<PAGE> 1
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 June 30, 1997
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 0-21533
TEAM AMERICA CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-1209872
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 EAST WILSON BRIDGE ROAD 43085
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (614) 848-3995
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---
THE NUMBER OF SHARES OF REGISTRANT'S ONLY CLASS OF COMMON STOCK OUTSTANDING ON
JULY 31, 1997 WAS 3,375,703
<PAGE> 2
TEAM AMERICA CORPORATION AND SUBSIDIARIES
JUNE 30, 1997
INDEX
PART I. FINANCIAL INFORMATION
PAGE
NO.
----
Item 1. Financial Statements:
Consolidated Statements of Income -- Three-month periods
ended June 30, 1997 and 1996 (unaudited) - 3 -
Consolidated Statements of Income -- Six-month periods
ended June 30, 1997 and 1996 (unaudited) - 4 -
Consolidated Balance Sheets -- June 30, 1997 (unaudited)
and December 31, 1996 - 5 -
Consolidated Statements of Cash Flows -- Six-month periods
ended June 30, 1997 and 1996 (unaudited) - 7 -
Consolidated Statement of Changes in Shareholders' Equity-
Six-month period ended June 30, 1997 (unaudited) - 8 -
Notes to Consolidated Financial Statements - 9 -
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - 10 -
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders - 16 -
Item 6. Exhibits and Reports on Form 8-K - 16 -
Signature - 17 -
Exhibit Index - 18 -
Exhibits - 19 -
- ----------
Note: Items 1 through 3 and 5 of Part II are omitted because they
are not applicable.
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1997 1996
(unaudited)
<S> <C> <C>
REVENUES $31,812,348 $23,441,256
DIRECT COSTS:
Salaries and wages 27,243,193 19,859,168
Payroll taxes, workers' compensation premiums,
employee benefits and other 2,756,449 2,199,527
----------- -----------
Total direct costs 29,999,642 22,058,695
----------- -----------
Gross profit 1,812,706 1,382,561
EXPENSES:
Administrative salaries, wages and employment taxes 836,795 627,521
Other general and administrative expenses 395,610 328,372
Advertising 107,867 85,397
Depreciation and amortization 51,024 19,623
----------- -----------
Total operating expenses 1,391,296 1,060,913
----------- -----------
Income from operations 421,410 321,648
OTHER INCOME 140,622 5,758
----------- -----------
Income before income taxes 562,032 327,406
INCOME TAX EXPENSE 230,192 147,185
----------- -----------
Net income $ 331,840 $ 180,221
=========== ===========
Earnings per share $ 0.10 $ 0.09
=========== ===========
Weighted average shares outstanding 3,375,703 2,087,848
=========== ===========
</TABLE>
3
<PAGE> 4
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1997 1996
(unaudited)
<S> <C> <C>
REVENUES $57,354,716 $44,902,660
DIRECT COSTS:
Salaries and wages 48,840,893 37,887,367
Payroll taxes, workers' compensation premiums,
employee benefits and other 5,301,928 4,562,402
----------- -----------
Total direct costs 54,142,821 42,449,769
----------- -----------
Gross profit 3,211,895 2,452,891
EXPENSES:
Administrative salaries, wages and employment taxes 1,560,115 1,254,587
Other general and administrative expenses 749,042 552,385
Advertising 159,619 121,681
Depreciation and amortization 86,702 34,473
----------- -----------
Total operating expenses 2,555,478 1,963,126
----------- -----------
Income from operations 656,417 489,765
OTHER INCOME 291,684 5,758
----------- -----------
Income before income taxes 948,101 495,523
INCOME TAX EXPENSE 384,742 224,520
----------- -----------
Net income $ 563,359 $ 271,003
=========== ===========
Earnings per share $ 0.17 $ 0.13
=========== ===========
Weighted average shares outstanding 3,355,396 2,090,608
=========== ===========
</TABLE>
4
<PAGE> 5
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents:
Cash $ 1,782,682 $ 1,383,023
Temporary cash investments 7,416,838 6,717,497
----------- -----------
Total cash and cash equivalents 9,199,520 8,100,520
Short-term investments 5,784,347 7,499,375
Receivables:
Trade, net 782,581 263,351
Employee advances 108,773 48,487
Unbilled revenues 3,639,252 2,550,854
----------- -----------
Total receivables 4,530,606 2,862,692
Prepaid income taxes 41,205 -
Prepaid expenses 303,400 267,784
Deferred income tax asset 120,000 120,000
----------- -----------
Total current assets 19,979,078 18,850,371
PROPERTY AND EQUIPMENT, NET 606,631 492,335
OTHER ASSETS:
Goodwill and non-compete agreements, net 671,758 -
Cash surrender value of life insurance policies 333,073 259,895
Mandated benefit/security deposits 140,499 129,500
Deferred income tax asset 102,000 102,000
Other assets 65,156 65,155
----------- -----------
Total other assets 1,312,486 556,550
----------- -----------
Total assets $21,898,195 $19,899,256
=========== ===========
</TABLE>
5
<PAGE> 6
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade $ 216,346 $ 254,181
Related parties - 24,768
------------ ------------
Total accounts payable 216,346 278,949
Accrued compensation 3,310,435 2,440,708
Accrued payroll taxes 1,032,045 670,952
Accrued workers' compensation premiums 1,136,593 839,117
Federal and state income taxes payable - 389,275
Other accrued expenses 190,037 265,433
Client deposits 478,254 470,135
Capital lease obligation, current portion 6,388 11,461
------------ ------------
Total current liabilities 6,370 098 5,366,030
CAPITAL LEASE OBLIGATION, net of current portion - -
DEFERRED RENT 112,479 126,125
DEFERRED COMPENSATION LIABILITY 331,743 259,895
------------ ------------
Total liabilities 6,814,320 5,752,050
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock:
Class A, no par value; 500,000 shares authorized; - -
none issued; (aggregate liquidation preference $0)
Class B, no par value; 500,000 shares authorized;
none issued - -
Common Stock, no par value:
Common Stock, 10,000,000 shares authorized
3,478,976 shares issued; 3,375,703 and
3,335,088 shares outstanding, respectively 13,994,661 13,629,005
Excess purchase price (83,935) (83,935)
Retained earnings 1,192,610 629,251
------------ ------------
15,103,336 14,174,321
Less - Treasury stock, 103,273 and 143,888 shares
respectively, at cost (19,461) (27,115)
------------ ------------
Total shareholders' equity 15,083,875 14,147,206
------------ ------------
Total liabilities and shareholders' equity $ 21,898,195 $ 19,899,256
============ ============
</TABLE>
6
<PAGE> 7
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1997 1996
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 563,359 $ 271,003
Adjustments to reconcile net income to
net cash provided by (used in) operating activities
Depreciation and amortization 86,702 34,473
Deferred tax expense (benefit) - -
(Increase) decrease in operating assets:
Receivables (1,667,914) (534,999)
Prepaid expenses (76,821) 29,204
Mandated benefit/security deposits (11,000) (26,070)
Other - (23,465)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (62,603) 64,657
Accrued expenses and other payables 1,063,625 446,275
Client deposits 8,119 33,576
Deferred liabilities 58,202 31,731
----------- -----------
Net cash provided by (used in) operating activities (38,331) 326,387
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (189,381) (166,158)
Increases in cash surrender value of life insurance policies (73,178) (44,422)
Decrease in short-term investments 1,715,028 -
AEM Acquisition (289,485) -
----------- -----------
Net cash provided by (used in) investing activities 1,162,984 (210,580)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable - (14,000)
Payments on capital lease obligation (5,073) (4,811)
Purchase of treasury stock - (2,600)
Offering costs incurred (20,580) -
----------- -----------
Net cash used in financing activities (25,653) (21,411)
----------- -----------
Net increase in cash and cash equivalents 1,099,000 94,396
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,100,520 1,938,253
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,199,520 $ 2,032,649
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the period for: Interest $ 713 $ 1,740
=========== ===========
Income Taxes $ 718,000 $ 309,000
=========== ===========
</TABLE>
7
<PAGE> 8
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Common Stock Treasury Stock Excess
------------------------ ---------------------- Purchase Retained
Number Value Number Value Price Earnings Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance 3,478,976 $ 13,629,005 143,888 $ (27,115) $ (83,935) $ 629,251 $ 14,147,206
December 31, 1996
AEM Acquisition 386,236 (40,615) 7,654 393,890
Offering Costs (20,580) (20,580)
Net Income 563,359 563,359
--------------------------------------------------------------------------------------------
Balance 3,478,976 $ 13,994,661 103,273 $ (19,461) $ (83,935) $ 1,192,610 $ 15,083,875
============================================================================================
June 30, 1997
</TABLE>
8
<PAGE> 9
TEAM AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- Unaudited Interim Consolidated Financial Statements
The accompanying interim consolidated financial statements as of June
30, 1997 and for the three-month and six-month periods then ended are unaudited.
However, in the opinion of management these interim statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position, results of operations and cash
flows of TEAM America Corporation.
NOTE 2 -- Accounting Policies
The financial statements should be read in conjunction with the audited
financial statements contained in TEAM America Corporation's Form 10-K Annual
Report for the year ended December 31, 1996. Since December 31, 1996 the
Company, effective April 1, 1997, acquired a PEO business in a transaction
accounted for as a purchase. Intangible assets recorded as a result of the
purchase were covenants not to compete, which are amortized over their stated
life of seven years, and goodwill. Goodwill was recorded as the amount by which
the consideration paid, including the value of stock issued and liabilities
assumed, exceeded the fair market value of assets acquired. Goodwill is being
amortized over a twenty-five year period.
9
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth results of operations for the
three-month and six-month periods ended June 30, 1997 and 1996 expressed as a
percentage of revenues:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Direct Costs:
Salaries and wages 85.6 84.7 85.2 84.4
Payroll taxes, workers' 8.7 9.4 9.2 10.1
compensation premiums,
employee benefits and other
costs
Gross Profit 5.7 5.9 5.6 5.5
Operating Expenses:
Administrative salaries, 2.6 2.7 2.7 2.8
wages and employment taxes
Other general and 1.2 1.4 1.3 1.2
administrative
Advertising 0.3 0.4 0.3 0.3
Depreciation and amortization 0.2 0.1 0.2 0.1
Total Operating Expenses 4.3 4.6 4.5 4.4
Other income (expense), net 0.4 - - 0.5 - -
Income before taxes 1.8 1.4 1.6 1.1
Provision for income taxes 0.7 0.6 0.6 0.5
Net income 1.1 0.8 1.0 0.6
</TABLE>
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
REVENUES
Revenues increased $8,371,000 or 36% in the three months ended June 30,
1997 compared to the three months ended June 30, 1996. $4,042,000 of the
increase came from Alternative Employee Management, Inc. which was acquired
April 1, 1997, ("the AEM Acquisition"). Worksite employees, excluding certain
seasonal employees, increased 30 % from 3,149 at June 30, 1996 to 4,089 at June
30, 1997. Without the AEM Acquisition, worksite employees increased by 9% from
June 30, 1996 to June 30, 1997.
10
<PAGE> 11
Average annualized wages per worksite employee increased 5.6 % to $26,650 in the
second quarter of 1997 from $25,225 in the second quarter of 1996. The increase
in revenues per employee was the result of continued emphasis on attracting
clients in higher paying industries and full time positions. The average
annualized wage per employee was $27,168 in the fourth quarter of 1996. The
decline in the average annualized wage per employee was due to the AEM
Acquisition as the acquired client base had a higher mix of lower paid
manufacturing and retail businesses.
DIRECT COSTS
Salaries and wages rose 37.2% to $27,243,000 in the three months ended
June 30, 1997 from $19,859,000 in the three months ended June 30, 1996. Payroll
taxes, etc., rose 25.3% to $2,756,000 in the second quarter of 1997 from
$2,199,000 in the second quarter of 1996. The increase in salaries and wages in
1997's second quarter was in line with the increased headcount and the higher
wage client base. Payroll taxes and benefits costs rose only 25.3% as a result
of the Company's risk management efforts and a 20% premium credit dividend from
the State of Ohio workers' compensation fund.
EXPENSES
Administrative salaries expense rose 33.3% to $837,000 for the three
months ended June 30, 1997 from $627,000 for the three months ended June 30,
1996 as the Company continued to add headcount to support the growth of the
Company. Other general and administrative expenses rose 20.5% from the second
quarter of 1996 to the second quarter of 1997 as the result of higher external
expenses related to being a public company and higher facilities costs.
INCOME FROM OPERATIONS
As a result of the 36% increase in revenues, income from operations
increased 31% to $421,000 in the three months ended June 30, 1997 from $321,000
in the three months ended June 30, 1996.
OTHER INCOME
Other income of $141,000 consists principally of interest income and
earnings on short-term investments and temporary cash investments. The
investments represent the cash proceeds from the initial public offering of TEAM
America stock in December, 1996. There were no excess cash investments in the
corresponding second quarter of 1996.
INCOME TAX EXPENSE
Income tax expense rose 56.4% from the second quarter of 1996 to the
second quarter of 1997. The effective tax rate was 41% for the three months
ended June 30, 1997 compared to 45% for the three months ended June 30, 1996.
The effective tax rate for all of calendar 1996 was 42.3%. The lower tax rate in
1997 reflects the tax-exempt investment income in 1997 and the lessened impact
of non-deductible life insurance premiums due to increased pre-tax income in
1997.
11
<PAGE> 12
NET INCOME AND EARNINGS PER SHARE
Net income increased $151,000 or 84% from the three months ended June
30, 1996 to the three months ended June 30, 1997 due to the higher revenues and
investment income. Earnings per share in the second quarter of 1997 increased
only 11% over the second quarter of 1996 because average shares outstanding
increased from 2,087,000 in the second quarter of 1996 to 3,376,000 in the
second quarterof 1997, or 61.7%, following the initial public offering of
1,250,000 shares of TEAM America stock in December, 1996. Basic earnings per
share, as calculated in accordance with FASB Statement No. 128, is the same as
earnings per share presented in the accompanying financial statements.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES
Revenues increased $12,452,000 or 27.7% in the six months ended June
30, 1997 compared to the six months ended June 30, 1996. $4,042,000 of the
increase came from the AEM Acquisition. Worksite employees, excluding certain
seasonal employees, increased 30% from 3,149 at June 30, 1996 to 4,089 at June
30, 1997, primarily as the result of the addition of 659 worksite employees due
to the AEM Acquisition. Average annualized wages per worksite employee increased
9.3% to $26,625 in the first half of 1997 from $24,350 in the first half of
1996. The increase in revenues per employee was the result of continued emphasis
on attracting clients in higher paying industries and full time positions. The
average annualized payroll per employee was $27,168 in the fourth quarter of
1996. The decline from the fourth quarter of 1996 is due to the addition of AEM
which has a lower paid client base.
DIRECT COSTS
Salaries and wages rose 28.9% to $48,841,000 in the six months ended
June 30, 1997 from $37,887,000 in the six months ended June 30, 1996. Payroll
taxes, etc., rose only 16.2% to $5,302,000 in the first half of 1997 from
$4,562,000 in the first half of 1996. The increase in salaries and wages in the
first six months of 1997 was in line with the increased headcount. Payroll taxes
and benefits costs rose only 16.2% as a result of the Company's risk management
efforts and a 20% premium credit dividend from the State of Ohio worker's
compensation fund.
EXPENSES
Administrative salaries expense rose 24.4% to $1,560,000 for the six
months ended June 30, 1997 from $1,255,000 for the six months ended June 30,
1996 as the Company continued to add headcount to support the growth of the
Company. Other general and administrative expenses rose 35.6% from the first
half of 1996 to the first half of 1997 as the result of higher external expenses
related to being a public company and higher facilities costs.
INCOME FROM OPERATIONS
As a result of the 28% increase in revenues, income from operations
increased 34% to $656,000 in the six months ended June 30, 1997 from $490,000 in
the six months ended June 30, 1996.
12
<PAGE> 13
OTHER INCOME
Other income of $292,000 consists principally of interest income and
earnings on short-term investments and temporary cash investments. The
investments represent the cash proceeds from the initial public offering of TEAM
America stock in December, 1996. There were no excess cash investments in the
corresponding first half of 1996.
INCOME TAX EXPENSE
Income tax expense rose 71.4% from the first half of 1996 to the first
half of 1997. The effective tax rate was 40.5% for the six months ended June 30,
1997 compared to 45.3% for the six months ended June 30, 1996. The effective tax
rate for all of calendar 1996 was 42.3%. The lower tax rate in 1997 reflects the
tax-exempt investment income in 1997 and the lessened impact of non-deductible
life insurance premiums due to increased pre-tax income in 1997.
NET INCOME AND EARNINGS PER SHARE
Net income increased $292,000 or 108% from the six months ended June
30, 1996 to the six months ended June 30, 1997 due to the higher revenues and
investment income. Earnings per share in the first half of 1997 increased only
31% over the first half of 1996 because average shares outstanding increased
from 2,091,000 in 1996's first six months to 3,355,000 in 1997's first six
months, or 60.5%, following the initial public offering of 1,250,000 shares of
TEAM America stock in December, 1996. Basic earnings per share, as calculated in
accordance with FASB Statement No. 128, is the same as earnings per share
presented in the accompanying financial statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997 and 1996, the Company had a working capital surplus
(deficit) in the amounts of $13,609,000 and $(6,000), respectively. At December
31, 1996, the working capital surplus was $13,484,000.
The Company's primary source of liquidity and capital resources has
historically been its internal cash flow from operations. In addition, in
December 1996, net cash of $13,314,000 was provided from an initial public
offering of Company stock. Net cash provided by (used in) operating activities
was $(38,000) and $326,000 for the six month periods ended June 30, 1997 and
1996, respectively.
The Company recognizes as revenue and as unbilled receivables, on an
accrual basis, any such amounts which relate to services performed by worksite
employees as of the end of each accounting period which have not yet been billed
to the client because of timing differences between the day the Company's
accounting period ends and the billing dates for client payroll periods that
include the day the Company's accounting period ends. The amount of unbilled
receivables, as well as accrued liabilities and client deposits, have increased
with the general growth of the Company.
13
<PAGE> 14
For work performed prior to the termination of a client agreement, the
Company may be obligated, as an employer, to pay the gross salaries and wages of
the client's worksite employees and the related employment taxes and workers'
compensation costs, whether or not the Company's client pays the Company on a
timely basis or at all. The Company, however, historically has not incurred
significant bad debt expenses because the Company generally collects from its
clients all revenues with respect to each payroll period in advance of the
Company's payment of the direct costs associated therewith. The Company attempts
to minimize its credit risk by investigating and monitoring the credit history
and financial strength of its clients and by generally requiring payments to be
made by wire transfer, immediately available funds or ACH transfer. With respect
to ACH transfers, the Company is obligated to pay the client's worksite
employees if there are insufficient funds in the client's bank account on the
payroll date. The Company's policy, however, is only to permit clients with a
proven credit history with the Company to pay by ACH transfer. In addition, in
the rare event of nonpayment by a client, the Company has the ability to
terminate immediately its contract with the client. The Company also protects
itself by obtaining unconditional personal guaranties from the owners of a
client and/or a cash security deposit, bank letter of credit or pledge of
certificates of deposit. As of June 30, 1997 and 1996, the Company held cash
security deposits in the amounts of $478,000 and $461,000, respectively.
Additional sources of funds to the Company are advance payments of
employment taxes and insurance premiums which the Company holds until they are
due and payable to the respective taxing authorities and insurance providers.
Net cash provided by (used in) investing activities was $1,163,000 and
$(211,000) for the six month periods ended June 30, 1997 and 1996, respectively.
The principal use of cash from investing activities was the purchase of
additional computer equipment and software to support the growth of the
business. Also in March and April, 1997 $289,485 was paid for the acquisition of
a PEO located in Dover, Ohio. 40,615 shares of Common Stock with a value of
$394,000 were also issued from treasury stock to the shareholders of AEM as part
of the purchase price. Fifty percent of the shares of Company stock has been
deposited in an escrow account at a bank. The shares will be released from
escrow in 1998, 1999 and 2000 subject to the satisfaction of covenants
pertaining to retention of worksite employees and fees.
The principal source of cash provided by investing activities was the
maturation of short-term investment instruments which were reinvested in
temporary cash investments at June 30, 1997.
Financing activities are not material as the Company has no debt or
significant capital leases.
Presently, the Company has no material commitments for capital
expenditures. Primary new uses of cash may include acquisitions, the size and
timing of which cannot be predicted.
14
<PAGE> 15
The Company has executed a $500,000 promissory note to a bank which, at
the bank's sole discretion, would allow the Company to obtain loans up to such
amount without negotiating or executing any further agreements. Borrowings under
this credit facility are payable upon demand and bear interest at the bank's
prime rate (8.25% at June 30, 1997). As of June 30, 1997 and 1996, no borrowings
were outstanding under this credit facility. In July, 1997 this credit facility
was replaced by a $5,000,000 revolving credit agreement with a bank. The credit
agreement provides for borrowings at the prime rate or LIBOR plus 2%. The credit
agreement requires the Company to maintain certain financial standards as to net
worth, current ratio and cash position and also requires the bank's consent to
acquisitions.
The Company believes that the net proceeds from the sale of the common
shares in December 1996 which were invested in marketable securities and
certificates of deposit, together with existing cash, cash equivalents and
internally generated funds will be sufficient to meet the Company's presently
anticipated working capital and capital expenditure requirements both for the
next twelve months and for the foreseeable future thereafter. To the extent that
the Company needs additional capital resources, the Company believes that it
will have access to both bank financing and capital leasing for additional
facilities and equipment. However, there can be no assurance that additional
financing will be available on terms favorable to the Company or at all.
The Company did not pay dividends in 1996, or thus far in 1997, and
does not expect to pay a dividend in the foreseeable future.
The Company believes the effects of inflation have not had a
significant impact on its results of operations or financial condition.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-Q including, without
limitation, statements containing the words "believes", "anticipates",
"intends", "expects", and words of similar import, constitute "forward-looking
statements" within the meaining of the Private Securities Litigation Reform Act.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company or the PEO industry to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
(i) potential for unfavorable interpretation of government regulations relating
to labor, tax, insurance and employment matters; (ii) changes in the laws
regulating collection and payment of payroll taxes and employee benefits,
including 401(k) plans; (iii) potential loss of qualified status for the
Company's 401(k) plan as a result of request by Internal Revenue Service ("IRS")
for Tax Advice Memorandum ("TAM"); (iv) general market conditions, including
demand for the Company's products and services, competition and price levels or
adverse economic developments in Ohio where a substantial portion of the
Company's business is concentrated; (v) the Company's ability to offer its
services in states other than Ohio where it has little or no market penetration;
(vi) higher than expected workers' compensation claims, increases in rates, or
changes in applicable laws or regulations; (vii) the level and quality of
acquisition opportunities available to the Company and the ability to properly
manage growth when acquisitions are made; (viii) short-term nature of client
agreements and the financial condition of the Company's clients; (ix) liability
for employment practices of clients; and (x) additional regulatory requirements
affecting the Company.
15
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on June 11,
1997. At the close of business on the record date of May 9, 1997, 3,375,703
common shares were outstanding and entitled to vote at the meeting. At the
Annual Meeting, 3,157,196 or 93.5% of the outstanding common shares entitled to
vote were represented in person or by proxy.
The Board of Directors is divided into two classes. Three directors
positions, to serve for a term of two years, were up for election. Directors
elected at the Annual Meeting were:
Paul M. Cash
William W. Johnston
M. R. Swartz
The voting for each director was as follows:
For Withheld
Paul M. Cash 3,140,146 17,050
William W. Johnston 3,139,146 18,050
M. R. Swartz 3,140,146 17,050
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
None
(b) Exhibits
10 Revolving Credit Agreement and Commercial Note Addendum dated
July 18, 1997
11 Computation of Earnings per Common and common Equivalent
Share
27 Financial Data Schedule
16
<PAGE> 17
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 hereunto duly authorized.
TEAM AMERICA CORPORATION
/s/MICHAEL R. GOODRICH
--------------------------------------
Chief Financial Officer and Authorized
Signing Officer
August 8 , 1997
17
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EXHIBIT INDEX
Exhibit Number Description Page #
- -------------- ----------- ------
10 Revolving Credit and Commercial Note - 19 -
Addendum dated July 18, 1997
11 Computation of Earnings per Common and
Common Equivalent Share - 33 -
27 Financial Data Schedule - - *
* In SEC EDGAR-filed document only
18
<PAGE> 1
EXHIBIT 10
COMMERCIAL NOTE: REVOLVING CREDIT/PRIME/LIBOR/MONEY MARKET (OHIO)
- ---------------- ---------------- ---------------- ----------------------------
Amount City, State Date FOR BANK USE ONLY
----------------------------
$5,000,000.00 Columbus, Ohio July 18, 1997 Obligor #
- ---------------- ---------------- ---------------- ----------------------------
Tax I. D. #
----------------------------
Obligation #
----------------------------
Office
----------------------------
FOR VALUE RECEIVED, TEAM AMERICA CORPORATION ("BORROWER"), an Ohio corporation,
whose mailing address is 110 East Wilson Bridge Road, Suite 150, Worthington,
Ohio 43085-2317, hereby promises to pay to the order of NATIONAL CITY BANK OF
COLUMBUS ("BANK"), a national banking association having its banking office at
155 East Broad Street, Columbus, Ohio 43251, at Bank's banking office (or at
such other place as Bank may from time to time designate by written notice) in
lawful money of the United States of America, the principal sum of FIVE MILLION
AND 00/100 DOLLARS or such lesser amount as may appear on this Note, or as may
be entered in a loan account on Bank's books and records, or both, together with
interest, all as provided below.
1. COMMITMENT. This Note evidences an arrangement (the "SUBJECT COMMITMENT")
whereby Borrower may, on the date of this Note and thereafter until (but not
including) July 31, 1998 (the "EXPIRATION DATE") or such earlier date upon which
the Subject Commitment is terminated or reduced to zero, obtain from Bank,
subject to the terms and conditions of this Note, such loans (each a "SUBJECT
LOAN") as Borrower may from time to time properly request. The amount of the
Subject Commitment shall be equal to the face amount of this Note, provided,
that Borrower shall have the right, at any time and from time to time, to
permanently reduce the amount of the Subject Commitment to any amount by giving
Bank not less than one (1) Banking Day's prior notice (which shall be
irrevocable) of the effective date of the reduction and the amount thereof,
provided, that no reduction in the amount of the Subject Commitment shall be
effective if, after giving effect to that reduction, the aggregate unpaid
principal balance of the Subject Loans would exceed the amount of the Subject
Commitment as so reduced. Regardless of any fee or other consideration received
by Bank, the Subject Commitment may be terminated pursuant to section 11.
2. FEES. Borrower shall pay Bank a commitment fee (a) in arrears on November 1,
1997 and quarter-annually thereafter and upon the termination of the Subject
Commitment or the reduction thereof to zero, (b) based on the average daily
difference between the amount of the Subject Commitment and the aggregate unpaid
principal balance of the Subject Loans during the period from the due date of
the last such fee (or, if none, the date of this Note) to the due date of the
fee in question, and (c) computed at the rate of two tenths of one percent
(.20%) per annum.
3. LOAN REQUESTS; DISBURSEMENT. A Subject Loan is properly requested if
requested orally or in writing not later than 2:00 p. m., Banking-Office Time,
of the Banking Day upon which that Subject Loan is to be made. Each request for
a Subject Loan shall of itself constitute, both when made and when honored, a
representation and warranty by Borrower to Bank that Borrower is entitled to
obtain the requested Subject Loan. Bank is hereby irrevocably authorized to make
an
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<PAGE> 2
appropriate entry on this Note, in a loan account on Bank's books and records,
or both, whenever Borrower obtains a Subject Loan. Each such entry shall be
prima facie evidence of the data entered, but the making of such an entry shall
not be a condition to Borrower's obligation to pay. Bank is hereby directed,
absent notice from Borrower to the contrary, to disburse the proceeds of each
Subject Loan to Borrower's general checking account with Bank. Bank shall have
no duty to follow, nor any liability for, the application of any proceeds of any
Subject Loan.
4. CONDITIONS: SUBJECT LOANS. Subject to Section 5, Subject Loans may be in any
amount. Borrower shall not be entitled to obtain any Subject Loan (a) on or
after the termination of the Subject Commitment or the reduction thereof to
zero, (b) if either at the time of Borrower's request for that loan or when that
request is honored there shall exist or would occur any Event of Default, (c) if
any representation, warranty, or other statement (other than any expressly made
as of a single date) made by any Person (other than Bank) in any Related Writing
would, if made either as of the time of Borrower's request for that Subject Loan
or as of the time when that request is honored, be untrue or incomplete in any
respect, or (d) if after giving effect to that Subject Loan and all others for
which requests are then pending, the aggregate unpaid principal balance of the
Subject Loans would exceed the then amount of the Subject Commitment.
5. INTEREST. The unpaid principal balance of each Subject Loan shall at all
times bear interest at the Contract Rate, provided, that so long as any
principal of or accrued interest on any Subject Loan is overdue, all unpaid
principal of each Subject Loan and all overdue interest on that principal (but
not interest on overdue interest) shall bear interest at a fluctuating rate
equal to two percent (2%) per annum above the rate that would otherwise be
applicable, but in no case less than two percent (2%) per annum above the Prime
Rate; provided further, that in no event shall any principal of or interest on
any Subject Loan bear interest at any time after Maturity at a lesser rate than
the rate applicable thereto immediately after Maturity. The "CONTRACT RATE"
shall at all times be a fluctuating rate per annum equal to the Prime Rate,
provided, that Borrower shall have the right from time to time to irrevocably
elect (a) two percent (2.0%) per annum plus LIBOR as the Contract Rate
applicable during a Contract Period to a Unit in a minimum amount of $500,000.00
by specifying the term and amount, respectively, of the Contract Period and Unit
in a notice given to Bank orally or in writing not later than 2:00 p. m.,
Banking-Office Time, of the third (3rd) Eurodollar Banking Day preceding the
first day of that Contract Period and (b) the Money Market Rate as the Contract
Rate applicable during a Contract Period to a Unit in a minimum amount of
$500,000.00 by specifying the term and amount, respectively, of the Contract
Period and Unit in a notice given to Bank orally or in writing on, and in any
case not later than 2:00 p. m., Banking-Office Time, of, the first day of that
Contract Period.
Interest on each Subject Loan shall be payable in arrears on September 1, 1997,
and on the first day of each month thereafter, at Maturity, and on demand
thereafter, except that interest on each Fixed Rate Unit shall be payable in
arrears on the last day of the Contract Period for that Unit, at Maturity, and
on demand thereafter, and in the case of any LIBOR Contract Period having a term
longer than three (3) months, shall be payable three (3) months after the first
day of the Contract Period and on the last day of said Contract Period. The
principal comprising each Fixed Rate Unit shall, at the end of the Contract
Period for that Unit, become part of the Prime Rate Unit unless and to the
extent that Borrower shall have elected otherwise as hereinbefore provided.
20
<PAGE> 3
Bank shall be entitled to fund and maintain its funding of all or any part of
any Fixed Rate Unit in any manner Bank may from time to time deem advisable,
Borrower hereby acknowledging that all determinations relating to Fixed Rate
Units shall be made as if Bank had actually funded and maintained each such Unit
by the purchase of deposits in an amount similar to the amount of that Unit,
with a maturity similar to the Contract Period for that Unit, and bearing
interest at the Fixed Rate with respect to that Unit.
6. INEFFECTIVE ELECTIONS. Notwithstanding any provision or inference to the
contrary, Bank shall have the right in its discretion, without notice to
Borrower, to deem ineffective Borrower's election of a Contract Rate if (a) on
or before the first day of the Contract Period specified in Borrower's notice of
that election, the Subject Commitment shall have been terminated or reduced to
zero, (b) the Contract Period specified in Borrower's notice of that election
would end after the Expiration Date, (c) at the time of that election or on the
first day of the Contract Period specified in Borrower's notice thereof, there
shall exist or there would occur any Event of Default, (d) any representation,
warranty, or other statement (other than any expressly made as of a single date)
made by any Person (other than Bank) in any Related Writing would, if made
either as of the time of that election or as of the first day of the Contract
Period specified in Borrower's notice thereof, be untrue or incomplete in any
respect, (e) after giving effect to that election, more than one Contract Rate
would be applicable to all or any part of any Unit, (f) Bank shall determine
that any governmental authority has asserted that it is unlawful for Bank to
fund, make, or maintain loans bearing interest based on the Fixed Rate on which
that Contract Rate is to be based, or (g) after giving effect to that election,
the aggregate unpaid principal balance of the Subject Loans would, on the first
day of the Contract Period specified in Borrower's notice of that election, be
less than the then aggregate amount of all Fixed Rate Units. Moreover, Borrower
shall not be entitled to elect a Contract Rate if Bank shall determine that (i)
dollar deposits of the appropriate amount and maturity are not available in the
market selected by Bank for the purpose of funding the relevant Unit at the
Fixed Rate on which that Contract Rate is to be based, (ii) circumstances
affecting the market selected by Bank for the purpose of funding the relevant
Unit make it impracticable for Bank to determine the Fixed Rate on which that
Contract Rate is to be based, (iii) the Fixed Rate on which that Contract Rate
is to be based is unlikely to adequately compensate Bank for the cost of making,
funding, or maintaining the relevant Unit for the Contract Period specified in
Borrower's notice of that election, or (iv) any governmental authority has
asserted that it is unlawful for Bank to fund, make, or maintain loans bearing
interest based on the Fixed Rate on which that Contract Rate is to be based.
Bank's books and records shall be conclusive (absent manifest error) as to
whether Bank shall have deemed any election of a Contract Rate ineffective.
Except as hereinbefore provided, there is no limit to the number of Contract
Rates that may be applicable to the unpaid principal balance of this Note at any
one time.
7. PREMIUM: INEFFECTIVE ELECTIONS; GOVERNMENTAL ACTS. If Bank shall deem
ineffective Borrower's election of any Contract Rate, then, and in each such
case, that election shall be ineffective and Borrower shall pay to Bank, on
Bank's demand, a premium based on the amount of the Unit specified in Borrower's
notice of that election and computed for the Contract Period specified in that
notice at a rate per annum equal to the excess, if any, of the Contract Rate so
elected over the Reinvestment Rate. If Bank shall determine that any
governmental authority has
21
<PAGE> 4
asserted that it is unlawful for Bank to fund, make, or maintain loans bearing
interest based on a Fixed Rate, then, and in each such case, notwithstanding any
provision or inference to the contrary, the principal comprising each then
outstanding Fixed Rate Unit bearing interest at a Contract Rate based on that
Fixed Rate shall, upon Bank's giving Borrower notice of that determination, be
added to and become part of the Prime Rate Unit, and Borrower shall concurrently
with the addition of that principal to the Prime Rate Unit, pay to Bank (a) the
accrued interest on the principal so added and (b) a premium based on the amount
of the principal so added and computed for the remainder of the Contract Period
therefor, at a rate equal to the excess, if any, of the Contract Rate
theretofore applicable over the Reinvestment Rate.
8. REPAYMENT. Subject to section 11, each Subject Loan shall be due and payable
in full upon the Expiration Date. Borrower shall have the right to prepay each
Subject Loan in whole or in part, provided, that each such prepayment shall be
in an amount that is an integral multiple of the Minimum Borrowing Amount. Each
prepayment of the Subject Loans may be made without premium or penalty,
provided, that if any Fixed Rate Unit is paid (whether by way of a prepayment or
a payment following any acceleration of the due date thereof) in whole or in
part before the last day of the Contract Period for that Unit, then, and in each
such case, Borrower shall, concurrently with the payment, pay to Bank (i) the
accrued interest on the principal being prepaid and (ii) a premium based on the
principal amount paid and computed for the period from the date of payment to
the last day of the Contract Period for that Unit at a rate per annum equal to
the excess, if any, of the Contract Rate theretofore applicable over the
Reinvestment Rate.
9. DEFINITIONS. As used in this Note, except where the context clearly requires
otherwise, "AFFILIATE" means, when used with reference to any Person (the
"subject"), a Person that is in control of, under the control of, or under
common control with, the subject, the term "control" meaning the possession,
directly or indirectly, of the power to direct the management or policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise; "BANK DEBT" means, collectively, all Debt to Bank, whether incurred
directly to Bank or acquired by it by purchase, pledge, or otherwise, and
whether participated to or from Bank in whole or in part; "BANKING DAY" means
any day (other than any Saturday, Sunday or legal holiday) on which Bank's
banking office is open to the public for carrying on substantially all of its
banking functions; "BANKING-OFFICE TIME" means, when used with reference to any
time, that time determined at the location of Bank's banking office; "Contract
Period" means, relative to a Unit, a period selected by Borrower, provided, that
(a) the Contract Period for each LIBOR Unit shall commence on a Eurodollar
Banking Day and end one (1) month, two (2) months, three (3) months or four (4)
months thereafter, provided, that (i) if any such Contract Period otherwise
would end on a day that is not a Eurodollar Banking Day, it shall end instead on
the next following Eurodollar Banking Day unless that day falls in another
calendar month, in which latter case the Contract Period shall end instead on
the next preceding Eurodollar Banking Day and (ii) if any such Contract Period
commences on a day for which there is no numerical equivalent in the calendar
month in which that Contract Period is to end, it shall end on the last
Eurodollar Banking Day of that calendar month, and (b) the Contract Period for
each Money Market Unit shall commence on a Banking Day and end at least one (1)
day and no greater than thirty (30) days thereafter, provided, that (i) each
such Contract Period shall be subject to Bank's assent thereto and (ii) if any
such Contract Period would otherwise end on a day that is not a
22
<PAGE> 5
Banking Day, it shall end instead on the next succeeding Banking
Day; "DEBT" means, collectively, all obligations of the Person or Persons in
question, including, without limitation, every such obligation whether owing by
one such Person alone or with one or more other Persons in a joint, several, or
joint and several capacity, whether now owing or hereafter arising, whether
owing absolutely or contingently, whether created by lease, loan, overdraft,
guaranty of payment, or other contract, or by quasi-contract, tort, statute,
other operation of law, or otherwise; "EURODOLLAR BANKING DAY" means any Banking
Day on which banks in the London Interbank Market deal in United States dollar
deposits and on which banking institutions are generally open for domestic and
international business at the place where Bank's banking office is located and
in New York City; "FIXED RATE" means LIBOR or the Money Market Rate, as the case
may be; "FIXED RATE UNIT" means a LIBOR Unit or a Money Market Unit, as the case
may be; "LIBOR" means, with respect to a Unit, the rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) determined by Bank by
dividing (a) the rate per annum determined by Bank to equal the average rate per
annum at which deposits (denominated in United States dollars) in an amount
similar to that Unit and with a maturity similar to the Contract Period for that
Unit are offered to Bank at 11:00 A.M. London time (or as soon thereafter as
practicable) two (2) Eurodollar Banking Days prior to the first day of that
Contract Period by banking institutions in any Eurodollar market selected by
Bank by (b) the difference of one (1) less the Reserve Percentage;; "LIBOR UNIT"
means a Unit for which the Contract Rate is based on LIBOR; "MATURITY" means,
when used with reference to any Subject Loan, the date (whether occurring by
lapse of time, acceleration, or otherwise) upon which that Subject Loan is due;
"MONEY MARKET RATE" means, with respect to a Unit, the rate per annum as
determined by Bank, in its sole discretion, on the first day of the Contract
Period for that Unit, and then quoted by Bank to Borrower as the rate which, if
then elected by Borrower, will be applicable to that Unit during that Contract
Period; "MONEY MARKET UNIT" means a Unit for which the Contract Rate is based on
the Money Market Rate; "NOTE" means this promissory note (including, without
limitation, each addendum, allonge, or amendment, if any, hereto); "OBLIGOR"
means any Person who, or any of whose property, shall at the time in question be
obligated in respect of all or any part of the Bank Debt of Borrower and (in
addition to Borrower) includes, without limitation, co-makers, indorsers,
guarantors, pledgors, hypothecators, mortgagors, and any other Person who
agrees, conditionally or otherwise, to make any loan to, purchase from, or
investment in, any other Obligor or otherwise assure such other Obligor's
creditors or any of them against loss; "PERSON" means an individual or entity of
any kind, including, without limitation, any association, company, cooperative,
corporation, partnership, trust, governmental body, or any other form or kind of
entity; "PRIME RATE" means the fluctuating rate per annum which is publicly
announced from time to time by Bank as being its so-called "prime rate" or "base
rate" thereafter in effect, with each change in the Prime Rate automatically,
immediately, and without notice changing the Prime Rate thereafter applicable
hereunder, it being acknowledged that the Prime Rate is not necessarily the
lowest rate of interest then available from Bank on fluctuating-rate loans;
"PRIME RATE UNIT" means, at any time, the then aggregate unpaid principal
balance of the Subject Loans for which the Contract Rate is based on the Prime
Rate; "PROCEEDING" means any assignment for the benefit of creditors, any case
in bankruptcy, any marshalling of any Obligor's assets for the benefit of
creditors, any moratorium on the payment of debts, or any proceeding under any
law relating to conservatorship, insolvency, liquidation, receivership,
trusteeship, or any similar event, condition, or other thing; "REINVESTMENT
RATE" means, when
23
<PAGE> 6
used with respect to any period, a per annum rate of interest equal to the
"bond equivalent yield" for the most actively traded issues of U. S. Treasury
Bills, U. S. Treasury Notes, or U. S. Treasury Bonds for a term similar to the
period in question; "RELATED WRITING" means this Note and any indenture, note,
guaranty, assignment, mortgage, security agreement, subordination agreement,
notice, financial statement, legal opinion, certificate, or other writing of
any kind pursuant to which all or any part of the Bank Debt of Borrower is
issued, which evidences or secures all or any part of the Bank Debt of
Borrower, which governs the relative rights and priorities of Bank and one or
more other Persons to payments made by, or the property of, any Obligor, which
is delivered to Bank pursuant to another such writing, or which is otherwise
delivered to Bank by or on behalf of any Person (or any employee, officer,
auditor, counsel, or agent of any Person) in respect of or in connection with
all or any part of the Bank Debt of Borrower; "REPORTING PERSON" means each
Obligor and each member of any "Reporting Group" as defined in any addendum to
this Note; "RESERVE PERCENTAGE" means the percentage (expressed as a decimal)
which Bank determines to be the maximum (but in any case less than 1.00)
reserve requirement (including, without limitation, any emergency, marginal,
special, or supplemental reserve requirement) prescribed for so-called
"Eurocurrency liabilities" (or any other category of liabilities that includes
deposits by reference to which the interest rate applicable to LIBOR Units is
determined) under Regulation D (as amended from time to time) of the Board of
Governors of the Federal Reserve System or under any successor regulation which
Bank determines to be applicable, with each change in such maximum reserve
requirement automatically, immediately, and without notice changing the
interest rate thereafter applicable to each LIBOR Unit, it being agreed that
LIBOR Units shall be deemed Eurocurrency liabilities subject to such reserve
requirements without the benefit of any credit for proration, exceptions, or
offsets; "UNIT" means the aggregate unpaid principal balance of this Note or
any part of that balance; and the foregoing definitions shall be applicable to
the respective plurals of the foregoing defined terms.
10. EVENTS OF DEFAULT. It shall be an "EVENT OF DEFAULT" if (a) all or any part
of the Bank Debt of any Obligor shall not be paid in full promptly when due
(whether by lapse of time, acceleration, or otherwise); (b) any representation,
warranty, or other statement made by any Person (other than Bank) in any Related
Writing shall be untrue or incomplete in any respect when made; (c) any Person
(other than Bank) shall repudiate or shall fail or omit to perform or observe
any agreement contained in this Note or in any other Related Writing that is on
that Person's part to be complied with; (d) any indebtedness (other than any
evidenced by this Note) of any Obligor shall not be paid when due, or there
shall occur any event, condition, or other thing which gives (or which with the
lapse of any applicable grace period, the giving of notice, or both would give)
any creditor the right to accelerate or which automatically accelerates the
maturity of any such indebtedness; (e) Bank shall not receive (in addition to
any information described in any addendum to this Note) without expense to Bank,
(i) forthwith upon each request of Bank made upon Borrower therefor, (A) such
information in writing regarding each Reporting Person's financial condition,
properties, business operations, if any, and pension plans, if any, prepared, in
the case of financial information, in accordance with generally accepted
accounting principles consistently applied and otherwise in form and detail
satisfactory to Bank or (B) written permission, in form and substance
satisfactory to Bank, from each Reporting Person to inspect (or to have
inspected by one or more Persons selected by Bank) the properties and records of
that Reporting Person and to make copies and extracts from those records
24
<PAGE> 7
or (ii) prompt written notice whenever Borrower (or any director, employee,
officer, or agent of Borrower) knows or has reason to know that any Event of
Default has occurred; (f) any judgment shall be entered against any Obligor in
any judicial or administrative tribunal or before any arbitrator or mediator;
(g) any Obligor shall fail or omit to comply with any applicable law, rule,
regulation, or order in any material respect; (h) any proceeds of any Subject
Loan shall be used for any purpose that is not in the ordinary course of
Borrower's business; (i) any property in which any Obligor now has or hereafter
acquires any rights or which now or hereafter secures any Bank Debt shall be or
become encumbered by any mortgage, security interest, or other lien, except any
mortgage, security interest, or other lien consented to by Bank; (j) any Obligor
shall at any time or over any period of time sell, lease, or otherwise dispose
of all or any material part of that Obligor's assets, except for inventory sold
in the ordinary course of business and other assets sold, leased, or otherwise
disposed of with the consent of Bank; (k) any Obligor shall cease to exist or
shall be dissolved, become legally incapacitated, or die; (l) any Proceeding
shall be commenced with respect to any Obligor; (m) there shall occur or
commence to exist any event, condition, or other thing that constitutes an
"Event of Default" as defined in any addendum to this Note; (n) there shall
occur any event, condition, or other thing that has, or, in Bank's judgment, is
likely to have, a material adverse effect on the financial condition,
properties, or business operations of any Obligor or on Bank's ability to
enforce or exercise any agreement or right arising under, out of, or in
connection with any Related Writing; or (o) the holder of this Note shall, in
good faith, believe that the prospect of payment or performance of any
obligation evidenced by this Note is impaired.
11. EFFECTS OF DEFAULT. If any Event of Default (other than the commencement of
any Proceeding with respect to Borrower) shall occur, then, and in each such
case, notwithstanding any provision or inference to the contrary, Bank shall
have the right in its discretion, by giving written notice to Borrower, to (a)
immediately terminate the Subject Commitment (if not already terminated or
reduced to zero) and (b) declare each Subject Loan (if not already due) to be
due, whereupon each Subject Loan shall immediately become due and payable in
full. If any Proceeding shall be commenced with respect to Borrower, then,
notwithstanding any provision or inference to the contrary, automatically,
without presentment, protest, or notice of dishonor, all of which are waived by
all makers and all indorsers of this Note, now or hereafter existing, (i) the
Subject Commitment shall immediately terminate (if not already terminated or
reduced to zero) and (ii) each Subject Loan (if not already due) shall
immediately become due and payable in full.
12. LATE CHARGES. If any principal of or interest on any Subject Loan is not
paid within ten (10) days after its due date, then, and in each such case, Bank
shall have the right to assess a late charge, payable by Borrower on demand, in
an amount equal to the greater of twenty dollars ($20.00) or five percent (5%)
of the amount not timely paid.
13. NO SETOFF. Borrower hereby waives any and all now existing or hereafter
arising rights to recoup or offset any obligation of Borrower under or in
connection with this Note or any Related Writing against any claim or right of
Borrower against Bank.
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<PAGE> 8
14. INDEMNITY: GOVERNMENTAL COSTS. If (a) there shall be enacted any law
(including, without limitation, any change in any law or in its interpretation
or administration and any request by any governmental authority) relating to any
interest rate or any assessment, reserve, or special deposit requirement (except
if and to the extent utilized in computation of the Reserve Percentage) against
assets held by, deposits in, or loans by Bank or to any tax (other than any tax
on Bank's overall net income) and (b) in Bank's sole opinion any such event
increases the cost of funding or maintaining any Fixed Rate Unit or reduces the
amount of any payment to be made to Bank in respect thereof, then, and in each
such case, upon Bank's demand, Borrower shall pay Bank an amount equal to each
such cost increase or reduced payment, as the case may be. In determining any
such amount, Bank may use reasonable averaging and attribution methods. Each
determination by Bank shall be conclusive absent manifest error.
15. INDEMNITY: CAPITAL ADEQUACY. If (a) at any time any governmental authority
shall require National City Corporation, a Delaware corporation, its successors
or assigns, or Bank, whether or not the requirement has the force of law, to
maintain, as support for the Subject Commitment, capital in a specified minimum
amount that either is not required or is greater than that required at the date
of this Note, whether the requirement is implemented pursuant to the "risk-based
capital guidelines" (published at 12 CFR 3 in respect of "national banking
associations", 12 CFR 208 in respect of "state member banks", and 12 CFR 225 in
respect of "bank holding companies") or otherwise, and (b) as a result thereof
the rate of return on capital of National City Corporation, its successors or
assigns, or Bank or both (taking into account their then policies as to capital
adequacy and assuming full utilization of their capital) shall be directly or
indirectly reduced by reason of any new or added capital thereby attributable to
the Subject Commitment; then, and in each such case, Borrower shall, on Bank's
demand, pay Bank as an additional fee such amounts as will in Bank's reasonable
opinion reimburse National City Corporation, its successors and assigns, and
Bank for any such reduced rate of return. In determining the amount of any such
fee, Bank may use reasonable averaging and attribution methods. Each
determination by Bank shall be conclusive absent manifest error.
16. INDEMNITY: ADMINISTRATION AND ENFORCEMENT. Borrower will reimburse Bank, on
Bank's demand from time to time, for any and all fees, costs, and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred by Bank in administering this Note or in protecting, enforcing, or
attempting to protect or enforce its rights under this Note. If any amount
(other than any principal of any Subject Loan and any interest and late charges)
owing under this Note is not paid when due, then, and in each such case,
Borrower shall pay, on Bank's demand, interest on that amount from the due date
thereof until paid in full at a fluctuating rate equal to four percent (4%) per
annum plus the Prime Rate.
17. WAIVERS; REMEDIES; APPLICATION OF PAYMENTS. Bank may from time to time in
its discretion grant waivers and consents in respect of this Note or any other
Related Writing or assent to amendments thereof, but no such waiver, consent, or
amendment shall be binding upon Bank unless set forth in a writing (which
writing shall be narrowly construed) signed by Bank . No course of dealing in
respect of, nor any omission or delay in the exercise of, any right, power,
26
<PAGE> 9
or privilege by Bank shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any further or other exercise thereof or of
any other, as each such right, power, or privilege may be exercised either
independently or concurrently with others and as often and in such order as Bank
may deem expedient. Without limiting the generality of the foregoing, neither
Bank's acceptance of one or more late payments or charges nor Bank's acceptance
of interest on overdue amounts at the respective rates applicable thereto shall
constitute a waiver of any right of Bank. Each right, power, or privilege
specified or referred to in this Note is in addition to and not in limitation of
any other rights, powers, and privileges that Bank may otherwise have or acquire
by operation of law, by other contract, or otherwise. Bank shall be entitled to
equitable remedies with respect to each breach or anticipatory repudiation of
any provision of this Note, and Borrower hereby waives any defense which might
be asserted to bar any such equitable remedy. Bank shall have the right to apply
payments in respect of the indebtedness evidenced by this Note with such
allocation to the respective parts thereof and the respective due dates thereof
as Bank in its sole discretion may from time to time deem advisable.
18. OTHER PROVISIONS. The provisions of this Note shall bind Borrower and
Borrower's successors and assigns and benefit Bank and its successors and
assigns, including each subsequent holder, if any, of this Note, provided, that
no Person other than Borrower may obtain Subject Loans; provided further, that
neither any such holder of this Note nor any assignee of any Subject Loan,
whether in whole or in part, shall thereby become obligated to grant Borrower
any Subject Loan. Except for Borrower and Bank and their respective successors
and assigns, there are no intended beneficiaries of this Note or the Subject
Commitment. The provisions of sections 12 through 22, both inclusive, shall
survive the payment in full of the principal of and interest on this Note. The
captions to the sections and subsections of this Note are inserted for
convenience only and shall be ignored in interpreting the provisions thereof.
Each reference to a section includes a reference to all subsections thereof
(i.e., those having the same character or characters to the left of the decimal
point) except where the context clearly does not so permit. If any provision in
this Note shall be or become illegal or unenforceable in any case, then that
provision shall be deemed modified in that case so as to be legal and
enforceable to the maximum extent permitted by law while most nearly preserving
its original intent, and in any case the illegality or unenforceability of that
provision shall affect neither that provision in any other case nor any other
provision. All fees, interest, and premiums for any given period shall accrue on
the first day thereof but not on the last day thereof (unless the last day is
the first day) and in each case shall be computed on the basis of a 360-day year
and the actual number of days in the period. In no event shall interest accrue
at a higher rate than the maximum rate, if any, permitted by law. Bank shall
have the right to furnish to its Affiliates, and to such other Persons as Bank
shall deem advisable for the conduct of its business, information concerning the
business, financial condition, and property of Borrower, the amount of the Bank
Debt of Borrower, and the terms, conditions, and other provisions applicable to
the respective parts thereof. This Note shall be governed by the law (excluding
conflict of laws rules) of the jurisdiction in which Bank's banking office is
located.
19. INTEGRATION. This Note and, to the extent consistent with this Note, the
other Related Writings, set forth the entire agreement of Borrower and Bank as
to the subject matter of this Note, and may not be contradicted by evidence of
any agreement or statement unless made in a writing (which writing shall be
narrowly construed) signed by Bank contemporaneously with or after the execution
and delivery of this Note. Without limiting the generality of the foregoing,
27
<PAGE> 10
Borrower hereby acknowledges that Bank has not based, conditioned, or offered to
base or condition the credit hereby evidenced or any charges, fees, interest
rates, or premiums applicable thereto upon Borrower's agreement to obtain any
other credit, property, or service other than any loan, discount, deposit, or
trust service from Bank.
20. NOTICES AND OTHER COMMUNICATIONS. Each notice, demand, or other
communication, whether or not received, shall be deemed to have been given to
Borrower whenever Bank shall have mailed a writing to that effect by certified
or registered mail to Borrower at Borrower's mailing address (or any other
address of which Borrower shall have given Bank notice after the execution and
delivery of this Note); however, no other method of giving actual notice to
Borrower is hereby precluded. Borrower hereby irrevocably accepts Borrower's
appointment as each Obligor's agent for the purpose of receiving any notice,
demand, or other communication to be given by Bank to each such Obligor pursuant
to any Related Writing. Bank shall be entitled to assume that any knowledge
possessed by any Obligor other than Borrower is possessed by Borrower. Each
communication to be given to Bank shall be in writing unless this Note expressly
permits that communication to be made orally, and in any case shall be given to
Bank's Metropolitan Banking Division at Bank's banking office (or any other
address of which Bank shall have given notice to Borrower after the execution
and delivery this Note). Borrower hereby assumes all risk arising out of or in
connection with each oral communication given by Borrower and each communication
given or attempted by Borrower in contravention of this section. Bank shall be
entitled to rely on each communication believed in good faith by Bank to be
genuine.
21. WARRANT OF ATTORNEY. Borrower hereby authorizes any attorney at law at any
time or times to appear in any state or federal court of record in the United
States of America after all or any part of the obligations evidenced by this
Note shall have become due, whether by lapse of time, acceleration, or
otherwise, and in each case to waive the issuance and service of process, to
present to the court this Note and any other writing (if any) evidencing the
obligation or obligations in question, to admit the due date thereof and the
nonpayment thereof when due, to confess judgment against Borrower in favor of
Bank for the full amount then appearing due, together with interest and costs of
suit, and thereupon to release all errors and waive all rights of appeal and any
stay of execution. The foregoing warrant of attorney shall survive any judgment,
it being understood that should any judgment against Borrower be vacated for any
reason, Bank may nevertheless utilize the foregoing warrant of attorney in
thereafter obtaining one or more additional judgments against Borrower.
22. JURISDICTION AND VENUE; WAIVER OF JURY TRIAL. Any action, claim,
counterclaim, crossclaim, proceeding, or suit, whether at law or in equity,
whether sounding in tort, contract, or otherwise at any time arising under or in
connection with this Note or any other Related Writing, the administration,
enforcement, or negotiation of this Note or any other Related Writing, or the
performance of any obligation in respect of this Note or any other Related
Writing (each such action, claim, counterclaim, crossclaim, proceeding, or suit,
an "ACTION") may be brought in any federal or state court located in the city in
which Bank's banking office is located. Borrower hereby unconditionally submits
to the jurisdiction of any such court with respect to each such Action and
hereby waives any objection Borrower may now or hereafter have to the venue of
any such Action brought in any such court. Borrower HEREBY, AND EACH HOLDER OF
THIS
28
<PAGE> 11
Note, BY TAKING POSSESSION THEREOF, KNOWINGLY AND VOLUNTARILY WAIVES JURY
TRIAL IN RESPECT OF ANY Action.
Borrower:
TEAM AMERICA CORPORATION
By:
------------------------------------------
Printed Name:
-------------------------------
Title:
--------------------------------------
By: /s/ Michael R. Goodrich
-----------------------------------------
Printed Name: Michael R. Goodrich
-------------------------------
Title: CFO
--------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
29
<PAGE> 12
COMMERCIAL NOTE: REVOLVING CREDIT/PRIME/LIBOR/MONEY MARKET (OHIO)
- ---------------- ---------------- ---------------- ----------------------------
Amount City, State Date FOR BANK USE ONLY
$5,000,000.00 Columbus, Ohio July 18, 1997 Obligor #
- ---------------- ---------------- ---------------- ----------------------------
Tax I. D. #
----------------------------
Obligation #
----------------------------
Office
----------------------------
This Commercial Note Addendum (this "ADDENDUM") is made by TEAM AMERICA
CORPORATION ("BORROWER"), an Ohio corporation, at the place and as of the date
first set forth above.
Borrower has executed and delivered to National City Bank of Columbus ("BANK") a
promissory note dated July 18, 1997, in the face amount set forth above and
captioned Commercial Note: Convertible Revolving Credit/Prime/LIBOR/Money Market
(Ohio).
This Addendum is hereby made a part of the note described above and that note is
hereby supplemented by adding the following Events of Default thereto:
1. INFORMATION. It shall be an Event of Default if Bank shall not receive:
(a) as soon as available, and in any event within forty-five (45) days after
each quarter-annual fiscal period of each of Borrower's fiscal years, the
Borrower's balance sheet as at the end of the period and the Borrower's
statements of cash flow, income, and surplus reconciliation for Borrower's
then current fiscal year to date, prepared for Borrower alone, and on
comparative basis with the prior year, in accordance with GAAP, and in form
and detail satisfactory to Bank, and
(b) as soon as available, and in any event within one hundred twenty (120)
days after the end of each of Borrower's fiscal years, a complete copy of an
annual report (including, without limitation, all financial statements
therein and notes thereto) of the Borrower for that year, (i) prepared in the
manner described in the next preceding clause (a), (ii) certified, without
qualification as to GAAP, as having been audited by independent certified
public accountants selected by Borrower and satisfactory to Bank, and (iii)
accompanied by a copy of any management report, letter, or similar writing
furnished to the Borrower by those accountants.
(c) concurrently with each delivery of financial statements pursuant to
clause (a) or (b) of this section 1, a compliance certificate signed by
Borrower's chief financial officer (or other officer acceptable to Bank) and
otherwise in form and substance satisfactory to Bank (i) certifying that to
the best of that officer's knowledge and belief, (A) those financial
statements have been prepared in accordance with GAAP and fairly present in
all material respects the financial condition and results of operations of
the Borrower, if any, in accordance with GAAP subject, in the case of interim
financial statements, to routine year-end adjustments and (B) no Event of
Default then exists or if any does, a brief description of the Event of
Default and Borrower's intentions in respect thereof and (ii) setting forth
calculations with respect to each subsection of section 2.
2. FINANCIAL STANDARDS. Each of the following shall be an Event of Default:
2.1 NET WORTH. If the Borrower's Net Worth shall as of the end of any
of Borrower's quarterly fiscal periods be less than Thirteen Million
Five Hundred Thousand and 00/100 Dollars ($13,500,000.00).
30
<PAGE> 13
2.2 TANGIBLE NET WORTH. If the Borrower's Tangible Net Worth
shall as of the end of any of Borrower's quarterly fiscal periods
be less than Five Million and 00/100 Dollars ($5,000,000.00).
2.3 LEVERAGE. If the Borrower's aggregate Debt shall as of the end of
any of Borrower's quarterly fiscal periods exceed an amount equal to
Seventy-Five percent (75%) of the Borrower's Net Worth.
2.4 CURRENT RATIO. If the Borrower's aggregate current assets shall as
of the end of any of Borrower's quarterly fiscal periods be less than
one hundred percent (100%) of the Borrower's aggregate current
liabilities.
2.5 CASH AND MARKET SECURITIES. If Borrower's total cash and Market
Securities on hand shall, as of the end of any of Borrower's quarterly
fiscal periods, be less than the then outstanding balance on the Note.
3. MERGERS AND EQUITY INTERESTS. It shall be an Event of Default if the Borrower
shall, without having first obtained Bank's consent, (a) be a party to any
merger or consolidation, (b) purchase or otherwise acquire all or substantially
all of the assets and business of any corporation or other business enterprise,
(c) create, acquire or have any Subsidiary or be or become a party to any joint
venture or partnership, except any existing Subsidiary, joint venture or
partnership fully disclosed in the Most Recent Financial Statements, (d) sell or
otherwise transfer any equity interest in any Subsidiary of Borrower to any
other Person, except if and to the extent the sale or other transfer is required
under applicable law solely for the purpose of qualifying directors, or (e)
issue any equity interest, except if and to the extent the issuance is required
under applicable law solely for the purpose of qualifying directors.
4. CREDIT EXTENSIONS AND GUARANTIES. It shall be an Event of Default if the
Borrower shall, without having first obtained Bank's consent, (a) make or have
outstanding at any time any advance or loan to any Person, except any existing
advance or loan fully disclosed in the Most Recent Financial Statements or any
existing or future advance made by the Borrower to an officer or employee solely
for the purpose of paying the ordinary and necessary business expenses of
Borrower or (b) be or become a guarantor of any kind, except any existing
guaranty fully disclosed in the Most Recent Financial Statements or any existing
or future indorsement of a check or other medium of payment for deposit or
collection, or any similar transaction in the ordinary course of business.
5. BORROWINGS. It shall be an Event of Default if the Borrower shall, without
having first obtained Bank's consent, create, assume, or have outstanding at any
time any Debt, except any existing Debt fully disclosed in the Most Recent
Financial Statements, any existing or future Bank Debt, any existing or future
Subordinated Debt, or any existing or future Debt secured by any mortgage,
security interest, or other lien expressly consented to by Bank.
6. DEFINITIONS. As used in this Addendum, except where the context clearly
requires otherwise, "COMPENSATION" includes all considerations (including
without limitation, deferred compensation and disbursements to trusts), whatever
the form or kind, for services rendered; "DIVIDEND" means a payment made,
liability incurred, or other consideration given by any Person (other than any
stock dividend or stock split payable solely in capital stock of that Person)
for the purchase, acquisition, redemption or retirement of any capital stock of
that Person or as a dividend, return of capital, or other distribution in
respect of that Person's capital stock; "GAAP" means generally accepted
accounting principles applied in a manner consistent with those used in
preparation of the Most Recent Financial Statements; "MARKET SECURITIES" means
shares of stock or other securities which are currently listed on a national
security exchange; "MOST RECENT FINANCIAL STATEMENTS" means the financial
statements included in the Borrower's most recent annual report delivered to
Bank on or before the date of this Addendum; "NET INCOME" means net income as
31
<PAGE> 14
determined in accordance with GAAP, after taxes, if any, and after extraordinary
items, but without giving effect to any gain resulting from any reappraisal or
write-up of any asset; " NET WORTH" means, as to any Person, the excess (as
determined in accordance with GAAP) of the net book value (after deducting all
applicable valuation reserves and without any consideration to any re-appraisal
or write-up of assets) of that Person's assets (including intangible assets such
as patents, costs of businesses over net assets acquired, good will, and
treasury shares) over that Person's Debt; "SUBORDINATED", as applied to any
liability of any Person, means a liability which at the time in question is
subordinated (by a writing in form and substance satisfactory to Bank) in favor
of the prior payment in full of that Person's Debt to Bank; "Subsidiary" means a
corporation or other business entity if shares constituting a majority of its
outstanding capital stock (or other form of ownership) or constituting a
majority of the voting power in any election of directors (or shares
constituting both majorities) are (or upon the exercise of any outstanding
warrants, options or other rights would be) owned directly or indirectly at the
time in question by the corporation in question or another Subsidiary of that
corporation or any combination of the foregoing; "TANGIBLE NET WORTH" means, as
to any Person, the excess (as determined in accordance with GAAP) of the net
book value (after deducting all applicable valuation reserves and without any
consideration to any re-appraisal or write-up of assets) of that Person's
tangible assets (i.e., all assets other than intangibles such as patents, costs
of businesses over net assets acquired, good will, and treasury shares) over
that Person's Debt; and the foregoing definitions shall be applicable to the
respective plurals of the foregoing defined terms. Any accounting term used in
Addendum shall have the meaning ascribed thereto by GAAP as in effect on the
date hereof, subject, however, to such modification, if any, as may be provided
in this Addendum or in the note hereby supplemented.
Borrower:
TEAM AMERICA CORPORATION
By:
------------------------------------------
Printed Name:
-------------------------------
Title:
--------------------------------------
By: /s/ Michael R. Goodrich
-----------------------------------------
Printed Name: Michael R. Goodrich
-------------------------------
Title: CFO
--------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
32
<PAGE> 1
EXHIBIT 11
TEAM AMERICA CORPORATION
COMPUTATION OF EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME $ 331,840 $ 180,221 $ 563,359 $ 271,003
========== ========== ========== ==========
SHARES:
Weighted average number of shares
outstanding during the period 3,375,703 2,087,848 3,355,396 2,090,608
Shares issuable upon the exercise
of stock options less shares
repurchased from the proceeds -- -- -- --
---------- ---------- ---------- ----------
Common and Common
equivalent shares outstanding 3,375,703 2,087,848 3,355,396 2,090,608
========== ========== ========== ==========
EARNINGS PER COMMON SHARE $ 0.10 $ 0.09 $ 0.17 $ 0.13
========== ========== ========== ==========
</TABLE>
33
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,199,520
<SECURITIES> 5,784,347
<RECEIVABLES> 4,530,606
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,979,078
<PP&E> 1,019,232
<DEPRECIATION> 412,601
<TOTAL-ASSETS> 21,898,195
<CURRENT-LIABILITIES> 6,370,098
<BONDS> 0
<COMMON> 13,994,661
0
0
<OTHER-SE> 1,089,214
<TOTAL-LIABILITY-AND-EQUITY> 21,898,195
<SALES> 0
<TOTAL-REVENUES> 57,354,716
<CGS> 0
<TOTAL-COSTS> 54,142,821
<OTHER-EXPENSES> 2,555,478
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 948,101
<INCOME-TAX> 384,742
<INCOME-CONTINUING> 563,359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 563,359
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
