healthcare services; (vi) litigation support services; and (vii)
employee and investor services. The Company's revenue also consists of sales of
micrographic and business imaging supplies and equipment, primarily in
conjunction with film processing and other micrographic services, sales of
filing supplies, shelving and software, commissions on the sales of imaging
systems and equipment and franchising fees.
Cost of services consists primarily of compensation and benefits to
non-administrative employees, occupancy costs, equipment costs and supplies. The
Company's cost of services also includes the cost of products sold for
micrographics and business imaging supplies and equipment, filing supplies,
shelving and software.
Selling, general and administrative expenses ("SG&A") consist primarily of:
(i) compensation and related benefits to the sales and marketing, executive
management, accounting, human resources and other administrative employees of
the Company; (ii) other sales and marketing costs; (iii) communications costs;
(iv) insurance costs; and (v) legal and accounting professional fees and
expenses.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Revenue
Revenue increased 49.4% from $35.9 million for the three months ended June
30, 1997 to $53.6 million for the three months ended June 30, 1998. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to June 30, 1997; and (ii) internal growth of 7.9% in revenue at the
companies acquired prior to June 30, 1997. Pro forma internal revenue growth was
8.9% for the three months ended June 30, 1998 assuming all acquisitions were
consummated as of January 1, 1997.
Gross profit
Gross profit increased 54.1% from $12.3 million for the three months ended
June 30, 1997 to $19.0 million for the three months ended June 30, 1998, largely
due to the increases in revenue
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discussed above. Gross profit as a percentage of revenue increased from 34.3%
for the three months ended June 30, 1997 to 35.4% for the three months ended
June 30, 1998, primarily due to the higher margin mix of revenue associated with
the acquisitions subsequent to June 30, 1997.
Selling, general and administrative expenses
SG&A increased 53.7% from $7.8 million, or 21.6% of revenue, for the three
months ended June 30, 1997 to $11.9 million, or 22.2% of revenue, for the three
months ended June 30, 1998, primarily due to SG&A associated with the
acquisitions subsequent to June 30, 1997. After giving effect to the
Compensation Differential in each period, SG&A increased 54.2% from $7.7 million
or 21.5% of revenue, for the three months ended June 30, 1997 to $11.9 million,
or 22.2% of revenue, for the three months ended June 30, 1998. This increase in
SG&A was a result of: (i) SG&A incurred at companies acquired subsequent to June
30, 1997; and (ii) increased corporate overhead required to manage the
consolidated group.
Pro forma operating income
Pro forma operating income adjusted for the Compensation Differential
increased 51.0% from $4.2 million, or 11.6% of revenue, for the three months
ended June 30, 1997 to $6.3 million, or 11.7% of revenue for the three months
ended June 30, 1998.
Pro forma income before income taxes and pro forma net income
Pro forma income before income taxes adjusted for the Compensation
Differential increased 44.9% from $4.1 million for the three months ended June
30, 1997 to $6.0 million for the three months ended June 30, 1998, and pro forma
net income adjusted for the Compensation Differential and pro forma provision
for taxes increased 49.7% from $2.4 million for the three months ended June 30,
1997 to $3.6 million for the three months ended June 30, 1998, largely
attributable to the factors discussed above.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Revenue
Revenue increased 50.2% from $69.4 million for the six months ended
June 30, 1997 to $104.2 million for the six months ended June 30, 1998. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to June 30, 1997; and (ii) internal growth of 7.4% in revenue at the
companies acquired prior to June 30, 1997. Pro forma internal revenue growth was
10.5% for the six months ended June 30, 1998 assuming all acquisitions were
consummated as of January 1, 1997.
Gross profit
Gross profit increased 55.7% from $23.7 million for the six months ended
June 30, 1997 to $36.9 million for the six months ended June 30, 1998, largely
due to the increases in revenue
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discussed above. Gross profit as a percentage of revenue increased from 34.2%
for the six months ended June 30, 1997 to 35.4% for the six months ended June
30, 1998, primarily due to the higher margin mix of revenue associated with the
acquisitions subsequent to June 30, 1997.
Selling, general and administrative expenses
SG&A increased 52.7% from $15.2 million, or 21.9% of revenue, for the six
months ended June 30, 1997 to $23.2 million, or 22.2% of revenue, for the six
months ended June 30, 1998, primarily due to SG&A associated with the
acquisitions subsequent to June 30, 1997. After giving effect to the
Compensation Differential in each period, SG&A increased 55.5% from $14.9
million, or 21.5% of revenue, for the six months ended June 30, 1997 to $23.2
million, or 22.2% of revenue, for the six months ended June 30, 1998. This
increase in SG&A was a result of: (i) SG&A incurred at companies acquired
subsequent to June 30, 1997; and (ii) increased corporate overhead required to
manage the consolidated group.
Pro forma operating income
Pro forma operating income adjusted for the Compensation Differential
increased 54.1% from $8.0 million, or 11.5% of revenue, for the six months ended
June 30, 1997 to $12.3 million, or 11.8% of revenue, for the six months ended
June 30, 1998.
Pro forma income before income taxes and pro forma net income
Pro forma income before income taxes adjusted for the Compensation
Differential increased 48.4% from $7.9 million for the six months ended June 30,
1997 to $11.8 million for the six months ended June 30, 1998, and pro forma net
income adjusted for the Compensation Differential and pro forma provision for
taxes increased 52.1% from $4.7 million for the six months ended June 30, 1997
to $7.1 million for the six months ended June 30, 1998, largely attributable to
the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had $25.0 million of working capital and $4.8
million of cash. Cash flows provided by operating activities for the six months
ended June 30, 1998 were $5.4 million and were impacted by an increase in
accounts receivable associated with the Company's revenue growth. Net cash used
in investing activities was $23.9 million, as the Company paid $17.4 million for
acquisitions, net of cash acquired. Net cash provided by financing activities
was $16.5 million primarily due to borrowings on the Company's line of credit.
During the six months ended June 30, 1997, cash flows used in operating
activities were $1.6 million. Net cash used in investing activities was $10.1
million, as the Company paid $7.8 million for acquisitions, net of cash
acquired. Net cash used in financing activities was $1.5 million.
The Company anticipates that cash on hand, cash from operations, additional
bank financing available under the 1998 Credit Agreement (as defined below), and
shares of Common Stock available under the Acquisition Shelf (as defined below)
will provide sufficient liquidity to execute the Company's acquisition and
internal growth plans for at least the next 12
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months. In February 1998, the Company entered into a new credit agreement (the
"1998 Credit Agreement") with Banque Paribas and Bank of America Texas, N.A., as
co-agents and the lenders named therein. Under the 1998 Credit Agreement, the
Company and its subsidiaries can borrow on a revolving credit basis loans in an
aggregate outstanding principal amount up to $50.0 million, subject to certain
customary borrowing capacity requirements. In August 1998, the 1998 Credit
Agreement was amended to increase the aggregate outstanding principal limit to
$65 million. The availability under the 1998 Credit Agreement as of August 3,
1998 was $31.2 million. Should the Company accelerate its acquisition program,
the Company may need to seek additional financing through the public or private
sale of equity or debt securities. There can be no assurance that the Company
could secure such financing if and when it is needed or on terms the Company
deems acceptable. The Company has an effective acquisition shelf Registration
Statement on Form S-4 (Registration No. 333-24015) registering 2,500,000 shares
of Common Stock for issuance in its acquisition program (the "Acquisition
Shelf"), of which 1,318,843 shares were available at June 30, 1998.
IMPACT OF THE YEAR 2000 ISSUE
The "Year 2000 Issue" describes the use of two digits rather than four
digits to define the applicable year in certain computer programs. With the
coming millennium, any of the Company's computer programs that have two digit
date-sensitive software may interpret a date of "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
Management is in the process of evaluating the effect of the Year 2000
Issue on the Company and the need to achieve Year 2000 compliance with no
material effect on customers or disruption in business operations. The
Company's process includes communications with suppliers, customers and others
with which it does business. Based on preliminary findings, the total cost of
addressing the Year 2000 Issue is not expected to have a material adverse
effect on the Company's business, financial condition or results of operations.
However, management is in the process of completing its assessment of the
potential impact and cost of the Year 2000 Issue on the Company and the
potential exposure of the Company to related problems of its customers and
suppliers. There can be no assurance that such exposure or the costs of
remediating any problems associated therewith will not materially adversely
affect the Company's future business, financial condition or results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 304 of Regulation S-K, the
quantitative and qualitative disclosures called for by Item 3 and by Rule 305
of Regulation S-K are inapplicable to the Company at this time.
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PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
On May 6, 1998, the Company held its annual meeting of stockholders. The
stockholders elected ten (10) directors. The shares voting on the director
nominees were cast as follows:
<TABLE>
<CAPTION>
Number of Votes
-----------------------------
Nominee For Against/Withheld Abstentions Broker Non-Votes
------- --- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
G. Michael Bellenghi 9,862,322 43,835 -- --
Ed H. Bowman, Jr. 9,862,322 43,835 -- --
Michael J. Bradley 9,862,322 43,835 -- --
Kyle C. Kerbawy 9,862,322 43,835 -- --
David Lowenstein 9,862,322 43,835 -- --
Gregory R. Melanson 9,862,322 43,835 -- --
Donald F. Moorehead, Jr. 9,862,322 43,835 -- --
Hon. Edward M. Rowell 9,862,322 43,835 -- --
Jonathan B. Shaw 9,862,322 43,835 -- --
Thomas C. Walker 9,862,322 43,835 -- --
</TABLE>
The stockholders approved the 1995 Stock Option Plan, as amended. The
shares voting on the 1995 Stock Option Plan, as amended were cast as follows:
8,499,880 shares were voted in favor of approving and adopting the 1995
Stock Option Plan, as amended. 651,335 shares were voted against approving and
adopting the 1995 Stock Option Plan, as amended, and 2,697 shares abstained.
ITEM 5. OTHER INFORMATION.
RECENT DEVELOPMENTS
Since December 31, 1997, the Company has acquired the following document
and information outsourcing solutions businesses (the "Recent Acquisitions"):
(i) ACT Medical Record Services, Inc., a medical records release of information
business in Wisconsin; (ii) Lifo Systems, Inc., a database creation and
management business in Texas; (iii) Medicopy, Inc., a medical records release of
information business in Mississippi; (iv) Associate Record Technician Services,
Inc., a medical temporary staffing agency in California; (v) DeBari Associates,
Inc., a litigation support and systems integration company in New York City and
St. Vincent, The Grenadines; (vi) Eagle Legal Services, Inc., a litigation
support company in Kansas and Missouri; and (vii) Doctex, a systems integration
company in Missouri.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This filing contains certain forward-looking statements such as the
Company's or management's intentions, hopes, beliefs, expectations, strategies,
predictions or any other variation thereof or comparable phraseology of the
Company's future activities or other future events or conditions within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be covered by the safe
harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including, without limitation,
variations in quarterly results, volatility of the Company's stock price,
development by competitors of new or superior products or services, entry
into the market of new competitors, the sufficiency of the Company's working
capital and the ability of the Company to realize benefits from consolidating
certain general and administrative functions, to assimilate and integrate
acquisitions, to continue its aggressive acquisition program, to retain
management, to implement its focused business strategy to expand its document
management services geographically, to retain or to attract customers from other
businesses, to increase revenue by cross-selling services and to successfully
defend itself in ongoing and future litigation. Although the Company believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate, and, therefore,
there can be no assurance that the forward-looking statements included in this
filing will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
II-1
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
10.31 First Amendment to Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Joe A. Rose
10.32 First Amendment to Amended and Restated Credit Agreement, dated as of
August 3, 1998, by and among F.Y.I. Incorporated, Banque Paribas,
Bank of America Texas, N.A. and the Lenders named therein
21 List of Subsidiaries of F.Y.I. Incorporated
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30,
1998.
II-2
<PAGE> 16
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 10, 1998 By: /s/ Ed H. Bowman, Jr.
---------------------
Ed H. Bowman, Jr.
President and
Chief Executive Officer
Date: August 10, 1998 By: /s/ Timothy J. Barker
---------------------
Timothy J. Barker
Senior Vice President and Chief
Financial Officer (Principal
Accounting Officer)
II-3
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
10.31 First Amendment to Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Joe A. Rose
10.32 First Amendment to Amended and Restated Credit Agreement, dated as of
August 3, 1998, by and among F.Y.I. Incorporated, Banque Paribas,
Bank of America Texas, N.A. and the Lenders named therein
21 List of Subsidiaries of F.Y.I. Incorporated
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.31
FIRST AMENDMENT TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This First Amendment to the Amended and Restated Employment Agreement (the
"Agreement") by and between F.Y.I. Incorporated, a Delaware corporation (the
"Company") and Joe A. Rose ("Employee") is hereby entered into and effective as
of June 17, 1998.
Paragraph 2(a) is hereby amended and restated as follows:
2. Compensation. For all services rendered by Employee,
the Company shall compensate Employee as follows:
(a) Base Salary; Annual Bonus. The base salary payable to Employee
shall be $165,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly (pro-rated for
any year in which Employee is employed for less than the full year). For 1998
and subsequent years, it is the Company's intent to develop a written Incentive
Bonus Plan setting forth the criteria under which Employee and other officers
and key employees will be eligible to receive year-end bonus awards. Employee
shall be eligible for a bonus opportunity of up to 50% of Employee's annual base
salary in accordance with this Incentive Bonus Plan, pro-rated for any year in
which Employee was employed for less than the full year. The award of any bonus
shall be based on the total performance of the business unit managed and shall
be payable in various increments based on the performance of the business unit
versus targeted goals. The incremental payments and the Company's targeted
performance shall be determined by the Board of Directors (the "Board") or the
compensation committee thereof.
Paragraph 4 is hereby amended and restated as follows:
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on June 17, 1997 and continue for two (2) years
(the "Term"). This Agreement and Employee's employment may be terminated in any
one of the following ways:
EMPLOYEE:
/s/ JOE A. ROSE
------------------------------
Joe A. Rose
F.Y.I. INCORPORATED
By:/s/ ED H. BOWMAN, JR.
---------------------------
Title: President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10.32
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") is entered into to be effective as of August 3, 1998, by and among
F.Y.I. Incorporated, a Delaware corporation ("F.Y.I."), the Lenders (as such
term is defined in the Credit Agreement, as hereinafter defined) which are
parties hereto, Banque Paribas, a bank organized under the laws of France
acting through its Chicago Branch, as agent for itself and the other Lenders
(the "Agent"), and Bank of America Texas, N.A., as co-agent for itself and the
other Lenders ("Co-Agent").
RECITALS
A. F.Y.I., the Agent, Co-Agent and the Lenders entered into that
certain Amended and Restated Credit Agreement dated as of February 17, 1998
(the "Credit Agreement"), pursuant to which, among other things, the Lenders
agreed to make certain loans available to F.Y.I. upon the terms and conditions
set forth therein;
B. F.Y.I., the Agent, Co-Agent and the Lenders desire to amend
the Credit Agreement in certain respects as more fully set out herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, F.Y.I., the Lenders, and the Agent hereby agree as follows:
1. Terms. All terms used herein which begin with an initial
capital letter shall, unless otherwise expressly defined herein, have the same
definitions assigned to such terms in the Credit Agreement, as modified by this
Amendment.
2. Amendment to Commitment. Effective as of the date hereof, the
aggregate principal amount of the Commitments is increased from $50,000,000.00
to $65,000,000.00. The amount set forth opposite the name of each Lender on
the signature pages hereto under the heading "Commitment" shall represent the
obligation of such Lender as increased hereby.
3. Amendment to Definitions. Effective as of the date hereof,
the following definition of "EBITA" shall be added to Section 1.1 of the Credit
Agreement:
"EBITA" means, for any period, without duplication, the sum of the
following for F.Y.I. and its Subsidiaries (or other applicable Person)
for such period determined on a consolidated basis in accordance with
GAAP: (a) Consolidated Net Income, plus (b) Consolidated Interest
Expense, plus (c) income and franchise taxes to the extent deducted in
determining Consolidated Net Income plus (d) amortization expense and
other non-cash, non-tax items (other than depreciation) to the extent
deducted in determining Consolidated Net Income. For purposes of
calculating the EBITA of F.Y.I. and its consolidated Subsidiaries for
any period of four consecutive fiscal quarters, the EBITA associated
with any Person or assets acquired in a
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 1
<PAGE> 2
Permitted Acquisition during such period of four consecutive fiscal
quarters shall be added, without duplication, if the Permitted
Acquisition and the EBITA of the Person or assets acquired were
approved in writing by the Required Lenders.
4. Amendment to Consolidated Fixed Charge Coverage Ratio.
Effective as of the date hereof, the definition of "Consolidated Fixed Charge
Coverage Ratio" in Section 1.1 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of (a)(i) EBITA of F.Y.I. and its Subsidiaries for such period
minus (ii) taxes of F.Y.I. and its Subsidiaries paid or payable in
cash during such period, to (b) the Fixed Charges of F.Y.I. and its
Subsidiaries for such period.
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 2
<PAGE> 3
5. Amendment to Permitted Acquisitions. Effective as of the date
hereof, the definition of "Permitted Acquisitions" in Section 1.1 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:
"Permitted Acquisition" means any Acquisition which has been
approved in writing by the Agent and the Required Lenders or any other
Acquisition which satisfies each of the following requirements: (a)
the acquiror (or surviving corporation if the acquisition is by means
of a merger) is F.Y.I. or any Subsidiary of F.Y.I., (b) the assets to
be acquired in connection with such Acquisition are assets that are to
be used in the existing businesses of the acquiror as such business is
presently conducted, (c) such Acquisition has been approved by the
Board of Directors of the acquired entity, (d) the acquired entity
shall have generated positive EBITDA during the twelve-month period
preceding the Acquisition, which positive EBITDA shall be audited or
reviewed by an accounting firm acceptable to the Agent if (but only
if) the Acquisition involves total consideration paid or payable of
$10,000,000 or more, after adjusting for excess owners' compensation
and other pro forma charges as validated by the Agent, (e) after
giving effect to such Acquisition and any Debt incurred in connection
therewith, Total Debt does not exceed 2.5 times EBITDA for the four
fiscal quarters most recently completed of F.Y.I. and its Subsidiaries
(and including the acquired entity's trailing twelve-month EBITDA as
adjusted for any interest not acquired, if audited or reviewed by an
accounting firm acceptable to the Agent) (EBITDA may include proforma
adjustments to an acquired entity's earnings, as adjusted for any
interest not acquired, acceptable to the Agent), (f) such Acquisition
shall not exceed $20,000,000 in total consideration (including any
Debt assumed or guaranteed in connection therewith), without Required
Lenders' approval, (g) the aggregate amount of all such Acquisitions
made on or after the Closing Date shall not exceed $25,000,000, in
total consideration (including any Debt assumed or guaranteed in
connection therewith) in any twelve-month period without Required
Lenders' approval; provided, however, for purposes hereof, the amount
of such consideration relating to the acquisition of DeBari Associates
Acquisition Corp. and the acquisition of Associate Record Technician
Services Acquisition Corp. shall not be included in such aggregate
amount of $25,000,000, (h) prior to and after giving effect to the
Acquisition, no Default shall exist, (i) after giving effect to such
Acquisition, F.Y.I. will not violate any financial covenant, and (j)
no material part of the Property or business operations to be acquired
are located outside the U.S. or Canada; provided, however, that up to
$7,000,000 (valued at total purchase consideration including any Debt
assumed or guaranteed in connection therewith) in Acquisitions made on
or after the Closing Date and during the term of this Agreement will
be deemed to be Permitted Acquisitions despite their failure to meet
the requirements of items (d) and (j) preceding so long as no such
acquired entity or entities shall have annual sales (individually for
any one such acquired entity or in the aggregate for all such acquired
entities) in excess of $10,000,000 or cumulative EBITDA losses
(individually for any one such acquired entity or in the aggregate for
all such acquired entities) in excess of $1,500,000 incurred, in each
case during the twelve- month period preceding the respective dates of
acquisition.
6. Amendment to Section 10.3. Effective as of the date hereof,
Section 10.3 of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
Section 10.3 Consolidated Fixed Charge Coverage Ratio.
F.Y.I. will not permit
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 3
<PAGE> 4
the Consolidated Fixed Charge Coverage Ratio, calculated as of
the end of each fiscal quarter of F.Y.I. for the four fiscal
quarters of F.Y.I. then ended, (i) commencing with the fiscal
quarter ended December 31, 1997 and ending with the fiscal
quarter ending March 31, 1998 to be less than 1.50 to 1.00 and
(ii) commencing with the fiscal quarter ended June 30, 1998,
and as of the last day of each fiscal quarter thereafter, to
be less than 1.20 to 1.00.
7. Representations and Warranties. The representations and
warranties made by F.Y.I. in the Loan Documents, as the same are amended
hereby, are true and correct at the time this Amendment is executed and
delivered, except to the extent that such representations and warranties are
expressly by their terms made only as of the Closing Date or another specified
date. F.Y.I. further represents and warrants to Agent and Lenders that (i) the
execution, delivery and performance of this Amendment and any and all other
Loan Documents executed and/or delivered in connection herewith have been
authorized by all requisite corporate action on the part of F.Y.I. and will not
violate the articles of incorporation or bylaws of F.Y.I., (ii) no Event of
Default has occurred and is continuing and no event or condition has occurred
that with the giving of notice or lapse of time or both would be an Event of
Default, and (iii) F.Y.I. is in full compliance with all covenants and
agreements contained in the Credit Agreement as amended hereby.
8. Costs. F.Y.I. agrees to pay all costs incurred in connection
with the negotiation, preparation, execution and consummation of this Amendment
and the transactions preceding and contemplated by this Amendment including,
without limitation, the fees and expenses of counsel to the Agent and the
Lenders.
9. Miscellaneous.
(a) Headings. Section headings are for reference only,
and shall not affect the interpretation or meaning of any provision of
this Amendment.
(b) No Waiver. No failure on the part of the Agent or
the Lenders to exercise, and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under the Loan
Documents shall operate as a waiver thereof, and no single or partial
exercise of any right, power, or privilege under the Loan Documents
shall preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege.
(c) Effect of this Amendment. The Credit Agreement, as
amended by this Amendment, shall remain in full force and effect
except that any reference therein, or in any other Loan Document,
referring to the Credit Agreement, shall be deemed to refer to the
Credit Agreement, as amended by this Amendment.
(d) Governing Law. EXCEPT TO THE EXTENT THAT THE CREDIT
AGREEMENT EXPRESSLY PROVIDES OTHERWISE, THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS.
(e) Counterparts. This Amendment may be executed by the
different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 4
<PAGE> 5
original, but all such counterparts shall constitute but one and the
same Amendment.
(f) NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS AMENDED
BY THIS AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS
THE ENTIRE AGREEMENT AMONG THE PARTIES, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
F.Y.I.:
F.Y.I. INCORPORATED
By:/s/ DAVID LOWENSTEIN
-----------------------------
David Lowenstein
Executive Vice President
LENDERS:
BANQUE PARIBAS, as Agent and a Lender
Commitment:
$25,000,000.00
By:/s/ CLARK C. KING III
--------------------------------
Name: Clark C. King III
------------------------------
Title: Director
-----------------------------
By:/s/ FRANCOIS DELANGLE
--------------------------------
Name: Francois Delangle
------------------------------
Title: Vice President
-----------------------------
BANK OF AMERICA TEXAS, N.A., as
Co-Agent and a Lender
Commitment:
$25,000,000.00
By:/s/ CONNER DUFFEY
--------------------------------
Name: Conner Duffey
------------------------------
Title: Vice President
-----------------------------
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 5
<PAGE> 6
BANK ONE, TEXAS, N.A.
Commitment:
$15,000,000.00
By:/s/ SCOTT RHEA
--------------------------------
Name: Scott Rhea
------------------------------
Title: Vice President
-----------------------------
Each Loan Party (other than F.Y.I.) hereby consents and agrees to this
Amendment and agrees that the Guaranty and the Security Agreements (if any)
executed by such Loan Party shall remain in full force and effect and shall
continue to be the legal, valid and binding obligations of such Loan Party
enforceable against such Loan Party in accordance with its respective terms.
LOAN PARTIES:
IMAGENT ACQUISITION CORP.
RESEARCHERS ACQUISITION CORP.
RECORDEX ACQUISITION CORP.
DPAS ACQUISITION CORP.
LEONARD ARCHIVES ACQUISITION CORP.
DELIVEREX ACQUISITION CORP.
PERMANENT RECORDS ACQUISITION CORP.
DELIVEREX SACRAMENTO ACQUISITION CORP.
B&B (BALTIMORE-WASHINGTON)ACQUISITION CORP.
PREMIER ACQUISITION CORP.
ROBERT A. COOK ACQUISITION CORP.
PENINSULA RECORD MANAGEMENT, INC.
RAC (CALIFORNIA) ACQUISITION CORP.
CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
MINNESOTA MEDICAL RECORD SERVICE
ACQUISITION CORP.
TEXAS MEDICAL RECORD SERVICE
ACQUISITION CORP.
ZIA INFORMATION ANALYSIS GROUP, INC.
CH ACQUISITION CORP.
DISC ACQUISITION CORP.
ACADIAN CONSULTANTS CORP.
ACT MEDICAL RECORD SERVICES, INC.
APS SERVICES ACQUISITION CORP.
COMPUTER CENTRAL CORPORATION
DELAWARE MAJOR ACQUISITION CORP.
INFORMATION MANAGEMENT ACQUISITION CORP.
INPUT OF TEXAS, INC.
MAVRICC MANAGEMENT SYSTEMS, INC.
MMS ESCROW AND TRANSFER AGENCY, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 6
<PAGE> 7
QCS INET ACQUISITION CORP.
QUALITY COPY ACQUISITION CORP.
THE RUST CONSULTING GROUP, INC.
ZIP SHRED CANADA ACQUISITION CORP.
ASSOCIATE RECORD TECHNICIAN SERVICES
ACQUISITION CORP.
DEBARI ASSOCIATES ACQUISITION CORP.
LIFO SYSTEMS, INC.
MEDICOPY ACQUISITION CORP.
MMS SECURITIES, INC.
ZIPSHRED,INC.
MICRO PUBLICATION SYSTEMS, INC.
By:/s/ DAVID LOWENSTEIN
-------------------------------------
David Lowenstein, authorized
officer acting on behalf of each of
the Loan Parties listed above
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT Page 7
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
Acadian Consultants Corp.
ACT Medical Record Services, Inc.
APS Services Acquisition Corp.
Associate Record Technician Services Acquisition Corp.
B&B (Baltimore-Washington) Acquisition Corp.
California Medical Record Service Acquisition Corp.
CH Acquisition Corp.
Computer Central Corporation
DeBari Associates Acquisition Corp.
Delaware Major Acquisition Corp.
Deliverex Acquisition Corp.
Deliverex Sacramento Acquisition Corp.
DISC Acquisition Corp.
Doctex Acquisition Corp.
DPAS Acquisition Corp.
Eagle Legal Services Acquisition Corp.
F.Y.I. Corporate Acquisition Corp.
Imagent Acquisition Corp.
Information Management Acquisition Corp.
Input of Texas, Inc.
Leonard Archives Acquisition Corp.
Lifo Systems, Inc.
MAVRICC Management Systems, Inc.
Medicopy Acquisition Corp.
Micro Publication Systems, Inc.
Minnesota Medical Record Service Acquisition Corp.
MMS Escrow and Transfer Agency, Inc.
Permanent Records Acquisition Corp.
Premier Acquisition Corp.
QCS Inet Acquisition Corp.
Quality Copy Acquisition Corp.
RAC (California) Acquisition Corp.
Recordex Acquisition Corp.
Researchers Acquisition Corp.
Robert A. Cook Acquisition Corp.
Texas Medical Record Service Acquisition Corp.
The Rust Consulting Group, Inc.
ZIA Information Analysis Group, Inc.
Zip Shred Canada Acquisition Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 4,834
<SECURITIES> 0
<RECEIVABLES> 38,239
<ALLOWANCES> 3,598
<INVENTORY> 1,363
<CURRENT-ASSETS> 47,160
<PP&E> 45,485
<DEPRECIATION> 19,897
<TOTAL-ASSETS> 165,686
<CURRENT-LIABILITIES> 22,178
<BONDS> 23,094
0
0
<COMMON> 119
<OTHER-SE> 119,331
<TOTAL-LIABILITY-AND-EQUITY> 165,686
<SALES> 3,550
<TOTAL-REVENUES> 104,243
<CGS> 2,657
<TOTAL-COSTS> 88,073
<OTHER-EXPENSES> (69)
<LOSS-PROVISION> 439
<INTEREST-EXPENSE> 534
<INCOME-PRETAX> 11,790
<INCOME-TAX> 4,715
<INCOME-CONTINUING> 7,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,075
<EPS-PRIMARY> .60
<EPS-DILUTED> .59
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-1-1997 JAN-1-1997 JAN-1-1997
<PERIOD-END> SEP-30-1997 JUN-30-1997 MAR-31-1997
<CASH> 8,296 8,803 14,076
<SECURITIES> 0 0 0
<RECEIVABLES> 28,491 25,715 22,960
<ALLOWANCES> 2,174 1,406 1,559
<INVENTORY> 1,464 1,444 1,161
<CURRENT-ASSETS> 40,692 37,516 39,640
<PP&E> 34,347 28,771 26,534
<DEPRECIATION> 16,667 13,674 12,330
<TOTAL-ASSETS> 115,727 107,124 105,010
<CURRENT-LIABILITIES> 17,237 15,328 18,882
<BONDS> 5,451 5,344 6,183
0 0 0
0 0 0
<COMMON> 103 101 99
<OTHER-SE> 93,135 86,571 80,693
<TOTAL-LIABILITY-AND-EQUITY> 115,727 107,124 105,010
<SALES> 5,878 3,590 1,765
<TOTAL-REVENUES> 109,893 69,384 33,488
<CGS> 4,527 2,773 1,351
<TOTAL-COSTS> 95,039 59,434 28,838
<OTHER-EXPENSES> (386) (375) (217)
<LOSS-PROVISION> 387 99 3
<INTEREST-EXPENSE> 535 380 197
<INCOME-PRETAX> 11,181 7,677 3,577
<INCOME-TAX> 4,536 3,134 1,414
<INCOME-CONTINUING> 6,645 4,543 2,163
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 6,645 4,543 2,163
<EPS-PRIMARY> 0.70 0.45 0.21
<EPS-DILUTED> 0.69 0.44 0.21
</TABLE>
