SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
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For Quarter Ended March 30, 1995 Commission File Number 0-7282
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COMPUTER HORIZONS CORP.
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(Exact name of registrant as specified in its charter)
New York 13-2638902
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
49 Old Bloomfield Avenue, Mountain Lakes, New Jersey 07046-1495
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (201) 402-7400
Not Applicable
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(Former name, former address and former fiscal year, if
changed since last report)
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 twelve 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.
X
--- --
Yes No
As of May 2, 1995, the issuer had 8,993,937 shares of common stock outstanding,
after retroactively adjusting for the three-for-two common stock split declared
on April 25, 1995 (see Notes to Consolidated Financial Statements).
<PAGE>
COMPUTER HORIZONS CORP.
Index
Part I Financial Information
Consolidated Balance Sheets
March 30, 1995 and December 31, 1994
Consolidated Statements of Income
Three Months Ended March 30, 1995 and
1994
Consolidated Statements of Cash Flows
Three Months Ended March 30, 1995 and
1994
Notes to Consolidated Financial
Statements
Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Part II Other Information
Signatures
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
Mar. 30, Dec. 31,
1995 1994
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(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 234 $ 2,278
Accounts receivable, net of allowance for doubtful
accounts of $542,000 and $566,000 at March 30, 1995 and
December 31, 1994, respectively .......................... 34,525 30,636
Deferred income tax benefit ................................. 516 771
Other ....................................................... 1,380 1,108
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TOTAL CURRENT ASSETS ................................. 36,655 34,793
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PROPERTY AND EQUIPMENT ......................................... 6,268 5,983
Less accumulated depreciation ............................... 3,577 3,348
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2,691 2,635
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OTHER ASSETS-NET:
Goodwill .................................................... 11,337 11,065
Other ....................................................... 778 657
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TOTAL OTHER ASSETS ................................... 12,115 11,722
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TOTAL ASSETS ................................................... $51,461 $49,150
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - banks ....................................... $ 3,950 $ 3,200
Current portion of long-term debt ........................... 1,428 1,556
Accrued payroll, payroll taxes and benefits ................. 6,441 7,305
Accounts payable ............................................ 731 560
Income taxes payable ........................................ 1,422 880
Other accrued expenses ...................................... 857 808
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TOTAL CURRENT LIABILITIES ............................ 14,829 14,309
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LONG-TERM DEBT ................................................. 4,288 4,288
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OTHER LIABILITIES .............................................. 621 636
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SHAREHOLDERS' EQUITY:
Preferred stock, $.10 par; authorized and unissued 200,000
shares, including 50,000 Series A
Common stock, $.10 par; authorized 30,000,000 shares; issued
10,758,320 shares and 10,715,922 shares at March 30, 1995
and December 31, 1994, respectively ...................... 1,076 1,072
Additional paid-in capital .................................. 13,762 13,642
Retained earnings ........................................... 31,533 29,851
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46,371 44,565
Less shares held in treasury, at cost: 1,786,883 shares at
March 30, 1995 and December 31, 1994 ..................... 14,648 14,648
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TOTAL SHAREHOLDERS' EQUITY ........................... 31,723 29,917
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................... $51,461 $49,150
======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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MARCH 30, 1995 MARCH 30, 1994
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(in thousands, except per share data)
<S> <C> <C> <C> <C>
REVENUES .................................... $43,867 100.0% $33,171 100.0%
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COSTS AND EXPENSES:
Direct Costs ............................. 31,366 71.5% 23,655 71.3%
Selling, administrative and general ...... 9,294 21.2% 7,281 21.9%
------- ----- ------- -----
40,660 92.7% 30,936 93.3%
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INCOME FROM OPERATIONS ...................... 3,207 7.3% 2,235 6.7%
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OTHER INCOME (expense):
Interest income .......................... 37 0.1% 35 0.1%
Interest expense ......................... (212) -0.5% (185) -0.6%
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(175) -0.4% (150) -0.5%
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INCOME BEFORE INCOME TAXES .................. 3,032 6.9% 2,085 6.3%
------- ----- ------- -----
INCOME TAXES:
Current .................................. 1,095 2.5% 915 2.8%
Deferred ................................. 255 0.6% 56 0.2%
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1,350 3.1% 971 2.9%
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NET INCOME .................................. $ 1,682 3.8% $ 1,114 3.4%
======= ===== ======= =====
EARNINGS PER SHARE:
Net income ............................... $ 0.18 $ 0.12
======= =======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,502,000 9,520,000
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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March 30, March 30,
1995 1994
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(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES ............. $(2,144) $(2,373)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ........... (285) (436)
Acquisitions, net ............................. (240)
(Increase) decrease in other assets ........... (121) 11
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(646) (425)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable - banks, net ......... 750 200
Payments of long-term debt ..................... (128) (127)
Stock options exercised ........................ 124 119
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746 192
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NET DECREASE IN CASH AND
CASH EQUIVALENTS ............................... (2,044) (2,606)
Cash and cash equivalents at beginning
of year ........................................ 2,278 4,370
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................. $ 234 $ 1,764
======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended March 30, 1995 and 1994
The information furnished reflects all adjustments (consisting of
normal recurring accruals) which, in the opinion of the Company, are necessary
to present fairly its consolidated financial position and the results of its
operations and changes in financial position for the periods indicated.
Reference is made to the Company's annual financial statements for the
year ended December 3l, l994, for a description of the accounting policies,
which have been continued without change. Also refer to the footnotes with those
annual statements for additional details of the Company's financial condition,
results of operations and changes in cash flows. Except for the common stock
split described below, the details in those notes have not changed except as a
result of normal transactions in the interim.
On April 25, 1995, the Company declared a three-for-two common stock
split in the form of a 50% stock distribution to shareholders of record on May
9, 1995, payable on May 30, 1995. An amount equal to the $0.10 par value of the
common shares to be distributed was retroactively transferred from additional
paid-in capital to common stock.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Quarters Ended March 30, 1995 and 1994
Consolidated revenues for the first quarter of 1995 increased 32%
compared to the first quarter of 1994. The increase was the result of both the
further development of the Company's solutions business and the continued
expansion in its core business of providing professional software personnel
services.
Direct costs as a percentage of consolidated revenues were 71.5% and
71.3% for the first quarters of 1995 and 1994, respectively.
Selling, administrative and general expenses were 21.2% of consolidated
revenues for the first quarter of 1995, compared to 21.9% for the same period in
1994. This decrease is attributable to both tighter cost controls and higher
consolidated revenues during the past year. The dollar expenditures were $9.3
million and $7.3 million for the respective periods.
First quarter income from operations was $3.2 million in 1995, compared
to $2.2 million in 1994, representing 7.3% and 6.7% of consolidated revenues for
1995 and 1994, respectively. The gains are primarily attributable to increased
revenues and various cost containment initiatives. The Company's business is
labor intensive and, as such, is sensitive to inflationary trends. This
sensitivity applies to client billing rates, as well as payroll costs.
The Company's effective tax rate for Federal, state and local income
taxes was 44.5% and 46.6% for the periods ended March 30, 1995 and March 30,
1994, respectively. The effective rate for the first quarter of 1995 decreased
due to profits increasing more than non-tax benefited charges. After accounting
for non-tax benefited charges such as goodwill amortization and certain travel
and entertainment deduction limitations, the Company's standard marginal income
tax rate approximates 42%.
Consolidated net income for the first quarter of 1995 was $1.7 million,
or $.18 per share, compared with $1.1 million, or $.12 per share in 1994. Each
quarter's earnings per share have been restated to reflect the 50% stock
distribution declared by the Company on April 25, 1995 (see Notes to
Consolidated Financial Statements).
As of March 30, 1995, the Company had a current ratio of 2.5 to 1.
Available bank lines of credit totaled $8.0 million at March 30, 1995 ($12.0
million less $4.0 million outstanding). As of May 2, 1995, the outstanding
borrowings under these facilities was $6.2 million. Borrowings have been used to
finance the growth in accounts receivable resulting from increased revenues and,
in the first quarter of 1995, the effect of normal year-end purchase order
expirations and resultant payment delays.
The Company continuously reviews its future cash requirements, together
with its available lines of credit and internally generated funds. The Company
believes it will meet all working capital obligations and fund further
development of its business at least through the end of 1995.
<PAGE>
PART II Other Information
Item 6.
b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
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.
COMPUTER HORIZONS CORP.
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(Registrant)
DATE: May 3, 1995 /s/ John J. Cassese
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John Cassese, Chairman of the
Board and President
DATE: May 3, 1995 /s/ Bernhard Hubert
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Bernhard Hubert, Executive Vice
President and Chief Financial
Officer (Principal Financial
Officer)
DATE: May 3, 1995 /s/ Michael J. Shea, CPA
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Michael J. Shea, CPA
Chief Accounting Officer and
Controller (Principal Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-30-1995
<CASH> 234
<SECURITIES> 0
<RECEIVABLES> 35,067
<ALLOWANCES> 542
<INVENTORY> 0
<CURRENT-ASSETS> 36,655
<PP&E> 6,268
<DEPRECIATION> 3,577
<TOTAL-ASSETS> 51,461
<CURRENT-LIABILITIES> 14,829
<BONDS> 4,288
<COMMON> 1,076
0
0
<OTHER-SE> 30,647
<TOTAL-LIABILITY-AND-EQUITY> 51,461
<SALES> 0
<TOTAL-REVENUES> 43,867
<CGS> 0
<TOTAL-COSTS> 31,366
<OTHER-EXPENSES> 9,294
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 175
<INCOME-PRETAX> 3,032
<INCOME-TAX> 1,350
<INCOME-CONTINUING> 1,682
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,682
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
