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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 March 31, 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
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Outstanding shares of each of the Registrant's classes of common
stock as of April 29, 1994 were:
Common stock, $.10 par value 19,714,828 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)
March 31, December 31,
Assets 1994 1993
------ --------- ------------
Current assets:
Cash $ 2,871 20,361
Accounts receivable, less allowance
for doubtful accounts of $1,911 -
March 31, 1994; $1,785 - December 31,
1993 192,417 168,051
Prepaid expenses 4,123 4,581
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Total current assets 199,411 192,993
Fixed assets, at cost:
Land 3,377 3,377
Buildings 11,716 11,179
Computer-aided design systems 24,692 24,554
Equipment and furniture 72,901 70,965
Leasehold improvements 11,108 11,053
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123,794 121,128
Accumulated depreciation 81,235 78,442
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Net fixed assets 42,559 42,686
Deferred income taxes 2,061 1,724
Goodwill and other intangible assets 23,167 23,791
Other assets 5,769 5,516
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$ 272,967 266,710
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CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
March 31, 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 7,765 4,038
Accounts payable 6,594 6,836
Withheld payroll taxes 3,588 1,425
Accrued expenses 52,706 46,731
Currently payable income taxes 6,576 7,516
Deferred income taxes 5,791 2,525
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Total current liabilities 83,020 85,071
Long-term debt 66,270 62,021
Deferred compensation 2,741 2,649
Minority interests 489 466
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, $.10 par value -
authorized 3,174,891 shares; none
issued - -
Additional paid-in capital 11,361 11,361
Retained earnings 107,705 103,761
Less 25,155 shares of common stock
in treasury, at cost (593) (593)
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Total shareholders' equity 120,447 116,503
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$ 272,967 266,710
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4
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)
Three months ended March 31,
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1994 1993
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Revenues $ 249,231 217,467
Cost of operations 229,883 203,461
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Gross profit 19,348 14,006
General and administrative expenses 11,759 11,624
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Operating profit 7,589 2,382
Interest expense 976 832
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Earnings before income taxes and
minority interests 6,613 1,550
Income taxes 2,646 651
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Earnings before minority interests 3,967 899
Minority interests 23 2
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Net earnings $ 3,944 897
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Per share $ .20 .05
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CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Three months ended March 31,
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1994 1993
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Operating activities:
Net earnings $ 3,944 897
Minority interests 23 2
Depreciation 3,062 2,848
Amortization of intangible assets 658 773
Income tax provision greater (less)
than tax payments and refunds 1,989 (933)
Change in assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (24,381) (8,514)
Increase in other assets (253) (37)
Increase in payables and accrued
expenses 7,896 6,251
Other 531 (33)
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(6,531) 1,254
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Investing activities:
Purchases of fixed assets (2,956) (4,474)
Acquisitions net of cash acquired - (4,137)
Other 21 (82)
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(2,935) (8,693)
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Financing activities:
Borrowings long-term debt 5,180 4,310
Payments long-term debt (16,931) (2,197)
Obligations not liquidated because
of outstanding checks 3,727 2,631
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(8,024) 4,744
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Decrease in cash (17,490) (2,695)
Cash at beginning of period 20,361 6,245
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Cash at end of period $ 2,871 3,550
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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 was 19,761,221 for the three months ended March 31,
1994 and 19,727,999 for the three months ended March 31, 1993.
Revenues and operating profit attributable to the business
segments of the Company for the three months ended March 31, 1994 and
1993 follows ($000s):
1994 1993
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Revenues:
Technical Services $ 209,818 183,273
Temporary Services 28,297 26,501
Management Recruiters 11,116 7,693
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$ 249,231 217,467
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Operating profit:
Technical Services $ 7,006 2,773
Temporary Services 717 64
Management Recruiters 1,351 917
Corporate expenses (1,485) (1,372)
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$ 7,589 2,382
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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 quarter ended March 31, 1994 were
15% above the comparable quarter a year ago. Operating profit margins
were 3.0% of revenues for the first quarter of this year compared to
1.1% for the same period in 1993.
Technical Services' revenues increased 14% over the first quarter
a year ago. Operating profit margins for Technical Services' were
3.3% in the first quarter of 1994 compared to 1.5% for the 1993 first
quarter. Technical Services achieved excellent gains in revenues and
profits in the automotive sector. Customers across a broad range of
industries are starting to award larger scale projects, embracing the
emerging concept of "outsourcing," yielding increased revenues in this
year's first quarter.
Temporary Services' revenues were up 7% over last year's first
quarter. Operating profit margins for Temporary Services were 2.5%
for the first quarter of 1994, compared to slightly above breakeven
for the first quarter a year ago. This improved performance continues
the trend established in 1993 and also reflects strength in the
office/clerical temporary services markets.
Management Recruiters' revenues for the first quarter of 1994
grew 44% over last year's first quarter. Operating profit margins
were 12% of revenues for both the first quarter of this year and the
first quarter of last year. This segment has had increased demand for
its middle-management search services.
Financial Condition
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The ratio of current assets to current liabilities was 2.4 to 1
as of March 31, 1994 compared to 2.3 to 1 as of December 31, 1993.
The ratio of long-term debt to total capital (long-term debt plus
shareholders' equity) was 35% for both March 31, 1994 and at December
31, 1993. The abnormally high cash balance on December 31, 1993 was
reduced during the first quarter ended March 31, 1994 coincident with
the repayment of $16 million of current debt that was outstanding on
December 31, 1993. Long-term debt increased from December 31, 1993 by
approximately $4 million because of additional working capital arising
primarily from the increased level of business activity during the
first quarter of 1994 and to a lesser degree from an increase in the
number of days outstanding in receivables from customers. The Company
believes that capital resources available from operations and
financing arrangements are adequate to support the Company's
businesses.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Statement re computation of per share earnings.
(b) The Registrant was not required to file a Form 8-K
during the quarter ended March 31, 1994.
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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May 9, 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
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11. Statement re computation of per share earnings. 10
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EXHIBIT 11
Statement Re Computation of Per Share Earnings
Three months ended March 31,
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1994 1993
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Primary
- - -------
Net earnings $ 3,944,000 897,000
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Common and common equivalent shares
outstanding:
Weighted average common shares
outstanding during the period 19,714,828 19,714,653
Assumed exercise of stock options 46,393 13,346
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19,761,221 19,727,999
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Earnings per share of common stock $ .20 .05
Fully diluted
- - -------------
Net earnings $ 3,944,000 897,000
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Common and common equivalent shares
outstanding:
Weighted average common shares
outstanding during the period 19,714,828 19,714,653
Assumed exercise of stock options 46,393 13,346
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19,761,221 19,727,999
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Earnings per share of common stock $ .20 .05
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