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, 1999. The information set forth below should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere herein.
Management's Discussion and Analysis of Financial Condition and Results of Operations. - ------------------------------------------------------------------------
Summary of Operations - Fiscal years ended March 31, 1998, 1997 and 1996 - ------------------------------------------------------------------------
For the fiscal year ended March 31, 1999 ("Fiscal 1999"), revenue from vocational rehabilitation services totaled $1,169,436, a decrease of 9.0% from the $1,285,798 reported for the fiscal year ended March 31, 1998 ("Fiscal 1998"). Revenue for Fiscal 1998 had experienced a 5.4% increase from the $1,219,890 generated in the fiscal year ended March 31, 1997 ("Fiscal 1997").
During Fiscal 1999, approximately 69% of total revenues were generated providing vocational rehabilitation services to the Washington State Department of Labor & Industries ("L&I"). Beginning in March 1999 and through May 1999, RPM experienced a substantial decrease in new case referrals received from L&I. Under a new performance-based vocational referral program ("the referral program"), RPM's performance rating was deemed to be below L&I's required rating to receive new case referrals. The implementation and criteria used in the referral program are currently the subject of considerable debate and potential litigation amongst numerous vocational rehabilitation providers and L&I. Although updated ratings were released by L&I in May 1999, which reported a qualifying rating for RPM, it cannot be predicted whether or not RPM will continue to receive a favorable rating under the referral program as it currently exists. If the referral program is not modified or eliminated and RPM should receive an unfavorable rating and/or if the Company's contracts with L&I are not renewed in August 1999, there would be a material adverse effect on the consolidated results of operation. Management assesses the unamortized goodwill for potential impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such goodwill totaled $468,811 at March 31, 1999.
The cost of vocational rehabilitation services was 43.7% of revenues for Fiscal 1999 as compared to 43.5% of revenues for Fiscal 1998. During Fiscal 1997, the cost of vocational rehabilitation services was 42.7% of related revenues.
Interest income decreased slightly to $452,181 during Fiscal 1999, as compared to interest income of $460,758 and $417,293 for Fiscal 1998 and Fiscal 1997, respectively. During Fiscal 1998, and 1997, the Company realized gains on the sales of marketable securities of $6,970 and $285,356, respectively. Miscellaneous income, including commission payments received based upon the net revenues of its sold hospital bill audit division, amounted to $115,967 in Fiscal 1999, as compared with ancillary revenues of $59,617 for Fiscal 1998 and $46,296 for Fiscal 1997.