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 29, 1996 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 April 30, 1996, the issuer had 15,868,005 shares of common stock
outstanding.
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COMPUTER HORIZONS CORP.
Index
Part I Financial Information
Consolidated Balance Sheets
March 29, 1996 and December 31, 1995
Consolidated Statements of Income
Three Months Ended March 29, 1996
and March 30, 1995
Condensed Consolidated Statements of
Cash Flows - Three Months Ended
March 29, 1996 and March 30, 1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis
of Financial Condition and Results of
Operations
Part II Other Information
Signatures
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<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
March 29, December 31,
1996 1995
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(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................ $ 8,763 $ 9,166
Accounts receivable, net of allowance for doubtful
accounts of $922,000 and $840,000 at March 29, 1996
and December 31, 1995, respectively .................... 48,066 44,729
Deferred income tax benefit .............................. 1,269 1,245
Other .................................................... 2,142 1,618
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TOTAL CURRENT ASSETS ............................. 60,240 56,758
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PROPERTY AND EQUIPMENT ..................................... 7,768 7,454
Less accumulated depreciation ............................ 4,300 4,031
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3,468 3,423
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OTHER ASSETS - NET:
Goodwill ................................................. 13,348 13,526
Other .................................................... 2,608 2,330
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TOTAL OTHER ASSETS ............................... 15,956 15,856
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TOTAL ASSETS ............................................... $79,664 $76,037
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ........................ $ 2,385 $ 2,385
Accrued payroll, payroll taxes and benefits .............. 10,458 10,812
Accounts payable ......................................... 770 1,746
Income taxes payable ..................................... 2,542 1,535
Other accrued expenses ................................... 1,225 1,386
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TOTAL CURRENT LIABILITIES ........................ 17,380 17,864
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LONG-TERM DEBT ............................................. 3,299 3,299
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OTHER LIABILITIES .......................................... 613 607
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<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- Continued (Unaudited)
March 29, December 31,
1996 1995
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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 17,644,663 shares and 17,407,514 shares at
March 29, 1996 and December 31, 1995, respectively ..... 1,764 1,741
Additional paid-in capital ............................... 28,196 27,416
Retained earnings ........................................ 43,060 39,758
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73,020 68,915
Less 1,786,883 shares held in treasury, at cost .......... 14,648 14,648
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TOTAL SHAREHOLDERS' EQUITY ....................... 58,372 54,267
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................. $79,664 $76,037
======= =======
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED
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MARCH 29, 1996 MARCH 30, 1995
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(in thousands, except per share data)
<S> <C> <C> <C> <C>
REVENUES ................................................ $57,031 100.0% $43,867 100.0%
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COSTS AND EXPENSES:
Direct costs ....................................... 39,368 69.0% 31,366 71.5%
Selling, administrative
and general ..................................... 12,120 21.3% 9,294 21.2%
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51,488 90.3% 40,660 92.7%
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INCOME FROM OPERATIONS .................................. 5,543 9.7% 3,207 7.3%
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OTHER INCOME (expense):
Interest income .................................... 103 0.2% 37 0.1%
Interest expense ................................... (144) -0.3% (212) -0.5%
Equity in Joint Venture net earnings ............... 213 0.4%
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172 0.3% (175) -0.4%
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INCOME BEFORE INCOME TAXES .............................. 5,715 10.0% 3,032 6.9%
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INCOME TAXES:
Current ............................................ 2,437 4.3% 1,095 2.5%
Deferred ........................................... (24) -0.0% 255 0.6%
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2,413 4.2% 1,350 3.1%
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NET INCOME .............................................. $3,302 5.8% $1,682 3.8%
============================ =========================
EARNINGS PER SHARE:
Net income ......................................... $0.20 $0.12
========== =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ...................................... 16,880,000 14,254,000
========== ==========
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
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March 29, March 30,
1996 1995
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(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES ................... $ (614) $(2,144)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ................. (314) (285)
Acquisitions, net ................................... (240)
Increase in other assets ............................ (278) (121)
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(592) (646)
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CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable - banks, net .............. 750
Payments of long-term debt .......................... (128)
Stock options exercised ............................. 803 124
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803 746
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ... (403) (2,044)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ......... 9,166 2,278
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CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. $ 8,763 $ 234
======= =======
See notes to consolidated financial statements.
</TABLE>
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COMPUTER HORIZONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended March 29, 1996 and March 30, 1995
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 31, 1995, 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. The details in those notes have
not changed except as a result of normal transactions in the interim.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Quarters Ended March 29, 1996 and March 30, 1995
Revenues for the quarter ended March 29, 1996 increased 30% in
comparison to the same period in 1995. The revenue growth is primarily
attributable to our Solutions offerings, along with continued expansion in the
professional staffing business.
As a percentage of revenues, direct costs improved for the first
quarter of 1996 (69.0% vs. 71.5%) when compared to 1995. The Company is
committed to maintaining and improving gross margins through cost control and
providing more value added services.
Selling, administrative and general expenses remained essentially
stable as a percentage of revenues (21.3% vs. 21.2%) during 1996's first quarter
in comparison to the same period last year. The Company's efforts to maintain
tight cost control while expanding its Solutions business is being achieved.
Other income/expense improved in the quarter ended March 29, 1996
primarily due to the Company's equity in the operating results of its Birla
Horizons joint venture, which was formed in 1995, as well as to additional
interest income received and interest expense saved relating to the funds
provided by the 1995 secondary public offering.
Income before income taxes for the first quarter of 1996 increased by
88% ($5,715,000 vs. $3,032,000) when compared to last year, while pre-tax
margins increased to 10.0% from 6.9%. These margin improvements are primarily
the result of improved direct cost margin percentages and more favorable other
income/expense.
The effective tax rate for Federal, state and local income taxes was
42.2% for the three months ended March 29, 1996, compared to 44.5% for the
comparable 1995 period. 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 96% ($3,302,000 vs. $1,682,000) for the first
quarter of 1996. Earnings per share increased by 67% for 1996's first quarter
($.20 vs. $.12) as compared to 1995's first quarter. 1995's earnings per share
have been restated to reflect the 50% stock distributions declared by the
Company on April 25, 1995 and December 12, 1995.
As of March 29, 1996, the Company had a current ratio position of 3.5
to 1, a cash position of $8.8 million and available bank lines of credit of
$25.0 million. The Company continuously reviews its future cash requirements,
together with its available bank 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 and 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.
(Registrant)
DATE: May 1, 1996 /s/ John J. Cassese
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John J. Cassese, Chairman of the Board
and President
DATE: May 1, 1996 /s/ Bernhard Hubert
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Bernhard Hubert, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
DATE: May 1, 1996 /s/ Michael J. Shea, CPA
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Michael J. Shea, CPA
Vice President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-29-1996
<CASH> 8,763
<SECURITIES> 0
<RECEIVABLES> 48,988
<ALLOWANCES> 922
<INVENTORY> 0
<CURRENT-ASSETS> 60,240
<PP&E> 7,768
<DEPRECIATION> 4,300
<TOTAL-ASSETS> 79,664
<CURRENT-LIABILITIES> 17,380
<BONDS> 3,299
0
0
<COMMON> 1,764
<OTHER-SE> 56,608
<TOTAL-LIABILITY-AND-EQUITY> 79,664
<SALES> 0
<TOTAL-REVENUES> 57,031
<CGS> 0
<TOTAL-COSTS> 39,368
<OTHER-EXPENSES> 11,907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 5,715
<INCOME-TAX> 2,413
<INCOME-CONTINUING> 3,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,302
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
