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Previous: CROWN ANDERSEN INC, 10-K405, 1998-12-22 |
Next: DEFINED ASSET FUNDS MUNICIPAL INVT TR FD MULTISTATE SER 2V, 24F-2NT, 1998-12-22 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 8, 1998
DIVERSIFIED CORPORATE RESOURCES, INC.
(Exact name of registrant as specified in charter)
Texas
(State or other jurisdiction of incorporation)
0-13984
(Commission File Number)
75-1565578
(IRS Employer Identification No.)
12801 N. Central Expressway, Suite 350
Dallas, TX 75243
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 972-458-8500
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses acquired
Audited balance sheets
December 31, 1997
Audited statements of income
Year ended December 31, 1997
Audited statements of changes in stockholders equity
Year ended December 31, 1997
Audited statements of cash flows
Year ended December 31, 1997
Notes to financial statements
Year ended December 31, 1997
Unaudited balance sheets
September 30, 1998
Unaudited statements of income
Nine months ended September 30, 1998
Unaudited statements of changes in stockholders equity
Nine months ended September 30, 1998
Unaudited statements of cash flows
Nine months ended September 30, 1998
(b) Pro forma financial information
Unaudited pro forma combined balance sheet
September 30, 1998
Unaudited pro forma combined statements of income
Year ended December 31, 1997 Nine months
ended September 30, 1998
(c) Exhibits
<PAGE>
HISTORICAL FINANCIAL STATEMENTS:
TEXCEL, INC.
Plymouth Meeting, Pennsylvania
December 31, 1997
I N D E X
Page Number
1 Index
2 Independent Auditor's Report
3 - 4 Balance Sheet as of December 31, 1997
5 Income Statement for the Year Ended December 31, 1997
6 Statement of Retained Earnings for the Year Ended December 31, 1997
7 Statement of Cash Flows for the Year Ended December 31, 1997
8 - 12 Notes to Financial Statements
This is page 1 of a report of 12 pages
<PAGE>
To the Shareholders
Texcel, Inc.
5170 Campus Drive
Plymouth Meeting, PA 19462
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Texcel, Inc. (an "S"
Corporation) as of December 31, 1997, and the related statements of income,
retained earnings, and cash flows, for the year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Texcel, Inc. at December 31,
1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Dreslin and Company, Inc.
December 4, 1998
East Norriton, PA
This is page 2 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Balance Sheet
December 31, 1997
<TABLE>
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 73,909
Accounts Receivable - Trade 849,788
Accounts Receivable - Intercompany 1,859
Prepaid Expenses 27,924
--------------
Total Current Assets 953,480
Fixed Assets:
Office Equipment and Furniture 428,594
Leasehold Improvements 20,229
--------------
448,823
Less: Accumulated Depreciation (207,151)
--------------
Total Fixed Assets - Net 241,672
Other Assets:
Security Deposits 4,667
------------
Total Assets $ 1,199,819
------------
------------
</TABLE>
(Continued)
This is page 3 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Balance Sheet (Continued)
December 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
LIABILITIES
Current Liabilities:
Current Portion of Loans Payable $ 37,383
Current Portion of Capital Lease Obligation 1,360
Accrued Commissions 360,661
Accrued Expense 24,253
Payroll Taxes Payable 17,283
Sales Tax Payable 60,441
Deferred Revenue 28,416
-------------
Total Current Liabilities 529,797
Long-Term Liabilities:
Loans Payable (Net of Current Portion) 29,167
Obligation Under Capital Lease (Net of Current Portion) 2,514
-------------
Total Long-Term Liabilities 31,681
-----------
Total Liabilities 561,478
STOCKHOLDERS' EQUITY
Capital Stock - Authorized 1,000 Shares, Issued and
Outstanding 100 Shares @ $10 Par Value 1,000
Additional Paid-In Capital 19,000
Retained Earnings 618,341
-------------
Total Stockholders' Equity 638,341
-----------
Total Liabilities and Stockholders' Equity $ 1,199,819
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 4 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Income Statement
For the Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
SALES (Net of Refunds of $131,395) $ 5,016,100
OPERATING EXPENSES:
Advertising 321,684
Auto Expenses 7,172
Contributions 10,510
Depreciation 59,905
Insurance 86,226
Interest 8,316
Marketing 28,474
Office 83,018
Payroll Taxes 156,465
Professional Fees 20,545
Profit Sharing 111,045
Rent 78,604
Referral Fees 1,800
Repairs and Maintenance 12,821
Salaries and Wages 3,327,580
Seminars and Training 7,247
Taxes - Other 24,438
Telephone 89,248
Travel and Entertainment 21,407
--------------
Total Expenses 4,456,505
------------
Income from Operations 559,595
OTHER INCOME 16,973
------------
Net Income $ 576,568
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 5 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Statement of Retained Earnings
For the Year Ended December 31, 1997
<TABLE>
<S> <C>
Balance - January 1, 1997 $ 521,773
Net Income for the Year 576,568
Dividend Distributions for the Year (480,000)
------------
Balance - December 31, 1997 $ 618,341
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 6 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Statement of Cash Flows
For the Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 576,568
Adjustments to Reconcile Net Income to Net Cash
Provided by OperatingActivities:
Depreciation 59,905
(Increase) in Current Assets:
Accounts Receivable (52,035)
Prepaid Expenses (2,554)
Increase (Decrease) in Current Liabilities:
Accrued Commissions 9,701
Accrued Expenses (6,553)
Payroll Taxes Payable 1,012
Sales Tax Payable 16,450
Deferred Revenue 28,416
---------
54,342
------------
Net Cash Provided by Operating Activities 630,910
CASH FLOWS (USED) BY INVESTING ACTIVITIES:
Purchase of Fixed Assets (117,392)
CASH FLOWS (USED) BY FINANCING ACTIVITIES:
Bank Loan 27,000
Bank Loan Principal Repayments (38,042)
Payment of Cash Dividends (480,000)
Principal Payments of Capital Lease Obligations (520)
----------
Net Cash (Used) by Financing Activities (491,562)
-----------
Net Increase in Cash 21,956
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 51,953
-----------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 73,909
-----------
-----------
SUPPLEMENTAL DISCLOSURES:
Cash Paid during the Year for:
Interest $ 8,316
Income Taxes -
Non-Cash Investing and Financing Activities:
Capitalized Lease Obligation Incurred for Purchase of Fixed Assets 4,395
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 7 of a report of 12 pages
<PAGE>
TEXCEL, INC.
Notes to Financial Statements
ORGANIZATION:
Texcel, Inc. was incorporated in Pennsylvania in 1985. It is engaged in the
business of providing permanent placement services of executive and technical
candidates to the engineering and management information science fields. Their
market area is concentrated in Southeastern Pennsylvania, New Jersey and
Delaware.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting:
The accompanying financial statements have been prepared utilizing the accrual
basis of accounting in accordance with generally accepted accounting principles.
Cash and Cash Equivalents:
The Company considers all short-term investments with a maturity of three months
or less from the original purchase date to be cash equivalents.
Accounts Receivable:
Amounts reflected as accounts receivable are deemed fully due and collectible at
December 31, 1997.
Fixed Assets:
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the useful lives of the assets. Depreciation expense
totaled $59,905 for 1997.
Use of Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of these financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
Advertising:
The Company follows the policy of charging advertising costs to expense as
incurred. Advertising costs incurred for year ended December 31, 1997 totaled
$321,684.
This is page 8 of a report of 12 pages
<PAGE>
FINANCIAL INSTRUMENTS:
Concentrations of Credit Risk:
Financial instruments that subject the Company to concentrations of credit risk
consist principally of trade accounts receivable. The credit risk associated
with trade receivables is limited due to the number of customers comprising the
Company's client base and the fact that they perform ongoing credit evaluations.
The Company maintains all of its cash balances at one financial institution.
Balances of up to $100,000 are insured by the Federal Deposit Insurance
Corporation. Balances in excess of $100,000 are uninsured. At December 31, 1997,
the Company had uninsured cash balances totaling $283,405.
INCOME TAXES:
The Company has elected to be treated as an "S" Corporation for federal and
state tax purposes. As an "S" Corporation, any profits or losses are passed
through to the shareholders of the Corporation and taxed on their individual
return. Accordingly, no provision for federal or state income taxes is reflected
on the accompanying financial statements.
FIXED ASSETS:
The major classification of fixed assets and their related accumulated
depreciation are as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
---- ------------
<S> <C> <C>
Office Equipment $302,034 $145,939
Furniture and Fixtures 126,560 59,958
Leasehold Improvements 20,229 1,254
-------- --------
Totals $448,823 $207,151
-------- --------
-------- --------
</TABLE>
LOANS PAYABLE:
Loans Payable consists of the following term loans payable to First Sterling
Bank:
<TABLE>
<CAPTION>
Long-
Original Interest Due Current Term
Amount Rate Date Portion Portion
-------- -------- ---- -------- -------
<S> <C> <C> <C> <C> <C>
(1) $ 35,000 9% 9/1/98 $ 12,383 $ --
(2) $ 75,000 Prime + 1% 3/1/00 25,000 29,167
-------- --------
$ 37,383 $ 29,167
-------- --------
-------- --------
</TABLE>
(1) 24-Month loan dated August 28, 1996. Monthly payment of $1,601 includes
interest.
(2) 36-Month loan dated March 6, 1997. Monthly payment of $2,083 plus interest.
This loan was originally a demand loan that was converted to a term loan.
This is page 9 of a report of 12 pages
<PAGE>
Both of the above loans are secured by all the assets of the company. In
addition, the loan agreements provide for the right of offset against certain
funds held by the lender. The loans also contain restrictive covenants
pertaining to minimum equity, debt service requirements and debt/equity ratios.
Interest expense on the above notes totaled $8,054. Debt payments due in future
years are as follows:
<TABLE>
<S> <C>
1998 (Current) $37,383
1999 25,000
2000 4,167
-------
$66,550
-------
-------
</TABLE>
OFFICE LEASE:
On May 1, 1996, the corporation entered into a leasing agreement with Upper
Merion Investment Corporation d/b/a Campus Three for a 7,250 square foot office
building in Whitemarsh Township, Pennsylvania. Beginning May 1, 1997, the
corporation began leasing an additional 1200 square feet at the same location
under this lease. The lease is for a term of five years and expires April 30,
2001.
Future minimum rents due under this lease are as follows:
<TABLE>
<S> <C>
1998 $ 86,781
1999 89,359
2000 90,309
2001 30,476
</TABLE>
There are no provisions for extension under the current lease agreement;
however, the company does have the right of first refusal on a purchase option
during the term of the lease.
The company sublet a portion of the space to another organization during 1997.
Net rent expense for the year ended December 31, 1997, totaled $78,604.
CAPITAL LEASE:
The corporation is leasing a Konica 1015 copier financed with GE Capital under a
capital lease. The lease, dated July 2, 1997, in the original amount of $4,395,
is for a period of 36 months. Monthly payments of $146 under this lease include
interest at the rate of 12%.
This is page 10 of a report of 12 pages
<PAGE>
Future minimum payments, excluding interest, are as follows:
<TABLE>
<S> <C>
1998 (Current) $1,360
1999 1,532
2000 982
------
$3,874
------
------
</TABLE>
Interest expense on the above lease totaled $262 for the current year.
RETIREMENT PLAN:
The Company maintains a defined contribution profit sharing plan for the benefit
of its employees. To be eligible for participation in the plan, an employee must
complete one year of service with the Company. Contributions to the Plan are at
the discretion of the Company and are limited to 15% of eligible compensation.
Contributions to the Plan for 1997 totaled $108,341. Contributions are vested on
the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested %
---------------- --------
<S> <C>
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
The Company has added a 401(k) provision to the Plan allowing employees to defer
a percentage of their compensation. Employees may elect to defer up to 15% of
their compensation subject to limitations imposed by the Internal Revenue
Service. The Company does not match these contributions. Employee contributions
to this Plan for 1997 totaled $118,521. These contributions are always fully
vested.
RELATED PARTY TRANSACTIONS:
Effective April 1994, Texcel, Inc. sold its temporary division to a separate
legal entity known as Texcel Technical Services, Inc. The shareholders of
Texcel, Inc. are also shareholders of that company.
Texcel, Inc. bills Texcel Technical Services, Inc. monthly for administrative
support services and other related business costs it provides. These costs
include administrative salaries, insurance, and financial services.
This is page 11 of a report of 12 pages
<PAGE>
The amount billed to Texcel Technical Services, Inc. during 1997 totaled
$12,586. Texcel Technical Services, Inc. owed the company $1,859 at December
31, 1997.
SUBSEQUENT EVENT:
Effective October 7, 1998, the Company sold all of its assets, properties and
business to DCRI Acquisition Corporation, a Texas Corporation. Subsequent to
the sale, the Company entered into a plan of complete liquidation.
This is page 12 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Plymouth Meeting, Pennsylvania
December 31, 1997
I N D E X
Page Number
1 Index
2 Independent Auditor's Report
3 - 4 Balance Sheet as of December 31, 1997
5 Statement of Income and Retained Earnings for the Year
Ended December 31, 1997
6 Statement of Cash Flows for the Year Ended December 31, 1997
7 - 10 Notes to Financial Statements
11 Supplementary Information
12 Schedule of Expenses for the Year Ended December 31, 1997
This is page 1 of a report of 12 pages
<PAGE>
To the Shareholders
Texcel Technical Services, Inc.
5170 Campus Drive
Plymouth Meeting, PA 19462
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Texcel Technical Services,
Inc. (an "S" Corporation) as of December 31, 1997, and the related statements
of income and retained earnings, and cash flows, for the year then ended.
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 audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Texcel Technical Services,
Inc. at December 31, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule of Expenses on page 12 is
presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Dreslin and Company, Inc.
December 4, 1998
East Norriton, PA
This is page 2 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Balance Sheet
December 31, 1997
<TABLE>
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 19,303
Accounts Receivable 274,273
--------------
Total Current Assets 293,576
Fixed Assets:
Leasehold Improvements 910
Furniture and Fixtures 13,349
Office Equipment 38,145
---------------
52,404
Less: Accumulated Depreciation (30,928)
---------------
Total Fixed Assets - Net 21,476
Other Assets:
Incorporation Costs 2,201
Goodwill 8,839
Less: Accumulated Amortization (3,857)
----------------
Net Intangibles 7,183
Security Deposit 1,650
---------------
Total Other Assets 8,833
-----------
Total Assets $ 323,885
-----------
-----------
</TABLE>
(Continued)
This is page 3 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Balance Sheet (Continued)
December 31, 1997
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
<S> <C> <C>
Current Liabilities:
Accrued Expenses $ 24,733
Accrued Interest 1,440
Intercompany Payable 1,859
Accrued and Withheld Payroll Taxes Payable 16,960
Accrued Payroll 8,326
---------------
Total Current Liabilities 53,318
Long-Term Liabilities:
Loans Payable - Officers 18,000
---------------
Total Long-Term Liabilities 18,000
------------
Total Liabilities 71,318
STOCKHOLDERS' EQUITY
Common Stock (100 Shares Authorized, Issued and
Outstanding - No Par Value) 20,000
Retained Earnings 232,567
---------------
Total Stockholders' Equity 252,567
-----------
Total Liabilities and Stockholders' Equity $ 323,885
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 4 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Statement of Income and Retained Earnings
For the Year Ended December 31, 1997
<TABLE>
<S> <C>
INCOME:
Sales $2,055,839
Commissions 106,755
----------
Total Income 2,162,594
----------
COST OF SALES:
Direct Labor 1,456,771
Payroll Taxes 106,594
Workman's Comp. Insurance 8,613
----------
Total Cost of Sales 1,571,978
----------
Gross Profit 590,616
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
(including depreciation of $9,666, amortization of $1,029
and interest of $7,550) 415,473
----------
Income from Operations 175,143
OTHER INCOME 251
----------
Net Income 175,394
RETAINED EARNINGS - BEGINNING OF YEAR 57,173
----------
RETAINED EARNINGS - END OF YEAR $ 232,567
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 5 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Statement of Cash Flows
For the Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 175,394
---------
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation 9,666
Amortization 1,029
Decrease in Current Assets:
Accounts Receivable 36,523
Increase (Decrease) in Current Liabilities:
Accrued Expenses 2,623
Accrued Interest (2,252)
Inter-company Payable (269)
Accrued and Withheld Payroll Taxes Payable (3,807)
Accrued Payroll 3,196
--------
46,709
---------
Net Cash Provided by Operating Activities 222,103
CASH FLOWS (USED) BY FINANCING ACTIVITIES:
Net Repayments on Line of Credit (212,835)
---------
Net Increase in Cash 9,268
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 10,035
---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 19,303
---------
---------
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for:
Interest $ 10,235
Taxes --
</TABLE>
The accompanying notes are an integral part of these financial statements.
This is page 6 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Notes to Financial Statements
ORGANIZATION:
Texcel Technical Services, Inc. was incorporated in Pennsylvania in 1994. It is
engaged in the business of placing technical personnel in the engineering and
management information science fields. Their market area is concentrated in
Southeastern Pennsylvania, New Jersey and Delaware.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting:
The accompanying financial statements have been prepared utilizing the accrual
basis of accounting in accordance with generally accepted accounting principles.
Cash and Cash Equivalents:
The Company considers all short-term investments with a maturity of three months
or less from the original purchase date to be cash equivalents.
Accounts Receivable:
Amounts reflected as accounts receivable are deemed fully due and collectible at
December 31, 1997.
Fixed Assets:
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the useful lives of the assets. Depreciation expense
totaled $9,666 for 1997.
Intangible Assets:
The Company incurred costs in connection with its incorporation. These costs
total $2,201 and are being amortized on the straight-line method over a 5 year
period.
Goodwill totaling $8,839, arising from the purchase of the business, is being
amortized on the straight-line method, over a 15 year period.
Amortization of these intangible assets totaled $1,029 for 1997.
Use of Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and
This is page 7 of a report of 12 pages
<PAGE>
liabilities and disclosure of contingent liabilities at the date of these
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Advertising:
The Company follows the policy of charging advertising costs to expense as
incurred. Advertising costs incurred for year ended December 31, 1997 totaled
$24,886.
FINANCIAL INSTRUMENTS:
Concentrations of Credit Risk:
Financial instruments that subject the Company to concentrations of credit risk
consist principally of trade accounts receivable. The credit risk associated
with trade receivables is limited due to the number of customers comprising the
Company's client base and the fact that they perform ongoing credit evaluations.
The Company maintains all of its cash balances at one financial institution. The
Federal Deposit Insurance Corporation insures balances of up to $100,000.
Balances in excess of $100,000 are uninsured. At December 31, 1997, the Company
had uninsured cash balances totaling $277,820.
INCOME TAXES:
The Company has elected to be treated as an "S" Corporation for federal and
state tax purposes. As an "S" Corporation, any profits or losses are passed
through to the shareholders of the Corporation and taxed on their individual
return. Accordingly, no provision for federal or state income taxes is reflected
on the accompanying financial statements.
FIXED ASSETS:
The major classifications of fixed assets and their related accumulated
depreciation is as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
---- ------------
<S> <C> <C>
Leasehold Improvements $ 910 $ 336
Furniture and Fixtures 13,349 5,243
Office Equipment 38,145 25,349
------- -------
Totals $52,404 $30,928
------- -------
------- -------
</TABLE>
This is page 8 of a report of 12 pages
<PAGE>
LINE OF CREDIT:
The Company has a $250,000 line of credit with Prime Bank. There were no
borrowings at December 31, 1997. The line of credit is collateralized by all of
the corporate assets and the personal guarantee of the majority shareholder.
Interest is charged at prime plus 1/2% and totaled $5,833.
LOAN PAYABLE - OFFICERS:
The officers of the Corporation loaned funds to the Company in June 1994. The
loans are to be repaid in June 1999 and bear interest at 8%. At December 31,
1997, interest of $1,440 is payable to the officers.
OFFICE LEASE:
Effective March 1, 1995, the Company entered into a lease for office space in
Lafayette Hill, Pennsylvania, with 600 West Partnership. The initial term of the
lease was for 31 months and called for monthly rentals of $1,640 plus a share of
operating expenses over a base amount. Effective October 1, 1997, the base rent
was adjusted to $1,700 plus a share of operating expenses. The lease now
continues year to year unless terminated by either party.
The Company sublets a portion of the space to another organization for $330 per
month. Net rent expense for the year ended December 31, 1997 totaled $17,623.
RETIREMENT PLAN:
The Company maintains a defined contribution profit sharing plan for the benefit
of its employees. To be eligible for participation in the plan, an employee must
complete one year of service with the Company. Contributions to the Plan are at
the discretion of the Company and are limited to 15% of eligible compensation.
Contributions to the Plan for 1997 totaled $15,256. Contributions are vested on
the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested %
---------------- --------
<S> <C>
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
The Company has added a 401(k) provision to the Plan allowing employees to
defer a percentage of their compensation. Employees may elect to defer up to
15% of their compensation subject to limitations imposed by the Internal
Revenue Service. The Company does not match these contributions. Employee
contributions to this Plan for 1997 totaled $23,087. These contributions are
always fully vested.
This is page 9 of a report of 12 pages
<PAGE>
RELATED PARTY TRANSACTIONS:
Texcel Technical Services, Inc. purchases administrative support services
from Texcel, Inc. The shareholders of Texcel, Inc. are also shareholders in
this Corporation. These services include administrative salaries, insurance
and financial services. The total amount billed for these services in 1997
was $12,586. Of this amount, $1,859 remained payable to Texcel, Inc. at
December 31, 1997.
SUBSEQUENT EVENT:
Effective October 7, 1998, the Company sold all of its assets, properties and
business to DCRI Acquisition Corporation, a Texas Corporation. Subsequent to
the sale, the Company entered into a plan of complete liquidation.
This is page 10 of a report of 12 pages
SUPPLEMENTARY INFORMATION
This is page 11 of a report of 12 pages
<PAGE>
TEXCEL TECHNICAL SERVICES, INC.
Schedule of Expenses
For the Year Ended December 31, 1997
<TABLE>
SELLING EXPENSES:
<S> <C>
Advertising $ 24,886
Marketing 2,855
Salaries 111,674
Telephone 8,473
--------
Total Selling Expenses 147,888
--------
GENERAL AND ADMINISTRATIVE:
Amortization 1,029
Contributions 400
Depreciation 9,666
Dues and Subscriptions 2,507
Insurance 14,687
Interest 7,550
Miscellaneous 734
Office Supplies 4,494
Payroll Taxes 18,336
Postage 1,162
Printing and Stationery 2,441
Professional Fees 22,180
Profit Sharing 15,256
Referrals 800
Rent 18,017
Repairs and Maintenance 3,910
Salaries 131,651
Seminars and Training 3,408
Taxes - Other 3,890
Travel and Entertainment 5,467
--------
Total General and Administrative Expenses 267,585
--------
Total Expenses $415,473
--------
--------
</TABLE>
This is page 12 of a report of 12 pages
<PAGE>
Texcel, Inc
Balance Sheet
September 30, 1998
<TABLE>
<CAPTION>
Assets
Current Assets
<S> <C> <C>
Cash and Cash Equivalents $ 393,411
Accounts Receivable - Trade 967,769
Accounts Receivable - Inter-Company 1,859
Prepaid Expense 13,884
-------------
Total Current Assets 1,376,923
Fixed Assets
Office Equipment & Furniture 479,034
Leasehold Improvements 62,294
------------
541,328
Less: Accumulated Depreciation 290,389
------------
Total Fixed Assets - Net 250,939
Other Assets
Security Deposits 15,906
----------
Total Assets $1,643,768
----------
----------
Liabilities & Stockholders Equity
Liabilities
Current Liabilities
Current Portion of Loans Payable $ 43,000
Current Portion of Capital Lease Obligation 1,487
Accrued Commissions 466,125
Accrued Expense 76,843
Payroll Taxes Payable 9,891
Sales Tax Payable 64,904
------------
Total Current Liabilities 662,250
Long-Term Liabilities
Loans Payable (Net of Current Portion) 42,602
Obligation Under Capital Lease (Net of Current Portion) 1,383
------------
Total Long-Term Liabilities 43,985
----------
Total Liabilities 706,235
----------
Stockholder Equity
Common Stock, Authorized 1,000 Shares, Issued
and outstanding 100 shares @ no par value 20,000
Retained Earnings 917,533
-----------
Total Stockholders' Equity 937,533
----------
Total Liabilities & Stockholders' Equity $1,643,768
----------
----------
</TABLE>
<PAGE>
Texcel, Inc
Income Statement
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Sales (Net of Refunds of 146,034 ) $ 4,459,998
Operating Expenses
Advertising 326,563
Auto Expenses 6,100
Contributions 200
Depreciation 128,298
Insurance 91,595
Interest 7,081
Marketing 12,744
Office 67,248
Payroll Taxes 146,803
Professional Fees 21,965
Profit Sharing 60,000
Rent 71,070
Referral Fees 2,750
Repairs & Maintenance 6,338
Salaries & Wages 2,907,312
Seminars & Training 5,868
Taxes - Other 19,129
Telephone 75,906
Travel & Entertainment 18,017
---------
Total Expense 3,974,987
----------
Income from Operations 485,011
Other Income 14,991
----------
Total $ 500,002
----------
----------
</TABLE>
Texcel, Inc
Statement of Retained Earnings
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Balance - January 1, 1998 $ 618,341
Basis Adjustment - Asset Disposal (810)
Net Income for the Year 500,002
Dividend Distributions for the Year (200,000)
---------
Balance - September 30, 1998 $ 917,533
---------
---------
</TABLE>
<PAGE>
Texcel, Inc
Statement of Cash Flows
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
Cash Flows from Operating Activities
<S> <C>
Net Income $ 500,002
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 128,298
(Increase) Decrease in Current Assets:
Accounts Receivable (117,981)
Prepaid Expenses 14,040
Increase (Decrease) in Current Liabilities:
Accrued Commissions 105,464
Accrued Expenses 41,351
Payroll Taxes Payable (7,392)
Sales Tax Payable 4,463
Deferred Revenue (28,416)
----------
Net Cash Provided by Operating Activities 639,829
Cash Flows (Used) by Investing Activities:
Purchase of Fixed Assets (138,375)
Cash Flows (Used) by Financing Activities:
Bank Loan 60,000
Bank Loan Principal Payments (40,948)
Payment of Cash Dividends (200,000)
Principal Payments of Capital Lease Obligations (1,004)
----------
Net Cash (Used) by Financing Activities (181,952)
---------
Net Increase in Cash 319,502
Cash and Cash Equivalents - Beginning of Year 73,909
-----------
Cash and Cash Equivalents - End of Period $ 393,411
-----------
-----------
</TABLE>
<PAGE>
Texcel Technical Services, Inc.
Balance Sheet
September 30, 1998
<TABLE>
<CAPTION>
Assets
Current Assets
<S> <C> <C>
Cash $ 52,205
Accounts Receivable 239,301
Prepaid Taxes 1,120
------------
Total Current Assets 292,626
Property & Equipment
Leasehold Improvements 910
Furniture & Fixtures 13,870
Office Equipment 44,497
-----------
Subtotal 59,277
Less: Accumulated Depreciation 39,075
-----------
Property & Equipment - Net 20,202
Other Assets
Incorporation Costs 2,201
Goodwill 8,839
------------
Subtotal 11,040
Less: Accumulated Amortization -Net (4,629)
------------
Intangibles - Net 6,411
Security Deposit - Lease 1,650
------------
Total Other Assets 8,061
---------
Total Assets $320,889
---------
---------
Liabilities & Stockholders Equity
Current Liabilities
Accounts Payable & Accrued Expenses $ 25,378
Accrued Interest 1,080
Inter-Company Payable 1,859
Accrued and Withheld Payroll Taxes Payable 25,237
Payroll Taxes Payable 9,576
-----------
Total Current Liabilities 63,130
Other Liabilities
Loans - Shareholders 18,000
---------
Total Liabilities 81,130
---------
Stockholders' Equity
Common Stock, Authorized, Issued and
Outstanding 100 shares, no par value 20,000
Retained Earnings 219,759
----------
Total Stockholders' Equity 239,759
---------
Total Liabilities & Stockholders' Equity $ 320,889
---------
---------
</TABLE>
<PAGE>
Texcel Technical Services, Inc.
Statement of Income and Retained Earnings
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
Income
<S> <C> <C>
Sales $ 1,290,272
Commissions 89,292
-----------
Total Income 1,379,564
Cost of Sales
Direct Labor 900,000
Payroll Taxes 102,695
Workman's Comp. Insurance 19,688
-----------
Total Expenses 1,022,383
----------
Gross Profit 357,181
Selling, General and Administrative Expenses
(Including Depreciation of 8,147, Amortization
of 772 and Interest of 1080) 341,185
----------
Income from Operations 15,996
Other Income 1,196
----------
Net Income 17,192
Retained Earnings - Beginning of Year 232,567
Distributions (30,000)
----------
Retained Earnings - End of Period $ 219,759
----------
----------
</TABLE>
<PAGE>
Texcel Technical Services, Inc.
Statement of Cash Flows
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
Cash Flows from Operating Activities
<S> <C> <C>
Net Income $ 17,192
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 8,147
Amortization 772
(Increase) Decrease in Current Assets
Accounts Receivable 34,972
Prepaid Expenses (1,120)
Increase (Decrease) in Current Liabilities
Accrued Expenses 645
Accrued Interest (360)
Accrued and Withheld Taxes 8,277
Accrued Payroll 1,250
--------
Net Cash Provided by Operating Activities 69,775
Cash Flows (Used) from Investment Activities
Purchase of Furniture and Equipment (6,873)
Distributions (30,000)
-----------
Net Increase in Cash 32,902
Cash and Cash Equivalents - Beginning of Year 19,303
-----------
Cash and Cash Equivalents - End of Period $ 52,205
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
Supplemental Disclosure:
<S> <C>
Cash Paid During the Year for:
Interest 1,440
Taxes 116,328
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the acquisition of Texcel, Inc. and Texcel Technical Services, Inc.
(collectively referred to herein as "Texcel") by Diversified Corporate
Resources, Inc. ("DCRI") pursuant to an Asset Purchase Agreement, dated
October 7, 1998, that was completed on October 8, 1998, effective September
30, 1998. This pro forma information has been prepared utilizing the
historical financial statements of DCRI and Texcel. This information should
be read in conjunction with the historical financial statements and notes
thereto of DCRI which are incorporated by reference to DCRI's Form 10-K and
the historical financial statements of Texcel which are incorporated within
this Form 8-K. The pro forma financial data are provided for comparative
purposes only and do not purport to be indicative of the results which
actually would have been obtained if the acquisition had been effected on the
dates indicated, or of the results which may be obtained in the future.
The pro forma financial information is based on the purchase method of
accounting for the acquisition. The pro forma adjustments are described in
the accompanying Notes to Unaudited Pro Forma Combined Balance Sheet and
Notes to Unaudited Pro Forma Combined Statements of Income. The Unaudited Pro
Forma combined statement of income for the year ended December 31, 1997
assumes that the acquisition of Texcel had occurred on January 1, 1997
(combining the results for the year ended December 31, 1997 for DCRI, and the
year ended December 31, 1997 for Texcel). The Unaudited Pro Forma Combined
Statements of Income for the nine months ended September 30, 1998 assumes
that the acquisition of Texcel had occurred on January 1, 1998 (combining the
results for the nine months ended September 30, 1998 for DCRI, and the nine
months ended September 30, 1998 for Texcel.) The unaudited Pro Forma Combined
Balance Sheet at September 30, 1998 assumes that the acquisition of Texcel
had occurred on September 30, 1998.
Acquisition
The consideration paid to the former shareholders of Texcel consisted of $1.8
million in cash and up to $2.64 million of contingent consideration payable
over three years based upon Texcel achieving certain base levels of operating
income for each of the three twelve month periods following the purchase and
100,000 shares of DCRI common stock.
Assumptions
Purchase Price Allocation
Although neither DCRI nor Texcel has complete information at this time as to
the fair value of Texcel's individual assets and liabilities, an estimate of
the eventual allocation of the purchase price was made on the basis of
available information. The final allocation of the purchase price will be
made on the basis of appraisals and valuations, which give effect to various
factors including the nature and intended future use of assets. It is not
anticipated that any change in the allocation price will be material from the
pro forma adjustments.
For the purpose of pro forma presentations, the excess purchase price over
the fair value of the net assets acquired is being amortized over an
estimated life of twenty (20) years.
<PAGE>
Diversified Corporate Resources, Inc
Unaudited Pro Forma Combined Balance Sheet
September 30, 1998
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------- -------------------------------------
DCRI TEXCEL TEXCEL TECH ADJUSTMENTS
HISTORICAL HISTORICAL HISTORICAL AND PROFORMA
9/30/98 9/30/98 9/30/98 ELIMINATION COMBINED
--------------- -------------- ---------------- ----------------- --------------
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets
Cash & cash equivalents $ 5,771,648 $ 393,411 52,205 (1,800,000) A 4,217,264
(200,000) B
Trade accts receivable 6,341,040 967,769 239,301 7,548,110
Notes receivable-related
party 31,188 31,188
Prepaid expenses and other
current assets 279,228 15,743 1,120 296,091
Federal income taxes
receivable 254,477 254,477
Deferred income taxes 260,101 260,101
------------- ------------ -------------- --------------- ------------
Total Current Assets 12,937,682 1,376,923 292,626 (2,000,000) 12,607,231
Property and Equip. Net A
2,739,824 250,939 20,202 271,141 3,282,106
Other Assets
Notes receivable-related
party 2,953 2,953
Deferred income taxes 264,913 264,913
Intangible Assets 136,803 6,411 2,567,177 A 2,910,391
200,000 B
Other 396,979 15,906 1,650 414,535
------------- ------------ -------------- --------------- ------------
$ 16,479,154 $ 1,643,768 $ 320,889 $ 1,038,318 $19,482,129
------------- ------------ -------------- --------------- ------------
------------- ------------ -------------- --------------- ------------
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Trade accounts payable and
accrued expenses 3,338,252 $ 617,763 $ 61,271 $ 4,017,286
Payable to Affiliates 1,859 1,859
Current maturities of
long-term debt 14,294 43,000 57,294
Current maturities of
capital lease
obligations 44,985 1,487 46,472
--------------- -------------- ---------------- ----------------- --------------
Total Current Liabilities
3,397,531 662,250 63,130 4,122,911
Deferred Lease Rents
68,208 68,208
Long-Term Debt
119,795 42,602 162,397
Loans Payable - Officers A
18,000 (18,000) -
Net Deferred Obligations A
1,752,360 1,752,360
Commitments and Contingincies
36,149 1,383 37,532
Stockholders Equity A
12,857,471 937,533 239,759 (696,042) 13,338,721
--------------- -------------- ---------------- ----------------- --------------
--------------- -------------- ---------------- ----------------- --------------
Total $ 16,479,154 $ 1,643,768 320,889 $ 1,038,318 $ 19,482,129
--------------- -------------- ---------------- ----------------- --------------
--------------- -------------- ---------------- ----------------- --------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
A To record initial cash and share consideration
B To reflect estimated acquisition costs
<PAGE>
Diversified Corporate Resources, Inc
Unaudited Pro Forma Combined Balance Sheet
Year ended December 31, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------- ----------------------------------------
DCRI TEXCEL TEXCEL TECH ADJUSTMENTS
HISTORICAL HISTORICAL HISTORICAL AND PROFORMA
12/31/97 12/31/97 12/31/97 ELIMINATION COMBINED
--------------- ------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Net Service Revenues
Permanent Placement $ 17,592,923 $ 5,016,100 $ 22,609,023
Speciality Placement 7,609,008 2,162,594 9,771,602
Contract Placement
8,609,603 8,609,603
--------------- ------------- --------------- ----------------- -----------------
Total Revenues
33,811,534 5,016,100 2,162,594 40,990,228
Cost of Services
23,678,331 3,484,045 1,571,978 28,734,354
--------------- ------------- --------------- ----------------- -----------------
Gross Margin
10,133,203 1,532,055 590,616 12,255,874
Selling, General and Administrative
Expenses $ A
(7,628,234) (964,144) (407,923) (169,017) (9,197,617)
B
(28,299)
Other Income (Expenses)
Income (Loss) from joint venture
operations (21,072) (21,072)
Interest income (expense), net C
(35,468) (8,316) (7,550) (285,595) (336,929)
Other, net
31,729 16,973 251 48,953
--------------- ------------- --------------- ----------------- -----------------
(24,811) 8,657 (7,299) (285,595) (309,048)
--------------- ------------- --------------- ----------------- -----------------
Income Before Income Taxes and
Extraordinary Item
2,480,158 576,568 175,394 (482,911) 2,749,209
Income Taxes D
123,195 (107,620) 15,575
--------------- ------------- --------------- ----------------- -----------------
Income Before Extraordinary Item
2,603,353 576,568 175,394 (590,531) 2,764,784
Extraordinary Item
56,627 56,627
--------------- ------------- --------------- ----------------- -----------------
--------------- ------------- --------------- ----------------- -----------------
NET INCOME $ 2,659,980 $ 576,568 $ 175,394 $ (590,531) $ 2,821,411
--------------- ------------- --------------- ----------------- -----------------
--------------- ------------- --------------- ----------------- -----------------
Basic Earnings Per Share
Income Before Extraordinary Item
$ $
1.33 1.35
Extraordinary Item
0.03 0.03
--------------- -----------------
--------------- -----------------
Total
$ $
1.36 1.38
--------------- -----------------
--------------- -----------------=
Weighted Average Common Shares
Outstanding
1,951,117 2,051,117
--------------- -----------------
--------------- -----------------
Diluted Earnings Per Share
Income Before Extraordinary Item
$ $
1.26 1.27
Extraordinary Item
0.03 0.03
--------------- -----------------
--------------- -----------------
Total
$ $
1.28 1.30
--------------- -----------------
--------------- -----------------
Weighted Average Common and Common
Equivalent Shares Outstanding
2,071,223 2,171,223
--------------- -----------------
--------------- -----------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED INCOME
STATEMENT
A To record amortization - intangibles
B To adjust depreciation
C To record interest effects of transaction
D To record tax effect of Texcel operations (estimated at 40% of income
before taxes and extraordinary items)
<PAGE>
Diversified Corporate Resources, Inc
Unaudited Pro Forma Combined Income Statement
Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------------------------- -------------------------------------
DCRI TEXCEL TEXCEL TECH ADJUSTMENTS
HISTORICAL HISTORICAL HISTORICAL AND PROFORMA
9/30/98 9/30/98 9/30/98 ELIMINATION COMBINED
--------------- ----------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Net Service Revenues
Permanent Placement $ 15,948,437 $ $
4,459,998 20,408,435
Speciality Placement $
4,723,381 1,379,564 6,102,945
Contract Placement
9,096,234 9,096,234
Training
453,003 453,003
--------------- ----------------- ---------------- ---------------- ------------------
Total Revenues
30,221,055 4,459,998 1,379,564 36,060,617
Cost of Services
21,124,298 3,054,115 1,022,383 25,200,796
--------------- ----------------- ---------------- ---------------- ------------------
Gross Margin
9,096,757 1,405,883 357,181 10,859,821
Selling, General and Administrative
Expenses $ A
(7,416,551) (913,791) (340,105) (114,191) (8,738,031)
B
46,607
Other Income (Expenses)
Income (Loss) from
joint venture operations (26,209) (26,209)
Interest income (expense), net C
276,489 (7,081) (1,080) (179,964) 88,364
Other, net
9,019 14,991 1,196 25,206
--------------- ----------------- ---------------- ---------------- ------------------
259,299 7,910 116 (179,964) 87,361
--------------- ----------------- ---------------- ---------------- ------------------
Income Before Income Taxes and
Extraordinary Item
1,939,505 500,002 17,192 (247,548) 2,209,151
Income Taxes D
(698,050) (107,859) (805,909)
--------------- ----------------- ---------------- ---------------- ------------------
Income Before Extraordinary Item
1,241,455 500,002 17,192 (355,407) 1,403,242
Extraordinary Item
-
=============== ================= ================ ================ ==================
NET INCOME $ $ $ $ $
1,241,455 500,002 17,192 (355,407) 1,403,242
=============== ================= ================ ================ ==================
Basic Earnings Per Share
Income Before Extraordinary Item
$ $
0.45 0.49
Extraordinary Item
- -
=============== ==================
Total
$ $
0.45 0.49
=============== ==================
Weighted Average Common Shares
Outstanding
2,765,611 2,865,611
=============== ==================
Diluted Earnings Per Share
Income Before Extraordinary Item
$ $
0.43 0.47
Extraordinary Item
- -
=============== ==================
Total
$ $
0.43 0.47
=============== ==================
Weighted Average Common and Common
Equivalent Shares Outstanding
2,887,268 2,987,268
=============== ==================
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED INCOME
STATEMENT
A To record amortization - intangibles
B To adjust depreciation
C To record interest effects of transaction
D To record tax effect of Texcel operations (estimated at 40% of income
before taxes and extraordinary items)
<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.
Date: December 22, 1998
Diversified Corporate Resources, Inc.
By: /s/ Douglas G. Furra
Douglas G. Furra
Chief Financial Officer
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As an independent public accountants, we hereby consent to the incorporation by
reference in the Diversified Corporate Resources, Inc. Registration Statements
on Form S-8 (File No.'s 333-27867 and 333-56671) of our report dated December 4,
1998 with respect to the financial statements of Texcel, Inc. and Texcel
Technical Services, Inc. included in the Diversified Corporate Resources, Inc.
Current Report on Form 8-K/A dated December 22, 1998 filed with the Securities
and Exchange Commission.
/s/ Dreslin and Company, Inc.
December 22, 1998
East Norriton, PA
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