-----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, LK3eS2LvnrlvCyt+o2bjY5E1A49+NQ8fyH1j3wtbTnJtUgMkpb2IQNTiE2Dnb+X1 fY+O8/CLaWY7Y3W8ajMNSw== 0000950148-97-002038.txt : 19970814 0000950148-97-002038.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950148-97-002038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ON ASSIGNMENT INC CENTRAL INDEX KEY: 0000890564 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 954023433 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20540 FILM NUMBER: 97657569 BUSINESS ADDRESS: STREET 1: 26651 WEST AGOURA ROAD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8188787900 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1997 OR [ ] 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: 0-20540 ON ASSIGNMENT, INC. (Exact name of registrant as specified in its charter) DELAWARE 95-4023433 (State of Incorporation) (IRS Employer Identification No.) 26651 WEST AGOURA ROAD, CALABASAS, CA 91302 (Address of principal executive offices) (Zip Code) (818) 878-7900 (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 (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 [ ] At June 30, 1997, the total number of outstanding shares of the Company's Common Stock ($0.01 par value) was 5,286,779. Page 1 of 18 pages Exhibit index on page 17 2 ON ASSIGNMENT, INC. INDEX PART I - FINANCIAL INFORMATION
PAGE NUMBER Item 1 - Consolidated Financial Statements Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 (Unaudited) 3 Consolidated Statements of Income for the three months ended June 30, 1997 and June 30, 1996 (Unaudited) 4 Consolidated Statements of Income for the six months ended June 30, 1997 and June 30, 1996 (Unaudited) 5 Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and June 30, 1996 (Unaudited) 6, 7 Notes to Consolidated Financial Statements (Unaudited) 8, 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 10, 11, 12, 13, 14 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security-Holders 15 Item 5 - Other Information 15 Item 6 - Exhibits and Reports on Form 8-K 16 Signatures 17 Index to Exhibits 18
2 3 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ----------------------------------------------------------------------------------------------------- June 30, December 31, 1997 1996 --------------- -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 18,405,000 $ 11,102,000 Marketable securities, current 2,050,000 3,000,000 Account receivable, net (note 5) 12,631,000 12,264,000 Advances and deposits 59,000 72,000 Prepaid expenses 589,000 681,000 Deferred income taxes 1,029,000 968,000 --------------- -------------- Total current assets 34,763,000 28,087,000 --------------- -------------- Office Furniture, Equipment and Leasehold Improvements, net (note 6) 2,501,000 2,294,000 Workers' compensation deposits 619,000 743,000 Goodwill, net (note 7) 557,000 581,000 Other assets 162,000 169,000 --------------- -------------- TOTAL ASSETS $ 38,602,000 $ 31,874,000 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accrued payroll $ 3,257,000 $ 2,397,000 Accounts payable 592,000 488,000 Accrued expenses 1,591,000 1,348,000 Income taxes payable 466,000 6,000 --------------- -------------- Total current liabilities 5,906,000 4,239,000 --------------- -------------- STOCKHOLDERS' EQUITY: Preferred stock (note 8) 0 0 Common stock (note 9) 53,000 52,000 Paid-in capital 10,284,000 8,777,000 Retained earnings 22,359,000 18,806,000 --------------- -------------- Total stockholders' equity 32,696,000 27,635,000 --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 38,602,000 $ 31,874,000 =============== ==============
3 4 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- ----------------------------------------------------------------------------------------------------- Three Months Ended June 30, ------------------------------------ 1997 1996 --------------- -------------- REVENUES $ 26,410,000 $ 21,438,000 COST OF SERVICES 18,447,000 14,919,000 --------------- -------------- GROSS PROFIT 7,963,000 6,519,000 OPERATING EXPENSES 5,090,000 4,332,000 --------------- -------------- OPERATING INCOME 2,873,000 2,187,000 INTEREST INCOME, NET 203,000 127,000 --------------- -------------- INCOME BEFORE INCOME TAXES 3,076,000 2,314,000 PROVISION FOR INCOME TAXES 1,153,000 944,000 --------------- -------------- NET INCOME $ 1,923,000 $ 1,370,000 =============== ============== PRIMARY AND FULLY DILUTED EARNINGS PER SHARE $ 0.35 $ 0.25 =============== ============== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 5,478,000 5,460,000 =============== ==============
4 5 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- ----------------------------------------------------------------------------------------------------- Six Months Ended June 30, ------------------------------------ 1997 1996 --------------- -------------- REVENUES $ 49,980,000 $ 40,340,000 COST OF SERVICES 34,882,000 28,048,000 --------------- -------------- GROSS PROFIT 15,098,000 12,292,000 OPERATING EXPENSES 9,751,000 8,402,000 --------------- -------------- OPERATING INCOME 5,347,000 3,890,000 ACQUISITION COSTS (Note 3) 0 401,000 --------------- -------------- INCOME BEFORE INTEREST AND INCOME TAXES 5,347,000 3,489,000 INTEREST INCOME, NET 358,000 240,000 --------------- -------------- INCOME BEFORE INCOME TAXES 5,705,000 3,729,000 PROVISION FOR INCOME TAXES 2,152,000 1,501,000 --------------- -------------- NET INCOME $ 3,553,000 $ 2,228,000 =============== ============== PRIMARY AND FULLY DILUTED EARNINGS PER SHARE $ 0.65 $ 0.41 =============== ============== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 5,453,000 5,439,000 =============== ==============
5 6 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------------------------------------------------------------- Six Months Ended June 30, ------------------------------------ 1997 1996 --------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,553,000 $ 2,228,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 375,000 321,000 Increase in allowance for doubtful accounts 210,000 140,000 Increase in deferred income taxes (61,000) (34,000) Loss on disposal of furniture and equipment 36,000 0 Increase in accounts receivable (577,000) (218,000) Increase in income taxes receivable 0 (2,000) Increase in accounts payable and accrued expenses 1,207,000 499,000 Increase (decrease) in income taxes payable 760,000 (204,000) Decrease in workers' compensation deposits 124,000 100,000 Decrease in prepaid expenses 92,000 173,000 Increase in other assets (1,000) (1,000) --------------- -------------- Net cash provided by operating activities 5,718,000 3,002,000 --------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of marketable securities (1,050,000) 0 Proceeds from the maturity of marketable securities 2,000,000 625,000 Acquisition of office furniture, equipment and leasehold improvements (592,000) (566,000) Proceeds from sale of furniture and equipment 6,000 0 Decrease in advances and deposits 13,000 10,000 --------------- -------------- Net cash provided by investing activities 377,000 69,000 --------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of common stock options 1,123,000 506,000 Proceeds from issuance of common stock - Employee Stock Purchase Plan 85,000 80,000 Borrowings on line of credit 0 450,000 Repayments of line of credit borrowings 0 (925,000) --------------- -------------- Net cash provided by financing activities 1,208,000 111,000 --------------- -------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 7,303,000 3,182,000 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,102,000 3,327,000 --------------- -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,405,000 $ 6,509,000 =============== ==============
6 7 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued) - -------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Six Months Ended June 30, ------------------------------------ 1997 1996 --------------- -------------- Cash paid during the period for income taxes, net of refunds $ 1,453,000 $ 1,740,000 =============== ==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Six Months Ended June 30, ------------------------------------ 1997 1996 --------------- -------------- Tax benefit of disqualifying dispositions $ 300,000 $ 100,000 =============== ==============
7 8 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 - -------------------------------------------------------------------------------- 1. The accompanying consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). This Report on Form 10-Q should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1996. Certain information and footnote disclosures which are normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. The information reflects all normal and recurring adjustments which, in the opinion of Management, are necessary for a fair presentation of the financial position of the Company and its results of operations for the interim periods set forth herein. The results for the three months or the six months ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year or any other period. 2. On January 1, 1997, the Company effected a corporate reorganization resulting in a consolidation of the Company's divisional field operations into Assignment Ready, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, in order to centralize management functions into one entity, to optimize regional activities and achieve economies of scale. 3. On March 27, 1996, the Company issued 171,579 shares of its common stock for all of the outstanding common stock of EnviroStaff, Inc. ("EnviroStaff"), a Minnesota corporation, which specialized in providing employees on temporary assignments to the environmental services industry. The acquisition has been accounted for as a pooling-of-interests and, accordingly, the Company's consolidated financial statements have been restated for all periods prior to the acquisition to include the results of operations, financial positions, and cash flows of EnviroStaff. Acquisition costs of approximately $401,000 related to the acquisition of EnviroStaff were charged to expense during the three-month period ended March 31, 1996. The after-tax impact of these expenses on primary and fully diluted earnings per share was $0.04 for the three-month period ended March 31, 1996. Acquisition costs included legal, accounting, financial advisory services, and other costs of the acquisition. 4. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 5. Accounts receivable are stated net of an allowance for doubtful accounts of $728,000 and $553,000 at June 30, 1997 and December 31, 1996, respectively. 8 9 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS ON ASSIGNMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (continued) - -------------------------------------------------------------------------------- 6. Office furniture, equipment and leasehold improvements are stated net of accumulated depreciation and amortization of $2,330,000 and $2,032,000 at June 30, 1997 and December 31, 1996, respectively. 7. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. It is being amortized on a straight-line basis over 15 years. Goodwill is stated net of accumulated amortization of $152,000 and $128,000 at June 30, 1997 and December 31, 1996, respectively. 8. At June 30, 1997 and December 31, 1996, Preferred Stock at a par value of $0.01 per share consisted of 1,000,000 shares authorized and 0 shares issued and outstanding. 9. At June 30, 1997 and December 31, 1996, Common Stock at a par value of $0.01 per share consisted of 25,000,000 shares authorized and 5,286,779 and 5,155,560 shares issued and outstanding, respectively. 10. In December 1997, the Company will be required to adopt Statement of Financial Accounting Standards No. 128, "Earnings Per Share." The provisions of this statement will require a change in the method of calculating earnings per share. The Company has not yet determined the effect, if any, that this statement will have on currently reported earnings per share. 11. Certain reclassifications have been made to the 1996 consolidated financial statements to conform with the 1997 consolidated financial statement presentation. 9 10 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion in this Report contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the management of growth, risks inherent in expansion into new professions and new markets, the Company's ability to attract and retain qualified scientific, environmental and financial personnel, and other risks discussed in "Risk Factors That May Affect Future Results" in the Business Section of the Company's Annual Report on Form 10-K for the year ended December 31, 1996, as well as those discussed elsewhere in this Report and from time to time in the Company's other reports filed with the Securities and Exchange Commission. CHANGES IN RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996: - -------------------------------------------------------------------------------- REVENUES - Revenues increased by 23.2% from $21,438,000 for the three months ended June 30, 1996, to $26,410,000 for the three months ended June 30, 1997, primarily as a result of the increase in the number of temporary employees on assignment in the Lab Support and Healthcare Financial Staffing divisions, partially offset by a decrease in the number of temporary employees on assignment in the EnviroStaff division. The growth of the Lab Support division's revenues were primarily attributable to strong performance in most of the markets in which the Lab Support division has older, better established branches and to a lesser extent the contribution of new offices opened in the past year, and an increase in average hourly billing rates during the 1997 period. The decrease in the EnviroStaff division's revenues were primarily attributable to the continuing transition of the division's business away from remediation and the resulting planned decline in remediation assignments, partially offset by increases in revenues from the division's higher margin core business and an increase in average hourly billing rates during the 1997 period. The growth of the Healthcare Financial Staffing division's revenues were primarily attributable to strong performance in most of the markets in which the Healthcare Financial division has older, better established branches and to a lesser extent the contribution of new offices opened in the past year, and an increase in average hourly billing rates, which were principally attributable to a concentration on new business with a higher price structure. 10 11 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHANGES IN RESULTS OF OPERATIONS (CONTINUED) FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996: - -------------------------------------------------------------------------------- COST OF SERVICES - Cost of services consists solely of compensation for temporary employees and payroll taxes and benefits paid by the Company in connection with such compensation. Cost of services increased 23.6% from $14,919,000 for the three months ended June 30, 1996, to $18,447,000 for the three months ended June 30, 1997. Cost of services as a percentage of revenues increased from 69.6% in the 1996 period to 69.8% in the 1997 period. This increase was primarily attributable to an increase in employer paid benefits and workers' compensation expense reserves, partially offset by an increase in conversion fee revenue (which has no associated cost of service) of the Lab Support and Healthcare Financial Staffing divisions in the 1997 period. OPERATING EXPENSES - Operating expenses include the costs associated with the Company's network of Account Managers and branch offices, including Account Manager compensation, rent, other office expenses and advertising for temporary employees, and corporate office expenses, including corporate operations and support personnel, management compensation, Account Manager recruiting and training expenses, corporate advertising and promotion, rent and other general and administrative expenses. Operating expenses increased 17.5% from $4,332,000 for the three months ended June 30, 1996, to $5,090,000 for the three months ended June 30, 1997. Operating expenses as a percentage of revenues decreased from 20.2% in the 1996 period to 19.3% in the 1997 period. This result was primarily attributable to improved Account Manager productivity in all three divisions and increased leverage of the Company's operations support infrastructure. INTEREST - Interest income, net increased 59.8% from $127,000 for the three months ended June 30, 1996 to $203,000 for the three months ended June 30, 1997, primarily as a result of interest earned on higher interest-bearing cash, cash equivalent and marketable security account balances in the 1997 period. PROVISION FOR INCOME TAXES - Income taxes increased 22.1% from $944,000 for the three months ended June 30, 1996 to $1,153,000 for the three months ended June 30, 1997. The effective tax rate decreased from 40.8% in the 1996 period to 37.5% in the 1997 period. This decrease was primarily attributable to the consolidation of divisional field operations into Assignment Ready, Inc., a wholly-owned subsidiary of the Company, which resulted in a lower overall effective state tax rate. 11 12 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHANGES IN RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996: - -------------------------------------------------------------------------------- REVENUES - Revenues increased by 23.9% from $40,340,000 for the six months ended June 30, 1996, to $49,980,000 for the six months ended June 30, 1997, primarily as a result of the increase in the number of temporary employees on assignment in the Lab Support and Healthcare Financial Staffing divisions, partially offset by a decrease in the number of temporary employees in the EnviroStaff division. The growth of the Lab Support division's revenues were primarily attributable to strong performance in most of the markets in which the Lab Support division has older, better established branches and to a lesser extent the contribution of new offices opened in the past year, and an increase in average hourly billing rates during the 1997 period. The decrease in the EnviroStaff division's revenues were primarily attributable to the continuing transition of the division's business away from remediation and the resulting planned decline in remediation assignments, partially offset by increases in revenues from the division's higher margin core business and an increase in average hourly billing rates. In addition, severe winter weather in several key markets contributed to the decrease in revenues in the 1997 period. The growth of the Healthcare Financial Staffing division's revenues were primarily attributable to strong performance in most of the markets in which the Healthcare Financial Staffing division has older, better established branches and to a lesser extent the contribution of new offices opened in the past year, and an increase in average hourly billing rates, which were principally attributable to a concentration on new business with a higher price structure. COST OF SERVICES - Cost of services increased 24.4% from $28,048,000 for the six months ended June 30, 1996, to $34,882,000 for the six months ended June 30, 1997. Cost of services as a percentage of revenues increased from 69.5% in the 1996 period to 69.8% in the 1997 period. This increase was primarily attributable to an increase in employer paid benefits and workers' compensation expense reserves, and a decrease in conversion fee revenue of the Lab Support and EnviroStaff divisions in the 1997 period. OPERATING EXPENSES - Operating expenses increased 16.1% from $8,402,000 for the six months ended June 30, 1996, to $9,751,000 for the six months ended June 30, 1997. Operating expenses as a percentage of revenues decreased from 20.8% in the 1996 period to 19.5% in the 1997 period. This result was primarily attributable to improved Account Manager productivity in all three divisions and increased leverage of the Company's operations support infrastructure. 12 13 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHANGES IN RESULTS OF OPERATIONS (CONTINUED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996: - -------------------------------------------------------------------------------- ACQUISITION COSTS - Acquisition costs consisted principally of legal, accounting, financial advisory services and other expenses related to the initial combination of EnviroStaff and the Company. The combined companies incurred approximately $401,000 in acquisition costs during the quarter ended March 31, 1996. INTEREST - Interest income, net increased 49.2% from $240,000 for the six months ended June 30, 1996 to $358,000 for the six months ended June 30, 1997, primarily as a result of interest earned on higher interest-bearing cash, cash equivalent and marketable security account balances in the 1997 period, and interest expense charged on EnviroStaff's line of credit borrowings in the 1996 period. PROVISION FOR INCOME TAXES - Income taxes increased 43.4% from $1,501,000 for the six months ended June 30, 1996 to $2,152,000 for the six months ended June 30, 1997. The effective tax rate decreased from 40.3% in the 1996 period to 37.7% in the 1997 period. This decrease was primarily attributable to the consolidation of divisional field operations into Assignment Ready, Inc., a wholly-owned subsidiary of the Company, which resulted in a lower overall effective state tax rate. 13 14 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES: - -------------------------------------------------------------------------------- The Company's primary sources of cash for the six months ended June 30, 1997 were funds provided by operating activities. For the six months ended June 30, 1996, operating activities provided $3,002,000 of cash compared to $5,718,000 for the six months ended June 30, 1997. This increase was primarily attributable to higher net income. In addition, an increase in income taxes payable, accounts payable and accrued expenses in the 1997 period contributed to net cash provided by operating activities. Cash provided by investing activities totaled $69,000 for the six months ended June 30, 1996, compared to $377,000 for the six months ended June 30, 1997. This was primarily attributable to cash proceeds from the maturity of marketable securities exceeding cash used to purchase marketable securities in the 1997 period. Cash provided by financing activities was $111,000 for the six months ended June 30, 1996, compared to $1,208,000 for the six months ended June 30, 1997. The increase was primarily attributable to higher proceeds from the sale of common stock in connection with the exercise of stock options and the Employee Stock Purchase Plan during the 1997 period, and repayments of EnviroStaff's line of credit borrowings exceeding the related borrowings during the 1996 period. Effective September 30, 1996, the Company renewed its unsecured bank line of credit. The maximum borrowings allowable under this agreement are $7,000,000 and bear interest at the bank's reference rate (8.5% at June 30, 1997). The agreement expires on July 1, 1998. No borrowings were outstanding under this credit line at June 30, 1997. In addition, the Company's EnviroStaff subsidiary had a $1,000,000 line of credit with a bank. Borrowings accrued interest at prime plus 1.25%. Advances were secured by all of the assets of EnviroStaff and the agreement included requirements for minimum operating ratios and tangible net worth and restricted the payment of dividends. On April 19, 1996, the Company paid the outstanding balance in full and the line of credit agreement was terminated. The Company believes that its cash balances, together with funds from operations and its borrowing capacity, will be sufficient to meet its cash requirements through at least the next twelve months. 14 15 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS The Company's 1997 annual meeting of stockholders was held on June 9, 1997. Karen Brenner and Jeremy M. Jones, both of whom served as directors prior to the meeting, were re-elected as directors by the stockholders. Of the total shares voting on this matter, 4,235,840 shares voted for the election of Ms. Brenner and Mr. Jones, and 143,214 shares withheld authority to vote. Jonathan S. Holman, H. Tom Buelter and the Honorable William E. Brock, all of whom were directors prior to the meeting, continued to serve as directors after the annual meeting. The following additional matters were submitted to the stockholders for vote at the meeting: 1. Approval of an amendment to the Company's Restated 1987 Stock Option Plan to increase the number of shares of the Company's Common Stock reserved for issuance under the Option Plan by 500,000 shares. Of the total shares voting on this matter, 2,322,362 shares voted for the proposal, 1,480,756 shares voted against the proposal, 7,556 shares abstained from such vote, and there were 568,380 broker non-votes. 2. Ratification of the appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending December 31, 1997. Of the total shares voting on this matter, 4,372,065 shares voted for the proposal, 2,486 shares voted against the proposal, 4,503 shares abstained from such vote and there were no broker non-votes. ITEM 5 - OTHER INFORMATION None ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - 11.1 Statement regarding computation of earnings per share (b) Reports on Form 8-K None 15 16 PART II - OTHER INFORMATION 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. ON ASSIGNMENT, INC. Date: August 12, 1997 By: /s/ H. TOM BUELTER --------------- --------------------------------------- H. Tom Buelter Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) Date: August 12, 1997 By: /s/ RONALD W. RUDOLPH --------------- --------------------------------------- Ronald W. Rudolph Sr. Vice President, Finance & Operations Support, and Chief Financial Officer (Principal Financial and Accounting Officer) 16 17 PART II - OTHER INFORMATION INDEX TO EXHIBITS
Sequentially Exhibit Numbered Number Description Page ------ ----------- ---- 11.1 Statement regarding computation 18 of earnings per share
17 18 EXHIBIT 11.1 ON ASSIGNMENT, INC. STATEMENTS OF COMPUTATION OF NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, ------------------------------- ------------------------------- 1997 1996 1997 1996 -------------- ------------- ------------- -------------- Net income used to compute primary and fully diluted earnings per share $ 1,923,000 $ 1,370,000 $ 3,553,000 $ 2,228,000 ============= ============ ============ ============= Weighted average number of shares outstanding 5,274,000 5,079,000 5,230,000 5,068,000 Dilutive effect of stock options and warrants 204,000 381,000 223,000 371,000 ------------- ------------ ------------ ------------- Number of shares used to compute primary and fully diluted earnings per share 5,478,000 5,460,000 5,453,000 5,439,000 ============= ============ ============ ============= Net earnings per share $ 0.35 $ 0.25 $ 0.65 $ 0.41 ============= ============ ============ =============
18 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS (UNAUDITED) AND CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 19,024,000 2,050,000 13,359,000 728,000 0 34,763,000 4,831,000 2,330,000 38,602,000 5,906,000 0 0 0 53,000 32,643,000 38,602,000 0 49,980,000 0 34,882,000 0 210,000 0 5,705,000 2,152,000 3,553,000 0 0 0 3,553,000 0.65 0.65
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