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 27, 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 August 1, 1996, the issuer had 16,063,278 shares of common stock
outstanding.
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COMPUTER HORIZONS CORP.
Index
Part I Financial Information
Consolidated Balance Sheets
June 27, 1996 and December 31, 1995
Consolidated Statements of Income
Three Months and Six Months Ended
June 27, 1996 and June 28, 1995
Condensed Consolidated Statements of
Cash Flows - Six Months Ended
June 27, 1996 and June 28, 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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<TABLE>
<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 27, December 31,
1996 1995
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(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................................ $ 8,195 $ 9,166
Accounts receivable, net of allowance for doubtful
accounts of $896,000 and $840,000 at June 27, 1996
and December 31, 1995, respectively ............................ 48,197 44,729
Deferred income tax benefit ...................................... 1,827 1,245
Other ............................................................ 2,307 1,618
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TOTAL CURRENT ASSETS ..................................... 60,526 56,758
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PROPERTY AND EQUIPMENT ............................................. 8,224 7,454
Less accumulated depreciation .................................... 4,568 4,031
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3,656 3,423
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OTHER ASSETS - NET:
Goodwill ......................................................... 13,171 13,526
Other ............................................................ 2,631 2,330
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TOTAL OTHER ASSETS ....................................... 15,802 15,856
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TOTAL ASSETS ....................................................... $79,984 $76,037
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ................................ $ 1,867 $ 2,385
Accrued payroll, payroll taxes and benefits ...................... 11,451 10,812
Accounts payable ................................................. 1,745 1,746
Income taxes payable ............................................. 986 1,535
Other accrued expenses ........................................... 650 1,386
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TOTAL CURRENT LIABILITIES ................................ 16,699 17,864
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LONG-TERM DEBT ..................................................... 1,432 3,299
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OTHER LIABILITIES .................................................. 621 607
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(Continued)
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<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
June 27, 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
17,834,161 shares and 17,407,514 shares at June 27, 1996
and December 31, 1995, respectively ............................ 1,783 1,741
Additional paid-in capital ....................................... 28,899 27,416
Retained earnings ................................................ 45,198 39,758
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75,880 68,915
Less 1,786,883 shares held in treasury, at cost .................. 14,648 14,648
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TOTAL SHAREHOLDERS' EQUITY ............................... 61,232 54,267
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................... $79,984 $76,037
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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 SIX MONTHS ENDED
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June 27, 1996 June 28, 1995 June 27, 1996 June 28, 1995
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(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES ................... $56,032 100.0% $48,397 100.0% $113,063 100.0% $92,264 100.0%
---------------------- ---------------------- ---------------------- ----------------------
COSTS AND EXPENSES:
Direct costs .......... 39,960 71.3% 34,230 70.7% 79,328 70.2% 65,596 71.1%
Selling, administrative
and general ........ 12,505 22.3% 10,222 21.1% 24,625 21.8% 19,516 21.2%
---------------------- ---------------------- ---------------------- ----------------------
52,465 93.6% 44,452 91.8% 103,953 91.9% 85,112 92.2%
---------------------- ---------------------- ---------------------- ----------------------
INCOME FROM OPERATIONS ..... 3,567 6.4% 3,945 8.2% 9,110 8.1% 7,152 7.8%
---------------------- ---------------------- ---------------------- ----------------------
OTHER INCOME (expense):
Interest income ....... 62 0.1% 57 0.1% 165 0.1% 94 0.1%
Interest expense ...... (145) -0.3% (222) -0.5% (289) -0.3% (434) -0.5%
Equity in Joint Venture
net earnings ........ 230 0.4% 96 0.2% 443 0.4% 96 0.1%
---------------------- ---------------------- ---------------------- ----------------------
147 0.3% (69) -0.1% 319 0.3% (244) -0.3%
---------------------- ---------------------- ---------------------- ----------------------
INCOME BEFORE INCOME TAXES.. 3,714 6.6% 3,876 8.0% 9,429 8.3% 6,908 7.5%
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INCOME TAXES:
Current ............... 2,134 3.8% 1,951 4.0% 4,571 4.0% 3,046 3.3%
Deferred .............. (558) -1.0% (240) -0.5% (582) -0.5% 15 0.0%
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1,576 2.8% 1,711 3.5% 3,989 3.5% 3,061 3.3%
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NET INCOME ................. $2,138 3.8% $2,165 4.5% $5,440 4.8% $3,847 4.2%
====================== ====================== ====================== ======================
EARNINGS PER SHARE:
Net income ............ $0.13 $0.15 $0.32 $0.26
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ......... 17,057,000 14,931,000 16,968,000 14,592,000
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED
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June 27, June 28,
1996 1995
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(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES ............... $ 960 $ 1,093
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ............. (770) (1,077)
Acquisitions, net ............................... (389)
Increase in other assets ........................ (301) (1,339)
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(1,071) (2,805)
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CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in notes payable - banks, net .......... (3,200)
Payments of long-term debt ...................... (2,385) (1,556)
Stock options exercised ......................... 1,525 297
Proceeds from issuance of stock ................. 13,441
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(860) 8,982
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (971) 7,270
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..... 9,166 2,278
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CASH AND CASH EQUIVALENTS AT END OF PERIOD ......... $ 8,195 $ 9,548
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
COMPUTER HORIZONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended June 27, 1996 and June 28, 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 June 27, 1996 and June 28, 1995
For the second quarter and six months ended June 27, 1996, revenues
increased to $56 million and $113 million, respectively, a 16% and 23% increase
over last year's comparable periods. These increases reflect continued growth in
the professional staffing and solutions businesses, when comparing the two
years. Because of the unexpected termination of certain contracts in the second
quarter of this year, revenues in the second quarter of 1996 dropped 2% compared
to the first quarter of 1996 ($56 million vs. $57 million).
As a percentage of revenues, direct costs increased to 71.3% vs. 70.7%
in the second quarter of this year as compared to last year. This increase was
primarily attributable to the substantial downtime incurred as a result of the
unexpected contract termination. For the six months, direct costs decreased to
70.2% from 71.1%.
Selling, administrative and general expenses increased as a percentage
of revenues, from 21% in 1995's second quarter and first six months, to 22% in
this year's comparable periods. In dollars, the expenditure increased by $2.3
million from last year, primarily due to the investment associated with our Year
2000 strategy.
Other income/expense improved in the second quarter and the first six
months of 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 was adversely affected in the second quarter
of 1996, by the unexpected termination of certain contracts, as well as the
substantial expenditures made by the Company to build the infrastructure
necessary and capable of handling the major Year 2000 conversion projects being
pursued. For the second quarter 1996 vs. 1995 comparison, pre-tax income
decreased to $3.7 million vs. $3.9 million. For the six months, pre-tax income
increased to $9.4 million from $6.9 million,
The effective tax rate for Federal, state and local income taxes was
42% for the three months and six months ended June 27, 1996, compared to 44% for
the comparable 1995 periods.
<PAGE>
Net income was $2.1 million for the second quarter of 1996 vs. $2.2
million for the second quarter of 1995. Earnings per share were $.13 as compared
to $.15, on 17.1 million shares in 1996's second quarter vs. 14.9 million shares
a year ago. The increased shares were principally the result of a June 1995
equity financing and the accounting impact of a higher common stock price on
existing stock options. Net income increased by 41% for 1996's first six months
to $5.4 million vs. $3.8 million or $.32 per share vs. $.26 per share as
compared to 1995's first six months. 1995's earnings per share have been
restated to reflect the 50% stock distribution declared by the Company on
December 12, 1995.
As of June 27, 1996, the Company had a current ratio position of 3.6 to
1, a cash position of $8.2 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.
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(Registrant)
DATE: August 1, 1996 /s/ John J. Cassese
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John J. Cassese, Chairman of the Board
and President
DATE: August 1, 1996 /s/ Bernhard Hubert
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Bernhard Hubert, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
DATE: August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-27-1996
<CASH> 8,195
<SECURITIES> 0
<RECEIVABLES> 49,093
<ALLOWANCES> 896
<INVENTORY> 0
<CURRENT-ASSETS> 60,526
<PP&E> 8,224
<DEPRECIATION> 4,568
<TOTAL-ASSETS> 79,984
<CURRENT-LIABILITIES> 16,699
<BONDS> 1,432
0
0
<COMMON> 1,783
<OTHER-SE> 59,449
<TOTAL-LIABILITY-AND-EQUITY> 79,984
<SALES> 0
<TOTAL-REVENUES> 113,063
<CGS> 0
<TOTAL-COSTS> 79,328
<OTHER-EXPENSES> 24,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 124
<INCOME-PRETAX> 9,429
<INCOME-TAX> 3,989
<INCOME-CONTINUING> 5,440
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,440
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
