SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
------------------------------------------------
OR
/ / 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 0-11876
-------
UNIFORCE TEMPORARY PERSONNEL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-1996648
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1335 JERICHO TURNPIKE, NEW HYDE PARK, NY 11040
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 437-3300
------------------------
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 / /.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practical date. 4,220,981 (as of May 1, 1995).
---------
<PAGE>
UNIFORCE TEMPORARY PERSONNEL, INC.
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements
Consolidated condensed statements of earnings -
three months ended March 31, 1995 and 1994
(unaudited) 1
Consolidated condensed balance sheets -
March 31, 1995 (unaudited) and December
31, 1994 2
Consolidated condensed statements of cash flows -
three months ended March 31, 1995 and 1994
(unaudited) 3
Notes to consolidated condensed financial
statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION:
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
UNIFORCE TEMPORARY PERSONNEL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Sales of supplemental staffing
services $29,194,701 $22,245,180
Service revenues and fees 1,488,349 1,269,340
----------- -----------
Total revenues 30,683,050 23,514,520
----------- -----------
Costs and expenses:
Cost of supplemental staffing
services 22,707,847 17,305,743
Licensees' share of gross
margin 2,219,473 2,237,130
General and administrative 4,479,213 3,009,742
Depreciation and amortization 230,242 193,108
----------- -----------
Total costs and expenses 29,636,775 22,745,723
----------- -----------
Earnings from operations 1,046,275 768,797
Other income (expense):
Interest - net (84,125) 30,180
Other income (expense) 8,843 72,347
---------- ------------
Earnings before provision for
income taxes 970,993 871,324
Provision for income taxes 368,000 331,000
----------- -----------
NET EARNINGS $ 602,993 $ 540,324
=========== ===========
Weighted average number
of shares outstanding 4,429,659 4,347,663
NET EARNINGS PER SHARE $ .14 $ .12
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE>
UNIFORCE TEMPORARY PERSONNEL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,861,088 $ 7,298,823
Accounts receivable - net 13,094,154 11,818,740
Funding and service fees
receivable - net 17,622,257 14,466,995
Current maturities of notes
receivable from licensees - net 361,622 399,714
Prepaid expenses and other
current assets 721,882 501,088
Deferred income taxes 379,771 379,771
----------- ------------
Total current assets 36,040,774 34,865,131
----------- ------------
Notes receivable from licensees - net 251,297 277,767
Fixed assets - net 1,444,925 1,294,550
Deferred costs and other assets - net 1,346,713 1,336,284
Cost in excess of fair value of net
assets acquired 3,673,367 3,722,576
----------- ------------
$42,757,076 $ 41,496,308
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loan payable $ 5,200,000 $ 3,500,000
Payroll and related taxes payable 7,033,855 7,007,921
Payable to licensees and clients 2,000,796 1,910,111
Income taxes payable 289,917 ---
Accrued expenses and
other liabilities 3,400,867 3,165,869
----------- ------------
Total current liabilities 17,925,435 15,583,901
----------- ------------
Loan payable - non-current 2,800,000 2,800,000
STOCKHOLDERS' EQUITY:
Common stock $.01 par value 49,701 49,468
Additional paid-in capital 7,553,765 7,411,572
Retained earnings 21,419,175 20,952,594
----------- ------------
29,022,641 28,413,634
Treasury stock, at cost, 757,500
shares in 1995 and 578,750
shares in 1994 (6,991,000) (5,301,227)
----------- ------------
Total stockholders' equity 22,031,641 23,112,407
----------- ------------
$42,757,076 $ 41,496,308
=========== ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE>
UNIFORCE TEMPORARY PERSONNEL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 602,993 $ 540,324
Adjustments to reconcile net
earnings to net cash (used)
by operating activities:
Depreciation and amortization 230,242 193,108
(Increase) in receivables
and prepaid expenses (4,651,470) (3,626,529)
Stock option compensation expense 4,500 4,500
Increase in liabilities 641,534 1,131,935
---------- ----------
Net cash (used) by operating
activities (3,172,201) (1,756,662)
---------- ----------
Cash flows from investing activities:
Purchases of fixed assets (232,773) (263,613)
Decrease (increase) in deferred
costs and other investments (109,064) 36,424
Decrease in notes receivable
from licensees 64,562 76,367
---------- ----------
Net cash (used) by investing
activities (277,275) (150,822)
---------- ----------
Cash flows from financing activities:
Increase in loan payable 1,700,000 1,500,000
Cash dividends paid (136,412) (129,201)
Purchase of treasury stock (1,689,773) ---
Proceeds from issuance of
common stock 137,926 30,651
---------- ----------
Net cash provided by financing
activities 11,741 1,401,450
---------- ----------
Net (decrease) in cash
and cash equivalents (3,437,735) (506,034)
Cash and cash equivalents at
beginning of period 7,298,823 7,155,081
---------- ----------
Cash and cash equivalents at
end of period $3,861,088 $6,649,047
========== ==========
Supplemental disclosures:
Cash paid for:
Interest $ 118,516 $ 16,764
---------- ----------
Income taxes $ 70,554 $ 146,696
---------- ----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
UNIFORCE TEMPORARY PERSONNEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Uniforce Temporary Personnel, Inc. and its wholly-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
2. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements as shown in the
accompanying index have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at March 31, 1995, and for all periods presented have
been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed, reclassified or omitted. It is
suggested that these consolidated condensed financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's December 31, 1994 financial statements. The results of
operations for the period ended March 31, 1995 are not necessarily indicative of
the operating results which may be achieved for the full year.
Tax accruals have been made based on estimated effective
annual tax rates for the periods presented.
3. CONTINGENCIES
In April 1994, various prior insurance carriers and their
not-for-profit trade association filed an action against the Company, its
officers and various unrelated parties. The action alleges breach of contracts
of insurance and underpayment of premiums. The Company's motion to dismiss the
action has not yet been decided and the Company continues to deny the validity
of the claims of the Plaintiffs. Further, it intends to assert substantial
claims in opposition to the claims of the Plaintiffs. Additionally, the Company
and its subsidiaries have filed suit against various prior worker compensation
carriers alleging claims mismanagement.
Management believes that the ultimate outcome of these matters
will not have a material adverse affect upon the financial position of the
Company. See PART II Other Information, Item 1. Legal Proceedings, included
elsewhere herein.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Total revenues increased by $7,168,530, or 30.5%, from
$23,514,520 in the first quarter of 1994 to $30,683,050 in the first quarter of
1995. Sales of supplemental staffing services increased by $6,949,521, or 31.2%,
from $22,245,180 in the first quarter of 1994 to $29,194,701 in the first
quarter of 1995. This increase resulted principally from the Company's
acquisition in April 1994 of certain assets of Brannon & Tully, Inc., a provider
of information services ("IS") contract professionals. This company now operates
under the tradename of Brannon & Tully/Uniforce Information Services. This
acquisition contributed $5,694,983 of sales for the first quarter of 1995 and
has had a favorable impact on the Company's results of operations and its
ability to develop higher margin professional services. Sales by the Company's
subsidiaries, PrO Unlimited, and to a lesser degree LabForce, continued to
increase as the Company emphasized the marketing of these services.
The Company's strategy is to expand through the development of
higher margin professional services such as IS, technical, automated office and
other professional support services as well as its PrO Unlimited and LabForce
subsidiaries, while continuing to reduce the percentage of its sales derived
from light industrial assignments. In addition, the Company intends to continue
to pursue acquisitions of established independent supplemental staffing service
companies that offer specialty services.
Service revenues and fees increased by 17.3% from $1,269,340
in the first quarter of 1994 to $1,488,349 in the first quarter of 1995. This
reflects increased service revenues and fees generated by existing and new
clients of Temporary Help Industry Servicing Company, Inc. ("THISCO") and
Brentwood Service Group, Inc. ("BSG"), two of the Company's subsidiaries. The
Company intends to continue to expand this portion of its business through
THISCO and BSG during 1995. In addition, system wide sales, which include sales
of Associated Offices serviced by THISCO and BSG, increased by 30.5%, from
$51,437,121 in the first quarter of 1994 to $67,133,526 in the first quarter of
1995.
Cost of supplemental staffing services was 77.8% of sales of
supplemental staffing services in the first quarter of 1995, as well as in the
first quarter of 1994.
Licensees' share of gross margin is principally based upon a
percentage of the gross margin generated from sales by licensed offices. The
gross margin from sales of supplemental staffing services amounted to $6,486,854
and $4,939,437 for the first quarter of 1995 and 1994, respectively. Licensees'
share of gross margin was 34.2% for the first quarter of 1995 as compared to
45.3% for the first quarter of 1994. The lower share as a percentage of total
gross margin in 1995 is due, in part, to the
5
<PAGE>
sales of Brannon & Tully/Uniforce Information Services for which there are no
related licensee distributions, and to the sales of PrO Unlimited for which
there are limited distributions.
General and administrative expenses increased by $1,469,471 or
48.8% during the first quarter of 1995 as compared to the first quarter of 1994.
As a percentage of revenues, general and administrative expenses were 14.6% and
12.8% for 1995 and 1994, respectively. These increases resulted principally from
expenses relating to the Brannon & Tully/Uniforce Information Services
operations and higher payroll and marketing costs at PrO Unlimited. Further
contributing to the increase were higher expenses relating to payroll costs with
respect to permanent staff and professional fees.
In 1994, the Company earned net interest income of $30,180 on
its short term investments and notes receivable from licensees. However, in
1995, as a result of the borrowings for the acquisition of Brannon & Tully, Inc.
and working capital requirements, the Company incurred net interest expense of
$84,125.
As a result of the factors discussed above, net earnings
increased by 11.6% from $540,324 ($.12 per share) in the first quarter of 1994
to $602,993 ($.14 per share) in the first quarter of 1995.
FINANCIAL CONDITION
As of March 31, 1995 the Company's working capital decreased
to $18,115,339, as compared to $19,281,230 at December 31, 1994. This decrease
was due primarily to the continuing profitable operations of the Company being
more than offset by the repurchase of its common stock, the acquisition of fixed
assets and the payment of the cash dividend detailed below.
On January 3, 1995, the Board of Directors declared a
quarterly cash dividend on shares of common stock of Uniforce of $.03 per share
which was paid on January 27, 1995, to holders of record on January 13, 1995.
Subsequent to March 31, 1995, the Board of Directors declared a quarterly cash
dividend of $.03 per share, which was paid on April 28, 1995 to holders of
record on April 14, 1995.
On April 18, 1994, the Company acquired certain assets of
Brannon & Tully, Inc., a provider of IS contract professionals. The purchase
price consisted of $3,150,000 in cash and the issuance of 127,720 shares of
common stock of the Company. The Company also acquired from Brannon & Tully,
Inc. certain accounts receivable, with recourse, for $1,301,595. The cash
portion of the purchase price and the accounts receivable acquired were
initially financed through a $4,500,000 borrowing under the Company's working
capital credit facility noted below.
6
<PAGE>
The Company maintains, with two banks, a working capital
credit facility and a revolving credit and term loan facility. The working
capital credit facility, the amount of which was increased from $9,000,000 to
$10,000,000 in June, 1994, comprises an open line of credit, borrowings under
which are payable on demand. Outstanding borrowings bear interest, at the
Company's option, at the banks' prime rate or at a rate 120 basis points above
the banks' LIBOR Rate (a rate based upon the London Interbank Offered Rate). At
March 31, 1995, the Company had outstanding borrowings of $4,600,000 with
interest being charged at the banks' prime rate.
On August 31, 1994, the Company entered into a new revolving
credit and term loan agreement establishing a two-year $6,000,000 facility,
outstanding borrowings under which, at the Company's option, may be converted at
the maturity of the revolving credit facility into a five-year term loan. The
loan agreement contains restrictive covenants relating to, among other things,
minimum net worth and profitability with which the Company is in compliance.
Borrowings under the revolving credit portion of the facility will bear
interest, at the Company's option, either at the banks' prime rate or at a rate
120 basis points above the banks' LIBOR Rate. Such borrowings, if converted to a
term loan, will bear interest, at the Company's option, either at the banks'
prime rate plus 1/4%, or at a rate 145 basis points above the LIBOR Rate. This
facility replaced a prior revolving credit facility that matured in June, 1994.
Borrowings under the prior facility, which aggregated $4,000,000 at maturity,
were converted into a five-year term loan. At March 31, 1995, $3,400,000 was
outstanding with interest being charged at 7.7% (145 basis points above the
LIBOR Rate). The terms of the prior facility are substantially identical to the
new revolving credit and term loan facility.
The Company does not currently have material commitments for
capital expenditures and does not anticipate entering into any such commitments
during the next 12 months. The Company believes that internally generated cash
flow and existing borrowing facilities will be adequate to meet operating
requirements. The Company intends to expand its business through the development
of higher margin professional services as well as through PrO Unlimited,
LabForce and Brannon & Tully/Uniforce Information Services. Additionally, the
Company continues to pursue expansion by acquisition of established independent
supplemental staffing service companies that offer specialty services. The
Company anticipates that this expansion will be financed from internally
generated cash flow and existing borrowing facilities (of which $6,000,000 is
available under the long term revolving credit facility described above).
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to ITEM 3. LEGAL PROCEEDINGS of the
Company's Annual Report on Form 10-K for the year ending December 31, 1994 and
to the description therein of an action commenced in the United States District
Court, Southern District of Florida, Palm Beach Division (the "Court"), by the
Company and its subsidiary, Uniforce Services, Inc., against the National
Council on Compensation Insurance, the National Workers' Compensation
Reinsurance Pool and others (the "NCCI Defendants"). In April 1995, the Court
granted the motion for summary judgment made by the NCCI Defendants in this
action. The Company has appealed this judgment, which, upon advice of counsel,
it believes to be erroneous as a matter of law.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter
ended March 31, 1995.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 12, 1995 UNIFORCE TEMPORARY PERSONNEL, INC.
By: /S/ JOHN FANNING
-----------------------------------
John Fanning, Chairman of the Board
and President
By: /S/ HARRY MACCARRONE
-----------------------------------
Harry Maccarrone, V.P. of Finance,
Principal Financial and Accounting
Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Uniforce's
Form 10-Q for the quarter ended March 31, 1995 and is qualified in its
entirety by reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,861,088
<SECURITIES> 0
<RECEIVABLES> 31,823,080
<ALLOWANCES> 493,750
<INVENTORY> 0
<CURRENT-ASSETS> 36,040,774
<PP&E> 3,588,098
<DEPRECIATION> 2,143,173
<TOTAL-ASSETS> 42,757,076
<CURRENT-LIABILITIES> 17,925,435
<BONDS> 0
<COMMON> 49,701
0
0
<OTHER-SE> 21,981,940
<TOTAL-LIABILITY-AND-EQUITY> 42,757,076
<SALES> 0
<TOTAL-REVENUES> 30,683,050
<CGS> 0
<TOTAL-COSTS> 29,636,775
<OTHER-EXPENSES> (8,843)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,125
<INCOME-PRETAX> 970,993
<INCOME-TAX> 368,000
<INCOME-CONTINUING> 602,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 602,993
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
