-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JQxz+gNxT59NGSVs9s+9i7M+wSsbc803TD3JD9DMSx0tDa9z9Ks3ot6U/ZcoFLNj TsX0qE+H/GrTR7b5mMp4CA== 0000950144-97-010831.txt : 19971015 0000950144-97-010831.hdr.sgml : 19971015 ACCESSION NUMBER: 0000950144-97-010831 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971014 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMALIE ASSOCIATES INC CENTRAL INDEX KEY: 0001038315 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 592776441 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22645 FILM NUMBER: 97694596 BUSINESS ADDRESS: STREET 1: 200 PARK AVE STREET 2: STE 3100 CITY: NEW YORK STATE: NY ZIP: 10166-0136 BUSINESS PHONE: 8139617494 MAIL ADDRESS: STREET 1: 3903 NORTHDALE BLVD CITY: TAMPA STATE: FL ZIP: 33624 10-Q 1 LAMALIE ASSOCIATES, INC. 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 EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1997 ( ) 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 0-22645 LAMALIE ASSOCIATES, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Florida 59-2776441 ------------------------------- ---------------------- (State of Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 200 Park Avenue New York, New York 10166-0136 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (212) 953-7900 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------------ ------------ At September 30, 1997, the Registrant had outstanding 5,340,684 shares of $.01 par value common stock. 2 LAMALIE ASSOCIATES, INC. INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Statements of Income for the three- and six-month periods ended August 31, 1997 and 1996 3 Condensed Balance Sheets at August 31, 1997 and February 28, 1997 4 Condensed Statements of Cash Flows for the six-month periods ended August 31, 1997 and 1996 5 Notes to Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 9 SIGNATURES 11
2 3 LAMALIE ASSOCIATES, INC. CONDENSED STATEMENTS OF INCOME (dollars in thousands, except per share data) (unaudited)
Three Months Ended Six Months Ended August 31, August 31, --------------------------- ----------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Fee revenue, net $ 16,773 $ 11,506 $ 30,498 $ 22,613 Operating expenses: Compensation and benefits 12,957 9,890 23,501 19,438 General and administrative expenses 2,071 1,400 3,875 2,828 ----------- ----------- ----------- ----------- Total operating expenses 15,028 11,290 27,376 22,266 ----------- ----------- ----------- ----------- Operating income 1,745 216 3,122 347 Interest income (expense), net 37 (105) (108) (146) ----------- ----------- ----------- ----------- Income before provision for income taxes 1,782 111 3,014 201 Provision for income taxes 766 103 1,296 198 ----------- ----------- ----------- ----------- Net income $ 1,016 $ 8 $ 1,718 $ 3 =========== =========== =========== =========== Net income per common and common equivalent share $ .22 $ -- $ .45 $ -- =========== =========== =========== =========== Weighted average common and common equivalent shares outstanding 4,657,000 3,293,000 3,850,000 3,302,000 =========== =========== =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 3 4 LAMALIE ASSOCIATES, INC. CONDENSED BALANCE SHEETS (dollars in thousands)
(unaudited) August 31, February 28, ASSETS 1997 1997 ---------- ---------- Current assets: Cash and cash equivalents $ 22,424 $ 1,662 Accounts receivable, less allowance of $1,340 and $890, respectively 14,756 14,392 Prepaid expenses 2,201 937 -------- -------- Total current assets 39,381 16,991 -------- -------- Property and equipment, net 4,459 4,184 Deferred tax assets 2,637 1,958 Other assets 3,887 2,428 -------- -------- Total assets $ 50,364 $ 25,561 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 706 $ 1,914 Accrued compensation 10,523 13,255 Income tax payable 2,295 -- Deferred tax liabilities -- 643 Current maturities of long-term debt 114 387 Other current liabilities 180 175 -------- -------- Total current liabilities 13,818 16,374 -------- -------- Accrued rent 1,019 1,038 Long-term debt, less current maturities 229 1,650 Deferred compensation 5,973 3,872 -------- -------- Commitments and contingencies Stockholders' equity: Preferred stock; $0.01 par value; 3,000,000 shares authorized; no shares issued and outstanding -- -- Common stock; $0.01 par value; 35,000,000 shares authorized; 5,340,684 and 3,075,000 shares issued and outstanding, respectively 53 31 Additional paid-in capital 28,892 4,087 Subscriptions receivable -- (153) Retained earnings (accumulated deficit) 380 (1,338) -------- -------- Total stockholders' equity 29,325 2,627 -------- -------- Total liabilities and stockholders' equity $ 50,364 $ 25,561 ======== ========
The accompanying notes are an integral part of these condensed financial statements. 4 5 LAMALIE ASSOCIATES, INC. CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)
Six Months Ended August 31, --------------------- 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,718 $ 3 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 404 465 Changes in operating assets and liabilities (2,601) (3,729) -------- -------- Net cash used in operating activities (479) (3,261) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (679) (497) Investment in whole life insurance (1,366) (606) -------- -------- Net cash used in investing activities (2,045) (1,103) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under long-term debt 4,576 3,995 Repayments of long-term debt (6,270) (1,223) Proceeds from issuance of common stock 24,980 823 -------- -------- Net cash provided by financing activities 23,286 3,595 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,762 (769) CASH AND CASH EQUIVALENTS, at beginning of period 1,662 2,529 -------- -------- CASH AND CASH EQUIVALENTS, at end of period $ 22,424 $ 1,760 ======== ========
The accompanying notes are an integral part of these condensed financial statements. 5 6 LAMALIE ASSOCIATES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) Note 1. Condensed Financial Statements In the opinion of the Company, the accompanying unaudited condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of August 31, 1997 and February 28, 1997, and the results of operations for the three- and six-month periods ended August 31, 1997 and 1996 and cash flows for the six-month periods ended August 31, 1997 and 1996. These financial statements, including the condensed balance sheet as of February 28, 1997, which has been derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and consequently may not include all disclosures normally required by generally accepted accounting principles or those normally made in the Company's Annual Report on Form 10-K. The accompanying condensed financial statements and related notes should be read in conjunction with the Company's Registration Statement on Form S-1 (File # 333-26027) as declared effective by the Securities and Exchange Commission on July 1, 1997. Note 2. Net Income Per Common and Common Equivalent Share Net income per common and common equivalent share is determined by dividing the net income by the weighted average number of shares of common stock outstanding and dilutive common equivalent shares outstanding using the treasury stock method. Common equivalent shares outstanding during the six-month period ended August 31, 1997, included options to purchase common stock. There were no common equivalent shares outstanding during the six-month period ended August 31, 1996. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 83, shares of common stock issued by the Company during the 12 months preceding the initial filing date have been included in the calculation of weighted average shares of common stock outstanding, using the treasury stock method, as if the shares were outstanding for all periods presented. All share and per share information in the financial statements has been adjusted to give effect to the 1,000 to one common stock split and par value restatement which became effective June 3, 1997, in connection with the reincorporation of the Company to Florida. Note 3. Long-Term Debt The Company has obtained a commitment letter from a bank to provide credit facilities of approximately $15.0 million. Outstanding borrowings under these facilities will bear interest at various rates based on either a LIBOR index or the bank's prime lending rate, as determined at the Company's option. No amounts were outstanding under these facilities as of August 31, 1997. 6 7 Note 4. Newly Issued Accounting Standards In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 130 is effective for financial statements for periods beginning after December 15, 1997. Management believes the effect of adopting SFAS 130 would not have a material impact on the accompanying financial statements. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: FISCAL 1998 COMPARED TO FISCAL 1997 Fee revenue. The Company's fee revenue increased 45.8% and 34.9%, respectively, to $16.8 million and $30.5 million for the three- and six-month periods ended August 31, 1997, as compared to $11.5 million and $22.6 million for the same periods in fiscal 1997. The average fee revenue per consultant employed for a full year for the six-month period ended August 31, 1997 increased 49.1%, to $510,000 from $342,000 for the same period in fiscal 1997. As of September 30, 1997, the total number of consultants employed was 69, an increase of 7 since the beginning of the fiscal year. The average first-year cash compensation of positions for which the Company conducted searches increased by 4.4% to $235,000 from $225,000 for the six-month period ended August 31, 1997. Approximately $2.1 million of the increase in fee revenue, or $38,000 per consultant, was related to two multiple-placement projects in the financial services sector conducted during the three-month period ended August 31, 1997. Such projects are infrequent in occurrence and generate much higher average fees than the typical assignment. The Company does not anticipate conducting similar projects on a regular basis. Compensation and benefits. Compensation and benefits increased 31.0% and 20.9%, respectively, to $13.0 million and $23.5 million for the three- and six-month periods ended August 31, 1997, as compared to $9.9 million and $19.4 million for the same periods in fiscal 1997. As a percentage of fee revenue, compensation and benefits decreased to 77.2% and 77.1%, respectively, for the three- and six-month periods ended August 31, 1997, as compared to 86.0% for the same periods in fiscal 1997. This decrease was primarily the result of changes to the Company's compensation system for consultants implemented effective March 1, 1997. General and administrative expenses. General and administrative expenses increased 47.9% and 37.0%, respectively, to $2.1 million and $3.9 million for the three- and six-month periods ended August 31, 1997, as compared to $1.4 million and $2.8 million for the same periods in fiscal 1997. As a percentage of fee revenue, general and administrative expenses increased to 12.4% and 12.7% for the three- and six-month periods ended August 31, 1997, as compared to 12.1% and 12.5% for the same periods in fiscal 1997. These increases were primarily due to increased costs associated with recruitment and relocation of additional staff, an initiative to reduce search cycle time, and the Company's training and development program. 7 8 Operating income. Operating income increased $1.5 million and $2.8 million, respectively, to $1.7 million and $3.1 million for the three- and six-month periods ended August 31, 1997, as compared to $216,000 and $347,000 for the same periods in fiscal 1997. This change was primarily the result of the decreases in compensation and benefits partially offset by increases in general and administrative expenses discussed above. Net interest income (expense). The Company received net interest income of $37,000 for the three-month period ended August 31, 1997, as compared to net interest expense incurred of $105,000 for the same period in fiscal 1997. Net interest expense decreased $38,000 to $108,000 for the six-month period ended August 31, 1997, as compared to $146,000 for the same period in fiscal 1997. This decrease was the result of the Company repaying all outstanding indebtedness under its credit facilities with proceeds from the issuance of its common stock during its initial public offering, as well as investment earnings from the remaining net proceeds. Provision for income taxes. The effective income tax rate for the six-month period ended August 31, 1997, of 43% varied from the statutory rate of 34% due to state and local income taxes and because certain expenses, including premiums on keyperson life insurance policies, a portion of meals and entertainment, and dues expense are non-deductible for income tax purposes. LIQUIDITY AND CAPITAL RESOURCES On July 8, 1997, the Company completed an initial public offering covering 2.3 million shares of its common stock. Net proceeds from the offering were approximately $24.6 million of which $3.9 million was used to repay all outstanding indebtedness under the Company's credit facilities. The Company intends to use approximately $3.0 million of the offering proceeds over the next 12 to 24 months for computer hardware and software purchases, upgrades, and enhancements. The remaining proceeds will be used for general corporate purposes, including expansion of the Company's client base, industry coverage, and geographic reach through selective acquisitions. The Company relies primarily upon cash flows from operations and available borrowings under its credit facilities to finance its operations. During the six-month period ended August 31, 1997, cash used in operations was approximately $479,000. To provide additional liquidity, the Company has obtained a commitment letter from a bank to provide credit facilities of approximately $15.0 million. Outstanding borrowings under these facilities will bear interest at various rates based on either a LIBOR index or the bank's prime lending rate, as determined at the Company's option. Capital expenditures totaled approximately $679,000 for the six-month period ended August 31, 1997. These expenditures consisted primarily of purchases of office equipment, upgrades to information systems, and leasehold improvements. Additionally, investments in whole life insurance policies intended to fund the Company's deferred compensation plan were approximately $1.4 million. The Company believes that funds from operations, its expanded credit facilities, and the net proceeds from the offering will be sufficient to meet its anticipated working capital, capital expenditures, and general corporate requirements on both a short-term basis (i.e., during the 12 months following the offering) and a long-term basis (i.e., after such 12-month period). 8 9 FORWARD-LOOKING STATEMENTS This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements that are based on the current beliefs and expectations of the Company's management, as well as assumptions made by, and information currently available to, the Company's management. Such statements include those regarding general economic and executive search industry trends. Because such statements involve risks and uncertainties, actual actions and strategies and the timing and expected results thereof may differ materially from those expressed or implied by such forward-looking statements, and the Company's future results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted. These potential risks and uncertainties include dependence on attracting and retaining qualified executive search consultants, portability of client relationships, restrictions imposed by blocking arrangements, competition, relationship with Amrop International alliance of executive search firms, implementation of acquisition strategy, reliance on information processing systems, and employment liability risk. In addition to the factors noted above, other risks, uncertainties, assumptions, and factors that could affect the Company's financial results are described in the Company's Registration Statement on Form S-1 (File No. 333-26027), originally filed with the Securities and Exchange Commission April 29, 1997, as amended and as effective July 1, 1997. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits
Exhibit Number Description - ------ ----------- 10.1 --1997 Omnibus Stock and Incentive Plan* 10.2 --Non-Employee Directors' Stock Option Plan* 10.3 --Profit Sharing Plan* 10.4 --1997 Employee Stock Purchase Plan* 10.5 --Form of Agreement for Deferred Compensation Plan* 10.6 --Managing Partners' Compensation Plan* 10.7 --Partners' Compensation Plan* 10.8 --Employment Agreement for Mr. Gow*
9 10 10.10 --Employment Agreement for Mr. Rothschild* 10.11 --Form of Indemnification Agreement entered into with Messrs. Philip R. Albright, Michael Brenner, Arthur J. Davidson, Mark P. Elliott, David W. Gallagher, Joe D. Goodwin, Roderick C. Gow, Ray J. Groves, Harold E. Johnson, John F. Johnson, Robert L. Pearson, Richard W. Pogue, John C. Pope, John S. Rothschild, Thomas M. Watkins III, Jack P. Wissman** 10.12 --Directors' Deferral Plan* 27 --Financial Data Schedule (for SEC use only)
*Incorporated by reference to the correspondingly numbered exhibit to the Registrant's Registration Statement on Form S-1 (File No. 333-26027), originally filed April 29, 1997, as amended and as effective July 1, 1997. **Incorporated by reference to the correspondingly numbered exhibit to the Registrant's first quarter 10-Q filed on August 8, 1997. 10 11 LAMALIE ASSOCIATES, INC. 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, Registrant's principal financial officer, thereunto duly authorized. October 14, 1997 LAMALIE ASSOCIATES, INC. ------------------------ (Registrant) /s/ ----------------------------------------------- Jack P. Wissman Executive Vice President (Authorized officer of Registrant and principal financial officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LAMALIE ASSOCIATES, INC. FOR THE SIX MONTHS ENDED AUGUST 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-28-1998 MAR-01-1997 AUG-31-1997 22,424 0 16,096 1,340 0 39,381 6,589 2,130 50,364 13,818 0 0 0 53 29,272 50,364 0 30,498 0 27,376 0 0 108 3,014 1,296 1,718 0 0 0 1,718 .45 .45
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