<PAGE> 1
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UNITED STATES
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 QUARTER ENDED APRIL 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-27612
DATA PROCESSING RESOURCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 95-3931443
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4400 MACARTHUR BOULEVARD, SUITE 600
NEWPORT BEACH, CA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 553-1102
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 [ ]
Number of shares of common stock outstanding as of April 30, 1997 is
10,895,579.
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<PAGE> 2
DATA PROCESSING RESOURCES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL INFORMATION,
OTHER INFORMATION AND SIGNATURE
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of April 30, 1997 and July 31,
1996........................................................................ 3
Condensed Consolidated Statements of Income for the Three and Nine Months
Ended April 30, 1997 and 1996............................................... 4
Condensed Consolidated Statements of Cash Flows for the Three and Nine
Months Ended April 30, 1997 and 1996........................................ 5
Notes to Condensed Consolidated Financial Statements........................ 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 8-11
PART II. OTHER INFORMATION...........................................................
Item 1. Legal Proceedings........................................................... 12
Item 2. Changes in Securities....................................................... 12
Item 3. Defaults Upon Senior Securities............................................. 12
Item 4. Submission of Matters to Vote of Security Holders........................... 12
Item 5. Other Information........................................................... 12
Item 6. Exhibits and Reports on Form 8-K............................................ 12
SIGNATURE ............................................................................ 13
</TABLE>
2
<PAGE> 3
DATA PROCESSING RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
A S S E T 1997 1996
- ----------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents...................................... $ 23,635,000 $21,855,000
Accounts Receivable (net of allowance for doubtful accounts of
$235,000 and $129,000 as of April 30, 1997 and July 31,
1996, respectively)......................................... 19,836,000 8,436,000
Prepaid Expenses and Other Current Assets...................... 1,106,000 603,000
------------ -----------
Total Current Assets................................... 44,577,000 30,894,000
Property, net.................................................... 1,362,000 739,000
Other Assets..................................................... 105,000 69,000
Intangible Assets................................................ 59,408,000 12,327,000
------------ -----------
$105,452,000 $44,029,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities....................... $ 8,311,000 $ 3,690,000
Income Taxes Payable........................................... 1,953,000 303,000
------------ -----------
Total Current Liabilities.............................. 10,264,000 3,993,000
Shareholders' Equity:
Preferred Stock; 2,000,000 shares authorized; no shares issued
and outstanding............................................. -- --
Common Stock; 20,000,000 shares authorized; 10,895,579 and
7,492,321 shares issued and outstanding as of April 30, 1997
and July 31, 1996, respectively............................. 88,913,000 38,125,000
Additional Paid-in Capital..................................... 1,636,000 1,636,000
Retained Earnings.............................................. 4,639,000 275,000
------------ -----------
Total Shareholders' Equity............................. 95,188,000 40,036,000
------------ -----------
$105,452,000 $44,029,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 4
DATA PROCESSING RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.................................... $31,355,000 $14,815,000 $75,266,000 $42,015,000
Cost of Professional Services............... 23,435,000 11,780,000 57,041,000 33,248,000
----------- ----------- ----------- -----------
Gross Margin........................... 7,920,000 3,035,000 18,225,000 8,767,000
Selling, General and Administrative
Expenses.................................. 5,191,000 1,606,000 11,709,000 4,841,000
----------- ----------- ----------- -----------
Operating Income............................ 2,729,000 1,429,000 6,516,000 3,926,000
Interest Income (Expense), net.............. 347,000 (83,000) 673,000 (396,000)
----------- ----------- ----------- -----------
Income Before Provision For Income Taxes.... 3,076,000 1,346,000 7,189,000 3,530,000
Provision For Income Taxes.................. 1,221,000 523,000 2,825,000 1,412,000
----------- ----------- ----------- -----------
Net Income.................................. $ 1,855,000 $ 823,000 $ 4,364,000 $ 2,118,000
=========== =========== =========== ===========
Net Income Per Share........................ $ 0.18 $ 0.13 $ 0.50 $ 0.38
=========== =========== =========== ===========
Weighted Average Shares Outstanding......... 10,530,000 6,550,000 8,816,000 5,512,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 5
DATA PROCESSING RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income......................................................... $ 4,364,000 $ 2,118,000
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization................................. 880,000 109,000
Changes in Operating Assets and Liabilities, Net of the Effect of
Acquisitions:
Accounts Receivable........................................... (4,212,000) (1,463,000)
Prepaid Expenses and Other Assets............................. (1,226,000) 366,000
Accounts Payable and Accrued Liabilities...................... 1,730,000 484,000
Income Taxes Payable.......................................... 697,000 (1,297,000)
------------ -----------
Net Cash Provided by Operating Activities................ 2,233,000 317,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Paid for Acquisitions......................................... (38,684,000) --
Purchase of Property............................................... (513,000) (511,000)
------------ -----------
Net Cash Used in Investing Activities.................... (39,197,000) (511,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Public Offering, net................................. 38,719,000 34,456,000
Proceeds from the Exercise of Stock Options........................ 25,000 14,000
Repayment of Long-Term Debt........................................ -- (4,309,000)
Proceeds from Line of Credit, net.................................. -- (836,000)
------------ -----------
Net Cash Provided by Financing Activities................ 38,744,000 29,325,000
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......................... 1,780,000 29,131,000
Cash and Cash Equivalents, Beginning of Period..................... 21,855,000 248,000
------------ -----------
Cash and Cash Equivalents, End of Period........................... $ 23,635,000 $29,379,000
============ ===========
SUPPLEMENTAL INFORMATION -- CASH PAID FOR:
Interest........................................................... $ 53,000 $ 408,000
============ ===========
Income Taxes....................................................... $ 2,129,000 $ 2,689,000
============ ===========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING
ACTIVITIES:
Detail of Businesses Acquired in Stock Purchase Transactions
Fair Value of Assets Acquired.................................... $ 11,892,000 --
Common Stock Issued in Acquisition............................... $ 18,819,000 --
Cash Paid for Acquisition, Net of Cash Acquired.................. $ 38,684,000 --
Liabilities Assumed or Created................................... $ 3,083,000 --
Adjustment to the Value of Common Stock Issued in Acquisition.... $ 6,775,000 --
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 1997 AND 1996
1. GENERAL
Business
Data Processing Resources Corporation (the Company) is a leading
multi-regional specialty staffing company providing information technology
services to a diverse group of corporate clients.
Interim Financial Data
The interim financial data as of April 30, 1997 and for the three and nine
months ended April 30, 1997 and 1996 is unaudited. The information reflects all
adjustments, consisting only of normal recurring entries, that, in the opinion
of management, are necessary to present fairly the financial position and
results of operations of the Company for the periods indicated. Results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full fiscal year. For further information refer to the
Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1996 and
the Company's registration statement on Form S-1 (Registration No. 333-18719)
originally filed with the Securities and Exchange Commission on December 24,
1996, as amended by Amendment No. 1 to such registration statement filed with
the Securities and Exchange Commission on January 7, 1997 and in the prospectus
related thereto filed January 21, 1997. Certain reclassifications have been made
in the condensed consolidated financial statements to conform amounts previously
reported for fiscal period 1996 to the fiscal period 1997 presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property
The cost of furniture, fixtures and equipment is depreciated using
accelerated methods based on the estimated useful lives of the related assets,
generally five to seven years.
Revenue Recognition
The Company recognizes revenues as services are performed.
Income Taxes
The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109). SFAS 109 is an asset and
liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's consolidated financial statements or tax returns. In
estimating future tax consequences, the Company generally considers all expected
future events other than the enactment of changes in the tax law or rates.
3. ACQUISITIONS
In November 1996, the Company acquired all of the outstanding common stock
of Phoenix-based Professional Software Consultants, Inc. (PSC). Under the terms
of the agreement, the purchase price was approximately $6.2 million in an all
cash transaction which included an earn-out based on PSC's earnings before
interest and taxes through December 31, 1996.
In January 1997, the Company acquired all of the outstanding capital stock
of Dallas-based LEARDATA Info-Services, Inc. (Leardata). Under the terms of the
agreement, the purchase price was approximately $21.4 million, consisting of
$17,329,000 in cash and 310,226 shares of restricted common stock, valued at
$4,043,000, after an adjustment to reflect the impact of restrictions on
disposition of the stock.
6
<PAGE> 7
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 1997 AND 1996
In April 1997, the Company completed the acquisition by merger of Computec
International Strategic Resources, Inc. ("Computec"). Under the terms of the
agreement, the purchase price was approximately $28.2 million, consisting of
$19,047,000 in cash and 677,880 shares of restricted common stock, valued at
$9,130,000, after an adjustment to reflect the impact of restrictions on
disposition of the stock. The definitive agreement also calls for an earnout
contingent upon Computec's earnings before interest and taxes through December
31, 1998.
Acquisition costs which include legal, accounting, tax, and advisory fees
of approximately $1.6 million for PSC, Leardata and Computec have been allocated
to goodwill.
Each of these transactions were accounted for as purchases. The excess of
cost over fair value was allocated to goodwill, which is amortized on a
straight-line basis over 25 years.
Unaudited pro forma combined results of operations for the nine months
ended April 30, 1997 and 1996 would have been as follows had the acquisitions
occurred as of the beginning of the respective periods:
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Revenues......................................... $101,978,000 $81,902,000
Pro Forma Net Income............................. $ 5,524,000 $ 2,792,000
Pro Forma Net Income Per Share................... $ 0.57 $ 0.42
Weighted Average Shares Outstanding.............. 9,666,000 6,652,000
</TABLE>
4. SHAREHOLDERS' EQUITY
In January 1997, the Company completed a second public offering (the
"Offering") of 2,395,000 shares of its common stock at an offering price of
$17.50 per share for net proceeds of $38.7 million after offering costs.
5. RELATED PARTY TRANSACTIONS
Information Technology Resources, Inc. ("ITR") was formed by the founder of
the Company and certain other persons, including former employees of ITR, with
the founder owning approximately 75.6% of the outstanding capital stock. As a
result of this arrangement, the Company provides certain management services to
ITR to support its operations, for which the Company receives a management fee
pursuant to a management services agreement. Management fees earned by the
Company were $810,000 and $750,000 for the nine months ended April 30, 1997 and
1996, respectively. ITR also contracts with the Company for technical
consultants to meet its staffing needs. For the nine months ended April 30, 1997
and 1996, the Company recorded revenues of $2,778,000 and $3,855,000 from
billing of ITR technical consultants, respectively.
7
<PAGE> 8
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve a number of risks and uncertainties,
including, without limitation, the Company's ability to recruit and retain
qualified technical consultants; identify, acquire and integrate suitable
acquisition candidates; obtain sufficient working capital to support such
growth; compete successfully with existing and future competitors; and other
factors described throughout this Form 10-Q, in the Company's Form 10-K for the
year ended July 31, 1996 and its Form 10-Q for the quarters ended October 31,
1996 and January 31, 1997. The actual results that the Company achieves may
differ materially from any forward-looking statements due to such risks and
uncertainties. Words such as "believes", "anticipates", "expects", "intends",
and similar expressions are intended to identify forward-looking statements, but
are not the exclusive means of identifying such statements. The Company
undertakes no obligation to revise any forward-looking statements in order to
reflect events or circumstances that may arise after the date of this report.
Readers are urged to carefully review and consider the various disclosures made
by the Company in this report and in the Company's other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect the Company's business, including the risk
factors set forth in the Company's prospectus dated January 21, 1997.
THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THREE MONTHS ENDED APRIL 30, 1996
Revenues. Revenues increased $16.5 million, or 111.6%, to $31.4 million for
the three months ended April 30, 1997 as compared to $14.8 million for the three
months ended April 30, 1996. This increase resulted primarily from the
contribution of revenues from the acquisitions of the Applications Design and
Development division ("AD&D") of ADD Consulting, Inc. (acquired in July 1996),
Professional Software Consultants, Inc. ("PSC") (acquired in November 1996) and
LEARDATA Info-Services, Inc. ("Leardata") (acquired in January 1997), and from
the Denver branch (opened in November 1995), the Seattle branch (opened in June
1996), the Des Moines branch (opened in September 1996), the Portland branch
(opened in February 1997) and increases in the Company's core market in Southern
California. The increases were also due to: (i) new information technology
projects; (ii) increased demand in the networking and communications market; and
(iii) a broadening of the types of services being provided such as LAN/WAN and
Year 2000 conversion.
Gross Margin. Gross margin increased $4.9 million, to $7.9 million for the
three months ended April 30, 1997, as compared to $3.0 million for the three
months ended April 30, 1996. As a percentage of revenues, gross margin increased
to 25.3%, as compared to 20.5% for the same period in the prior year. This gross
margin percentage improvement reflects higher gross margins from: (i) AD&D, PSC
and Leardata due to their higher mix of salaried consultants; (ii) the opening
of the branch offices in Denver, Seattle, Des Moines and Portland which are
generating higher gross margins than those in the core market in Southern
California; and (iii) the gross margin improvement program in existing markets
and a change in the mix of service offerings.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $3.6 million, to $5.2 million
for the three months ended April 30, 1997, as compared to $1.6 million for the
three months ended April 30, 1996. Selling, general and administrative expenses
also increased as a percentage of revenues to 16.6% for the three months ended
April 30, 1997, as compared to 10.8% for the prior year period. This increase
primarily resulted from: (i) amortization of intangible assets related to the
acquisitions of AD&D, PSC and Leardata, (ii) investment in additional management
personnel and corporate infrastructure required to support planned Company
growth, particularly sales and recruiting personnel; and (iii) costs related to
new branch openings.
Operating Income. Operating income increased $1.3 million, or 91.0% to $2.7
million for the three months ended April 30, 1997 from $1.4 million for the
three months ended April 30, 1996. As a percentage of revenues, operating income
decreased to 8.7% for the three months ended April 30, 1997 as compared to 9.6%
8
<PAGE> 9
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
for the three months ended April 30, 1996 reflecting the increase in selling,
general and administrative expenses as a percentage of revenues, offset, in
part, by gross margin improvement.
Interest Income (Expense), net. The Company had net interest income of
$347,000 for the three months ended April 30, 1997 as compared to net interest
expense of $83,000 for the three months ended April 30, 1996 as a result of the
repayment of the Company's interest bearing debt with a portion of the proceeds
of the Company's initial public offering of securities in March 1996, the
proceeds of the Company's second public offering of securities (the "Offering")
in January 1997, and the investment of the remaining proceeds of both offerings
in interest bearing securities.
NINE MONTHS ENDED APRIL 30, 1997 COMPARED TO NINE MONTHS ENDED APRIL 30, 1996
Revenues. Revenues increased $33.3 million, or 79.1%, to $75.3 million for
the nine months ended April 30, 1997 as compared to $42.0 million for the nine
months ended April 30, 1996. This increase resulted primarily from the
contribution of revenues from the acquisitions of AD&D, PSC and Leardata, the
Denver branch, the Seattle branch, the Des Moines branch, the Portland branch
and increases in the Company's core market in Southern California. The increases
were also due to: (i) new information technology projects; (ii) increased demand
in the networking and communications market; and (iii) a broadening of the types
of services being provided such as LAN/WAN and Year 2000 conversion.
Gross Margin. Gross margin increased $9.5 million, to $18.2 million for the
nine months ended April 30, 1997, as compared to $8.8 million for the nine
months ended April 30, 1996. As a percentage of revenues, gross margin increased
to 24.2%, as compared to 20.9% for the same period in the prior year. This gross
margin percentage improvement reflects higher gross margins from: (i) AD&D, PSC
and Leardata due to their higher mix of salaried consultants; (ii) the opening
of the branch offices in Denver, Seattle, Des Moines and Portland which are
generating higher gross margins than those in the core market in Southern
California; and (iii) the gross margin improvement program in existing markets
and a change in the mix of service offerings.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $6.9 million, to $11.7 million
for the nine months ended April 30, 1997, as compared to $4.8 million for the
nine months ended April 30, 1996. Selling, general and administrative expenses
also increased as a percentage of revenues to 15.6% for the nine months ended
April 30, 1997, as compared to 11.5% for the prior year period. This increase
primarily resulted from: (i) amortization of intangible assets related to the
acquisitions of AD&D, PSC and Leardata, (ii) investment in additional management
personnel and corporate infrastructure required to support planned Company
growth, particularly sales and recruiting personnel; and (iii) costs related to
new branch openings.
Operating Income. Operating income increased $2.6 million, or 66.0% to $6.5
million for the nine months ended April 30, 1997 from $3.9 million for the nine
months ended April 30, 1996. As a percentage of revenues, however, operating
income decreased to 8.7% for the nine months ended April 30, 1997 as compared to
9.3% for the nine months ended April 30, 1996 reflecting the increase in
selling, general and administrative expenses as a percentage of revenues,
offset, in part, by the gross margin improvement.
Interest Income (Expense), net. The Company had net interest income of
$673,000 for the nine months ended April 30, 1997 as compared to net interest
expense of $396,000 for the nine months ended April 30, 1996 as a result of the
repayment of the Company's interest debt with a portion of the proceeds of the
Company's initial public offering of securities in March 1996, the proceeds of
the offering in January 1997, and the investment of the remaining proceeds of
both offerings in interest bearing securities.
9
<PAGE> 10
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and net working capital totaled $23.6 million and
$34.3 million, respectively, as of April 30, 1997. The Company generated $2.2
million in cash flow from operations for the nine months ended April 30, 1997.
The Company used $38.7 million in cash to acquire companies and generated cash
from financing activities of $38.7 million in net proceeds from the Offering
completed in January 1997.
In October 1996, the Company obtained a two-year credit facility with Wells
Fargo Bank (the "Credit Agreement") which provides a revolving line of credit in
the principal amount of $10.0 million and a facility for acquisitions in the
principal amount of $10.0 million. Borrowings under the revolving line of credit
bear interest at either LIBOR plus 1.0% or prime, at the Company's option.
Borrowings under the acquisition facility bear interest at LIBOR plus 1.25% or
prime, at the Company's option, and amortize over a five year term. Both
facilities are secured by accounts receivable and equipment. Additional pricing
options and alternatives are available to the Company depending on certain
financial conditions. The Credit Agreement contains various covenants, including
the maintenance of defined financial ratios such as liquidity and tangible net
worth. During January 1997 the Company utilized borrowings on a short-term basis
on the Credit Agreement which were repaid with the proceeds of the Offering.
As of April 30, 1997, the Company had no outstanding borrowings under the
Credit Agreement and was in compliance with such covenants. The Company is
currently under negotiations to increase its line of credit, but no assurances
may be made that the Company will actually obtain such increase.
On April 30, 1997, the Company completed the acquisition by merger of
Computec. Under the terms of the agreement, the purchase price was approximately
$28.2 million, consisting of $19,047,000 in cash after cash adjustments and
677,880 shares of restricted common stock, valued at $9,130,000, after an
adjustment to reflect the impact of restrictions on disposition of the stock.
The definitive agreement also calls for an earnout contingent upon Computec's
earnings before interest and taxes through December 31, 1998.
The Company anticipates that its primary uses of working capital in future
periods will be for acquisitions, the internal development of new branches and
the funding of increases in accounts receivable. Although the Company seeks to
use its common stock to make acquisitions, to the extent possible, a substantial
portion of the purchase price for AD&D, Leardata, Computec and all of the
purchase price for PSC was paid in cash. The Company continually reviews and
evaluates acquisition candidates to complement and expand its existing business,
and is at various stages of evaluation and discussion with a number of such
candidates. Such acquisition candidates may also require that all or a
significant portion of the purchase price be paid in cash. The Company's ability
to grow through acquisitions is dependent on the availability of suitable
acquisition candidates and the terms on which such candidates may be acquired,
which may be adversely affected by competition for such acquisitions. The
Company cannot predict to what extent new branches will be added through
acquisitions as compared to internal development.
The Company anticipates that the opening of new branches will require an
investment of approximately $150,000 to $200,000 per branch to acquire equipment
and supplies and to fund operating losses for the initial nine- to twelve-month
period of operations which management believes will generally be required for a
new branch to achieve profitability. The Company expenses the costs of opening a
new branch as incurred, except for the cost of equipment and other capital
assets, which are capitalized. Generally, expenditures for such capital assets
for a new branch will be less than $50,000. There can be no assurance that
future branches will achieve profitability within a nine- to twelve-month period
after opening. The Company anticipates making additional capital expenditures in
connection with the development of new branch facilities in future periods and
the improvement of its network and operating system infrastructure and
management reporting system.
10
<PAGE> 11
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company believes that the existing cash and cash equivalents, cash flow
from operations and available borrowings under the Credit Agreement, will be
sufficient to meet the Company's presently anticipated working capital needs for
at least the next 12 months, although the Company is evaluating various
potential acquisitions which could require all or a substantial portion or the
existing cash and cash equivalents and could be completed within the next 12
months. To the extent the Company uses all of its cash resources for
acquisitions, the Company may be required to obtain additional funds, if
available, through additional borrowings or equity financings. There can be no
assurance that such capital will be available on acceptable terms. If the
Company is unable to obtain sufficient financing, it may be unable to implement
its growth strategy fully.
11
<PAGE> 12
DATA PROCESSING RESOURCES CORPORATION
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
In connection with the Company's acquisition by merger of Computec
International Strategic Resources, Inc. ("Computec") on April 30, 1997, the
Company issued 677,880 shares of Common Stock to certain shareholders of
Computec in exchange for their cancellation of their shares of common stock of
Computec. The issuance of such shares was exempt from the registration
requirements of the Securities Act of 1933 by virtue of Section 4(2) thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed the following reports on Form 8-K with the
Securities and Exchange Commission during the third quarter of fiscal
1997:
None
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Newport Beach, State of California, on
the 16th day of June, 1997.
DATA PROCESSING RESOURCES
CORPORATION
By: /s/ MICHAEL A. PIRAINO
-------------------------------
Michael A. Piraino,
Senior Vice President
and Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERNALLY
PREPARED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 9 MONTHS ENDED APRIL 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR PERIOD ENDED
APRIL 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> APR-30-1997
<CASH> 23,635
<SECURITIES> 0
<RECEIVABLES> 19,836
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,577
<PP&E> 1,362
<DEPRECIATION> 0
<TOTAL-ASSETS> 105,452
<CURRENT-LIABILITIES> 10,264
<BONDS> 0
0
0
<COMMON> 88,913
<OTHER-SE> 1,636
<TOTAL-LIABILITY-AND-EQUITY> 105,452
<SALES> 0
<TOTAL-REVENUES> 75,266
<CGS> 0
<TOTAL-COSTS> 57,041
<OTHER-EXPENSES> 11,709
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,189
<INCOME-TAX> 2,825
<INCOME-CONTINUING> 4,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,364
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
