<PAGE> 1
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 JANUARY 31, 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)
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)
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 January 31, 1997 is
10,197,547.
<PAGE> 2
DATA PROCESSING RESOURCES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of January 31, 1997 and July 31, 1996 3
Condensed Consolidated Statements of Income for the Three and Six Months Ended
January 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the Three and Six Months
Ended January 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9-12
PART II. OTHER INFORMATION 13
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE 14
</TABLE>
2
<PAGE> 3
DATA PROCESSING RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $42,682,000 $21,855,000
Accounts Receivable (net of allowance for doubtful accounts
of $213,000 and $129,000 as of January 31, 1997
and July 31, 1996, respectively) 14,437,000 8,436,000
Prepaid Expenses and Other Current Assets 825,000 603,000
----------- -----------
Total Current Assets 57,944,000 30,894,000
Property, net 1,199,000 739,000
Other Assets 65,000 69,000
Intangible Assets 31,396,000 12,327,000
----------- -----------
$90,604,000 $44,029,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 5,659,000 $ 3,690,000
Income Taxes Payable 432,000 303,000
----------- -----------
Total Current Liabilities 6,091,000 3,993,000
Shareholders' Equity:
Preferred Stock; 2,000,000 shares authorized; no shares
issued and outstanding - -
Common Stock; 20,000,000 shares authorized; 10,197,547 and
7,492,321 shares issued and outstanding as of January 31, 1997
and July 31, 1996, respectively 80,093,000 38,125,000
Additional Paid-in Capital 1,636,000 1,636,000
Retained Earnings 2,784,000 275,000
----------- -----------
Total Shareholders' Equity 84,513,000 40,036,000
----------- -----------
$90,604,000 $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 SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------------------------------------------
1997 1996 1997 1996
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Revenues $23,777,000 $ 13,246,000 $43,911,000 $ 27,200,000
Cost of Professional Services 18,172,000 10,433,000 33,606,000 21,468,000
----------- ------------ ----------- ------------
Gross Margin 5,605,000 2,813,000 10,305,000 5,732,000
Selling, General and Administrative Expenses 3,665,000 1,744,000 6,518,000 3,235,000
----------- ------------ ----------- ------------
Operating Income 1,940,000 1,069,000 3,787,000 2,497,000
Interest Income (Expense), net 124,000 (154,000) 326,000 (313,000)
----------- ------------ ----------- ------------
Income Before Provision For Income Taxes 2,064,000 915,000 4,113,000 2,184,000
Provision For Income Taxes 803,000 373,000 1,604,000 889,000
----------- ------------ ----------- ------------
Net Income $ 1,261,000 $ 542,000 $ 2,509,000 $ 1,295,000
=========== ============ =========== ============
Net Income Per Share $ 0.16 $ 0.11 $ 0.32 $ 0.26
=========== ============ =========== ============
Weighted Average Shares Outstanding 8,065,000 4,926,000 7,965,000 4,926,000
=========== ============ =========== ============
</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>
SIX MONTHS ENDED
JANUARY 31,
---------------------------
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,509,000 $ 1,295,000
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 447,000 55,000
Changes in Operating Assets and Liabilities,
Net of the Effect of Acquisitions:
Accounts Receivable (1,570,000) (1,065,000)
Prepaid Expenses and Other Assets (950,000) 96,000
Accounts Payable and Accrued Liabilities 559,000 97,000
Income Taxes Payable 75,000 (1,411,000)
------------ -----------
Net Cash Provided by (Used in) Operating Activities 1,070,000 (933,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Paid for Acquisitions (18,924,000) -
Purchase of Property (373,000) (282,000)
------------ -----------
Net Cash Used in Investing Activities (19,297,000) (282,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Public Offering, net 39,054,000 -
Proceeds from Line of Credit,net - 1,392,000
Repayment of Notes Payable - Other - (302,000)
------------ -----------
Net Cash Provided by Financing Activities 39,054,000 1,090,000
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,827,000 (125,000)
Cash and Cash Equivalents, Beginning of Period 21,855,000 247,000
------------ -----------
Cash and Cash Equivalents, End of Period $ 42,682,000 $ 122,000
============ ===========
SUPPLEMENTAL INFORMATION - CASH PAID FOR:
Interest $ 11,000 $ 289,000
============ ===========
Income Taxes $ 1,528,000 $ 2,325,000
============ ===========
SUPPLEMENTAL SCHEDULE OF NONCASH
FINANCING AND INVESTING ACTIVITIES:
Detail of Businesses Acquired in Stock Purchase
Transactions
Fair Value of Assets Acquired $ 8,049,000 -
Common Stock Issued in Acquisition $ 4,043,000 -
Cash Paid for Acquisition, Net of Cash Acquired $ 18,924,000 -
Liabilities Assumed or Created $ 1,188,000 -
Adjustment to the value of Common Stock Issued
-
in Acquisition $ 1,129,000 -
</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 SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
1. GENERAL
Business
Data Processing Resources Corporation (the Company) is a leading regional
specialty staffing company providing information technology services to a
diverse group of corporate clients.
Interim Financial Data
The interim financial data as of January 31, 1997 and for the three and
six months ended January 31, 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 recent filing on Form S-1 dated January 21, 1997.
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.
6
<PAGE> 7
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
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 $4.9 million in an
all cash transaction plus an earn-out, to be paid by March 31, 1997, 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 Company common stock,
valued at $4,043,000.
Each of these transactions were accounted for as a purchase. 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 six months
ended January 31, 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 $ 55,680,000 $ 44,672,000
Pro Forma Net Income $ 2,905,000 $ 1,586,000
Pro Forma Net Income Per Share $ 0.35 $ 0.29
Weighted Average Shares Outstanding 8,223,000 5,388,000
</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 $39.1 million after offering costs.
7
<PAGE> 8
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
5. RELATED PARTY TRANSACTIONS
In fiscal 1994, one of the Company's larger clients desired to outsource
its entire information systems department through an employee leasing
arrangement. Because the Company does not provide such employee leasing services
and was unable to provide a comparable employment benefit package to consultants
working for this company, a separate company, Information Technology Resources,
Inc. ("ITR"), was formed by the founder of the Company and certain other
persons, including certain former employees of the client, 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
$570,000 and $452,000 for the six months ended January 31, 1997 and 1996,
respectively. ITR also contracts with the Company for technical consultants to
meet its staffing needs. For the six months ended January 31, 1997 and 1996, the
Company recorded revenues of $1,999,000 and $2,653,000 from billing of ITR
technical consultants.
Receivables from affiliates includes a receivable from ITR related to
these management services and amounted to $130,000 and $104,000 as of January
31, 1997 and July 31, 1996, respectively. The Company has trade accounts
receivable for technical consultants due from ITR of $350,000 and $133,000 as of
January 31, 1997 and July 31, 1996, respectively, which are included in accounts
receivable in the accompanying balance sheets.
8
<PAGE> 9
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 quarter ended October
31, 1996. 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 JANUARY 31, 1997 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1996
Revenues. Revenues increased $10.5 million, or 79.5%, to $23.8 million for
the three months ended January 31, 1997 as compared to $13.2 million for the
three months ended January 31, 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) and increases in the
Company's core market in Southern California. Despite seasonal lows typically
experienced during the second fiscal quarter due to holidays, vacations and
holiday shut downs at client sites, the increases were also due to: (i) new
information technology projects; (ii) increased demand in the networking and
communications market; (iii) a broadening of the types of services being
provided; and (iv) an increase in the performance of the San Francisco branch
which contributed $481,000 to revenues for the three months ended January 31,
1997, up from $434,000 in the comparable period in the prior year.
Gross Margin. Gross margin increased $2.8 million, to $5.6 million for the
three months ended January 31, 1997, as compared to $2.8 million for the three
months ended January 31, 1996. As a percentage of revenues, gross margin
increased to 23.6%, as compared to 21.2% 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 and Des Moines which are
generating higher gross margins than those in the core market; and (iii) the
gross margin improvement program in existing markets and a change in service
mix, with an increased component of higher gross margin client/server and
networking and communications services in the three months ended January 31,
1997 than in the comparable period in the prior year.
9
<PAGE> 10
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $1.9 million, to $3.7 million
for the three months ended January 31, 1997, as compared to $1.7 million for the
three months ended January 31, 1996. Selling, general and administrative
expenses also increased as a percentage of revenues to 15.4% for the three
months ended January 31, 1997, as compared to 13.2% for the prior year period.
This increase primarily resulted from: (i) amortization of intangible assets
related to the acquisition 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 $871,000, or 81.5% to $1.9
million for the three months ended January 31, 1997 from $1.1 million for the
three months ended January 31, 1996. As a percentage of revenues, operating
income increased to 8.2% for the three months ended January 31, 1997 as compared
to 8.1% for the three months ended January 31, 1996 reflecting gross margin
improvement, offset, in part, by the increase in selling, general and
administrative expenses as a percentage of revenues.
Interest Income (Expense), net. The Company had interest income of
$124,000 for the three months ended January 31, 1997 as compared to interest
expense of $154,000 for the three months ended January 31, 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.
SIX MONTHS ENDED JANUARY 31, 1997 COMPARED TO SIX MONTHS ENDED JANUARY 31, 1996
Revenues. Revenues increased $16.8 million, or 61.4%, to $43.9 million for
the six months ended January 31, 1997 as compared to $27.2 million for the six
months ended January 31, 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 and increases in the
Company's core market in Southern California. Despite seasonal lows typically
experienced during the second fiscal quarter due to holidays, vacations and
holiday shut downs at client sites, 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. These increases were partially offset by the performance of the San
Francisco branch which contributed $999,000 to revenues for the six months ended
January 31, 1997, down from $1.1 million in the comparable period in the prior
year.
Gross Margin. Gross margin increased $4.6 million, to $10.3 million for
the six months ended January 31, 1997, as compared to $5.7 million for the six
months ended January 31, 1996. As a percentage of revenues, gross margin
increased to 23.5%, as compared to 21.1% 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 and Des Moines which are
generating higher gross margins than those in the core market; and (iii) the
gross margin improvement program in existing markets and a change in service
mix, with an increased component of higher
10
<PAGE> 11
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
gross margin client/server and networking and communications services in the six
months ended January 31, 1997 than in the comparable period in the prior year.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $3.3 million, to $6.5 million
for the six months ended January 31, 1997, as compared to $3.2 million for the
six months ended January 31, 1996. Selling, general and administrative expenses
also increased as a percentage of revenues to 14.8% for the six months ended
January 31, 1997, as compared to 11.9% for the prior year period. This increase
primarily resulted from: (i) amortization of intangible assets related to the
acquisition 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 51.7% to
$3.8 million for the six months ended January 31, 1997 from $2.5 million for the
six months ended January 31, 1996. As a percentage of revenues, however,
operating income decreased to 8.6% for the six months ended January 31, 1997 as
compared to 9.2% for the six months ended January 31, 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 interest income of
$326,000 for the six months ended January 31, 1997 as compared to interest
expense of $313,000 for the six months ended January 31, 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.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and net working capital totaled $42.7 million
and $51.9 million, respectively, as of January 31, 1997. The Company generated
$1.0 million in cash flow from operations for the six months ended January 31,
1997 from net income and an increase in accounts payable and accrued
liabilities, offset by an increase in accounts receivable, prepaid expenses and
other assets. The Company used $18.9 million in cash to acquire companies and
generated cash from financing activities of $39.1 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
11
<PAGE> 12
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 January 31, 1997, the Company had no outstanding borrowings
under the Credit Agreement and was in compliance with such covenants.
In November 1996, the Company acquired all of the outstanding common
stock of Phoenix-based PSC. Under the terms of the agreement, the purchase price
was approximately $4.9 million in an all cash transaction plus an earn-out, to
be paid by March 31, 1997, based on PSC's earnings before interest and taxes
through December 31, 1996.
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 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.
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.
12
<PAGE> 13
DATA PROCESSING RESOURCES CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable
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 second quarter of
fiscal 1997:
Current Report on Form 8-K dated November 26, 1996 and filed on
December 11, 1996, filing under Item 2 statement regarding the
acquisition by the Company of the outstanding stock of Professional
Software Consultants, Inc.
Current Report on Form 8-K dated January 6, 1997 and filed on
January 21, 1997, filing under Item 2 statement regarding the
acquisition by the Company of the outstanding capital stock of
LEARDATA Info-Services, Inc. ("Leardata"). The financial statements
of Leardata were incorporated into the Current Report on Form 8-K by
reference from 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.
13
<PAGE> 14
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 17TH DAY OF MARCH, 1997.
DATA PROCESSING RESOURCES CORPORATION
By: /s/ MICHAEL A. PIRAINO
--------------------------------------
Michael A. Piraino, Senior Vice President
and Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERNALLY
PREPARED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED JANUARY 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR PERIOD
ENDED JANUARY 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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0
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