FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 1, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17840
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HANDEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2941704
---------------------------- ----------------------------------
(State or other jurisdiction (I.R.S. Employer Identification of
incorporation or organization) No.)
500 Campus Drive, Morganville, New Jersey 07751
(Address of principal executive offices)
(Zip Code)
(908) 536-8500
(Registrant's telephone number, including area code)
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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 ____
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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 practicable date.
Number of shares of common stock outstanding at July 30, 1995 6,865,212
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
July 1, 1995 and December 31, 1994
July 1, December 31,
1995 1994
---- ----
Assets (unaudited)
--------
Current assets:
Cash and cash equivalents $ 1,202,172 2,895,478
Marketable securities 4,400,000 3,940,000
Accounts receivable, net 26,425,318 26,854,906
Inventories 399,242 298,326
Refundable income tax 216,803 388,682
Deferred income tax assets 599,431 609,668
Prepaid expenses and other
current assets 1,282,644 609,146
------------ ------------
Total current assets 34,525,610 35,596,206
Property, plant and equipment, net 9,883,022 8,736,608
Other non-current assets 2,052,816 1,665,793
Intangible assets 15,948,131 15,921,530
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$62,409,579 61,920,137
============= =============
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
July 1, 1995 and December 31, 1994
July 1, December 31,
Liabilities and Stockholders' 1995 1994
Equity ------ -------
--------------------------------- (unaudited)
Current liabilities:
Current installments of long-
term obligations $ 349,840 579,991
Accounts payable 4,436,780 4,523,848
Accrued expenses 6,007,010 5,826,066
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Total current liabilities 10,793,630 10,929,905
Long-term obligations, excluding
current installments 491,971 464,357
Deferred income tax liability 890,510 888,516
Stockholders' equity:
Preferred stock, without par
value, 2,000,000 shares
authorized, no shares issued -- --
Common stock, $.01 par value,
15,000,000 shares authorized;
issued 7,050,212 shares in
1995 and 1994 70,502 70,502
Additional paid-in capital 24,352,966 24,365,566
Retained earnings 27,108,125 26,499,416
Treasury stock at cost-185,000
shares in 1995 and 1994 (1,298,125) (1,298,125)
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Total stockholders' equity 50,233,468 49,637,359
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$ 62,409,579 61,920,137
============= ===========
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
Six and Three Months ended July 1, 1995 and July 2, 1994
(Unaudited)
Six Months Ended Three Months Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
Total operating revenues $41,015,978 27,040,478 20,631,265 15,098,800
Subcontractor costs 6,941,146 5,358,304 3,557,272 3,222,679
Net operating
revenues 34,074,932 21,682,174 17,073,993 11,876,121
Cost of net operating
revenues 21,333,342 13,948,965 10,553,046 7,372,628
------------ ------------ ----------- -----------
Gross profit 12,741,490 7,733,209 6,520,947 4,503,493
General and
administrative expenses 11,643,082 6,901,549 5,937,999 3,576,145
------------ ------------ ---------- ----------
Operating income 1,098,408 831,660 582,948 927,348
Other income (expense):
Interest expense (49,400) (91) (26,428) (79)
Interest income 347,068 454,932 184,761 232,451
Other (313,006) (91,192) (120,436) (47,929)
------------ ------------ ------------ -----------
(15,338) 363,649 37,897 184,443
------------ ------------ ------------ -----------
Income before income
taxes 1,083,070 1,195,309 620,845 1,111,791
Provision for income
taxes 474,360 458,064 286,007 434,794
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Net income $ 608,710 737,245 334,838 676,997
============ ============ ============ ==========
Net income per share $ .09 .11 .05 .10
============ =========== ============ ==========
Weighted average number 6,865,212 6,860,926 6,865,212 6,865,212
of shares outstanding
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Six Months ended July 1, 1995 and July 2, 1994
(Unaudited)
1995 1994
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 608,710 737,245
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,715,030 1,159,967
Gain on sale of equipment (2,183) (37,641)
Deferred income taxes 12,231 (105,037)
Cash provided (used) from the
change in:
Accounts receivable 429,588 (4,275,371)
Inventories (100,916) 3,397
Prepaid expenses and other
current assets (673,498) 3,658
Refundable income tax 171,879 131,998
Other assets (391,403) (222,165)
Income taxes payable -- 171,532
Accounts payable (87,068) 661,914
Accrued expenses 180,944 1,326,986
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Net cash (used in) provided
by operating activities 1,863,314 (443,517)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (4,000,000) (12,705,000)
Redemption of marketable securities 3,540,000 14,670,000
Additions to property, plant and
equipment (2,642,984) (1,301,442)
Other (233,604) --
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Net cash provided (used) in investing
activities (3,336,588) 663,558
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 65,000
Proceeds from debt obligations 304,190 --
Principal payments on debt obligations (511,622) --
Other (12,600) --
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Net cash (used) provided by financing
activities (220,032) 65,000
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Net (decrease) increase in cash and cash
equivalents (1,693,306) 285,041
Cash and cash equivalents at beginning of
period 2,895,478 882,823
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,202,172 1,167,864
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash was paid for:
Interest $ 49,400 91
============= ============
Income taxes $ 270,796 444,654
============= =============
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Six and Three Months Ended July 1, 1995 and July 2, 1994
Note 1 In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and
recurring in nature), necessary to present fairly the financial position
of the Company at July 1, 1995 and the results of operations for the six
and the three month periods ended July 1, 1995 and July 2, 1994. The
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report for the year
ended December 31, 1994.
Note 2 Certain items on the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
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On August 15, 1994, a newly organized subsidiary of Handex Corporation
("Company"), New Horizons Education Corporation, acquired all of the issued and
outstanding shares of New Horizons Franchising, Inc. Simultaneously, a newly
organized subsidiary of New Horizons Education Corporation, acquired
substantially all of the assets of New Horizons Computer Learning Center, Inc.
As a result of these acquisitions, the Company conducts two distinct lines of
business and reports its results in two segments, environmental and educational.
The discussion that follows, highlights the business conditions and certain
financial information specific to each of the two business segments.
ENVIRONMENTAL BUSINESS SEGMENT
------------------------------
Net operating revenues include fees for services provided directly by
subsidiaries of Handex Environmental, Inc. ("Handex Environmental") and fees for
arranging for subcontractors' services, as well as proceeds from the rental and
sale of equipment. Handex Environmental, in the course of providing its
services, routinely subcontracts for outside services such as soil cartage,
laboratory testing and other specialized services. These costs are generally
passed through to clients and, in accordance with industry practice, are
included in total operating revenues. Because subcontractor services can change
significantly from project to project, changes in total operating revenues may
not be truly indicative of business trends. Accordingly, Handex Environmental
views net operating revenues, which is total operating revenues less the cost of
subcontractor services, as its primary measure of revenue growth.
Cost of net operating revenues includes professional salaries, other direct
labor, material purchases and certain direct and indirect overhead costs.
Selling, general and administrative expenses include management salaries, sales
and marketing salaries and expenses, and clerical and administrative overhead.
During 1994 and the first six months of 1995, several trends continued to
develop which Handex Environmental believes will have a direct impact on its
future results of operations. Handex Environmental believes that expenses for
administration, computerization, marketing and engineering will continue to
increase as a result of the increasing desire of Handex Environmental's
customers for more detailed information concerning the status of their
environmental projects. Handex Environmental's marketing costs will continue to
increase due to the effects of increased competition in the environmental
industry and Handex Environmental's strategy to diversify its client base.
Handex Environmental's customers have become increasingly cost conscious
during recent periods in part due to their own financial constraints. To date,
this cost consciousness on the part of customers has manifested itself primarily
in three areas: (i) the manner in which Handex Environmental obtains its
business and charges for its services; (ii) the use of other contractors to
provide certain services traditionally provided by Handex Environmental; and
(iii) an increasing preference to purchase, rather than lease, remediation
equipment.
Over the last three years, Handex Environmental has experienced a
significant increase in customer demand for competitive bidding and/or fixed
price contracts. During 1994 and the first six months of 1995, a majority of
Handex Environmental's work was performed under fixed price contracts and unit
pricing arrangements. However, management believes that, over the long term, the
quality and cost effectiveness of its services will continue to be an important
competitive advantage. Accordingly, in responding to price competition, Handex
Environmental will attempt to maintain a high level of technical quality in its
services.
A majority of Handex Environmental's major customers now purchase directly
from other contractors equipment and certain services, such as laboratory
analyses, which were formerly provided by or through Handex Environmental as
part of its full service approach. Management believes that this trend will
continue.
Handex Environmental's quarterly results may fluctuate from period to
period. Among the principal factors influencing quarterly variations are
weather, which may limit the amount of time Handex Environmental's professional
and technical personnel have in the field; the addition of new professionals who
require training and initially bill a lower percentage of their time; the timing
of receipt of discharge and other permits necessary to install dewatering and
recovery systems, and the opening of new offices, which initially have higher
expenses relative to revenues than established offices.
In recent years and through the first quarter of 1995, Handex
Environmental's business has been partially driven by the cost reimbursement
program maintained by the State of Florida through the Florida Inland Protection
Trust Fund ("Fund"). The Fund has recently been revised by the Florida
legislature to require site prioritization and prior approval of costs by the
Florida Department of Environmental Protection for reimbursement of cleanup
expenditures. These revisions have effectively reduced the number of projects
qualifying for reimbursement under the Fund rules and as had been expected, have
adversely affected the results of the Company's environmental operations in
Florida in particular and the overall results of its environmental operations
for the 1995 second quarter. The Company's Florida operations accounted for over
22%, 22%, and 24% of total environmental revenues in fiscal years 1994 and 1993
and in the first half of 1995 respectively. In the light of the size of the
Company's environmental operations in Florida, the Company expects such
revisions to continue to adversely affect its operating results in future
periods.
The Company has taken steps to mitigate revenues lost resulting from these
changes in Florida's reimbursement program. The Company, through its Florida
subsidiary has recently entered into an agreement to acquire certain assets of a
local environmental company along with servicing approximately 800 remediation
sites. Through this acquisition which is expected to be completed in August, the
Company expects to replace a portion of revenues lost from the regulatory
changes. In addition, the Company is continuing its efforts to diversify its
client base and the services it offers.
EDUCATIONAL BUSINESS SEGMENT
----------------------------
The educational segment of the Company's business is operated through its
New Horizons Education Corporation ("New Horizons") subsidiary.
The education segment is comprised of two distinct businesses, one, which
operates wholly-owned training centers, and the other which supplies systems of
instruction and sales and management concepts concerning computer training to
independent franchisees.
Revenues for the training centers which are wholly-owned by subsidiaries of
New Horizons consist primarily of training fees and fees derived from sales of
courseware materials. Cost of sales consists primarily of instructors' salaries
and benefits, facilities costs such as rent, utilities and classroom equipment,
courseware, and computer hardware, software and peripherals. Selling, general
and administrative expenses consist primarily of costs associated with technical
support personnel, facilities support personnel, scheduling personnel, training
personnel, accounting and finance support and sales executives.
Revenues for the franchising operation consist primarily of initial
franchise fees associated with the sale of a franchise, royalty and advertising
fees based on a percentage of franchisee gross training revenues, and percentage
royalties received on the gross sales of courseware. Cost of sales consists
primarily of costs associated with franchise support personnel who provide
system guidelines and advice on daily operating issues including sales,
marketing, instructor training and general business problems. Selling, general
and administrative expenses consist primarily of technical support, courseware
development, accounting and finance support, national account sales support, and
advertising expenses.
RESULTS OF OPERATIONS
NET OPERATING REVENUES
Consolidated net operating revenues increased $5,198,000 or 43.8% for the second
quarter of 1995 and increased $12,393,000 for the first six months of 1995
compared to the same periods in 1994. Consolidated net operating revenues for
the second quarter and the first six months of 1995 included New Horizons' net
operating revenues of $5,611,000 and $10,747,000, respectively. New Horizons'
net operating revenues account for 32.9% and 31.5% respectively, of consolidated
net operating revenues for the second quarter and first six months of 1995 and
represent 47.2% and 49.6% respectively, of the increase in net operating
revenues over last year's comparable periods. New Horizons' net operating
revenues for the second quarter of 1995 reflect an improvement of 9.2% over
reported revenues for the first quarter of 1995. Handex Environmental's net
operating revenues of $11,464,000 for the second quarter of 1995 declined 3.5%
compared to the 1994 quarter, and increased 7.6% for the first six months of
1995 compared to the same period last year. These results reflect a combination
of the impact of the changes in the state-funded site rehabilitation program in
Florida, which reduced the number of sites qualifying for reimbursement under
the program, intense competition in all other regions where the Company operates
and clients' deferral of environmental projects. Handex Environmental
subsidiaries which were in operation prior to 1994, reported an aggregate
decline of 9.0% and an increase of 0.8% in net operating revenues for the second
quarter and the first six months of 1995, respectively, compared to the same
periods in 1994.
New Horizons, combined with Handex Environmental's locations which opened in
1995 and 1994, accounted for over 38% and 36% respectively, of consolidated net
operating revenues for the second quarter and the first six months of 1995.
COST OF NET OPERATING REVENUES
Consolidated cost of net operating revenues increased $3,180,000 or 43.1% for
the second quarter of 1995, and increased $7,384,000 or 52.9% for the first six
months of 1995 compared to the same periods in 1994. As a percentage of net
operating revenues, the Company's cost of net operating revenues declined to
61.8% in the second quarter of 1995 from 62.1% in the same period in 1994 and
for the first six months of 1995, declined to 62.6% from 64.3% in the same
period in 1994. New Horizons' cost of operating revenues for the second quarter
of 1995 amounted to $3,079,000 or 54.9% of its net operating revenues and
amounted to $5,865,000 or 54.6% of its net operating revenues for the first six
months of 1995. New Horizons' cost of net operating revenues accounted for 41.8%
and 42.0% respectively, of the percentage increase over similar periods in 1994.
Handex Environmental's cost of net operating revenues, as a percentage of net
operating revenues increased to 65.2% in the second quarter of 1995 from 62.1%
in 1994 and for the first six months of 1995 increased to 66.3% from 64.3% in
1994. The increase in Handex Environmental's cost of net operating revenues,
both in absolute dollars and as a percentage of net operating revenues, was due
mainly to costs associated with a higher number of employees combined with lower
than expected net operating revenues.
GROSS PROFIT
Consolidated gross profit for the second quarter of 1995 increased $2,017,000 or
44.8%, and for the first six months of 1995, increased $5,008,000 or 64.8%,
compared to the same periods in 1994. As a percentage of net operating revenues,
consolidated gross profit for the 1995 quarter increased slightly to 38.2 % from
37.9% in 1994 and for the first six months of 1995, increased to 37.4% from
35.7% in 1994. Gross profit from New Horizons for the second quarter of 1995
amounted to $2,531,000 or 45.1% of its net operating revenues and for the first
six months of 1995, amounted to $4,882,000 or 45.4% of its net operating
revenues. New Horizons' gross profit accounted for 56.2% and 63.1% respectively
of the percentage increase over the same periods in 1994. Handex Environmental's
gross profit, as a percentage of net operating revenues, decreased to 34.8% in
the second quarter of 1995 from 37.9% in 1994 and for the first six months of
1995, decreased to 33.7% from 37.4% in 1994. The decrease in Handex
Environmental's gross profit as a percentage of net operating revenues was due
primarily to costs associated with a higher number of employees combined with
lower than expected net operating revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses increased $2,362,000
or 66.0% in 1995 quarter compared to 1994 and for the first six months of 1995,
increased $4,742,000 or 68.7% compared with 1994. As a percentage of net
operating revenues, selling general and administrative expenses rose to 34.8% in
the 1995 quarter from 30.1% in 1994, and for the first six months of 1995, rose
to 34.2% from 31.8% in 1994. New Horizons' selling, general and administrative
expenses amounted to $2,192,000 or 39.1% of its net operating revenues for the
1995 quarter and amounted to $4,180,000 or 38.9% of its net operating revenues
for the first half of 1995. New Horizons' selling, general and administrative
expenses accounted for 61.3% and 60.6% respectively, of the percentage increase
over the 1994 periods. Handex Environmental's selling, general and
administrative expenses, as a percentage of net operating revenues, rose to
32.7% and 32.0% in the second quarter and first six months of 1995,
respectively, from 30.1% and 31.8% in the corresponding periods of 1994. The
increase in Handex Environmental's selling, general and administrative expenses,
as a percentage of net operating revenues was due mainly to the increased costs
related to its sales and marketing function, the new offices opened in 1995 and
1994, the hiring of Health and Safety personnel and lower than expected net
operating revenues.
OTHER INCOME/EXPENSE
Interest expense for the second quarter of 1995 increased to $26,000 and for the
first six months of 1995, increased to $49,400 from $0 in the corresponding 1994
periods. The increase in both periods was primarily due to interest expense on
New Horizons capital lease obligations. As a percentage of net operating
revenues, interest expense rose to 0.2% in the 1995 quarter and to 0.1% in the
first six months of 1995 from 0% in 1994.
Interest income for the second quarter of 1995 declined to $185,000 and for the
first six months of 1995, declined to $347,000 from $232,000 and $455,000
respectively in the corresponding 1994 periods. As a percentage of net operating
revenues, interest income decreased to 1.1% in the second quarter and decreased
to 1.0% in the first six months of 1995, from 2.0% and 2.1% respectively in the
corresponding periods of 1994. The decline in interest income in absolute
dollars and as a percentage of net operating revenues was due principally to the
lower tax-free interest income earned as a result of using cash reserves to
acquire New Horizons In August 1994.
Other expenses increased to $120,000 in the second quarter and increased to
$313,000 in the first six months of 1995 from $48,000 and $91,000 respectively,
in the corresponding periods of 1994. As a percentage of net operating
revenues, other expenses increased to 0.7% in 1995 quarter and to 0.9% in the
first six months of 1995, from 0.4% in the 1994 periods. The increase in other
expenses in the 1995 reporting periods compared to 1994, was due primarily to
the amortization of certain expenses incurred with the acquisition of New
Horizons.
INCOME TAXES
The provision for income taxes as a percentage of income before taxes rose to
46.1% and 43.8% respectively, for the second quarter and first six months of
1995, from 39.1% and 38.3% respectively for the same periods last year. The
increase in the provision for income taxes was due primarily to the reduction in
the Company's tax-free interest income.
NET INCOME
Consolidated net income for the 1995 quarter decreased $343,000 or 50.5% and for
the first six months of 1995, decreased $129,000 or 17.4% from the same periods
in 1994. As a percentage of net operating revenues, consolidated net income
declined to 2.0% in 1995 quarter and for the first six months of 1995, declined
to 1.8% from 5.7% and 3.4% respectively, in 1994. New Horizons' net income
amounted to $112,000 or 2.0% of its net operating revenues in the 1995 quarter
and $253,000 or 2.4% of its net operating revenues for the first six months of
1995. Handex Environmental's net income declined to $222,000 and $355,000
respectively. in the second quarter and first six months of 1995 from $677,000
and $737,000 respectively, in 1994. As a percentage of net operating revenues,
Handex Environmental's net income declined to 1.9% and 1.5% respectively, from
5.7% and 3.4% respectively, in 1994. The decline in net income in both periods
was due principally to costs associated with a higher number of employees
combined with lower than expected net operating revenues.
LIQUIDITY AND CAPITAL RESOURCES
As of July 1, 1995, the Company's working capital was $23,732,000, and its cash,
cash equivalents and short-term investments totaled $5,602,000. Working capital
as of July 1, 1995 reflected a decrease of $934,000 from $24,666,000 as of
December 31, 1994. The Company's cash flow from operating activities reflected
an improvement over last year's primarily due to lower accounts receivable
balance and higher non-cash depreciation and amortization expenses. The Company
also has available a $5,500,000 unsecured facility with a commercial bank. This
facility bears interest at either the bank's prime rate (8.75% as of July 1,
1995), or the bank's short-term money market rate, whichever the Company elects.
The Company has not used this facility since June 1991.
The Company's full service approach to its environmental business in certain
markets and its continuing geographic expansion require Handex Environmental to
make capital expenditures for machinery and equipment and to incur costs
associated with the establishment of new office locations. During the first six
months of 1995, Handex Environmental spent approximately $918,000 on capital
equipment and anticipates spending up to $2,000,000 during 1995.
The nature of New Horizons' business and continued expansion require it to make
capital expenditures for computer equipment, software and facilities. During the
first six months of 1995, New Horizons spent approximately $1,922,000 on capital
equipment and anticipates spending up to $2,500,000 during 1995.
Management believes that current cash and cash equivalents, together with cash
generated by operations, and its funds available under its revolving credit
facility will provide the liquidity necessary to support its current and
anticipated capital expenditures through the end of 1995.
SIGNATURE
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 thereto duly authorized.
HANDEX CORPORATION
(Registrant)
Date: August 11, 1995 By: /s/ John T. St. James
------------------ ---------------------------------
John T. St. James
(Duly authorized officer and
Principal Financial Officer)
FORM 10Q - PART II: OTHER INFORMATION
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Item 6. Exhibits and other reports on Form 8-K
(a) Exhibit Index
Exhibit
Number Description of Documents
-------- ------------------------
4.1 Specimen Certificate for Shares of Common Stock, $.01 par value,
of the Registrant(1)
4.2 Unsecured Revolving Loan Agreement(4)
4.3 First Amendment to Unsecured Revolving Loan Agreement(7)
10.1 Key Employees Stock Option Plan of the Registrant(1)
10.2 Amendment No. 1 to Key Employees Stock Option Plan of the
Registrant(7)
10.3 Form of Stock Option Agreement executed by recipients of options
under Key Employees Stock Option Plan(6)
10.4 Stock Option Agreement dated August 6, 1992, between the
Registrant and Thomas J. Bresnan(7)
10.5 Outside Directors Stock Option Plan of the Registrant(1)
10.6 Amendment No. 1 to the Outside Directors Stock Option Plan of the
Registrant(7)
10.7 Form of Stock Option Agreement executed by recipients of options
under the Outside Directors Stock Option Plan(7)
10.8 Amended and Restated 401(k) Profit Sharing Trust and Plan of the
Registrant(1)
10.9 Amendment No. 1 to the Registrant's Amended and Restated 401(k)
Profit Sharing Trust Plan(2)
10.10 Amendment No. 2 to the Registrant's Amended and Restated 401(K)
Profit Sharing Trust and Plan(3)
10.11 Amendment No. 3 to the Registrant's Amended and Restated 401(k)
Profit Sharing Trust and Plan(6)
10.12 Form of Indemnity Agreement with Directors and Officers of the
Registrant(6)
10.13 Employment Agreement dated August 3, 1992, between the Registrant
and Thomas J. Bresnan(7)
10.14 Lease Agreement dated April 26, 1988, between Jocama Construction
Inc. and the Registrant(1)
10.15 Addenda to the Lease Agreement dated April 6, 1988 between Jocama
Construction and the Registrant(8)
EXHIBIT INDEX (CONTINUED)
10.16 Indenture of Lease dated June 17, 1987, between Xednah
Investments and Handex of Florida, as amended(1)
10.17 Lease Agreement dated March 25,1991, between Handex of New
England, Inc. and Metro Park Marlboro Realty Trust, as amended(6)
10.18 Lease Agreement dated January 20, 1992, between Handex of
Maryland, Inc. and Winmeyer Commons II Limited Partnership(6)
10.19 Lease Agreement dated March 1, 1995 between New Horizons Learning
Center of Metropolitan New York, Inc. and Mid-City Associates,
guaranteed by Registrant(11)
10.20 Lease Agreement dated February 24, 1995, between New Horizons
Learning Centers of Cleveland, Ltd., and Realty One Property
Management, guaranteed by the Registrant(11)
10.21 Consulting Agreement between the Registrant and The Nassau Group,
Inc. dated December 17, 1993(9)
10.22 Warrants for the purchase of 25,000 shares of Common Stock $.01
par value per share of the Registrant issued to The Nassau Group,
Inc. on December 17, 1993(9)
10.23 Warrants for the purchase of 40,000 shares of common stock $.01
par value per share of the Registrant issued to The Nassau Group,
Inc. on August 15, 1994(11)
10.24 Asset Purchase Agreement dated as of August 15, 1994 by and among
New Horizons Computer Learning Centers, Inc. a Delaware
Corporation, New Horizons Learning Center, Inc., a California
Corporation and Michael A. Brinda(10)
10.25 Stock Purchase Agreement dated as of August 15, 1994 by and among
New Horizons Education Corporation, a Delaware Corporation and
Michael A. Brinda(10)
10.26 Lease Agreement dated April 5, 1995 between New Horizons Computer
Learning Center of Chicago, Inc. and The Equitable Life Assurance
Society of the United States(12)
15.0 Letter from Independent Certified Public Accountants*
99.1 Certificate of Amendment to Certificate of Incorporation(12)
__________________________________________________________
(1) Incorporated herein by reference to the appropriate exhibits to the
Registrant's Registration Statement on
Form S-1 (File No. 33-28798).
(2) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1989.
(3) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report on Form 10-Q for the period ended March 31,
1990.
(4) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report or Form 10-Q for the period ended June 30,
1990.
EXHIBIT INDEX (CONTINUED)
(5) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1990.
(6) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991.
(7) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31,1992.
(8) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report on Form 10-Q for the period ended July 3,
1993.
(9) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended January 1, 1994.
(10) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Form 8-K dated August 15, 1994.
(11) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1994.
(12) Incorporated by reference to the appropriate exhibit to the Registrant's
Quarterly Report on Form 10-Q for the period ended April 1, 1995.
* Filed herewith.
(b) Reports on Form 8-K
On April 13, 1995, the Registrant filed a current report on Form 8-K in
connection with its announcement on the expected adverse impact of the
amendment to the Florida State's reimbursement program signed into law by
Governor Lawton Chiles. The Company also announced lower than anticipated
revenues for the first quarter, primarily as a result of client's deferral
of scheduled environmental remediation projects. This deferral may also
adversely affect anticipated second quarter results. The filling included
a copy of the announcement released to the public.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 1,202,172
<SECURITIES> 4,400,000
<RECEIVABLES> 27,406,793
<ALLOWANCES> (981,475)
<INVENTORY> 399,242
<CURRENT-ASSETS> 34,525,610
<PP&E> 25,328,007
<DEPRECIATION> (15,444,985)
<TOTAL-ASSETS> 62,409,579
<CURRENT-LIABILITIES> 10,793,630
<BONDS> 0
<COMMON> 70,502
0
0
<OTHER-SE> 50,162,966
<TOTAL-LIABILITY-AND-EQUITY> 62,409,579
<SALES> 34,074,932
<TOTAL-REVENUES> 34,074,932
<CGS> 21,333,342
<TOTAL-COSTS> 32,976,424
<OTHER-EXPENSES> 34,062
<LOSS-PROVISION> 88,000
<INTEREST-EXPENSE> (44,900)
<INCOME-PRETAX> 1,083,070
<INCOME-TAX> 474,360
<INCOME-CONTINUING> 608,710
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 608,710
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
FORM 10-Q, PART II
ITEM 6
EXHIBIT 15.0
INDEPENDENT AUDITORS' REVIEW REPORT
--------------------------------------
The Board of Directors
Handex Corporation and Subsidiaries
We have reviewed the condensed consolidated balance sheet of Handex Corporation
and subsidiaries as of July 1, 1995, and the related condensed consolidated
statements of income for the three-month and six-month periods ended July 1,
1995 and July 2, 1994, and cash flows for the six-month periods ended July 1,
1995 and July 2, 1994. These condensed consolidated financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Handex Corporation and subsidiaries
as of December 31, 1994, and the related consolidated statements of income,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 17, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1994, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Cleveland, Ohio
July 28, 1995
