1
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, 1995
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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
------
CDI CORP.
------------------------------------------------------
(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
----------------------------------------------------------
(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 April 28, 1995 were:
Common stock, $.10 par value 19,714,928 shares
Class B common stock, $.10 par value None
<PAGE>
2
PART 1. FINANCIAL INFORMATION
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
Assets 1995 1994
- ------ --------- ------------
Current assets:
Cash $ 5,692 5,160
Accounts receivable, less allowance
for doubtful accounts of $2,034 -
March 31, 1995; $3,184 - December 31,
1994 257,679 214,867
Prepaid expenses 5,082 4,389
------- -------
Total current assets 268,453 224,416
Fixed assets, at cost:
Land 2,647 3,013
Buildings 8,724 9,884
Computer-aided design systems 25,191 26,328
Equipment and furniture 82,254 76,412
Leasehold improvements 12,600 11,976
------- -------
131,416 127,613
Accumulated depreciation 86,564 84,560
------- -------
Net fixed assets 44,852 43,053
Deferred income taxes 2,245 2,124
Goodwill and other intangible assets 21,559 22,048
Other assets 6,407 6,034
------- -------
$ 343,516 297,675
======= =======
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3
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
March 31, December 31,
Liabilities and Shareholders' Equity 1995 1994
- ------------------------------------ --------- ------------
Current liabilities:
Obligations not liquidated because of
outstanding checks $ 10,031 6,733
Accounts payable 13,709 10,766
Withheld payroll taxes 1,580 5,635
Accrued expenses 71,763 59,138
Currently payable income taxes 9,439 10,016
Deferred income taxes 6,132 3,879
------- -------
Total current liabilities 112,654 96,167
Long-term debt 80,812 58,798
Deferred compensation 3,760 3,528
Minority interests 273 305
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 133,272 126,132
Less 25,055 shares of common stock
in treasury, at cost (590) (590)
------- -------
Total shareholders' equity 146,017 138,877
------- -------
$ 343,516 297,675
======= =======
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4
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)
Three months ended March 31,
----------------------------
1995 1994
------- -------
Revenues $ 319,002 249,231
Cost of operations 291,624 229,883
------- -------
Gross profit 27,378 19,348
General and administrative expenses 14,219 11,759
------- -------
Operating profit 13,159 7,589
Interest expense 1,312 976
------- -------
Earnings before income taxes and
minority interests 11,847 6,613
Income taxes 4,739 2,646
------- -------
Earnings before minority interests 7,108 3,967
Minority interests (32) 23
------- -------
Net earnings $ 7,140 3,944
======= =======
Per share $ .36 .20
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5
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Three months ended March 31,
----------------------------
1995 1994
------ ------
Operating activities:
Net earnings $ 7,140 3,944
Minority interests (32) 23
Depreciation 3,023 3,062
Amortization of intangible assets 504 658
Income tax provision greater
than tax payments 1,555 1,989
Change in assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (42,812) (24,381)
Increase in payables and accrued
expenses 11,513 7,896
Other (849) 278
------ ------
(19,958) (6,531)
------ ------
Investing activities:
Purchases of fixed assets (6,379) (2,956)
Other 1,557 21
------ ------
(4,822) (2,935)
------ ------
Financing activities:
Borrowings long-term debt 22,032 5,180
Payments long-term debt (18) (16,931)
Obligations not liquidated because
of outstanding checks 3,298 3,727
------ ------
25,312 (8,024)
------ ------
Increase (decrease) in cash 532 (17,490)
Cash at beginning of period 5,160 20,361
------ ------
Cash at end of period $ 5,692 2,871
====== ======
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6
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 19,822,600 for the three months ended March 31,
1995 and 19,761,221 for the three months ended March 31, 1994.
Revenues and operating profit attributable to the business
segments of the Company for the three months ended March 31, 1995 and
1994 follows ($000s):
1995 1994
------- -------
Revenues:
Technical Services $ 270,025 209,818
Temporary Services 32,271 28,297
Management Recruiters 16,706 11,116
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$ 319,002 249,231
======= =======
Operating profit:
Technical Services $ 11,440 7,006
Temporary Services 1,289 717
Management Recruiters 2,491 1,351
Corporate expenses (2,061) (1,485)
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$ 13,159 7,589
======= =======
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, 1994.
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.
<PAGE>
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Consolidated revenues for the quarter ended March 31, 1995 were
28% above the comparable quarter a year ago. Operating profit margins
were 4.1% of revenues for the first quarter of this year compared to
3.0% for the same period in 1994.
Technical Services' revenues increased 29% over the first quarter
a year ago. Operating profit margins for Technical Services' were
4.2% in the first quarter of 1995 compared to 3.3% for the 1994 first
quarter. Technical Services multi-year managed outsource programs for
customers continued their strong growth. In addition, telecommunica-
tions markets were exceptionally strong, and chemicals/petrochemicals
has once again resumed growth after about a year and a half pause.
The domestic auto manufacturers seem intent on maintaining a high
level of design activity even with fluctuating car sales.
Temporary Services' revenues were up 14% over last year's first
quarter. Operating profit margins for Temporary Services were 4.0%
for the first quarter of 1995, compared to 2.5% for the 1994 first
quarter. This is the first pure year over year comparison since CDI
downsized its temporary office/clerical segment a couple of years ago
and integrated it with the Todays Temporary's operation (acquired in
1991) under Todays management. That restructuring saw the segment
become solidly profitable.
Management Recruiters' revenues for the first quarter of 1995
grew 50% over last year's first quarter. Operating profit margins
were 15% of revenues for the first quarter of this year and 12% for the
first quarter of last year. Management Recruiters' markets are very
active. Demand for middle-manager candidates is continuing to increase
as companies expand their own operations. Management Recruiters' new
"temp-to-perm" services for middle management and office support
personnel are contributing to both revenue and profit growth.
Financial Condition
-------------------
The ratio of current assets to current liabilities was 2.4 to 1
as of March 31, 1995 compared to 2.3 to 1 as of December 31, 1994.
The ratio of long-term debt to total capital (long-term debt plus
shareholders' equity) was 36% as of March 31, 1995 compared to 30% at
December 31, 1994. Working capital needs expanded during the quarter
ended March 31, 1995 as a result of the increased volume of business
conducted as well as higher levels of receivables which arose because
certain customers' internal processes caused delays in billings to
those customers. Funding for the increased investment in working
capital was provided, in part, by additional borrowings of long-term
debt. The Company believes that capital resources available from
operations and financing arrangements are adequate to support the
Company's businesses.
<PAGE>
8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.(i) Articles of incorporation of the registrant,
incorporated herein by reference to the
Registrant's report on Form 10-Q for the
quarter ended June 30, 1990 (File No. 1-5519).
(ii) Bylaws of the Registrant, incorporated herein
by reference to the Registrant's report on
Form 10-Q for the quarter ended June 30, 1990
(File No. 1-5519).
10.a. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, incorporated herein
by reference to the EDGAR filing made by the
Registrant on March 21, 1995 in connection with
the Registrant's definitive Proxy Statement for
its annual meeting of shareholders held on May 2,
1995 (File No. 1-5519). (Constitutes a manage-
ment contract or compensatory plan or arrangement)
b. Employment Agreement dated May 1, 1973 by and
between Comprehensive Designers, Inc. and Walter
R. Garrison, incorporated herein by reference to
Exhibit 10.e. to Registrant's registration state-
ment on Form 8-B (File No. 1-5519). (Constitutes
a management contract or compensatory plan or
arrangement)
c. Employment Agreement dated April 1, 1963, as
amended and restated effective May 1, 1986, by
and between Registrant and Christian M. Hoechst,
incorporated herein by reference to Registrant's
report on Form 10-K for the year ended April 30,
1987 (File No. 1-5519). (Constitutes a manage-
ment contract or compensatory plan or arrangement)
d. Employment Agreement dated April 30, 1973 by and
between Comprehensive Designers, Inc. and Edgar
D. Landis, incorporated herein by reference to
Exhibit 10.g. to Registrant's registration state-
ment on Form 8-B (File No. 1-5519). (Constitutes
a management contract or compensatory plan or
arrangement)
e. Supplemental Pension Agreement dated April 11,
1978 between CDI Corporation and Walter R.
Garrison, incorporated herein by reference to
the Registrant's report on Form 10-K for the
year ended December 31, 1989 (File No. 1-5519).
(Constitutes a management contract or compensa-
tory plan or arrangement)
<PAGE>
9
11. Statement re computation of per share earnings.
27. Financial Data Schedule.
(b) The Registrant was not required to file a Form 8-K during
the quarter ended March 31, 1995.
<PAGE>
10
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 10, 1995 By: /s/ Edgar D. Landis
-----------------------------------
EDGAR D. LANDIS
Executive Vice President, Finance
(Duly authorized officer and
principal financial officer of
Registrant)
<PAGE>
11
INDEX TO EXHIBITS
Number Exhibits Page
- ------ ------------------------------------------------------ ----
3.(i) Articles of incorporation of the Registrant,
incorporated herein by reference to the Registrant's
report on Form 10-Q for the quarter ended June 30,
1990 (File No. 1-5519).
(ii) Bylaws of the Registrant, incorporated herein by
reference to the Registrant's report on Form 10-Q
for the quarter ended June 30, 1990 (File No. 1-5519).
10.a. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, incorporated herein by
reference to the EDGAR filing made by the Registrant
on March 21, 1995 in connection with the Registrant's
definitive Proxy Statement for its annual meeting of
shareholders held on May 2, 1995 (File No. 1-5519).
(Constitutes a management contract or compensatory
plan or arrangement)
b. Employment Agreement dated May 1, 1973 by and between
Comprehensive Designers, Inc. and Walter R. Garrison,
incorporated herein by reference to Exhibit 10.e. to
Registrant's registration statement on Form 8-B (File
No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
c. Employment Agreement dated April 1, 1963, as amended
and restated effective May 1, 1986, by and between
Registrant and Christian M. Hoechst, incorporated
herein by reference to Registrant's report on Form
10-K for the year ended April 30, 1987 (File No.
1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
d. Employment Agreement dated April 30, 1973 by and
between Comprehensive Designers, Inc. and Edgar D.
Landis, incorporated herein by reference to Exhibit
10.g. to Registrant's registration statement on Form
8-B (File No. 1-5519). (Constitutes a management
contract or compensatory plan or arrangement)
e. Supplemental Pension Agreement dated April 11, 1978
between CDI Corporation and Walter R. Garrison,
incorporated herein by reference to the Registrant's
report on Form 10-K for the year ended December 31,
1989 (File No. 1-5519). (Constitutes a management
contract or compensatory plan or arrangement)
11. Statement re computation of per share earnings. 12
27. Financial Data Schedule. 13
<PAGE>
12
EXHIBIT 11
Statement Re Computation of Per Share Earnings
Three months ended March 31,
----------------------------
1995 1994
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Primary
- -------
Net earnings $ 7,140,000 3,944,000
========== ==========
Common and common equivalent shares
outstanding:
Weighted average common shares
outstanding during the period 19,714,928 19,714,828
Assumed exercise of stock options 107,672 46,393
---------- ----------
19,822,600 19,761,221
========== ==========
Earnings per share of common stock $ .36 .20
Fully diluted
- -------------
Net earnings $ 7,140,000 3,944,000
========== ==========
Common and common equivalent shares
outstanding:
Weighted average common shares
outstanding during the period 19,714,928 19,714,828
Assumed exercise of stock options 141,180 46,393
---------- ----------
19,856,108 19,761,221
========== ==========
Earnings per share of common stock $ .36 .20
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,692
<SECURITIES> 0
<RECEIVABLES> 259,713
<ALLOWANCES> 2,034
<INVENTORY> 0
<CURRENT-ASSETS> 268,453
<PP&E> 131,416
<DEPRECIATION> 86,564
<TOTAL-ASSETS> 343,516
<CURRENT-LIABILITIES> 112,654
<BONDS> 80,812
<COMMON> 1,974
0
0
<OTHER-SE> 144,043
<TOTAL-LIABILITY-AND-EQUITY> 343,516
<SALES> 0
<TOTAL-REVENUES> 319,002
<CGS> 0
<TOTAL-COSTS> 291,624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,312
<INCOME-PRETAX> 11,847
<INCOME-TAX> 4,739
<INCOME-CONTINUING> 7,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,140
<EPS-PRIMARY> .36
<EPS-DILUTED> 0
</TABLE>
