SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-7282
COMPUTER HORIZONS CORP.
(Exact name of registrant as specified in its charter)
New York 13-2638902
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey 07046-1495
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number,
including area code: (201) 402-7400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par value $.10 per share)
(Title of class)
Series A Preferred Stock Purchase Rights
(Title of class)
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 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 [ ]
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant as of March 20, l997, was approximately
$408,313,000.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of March 20, l997: 16,233,702 shares.
DOCUMENTS INCORPORATED BY REFERENCE
There is incorporated herein by reference the registrant's (i) Annual
Report to Shareholders for the year ended December 3l, l996, in Part II of this
Report and (ii) Proxy Statement for the 1997 Annual Meeting of Shareholders,
expected to be filed with the Securities and Exchange Commission on or before
April 7, 1997, in Part III hereof.
<PAGE>
PART I
Item 1. Business
General
The Company provides a wide range of information technology services
and solutions to major corporations. Historically a professional services
staffing firm, the Company has, over the past five years, developed the
technological and managerial infrastructure to offer its clients value added
services including CHC's Signature 2000(TM) solution for the millennium change,
client/server systems development and migration, enterprise network management,
document imaging practices, outsourcing and offshore software development and
maintenance ("solutions"). The Company markets solutions to both existing and
potential clients with the objective of becoming a preferred provider of
comprehensive information technology services and solutions for such clients.
Solutions engagements, which represented less than five percent of the Company's
consolidated revenues in 1992, accounted for approximately 30% of its
consolidated revenues in 1996. The Company believes that the range of services
and solutions that it offers, combined with its worldwide network of 43 offices
and subsidiary organizations, provides it with significant competitive
advantages in the information technology marketplace.
In 1996, the Company expanded operations by opening offices in Toronto,
Canada and London, England. Together with the offices operated by the Company's
joint venture, Birla Horizons International, the Company has established itself
as an international enterprise, with global capabilities.
The Company's clients primarily are Fortune 1,000 companies with
significant information technology budgets and recurring staffing or software
development needs. In 1996, the Company provided information technology services
to 453 clients. During 1996, the Company's largest client, AT&T accounted for
9.8% of the Company's consolidated revenues, with no other client accounting for
more than 5% of such revenues.
With the trend in the commercial market moving towards fully integrated
information systems solutions, the Company offers its clients a broad range of
business and technical services as a service outsourcer and systems integrator
capable of providing complex total solutions. This total solutions approach
comprises proprietary software and tools, proven processes and methodologies,
tested project management practices and resource management and procurement
programs.
The Company offers a range of information technology services and
solutions, which include (1) professional services staffing, (2) the solution
for the millennium change, (3) client/ server systems development and migration,
(4) enterprise network management, (5) document imaging practices, (6)
outsourcing, (7) offshore software development and maintenance, and (8)
knowledge transfer.
(1) Professional Services Staffing: Providing highly skilled software
professionals to augment the internal information management staffs of major
corporations remains the Company's primary business. The Company offers its
clients centralized vendor management, supplying their staffing needs from among
the Company's over 2,500 software professionals. The Company is committed to
expanding its professional services staffing operations in conjunction with its
solutions business.
<PAGE>
(2) Solution for the Millennium Change: CHC's Signature 2000(TM)
offering combines an internally developed proprietary software toolkit, skilled
resources, proven methodologies, experienced project management, as well as
significant millennium project experience. It analyzes, locates, reports on, and
then restructures all programs and database definitions affected by the absence
of a century date field to permit processing of dates after December 31, 1999.
The solution is customized for each particular enterprise and deals with all
collateral issues. In effect, CHC's Signature 2000(TM) provides the Company with
an opportunity to facilitate field expansion, while simultaneously performing
other systems upgrades such as language conversions and platform migrations.
(3) Client/Server Systems Development and Migration: The Company has
the capability to develop and implement open computer systems using
client/server architecture and integrating servers, mini and mainframe systems,
workstations, terminals and communication gateways into complete, flexible
networks. Such services include project management, selection of viable systems
platforms, creation of migration plans, development of customized software
applications, and systems and database integration. The Company specializes in
integrating local area network ("LAN") environments into single heterogeneous
networks and unifying enterprise networks into wide area network ("WAN")
environments.
(4) Enterprise Network Management: As application development migrates
to distributed systems platforms, so too must the disciplines of systems
management. The Company's enterprise network management offering is comprised of
experienced technical professionals whose only business focus is the development
and integration of centralized management platforms for mission-critical
distributed systems environments. The Company's staff handles large-scale
integration projects, including those requiring vendor product integration and
custom software development associated with LAN/WAN monitoring and control,
network asset management, software distribution and help desk support.
(5) Document Imaging Practices: The Company offers an
open-architectured document management solution that enables its clients to
seamlessly image-enable existing applications that can reside on mainframes,
mid-range or PC environments. The client is able to obtain a total solution that
utilizes the Company's proprietary toolset, UNIDOC(TM), to provide customized
design, development and deployment for their document management needs.
(6) Outsourcing: Spurred by global competition and rapid technological
change, big companies, in particular, are downsizing and outsourcing for reasons
ranging from cost reduction to capital asset improvement and from improved
technology introduction to better strategic focus. In response to this trend,
the Company has created a group of regional outsourcing centers with 24 hour/7
day a week support, which are fully equipped with the latest technology and
communications, as well as a complete staff that includes experienced project
managers, technicians and operators. These professionals facilitate essential
data functions including: applications development, systems maintenance, data
network management, voice network administration and help desk operations.
(7) Offshore Software Development and Maintenance: For major U.S.
corporations under the constraints of downsizing and cost-cutting, offshore
software development and maintenance provides a high quality, low-cost
alternative to having these services performed domestically. Through Birla
Horizons International, a joint venture established in India, the Company is
able to provide offshore development, legacy systems maintenance and conversion
services, which can be ported to client computers at satellite speed. Quality
control and project management remain localized through one of the Company's
domestic offices.
<PAGE>
8) Knowledge Transfer: The Company offers both standard curricula and
custom-tailored courses for a client's particular environment and needs.
Comprehensive courses cover languages, hardware, software, tools, methodologies
and management and productivity skills. The Company's offerings include
application downsizing, graphical interfaces, open systems, computer-aided
software engineering ("CASE") and information engineering technologies,
relational technology and personal computer software and hardware. The Company
also has reseller and training rights in selected markets to certain development
tools used as an aid in building client/server applications.
Personnel
As of December 3l, 1996, the Company had a staff of 2,916, of whom
2,510 were computer professionals. The Company devotes significant resources to
recruitment of qualified professionals and provides continuing in-house training
and education, and a career path management development program within the
Company.
Competition
The Company competes in the commercial information technology services
market which is highly competitive and served by numerous firms, many of which
serve only their respective local markets. The market includes participants in a
variety of market segments, including systems consulting and integration firms,
professional services companies, application software firms, temporary
employment agencies, the professional service groups of computer equipment
companies such as Hewlett-Packard Company, Unisys Corporation and Digital
Equipment Corporation, facilities management and management information systems
("MIS") outsourcing companies, certain "Big Six" accounting firms, and general
management consulting firms. The Company's competitors also include companies
such as Andersen Consulting, Technology Solutions Corporation, Cambridge
Technology Partners, Inc., Cap Gemini America, Business System Group, the
consulting division of Computer Sciences Corporation, Analysts International
Corp., CIBER, Inc., Computer Task Group Inc., and Keane Inc.
Many participants in the information technology consulting and software
solutions market have significantly greater financial, technical and marketing
resources and generate greater revenues than the Company. The Company believes
that the principal competitive factors in the commercial information technology
services industry include responsiveness to client needs, speed of application
software development, quality of service, price, project management capability
and technical expertise. Pricing has its greatest importance as a competitive
factor in the area of professional service staffing. The Company believes that
its ability to compete also depends in part on a number of competitive factors
outside its control, including the ability of its competitors to hire, retain
and motivate skilled technical and management personnel, the ownership by
competitors of software used by potential clients, the price at which others
offer comparable services and the extent of its competitors' responsiveness to
customer needs.
<PAGE>
Item 2. Properties
The Company's Corporate and Financial Headquarters, its Unified Systems
Solutions, Inc. subsidiary, its ComputerKnowledge division, as well as its
Eastern Regional Office, comprising approximately 43,500 square feet, are
located at 49 Old Bloomfield Avenue, Mountain Lakes, New Jersey. The Mountain
Lakes leases are for terms expiring December 31, 1999, at a current annual
rental of approximately $734,000. As of December 3l, l996, the Company also
maintained facilities in Arizona, California, Colorado, Connecticut, Florida,
Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota,
Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee,
Texas, Toronto and Washington D.C. with an aggregate of approximately 136,400
square feet. The leases for these facilities are at a current annual aggregate
rental of approximately $1,854,000. These leases expire at various times with no
lease commitment longer than December 31, 2001. In addition, through Birla
Horizons International, the Company has offices in New Delhi, India; London,
England; California; New Jersey, and Toronto, Canada.
Item 3. Legal Proceedings
There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Company
The following table sets forth certain information with respect to the
executive officers of the Company, who are elected to serve until the next
annual meeting of the Board of Directors and until their successors are elected
and qualify. All the positions listed are or were held by such officers with the
Company.
<TABLE>
<CAPTION>
PERIOD
NAME AGE TITLE POSITION HELD
- ---- --- ----- -------------
<S> <C> <C> <C>
John J. Cassese 52 Chairman of the Board 1982-Present
and President
Director 1969-Present
William J. Murphy 52 Executive Vice President 1997 - Present
and CFO
Bernhard Hubert 52 Senior Vice President 1982-1995
and CFO
Executive Vice President 1995-1996
and CFO*
Director* 1995-1996
Michael J. Shea 36 Controller 1995-Present
Vice President 1996-Present
*Resigned effective December 31, 1996.
</TABLE>
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
The information required by this item is contained under the caption
"Market and Dividend Information" in the Company's Annual Report to Shareholders
for the year ended December 3l, 1996, which material is incorporated by
reference in this Form 10-K Annual Report.
Item 6. Selected Financial Data
The information required by this item is contained under the caption
"Selected Financial Data" in the Company's Annual Report to Shareholders for the
year ended December 3l, 1996, which material is incorporated by reference in
this Form 10-K Annual Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation
The information required by this item is contained under the caption
"Management's Discussion and Analysis" in the Company's Annual Report to
Shareholders for the year ended December 3l, 1996, which material is
incorporated by reference in this Form 10-K Annual Report.
Item 8. Financial Statements and Supplementary Data
The financial statements together with the report thereon by Grant
Thornton LLP, Independent Certified Public Accountants, appearing in the
Company's Annual Report to Shareholders for the year ended December 31, 1996,
are incorporated herein by reference. Such information is listed in Item 14(a)1
of this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
There have been no disagreements with the Company's independent
accountants involving accounting and financial disclosure matters.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The information called for by Item 10 with respect to
identification of directors of the Company is incorporated herein by reference
to the material under the caption "Election of Directors" in the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders which is expected to be
filed with the Securities and Exchange Commission on or before April 7, 1997
(the "1997 Proxy Statement").
(b) The information called for by Item 10 with respect to executive
officers of the Company is included in Part I herein under the caption
"Executive Officers of the Company".
Item 11. Executive Compensation
The information called for by Item 11 with respect to management
remuneration and transactions is incorporated herein by reference to the
material under the caption "Executive Compensation" in the 1997 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by Item 12 with respect to security
ownership of certain beneficial owners and management is incorporated herein by
reference to the material under the caption "Certain Holders of Voting
Securities" in the 1997 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
None
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K
(a) 1. The following consolidated financial statements for 1996 and
1995, appearing in the Company's Annual Report to Shareholders, are incorporated
herein by reference.
- Consolidated balance sheets as of December 3l, 1996 and 1995
- Consolidated statements of income for each of the
three years in the period ended December 31, 1996
- Consolidated statement of shareholders' equity for each of the
three years in the period ended December 31, 1996
- Consolidated statements of cash flows for each of the
three years in the period ended December 31, 1996
- Notes to consolidated financial statements
- Report of independent certified public accountants on
the consolidated financial statements
2. Schedule II - Valuation and qualifying accounts for the years
ended December 31, 1996, 1995 and 1994.
-Report of independent certified public accountants on
the financial statements schedule.
All other schedules are omitted because they are not applicable or
the required information is shown in the consolidated financial statements or
notes thereto.
3. The exhibit index
4. Consent of Grant Thornton LLP
(b) No reports on Form 8K were filed during the quarter ended
December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 21, 1997 By: /s/ John J. Cassese
------------------------
John J. Cassese, Chairman
of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
COMPUTER HORIZONS CORP.
Date: March 21, 1997 By: /s/ John J. Cassese
-------------------
John J. Cassese, Chairman
of the Board and President
(Principal Executive Officer)
and Director
Date: March 21, 1997 By: /s/ William J. Murphy
----------------------
William J. Murphy,
Executive Vice President and CFO
(Principal Financial Officer)
Date: March 21, 1997 By: /s/ Michael J. Shea
----------------------
Michael J. Shea
Vice President and Controller
(Principal Accounting Officer)
Date: March 21, 1997 By: /s/ Thomas J. Berry
--------------------
Thomas J. Berry, Director
Date: March 21, 1997 By: /s/ Rocco J. Marano
-------------------
Rocco J. Marano
Date: March 21, 1997 By: /s/ Wilfred R. Plugge
---------------------
Wilfred R. Plugge, Director
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Description Incorporated by Reference to
- ------- ----------- -------------------------------------
<S> <C> <C>
3(a-1) Certificate of Incorporation as amended Exhibit 3(a) to Registration
through 1971. Statement on Form S-1 (File No.
2-42259).
3(a-2) Certificate of Amendment dated May 16, Exhibit 3(a-2) to Form 10K for the
1983 to Certificate of Incorporation. fiscal year ended February 28, 1983.
3(a-3) Certificate of Amendment dated June 15, Exhibit 3(a-3) to Form 10K for the
1988 to Certificate of Incorporation. fiscal year ended December 31, 1988.
3(a-4) Certificate of Amendment dated July 6, Exhibit 3(a-4) to Form 10K
1989 to Certificate of Incorporation. for the fiscal year ended
December 31, 1994.
3(a-5) Certificate of Amendment dated February Exhibit 3(a-4) to Form 10K for the
14, 1990 to Certificate of year ended December 31, 1989.
Incorporation.
3(a-6) Certificate of Amendment dated May 1, Exhibit 3(a-6) to Form 10K
1991 to Certificate of Incorporation. for the fiscal year ended
December 31, 1994.
3(a-7) Certificate of Amendment dated July 12, Exhibit 3(a-7) to Form 10K
1994 to Certificate of Incorporation. for the fiscal year ended
December 31, 1994.
3(b) Bylaws, as amended and presently in Exhibit 3(b) to Form 10K for the
effect. year ended December 31, 1988.
4(a) Rights Agreement dated as of July 6, Exhibit 1 to Registration Statement
1989 between the Company and Chemical on Form 8-A dated July 7, 1989.
Bank, as Rights Agent ("Rights
Agreement") which includes the form of
Rights Certificate as Exhibit B.
4(b) Amendment No. 1 dated as of February Exhibit 1 to Amendment No. 1 on
13, 1990 to Rights Agreement. Form 8 dated February 13, 1990 to
Registration Statement on Form 8-A
4(c) Amendment No. 2 dated as of August 10, Exhibit 4(c) to Form 10K
1994 to Rights Agreement. for the fiscal year ended
December 31, 1994.
4(d) Employee's Savings Plan and Amendment Exhibit 4.4 to Registration
Number One. Statement on Form S-8 dated
December 5, 1995.
4(e) Employee's Savings Plan Trust Agreement Exhibit 4.5 to Registration
as Amended and Restated Effective Statement on Form S-8 dated
January 1, 1996. December 5, 1995.
10(a) Employment Agreement dated as of Exhibit 10(a) to Form 10K for the
February 16, 1990 between the Company year ended December 31, 1989.
and John J. Cassese
<PAGE>
10(b) Employment Agreement dated as of Exhibit 10(c) to Form 10K for the
February 16, 1990 between the Company year ended December 31, 1989.
and Bernhard Hubert.
10(c) Employment Agreement dated as of March
6, 1997 between the Company and Michael
J. Shea.
10(d) Note Agreement dated as of March 15, Exhibit 10(i) to Form 10K for the
1988 between the Company and year ended December 31, 1988.
Massachusetts Mutual Life Insurance
Company.
10(e) 1991 Directors' Stock Option Plan, as Exhibit 10(g) to Form 10K
amended. for the fiscal year ended
December 31, 1994.
10(f) 1994 Incentive Stock Option and Exhibit 10(h) to Form 10K
Appreciation Plan. for the fiscal year ended
December 31, 1994.
10(g) $15,000,000 Promissory Note payable to
Chemical Bank
10(h) $10,000,000 Discretionary Line of
Credit from PNC Bank.
11 Statement regarding Computation of Per
Share Earnings.
13 Annual Report to Security Holders.
21 List of Subsidiaries.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer Horizons Corp. and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1996, 1995 and 1994
Column A Column B Column C Column D Column E
Balance at Charged to Balance at
beginning costs and Deductions - end of
Description of period expenses describe(l) period
----------- --------- -------- ----------- ------
<S> <C> <C> <C> <C>
Year ended December 31, 1996
Allowance for doubtful accounts $840,000 $487,000 $124,000 $1,203,000
-------- -------- -------- ----------
Year ended December 31, 1995
Allowance for doubtful accounts $566,000 $465,000 $191,000 $ 840,000
-------- -------- -------- ----------
Year ended December 31, 1994
Allowance for doubtful accounts $462,000 $244,000 $140,000 $ 566,000
-------- -------- -------- ----------
Notes
(1) Uncollectible accounts written off, net of recoveries.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
Board of Directors and Shareholders
Computer Horizons Corp.
In connection with our audit of the consolidated financial statements of
Computer Horizons Corp. and Subsidiaries referred to in our report dated January
27, 1997, which is included in the 1996 Annual Report to Shareholders and
incorporated by reference in this Form 10-K, we have also audited Schedule II
for each of the years ended December 31, 1996, 1995 and ]994. In our opinion,
this schedule presents fairly, in all material respects, the information
required to be set forth therein.
GRANT THORNTON LLP
Parsippany, New Jersey
January 27, 1997
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Computer Horizons Corp.
We have issued our report dated January 27, 1997, accompanying the consolidated
financial statements incorporated by reference in the Annual Report to
Shareholders of Computer Horizons Corp. (the "Company") on Form 10-K for the
year ended December 31, 1996. We hereby consent to the incorporation by
reference of said report in the Registration Statements on Forms S-8, covering
shares of common stock, par value $.10 per share, to be offered pursuant to the
Computer Horizons Corp. Employee Savings Plan and the Company's 1994 Incentive
Stock Option and Appreciation Plan, 1985 Incentive Stock Option and Appreciation
Plan, as amended, 1976 Stock Option Plan, as amended, and 1991 Directors' Stock
Option Plan, as amended.
GRANT THORNTON LLP
Parsippany, New Jersey
March 18, 1997
Exhibit 10 (c)
AGREEMENT as of March 6, 1997 between Michael J. Shea (the "Executive")
and Computer Horizons Corp., a New York Corporation (the "Company") which
Agreement supercedes any prior Agreements between the parties.
The Parties hereto agree as follows:
1. The Company hereby continues the employment of the Executive for the
period (hereafter referred to as the "Employment Period") commencing as of March
6, 1997 and continuing until March 6, 1998 and thereafter except as may be
modified by the parties, shall be automatically renewed for periods of one year
unless and until either party exercises its right to terminate as provided
elsewhere herein. The Executive shall continue to serve as a Vice President of
the Company, hereby accepts such continued employment and agrees to devote his
full time and effort to the business and affairs of the Company with such duties
as may be reasonably assigned to the Executive from time to time by the
President or by an Executive Vice President of the Company.
2. (a) The Company shall pay to the Executive, for all services
rendered by the Executive in any capacity hereunder, an initial salary at a rate
of $115,000.00 per year, payable in accordance with the Company's general
practice.
(b) In addition, the Company in its sole discretion agrees to pay
the Executive a bonus, provided certain criteria, which forms the basis for
Management Bonus Objectives are met.
(c) The Company, in lieu of providing the Executive with a car,
agrees to pay the Executive on a monthly basis, as a car allowance, an amount
agreed to from time to time.
(d) It is expressly understood and agreed that any changes in the
Executive's salary, duties, location or title etc. will not invalidate this
contract but rather said change(s) may at the option of the parties be
incorporated into a "Rider" to be appendixed to this contract. In any event
failure to so do will not effect the validity of, or the enforceability or the
other terms herein.
3. The Executive, during the Employment Period, shall be entitled to
participate in, and receive benefits in accordance with, the Company's employee
benefit plans and programs at the time maintained by the Company for its
executives, subject to the provisions of such plans and programs.
4. The Employment Period may be terminated by the Company or the
Executive upon thirty (30) days prior written notice to the other.
5. (a) In the event that the Employment Period shall be terminated by
the Company for any reason, the Company shall pay to the Executive, subject to
the provisions hereof, severance pay in the amount equal to his then annual
salary rate ("Severance Pay"); provided the Executive shall not be or have been
at any time in default of the covenants contained in Section 6 hereof. Except as
herein provided the Severance Pay shall be payable in bi-weekly installments,
and, in addition, during this twelve (12) month period, the Company will
continue to pay and provide Executive with the same Benefits and Health Coverage
that the Executive was receiving prior to the conclusion of his employment.
(b) In the event the Executive shall be in default in the covenants
contained in Section 6 hereof, any amounts shall be promptly repaid by the
Executive to the Company.
<PAGE>
6. (a) The Executive agrees that he will not, in any manner, directly
or indirectly, compete or attempt to compete with the Company or any subsidiary
of the Company or have a substantial ownership in, manage, operate, or control
any entity which directly or indirectly competes or attempts to compete with the
Company or any subsidiary for a period of one ( 1) year from termination of the
Executive's employment with the Company by (i) performing, or causing to be
performed, or soliciting or aiding, in any manner, solicitation of, any work for
any firm, corporation, or other entity ("Customer") with which, at the time
during the 12 month period prior to termination of the Employment Period, the
Company or any subsidiary conducted any business or (ii) inducing any personnel
to leave the service of the Company or of any subsidiary. Within two (2) weeks
of a written request of the Executive following termination of the Employment
Period, the Company shall deliver to the Executive a list of Customers and the
Executive shall within two (2) weeks after such delivery on reasonable prior
notice have the right during normal business hours to examine such books and
records of the Company as shall be reasonably necessary to confirm that only the
names of Customers are set forth on the list.
(b) The Executive agrees that the remedy at Law for any breach by
him of the foregoing shall be inadequate and that the Company shall be entitled
to injunctive relief. This selection constitutes an independent and separable
Covenant that shall be enforceable notwithstanding any right or remedy that the
Company may have under any other provisions of this Agreement or otherwise.
7. (a) This Agreement contains the entire agreement between the Parties
hereto, and supercedes and nullifies all prior understandings, promises and
undertakings, if any, made orally or in writing by or on behalf of the Parties
hereto, with respect to the subject matter hereof, and may not be modified or
terminated orally. This Agreement shall be construed and governed in accordance
with the laws of the State of New Jersey.
(b) This Agreement shall be biding upon and inure to the benefit of the
Company and its successors and assigns and the Executive and his heirs,
executors, administrators and legal representatives but except for the right of
the Executive hereunder to receive any salary or Severance Pay, may be assigned,
pledged or encumbered by the Executive without the consent of the Company.
8. Any offer, notice, or request or other communication hereunder shall
be in writing and shall be deemed to have been duly delivered if hand or mailed
by registered or certified mail, return receipt requested, addressed to the
respective address of each Party herein set forth, or to such other address as
each Party may designate by a notice pursuant hereto:
If to the Company: Computer Horizons Corp.
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey 07046-1495
Attention: President
If to the Executive: Computer Horizons Corp.
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey 07046-1495
Attention: Michael J. Shea
9. If any provisions of this Agreement shall be held for any reason to
be unenforceable, the remainder of the Agreement shall nevertheless remain in
full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
COMPUTER HORIZONS CORP.
BY:/s/John J.Cassese
-------------------
John J. Cassese
President
/s/Michael J. Shea
-------------------
Michael J. Shea
Vice President
<PAGE>
Exhibit 10 (g)
$15,000,000.00 New York, New York
June 30, 1996
1. For value received, the undersigned, by this promissory note (the
"Note") unconditionally promises to pay to the order of CHEMICAL BANK (the
"Bank") at any of its banking offices in New York, New York, in lawful money of
the United States and immediately available funds, the principal amount of
Fifteen Million and 00/100 Dollars ($15,000,000.00) or the aggregate unpaid
principal balance of all advances made by the Bank to the undersigned, whichever
is less, together with interest on each advance, in like money and funds, at a
rate determined by the Bank in its sole discretion at the time of such advance.
Each advance shall be payable on the maturity date thereof, as agreed between
the Borrower and the Bank on the date of such advance, provided that no advance
may mature after June 30, 1997 (the "Final Maturity Date"). Interest shall be
payable on the maturity date of each advance and upon any prepayment of any
advance.
2. If all or any portion of any advance shall not be paid when due
(whether as stated, by acceleration or otherwise) such advance shall bear
interest, for the period from the due date of such advance until the maturity
date thereof, at the rate per annum which is equal to 2% above the rate which
would otherwise be applicable hereunder and thereafter until the unpaid
principal amount thereof shall be paid in full, at the rate per annum which is
equal to 2% above the rate of interest publicly announced by the Bank from time
to time in New York, New York as its prime rate. Each change in the interest
rate hereon resulting from a change in the prime rate of the Bank shall become
effective as of the opening of business on the day on which such change in such
prime rate occurs. Interest shall be calculated on the basis of a 360 day year
for actual days elapsed. Anything in this Note to the contrary notwithstanding,
the Bank shall not be permitted to charge or receive, and the undersigned shall
not be obligated to pay, interest in excess of the maximum rate from time to
time permitted by applicable law; provided, however, if the maximum rate
permitted by law changes, the rate hereunder shall change, without notice to the
undersigned, on the same day the maximum rate permitted by law changes.
3. The undersigned may not prepay any advance unless it shall reimburse
the Bank on demand for any loss incurred or to be incurred by it in the
reemployment of the funds released by any such prepayment. Such loss shall be
the difference, as determined by the Bank, between the cost of obtaining the
funds for the advance or advances (or portion thereof) prepaid and any lesser
amount which may be realized by the Bank in reemploying the funds received in
prepayment during the period from the date of prepayment to the maturity date of
each advance prepaid.
4. If any amount becomes due and payable under this Note on a Saturday,
Sunday or other day on which commercial banks are authorized to close under the
laws of the State of New York, the maturity thereof shall be extended to the
next succeeding business day and interest thereon shall be payable during such
extension at the rate applicable to the Note prior to such extension.
5. The undersigned shall pay all reasonable out-of-pocket costs and
expenses incurred by the Bank in connection with the preparation, development
and execution of this note and any amendment, supplement or modification hereto,
including, without limitation, the fees and disbursements of counsel to the Bank
(which may include allocation of the cost of in-house counsel to the Bank).
<PAGE>
6. Upon occurrence, with respect to any maker, endorser or guarantor of
any of the following: default in payment of this Note or any other obligation of
any nature or description to the Bank (collectively, the "Obligations"); any
other violation of any covenant or condition of any of the Obligations; calling
a meeting of any creditors; filing of a voluntary or involuntary petition under
the Federal Bankruptcy Code which, in the case of an involuntary petition, is
not dismissed, discharged or bonded with 60 days of the date of such petition;
insolvency; entry of a judgment; failure to pay or remit any tax when assessed
or due unless contested in good faith by appropriate proceedings, for which
adequate reserves are being provided; death (in the case of an individual),
termination (in the case of a partnership) or dissolution (in the case of a
corporation); granting a security interest in any property; suspension or
liquidation of usual business; failing to furnish financial information or to
permit inspection of books or records; making any misrepresentation to the Bank
in obtaining credit; or, in the Bank's opinion, impairment of financial
responsibility; then the Obligations shall be due and payable immediately
without notice or demand.
7. The undersigned agrees to indemnity the Bank for, and to hold the
Bank harmless from, any loss or expense which the Bank may sustain or incur,
including any interest payment by the Bank to lenders of funds borrowed by it in
order to make or maintain the loans evidenced hereby as a consequence of (a)
default by the undersigned in payment of the principal amount of, or interest
on, this Note and (b) payment by the undersigned on a day other than the
maturity date of any advance as a result of acceleration of the obligations
hereunder or otherwise. This covenant shall survive payment of this Note.
8. Each advance, and each payment made on account of the principal
thereof, shall be endorsed by the holder on an attachment hereto on the date
such advance is made or a payment in immediately available funds is received.
This Note shall be used to record all advances and payments of principal made
hereunder until it is surrendered to the undersigned by the Bank and it shall
continue to be used even though there may be periods prior to such surrender
when no amount of principal or interest is owing hereunder.
9. The Bank shall have a continuing lien and/or right of set-off on
deposits (general and special) and credits with the Bank of every maker,
endorser and guarantor, and may apply all or part of same to the Obligations
(whether contingent or unmatured), at any time or times, without notice. The
Bank shall have a continuing lien on all property of every maker, endorser and
guarantor and the proceeds thereof held or received by or for the Bank for any
purpose. Any notice of disposition of property shall be deemed reasonable if
mailed at least 5 days before such disposition to the last address of such
maker, endorser or guarantor on the Bank's records. Each maker, endorser and
guarantor agrees to pay the costs and expenses (including, without limitation,
reasonable attorneys' fees) of enforcing the Obligations. Each maker, endorser
and guarantor waives protest and, in any litigation (whether or not relating to
the Obligations) in which the Bank and any of them shall be adverse parties,
waives the right to interpose any set-off or counterclaim of any nature or
description and any defense based upon any statute of limitations or any claim
of laches. Time for payment extended by law shall be included in the computation
of interest.
<PAGE>
10. The undersigned hereby irrevocably (a) submits, in any legal
proceeding relating to this Note, to the non-exclusive in personam jurisdiction
of any state or United States court of competent jurisdiction sitting in the
State of New York and agrees to suit being brought in any such court, (b)
agrees to service of process in any such legal proceeding by mailing of copies
thereof (by registered or certified mail, if practicable) postage prepaid, or by
telex, to the undersigned at the last known address of the undersigned on the
books of the Bank, and (c) agrees that nothing contained herein shall effect the
Bank's right to effect service of process in any other manner permitted by law;
and the undersigned and the Bank hereby irrevocable waive, in any such legal
proceeding, trial by jury.
11. This Note shall be governed by, and construed in accordance with,
the laws of the State of New York.
COMPUTER HORIZONS CORP.
By: /s/David W. Bialick
---------------------
David W. Bialick
Title: Treasurer
<PAGE>
SCHEDULE OF ADVANCES
<TABLE>
<CAPTION>
UNPAID
INTEREST AMOUNT OF PRINCIPAL NOTATION
AMOUNT OF MATURITY RATE PER PRINCIPAL BALANCE OF MADE
DATE ADVANCE DATE ANNUM PAID ADVANCE BY
- --- --------- -------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
</TABLE>
<PAGE>
Exhibit 10 (h)
PNC Bank, N.A. 201 881 5187 Herbert C. Umland
Corporate Banking 201 881 5288 Vice President
1 Garret Mountain Plaza
West Paterson, NJ 07424
PNC BANK
March 14, 1997
Mr. David Bialick
Computer Horizons Corp.
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey 07046-1495
THIS LETTER SUPERSEDES CONFIRMATION
LETTERS DATED DECEMBER 20, 1996 AND MARCH 7, 1997
AND IS NOT IN ADDITION THERETO. THESE LETTERS
OF DECEMBER 20, 1996 AND MARCH 7, 1997 ARE WITHDRAWN.
RE: $10,000,000 Discretionary Line of Credit with a $1,000,000 Sublimit for
Letters of Credit
Dear Mr. Bialik:
We are pleased to confirm that PNC Bank, National Association (the "Bank"), has
approved a $10,000,000 Discretionary Line of Credit to Computer Horizons Corp.
("Borrower") or (the "Company"). The Line of Credit may be used for Working
Capital purposes. The Bank will also consider applcations for Standby or
Commercial Import Letters of Credit for amounts up to $1,000,000 in the
aggregate for periods up to one year. The issuance of Letters of Credit will
reduce the amount available under the $10,000,000 Discretionary Line of Credit.
Advances made under the line of credit, if any, shall be due and payable
quarterly, or on the last day of the applicable interest period, and all
obligations of the Company to the Bank shall be due and payable upon the
occurrence of an event of default. All advances will be cross-defaulted to one
another and will bear interest at a rate of Libor (reserve adjuted) plus 50
basis points, calculated on a 360 day basis and payable quarterly or on the last
day of each interest period, for periods of 1, 2 or 3 months and will be subject
to the terms and conditions set forth in this letter and the appropriate Note.
The line of credit will be reviewed by the Bank from time to time and in any
event prior to its expiration on May 31, 1998 (the "Expiration Date") to
determine whether it should be continued or renewed.
This is not a committed line of credit. The Company acknowledges and agrees that
advances made or letters of credit issued, under this line of credit, if any
shall be made at the sole discretion of the Bank. The Bank may decline to make
advances or issue letters of credit under the line, terminate the line at any
time and for any reason without prior notice to the Company. This letter sets
forth certain terms and conditions solely to assure that the parties understand
each other's expectations and to assist the Bank in evaluating the status, on an
ongoing basis, of the line.
<PAGE>
The Bank's willingness to consider making advances or issue letters of credit
under this facility is subject to the Company's ongoing agreement (a) to furnish
the Bank with its audited consolidated annual financial statement and 10K within
90 days after the end of its fiscal year, its unaudited management prepared
accountant reviewed 10Q, which includes the quarterly financial statements
within 60 days after the end of each fiscal quarter and such other financial
information as the Bank may reasonalby request from time to time promptly after
receipt of each request, (b) upon the Banks' request, to provide certificates
indicating compliance with any restrictions concerning other borrowings
contained in Senior Note documents and to notify the Bank as soon as practical
following the ocurrence of any default (or event which, with the passage of time
or giving of notice or both, would become a default) under any direct or
contingent obligation of the Company, and (c) upon the Bank's request, to
furnish copies of any covenant compliance certificates prepared in connection
with any such obligataions. (d) All credit facilities to be cross defaulted.
Please indicate the Company's agreement to the terms and conditions of this
letter by having the enclosed copy of this letter executed where indicated and
returning it to me. Prior to the making of any advances hereunder, the Company
must deliver to the Bank a duly executed original Note and a certified copy of
resolutions and an incumbency certificate, each in form and substance
satisfactory to the Bank.
All letters of credit that might be issued will be subject to the terms and
conditions set forth herein and in an Application and a Reimbursement Agreement
for the issuance of a Letter of Credit (an Application) executed by the Company
and delivered to the Bank.
We are pleased to offer support for your banking needs and look forward to
working with you, your staff and Computer Horizons Corp.
Very truly yours,
PNC Bank, National Association
/s/Herbert C. Umland
- --------------------
Herbert C. Umland
Vice President
Agreed and accepted this 17th day of March, 1997.
The undersigned hereby agrees and consents to the terms as outlined herein.
Borrower: Computer Horizons Corp.
By: /s/David W. Bialick Date: 3/17/97
- ------------------------
David W. Bialick
Title: Treasurer
Exhibit 11
Computer Horizons Corp. and Subsidiaries
EARNINGS PER COMMON AND COMMON SHARE EQUIVALENT
Year ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Primary
Average shares outstanding ........ 15,951,000 14,572,000 13,322,000
Stock options ..................... 1,023,000 1,004,000 936,000
----------- ----------- -----------
Primary weighted average of common.
and common equivalent shares
outstanding ....................... 16,974,000 15,576,000 14,258,000
=========== =========== ===========
Fully diluted
Average shares outstanding ........ 15,951,000 14,572,000 13,322,000
Stock options ..................... 1,074,000 1,085,000 979,000
----------- ----------- -----------
Fully diluted weighted average
number of common and common
equivalent shares outstanading..... 17,025,000 15,657,000 14,301,000
=========== =========== ===========
Net income ........................... $11,232,000 $ 9,907,000 $ 5,686,000
=========== =========== ===========
Earnings per share
Primary ........................... $ .66 $ .64 $ .40
=========== =========== ===========
Fully diluted ..................... $ .66 $ .63 $ .40
=========== =========== ===========
</TABLE>
Computer Horizons Corp.
Solutions For Growth
1996 ANNUAL REPORT
<PAGE>
"The process of transforming our
company, a process that began four years
ago, brought momentous changes during
the 12 months of 1996, changes that have
forever altered the face of Computer
Horizons. We have become widely
recognized as a major force in the
information industry, attracting more
media recognition and financial
community coverage than at any time in
our 25-year history as a public
company."
/s/John Cassese
TO OUR SHAREHOLDERS
A number of highly creative product and service innovations were introduced to
the marketplace this year through our Signature 2000TM Millennium Solution. As a
result, we have added important new clients at a faster rate than ever before.
We have expanded the scope and importance of the assignments we can now
undertake on their behalf. We have provided an abundance of exciting new
opportunities for our rapidly growing base of highly skilled employees. Finally,
we increased the market value of our firm by more than 50 percent, drawing
widespread attention from industry participants and keen support from industry
analysts.
We view the Year 2000 marketplace as an exciting opportunity which, although
still a year or two away from peaking, begins in earnest this year. However, we
look at our own state of readiness to respond to the opportunity as one that is
far more mature. Our suite of Signature products has been tested and retested
under live conditions with acclaim from our clients. Our administrative and
project management approaches have been challenged and have met the test. Our
response to client needs, as our experience with them grows in scope, is quickly
becoming the industry model.
In another area, our dogged determination to comply with client requirements has
resulted in winning the valued Ford Motor Company Q1 Quality Award. In
preparation for this accomplishment, we have designed and incorporated numerous
quality standards into our everyday operations, thereby adding to our value for
our entire array of clients. While we are pleased to have achieved this level of
quality practice, we will continue to strive for improvement in this regard and
expect to achieve ISO 9000 certification in the months ahead.
The past year has not been without difficulties. During a tumultuous period
early in the year, a single large client totally and unexpectedly changed its
practices with regard to employing outside services. This resulted in a sudden
decline in CHC-provided resources and a serious disruption in our revenues. We
are gratified to have quickly reversed this impact and to have finished the year
at a record-setting revenue pace.
<PAGE>
As we enter the final years of the second millennium, we at Computer Horizons
look forward to seeing our vision become reality. Although we have already
witnessed our investments in products, services, people and organization bear
fruit, we are developing new growth areas and are expanding others. New
technology, products and services are being assembled and are becoming part of
our network management and document imaging practices. Enhanced services for
client/ server projects are being offered, and our legacy maintenance practice
is being expanded. As the paradigm shift to outsourced solutions continues to
accelerate, we will continue to expand our readiness to accept bigger and
broader contracts.
Our client base has grown, with some of the most prestigious companies in the
country placing confidence in our solutions and in our people. We are prepared
for the grueling demands of dealing with the anticipated worldwide resource
shortage. We have begun to establish a foothold in Western Europe and recognize
the implications of becoming a global vendor.
Our industry is in the midst of perhaps its healthiest growth period ever, and
we are confident that our past accomplishments have positioned us to take
advantage of this growth.
PHOTO ---
John Cassese, Chairman and President, has directed the growth of Computer
Horizons. His leadership has provided a winning direction and has guided the
firm to a position of market leadership.
<PAGE>
During 1996, Computer Horizons achieved a key objective by becoming recognized
by both industry observers and participants as a leading IT total solutions and
services company. A retrospective of all that our company has been able to
accomplish during this year is proof that we have kept the commitments promised
to all our stakeholders:
o Employees--the corporation
o Customers--the marketplace
o Shareholders--the investors
A significant result of our efforts, which set the stage for a positive outlook
throughout this decade, has been the emergence and industry-wide acceptance of
Computer Horizons. Your company is recognized as the leading provider of
solutions for the massive problem of correcting the Year 2000 millennium
software problem prior to reaching the next century. Computer Horizons'
Signature 2000TM solution is the choice of many of our nation's largest
corporations and is widely recognized as a model approach.
In 1996, Computer Horizons created or delivered a series of "firsts,"
representing important marketplace differentiators for your company. Although
each achievement is significant by itself, these achievements collectively
represent a substantial foundation for future growth and marketplace expansion.
PROPRIETARY SOFTWARE TOOLS We made several important additions to our suite of
self-designed, self-engineered and self-produced proprietary software tools.
Leading the new additions is Computer Horizons' Signature Time EngineerTM. Its
approach to the complex task of converting hundreds of millions of lines of
programming code that cannot function in the next century is unique. Computer
Horizons has applied for and received patent protection. Of major importance to
our clients is the fact that Signature Time Engineer can significantly reduce
the time and effort necessary to convert systems, enabling them to function
correctly in the next century. This worldwide problem, estimated to cost $500
billion to fix, is extremely time-sensitive, especially as we move closer to the
Year 2000. By adding Signature Time Engineer to our existing suite of
proprietary tools, we have virtually completed our offerings.
<PAGE>
Signature Time Engineer was conceived and developed internally by outstanding
Computer Horizons Solutions engineers and managers. Computer Horizons has become
a member of a highly exclusive club of IT solution providers. Your company is
able to deliver a total lifecycle solution that combines proprietary tools with
trained and experienced resources, tested project managers, facilities and a
leading project methodology.
WORLD-CLASS METHODOLOGIES AND PROCESSES Computer Horizons has assembled a
world-class team of solutions professionals, including delivery and engagement
executives, project managers and experienced staff. Also critical are the
practices, policies, project management and process methodologies which they
have developed and which they follow. Major clients throughout the world now
seek out Computer Horizons for our leadership in order to oversee major efforts
built on a broad range of disciplines.
Having teamed with Texas-based LBMS, Inc. (the leading provider of process
management products to Fortune 200 organizations), major corporations can now
take advantage of our best practices. By accessing our methodology, clients can
generate and track detailed project plans for new technology development and
Year 2000 conversion projects. This offering provides highly detailed and
accurate information on activities, deliverables, roles and responsibilities,
dependencies, resources, tools and techniques, in addition to estimating metrics
for the selected type of project. Process management is absolutely critical to
overcoming the daunting challenges of Year 2000 conversions. By combining
Computer Horizons' proven methodologies and quality processes with LBMS Process
Engineer(R) toolset, LBMS is now marketing the best possible Year 2000 process
solution to the Fortune 500 community worldwide. Established clients and new
prospects are learning about Computer Horizons' solutions capabilities and
practices through this partnership arrangement.
<PAGE>
OPERATIONAL FACILITIES In 1996, the Fortune 500 community continued to pare
budgets and to concentrate their personnel on their company's core competencies,
a trend that will continue in the future. This select group of IT users is
seeking creative vendors to satisfy their growing needs without increasing their
budgets. To meet this challenge, by partnering with our clients, Computer
Horizons has developed innovative programs and offerings. Many of our new
offerings permit us "to do more for less."
This year we commenced operations in several Millennium Refurbishment Centers
(MRCs). Plans are in place to add several new international MRCs during the next
eighteen months. Each one is a self-contained outsourcing facility that permits
us to manage complete projects off-site for our customers. This capability
enables our clients to focus their staff and facility on asset-building projects
or to formulate a balance between old tasks and new while Computer Horizons
delivers the necessary quality solution. Although initially designed to provide
Year 2000 renovation services, each facility is equipped to handle virtually any
IT challenge presented by our clients. Projects include applications
development, maintenance of legacy applications, production systems support,
plus a variety of open systems or client/server engagements.
As an adjunct, each facility is outfitted with a state-of-the-art technical
environment, fully staffed with experienced delivery, engagement and project
management professionals. These teams are supported by our full array of
proprietary software and process methodology. Additionally, clients have the
option to house some of their management and staff at our facilities during the
project lifecycle.
<PAGE>
INTERNATIONAL EXPANSION Computer Horizons' international expansion, which began
two years ago with the formation of our India-based joint venture (Birla
Horizons International), has now become the springboard for globalization.
During 1996, CHC established an international presence with operations in Canada
and the United Kingdom. For the first time, our company has personnel based in
international locations serving an international clientele. We also expanded our
Birla Horizons subsidiary in these markets.
From our Toronto-based team, Canadian companies can select from the same menu of
services available to their United States counterparts. From our London
headquarters, we offer the European community the complete range of total
solutions available to our domestic clients.
Large companies around the world share the same need for quality IT solutions to
solve the complex technical and business problems of a competitive global
marketplace. Computer Horizons is successfully transferring its knowledge,
skills, offerings and reputation abroad by offering the same high quality
solutions delivered domestically by Computer Horizons Solutions.
Fueling this expansion are several of our domestic clients who have selected us
to provide leadership, services and staff for projects with their foreign
subsidiaries and parent companies. From these early efforts and international
outposts, we are systematically globalizing our company.
INTERNAL INFRASTRUCTURE Perhaps the most dramatic and significant "firsts" for
Computer Horizons have been the investments in, additions to and changes in our
internal infrastructure. Our executive team has been invigorated by the addition
of important new functions. Our Solutions unit has created new positions and
staffed them with experienced leaders. These organizational enhancements were
necessary to deliver increasingly complex services well into the next century.
<PAGE>
Faced with the challenge of housing growing numbers of staff in our facilities
or on large projects for prolonged periods of time, a formalized and much
strengthened Human Resource Department has been added. With leadership from the
corporate level, the Vice President of Human Resources has HR staff assigned to
the Millennium Refurbishment Centers and in our Solutions units. The newly
created Corporate Resource Center commands a globally based corporate recruiting
team deployed to meet the staffing challenges facing our industry. Tackling the
complex issues of staff retention, turnover, competitive benefits and
international staffing, our HR group has already made a significant contribution
to meeting our obligations to all our stakeholders.
Computer Horizons has succeeded in building marketplace awareness and assuming a
position of leadership. Through a bold plan that combined conference and
exhibition participation, public relations, new collateral material, unified
corporate image and capability presentations, the recently created Corporate
Marketing Department has spread the knowledge of our successes to a vast new
audience. Supported by a team of marketing professionals in each business unit,
the Corporate Vice President of Marketing keeps our name and reputation in the
general and trade media, and before the executives who make the buying
decisions.
Within Computer Horizons Solutions, we have added delivery executives charged
with examining, closing and the eventual completion of complex technical
projects. Supported by an equally talented group of engagement executives and
project managers working in concert with our field organization, Computer
Horizons is now routinely engaged in larger and larger projects that were once
out of our reach. Our software development team has been able to turn the vision
of our solutions executives into new software tools. Each innovative tool has
been conceived and created by our team of industry professionals. Working
together, our solutions professionals have created the project management
process and methodology used internally and which are now sought after in the
marketplace. Their successes have added to the reputation and capabilities of
Computer Horizons.
<PAGE>
OUR FIRSTS ARE DIFFERENTIATORS FOR THE FUTURE The same determination and
creativity that existed for the past 27 years will continue to forge
opportunities and successes for Computer Horizons. The creative talents of our
people have energized our company. Many of our recent achievements can be traced
to the skillful blending of our tenured staff with the many newcomers who have
joined our ranks.
Our innovative tools and approaches for solving the complex needs of a
competitive market have brought us many new customers. Teams are spreading out
within this new client base to establish lasting relationships. Our philosophy
of establishing a partnership type relationship with each of our clients has
rewarded Computer Horizons with a loyal following.
Our people's ability to recognize the future needs of the business community and
translate them into new offerings is a key component to future growth. With
leadership from the executive core, we will continue to develop new tools,
improved methodologies and processes. We will reach out and attract future
leaders to join us. We will continue to challenge our people to reach into new
markets with solutions superior to those of our competitors. Computer Horizons
will continue to distinguish itself with differentiating "firsts" well into the
future.
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
SELECTED FINANCIAL DATA
Year Ended December 31,
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Summary Income Statements
Revenues $233,858 $200,050 $152,192 $121,550 $102,206
Direct costs 163,272 140,344 108,189 87,800 74,200
Selling, general and
administrative 52,146 42,131 32,992 26,256 23,536
Income from operations 18,440 17,575 11,011 7,494 4,470
Interest expense--net (163) (365) (638) (584) (578)
Equity in net earnings of
joint venture 885 361
Income before income taxes 19,162 17,571 10,373 6,910 3,892
Income taxes 7,930 7,664 4,687 3,206 1,866
- ------------------------------------------------------------------------------------------------------
Net Income $ 11,232 $ 9,907 $ 5,686 $ 3,704 $ 2,026
======================================================================================================
Earnings per share
Primary $.66 $.64 $.40 $.25 $.15
======================================================================================================
Weighted average number of
shares outstanding
Primary 16,974,000 15,576,000 14,258,000 14,994,000 13,624,000
======================================================================================================
<PAGE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
SELECTED FINANCIAL DATA (continued)
Year Ended December 31,
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Analysis (%)
Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
Gross margin 30.2% 29.8% 28.9% 27.8% 27.4%
Selling, general and
administrative 22.3% 21.1% 21.7% 21.6% 23.0%
Income from operations 7.9% 8.8% 7.2% 6.2% 4.4%
Interest expense--net -0.1% -0.2% -0.4% -0.5% -0.6%
Equity in net earnings of
joint venture 0.4% 0.2%
Income before income taxes 8.2% 8.8% 6.8% 5.7% 3.8%
Income taxes 3.4% 3.8% 3.1% 2.6% 1.8%
Net Income 4.8% 5.0% 3.7% 3.0% 2.0%
Revenue growth YOY 16.9% 31.4% 25.2% 18.9% 8.1%
Net income growth YOY 13.4% 74.2% 53.5% 82.8% -10.6%
Return on equity, average 18.3% 23.5% 20.5% 14.1% 8.3%
Effective tax rate 41.4% 43.6% 45.2% 46.4% 47.9%
At year-end
Total assets $ 88,412 $ 76,037 $ 49,150 $ 40,600 $ 41,249
Working capital 50,562 39,224 20,484 17,531 20,317
Long-term debt 1,432 3,299 4,288 5,843 7,144
Shareholders' equity 68,814 54,267 29,917 25,689 26,856
Stock price $38.50 $25.33 $6.00 $3.48 $1.96
P/E multiple 58 39 15 14 13
Employees* 2,916 2,511 2,150 1,603 1,414
Clients (during year)* 453 462 455 458 402
Offices (worldwide) 43 39 33 30 29
======================================================================================================
*Does not include Birla Horizons International.
</TABLE>
<PAGE>
Computer
Horizons Corp. and
Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
The following table sets forth (i) certain income and expense items expressed as
a percentage of the Company's consolidated revenues and (ii) the percentage of
dollar increase in the amount of such items in 1996 compared to 1995:
<TABLE>
<CAPTION>
Percentage
of Dollar
Year Ended December 31, Increase
- -------------------------------------------------------------------------------------------------------
1996 1995 1994 1996/1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 16.9%
Direct costs 69.8% 70.2% 71.1% 16.3%
Selling, general and administrative 22.3% 21.1% 21.7% 23.8%
Income from operations 7.9% 8.8% 7.2% 4.9%
Interest expense--net -0.1% -0.2% -0.4% -55.3%
Equity in net earnings of joint venture 0.4% 0.2% 145.2%
Income before income taxes 8.2% 8.8% 6.8% 9.1%
Income taxes 3.4% 3.8% 3.1% 3.5%
Net income 4.8% 5.0% 3.7% 13.4%
</TABLE>
Revenues
Consolidated revenues in 1996 increased by 17% compared to 1995, and in 1995
consolidated revenues increased by 31% compared to 1994. In dollars, these
amounts were $233.9, $200.1 and $152.2 million in 1996, 1995 and 1994,
respectively. The increase in 1996 was primarily the result of increased
staffing business ($171.1 million compared to $140.6 million in 1995), which was
partially offset by the decline in solutions revenues. 1996 solutions revenues
were negatively impacted by the unexpected termination by one large customer
during the second quarter of 1996, which had the effect of reducing solutions
revenues by approximately $6.0 million when compared to 1995. The increase in
1995 revenues was attributable to increased solutions business and improved
pricing applicable thereto.
The Company's core staffing business has increased by 22% in 1996 as compared to
1995. The solutions business, impacted by the above mentioned early termination,
declined by 11%, while the Year 2000 services revenues, virtually nil in 1995,
exceeded $10 million in 1996.
Direct Costs
Direct costs, as a percentage of consolidated revenues, were 69.8%, 70.2% and
71.1% in 1996, 1995 and 1994, respectively. The Company is committed to
maintaining and improving gross margins through cost containment and providing
more value-added services. In general, gross margins are better for Year 2000
business and solutions than for staffing.
<PAGE>
Selling, General and Administrative
Selling, general and administrative expenses, as a percentage of consolidated
revenues, were 22.3%, 21.1% and 21.7% in 1996, 1995 and 1994, respectively. In
dollars, these amounts were $52.1, $42.1 and $33.0 million, respectively, for
those years. The increase in these expenses in 1996 is almost entirely
attributable to the investments associated with the Company's Year 2000
strategy; investments in engagement and technical managers and infrastructure
necessary to pursue large, high profile opportunities, as well as marketing
expenses incurred to raise the Company's visibility through public relations,
trade shows and conferences.
<PAGE>
Profitability
Consolidated income from operations was $18.4 million in 1996, compared to $17.6
million in 1995 and $11.0 million in 1994. As a percentage of consolidated
revenues, income from operations was 7.9%, 8.8% and 7.2% in 1996, 1995 and 1994,
respectively. The dollar gains are attributable to increased revenues and
improved gross margins, offset by the impact of the unexpected termination of a
large contract in the second quarter of 1996 and the increase in selling,
general and administrative expenses in 1996. 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 to payroll costs.
In 1996, Other Income exceeded $700 thousand, compared to nil in 1995 and an
expense of over $600 thousand in 1994. This area has been favorably impacted by
reduced interest expense due to the June 1995 public offering, as well as by the
increased earnings of the Company's international joint venture--Birla Horizons.
Consolidated net income for 1996 was $11.2 million, or $.66 per share, compared
with $9.9 million, or $.64 per share in 1995 and $5.7 million, or $.40 per share
in 1994. The Company's effective tax rate for Federal, state and local income
taxes was 41.4%, 43.6% and 45.2% for 1996, 1995 and 1994, respectively. After
accounting for non-tax benefited charges and credits, such as goodwill
amortization and certain travel and entertainment deduction limitations, and the
undistributed earnings of Birla Horizons, as well as taking into consideration
the states in which business has been conducted, the Company's income tax rate
approximated 41% in 1996 and 42% in 1995 and 1994.
Liquidity and Capital Resources
At December 31, 1996, the Company had a current ratio of 4.0 to 1, including
cash and cash equivalents of $10.9 million, and had available bank lines of
credit of $25.0 million. There were no borrowings under the Company's lines of
credit during 1996. In 1995, The Company had a maximum amount of $7.2 million
outstanding under its lines of credit which was repaid in June 1995 with the
cash proceeds of $13.3 million from the sale of 1,710,000 shares of its common
stock in a public offering. During 1995, the average outstanding amount under
the Company's lines of credit was $1.7 million and the weighted average interest
rate approximated 7%.
The Company's long-term debt consists of notes issued to financial institutions
in the outstanding principal amount of $2.9 million as of December 31, 1996,
payable in installments of $1.4 million on April 15, 1997 and 1998, bearing
interest at the rate of 9.55% per annum; and notes issued to the four former
shareholders of Unified Systems Solutions in the outstanding amount of $0.4
million, payable on April 1, 1997, with 8.75% imputed interest.
The Company believes that its cash, lines of credit and internally generated
funds will be sufficient to meet its working capital needs through 1997.
In 1996, the Company acquired $1.4 million of capital assets. Although there are
no material, firm commitments for capital spending in 1997, the Company
anticipates a spending level in line with that of 1996.
<PAGE>
AUDITORS' REPORT
Report of [GRAPHIC-Logo]
Independent
Certified Public
Accountants
Board of Directors and Shareholders
Computer Horizons Corp.
We have audited the accompanying consolidated balance sheets of Computer
Horizons Corp. and Subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Computer Horizons
Corp. and Subsidiaries as of December 31, 1996 and 1995 and the consolidated
results of their operations and their consolidated cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/GRANT THORNTON LLP
- ---------------------
GRANT THORNTON LLP
Parsippany, New Jersey
January 27, 1997
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
1996 1995 1994
- -------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C>
Revenues (Notes 1 and 9) $233,858 $200,050 $152,192
- -------------------------------------------------------------------------------------------------------
Costs and expenses:
Direct costs 163,272 140,344 108,189
Selling, general and administrative 52,146 42,131 32,992
- -------------------------------------------------------------------------------------------------------
215,418 182,475 141,181
- -------------------------------------------------------------------------------------------------------
Income from operations 18,440 17,575 11,011
- -------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 307 266 53
Interest expense (470) (631) (691)
Equity in net earnings of joint venture (Note 3) 885 361
- -------------------------------------------------------------------------------------------------------
722 (4) (638)
- -------------------------------------------------------------------------------------------------------
Income before income taxes 19,162 17,571 10,373
- -------------------------------------------------------------------------------------------------------
Income taxes (Notes 1 and 6):
Current 8,292 8,138 5,044
Deferred (362) (474) (357)
- -------------------------------------------------------------------------------------------------------
7,930 7,664 4,687
- -------------------------------------------------------------------------------------------------------
Net Income $ 11,232 $ 9,907 $ 5,686
=======================================================================================================
Earnings per share $.66 $.64 $.40
=======================================================================================================
Weighted average number of shares outstanding 16,974,000 15,576,000 14,258,000
=======================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Assets Current assets:
Cash and cash equivalents $10,937 $ 9,166
Accounts receivable, net of allowance for doubtful
accounts of $1,203,000 and $840,000 at December 31, 1996
and 1995, respectively 54,280 44,729
Deferred income tax benefit (Note 6) 1,024 1,122
Other 962 1,618
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets 67,203 56,635
- ------------------------------------------------------------------------------------------------------------------------------------
Property and equipment:
Furniture, equipment and other 9,449 7,454
Less accumulated depreciation 5,228 4,031
- ------------------------------------------------------------------------------------------------------------------------------------
4,221 3,423
- ------------------------------------------------------------------------------------------------------------------------------------
Other assets - net:
Goodwill (Note 1) 13,322 13,526
Deferred income tax benefit (Note 6) 583 123
Other (Note 3) 3,083 2,330
- ------------------------------------------------------------------------------------------------------------------------------------
16,988 15,979
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $88,412 $76,037
====================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31,
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Liabilities and Current liabilities:
Shareholders' Current portion of long-term debt (Note 4) $ 1,867 $ 2,385
Equity Accrued payroll, payroll taxes and benefits 11,963 10,359
Accounts payable 1,122 1,746
Income taxes payable 940 1,535
Other accrued expenses 749 1,386
- ------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 16,641 17,411
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term debt (Note 4) 1,432 3,299
- ------------------------------------------------------------------------------------------------------------------------------------
Other liabilities (Note 7) 1,525 1,060
- ------------------------------------------------------------------------------------------------------------------------------------
Commitments (Note 8)
- ------------------------------------------------------------------------------------------------------------------------------------
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 17,874,536 shares and 17,407,514
shares at December 31, 1996 and 1995, respectively 1,787 1,741
Additional paid-in capital 30,685 27,416
Retained earnings 50,990 39,758
- ------------------------------------------------------------------------------------------------------------------------------------
83,462 68,915
Less shares held in treasury, at cost; 1,786,883 shares
at December 31, 1996 and 1995 14,648 14,648
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 68,814 54,267
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $88,412 $76,037
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Additional Notes
Common stock paid-in Retained Treasury stock receivable,
Shares Amount capital earnings Shares Amount officers
- ------------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1996, 1995 and 1994 (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 5,366,272 $ 537 $12,155 $24,165 1,437,278 $10,539 $ 629
Three-for-two stock split declared
February 1994 1,964,497 196 (196)
Stock options exercised 408,807 41 1,981
Purchases of treasury stock 349,605 4,109
Repayment of notes receivable, officers (629)
Net income for the year 5,686
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 7,739,576 774 13,940 29,851 1,786,883 14,648 --
Three-for-two stock split declared:
April 1995 3,002,998 300 (300)
December 1995 5,206,877 521 (521)
Stock options exercised 318,063 32 1,138
Sale of common stock,
net of expenses 1,140,000 114 13,159
Net income for the year 9,907
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 17,407,514 1,741 27,416 39,758 1,786,883 14,648 --
Stock options exercised 467,022 46 1,680
Tax benefits related to
stock option plans 1,589
Net income for the year 11,232
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 17,874,536 $1,787 $30,685 $50,990 1,786,883 $14,648 $ --
- ------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Computer
Horizons Corp. and
Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1996 1995 1994
- --------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities
Net income $11,232 $ 9,907 $ 5,686
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Deferred taxes (362) (474) (357)
Depreciation 1,192 683 754
Amortization of intangibles 587 505 568
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (9,551) (14,093) (9,770)
Other current assets 9 (510) (433)
Accrued payroll, payroll taxes and benefits 1,604 3,054 1,287
Accounts payable (624) 1,186 273
Income taxes payable 994 655 705
Accrued expenses (637) 578 11
Other liabilities 465 424 341
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 4,909 1,915 (935)
- --------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of furniture and equipment (1,364) (1,471) (1,353)
Acquisitions (363) (2,966) (245)
Change in other assets (753) (1,673) 254
Loans to officers, net 629
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,480) (6,110) (715)
- --------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Notes payable - banks, net (3,200) 3,200
Long-term debt, net (2,385) (160) (1,555)
Stock options exercised 1,727 1,170 2,022
Proceeds from issuance of stock 13,273
Purchases of treasury stock (4,109)
- --------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (658) 11,083 (442)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,771 6,888 (2,092)
Cash and cash equivalents at beginning of year 9,166 2,278 4,370
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $10,937 $ 9,166 $ 2,278
========================================================================================================
Cash paid during the year for:
Interest $ 433 $ 597 $ 713
Income taxes 7,112 6,514 4,269
========================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Computer
Horizons Corp. and
Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 December 31, 1996, 1995 and 1994
Summary of
Significant Description of Business
Accounting The Company provides a wide range of information
technology services and solutions to major corporations.
In addition to professional services staffing, the
Company has developed the technological and managerial
infrastructure to offer its clients Year 2000 conversion
services, as well as other value-added services
including client/server systems development and
migration, network and facility management and
administration, systems and business process
re-engineering and outsourcing solutions.
Principles of Consolidation
The consolidated financial statements include the
accounts of Computer Horizons Corp. and its wholly-owned
subsidiaries (the "Company"). The Company's investment
in a joint venture (Note 3) is accounted for under the
equity method of accounting. All material intercompany
accounts and transactions have been eliminated.
Revenue Recognition
The Company recognizes revenues as professional services
are performed. On fixed fee engagements, revenue and
gross profit adjustments are made to reflect revisions
in estimated total costs and contract values. Estimated
losses are recorded when identified.
Recruitment Costs
Recruitment costs are charged to operations as incurred.
<PAGE>
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid
instruments with a maturity of three months or less at
the time of purchase and consist of the following at
December 31:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Cash $ 997 $2,017
Money market funds 5,926 3,549
Demand obligations 2,767 1,500
Commercial paper 1,247
Repurchase agreements 2,100
- --------------------------------------------------------------------------------
$10,937 $9,166
================================================================================
</TABLE>
Concentrations of Credit Risk
Financial instruments, which potentially subject the
Company to concentrations of credit risk, regardless of
the degree of such risk, consist principally of cash and
cash equivalents and trade accounts receivable. The
Company invests the majority of its excess cash in money
market funds, demand obligations, commercial paper and
repurchase agreements of high-credit, high-quality
financial institutions or companies, with certain
limitations as to the amount that can be invested in any
one entity.
The Company maintains its cash balances principally in
two financial institutions located in New York and New
Jersey. These balances are insured by the Federal
Deposit Insurance Corporation up to $100,000 for each
entity at each institution. At December 31, 1996,
uninsured amounts held at these financial institutions
total approximately $2,306,000.
The Company's customers are generally very large,
Fortune 500 companies in many industries and with wide
geographic dispersion. The Company's largest customer
accounts for approximately 12% of accounts receivable at
December 31, 1996. The Company establishes an allowance
for doubtful accounts based upon factors surrounding the
credit risk of specific customers, historical trends,
and other information.
<PAGE>
Fair Value of Financial Instruments
The carrying value of financial instruments (principally
consisting of cash and cash equivalents, accounts
receivable and payable and long-term debt) approximates
fair value because of the short maturities or, as to
long-term debt, the rates currently offered to the
Company.
Property and Equipment and Depreciation
Property and equipment are stated at cost. Depreciation
is computed using the straight-line method over the
estimated useful lives of the assets.
Goodwill
Goodwill, the cost in excess of the net assets of
acquired businesses, is being amortized by the
straight-line method, primarily over thirty years.
Accumulated amortization is $3,921,000 and $3,333,000 at
December 31, 1996 and 1995, respectively. On an ongoing
basis, management reviews the valuation and amortization
of goodwill. As part of this review, the Company
estimates the value and future benefits of income
generated, to determine that no impairment has occurred.
Income Taxes
Deferred income taxes result from temporary differences
between income reported for financial and income tax
purposes. These temporary differences result primarily
from the allowance for doubtful accounts provision and
certain accrued expenses which are deductible, for tax
purposes, only when paid.
Tax benefits from early disposition of the stock by
optionees under incentive stock options and from
exercise of non-qualified options are credited to
additional paid-in capital.
The Company intends to permanently reinvest the earnings
from its foreign corporate joint venture and,
accordingly, is not providing deferred taxes on its
share of undistributed earnings.
Earnings Per Share
Earnings per share are based on the weighted average
number of common and common equivalent shares
outstanding. The calculation takes into account the
shares that may be issued upon exercise of stock
options, reduced by the shares that may be repurchased
with the funds received from the exercise, based on the
average price during the year.
<PAGE>
Use of Estimates in Financial Statements
In preparing financial statements in conformity with
generally accepted accounting principles, management
makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain amounts in the 1995 financial statements were
reclassified to conform to the current year's
presentation.
New Accounting Pronouncements
SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," implemented in 1996, requires that
long-lived assets and certain identifiable intangibles
held and used by the entity be reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be
recoverable. If the sum of the expected future cash
flows (undiscounted and without interest) is less than
the carrying amount of the asset, an impairment loss is
recognized. Measurement of that loss would be based on
the fair value of the asset. Implementation of this
statement has had no material effect on the Company's
financial position.
<PAGE>
SFAS No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"), implemented in 1996, introduces a
choice of the method of accounting used for stock-based
compensation. Entities may use the "intrinsic value"
method currently based on APB No. 25 or the "fair value"
method contained in SFAS No. 123. The Company
implemented SFAS No. 123 in 1996 by continuing to
measure stock-based compensation under APB No. 25. As
required by SFAS No. 123, the pro forma effects on net
income and earnings per share have been determined as if
the fair value based method had been applied and are
disclosed in Note 5 of the notes to the consolidated
financial statements.
- --------------------------------------------------------------------------------
Note 2 In June 1994, the Company acquired the net assets of
Acquisitions Strategic Outsourcing Services, Inc. ("SOS"), a New
Jersey-based provider of data processing services, for
approximately $250,000. The acquisition agreement also
provides for contingent consideration based on the
future performance of SOS, through 1998. The acquisition
was accounted for as a purchase. In 1996 and 1995, the
Company recorded contingent consideration, totaling
approximately $137,000 and $202,000, as additional
goodwill, with certain additional amounts payable
subject to future performance. These contingent
consideration payments are not dependent upon the
continued employment of the former shareholder.
The results of operations of SOS are included in the
consolidated financial statements from June 1, 1994. The
consolidated results of operations in 1994 would not
have been materially different had the acquisition taken
place at the beginning of the year.
In January 1993, the Company acquired Unified Systems
Solutions, Inc. ("USS"), a New Jersey-based provider of
systems and network integration services, for
approximately $750,000. The acquisition agreement also
provides for contingent consideration based on the
future performance of USS through 1996. The acquisition
was accounted for as a purchase. The excess of cash over
the fair value of assets acquired, totaling
approximately $509,000, was recorded as goodwill in
1994. In 1995 and 1994, the Company recorded contingent
consideration, totaling approximately $390,000 and
$245,000, as additional goodwill. These contingent
consideration payments are not dependent upon the
continued employment of the former shareholders. Also in
1995, the Company entered into an agreement with the
former shareholders of USS to pay approximately
$2,396,000, plus interest, in lieu of any amounts that
may have been due for the remaining contingent period
ending March 31, 1996. The $2,396,000 was also recorded
as goodwill in 1995.
<PAGE>
- --------------------------------------------------------------------------------
Note 3 In 1995, the Company entered into a software development
Investment in and services joint venture with the Birla Group, a large
Joint Venture multinational conglomerate located in India. The foreign
joint venture, known as Birla Horizons International
("BHI"), is headquartered in New Delhi, India and
currently has operations in India, the United States,
the United Kingdom and Canada.
The Company and the Birla Group each made cash
contributions of $500,000 and each received a 50%
interest in the joint venture. The Birla Group has also
contributed the net assets of its then existing
information technology company to the joint venture and
the Company is providing technological and management
support.
The Company's total investment in BHI is $1,746,000 and
$861,000 at December 31, 1996 and 1995, respectively,
representing the initial cost plus equity in the
undistributed net earnings since formation, and is
included in other non-current assets.
- --------------------------------------------------------------------------------
Note 4 Long-term debt consists of the following at December 31:
Long-Term Debt
and Lines of Credit
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
9.55% senior notes $2,860 $4,288
Notes payable at prime 439 1,396
- --------------------------------------------------------------------------------
3,299 5,684
Less current maturities 1,867 2,385
- --------------------------------------------------------------------------------
$1,432 $3,299
================================================================================
</TABLE>
<PAGE>
In 1988, the Company issued two senior notes aggregating
$10,000,000 bearing interest at 9.55%, payable
semiannually. The notes are payable in annual
installments of $1,428,000 from April 15, 1992 through
1997 with a final payment of $1,432,000 due April 15,
1998, and are subject to the provisions of the loan
agreement, including, among other things, restrictions
on additional borrowings, prepayments, dividends and
stock purchases (which were waived in connection with
certain purchases of treasury stock), and maintenance of
a minimum net worth of $13,500,000.
The notes payable consist of notes to the four former
shareholders of USS. In 1995, an agreement was signed
(Note 2) resulting in $957,000 being due in April 1996
and $439,000 in April 1997, with 8.75% imputed interest.
Long-term debt matures as follows: $1,867,000 in 1997
and $1,432,000 in 1998.
At December 31, 1996, the Company has two unused bank
lines of credit totaling $25,000,000 at rates below the
banks' prime lending rates. During 1996, the Company had
no borrowings against either line.
- --------------------------------------------------------------------------------
Note 5 Authorized Shares
Shareholders' On June 15, 1994, the Company approved an amendment to
Equity the Company's Certificate of Incorporation increasing
the authorized number of shares of the Company's common
stock from 10,000,000 to 30,000,000.
Stock Splits
The Board of Directors of the Company has declared
three-for-two common stock splits in the form of 50%
stock distributions as follows:
<TABLE>
<CAPTION>
Shareholder of
Date declared record date Date payable
- --------------------------------------------------------------------------------------------
<S> <C> <C>
December 12, 1995 December 22, 1995 January 9, 1996
April 24, 1995 May 9, 1995 May 30, 1995
February 17, 1994 March 1, 1994 March 22, 1994
</TABLE>
Amounts equal to the $.10 par value of the common shares
distributed have been retroactively transferred from
additional paid-in capital to common stock. All
references in the financial statements with regard to
number of shares of common stock, common stock prices
and per share amounts have been restated to reflect the
above-mentioned stock splits.
<PAGE>
Repurchases of Stock
In 1994, the Company repurchased 350,000 shares of its
common stock from three officers of the Company for
approximately $4,109,000. The repurchase of 240,000
shares for $2,792,000 was related to the retirement of
the Vice Chairman and Executive Vice President (Note 8).
The remaining 110,000 shares were repurchased for
$1,317,000 from two other active officers. Approximately
$824,000 of the repurchase amount was used by these
officers to repay amounts they owed the Company,
$629,000 in note repayments and $195,000 in accrued
interest.
Stock Options and SFAS No. 123 Pro Forma Disclosure
In 1994, the Company adopted a stock option plan which
provides for the granting, to officers and key
employees, of options for the purchase of a maximum of
5,063,000 shares of common stock and stock appreciation
rights (SARs). Options and SARs generally expire five
years from the date of grant and become exercisable in
specified amounts during the life of the respective
options. No SARs have been granted as of December 31,
1996. This plan, which replaces the Company's 1985 Plan,
will terminate on June 15, 2004. There were 3,915,000
shares available for option at December 31, 1996.
<PAGE>
In 1994, the Company amended the non-qualified
Directors' Stock Option Plan increasing the maximum
number of shares of common stock that may be acquired
pursuant to the exercise of options granted under the
plan from 253,000 to 563,000, and providing that each
new director of the Company who is not an employee of
the Company (i) shall immediately receive options to
purchase 50,625 shares of its common stock and (ii)
shall receive up to five annual grants to purchase 6,750
shares of its common stock. The plan expires on March 4,
2001. There were 121,300 shares available for option at
December 31, 1996.
The exercise price per share on all options and/or SARs
granted may not be less than the fair value at the date
of the option grant. Accordingly, no compensation cost
has been recognized for the plans. Had compensation cost
for the plans been determined based on the fair value of
the options at the grant dates consistent with the
method of SFAS No. 123, the Company's net income and
earnings per share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income As reported $11,232,000 $9,907,000
Pro forma 8,037,000 8,962,000
Earnings per share As reported $.66 $.64
Pro forma .47 .58
</TABLE>
The fair value of each option grant is estimated on the
date of grant using the Black-Scholes options-pricing
model with the following weighted average assumptions
used for grants in 1996 and 1995, respectively: expected
volatility of 97% and 70%; risk-free interest rates of
6.28% and 6.27%; and expected lives of 4.9 and 4.5
years.
<PAGE>
A summary of the status of the Company's stock option
plans as of December 31, 1996, 1995 and 1994, and
changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
average average average
exercise exercise exercise
Shares price Shares price Shares price
- -------------------------------------------------------------------------------------------------------------------------------
(000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
Outstanding--January 1 1,476 $ 5.53 1,471 $ 3.05 1,876 $1.94
Granted 558 22.98 525 9.01 515 5.33
Exercised (452) 3.74 (517) 1.94 (920) 1.87
Canceled/forfeited (168) 26.93 (3) 10.17
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding--December 31 1,414 $10.45 1,476 $ 5.53 1,471 $3.05
===============================================================================================================================
Options exercisable--December 31 509 $ 7.41 666 $ 3.63 772 $2.36
===============================================================================================================================
Weighted average fair value of
options granted during the year $17.47 $ 5.46 $3.25
</TABLE>
The following information applies to options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
- ------------------------------------------------------------------------------------------------------------------------------
Weighted average Weighted Exercisable Weighted
Range of Outstanding as of remaining average as of average
exercise prices December 31, 1996 contractual life exercise price December 31, 1996 exercise price
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(000) (000)
$ 0.00-$ 4.99 366 6.3 $ 2.94 306 $ 3.02
5.00- 9.99 381 6.6 6.22 96 6.55
10.00- 14.99 266 5.1 11.09 12 13.50
15.00- 19.99 212 5.7 18.18
20.00- 24.99 81 9.0 21.00 81 21.00
25.00- 29.99 108 6.3 25.99 14 25.33
- ------------------------------------------------------------------------------------------------------------------------------
1,414 6.2 $10.45 509 $ 7.41
==============================================================================================================================
</TABLE>
<PAGE>
Certain officers have the right to borrow from the
Company against the exercise price of options exercised.
Such borrowings were repaid in 1994 in connection with
the repurchase of common stock from these officers.
The Company has issued warrants to purchase shares of
its common stock to two outside business/legal
consulting firms. Warrants for 20,000 and 6,750 shares
were granted, respectively, in 1996 and 1995. The
exercise price is the fair value at the date of grant.
Shareholder Rights Plan
In July 1989, the Board of Directors declared a dividend
distribution of .197 preferred stock purchase right on
each outstanding share of common stock of the Company.
The rights were amended on February 13, 1990. Each right
will, under certain circumstances, entitle the holder to
buy one one-hundredth (1/100) of a share of Series A
preferred stock at an exercise price of $30.00 per one
one-hundredth (1/100) share, subject to adjustment. Each
one one-hundredth (1/100) of a share of Series A
preferred stock has voting, dividend and liquidation
rights and preferences substantively equivalent to one
share of common stock.
The rights will be exercisable and transferable
separately from the common stock only if a person or
group acquires 20% or more, subject to certain
exceptions, of the Company's outstanding common stock or
announces a tender offer that would result in the
ownership of 20% or more of the common stock. If a
person becomes the owner of at least 20% of the
Company's common shares (an "Acquiring Person"), each
holder of a right other than the Acquiring Person is
entitled, upon payment of the then current exercise
price per right (the "Exercise Price"), to receive
shares of common stock (or common stock equivalents)
having a market value equal to twice the Exercise Price.
Additionally, if the Company subsequently engages in a
merger or other business combination with the Acquiring
Person in which the Company is not the surviving
corporation, or in which the outstanding shares of the
Company's common stock are changed or exchanged, or if
more than 50% of the Company's assets or earning power
is sold or transferred, a right would entitle a Computer
Horizon Corp. shareholder, other than the Acquiring
Person and its affiliates, to purchase upon payment of
the Exercise Price, shares of the Acquiring Person
having a market value of twice the Exercise Price. Prior
to a person becoming an Acquiring Person, the rights may
be redeemed at a redemption price of one cent per right,
subject to adjustment. The rights are subject to
amendment by the Board. No shareholder rights have
become exercisable. The rights will expire on July 16,
1999.
<PAGE>
- --------------------------------------------------------------------------------
Note 6 The provision for income taxes consists of the following
Income Taxes for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $6,282 $5,875 $3,645
State 2,010 2,263 1,399
Deferred:
Federal (331) (339) (255)
State (31) (135) (102)
- --------------------------------------------------------------------------------
$7,930 $7,664 $4,687
================================================================================
</TABLE>
<PAGE>
Deferred tax assets and liabilities consist of the
following at December 31:
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Accrued insurance $ 291 $ 477
Accrued payroll and benefits 938 516
Deferred lease obligations 72 99
Allowance for doubtful accounts 249 221
Other 77 140
- ------------------------------------------------------------------------------------------------------------------------------------
1,627 1,453
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation 20 208
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets, net $1,607 $1,245
====================================================================================================================================
</TABLE>
A reconciliation of income taxes, as reflected in the
accompanying statements, with the statutory Federal
income tax rate of 35% for the years ended December 31,
1996 and 1995 and 34% for the year ended December 31,
1994, is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Statutory Federal income taxes $6,707 $6,149 $3,527
State and local income taxes, net of Federal tax benefit 1,286 1,382 858
Amortization of goodwill 201 180 158
Equity in net earnings of joint venture (310) (126)
Other, net 46 79 144
- ------------------------------------------------------------------------------------------------------------------------------------
$7,930 $7,664 $4,687
====================================================================================================================================
</TABLE>
Deferred income taxes of approximately $436,000
($310,000 in 1996 and $126,000 in 1995) have not been
provided on undistributed earnings of a foreign joint
venture in the amount of $1,246,000 ($885,000 in 1996
and $361,000 in 1995) as the earnings are considered to
be permanently reinvested.
- --------------------------------------------------------------------------------
Note 7 The Company maintains a defined contribution savings
Savings Plan plan covering eligible employees. The Company makes
and Other contributions up to a specific percentage of
Retirement Plans participants' contributions. The Company contributed
approximately $324,000, $229,000 and $204,000 in 1996,
1995 and 1994, respectively.
<PAGE>
In 1995, the Company instituted a Supplemental Executive
Retirement Plan whereby key executives are entitled to
receive lump-sum payments (or, if they elect, a ten-year
payout) upon reaching the age of 65 and being in the
employ of the Company. The maximum commitment if all
plan members remain in the employ of the Company until
age 65 is approximately $6 million. Benefits accrue and
vest based on a formula which includes total years with
the Company and total years possible until age 65. The
plan is non-qualified and not formally funded. Life
insurance policies on the members are purchased to
assist in funding the cost. The deferred compensation
expense is charged to operations during the remaining
service lives of the members and amounted to
approximately $97,000 and $82,000 in 1996 and 1995,
respectively.
In addition, the Company adopted a Deferred Compensation
Plan for Key Executives that permits the individuals to
defer a portion of their annual salary or bonus for a
period of at least five years. There is no effect on the
Company's operating results since any amounts deferred
would have previously been expensed. Amounts deferred
have been included in other non-current liabilities.
<PAGE>
- --------------------------------------------------------------------------------
Note 8 Leases
Commitments
The Company leases office space under long-term
operating leases expiring through 2001. As of December
31, 1996, approximate minimum rental commitments were as
follows:
<TABLE>
<CAPTION>
Year ending (in thousands)
- --------------------------------------------------------------------------------------
<S> <C>
1997 $2,588
1998 2,234
1999 1,611
2000 324
2001 158
- --------------------------------------------------------------------------------------
$6,915
======================================================================================
</TABLE>
Office rentals are subject to escalations based on
increases in real estate taxes and operating expenses.
Aggregate rent expense for operating leases approximated
$2,612,000, $2,007,000 and $1,796,000 in the years ended
December 31, 1996, 1995 and 1994, respectively.
Other
In 1994, the Vice Chairman and Executive Vice President
of the Company announced his resignation effective
February 15, 1995. The Company recorded approximately
$400,000 of deferred compensation in 1994 which is to be
paid beginning February 1998 through 2005. The Company
also agreed to retain this former officer as a
consultant for a three-year period for approximately
$75,000 each year and entered into a noncompetition
agreement for that period. In connection with this
resignation, the Company repurchased approximately
240,000 shares of common stock of the Company from this
former officer for approximately $2,792,000.
- --------------------------------------------------------------------------------
Note 9 The Company's largest client accounted for 9.8%, 7.8%
Major Client and 9.0%, respectively, of the Company's consolidated
revenues in 1996, 1995 and 1994. No other client
accounted for more than 7% in those years.
<PAGE>
Note 10 For the years ended December 31, 1996 and 1995, selected
Selected Quarterly quarterly financial data is as follows:
Financial Data
(Unaudited)
<TABLE>
<CAPTION>
Quarters
- ------------------------------------------------------------------------------------------------------------------------------
First Second Third Fourth
- ------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
1996
- ------------------------------------------------------------------------------------------------------------------------------
Revenues $ 57,031 $ 56,032 $ 57,275 $ 63,520
Direct costs 39,368 39,960 39,756 44,188
Selling, general and administrative 12,120 12,505 13,177 14,344
Income from operations 5,543 3,567 4,342 4,988
Interest expense--net (41) (83) (16) (23)
Equity in net earnings of joint venture 213 230 200 242
Income before income taxes 5,715 3,714 4,526 5,207
Income taxes 2,413 1,576 1,893 2,048
Net income $ 3,302 $ 2,138 $ 2,633 $ 3,159
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per share $.20 $.13 $.16 $.19
==============================================================================================================================
1995
- ------------------------------------------------------------------------------------------------------------------------------
Revenues $ 43,867 $ 48,397 $ 51,467 $ 56,319
Direct costs 31,366 34,230 35,696 39,052
Selling, general and administrative 9,294 10,222 10,922 11,693
Income from operations 3,207 3,945 4,849 5,574
Interest expense--net (175) (165) (36) 11
Equity in net earnings of joint venture 96 124 141
Income before income taxes 3,032 3,876 4,937 5,726
Income taxes 1,350 1,711 2,133 2,470
Net income $ 1,682 $ 2,165 $ 2,804 $ 3,256
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per share $.12 $.15 $.17 $.20
==============================================================================================================================
</TABLE>
<PAGE>
MARKET AND DIVIDEND INFORMATION
The Company's common stock is quoted on the Nasdaq
National Market, under the symbol CHRZ. The range of
high and low closing stock prices, as reported by the
Nasdaq National Market, for each of the quarters for the
years ended December 31, 1996 and 1995, retroactively
adjusted to reflect the three-for-two common stock split
declared by the Board of Directors in December 1995, is
as follows:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
Quarter High Low High Low
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $38.50 $19.00 $ 8.44 $ 5.89
Second 54.00 33.00 10.83 7.33
Third 42.25 15.00 15.83 10.17
Fourth 38.75 24.25 26.67 11.50
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company plans to reinvest its earnings in future
growth opportunities and, therefore, does not anticipate
paying cash dividends in the near future and has not
paid any to date. As of December 31, 1996, there were
approximately 1,200 holders of record of common stock.
<PAGE>
Computer
Horizons Corp. and
Subsidiaries
- --------------------------------------------------------------------------------
CORPORATE INFORMATION
Board of Directors
John J. Cassese
Chairman and President
Thomas J. Berry
Retired--AT&T
Rocco J. Marano
Retired--Bellcore
Wilfred R. Plugge
Retired--SRI International
Corporate
John J. Cassese
Chairman and President
William J. Murphy
Executive Vice President & CFO
David M. Reingold
Vice President
Michael J. Shea
Vice President & Controller
Mark W. Walztoni
Vice President--Human Resources
Field Organization
Charles J. McCourt
Senior Vice President
Barry D. Olson
Senior Vice President
Robert J. Palmieri
Senior Vice President
Terry C. Quinn
Senior Vice President
Solutions Companies
Pamela A. Fredette
President--Horizons Consulting
Arthur V. Quinlan
Senior V.P.--Horizons Consulting
Steven J. Morgenthal
President--Unified Systems Solutions
David M. Reingold
Vice Chairman--Birla Horizons International
Barry D. Olson
President--ComputerKnowledge
Edward D. Williams
President--Strategic Outsourcing Services
<PAGE>
Corporate and Financial
Headquarters
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey
07046-1495
(201) 402-7400
Regional and Local Offices
Eastern Region
Hartford, CT
Washington, DC
Pompano Beach, FL
Boston, MA
Iselin, NJ
Mountain Lakes, NJ
New York, NY
Philadelphia, PA
Central States Region
Atlanta, GA
Indianapolis, IN
Louisville, KY
Charlotte, NC
Raleigh, NC
Cincinnati, OH
Cleveland, OH
Columbus, OH
Dayton, OH
Memphis, TN
Nashville, TN
Dallas, TX
Houston, TX
Midwest/West Region
Phoenix, AZ
Concord, CA
Los Angeles, CA
Colorado Springs, CO
Denver, CO
Cedar Rapids, IA
Chicago, IL
Detroit, MI
Minneapolis, MN
Kansas City/St. Louis, MO
Toronto, Canada
Communications Division
Washington, DC
Jacksonville, FL
Orlando, FL
Tampa, FL
Clark, NJ
Dallas, TX
<PAGE>
Birla Horizons International
New Delhi, India
London, England
Sunnyvale, CA
Iselin, NJ
Toronto, Canada
Corporate Counsel
Dennis M. DiVenuta, Esq.
General Counsel
Proskauer Rose Goetz &
Mendelsohn LLP
Auditors
Grant Thornton LLP
Transfer Agent
Registrar & Transfer Company
Cranford, New Jersey
Shares Traded
Nasdaq National Market
Symbol--CHRZ
Options Traded
Chicago Board Options Exchange
Symbol--ZQH
Availability of Form 10-K A copy of the Company's Annual Report to the SEC on
Form 10-K may be obtained without charge by writing to:
Shareholder Relations
Computer Horizons Corp.
49 Old Bloomfield Avenue
Mountain Lakes,
New Jersey 07046-1495
Annual Meeting
The Annual Meeting of Shareholders will be held at
The Parsippany Hilton
One Hilton Court
Parsippany, New Jersey,
on Wednesday, May 7, 1997
at 10:00 A.M.
Exhibit 21
The Company's only active subsidiaries are each wholly owned and are included in
the consolidated financial statements of the Company, and their jurisdictions of
incorporation are as follows:
Jurisdiction of
Name of Subsidiary Incorporation
------------------ -------------
CHC Solutions Europe Limited England and Wales
Computer Horizons (Canada) Corp. Toronto, Canada
Horizon Enterprises Inc. Delaware
Horizons Consulting, Inc. Delaware
Strategic Outsourcing Systems, Inc. Delaware
Unified Systems Solutions, Inc. New Jersey
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,937
<SECURITIES> 0
<RECEIVABLES> 55,483
<ALLOWANCES> 1,203
<INVENTORY> 0
<CURRENT-ASSETS> 67,203
<PP&E> 9,449
<DEPRECIATION> 5,228
<TOTAL-ASSETS> 88,412
<CURRENT-LIABILITIES> 16,641
<BONDS> 1,432
0
0
<COMMON> 1,787
<OTHER-SE> 67,027
<TOTAL-LIABILITY-AND-EQUITY> 88,412
<SALES> 0
<TOTAL-REVENUES> 233,858
<CGS> 0
<TOTAL-COSTS> 163,272
<OTHER-EXPENSES> 51,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> 19,162
<INCOME-TAX> 7,930
<INCOME-CONTINUING> 11,232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,232
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
