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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-5519
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CDI CORP.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2394430
- - ------------------------- -----------------------
(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification Number)
organization)
1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768
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(Address of principal executive offices)
Registrant's telephone number, including area code: (215) 569-2200
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Indicate 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
----- -----
Outstanding shares of each of the Registrant's classes of common
stock as of August 3, 1994 were:
Common stock, $.10 par value 19,714,928 shares
Class B common stock, $.10 par value None
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PART 1. FINANCIAL INFORMATION
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
Assets 1994 1993
- - ------ -------- ------------
Current assets:
Cash $ 4,036 20,361
Accounts receivable, less allowance
for doubtful accounts of $1,824 -
June 30, 1994; $1,785 - December 31,
1993 194,792 168,051
Prepaid expenses 3,340 4,581
------- -------
Total current assets 202,168 192,993
Fixed assets, at cost:
Land 3,401 3,377
Buildings 11,746 11,179
Computer-aided design systems 24,633 24,554
Equipment and furniture 74,364 70,965
Leasehold improvements 11,141 11,053
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125,285 121,128
Accumulated depreciation 82,995 78,442
------- -------
Net fixed assets 42,290 42,686
Deferred income taxes 2,417 1,724
Goodwill and other intangible assets 22,600 23,791
Other assets 5,748 5,516
------- -------
$ 275,223 266,710
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CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
June 30, December 31,
Liabilities and Shareholders' Equity 1994 1993
- - ------------------------------------ -------- ------------
Current liabilities:
Current portion of long-term debt $ - 16,000
Obligations not liquidated because
of outstanding checks 7,954 4,038
Accounts payable 7,575 6,836
Withheld payroll taxes 4,992 1,425
Accrued expenses 53,697 46,731
Currently payable income taxes 8,265 7,516
Deferred income taxes 6,315 2,525
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Total current liabilities 88,798 85,071
Long-term debt 58,093 62,021
Deferred compensation 2,853 2,649
Minority interests 571 466
Shareholders' equity:
Preferred stock, $.10 par value -
authorized 1,000,000 shares; none
issued - -
Common stock, $.10 par value -
authorized 100,000,000 shares;
issued 19,739,983 shares 1,974 1,974
Class B common stock, $.10 par value -
authorized 3,174,891 shares; none
issued - -
Additional paid-in capital 11,361 11,361
Retained earnings 112,166 103,761
Less 25,155 shares of common stock
in treasury, at cost (593) (593)
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Total shareholders' equity 124,908 116,503
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$ 275,223 266,710
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CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)
Quarter ended Six months ended
June 30, June 30,
---------------- ----------------
1994 1993 1994 1993
------- ------- ------- -------
Revenues $ 264,901 233,534 514,132 451,001
Cost of operations 243,764 216,643 473,647 420,104
------- ------- ------- -------
Gross profit 21,137 16,891 40,485 30,897
General and administrative
expenses 12,675 13,080 24,434 24,704
------- ------- ------- -------
Operating profit 8,462 3,811 16,051 6,193
Interest expense 892 1,078 1,868 1,910
------- ------- ------- -------
Earnings before income taxes
and minority interests 7,570 2,733 14,183 4,283
Income taxes 3,027 1,148 5,673 1,799
------- ------- ------- -------
Earnings before minority
interests 4,543 1,585 8,510 2,484
Minority interests 82 13 105 15
------- ------- ------- -------
Net earnings $ 4,461 1,572 8,405 2,469
======= ======= ======= =======
Per share $ .23 .08 .43 .13
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CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Six months ended June 30,
-------------------------
1994 1993
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Operating activities:
Net earnings $ 8,405 2,469
Minority interests 105 15
Depreciation 6,092 6,022
Amortization of intangible assets 1,242 1,533
Income tax provision greater (less)
than tax payments and refunds 3,846 (606)
Change in assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (26,756) (5,321)
Increase in other assets (232) (152)
Increase in payables and accrued
expenses 11,272 10,753
Other 1,409 416
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5,383 15,129
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Investing activities:
Purchases of fixed assets (5,821) (6,927)
Acquisitions net of cash acquired - (4,040)
Other 125 24
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(5,696) (10,943)
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Financing activities:
Payments long-term debt (19,928) (5,477)
Obligations not liquidated because
of outstanding checks 3,916 3,220
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(16,012) (2,257)
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Increase (decrease) in cash (16,325) 1,929
Cash at beginning of period 20,361 6,245
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Cash at end of period $ 4,036 8,174
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CDI CORP. AND SUBSIDIARIES
Comments to Financial Statements
Earnings per share of common stock are based on the weighted
average number of shares of common stock and dilutive common share
equivalents, which arise from stock options, outstanding during the
periods. No further dilution resulted from a computation of fully
diluted earnings per share. The number of shares used to compute
earnings per share for the second quarter and six months of 1994 was
19,783,355 and 19,772,288 shares, respectively. For the second
quarter and six months of 1993, 19,718,981 and 19,723,486 shares,
respectively, were used.
Revenues and operating profit attributable to the business
segments of the Company for the second quarter and six months ended
June 30, 1994 and 1993 follows ($000s):
Second quarter Six months
1994 1993 1994 1993
------- ------- ------- -------
Revenues:
Technical Services $ 222,523 197,561 432,341 380,834
Temporary Services 30,213 27,850 58,510 54,351
Management Recruiters 12,165 8,123 23,281 15,816
------- ------- ------- -------
$ 264,901 233,534 514,132 451,001
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Operating profit:
Technical Services $ 7,148 3,858 14,154 6,631
Temporary Services 1,122 561 1,839 625
Management Recruiters 1,808 820 3,159 1,737
Corporate expenses (1,616) (1,428) (3,101) (2,800)
------- ------- ------- -------
$ 8,462 3,811 16,051 6,193
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Certain prior year's amounts have been reclassified to conform to
current year presentation.
These comments contain only the information which is required by
Form 10-Q. Further reference should be made to the comprehensive
disclosures contained in the Company's annual report on Form 10-K for
the year ended December 31, 1993.
The financial statements included in this report reflect all
adjustments which, in the opinion of management, are necessary for a
fair statement of the results for the periods presented.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
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Consolidated revenues for the six months and quarter ended June
30, 1994 were 14% and 13% higher, respectively, compared to the same
period a year ago. Operating profit for the six months and second
quarter in 1994 was 3.1% and 3.2% of revenues, respectively, compared
to 1.4% and 1.6% for the six months and second quarter in 1993.
Technical Services' revenues for the six months and second
quarter of 1994 grew 14% and 13%, respectively, from last year's
comparable periods. Operating profit margins for the six months and
second quarter of 1994 were 3.3% and 3.2%, respectively, vs. 1.7% and
2.0% for last year's comparable periods. Technical Services achieved
excellent gains in 1994 in both revenues and profits in the automotive
sector. Customers in certain other fields are awarding larger scale
projects which are yielding additional increases in revenues. Demand
has remained somewhat soft in certain parts of Technical Services'
chemicals/petrochemicals markets, however.
Temporary Services' revenues for the six months and second
quarter of 1994 were each 8% higher than last year's comparable
periods. Operating profit margins for the six months and second
quarter of 1994 were 3.1% and 3.7%, respectively, vs. 1.1% and 2.0%
for last year's comparable periods. This improved performance
continues the trend established in 1993 and also reflects strength in
the office/clerical temporary services markets.
Management Recruiters' revenues were up 47% for the six months of
this year and up 50% compared to last year's second quarter.
Operating profit margins for the six months and second quarter of 1994
were 13.6% and 14.9%, respectively, compared to 11.0% and 10.1%,
respectively, for the same periods in 1993. Demand has increased for
the segment's middle management search services. In addition, new
product offerings, including recently introduced InterExec, a
temporary middle manager service, have produced increased revenues
over and above improvements in its traditional middle management
search business.
Financial Condition
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The ratio of current assets to current liabilities was 2.3 to 1
as of June 30, 1994 and December 31, 1993. The ratio of long-term
debt to total capital (long-term debt plus shareholders' equity) was
32% as of June 30, 1994, compared to 35% at December 31, 1993. The
abnormally high cash balance on December 31, 1993 was reduced early in
1994 coincident with the repayment of $16 million of current debt that
was outstanding on December 31, 1993. Working capital has increased
in 1994 primarily as a result of the higher levels of business at
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which the Company has been operating. Earnings have been sufficient
to fund the increase in working capital and capital expenditures
through June 30, 1994 as well as providing enough capital to reduce
long-term debt by $4 million during the first half of 1994. The
Company believes that capital resources available from operations and
financing arrangements are adequate to support the Company's
businesses.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 3, 1994 the Company held its annual meeting of
shareholders. The only matters of business conducted at the meeting
were the reelection of all eight directors of the Company and a vote
to increase the number of shares of common stock which may be issued
under the CDI Corp. Non-Qualified Stock Option and Stock Appreciation
Rights Plan from 300,000 to 800,000.
The name of each director reelected at the meeting and a
tabulation of the voting by nominee follows:
Votes Votes
for withheld
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Walter R. Garrison 18,766,151 23,869
Christian M. Hoechst 18,766,194 23,826
Lawrence C. Karlson 18,766,617 23,403
Edgar D. Landis 18,766,251 23,769
Allen M. Levantin 18,766,315 23,705
John W. Pope 18,662,617 127,403
Allen I. Rosenberg 18,764,881 25,139
Barton J. Winokur 18,765,725 24,295
There were no abstentions or broker non-votes.
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The vote to increase the number of shares of common stock which
may be issued under the CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan from 300,000 to 800,000 was as follows:
Votes Votes
for against Abstentions Broker non-votes
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16,659,197 1,810,465 320,358 - 0 -
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, as amended, incorporated
herein by reference to the Registrant's Proxy
Statement for its annual meeting of shareholders
held on May 3, 1994 (Constitutes a management
contract or compensatory plan or arrangement)
11. Statement re computation of per share earnings
(b) The Registrant was not required to file a Form 8-K
during the quarter ended June 30, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CDI CORP.
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August 10, 1994 By: /s/ Edgar D. Landis
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EDGAR D. LANDIS
Executive Vice President, Finance
(Duly authorized officer and
principal financial officer of
Registrant)
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INDEX TO EXHIBITS
Number Exhibits Page
- - ------ -------------------------------------------------- ----
10. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, as amended, incorporated
herein by reference to the Registrant's Proxy
Statement for its annual meeting of shareholders
held on May 3, 1994 (Constitutes a management
contract or compensatory plan or arrangement)
11. Statement re computation of per share earnings 12
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EXHIBIT 11
Statement Re Computation of Per Share Earnings
Quarter ended Six months ended
June 30, June 30,
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1994 1993 1994 1993
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Primary
- - -------
Net earnings $ 4,461,000 1,572,000 8,405,000 2,469,000
========== ========== ========== ==========
Common and common
equivalent shares
outstanding:
Weighted average
common shares
outstanding
during the period 19,714,828 19,714,753 19,714,828 19,714,699
Assumed exercise of
stock options 68,527 4,228 57,460 8,787
---------- ---------- ---------- ----------
19,783,355 19,718,981 19,772,288 19,723,486
========== ========== ========== ==========
Earnings per share of
common stock $ .23 .08 .43 .13
Fully diluted
- - -------------
Net earnings $ 4,461,000 1,572,000 8,405,000 2,469,000
========== ========== ========== ==========
Common and common
equivalent shares
outstanding:
Weighted average
common shares
outstanding
during the period 19,714,828 19,714,753 19,714,828 19,714,699
Assumed exercise of
stock options 68,527 4,228 61,604 8,787
---------- ---------- ---------- ----------
19,783,355 19,718,981 19,776,432 19,723,486
========== ========== ========== ==========
Earnings per share of
common stock $ .23 .08 .43 .13
