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 June 28, 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
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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 August 4, 1995, the issuer had 10,229,742 shares of common stock
outstanding.
<PAGE>
COMPUTER HORIZONS CORP.
Index
Part I Financial Information
Consolidated Balance Sheets
June 28, 1995 and December 31, 1994
Consolidated Statements of Income
Three Months and Six Months Ended
June 28, 1995 and 1994
Consolidated Statements of Cash Flows
Six Months Ended June 28, 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>
June 28, December 31,
1995 1994
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(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 9,548 $ 2,278
Accounts receivable, net of allowance for doubtful
accounts of $653,000 and $566,000 at June 28, 1995 and
December 31, 1994, respectively .......................... 35,872 30,636
Deferred income tax benefit ................................. 756 771
Other ....................................................... 1,238 1,108
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TOTAL CURRENT ASSETS ................................. 47,414 34,793
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PROPERTY AND EQUIPMENT ......................................... 7,060 5,983
Less accumulated depreciation ............................... 3,814 3,348
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3,246 2,635
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OTHER ASSETS-NET:
Goodwill .................................................... 11,172 11,065
Other ....................................................... 1,996 657
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TOTAL OTHER ASSETS ................................... 13,168 11,722
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TOTAL ASSETS ................................................... $63,828 $49,150
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - banks ....................................... $ -- $ 3,200
Current portion of long-term debt ........................... 1,428 1,556
Accrued payroll, payroll taxes and benefits ................. 8,078 7,305
Accounts payable ............................................ 2,120 560
Income taxes payable ........................................ 791 880
Other accrued expenses ...................................... 610 808
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TOTAL CURRENT LIABILITIES ............................ 13,027 14,309
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LONG-TERM DEBT ................................................. 2,860 4,288
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OTHER LIABILITIES .............................................. 515 636
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</TABLE>
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Continued)
<TABLE>
<CAPTION>
June 28, December 31,
1995 1994
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(in thousands)
<S> <C> <C>
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
11,961,875 shares and 10,715,922 shares at June 28,
1995 and December 31, 1994, respectively ................. 1,196 1,072
Additional paid-in capital .................................. 27,180 13,642
Retained earnings ........................................... 33,698 29,851
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62,074 44,565
Less shares held in treasury, at cost: 1,786,883 shares at
June 28, 1995 and December 31, 1994 ...................... 14,648 14,648
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TOTAL SHAREHOLDERS' EQUITY ........................... 47,426 29,917
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................... $63,828 $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 SIX MONTHS ENDED
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JUNE 28, 1995 JUNE 28, 1994 JUNE 28, 1995 JUNE 28, 1994
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(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $48,397 100.0% $36,278 100.0% $92,264 100.0% $69,449 100.0%
--------------- --------------- -------------- --------------
COSTS AND EXPENSES:
Direct Costs 34,230 70.7% 25,622 70.6% 65,596 71.1% 49,277 71.0%
Selling, administrative and
general 10,222 21.1% 7,858 21.7% 19,516 21.2% 15,139 21.8%
--------------- --------------- -------------- --------------
44,452 91.8% 33,480 92.3% 85,112 92.2% 64,416 92.8%
--------------- --------------- -------------- --------------
INCOME FROM OPERATIONS 3,945 8.2% 2,798 7.7% 7,152 7.8% 5,033 7.2%
--------------- --------------- -------------- --------------
OTHER INCOME (expense):
Interest income 57 0.1% 21 0.1% 94 0.1% 56 0.1%
Interest expense (222) -0.5% (180) -0.5% (434) -0.5% (365) -0.5%
Equity in Joint Venture
net earnings 96 0.2% 96 0.1%
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(69) -0.1% (159) -0.4% (244) 0.3% (309) -0.4%
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INCOME BEFORE INCOME TAXES 3,876 8.0% 2,639 7.3% 6,908 7.5% 4,724 6.8%
--------------- --------------- -------------- --------------
INCOME TAXES:
Current 1,951 4.0% 1,165 3.2% 3,046 3.3% 2,080 3.0%
Deferred (240) -0.5% 15 0.0% 15 0.0% 71 0.1%
--------------- --------------- -------------- --------------
1,711 3.5% 1,180 3.3% 3,061 3.3% 2,151 3.1%
--------------- --------------- -------------- --------------
NET INCOME $ 2,165 4.5% $ 1,459 4.0% $ 3,847 4.2% $ 2,573 3.7%
=============== =============== ============== ==============
EARNINGS PER SHARE:
Net income $0.22 $0.15 $0.40 $0.27
===== ===== ===== =====
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 9,954,000 9,498,000 9,728,000 9,509,000
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
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June 28, June 28,
1995 1994
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(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES .............. $ 1,093 $ (312)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ............ (1,077) (974)
Acquisitions, net .............................. (389) (252)
Increase in other assets ....................... (1,339) (31)
Repayment of loans to Officers ................. 608
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(2,805) (649)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable - banks, net (3,200) 600
Payments of long-term debt ...................... (1,556) (1,555)
Stock options exercised ......................... 297 651
Proceeds from common stock offering, net ........ 13,441
Purchase of treasury stock ...................... (1,296)
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8,982 (1,600)
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(INCREASE) DECREASE IN CASH AND
CASH EQUIVALENTS ................................ 7,270 (2,561)
Cash and cash equivalents at beginning
of year ......................................... 2,278 4,370
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD ................................... $ 9,548 $ 1,809
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended June 28, 1995 and 1994
The information furnished reflects all adjustments 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 and the common stock offering 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 distributed was transferred from additional paid-in capital to
common stock.
On June 7, 1995, the Company sold 1,140,000 shares of its common stock
in a public offering, realizing net proceeds of approximately $13,400,000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Quarters Ended June 28, 1995 and 1994
Revenues for both the second quarter and six months ended June 28, 1995
increased 33% in comparison to the same periods in 1994. This increase is
primarily attributable to continued growth in the professional staffing
business, along with accelerating demand in the solutions business.
As a percentage of revenues, direct costs were essentially unchanged for
the second quarter of 1995 (70.7% vs. 70.6%) and the six month period (71.1% vs.
71.0%) when compared to 1994. The Company is committed to maintaining and
improving gross margins through cost control and providing more value added
services.
Selling, administrative and general expenses have moved in a favorable
direction in 1995. As a percent of revenues, they were 21.1% in the second
quarter of 1995, in comparison to 21.7% in 1994. For the six month period ended
June 28, 1995, SG&A costs were 21.2% vs. 21.8% in 1994. This decrease is
attributable to tighter cost controls and higher consolidated revenues during
each period.
Other income/expense improved in the second quarter ended and the first six
months of 1995, primarily due to the operating results in our newly formed Birla
Horizons joint venture.
Income before income taxes for the second quarter of 1995 increased by 47%
($3,876,000 vs. $2,639,000) when compared to last year, while pre-tax margins
increased to 8.0% from 7.3%, For the six month period, income before income
taxes was up to 46% ($6,908,000 vs. $4,724,000) with margins increasing to 7.5%
from 6.8%. These margin improvements are primarily the result of lower SG&A
expense as a percent of revenues.
The effective tax rate for Federal, state and local income taxes was 44.1%
and 44.3% for the three and six months ended June 28, 1995, compared to 44.7%
and 45.5 for the comparable 1994 periods. After accounting for non-tax benefited
charges such as goodwill amortization and certain travel and entertainment
deduction limitations, the Company's standard income tax rate approximates 42%.
Net income increased by 48% ($2,165,000 vs. $1,459,000) for the second
quarter and 50% ($3,847,000 vs. $2,573,000) for the six months ended June 28,
1995.
Earnings per share increased 47% for the second quarter of 1995 ($.22 vs.
$.15) and 48% for the six months ($.40 vs. $.27). Each period'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 June 28, 1995, the Company had a current ratio position of 3.6 to 1,
a cash position of $9.5 million and available lines of credit of $25.0 million.
On June 7, 1995, the Company sold 1,140,000 shares of its common stock in a
public offering generating approximately $13.4 million in cash. These proceeds
were used to repay outstanding indebtedness and provide the Company with
additional working capital.
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 for at least the next 12 months.
<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.
<TABLE>
<S> <C>
COMPUTER HORIZONS CORP.
---------------------------------------
(Registrant)
DATE: August 4, 1995 /s/ John J. Cassese
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John Cassese, Chairman of the Board
and President
DATE: August 4, 1995 /s/ Bernhard Hubert
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Bernhard Hubert, Executive Vice
President and Chief Financial Officer
(Principal Financial Officer)
DATE: August 4, 1995 /s/ Michael J. Shea
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Michael J. Shea, CPA
Chief Accounting Officer and Controller
(Principal Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-28-1995
<CASH> 9,548
<SECURITIES> 0
<RECEIVABLES> 36,525
<ALLOWANCES> 653
<INVENTORY> 0
<CURRENT-ASSETS> 47,414
<PP&E> 7,060
<DEPRECIATION> 3,814
<TOTAL-ASSETS> 63,828
<CURRENT-LIABILITIES> 13,027
<BONDS> 2,860
<COMMON> 1,196
0
0
<OTHER-SE> 46,230
<TOTAL-LIABILITY-AND-EQUITY> 63,828
<SALES> 0
<TOTAL-REVENUES> 92,264
<CGS> 0
<TOTAL-COSTS> 65,596
<OTHER-EXPENSES> 19,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 340
<INCOME-PRETAX> 6,908
<INCOME-TAX> 3,061
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,847
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
