accordingly for the remainder of the lease term. RPM leases approximately 3,900 square feet of office space in Spokane, Washington. This lease expires in June 2000. RPM also maintains an office in Moses Lake, Washington which is leased on a month-to-month basis.
The Company believes that its existing facilities will be adequate to meet its present needs. However, should the Company require additional space it is assumed that such space will be available.
The following table sets forth certain selected financial data with respect to the Company for each of the years in the five year period ended March 31, 1996. The information set forth below should be read in conjunction with the financial statements and the notes thereto included elsewhere herein.
(2) Net earnings per share of Common Stock reflects a 100% share dividend declared October 1, 1991.
The following table sets forth information with respect to the Company's types of revenues for the fiscal years ended March 31, 1996, 1995 and 1994:
Type of revenues: 1996 1995 1994 - - ----------------- ----------- ----------- ----------- Hospital bill audit services $ 3,946,682 $ 4,061,918 $ 5,063,134 Vocational rehabilitation services 1,293,166 1,304,212 748,794 ----------- ----------- ----------- $ 5,239,848 $ 5,366,130 $ 5,811,928 =========== =========== ===========
Hospital bill auditing ("HBA") revenues have been severely affected by several factors, the first of which is the successive loss of its two largest clients. During Fiscal 1996, the Company was notified that MetraHealth, formerly Metropolitan Life Insurance Company's group health division, would no longer be utilizing the Company's hospital bill auditing services. MetraHealth comprised 9%, 22% and 12% of consolidated revenues for the fiscal years ended March 31, 1996, 1995 and 1994, respectively. Previously, The Travelers, which represented 11% of Fiscal 1994 consolidated revenues, chose not to renew its HBA services contract with the Company.
Over the past several years, the HBA industry as a whole has suffered a decline in demand for its services and the number of hospital bill audits being performed. To compensate for the erosion in traditional hospital bill audits, the Company introduced two additional services in Fiscal 1995, a provider discount network and nurse-directed negotiations. Although these services have provided new sources of HBA revenue, they have not been able to generate enough incremental revenue to counter the continuing decrease in the total number of claims received for HBA services. Management anticipates that the volume of claims received for HBA services may continue to decrease during the upcoming year. This trend may have a material impact on earnings from HBA operations.
Selling, general and administrative expenses during Fiscal 1996 decreased $914,321 to 49.4% of consolidated revenues from 65.2% of consolidated revenues in Fiscal 1995. This decrease was achieved through various cost saving initiatives introduced during the prior fiscal year, the benefits of which were fully realized during Fiscal 1996. During Fiscal 1995, selling, general and administrative expenses decreased by $564,846, or 13.9%, from Fiscal 1994 even though Fiscal 1995 contained a full year of expenses from RPM Rehabilitation & Associates, Inc., which was acquired on September 15, 1993. This decrease was achieved as a direct result of the savings produced by the centralization of HBA services to Dallas, Texas and the initial implementation of the Company's cost saving program which included workforce reductions.
1996. The provision for income taxes in Fiscal 1995 produced a higher effective tax rate as a result of nondeductible amortization of goodwill related to the acquisition of RPM being added to a low level of net earnings. For Fiscal 1994, the Company recorded a tax benefit of $13,500 as result of a reduction in deferred taxes due to the elimination of cash basis accounting for tax purposes, tax-exempt income and the benefit of graduated tax rates being imposed on a reduced level of income.
At March 31, 1996, the Company had working capital of $7,569,169, including cash and cash equivalents of $7,242,909, as compared to working capital of $5,550,420 at March 31, 1995. This $2,018,749 increase in working capital is attributable to the sale of marketable securities which had been classified as non-current in the prior year and net earnings from operations.
Net cash provided by operations during Fiscal 1996 of $508,096 was primarily the result of net earnings from operations and non-cash depreciation and amortization.
There were no cash flows from financing activities during Fiscal 1996 or 1995.
In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123) was issued. SFAS 123 encourages companies to adopt a fair value basis method of accounting for stock-based compensation plans in place of the intrinsic value method provided for by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Companies which continue to apply the provisions of APB 25 must make pro forma disclosures in the notes to their financial statements of net income and earnings per share as if the fair value based method of accounting defined in SFAS 123 had been applied. The Company plans to adopt the SFAS 123 in fiscal year 1997 on a pro forma disclosure basis.