View:


<PAGE>

                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549

                                Form 10-Q


[X]     Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996.

[ ]     Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________.

Commission file number 0-27824


                       PIA MERCHANDISING SERVICES, INC.
           (Exact name of registrant as specified in its charter)

          Delaware                                           33-0684451
  (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                         Identification No.)

                  19900 MacArthur Blvd., Suite 900, Irvine, CA 92612
                     (Address of principal executive offices)

                                   (714) 476-2200
                 (Registrant's telephone number, including area code)

                                  NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last 
report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:  [X] Yes        [ ] No

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.

Common Stock, $.01 Par Value:  5,815,206 shares as of October 31, 1996.



<PAGE>


                        PIA Merchandising Services, Inc.



PART I:     FINANCIAL INFORMATION                                      PAGE
                                                                       ----

     Item 1: Financial Statements

             Condensed Consolidated Balance
             Sheets as of September 30, 1996 (Unaudited)
             and December 31, 1995

             Condensed Consolidated Statements of
             Income for the Nine Months Ended
             September 30, 1996 (Unaudited) and
             September 30, 1995 (Unaudited)

             Condensed Consolidated Statements of
             Cash Flows for the Nine Months Ended
             September 30, 1996 (Unaudited) and
             September 30, 1995 (Unaudited)

             Notes to Condensed Consolidated Financial

             Statements


     Item 2: Management's Discussion and Analysis of Financial
                 Condition and Results of Operations


PART II:    OTHER INFORMATION


     Item 6: Exhibits and Reports on Form 8-K


SIGNATURES


<PAGE>

PIA MERCHANDISING SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
(IN THOUSANDS)


<TABLE>
<CAPTION>

                                                 September 30,   December 31,
                                                      1996          1995
                                                      ----          ----
                                                  (Unaudited)
<S>                                               <C>             <C>
            ASSETS
CURRENT ASSETS:
Cash and cash equivalents                            $17,865       $   185
Accounts receivable, net of allowance
    for doubtful accounts                             20,682        12,213
Prepaid expenses and other current assets                860           638
Deferred income taxes                                    493           493
                                                     -------       -------
    Total current assets                              39,900        13,529

PROPERTY AND EQUIPMENT, net                            1,950         2,110

OTHER ASSETS                                             914           447
                                                     -------       -------

                                                     $42,764       $16,086
                                                     -------       -------
                                                     -------       -------

    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                      $  743      $  1,838
Other current liabilities                              6,478         4,105
Income taxes payable                                     228           455
                                                     -------       -------

    Total current liabilities                          7,449         6,398

DEFERRED INCOME TAXES                                    300           300

LONG-TERM DEBT                                             0         3,400

STOCKHOLDERS' EQUITY                                  35,015         5,988
                                                     -------       -------

                                                     $42,764       $16,086
                                                     -------       -------
                                                     -------       -------
</TABLE>



                    See accompanying notes.


<PAGE>

PIA MERCHANDISING SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
                                    For the Three Months Ended September 30,
                                    ----------------------------------------
                                            1996            1995
                                            ----            ----
<S>                                        <C>            <C>
NET REVENUES                               $33,589        $28,177

OPERATING EXPENSES:
Field  service costs                        26,483         22,098

Selling expenses                             2,885          2,731

General and administrative expenses          2,140          1,653

Depreciation and amortization                  154            128
                                           -------        -------
    Total operating expenses                31,662         26,610
                                           -------        -------

OPERATING INCOME                             1,927          1,567

INTEREST INCOME (EXPENSE), NET                 261            (99)
                                           -------        -------

INCOME BEFORE PROVISION FOR
    INCOME TAXES                             2,188          1,468

PROVISION FOR INCOME TAXES                     851            515
                                           -------        -------

NET INCOME                                $  1,337         $  953
                                           -------        -------
                                           -------        -------

NET INCOME PER COMMON AND COMMON
    EQUIVALENT SHARE                       $  0.21        $  0.22
                                           -------        -------
                                           -------        -------

WEIGHTED AVERAGE COMMON AND
    COMMON EQUIVALENT SHARES                 6,251          4,309
                                           -------        -------
                                           -------        -------
</TABLE>


                    See accompanying notes.


<PAGE>

PIA MERCHANDISING SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>

                                               For the Nine Months Ended September 30,
                                               ---------------------------------------
                                                           1996          1995
                                                           ----          ----
<S>                                                       <C>           <C>
NET REVENUES                                              $86,703       $78,517

OPERATING EXPENSES:
Field  service costs                                       68,591        61,458

Selling expenses                                            8,508         7,711

General and administrative expenses                         5,733         4,944

Depreciation and amortization                                 453           361
                                                          -------       -------

    Total operating expenses                               83,285        74,474
                                                          -------       -------

OPERATING INCOME                                            3,418         4,043

INTEREST INCOME (EXPENSE), NET                                590          (358)
                                                          -------       -------

INCOME BEFORE PROVISION FOR
    INCOME TAXES                                            4,008         3,685

PROVISION FOR INCOME TAXES                                  1,568         1,293
                                                          -------       -------

NET INCOME                                                $ 2,440       $ 2,392
                                                          -------       -------
                                                          -------       -------

NET INCOME PER COMMON AND COMMON
    EQUIVALENT SHARE                                      $  0.41       $  0.56
                                                          -------       -------
                                                          -------       -------

WEIGHTED AVERAGE COMMON AND
    COMMON EQUIVALENT SHARES                                5,972         4,309
                                                          -------       -------
                                                          -------       -------
</TABLE>


                    See accompanying notes.


<PAGE>

PIA MERCHANDISING SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>

                                                For the Nine Months Ended September 30,
                                                ---------------------------------------
                                                          1996           1995
                                                          ----           ----
<S>                                                      <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                               $  2,440      $  2,392
Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:

    Depreciation and amortization                             453           361
    Amortization of other assets and discount
      on subordinated debt                                     11            67
    Provision for doubtful receivables                        282           147
    Deferred income taxes, net                                  0            46
Changes in operating assets and liabilities                (8,401)       (2,904)
                                                          -------        ------

    Net cash (used in) provided by operating activities    (5,215)          109

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                     (293)         (527)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long term debt                                 (3,400)         (651)

Repurchase of common stock                                      0           (24)

Proceeds from issuance of common stock, net                26,588             0
                                                          -------        ------

    Net cash provided by (used in) financing activities    23,188          (675)
                                                          -------        ------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                                       17,680        (1,093)

CASH AND CASH EQUIVALENTS,
beginning of period                                           185         1,414
                                                          -------        ------

CASH AND CASH EQUIVALENTS,
end of period                                             $17,865        $  321
                                                          -------        ------
                                                          -------        ------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
    Cash paid for interest                                $     0        $  322

    Cash paid for income taxes                            $ 1,820        $1,119
</TABLE>


                    See accompanying notes.



<PAGE>

PIA Merchandising Services, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Three and Nine Months Ended September 30, 1996

1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements
     have been prepared in accordance with generally accepted accounting
     principles for interim financial information and with the instructions to
     Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not
     include all of the information and footnotes required by generally
     accepted accounting principles for complete financial statements.  In the
     opinion of management, all adjustments (consisting of normal recurring
     accruals) considered necessary for a fair presentation have been
     included.  This financial information should be read in conjunction with
     the consolidated financial statements and notes thereto for the year
     ended December 31, 1995, included in the Company's Registration Statement
     on Form S-1, which was declared effective on February 29, 1996. Operating
     results for the three and nine month periods ended September 30, 1996 are
     not necessarily indicative of the results that may be expected for the
     year ended December 31, 1996.

2.   Net Income per Share

     Net income per share is based on the weighted average number of
     outstanding shares of common stock and dilutive common equivalent shares
     from stock options and warrants (using the treasury stock method).

3.   Initial Public Offering

     In March 1996, the Company completed its initial public offering of
     2,137,800 shares of unissued common stock and 544,000 shares of
     outstanding common stock that were offered by certain selling
     stockholders.  The Company received net proceeds of approximately $26.6
     million after deducting expenses and underwriting discounts.  Concurrent
     with the offering, the Company was reincorporated in Delaware which
     resulted in an increase in authorized preferred stock to 3,000,000
     shares, an increase in authorized common stock to 15,000,000 shares and a
     change in the par value of both the Company's common stock and preferred
     stock from no par value to $.01 par value. This change in par value
     resulted in a reclassification of $6,418,000 from common stock to
     additional paid-in capital.

4.   Line of credit and long-term obligations

     In March 1996, $3.0 million of net proceeds from the initial public
     offering were used for repayment of bank line of credit indebtedness.


<PAGE>


I
tem 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

PIA Merchandising Services, Inc. (the Company or PIA) provides merchandising
services to manufacturers and retailers principally in grocery, mass
merchandiser and chain and deep discount drug stores.  For the quarters ended
September 30, 1996 and 1995, the Company generated approximately 87.8% and
79.7% of its net revenues from manufacturer clients and 12.2% and 20.3% from
retailer clients, respectively.  For the nine month periods ended September
30, 1996 and 1995, the Company generated approximately 86.8% and 79.7% of its
net revenues from manufacturer clients and 13.2% and 20.3% from retailer
clients, respectively.  The mix of the Company's business between manufacturer
and retailer clients historically has not had a material impact on the
Company's cash flows or results of operations.

PIA's quarterly results of operations are subject to certain variability
related to the timing of retailer-mandated activity and the receipt of
commission overrides.  Retailer-mandated activity is typically higher in the
second and third quarters of the year due to retailer scheduling of activity
in off-peak shopping periods.  In addition, new product introductions increase
during such periods which require the reset of categories as the new products
gain distribution.  The amount of commissions earned by PIA under its
commission-based contracts varies seasonally, and generally corresponds to the
peak selling seasons of the clients that have entered into these types of
contracts.  Historically, the Company has recognized greater commission income
in the first and fourth quarters.  See "Risk Factors -- Uncertainty of
Commission Income."  The Company's quarterly results have in the past been
subject to fluctuations and, thus, the operating results for any quarter are
not necessarily indicative of results for any future period.

Results of Operations - Third Quarter of Fiscal 1996 Compared to Third Quarter
of Fiscal 1995:

The following table sets forth certain financial data as a percentage of net
revenues for the periods indicated:

<TABLE>
<CAPTION>
                                    Three Months Ended September 30,
                                    --------------------------------
                                           1996         1995
                                           ----         ----
<S>                                       <C>          <C>
Net revenues                               100%         100%
Operating expenses:
  Field service costs                     78.8%        78.4%
  Selling expenses                         8.6%         9.6%
  General and administrative expenses      6.4%         5.9%
  Depreciation and amortization            0.5%         0.5%
                                          -----        -----
Total operating expenses                  94.3%        94.4%
                                          -----        -----

Operating income                           5.7%         5.6%
Interest (income) expense, net            (0.8%)        0.4%
                                          -----        -----

Income before provision for income taxes   6.5%         5.2%
Provision for income taxes                 2.5%         1.8%
                                          -----        -----

Net income                                 4.0%         3.4%
                                          -----        -----
                                          -----        -----
</TABLE>



<PAGE>

Net revenue increased $5.4 million, or 19.2%, to $33.6 million in the third
quarter of 1996 from $28.2 million for the third quarter of 1995.  The
increase in net revenue for the third quarter includes $5.7 million in revenue
from services performed for new clients.  A decline in revenues from ongoing
routed coverage of $.6 million was partially offset by increases in project
revenue of $.3 million during the quarter.

Field service costs increased $4.4 million, or 19.8%, to $26.5 million in the
third quarter of 1996 compared to $22.1 million in the third quarter of 1995.
Field service costs are comprised principally of field labor and related costs
and expenses required to provide routed coverage, project activities, key
account management and related technology costs, as well as the field overhead
required to support the activities of these groups of employees.  The increase
in field service costs was in line with the increase in net revenues.  As a
percentage of net revenues, field service costs were 78.8% in the third
quarter of 1996 compared to 78.4% in the third quarter of 1995.

Selling expenses of $2.9 million were approximately the same as last year.  As
a percentage of net revenues, selling expenses decreased to 8.6% in the third
quarter of 1996 from 9.6% in the third quarter of 1995.

General and administrative expenses increased $0.5 million, or 29.5%, to $2.1
million in the third quarter of 1996 from $1.6 million in the third quarter of
1995.  General and administrative expenses increased primarily as a result of
higher payroll costs due to increased staffing in general management and
management information services that were required to support overall business
growth, and salary increases in the ordinary course of business.  As a
percentage of net revenues, general and administrative expenses amounted to
6.4% in the third quarter of 1996 compared to 5.9% in the third quarter of
1995.

Depreciation and amortization expenses remained approximately the same for the
third quarter of 1996 and 1995.


<PAGE>

Interest income was $0.3 million during the third quarter of 1996.  The
interest income resulted from the investment of a portion of the Company's
initial public offering proceeds in interest bearing securities.  These
investments produced interest earnings throughout the third quarter of 1996.
The Company had no interest expense during the third quarter of 1996.

Income taxes were $0.9 million in the third quarter of 1996 and approximately
$0.5 million in the third quarter of 1995, representing an effective rate of
38.9% and 35.1%, respectively.  The 1996 and 1995 tax rates differed from an
expected combined federal and state tax rate of 40% due principally to
interest earned in 1996 from tax exempt securities and to a $0.1 million
reduction in the valuation allowance caused by the utilization of net
operating loss carryforwards in 1995.

Net income increased approximately $0.4 million, or 40.3%, to approximately
$1.3 million in the third quarter of 1996, from approximately $1.0 million in
the third quarter of 1995, primarily as a result of increased revenues, the
reduction in operating expenses as a percent of sales and interest income from
investment of the proceeds of the initial public offering.

Results of Operations - Nine Months Ended September 30, 1996 Compared to Nine
Months Ended September 30, 1995:

The following table sets forth certain financial data as a percentage of net
revenues for the periods indicated:

<TABLE>
<CAPTION>
                                        Nine Months Ended September 30,
                                        -------------------------------
                                              1996         1995
                                              ----         ----
<S>                                           <C>          <C>
Net revenues                                  100%          100%
Operating expenses:
  Field service costs                        79.2%         78.3%
  Selling expenses                            9.8%          9.8%
  General and administrative expenses         6.6%          6.3%
  Depreciation and amortization               0.5%          0.5%
                                             -----         -----

Total operating expenses                     96.1%         94.9%
                                             -----         -----

Operating income                              3.9%          5.1%
Interest (income) expense, net               (0.7%)         0.5%
                                             -----        -----

Income before provision for income taxes      4.6%          4.6%
Provision for income taxes                    1.8%          1.6%
                                             -----        -----

Net income                                    2.8%          3.0%
                                             -----        -----
                                             -----        -----
</TABLE>



<PAGE>

Net revenue increased $8.2 million, or 10.4%, to $86.7 million in the first
nine months of 1996 from $78.5 million for the corresponding period of 1995.
The increase in net revenue includes $6.4 million in revenue from services
performed for new clients.  Revenues for the nine months ended September 30,
1996 from ongoing routed coverage increased $.3 million and project revenue
increased $1.5 million from the corresponding period in 1995.

Field service costs increased $7.1 million, or 11.6%, to $68.6 million in the
first nine months of 1996 compared to $61.5 million for the corresponding
period of 1995.  The increase in field service costs was the result of
increased operating costs associated with revenue growth and a reduction of
margins due to a strategic decision by the Company to maintain employment
levels in field service and field management personnel in anticipation of new
business in the second quarter.  As a percentage of net revenues, field
service costs increased to 79.2% in the first nine months of 1996 from 78.3%
for the corresponding period of 1995.

Selling expenses increased $0.8 million or 10.3%, to $8.5 million in the first
nine months of 1996 from $7.7 million for the corresponding period of 1995.
As a percentage of net revenues, selling expenses were 9.8% in both the first
nine months of 1996 and 1995.

General and administrative expenses increased $0.8 million, or 16.0%, to $5.7
million in the first nine months of 1996 from $4.9 million for the
corresponding period of 1995.  General and administrative expenses increased
primarily as a result of higher payroll costs due to increased staffing in
general management and management information services that were required to
support overall business growth, salary increases in the ordinary course of
business, and legal expenses associated with the negotiation of a significant
new contract.  As a percentage of net revenues, general and administrative
expenses increased to 6.6% in the first nine months of 1996 from 6.3% for the
corresponding period of 1995.  The increase was principally the result of the
increased spending noted above and lower than anticipated net revenues.

Depreciation and amortization expenses remained approximately the same for the
first nine months of 1996 and 1995.

Net interest income was $0.6 million during the first nine months of 1996.
Interest expense in the corresponding period of 1995 was $0.4 million.  The
interest income resulted from the investment of a portion of the Company's
initial public offering proceeds in interest bearing securities.

Income taxes were $1.6 million for the first nine months of 1996 and
approximately $1.3 million in the corresponding period of 1995, representing
an effective rate of 39.1% and 35.1%, respectively.  The 1996 and 1995 tax
rates differed from an expected combined federal and state tax rate of 40% due
principally to interest earned from tax exempt securities in 1996 and to a
$0.2 million reduction in the valuation allowance caused by the utilization of
net operating loss carryforwards in 1995.

Net income remained approximately the same for the first nine months of 1996
and 1995.  Increases in revenues were offset by higher field service costs and
other expenses.


<PAGE>

RISK FACTORS

The following risk factors should be carefully reviewed in addition to the
other information contained in this Quarterly Report on Form 10-Q.

Concentrated Client Base

The Company's success is dependent in part upon its ability to maintain its 
existing clients and to obtain new clients.  The Company's ten largest 
clients generated approximately 61.3% and 59.8% of the Company's net revenue 
for the quarters ended September 30, 1996 and 1995, respectively, and 58.1% 
and 59.8% of net revenue for the nine month periods ended September 30, 1996 
and 1995, respectively. During these periods, none of the Company's 
manufacturer or retailer clients accounted for greater than 10% of net 
revenues, other than (i) Buena Vista Home Video which accounted for 
approximately 16.9% for the quarter ended September 30, 1996; (ii) S.C. 
Johnson Wax, which accounted for approximately 11.5% of net revenues for the 
nine month period ended September 30, 1996, and 10.6% for the quarter ended 
September 30, 1995; and (iii) Thrifty Payless, Inc. which accounted for 
approximately 15.0% and 14.4% for the quarter and for the nine month period 
ended September 30, 1995, respectively. The Company's contracts with its 
clients range from one to five years.  PIA believes that the uncollectibility 
of amounts due from any of its large clients, the loss of one or more of such 
clients, a significant reduction in business from such clients, or the 
inability to attract new clients, could have a material adverse effect on the 
Company's results of operations.

Increase in Services Required Under Fixed Price Contracts

Manufacturers who sell their products through retail grocery stores generally
are required by the retailer to provide labor support inside these stores for
a variety of purposes, including new store sets and existing store resets,
remerchandisings, remodels and category implementations.  The Company has
historically contracted with its manufacturer clients to provide these
services, among others, for a monthly flat fee or, in some cases, for a
commission.  Substantially all of the Company's current contracts provide for
one of these two types of arrangements.  As requests for retailer-mandated
services and new product introductions by manufacturers have increased over
the past several years, the Company's labor expense has increased without any
related increase in its revenue.  Consequently, the Company has reevaluated
its approach to contracting with its clients, and is currently engaged in an
effort to revise its existing contracts upon their renewal to implement
provisions that charge for retailer-mandated services separately from
traditional merchandising and shelf maintenance tasks.  In addition, the
Company has recently developed a new, standard contract that provides this
activity-based approach to pricing for the Company's more recent customers.
The Company has recently renewed its contracts with two of its major
manufacturer clients using activity-based pricing, and is currently in the
process of renegotiating contracts upon their annual renewal with certain of
its other major clients.  However, no assurance can be given that PIA will be
successful in renewing its other contracts on this basis.  If PIA is not
successful in so renegotiating its major contracts, its margins could be
adversely affected.



<PAGE>

Uncertainty of Commission Income

Approximately 15.3% and 18.4% of the Company's net revenues for the quarter
and nine month period ended September 30, 1996, respectively, was earned under
commission-based contracts.  These contracts provide for commissions based on
a percentage of the client's net sales of certain of its products to
designated retailers.  Some of these contracts also provide for a guaranteed
minimum compensation to the Company.  Commissions paid to PIA under these
contracts have had a significant effect on the Company's profitability in
certain quarters.

Under these contracts, the Company generally receives a draw on a monthly or
quarterly basis, which is then applied against commissions earned.
Adjustments are made on a monthly or quarterly basis upon receipt of
reconciliations between commissions earned from the client and the draws
previously received.  The reconciliations typically result in commissions owed
to the Company in excess of previous draws; however, the Company cannot
predict with accuracy the level of its clients' commission-based sales.
Accordingly, the amount of commissions in excess of or less than the draws
previously received will fluctuate and can significantly affect the Company's
operating results in any quarter.

In addition, the amount of commissions earned by the Company under these
contracts varies seasonally, and generally corresponds to the peak selling
seasons of the clients who have entered into these types of contracts.
Historically, the Company has recognized greater commission income in its
first and fourth quarters due to the timing of such clients' sales.


<PAGE>

                PIA Merchandising Services, Inc.

P
ART II:    OTHER INFORMATION

     Item 1: Legal Proceedings
                 None

     Item 2: Changes in Securities
                 None

     Item 3: Defaults Upon Senior Securities
                 None

     Item 4: Submission of Matters to a Vote of Security Holders
                 None

     Item 5: Other Information
                 None

     Item 6: Exhibits and Reports on Form 8-K.
                 (27)  Financial Data Schedules

                 The Company did not file any reports on Form 8-K during the 
                 three months ended September 30, 1996.


<PAGE>


                           SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                   PIA MERCHANDISING SERVICES, INC.
                                   (Registrant)



                                   By:     /s/       Clinton E. Owens
                                      --------------------------------------
                                         Clinton E. Owens
                                         Chairman of the Board and
                                         Chief Executive Officer



                                   By:     /s/       Roy L. Olofson
                                      --------------------------------------
                                         Roy L. Olofson
                                         Executive Vice President and
                                         Chief Financial Officer


Dated:  November 14, 1996







<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-START>                             JUL-01-1996
<PERIOD-END>                               SEP-30-1996
<CASH>                                          17,865
<SECURITIES>                                         0
<RECEIVABLES>                                   21,245
<ALLOWANCES>                                       559
<INVENTORY>                                          0
<CURRENT-ASSETS>                                39,800
<PP&E>                                           4,052
<DEPRECIATION>                                   2,102
<TOTAL-ASSETS>                                  42,764
<CURRENT-LIABILITIES>                            7,449
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            58
<OTHER-SE>                                      35,257
<TOTAL-LIABILITY-AND-EQUITY>                    42,764
<SALES>                                              0
<TOTAL-REVENUES>                                33,589
<CGS>                                                0
<TOTAL-COSTS>                                   26,483
<OTHER-EXPENSES>                                 5,066
<LOSS-PROVISION>                                   113
<INTEREST-EXPENSE>                               (261)
<INCOME-PRETAX>                                  2,188
<INCOME-TAX>                                       851
<INCOME-CONTINUING>                              1,337
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,337
<EPS-PRIMARY>                                      .21
<EPS-DILUTED>                                      .21
        

</TABLE>