<PAGE>
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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 January 31, 1999
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)
(949) 553-1102
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 [_]
Number of shares of common stock outstanding as of January 31, 1999 is
14,378,598.
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<PAGE>
DATA PROCESSING RESOURCES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION
AND SIGNATURE
<TABLE>
<CAPTION>
Page
-----
<C> <S> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of January 31, 1999
(unaudited) and July 31, 1998............................... 3
Consolidated Statements of Income for the Three Months and
Six Months Ended January 31, 1999 and 1998 (unaudited)...... 4
Consolidated Statements of Cash Flows for the Six Months
Ended January 31, 1999 and 1998 (unaudited)................. 5
Notes to Consolidated Financial Statements (unaudited)....... 6-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 10-15
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 16
Part II. Other Information............................................ 17
Item 1. Legal Proceedings............................................ 17
Item 2. Changes in Securities and Use of Proceeds.................... 17
Item 3. Defaults Upon Senior Securities.............................. 17
Item 4. Submission of Matters to Vote of Security Holders............ 17-18
Item 5. Other Information............................................ 19
Item 6. Exhibits and Reports on Form 8-K............................. 19
Signature.............................................................. 20
</TABLE>
2
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
January 31, July 31,
1999 1998
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents.............................. $ 45,463 $ 40,881
Investments............................................ 28,931 59,969
Accounts Receivable (net of allowance for doubtful
accounts of $1,950 and $1,369 as of January 31, 1999
and July 31, 1998, respectively)...................... 53,926 48,103
Prepaid Expenses and Other Current Assets.............. 8,517 4,601
Deferred Tax Asset..................................... 711 1,538
--------- --------
Total Current Assets................................. 137,548 155,092
Property, net............................................ 7,009 4,445
Other Assets............................................. 741 921
Intangible Assets, net................................... 164,646 114,822
--------- --------
$ 309,944 $275,280
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities............... $ 49,854 $ 31,694
Income Taxes Payable................................... -- 1,625
Line of Credit......................................... -- 2,522
--------- --------
Total Current Liabilities.............................. 49,854 35,841
Long-Term Deferred Income Taxes.......................... 784 784
Long-Term Debt........................................... 111,283 111,288
Commitments and Contingencies
Shareholders' Equity:
Common Stock; no par value; 60,000,000 and 20,000,000
shares authorized as of January 31, 1999 and July 31,
1998, respectively; 14,378,598 and 13,677,028 shares
issued and outstanding as of January 31, 1999 and July
31, 1998, respectively................................ 121,732 110,421
Compensation Expense Associated With Performance
Vesting Options....................................... -- (1,553)
Retained Earnings...................................... 26,291 18,499
--------- --------
Total Shareholders' Equity........................... 148,023 127,367
--------- --------
$ 309,944 $275,280
========= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
-------------------- ------------------
1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues.............................. $90,193 $56,183 $181,234 $112,477
Cost of Professional Services......... 62,877 40,868 126,128 81,250
------- ------- -------- --------
Gross Margin........................ 27,316 15,315 55,106 31,227
Selling, General and Administrative
Expenses............................. 17,578 11,051 35,645 22,119
Merger-Related Expenses............... 3,054 -- 3,054 --
Compensation Expense Associated With
Performance-Vesting Options.......... -- -- 932 --
------- ------- -------- --------
Operating Income...................... 6,684 4,264 15,475 9,108
Interest (Expense) Income, net........ (905) 33 (1,445) 124
------- ------- -------- --------
Income Before Provision for Income
Taxes................................ 5,779 4,297 14,030 9,232
Provision for Income Taxes............ 2,520 1,916 6,238 3,915
------- ------- -------- --------
Net Income............................ $ 3,259 $ 2,381 $ 7,792 $ 5,317
======= ======= ======== ========
Net Income per Share--Basic........... $ 0.23 $ 0.18 $ 0.55 $ 0.40
======= ======= ======== ========
Net Income per Share--Diluted......... $ 0.22 $ 0.17 $ 0.54 $ 0.39
======= ======= ======== ========
Weighted Average Common Shares
Outstanding--Basic................... 14,229 13,324 14,056 13,290
======= ======= ======== ========
Weighted Average Common Shares
Outstanding--Diluted................. 14,617 13,734 14,441 13,706
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................................... $ 7,792 $ 5,317
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation......................................... 759 303
Amortization......................................... 2,704 1,419
Amortization of Debt Discount and Issue Costs........ (100) --
Compensation Expense Associated with Performance-
Vesting Options..................................... 932 --
Changes in Operating Assets and Liabilities, net of
the Effect of Acquisitions:
Accounts Receivable................................ (3,660) (4,812)
Deferred Income Taxes.............................. 827 --
Prepaid Expenses and Other Assets.................. (1,050) (1,041)
Accounts Payable and Accrued Liabilities........... 6,690 552
Income Taxes Payable............................... (3,562) (889)
-------- --------
Net Cash Provided by Operating Activities........ 11,332 849
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Paid for Acquisitions, Net of Cash Acquired......... (24,717) (28,067)
Proceeds from the Sale of Investments Available for
Sale.................................................... 31,038 --
Cash Paid for Contingent Acquisition Obligations, net.... (9,190) (1,384)
Purchase of Property..................................... (3,217) (906)
-------- --------
Net Cash Used in Investing Activities............ (6,086) (30,357)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Line of Credit............................. 14,173 25,500
Repayments of Line of Credit............................. (16,695) (799)
Proceeds from Employee Stock Purchase Plan............... 784 388
Issuance of Common Stock from Profit Sharing Plan........ -- 22
Purchase of Common Stock from Profit Sharing Plan........ (22) --
Proceeds from the Exercise of Stock Options.............. 1,096 1,464
-------- --------
Net Cash (Used in) Provided by Financing
Activities........................................ (664) 26,575
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....... 4,582 (2,933)
Cash and Cash Equivalents, Beginning of Period............. 40,881 17,816
-------- --------
Cash and Cash Equivalents, End of Period................... $ 45,463 $ 14,883
======== ========
SUPPLEMENTAL INFORMATION--Cash paid for:
Interest................................................. $ 3,283 $ 126
======== ========
Income Taxes............................................. $ 7,314 $ 4,894
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Tax Benefit of Stock Options Exercised................... $ 738 $ 418
Other Receivable from Stock Options Exercised............ $ 970 $ --
Detail of Businesses Acquired in Purchase Transactions:
Fair Value of Assets Acquired.......................... $ 32,397 $ 33,718
Common Stock Issued in Acquisitions.................... (5,653) (4,333)
Cash Paid for Acquisitions............................. (24,717) (29,746)
-------- --------
Liabilities (Relieved) Assumed......................... $ 2,027 $ (361)
======== ========
Accrual to Satisfy Earnout Obligation.................... $ 23,200 $ --
Shares Issued to Satisfy Earnout Obligation.............. $ 2,837 $ --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
For the Three and Six Months Ended January 31, 1999 and 1998
1. General
Business
Data Processing Resources Corporation (DPRC or the Company), a California
corporation, is a leading national specialty staffing company providing
information technology services to a diverse group of corporate clients.
On December 21, 1998, DPRC acquired Systems & Programming Consultants, Inc.
(SPC), a North Carolina corporation, pursuant to the terms of the Agreement
and Plan of Merger, dated June 16, 1998, as amended on October 13, 1998 and on
October 20, 1998, by and among DPRC, DPRC Acquisition Corp., a wholly owned
subsidiary of DPRC (Merger Sub), SPC and certain shareholders of SPC (the
Merger Agreement). The Merger Agreement stipulates that Merger Sub be merged
with and into SPC, with SPC continuing as the surviving corporation as a
wholly owned subsidiary of DPRC (the Merger). The consideration delivered in
connection with the Merger was paid in shares of DPRC common stock. In the
Merger, each outstanding share of SPC common stock was converted into 6.399204
shares of DPRC common stock (approximately 2.2 million shares of DPRC common
stock). No fractional shares were issued. Additionally, DPRC assumed the
outstanding options under the SPC Stock Option Plan. Such SPC options are
fully vested and exercisable to purchase approximately 1.1 million shares of
DPRC common stock at a weighted average option exercise price of approximately
$4.06 per share. The Merger was approved on December 17, 1998, at a special
meeting of SPC shareholders and on December 21, 1998, at a special meeting of
DPRC shareholders. The effective date of the Merger was December 21, 1998.
The consolidated financial statements, included herein, give retroactive
effect, for all periods presented, to the Merger, as such business combination
has been accounted for as a pooling of interests, in accordance with generally
accepted accounting principles.
Interim Financial Data
The interim financial data as of January 31, 1999 and for the three and six
months ended January 31, 1999 and 1998 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. This report should be read in
conjunction with the Company's Annual Report on Form 10-K/A (Amendment No. 1)
for the fiscal year ended July 31, 1998, Form 10-Q for the quarter ended
October 31, 1998, the Company's Registration Statement on Form S-4 (No. 333-
61017) as declared effective by the Securities and Exchange Commission on
November 13, 1998, and the Company's Current Report on Form 8-K, dated March
1, 1999, which gives retroactive effect to the Merger with SPC. Certain
reclassifications have been made in the consolidated financial statements to
conform amounts previously reported for fiscal 1998 to the fiscal 1999
presentation.
2. Summary of Significant Accounting Policies
Net Income Per Share--In the second quarter of 1998, the Company adopted
SFAS No. 128 "Earnings Per Share." SFAS No. 128 redefines earnings per share
under generally accepted accounting principles. Under the new standard,
primary net income per share is replaced by basic net income per share and
fully diluted net income per share is replaced by diluted net income per
share. All historical earnings per share information has been restated as
required by SFAS No. 128.
6
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Six Months Ended January 31, 1999 and 1998
2. Summary of Significant Accounting Policies (continued)
Basic net income per share is computed using the weighted average number of
common shares outstanding during the periods presented. Diluted net income per
share is computed using the weighted average number of common and common
equivalent shares outstanding during the periods presented assuming the
conversion of all shares of the Company's convertible preferred stock into
common stock and the exercise of all in-the-money stock options. Common
equivalent shares have not been included where inclusion would be
antidilutive. The effect of the 5 1/4% convertible subordinated notes issued
in March 1998 was not dilutive at January 31, 1999.
3. Acquisitions
In fiscal 1998 and 1999, the Company completed four acquisitions accounted
for as purchases, and SPC, which was accounted for as a pooling of interests.
The excess of cost over fair value of net assets acquired was allocated to
goodwill, which is amortized using the straight-line method over 25 years. The
consolidated financial statements of the Company include the results of
operations for each acquired business from the acquisition date. A summary of
the acquisitions in fiscal 1998 and 1999 is as follows:
In January 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of S/3/G, Inc., a Texas Corporation (S/3/G). Under
the terms of the asset purchase agreement, the purchase price was $32.2
million, consisting of $28.2 million in cash and 204,552 shares of restricted
DPRC common stock. In addition, the former shareholder of S/3/G has the right
to receive certain additional consideration contingent upon S/3/G's adjusted
earnings before interest and taxes through December 31, 1998. The earnout is
payable semi-annually, 85% in cash and 15% in shares of restricted common
stock. The first installment of the earnout payment, consisting of $5.8
million in cash and 32,880 shares of restricted common stock, was paid in
September 1998. The second installment of the earnout consisting of $19.7
million in cash and 137,501 shares of restricted common stock was paid in
March 1999, and recorded in intangible assets and accounts payable and accrued
liabilities as of January 31, 1999. A final adjustment to the earnout is due
in March 1999 and is estimated to range between zero and $6 million depending
primarily on subsequent cash collections of outstanding receivables.
In May 1998, the Company acquired by merger all of the outstanding capital
stock of EXi Corp., a Minnesota Corporation (EXi).
In October 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of RIDGE Consultants, Inc. (Ridge).
In November 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Vista High-Tech Resources, Inc. and Vista High-
Tech Resources of RI, Inc. (collectively, Vista).
In December 1998, the Company acquired SPC pursuant to the terms of the
Agreement and Plan of Merger, dated June 16, 1998, as amended on October 13,
1998 and on October 20, 1998, by and among DPRC, DPRC Acquisition Corp., a
wholly owned subsidiary of DPRC (Merger Sub), SPC and certain shareholders of
SPC (the Merger Agreement). The Merger Agreement stipulates that Merger Sub be
merged with and into SPC, with SPC continuing as the surviving corporation as
a wholly owned subsidiary of DPRC (the Merger). The consideration delivered in
connection with the Merger was paid in shares of DPRC common stock. In the
Merger, each outstanding share of SPC common stock was converted into 6.399204
shares of DPRC common stock (approximately 2.2 million shares of DPRC common
stock). No fractional shares were issued. Additionally, DPRC assumed the
outstanding options under the SPC Stock Option Plan. Such SPC options are
fully vested and exercisable to purchase approximately 1.1 million shares of
DPRC common stock at a weighted average
7
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Six Months Ended January 31, 1999 and 1998
3. Acquisitions (continued)
option exercise price of approximately $4.06 per share. The Merger was
approved on December 17, 1998, at a special meeting of SPC shareholders and on
December 21, 1998, at a special meeting of DPRC shareholders. The effective
date of the Merger was December 21, 1998.
Unaudited pro forma consolidated results of operations for the six months
ended January 31, 1998 would have been as follows had the acquisition of S/3/G
occurred as of the beginning of the period (in thousands, except per share
data):
<TABLE>
<CAPTION>
Six Months
Ended
January 31,
1998
-----------
<S> <C>
Pro forma revenues.............................................. $119,477
Pro forma net income............................................ $ 5,914
Pro forma net income per share--basic........................... $ 0.44
Pro forma net income per share--diluted......................... $ 0.43
Pro forma weighted average common shares outstanding--basic..... 13,435
Pro forma weighted average common shares outstanding--diluted... 13,911
</TABLE>
Pro forma adjustments have been applied to reflect the purchase of S/3/G
including the addition of amortization related to the intangible assets
acquired and reduction in interest income and additional interest expense.
The above pro forma financial data is based on management's preliminary
assumptions regarding purchase accounting adjustments for the S/3/G
acquisition based on currently available information. The final allocation of
the purchase price for the S/3/G acquisition will be adjusted to the extent
that actual amounts differ from management's estimates.
4. Debt
On March 24, 1998, the Company completed the sale of $115.0 million of its 5
1/4% convertible subordinated notes due 2005 (the "Notes") in a private
offering under Rule 144A to qualified institutional buyers. The Notes are
convertible at any time at the option of the holders into shares of common
stock of DPRC at a conversion price of $35.50 per share of common stock of the
Company. The Notes mature on April 1, 2005 and are non-callable for the first
three years. The Company used a portion of the net proceeds of the offering
for the purchase of acquisitions and earnout payments in the amount of
approximately $33.9 million for the six months ended January 31, 1999.
Interest is payable on April 1 and October 1 of each year, commencing on
October 1, 1998. The Notes were recorded net of a discount and issue costs of
$3,950,000, which will be amortized over seven years based on the effective
interest method. As of January 31, 1999, accumulated amortization was
$233,000. As of January 31, 1999, there have been no conversions of notes to
common stock.
The Company has a five-year, $60.0 million Revolving/Term Loan Agreement
(the "Credit Facility") with a bank syndicate. The Credit Facility consists of
a revolving line of credit of $60.0 million principal amount, and bears
interest at the prime rate to prime rate plus 0.50% or LIBOR plus 0.50% to
1.75% depending on defined financial conditions. At the end of three years,
the outstanding principal balance on the facility converts to a two-year fully
amortized term loan. The Credit Facility is guaranteed by the Company's
subsidiaries and secured by substantially all of the assets of the Company and
its subsidiaries, including accounts receivable and equipment and a pledge of
all of the stock of the Company's subsidiaries. The Credit Facility contains
various
8
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Six Months Ended January 31, 1999 and 1998
4. Debt (continued)
covenants, including the maintenance of defined financial ratios such as net
worth. As of January 31, 1999, the Company had no borrowings outstanding under
the credit facility and was in compliance with bank covenants. The Company's
Credit Facility prohibits the payment of dividends without the prior written
consent of the lender.
5. Related Party Transactions
Information Technology Resources, Inc. ("ITR") was formed by the founder of
the Company and certain other persons, including certain former employees of
ITR's client, with the founder owning approximately 79.0% of the outstanding
capital stock. Effective as of December 31, 1998, the founder sold a portion
of her stock of ITR to reduce her ownership interest to less than 10.0% 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. Effective August 1, 1997 the management service agreement with ITR
was renegotiated to reflect a reduction in the management fee. Management fees
earned by the Company were $90,000 and $243,000 for the six months ended
January 31, 1999 and 1998, respectively. ITR also contracts with the Company
for technical consultants to meet its staffing needs. For the six months ended
January 31, 1999 and 1998, the Company recorded revenues of $1,341,000 and
$1,499,000 from billing of ITR technical consultants, respectively.
In fiscal 1998, a member of DPRC's Board of Directors, who was also the
President of one of the Company's operating subsidiaries, acquired a 33%
ownership interest in Message & Ques Tech., Inc. ("MQTECH"), a software
development company, which interest was subsequently increased to 80%. The
Company was providing technical consultants to MQTECH through its Computec
subsidiary. Revenue from MQTECH totaled approximately $2.0 million for the six
months ended January 31, 1999 and accounts receivable as of January 31, 1999
totaled approximately $798,000. This former Director has provided a personal
guarantee for payment of all accounts receivable owed to the Company through
February 28, 1999, by MQTECH. After this date, the Company does not anticipate
receiving any revenues from or continuing to do business with MQTECH.
9
<PAGE>
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; manage growth; 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, the Company's Form 10-Q for the
three months ended October 31, 1998, and in the Company's Form 10-K/A
(Amendment No. 1) for the year ended July 31, 1998, and the Company's Current
Report on Form 8-K, dated March 1, 1999, which gives retroactive effect to the
Merger with SPC. 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 proxy and prospectus
dated November 13, 1998.
Three Months Ended January 31, 1999 Compared to Three Months Ended January 31,
1998
Revenues. Revenues increased $34.0 million, or 60.5%, to $90.2 million for
the three months ended January 31, 1999 as compared to $56.2 million for the
three months ended January 31, 1998. This increase resulted primarily from the
contribution of revenues from the acquisitions of S/3/G (acquired in January
1998), EXi (acquired in May 1998), Ridge Consultants (acquired in October
1998), and Vista (acquired in November 1998). These acquisitions contributed
$16.6 million of incremental revenue, or 29.5%. The remaining $17.4 million
increase in revenue is attributed to internal growth. Internal growth is due
to a combination of: (i) new information technology projects; (ii) increased
demand in the networking and communications market; (iii) a broadening of the
types of services being provided, such as packaged software implementations,
network management and desktop services, Tandem and Year 2000 conversions;
(iv) direct international recruiting through the Company's Computec
subsidiary, as well as direct and indirect recruiting in the Far East; and (v)
increased billing rates resulting from an increase in consultant wages.
Gross Margin. Gross margin increased $12.0 million, or 78.4%, to $27.3
million, for the three months ended January 31, 1999 as compared to $15.3
million for the three months ended January 31, 1998. As a percentage of
revenues, gross margin increased for the three months ended January 31, 1999
to 30.3% as compared to 27.3% for the same period in fiscal 1998. This gross
margin percentage improvement reflects higher gross margins from: (i)
acquisitions of companies with higher gross margin business, such as packaged
software implementation, software engineering, and Microsoft Solutions; (ii)
emphasis on expansion of the higher margin businesses in existing markets,
including network management and desktop services; and (iii) internal growth
in the Company's international recruiting.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $9.6 million, or 86.7%, to
$20.6 million for the three months ended January 31, 1999, as compared to
$11.0 million for the three months ended January 31, 1998. Selling, general
and administrative expenses also increased as a percentage of revenues to
22.9% for the three months ended January 31, 1999, as compared to 19.7% for
the same period in fiscal 1998. This increase is primarily attributable to:
(i) the one-time merger expenses attributed to the acquisition of SPC of $3.1
million; (ii) increased amortization expense from
10
<PAGE>
intangible assets related to the acquisitions of $900,000; (iii) increased
expenses related to corporate management personnel of $4.1 million; (iv)
infrastructure required to support actual and planned Company growth of
$1.3 million; and (v) increased allowance for bad debts of $400,000.
Operating Income. Operating income increased $2.4 million, or 56.7%, to $6.7
million for the three months ended January 31, 1999 from $4.3 million for the
same period in fiscal 1998. The increase in operating income primarily
reflected the increase in gross margin percentage, offset by the merger-
related expenses of $3.1 million incurred during the second quarter of fiscal
year 1999.
Interest (Expense) Income, net. The Company had net interest expense of
$905,000 for the three months ended January 31, 1999 as compared to net
interest income of $33,000 for the three months ended January 31, 1998,
primarily as a result of interest expense on the $115.0 million aggregate
principal amount of 5 1/4% convertible subordinated notes issued in March
1998, which was offset by interest income from the investment of proceeds of
those notes.
Provision for Income Taxes. The Company's effective income tax rate
decreased to 43.6% for the three months ended January 31, 1999 from 44.6% for
the three months ended January 31, 1998. The decrease in the effective tax
rate is primarily due to a decrease in non-deductible amortization of goodwill
as a percentage of taxable income.
Six Months Ended January 31, 1999 Compared to Six Months Ended January 31,
1998
Revenues. Revenues increased $68.8 million, or 61.1%, to $181.2 million for
the six months ended January 31, 1999 as compared to $112.5 million for the
six months ended January 31, 1998. This increase resulted primarily from the
contribution of revenues from the acquisitions of S/3/G (acquired in January
1998), EXi (acquired in May 1998), Ridge Consultants (acquired in October
1998), and Vista (acquired in November 1998). These acquisitions contributed
$30.5 million of incremental revenue, or 27.1%. The remaining increase in
revenue is attributed to an internal growth of $38.3 million. Internal growth
is due to a combination of: (i) new information technology projects; (ii)
increased demand in the networking and communications market; (iii) a
broadening of the types of services being provided, such as packaged software
implementations, and network management and desktop services; (iv) direct
international recruiting through the Company's Computec subsidiary, as well as
direct and indirect recruiting in the Far East; and (v) increased billing
rates resulting from an increase in consultant wages.
Gross Margin. Gross margin increased $23.9 million, or 76.5%, to $55.1
million, for the six months ended January 31, 1999 as compared to $31.2
million for the six months ended January 31, 1998. As a percentage of
revenues, gross margin increased for the six months ended January 31, 1999 to
30.4% as compared to 27.8% for the same period in fiscal 1998. This gross
margin percentage improvement reflects higher gross margins from: (i)
acquisitions of companies with higher gross margin business, such as packaged
software implementation, software engineering, and Microsoft Solutions; (ii)
emphasis on expansion of the higher margin businesses in existing markets,
including network management and desktop services; and (iii) internal growth
in the Company's international recruiting.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $17.5 million, or 79.2%, to
$39.6 million for the six months ended January 31, 1999, as compared to $22.1
million for the six months ended January 31, 1998. Selling, general and
administrative expenses also increased as a percentage of revenues to 21.9%
for the six months ended January 31, 1999, as compared to 19.7% for the same
period in fiscal 1998. This increase is primarily attributable to the
transaction costs related to the SPC merger of $3.1 million, and compensation
expense associated with performance vesting stock options related to the SPC
merger of $900,000. Merger-related charges included in selling, general and
administrative expenses accounted for 2.2% of revenue for the six months ended
January 31, 1999.
11
<PAGE>
Operating Income. Operating income increased $6.4 million, or 69.9%, to
$15.5 million for the six months ended January 31, 1999 from $9.1 million for
the same period in fiscal 1998. The increase in operating income primarily
reflected the increase in gross margin percentage, offset by the merger-
related expenses and compensation expense associated with performance-vesting
options of $4.0 million incurred during the six months ended January 31, 1999.
Interest (Expense) Income, net. The Company had net interest expense of $1.4
million for the six months ended January 31, 1999 as compared to net interest
income of $124,000 for the six months ended January 31, 1998, primarily as a
result of interest expense on the $115.0 million aggregate principal amount of
5 1/4% convertible subordinated notes issued in March 1998, which was offset
by interest income from the investment of proceeds of those notes.
Provision for Income Taxes. The Company's effective income tax rate
increased to 44.5% for the six months ended January 31, 1999 from 42.4% for
the six months ended January 31, 1998. The increase in the effective tax rate
is primarily due to a decrease in non-deductible amortization of goodwill as a
percentage of taxable income.
Liquidity and Capital Resources
Cash, cash equivalents and investments was $74.4 million, and working
capital totaled $87.7 million, as of January 31, 1999. Cash provided by
operating activities increased to $11.3 million for the six months ended
January 31, 1999 as compared to $849,000 in the same period in fiscal 1998.
The increase in cash provided was primarily due to an increase in net income
and a decrease in the days sales outstanding from 58 days in the six months
ended January 31, 1998, to 56 days in the six months ended January 31, 1999.
Cash used in investing activities decreased to $6.1 million for the six
months ended January 31, 1999, as compared to cash used of $30.4 million in
the same period in fiscal 1998. The decrease in cash used in fiscal 1999 is
due primarily to the proceeds from the sale of investments of $31.0 million
offset partially by cash used in connection with its ongoing acquisition
program and earnouts related to previous acquisitions.
On March 24, 1998, the Company completed the sale of $115 million of its 5
1/4% convertible subordinated Notes due 2005. The Notes are convertible at any
time at the option of the holders into shares of common stock of DPRC at a
conversion price of $35.50 per share of common stock of the Company. The Notes
mature on April 1, 2005 and are non-callable for the first three years. The
Company used a portion of the net proceeds of the offering for acquisitions in
the period and expects to use remaining net proceeds of the offering for
working capital and other general corporate purposes, including acquisitions.
Interest is payable on April 1 and October 1 of each year. Interest payments
commenced on October 1, 1998.
The Company has a five-year, $60.0 million Revolving/Term Loan Agreement
(the "Credit Facility") with a bank syndicate. The Credit Facility consists of
a revolving line of credit of $60.0 million principal amount, and bears
interest at the prime rate to prime rate plus 0.50% or LIBOR plus 0.50% to
1.75%, depending on defined financial conditions. At the end of three years,
the outstanding principal balance on the facility converts to a two-year fully
amortized term loan. The Credit Facility contains various covenants, including
the maintenance of defined financial ratios such as net worth. As of January
31, 1999, the Company had no borrowings outstanding under the Credit Facility
and was in compliance with bank covenants.
The Company previously completed the acquisition by merger of Computec
International Strategic Resources, Inc. ("Computec") on April 30, 1997. The
definitive agreement obligates the Company to make earnout payments contingent
upon Computec's adjusted earnings before interest and taxes through December
31, 1998. Specifically, the earnout is conditioned upon Computec's obtaining a
higher earnings before interest and taxes in calendar years 1997 and 1998 as
compared to calendar years 1996 and 1997, respectively, and if achieved, will
be calculated based upon a multiple of the calendar year's earnings before
interest and taxes that is in excess of the prior year's earnings before
interest and taxes. The earnout is payable 60% in cash and 40% in shares of
restricted common stock. The aggregate amount of the initial consideration and
the earnout may not
12
<PAGE>
exceed $70.0 million. The final installment of the earnout is due in April
1999. The Company believes that the final earnout payment, as adjusted, should
be approximately $4 million. Although the parties are still in the process of
preparing and reviewing the earnout calculation, based on the communications
to date, the Company anticipates that the former shareholder may disagree with
approximately $8 million of such adjustments and may contend that the final
payment should be approximately $12 million. Although there is no legal action
currently pending, the Company has given written notice of its desire to
resolve this issue under the dispute resolution mechanisms of the merger
agreement, and if necessary will demand mediation and arbitration to resolve
the amount of the final payment. As a result, the ultimate amount of the final
earnout payment to be made by the Company is presently uncertain. The Company
expects to pay any such earnout payment from existing cash and cash
equivalents, investments, cash flow from operations and available borrowings
under the Credit Facility.
On January 27, 1998, the Company completed the acquisition of substantially
all the assets of S/3/G for approximately $28.2 million in cash and 204,552
shares of restricted DPRC common stock. The Company borrowed $25.5 million
under the credit facility to finance a portion of the cash purchase price of
such acquisition. The definitive purchase agreement obligates the Company to
make additional earnout payments semi-annually contingent upon earnings before
interest and taxes of the S/3/G business through December 31, 1998. The
earnout is conditioned upon the S/3/G business first obtaining a 30.0% growth
rate in calendar year 1998 as compared to calendar year 1997 and, if achieved,
will be calculated based upon a multiple of the amount of the calendar year
1998 earnings before interest and taxes that is in excess of such threshold.
The earnout is payable semi-annually, 85% in cash and 15% in shares of
restricted common stock. The second installment of the earnout consisting of
$19.7 million in cash and 137,501 shares of restricted common stock was paid
in March 1999, and recorded in intangible assets and accounts payable and
accrued liabilities as of January 31, 1999. A final adjustment to the earnout
is due in March 1999 and is estimated to range between zero and $6 million
depending primarily on subsequent cash collection of outstanding receivables.
In November 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Vista High-Tech Resources, Inc. and Vista High-
Tech Resources of RI, Inc. (collectively, "Vista"). Vista has the right to
receive certain additional consideration contingent upon Vista's adjusted
earnings before interest and taxes through July 31, 1999. The earnout is
payable 65% in cash and 35% in shares of restricted common stock. The earnout
is due on or before September 30, 1999 and will be recorded as an addition to
goodwill.
The Company is in the process of installing and implementing a new
Enterprise Resource Planning (ERP) system at a cost of up to $9.5 million. The
new ERP system is expected to take 18-24 months to fully install, test and
implement in all office locations. The Company expects to pay the costs of
this project with existing cash and cash equivalents, investments, cash flow
from operations and available borrowings under the Credit Facility.
The Company anticipates that its primary uses of working capital in future
periods will be for acquisitions, the internal development of new offices,
investments in its management information systems, earnout payments 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 acquisitions has been paid in cash. The
Company continually reviews and evaluates acquisition candidates to complement
and expand its 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 offices will
be added through acquisitions as compared to internal development.
The Company anticipates that the opening of new offices will require an
investment of approximately $150,000 to $250,000 per office to acquire
equipment and supplies and to fund operating losses for the initial nine- to
12-month period of operations which management believes will generally be
required for a new office to achieve profitability. The Company expenses the
costs of opening a new office as incurred, except for the cost of equipment
and other capital assets, which are capitalized. Generally, expenditures for
such capital assets for a
13
<PAGE>
new office will be less than $100,000. There can be no assurance that future
offices will achieve profitability within a nine- to 12-month period after
opening. The Company anticipates making additional capital expenditures in
connection with the development of new offices 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,
investments, cash flow from operations and available borrowings under the
Credit Facility 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 a substantial
portion of the existing cash and cash equivalents, investments, cash flow from
operations and availability under the Credit Facility and could be completed
within the next 12 months. To the extent the Company uses all of its cash
resources and existing credit 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 fully implement its growth strategy.
Year 2000
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from
the use of computer programs which have been written using two digits, rather
than four, to define the applicable year of business transactions. In
evaluating the Company's state of readiness the Company is considering the
following key areas: (i) the Company's principal staffing and financial
systems; (ii) software used in the Company's internal computer network; (iii)
third-party vendors; (iv) customers; and (v) telecommunications and other
support systems. The Company is addressing each of these areas in three
separate phases. The first phase identifies all systems in each area that may
contain potential Year 2000 issues. The second phase involves an investigation
into whether a Year 2000 issue actually exists for each system identified. The
third phase involves actual resolution of the issue and/or the development of
a contingency plan.
The Company has completed an evaluation of the principal staffing and
financial systems. These systems are licensed from, and maintained by, third-
party software development companies, which the Company believes are Year 2000
compliant. The Company has obtained representations from these companies that
indicate that the systems are Year 2000-compliant. In addition to those
representations, the Company will conduct its own tests of these critical
systems to ensure that they are Year 2000-compliant. The initial testing of
these systems should be completed by March 31, 1999. In addition, the Company
is currently in the process of installing a new financial system, which
management believes is, and the software vendor has represented as being, Year
2000-compliant. The Company does not anticipate any significant disruptions of
the business resulting from its principal staffing and financial systems.
The Company has completed the first phase of an evaluation of the mission
critical software used on the Company's internal computer network. Software
used on the Company's internal computer network is substantially all licensed
from major software vendors that have represented that their products are
compliant or will be compliant by January 1, 2000. The Company is currently in
the second phase of the process, which involves investigating, testing and
documenting these facts for each software product, supported by the Company.
This phase is expected to be complete by March 31, 1999. The Company does not
anticipate any significant disruptions of the business resulting from such
software.
The Company completed a review of other third-party vendors in December
1998. The Company is investigating those third party vendors that are
considered critical to determine their state of Year 2000 readiness. That will
be completed by April 30, 1999. The Company, however, believes that its
exposure in regards to third-party vendors is minimal, as the Company is
mainly a service provider and is not dependent on a supply of raw materials or
inventory. With the exception of basic utilities, payroll processing, bank
services and benefit administration, any disruption to the Company's other
vendors is not likely to significantly disrupt the Company's business.
14
<PAGE>
The Company does rely on third-party vendors for payroll processing and
benefits administration. The payroll- processing vendor has indicated that its
product is Year 2000-compliant. The Company is in the process of selecting a
new benefits administrator and is expected to complete the selection by
September 1, 1999. Year 2000 compliance is a criterion for administrator
selection.
The Company is dependent on basic public infrastructure, such as
telecommunications and utilities, in order to function normally. Significant
long-term interruptions of this infrastructure could have an adverse effect on
the operations of the Company. As part of the second phase, the Company will
be contacting major telecommunications and utility companies to determine
whether any significant interruptions of service are probable. Notwithstanding
the Company's efforts in this area, there can be no assurance that the Company
can develop a contingency plan that effectively deals with a major failure of
public infrastructure.
The Company has begun an evaluation of the potential risks associated with
its customers' Year 2000 issues. The Company is in the process of evaluating
whether a potential disruption of revenue could result from a Year 2000
problem in a customer's system. The first phase will involve polling of the
Company's customers and consultants. The first phase should be completed by
March 31, 1999. The second phase will be planned based on the results of the
initial evaluation. The Company feels that Year 2000 issues are not likely to
cause a significant disruption of development projects that its consultants
are working on and may, in some cases, actually create a demand for more
consultant hours in order to respond to Year 2000 disruptions.
The Company has begun a review of non-information technology systems, such
as telephones, office equipment and facility-related systems. This first phase
of identifying potential issues was completed in January 1999. The second
phase of evaluating actual Year 2000 problems should be completed by June 30,
1999.
The Company does not believe that it will need to acquire any significant
new software systems in response to Year 2000 issues. The decision to develop
and implement a new ERP system was made independent of Year 2000 concerns for
the purposes of improving the Company's efficiency and financial reporting
capabilities. Most of the cost related to Year 2000 will be for additional
technical services retained to supplement the existing information systems
staff for Year 2000 projects. The Company has incurred approximately $48,000
thus far on Year 2000 issues and expects to incur another $400,000 to complete
the project.
The Company is in the second phase of its evaluation of Year 2000 issues for
all areas. This phase is scheduled to be completed as discussed above. Upon
completion of Phase 2 for each area, the contingency planning phase will
begin. The Company anticipates that all of its evaluations and contingency
plans will be completed by June 30, 1999. There can be no assurance that any
such plans will fully mitigate any potential failures or problems.
Furthermore, there may be certain mission-critical third parties, such as
utilities, telecommunication companies, or vendors where alternative
arrangements or sources are limited or unavailable.
The extent and magnitude of the Year 2000 problem as it will affect the
Company, both before, and for some period after, January 1, 2000, is difficult
to predict or quantify for a number of reasons. Among the most important are
the lack of control over systems that are used by the third parties who are
critical to the Company's operation, such as telecommunications and utilities
companies, the complexity of testing interconnected networks and applications
that depend on third-party networks and the uncertainty surrounding how others
will deal with liability issues raised by Year 2000-related failures.
Moreover, the estimated costs of implementing the Plan do not take into
account the costs, if any, that might be incurred as a result of Year 2000-
related failures that occur despite the Company's implementation of the plan.
Although the Company is not currently aware of any material operational
issues associated with preparing its internal systems for the Year 2000, or
material issues with respect to the adequacy of mission-critical third-party
systems, there can be no assurance, due to the overall complexity of the Year
2000 issue, that the Company will not experience material unanticipated
negative consequences and/or material costs caused by undetected errors or
defects in such systems or by the Company's failure to adequately prepare for
the results of such errors or defects, including costs or related litigation,
if any. The impact of such consequences could have a material adverse effect
on the Company's business, financial condition or results of operations.
15
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates.
A discussion of the Company's accounting policies for financial instruments
and further disclosures relating to financial instruments is included in the
Summary of Significant Accounting Policies in the Notes to Consolidated
Financial Statements of the Company's Annual Report on Form 10-K/A (as
amended) for the year ended July 31, 1998. The Company monitors the risks
associated with interest rates and financial instrument positions.
The Company's revenue derived from international operations is not material
and, therefore, the risk related to foreign currency exchange rates is not
material.
16
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
On April 30, 1997, the Company acquired by merger Computec International
Strategic Resources, Inc. ("Computec"). The merger agreement provides that the
Company will make earnout payments contingent upon Computec's earnings before
interest and taxes through December 31, 1998 to Christopher Lancashire, the
former owner of Computec, who was a director of the Company during such time
period, and his wife and related trust. The first installment of the earnout
payment was paid in October 1997, the second installment was paid in June
1998, the third installment was paid in September 1998 and the fourth
installment is due in April 1999. Each of the earnout payments is payable 60%
in cash and 40% in shares of the Company's restricted common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." The Company believes that the
final earnout payment, as adjusted, should be approximately $4 million.
Although the parties are still in the process of preparing and reviewing the
earnout calculation, based on the communications to date, the Company
anticipates that the Lancashires may disagree with approximately $8 million of
such adjustments and may contend that the final payment should be
approximately $12 million. Although there is no legal action currently
pending, the Company has given written notice of its desire to resolve this
issue under the dispute resolution mechanisms of the merger agreement, and if
necessary will demand mediation and arbitration to resolve the amount of the
final payment. As a result, the ultimate amount of the final earnout payment
to be made by the Company is presently uncertain.
Item 2. Changes in Securities and Use of Proceeds
On December 21, 1998, the Company amended its Articles of Incorporation to
increase from 20.0 million to 60.0 million the number of authorized shares of
common stock of the Company. This amendment to the Company's Articles of
Incorporation was approved by the shareholders at the Company's Special
Meeting of Shareholders held on December 21, 1998.
In connection with the Company's acquisition of substantially all of the
assets and assumption of certain liabilities of Vista High-Tech Resources,
Inc. and Vista High-Tech Resources of RI, Inc. on November 6, 1998, the
Company issued 147,807 shares of restricted common stock. 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
The Company's Special Meeting of Shareholders was held on December 21, 1998.
Proposal 1, submitted to a vote of shareholders at the meeting, was to approve
the Agreement and Plan of Merger, dated as of June 16, 1998, as amended
October 13, 1998 and October 20, 1998 by and among the Company, DPRC
Acquisition Corp., a wholly-owned subsidiary of the Company, Systems &
Programming Consultants, Inc. (SPC) and certain shareholders of SPC, pursuant
to which DPRC Acquisition Corp. would be merged with and into SPC, with SPC
surviving as a wholly-owned subsidiary of the Company. Votes cast were as
follows:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Broker Non-Votes
7,901,386 2,400 1,715 12,486
</TABLE>
The proposal was approved.
17
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders (continued)
Proposal 2, submitted to a vote of shareholders at the meeting, was to
approve the issuance of common stock of the Company in the merger with Systems
& Programming Consultants, Inc. Votes cast were as follows:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Broker Non-Votes
7,900,779 2,947 1,775 12,486
</TABLE>
The proposal was approved.
Proposal 3, submitted to a vote of shareholders at the meeting, was to
approve an amendment to the Company's Articles of Incorporation to increase
the authorized shares of common stock of the Company from 20.0 million to 60.0
million. Votes cast were as follows:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Broker Non-Votes
7,058,908 855,842 3,237 0
</TABLE>
The proposal was approved.
Proposal 4, submitted to a vote of shareholders at the meeting, was to
approve an amendment to the Company's 1994 Stock Option Plan, As Amended, to
increase the number from 2.0 million to 3.0 million of shares of stock
available for issuance upon exercise of options granted under the plan. Votes
cast were as follows:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Broker Non-Votes
6,516,689 1,385,485 3,327 12,486
</TABLE>
The proposal was approved.
The Company's Annual Meeting of Shareholders was held on January 20, 1999.
Proposal 1, submitted to a vote of shareholders at the meeting, was the
election of Directors. The following Directors were elected at the meeting as
all of the Directors of the Company, with the number of votes cast for or
against each Director or abstentions for each Director being set forth after
his or her respective name:
<TABLE>
<S> <C> <C> <C>
Name Votes For Votes Against Abstentions
Mary Ellen Weaver 8,259,520 0 18,798
David M. Connell 8,259,250 0 18,798
J. Christopher Lewis 8,276,658 0 1,660
Patrick C. Haden 8,276,658 0 1,660
Thomas G. Carlisle 8,258,832 0 19,486
</TABLE>
There were no broker non-votes recorded.
Proposal 2, submitted to a vote of shareholders at the meeting, was the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the fiscal year ending July 31, 1999. Votes cast were as follows:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Broker Non-Votes
8,273,337 786 4,195 0
</TABLE>
The proposal was approved.
18
<PAGE>
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27.1 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
1999:
Current Report on Form 8-K, dated December 21, 1998, reporting under
Items 2 and 7, the Company's acquisition by merger of SPC, including
certain financial statements and information of SPC.
19
<PAGE>
SIGNATURE
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, in the City of Newport Beach, State of
California, on the 16th day of March, 1999.
DATA PROCESSING RESOURCES CORPORATION
/s/ James A. Adams
By: _________________________________
James A. Adams,
Chief Financial Officer
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERNALLY
PREPARED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED JANUARY 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR PERIOD
ENDED JANUARY 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 45,463
<SECURITIES> 28,931
<RECEIVABLES> 53,926
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,548
<PP&E> 7,009
<DEPRECIATION> 0
<TOTAL-ASSETS> 309,944
<CURRENT-LIABILITIES> 49,854
<BONDS> 0
0
0
<COMMON> 121,732
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 309,944
<SALES> 0
<TOTAL-REVENUES> 181,234
<CGS> 0
<TOTAL-COSTS> 126,128
<OTHER-EXPENSES> 39,631
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,445
<INCOME-PRETAX> 14,030
<INCOME-TAX> 6,238
<INCOME-CONTINUING> 7,792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,792
<EPS-PRIMARY> .55<F1>
<EPS-DILUTED> .54<F2>
<FN>
<F1>EPS IS REPORTED AS "BASIC EPS," AS PRESCRIBED BY SFAS NO. 128
<F2>EPS IS REPORTED AS "DILUTED EPS," AS PRESCRIBED BY SFAS NO. 128
</FN>
</TABLE>
