<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 March 31, 1998
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
MAY 11, 1998 WAS 4,720,183.
<PAGE> 2
TEAM AMERICA CORPORATION AND SUBSIDIARIES
MARCH 31, 1998
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NO.
---
<S> <C>
Item 1. Financial Statements:
Consolidated Statements of Income -- Three-month periods
ended March 31, 1998 and 1997 (unaudited) - 3 -
Consolidated Balance Sheets -- March 31, 1998 (unaudited)
and December 31, 1997 - 4 -
Consolidated Statements of Cash Flows -- Three month periods
ended March 31, 1998 and 1997 (unaudited) - 6 -
Consolidated Statement of Changes in Shareholders' Equity-
Three-month period ended March 31, 1998 (unaudited) - 7 -
Notes to Consolidated Financial Statements - 8 -
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - 9 -
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K - 15 -
Signature - 16 -
Exhibit Index - 17 -
</TABLE>
- ----------
Note: Items 1 through 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 MARCH 31,
<TABLE>
<CAPTION>
1998 1997
(unaudited)
<S> <C> <C>
REVENUES $70,034,431 $25,542,368
DIRECT COSTS:
Salaries and wages 59,128,465 21,597,700
Payroll taxes, workers' compensation premiums,
employee benefits and other 7,495,996 2,545,479
----------- -----------
Total direct costs 66,624,461 24,143,179
----------- -----------
Gross profit 3,409,970 1,399,189
EXPENSES:
Administrative salaries, wages and employment taxes 1,762,783 723,320
Other selling, general and administrative expenses 1,207,713 405,184
Depreciation and amortization 339,415 35,678
----------- -----------
Total operating expenses 3,309,911 1,164,182
----------- -----------
Income from operations 100,059 235,007
OTHER INCOME 43,359 151,061
----------- -----------
Income before income taxes 143,418 386,068
INCOME TAX EXPENSE 142,000 154,550
----------- -----------
NET INCOME $ 1,418 $ 231,518
=========== ===========
EARNINGS PER SHARE:
Basic $ 0.00 $ 0.07
=========== ===========
Diluted $ 0.00 $ 0.07
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 4,694,000 3,335,100
=========== ===========
Diluted 4,972,000 3,335,100
=========== ===========
</TABLE>
3
<PAGE> 4
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,815,337 $ 1,465,141
Temporary cash investments 2,802,739 4,484,367
Total cash and cash equivalents 5,618,076 5,949,508
Short-term investments 515,000 515,000
Receivables:
Trade, net 1,399,337 1,509,583
Other 260,537 165,519
Unbilled revenues 8,264,854 7,070,588
Refundable income taxes -- 253,396
----------- -----------
Total receivables 9,924,728 8,999,086
Prepaid expenses 781,067 216,685
Deferred income tax asset 107,000 107,000
----------- -----------
Total current assets 16,945,871 15,787,279
PROPERTY AND EQUIPMENT, NET 1,279,600 991,477
OTHER ASSETS:
Goodwill and non-compete agreements, net 24,477,700 23,216,338
Cash surrender value of life insurance policies 467,443 398,005
Mandated benefit/security deposits 292,761 329,251
Deferred income tax asset 159,000 159,000
Other assets 463,833 128,585
----------- -----------
Total other assets 25,860,737 24,231,179
----------- -----------
Total assets $44,086,208 $41,009,935
=========== ===========
</TABLE>
4
<PAGE> 5
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 428,522 $ 336,694
Accrued compensation 7,321,408 6,575,641
Accrued payroll taxes 4,059,960 2,484,735
Accrued workers' compensation premiums 900,948 1,255,013
Federal and state income taxes payable 92,630 160,000
Other accrued expenses 656,486 791,690
Client deposits 542,457 544,330
Notes payable and capital lease obligation, current portion 106,000 10,128
------------ ------------
Total current liabilities 14,108 411 12,158,231
CAPITAL LEASE OBLIGATION, net of current portion 15,252 18,941
DEFERRED RENT 93,582 98,832
DEFERRED COMPENSATION LIABILITY 465,521 394,687
------------ ------------
Total liabilities 14,682,766 12,670,691
------------ ------------
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
4,836,994 and 4,730,716 shares issued; 4,720,183 and
4,613,905 shares outstanding, respectively 27,949,006 26,886,226
Excess purchase price (83,935) (83,935)
Retained earnings 1,560,384 1,558,966
------------ ------------
29,425,455 28,361,257
Less - Treasury stock, 116,811 shares
respectively, at cost (22,013) (22,013)
------------ ------------
Total shareholders' equity 29,403,442 28,339,244
------------ ------------
Total liabilities and shareholders' equity $ 44,086,208 $ 41,009,935
============ ============
</TABLE>
5
<PAGE> 6
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1998 1997
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,418 $ 231,518
Adjustments to reconcile net income to
net cash provided by (used in) operating activities
Depreciation and amortization 339,415 35,678
Deferred tax expense (benefit) -- --
(Increase) decrease in operating assets:*
Receivables (791,579) (398,938)
Prepaid expenses (561,152) (9,569)
Mandated benefit/security deposits 72,648 10,001
Other (6,784)
Increase (decrease) in operating liabilities:*
Accounts payable and accrued expenses 90,173 (240,783)
Accrued expenses and other payables 1,534,065 292,206
Client deposits (1,874) (15,701)
Deferred liabilities 65,495 13,947
----------- -----------
Net cash provided by (used in) operating activities 741,825 (81,641)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (339,518) (103,417)
Increases in cash surrender value of life insurance policies (69,438) (22,791)
Decrease in short-term investments -- 443,202
Acquisitions, net of cash obtained (659,769) (262,375)
----------- -----------
Net cash provided by (used in) investing activities (1,068,725) 54,619
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligation (4,532) (2,492)
Offering costs incurred -- (20,580)
----------- -----------
Net cash used in financing activities (4,532) (23,072)
----------- -----------
Net decrease in cash and cash equivalents (331,432) (50,094)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,949,508 8,100,520
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,618,076 $ 8,050,426
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest $ 5,359 $ 368
=========== ===========
Income Taxes $ 34,685 $ 408,000
=========== ===========
</TABLE>
* Amounts exclude the effects of acquisitions.
6
<PAGE> 7
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Excess
Common Stock Treasury Stock Purchase Retained
------ ----- -------- -----
Number Value Number Value Price Earnings Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance 4,730,716 $26,886,226 116,811 $(22,013) $(83,935) $1,558,966 $28,339,244
December 31, 1997
Acquisitions 106,278 1,062,780 1,062,780
Net Income 1,418 1,418
-------------------------------------------------------------------------------------------
Balance 4,836,994 $27,949,006 116,811 $(22,013) $(83,935) $1,560,384 $29,403,442
March 31, 1998 ===========================================================================================
</TABLE>
7
<PAGE> 8
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 March
31, 1998 and for the three-month period 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 Annual Report or
Form 10-K for the year ended December 31, 1997. Since December 31, 1997, the
Company acquired PEO businesses in transactions accounted for as purchases.
Intangible assets recorded as a result of the purchase were 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.
NOTE 3 -- Earnings Per Share
Earnings per share were determined in accordance with SFAS No. 128.
There were no differences to reconcile to determine net income for basic and
diluted earnings per share purposes. The effects of dilutive stock options
increased the shares outstanding from 4,694,000 to 4,972,000 in the first
quarter of 1998. Dilutive stock options had no effect on the shares outstanding
for diluted earnings per share purposes in the first quarter of 1997.
8
<PAGE> 9
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 periods ended March 31, 1998 and 1997 expressed as a percentage of
revenues:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues 100.0% 100.0%
Direct Costs:
Salaries and wages 84.4 84.6
Payroll taxes, workers' 10.7 10.0
compensation premiums, employee
benefits and other costs
Gross Profit 4.9 5.4
Operating Expenses:
Administrative salaries, 2.5 2.8
wages and employment
taxes
Other selling, general and
administrative 1.7 1.6
Depreciation and
amortization 0.5 0.1
Total Operating Expenses 4.7 4.5
Other income (expense), net -- .6
Income before taxes 0.2 1.5
Income taxes 0.2 0.6
Net income -- 0.9
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
9
<PAGE> 10
REVENUES
Revenues increased 174% from $25,542,000 in the three months ended
March 31, 1997 to $70,034,000 in the three months ended March 31, 1998. Since
March 31, 1997 the Company completed seven acquisitions of PEO's including three
in the first quarter of 1998. Revenues from the acquisitions accounted for 49%
of the revenues recorded in the first quarter of 1998. Internal growth in the
Company's original core business, primarily in Ohio, was approximately 27% in
the first quarter of 1998. Total worksite employees increased to approximately
13,000 at March 31, 1998 compared to 3,250 at March 31, 1997.
DIRECT COSTS
Total direct costs increased 176% to $66,624,000 in the three months
ended March 31, 1998 from $24,143,000 in the three months ended March 31, 1997.
Direct costs increased to 95.1% of total revenues in the first quarter of 1998
up from 94.6% in the first quarter of 1997. Costs rose more than revenues and
increased as a percentage of revenues for two reasons. First, the acquired
companies have lower fees and margins than the core business. Improving margins
through fee increases and better leveraging of acquiring insurances and other
benefits is an opportunity for future profit and margin improvement in the newly
acquired companies. The second factor affecting margin is that the acquirees
have more flat percentage fee arrangements with their clients, whereas this
billing method was used infrequently in the core business where a weekly per
head count fee is prevalent. The flat fee percentage results in lower margins in
the first half of the year when certain costs, such as unemployment taxes are
highest. As these taxes reach their statutory maximums, they drop off. Costs
decline but the flat percentage fee continues, resulting in higher margins in
the second half of the year.
EXPENSES
Administrative salaries, wages and employment taxes rose 144% to
$1,763,000 in the three months ended March 31, 1998 from $723,000 in the three
months ended March 31, 1997. These costs declined to 2.5% of total revenues in
the first quarter of 1998 from 2.8% of total revenues in the first quarter of
1997. The increase in this expense category reflects the number of
administrative employees from the acquisitions. However, the acquired entities
had lower expenses as a percentage of revenues leading to the decline as a
percentage of revenues in this cost category.
Other selling, general and administrative expenses increased 198% to
$1,208,000 in the three months ended March 31, 1998 from $405,000 in the three
months ended March 31, 1997. In addition to the increased costs from the
acquired companies, expenses also rose for liability and employment practices
insurance, printing for new brochures and stationary for the acquired companies,
travel and facilities costs. These costs are not expected to continue to
increase at a greater pace than revenues. Additional savings are also expected
once the Company's new payroll, human resources and accounting software package
is deployed and operating at all locations, which is now expected to occur in
the second half of 1998.
Depreciation and amortization expense rose to $339,000 in the three
months ended March 31, 1998 from $36,000 in the three months ended March 31,
1997. Depreciation expense was $67,000 in 1998 compared to $36,000 in 1997 while
amortization expense was $272,000 in 1998 compared to none in the first quarter
of 1997. The increased depreciation expense resulted from the investment in
computer equipment and software during the past year. The amortization expense
is the 25 year amortization of goodwill arising from the seven acquisitions
completed in the last three quarters of 1997 and the first quarter of 1998.
10
<PAGE> 11
INCOME FROM OPERATIONS
As a result of the lower gross margin percentage and the higher
selling, general and administrative and depreciation and amortization expenses,
income from operations declined to $100,000 in the three months ended March 31,
1998 from $235,000 in the three months ended March 31, 1997. However, on an
EBITDA basis there was actually an increase in operating income to $439,000 in
the three months ended March 31, 1998 from $271,000 in the three months ended
March 31, 1997.
OTHER INCOME
Other income declined to $43,000 in the three months ended March 31,
1998 from $151,000 in the three months ended March 31, 1997. Other income is
income from the investment of the of the proceeds from the IPO on December 31,
1996. In the first quarter of 1997 the entire $13,000,000 from the IPO was
invested. By December 31, 1997 the balance remaining had declined to
approximately $5,000,000 and had further declined to approximately $3,300,000 at
March 31, 1998 as a result of using the proceeds to acquire other PEO's.
INCOME TAX EXPENSE
Income tax expense was $142,000 or 99% of income before taxes in the
three months ended March 31, 1998 compared to $155,000 or 40% of income before
taxes in the three months ended March 31, 1997. Income tax expense rose as a
percent of pre-tax income in 1998 because the goodwill amortization is not a
deductible expense for tax purposes. The tax provision in 1997 also benefitted
from the investment income, almost half of which was from tax-free municipal
bonds.
NET INCOME AND EARNINGS PER SHARE
As a result of the lower gross margin percentage, higher amortization
expense and lower investment income, net income declined to $1,418 in the three
months ended March 31, 1998 from $231,518 in the three months ended March 31,
1997.
Basic and diluted earnings per share were $0.00 in the three months
ended March 31, 1998 and $.07 in the three months ended March 31, 1997. Average
shares outstanding increased to 5,040,500 in the three months ended March 31,
1998 compared to 3,335,088 in the three months ended March 31, 1997 due to the
shares issued for acquisitions in the last three quarters of 1997 and the first
quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had a working capital surplus of
$2,837,000. At December 31, 1997, the working capital surplus was $3,117,000.
11
<PAGE> 12
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 $742,000 and
($82,000) for the three month periods ended March 31, 1998 and 1997,
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 growth of the Company.
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 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 deposits. As of March 31, 1998 and 1997, the Company held cash
security deposits in the amounts of $542,000 and $544,000 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 $1,069,000 and
$55,000 for the three month periods ended March 31, 1998 and 1997 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.
During the first quarter of 1998, $660,000 was paid toward the purchase
of three PEO companies. Also, included in the cash paid during the first quarter
of 1998 was $92,000 additional purchase price owed for a PEO company acquired in
October 1997. In addition to the cash paid during the first quarter for
acquisitions, 106,278 shares of TEAM America Common Stock at a price of $10 per
share were also issued. These shares are unregistered restricted shares and
cannot be sold for a one year period from the date of issuance.
The principal source of cash provided by investing activities in the
first quarter of 1997 was the maturation of short-term investment instruments
which were reinvested in temporary cash investments at March 31, 1998 and used
towards the acquisition of AEM.
Financing activities are not material as the Company has no debt or
significant leases.
12
<PAGE> 13
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. However, the Company is limited in its
ability to continue to acquire other PEO companies unless it can raise
additional capital since most acquisitions involve the payment of cash and the
issuance of stock for the purchase price and may also require some additional
working capital following acquisitions.
In July 1997 the Company obtained 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. There were no borrowings under
the revolving credit agreement in the first quarter of 1998. The Company is
currently negotiating to increase this commitment to $10,000,000 and to
restructure the financial covenants to be more conducive to using the line of
credit to fund the cash portion of the purchase price of PEO acquisitions.
The Company believes that the net remaining 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, excluding
acquisitions of other PEO's, 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 financial resources will be available
on terms favorable to the Company or at all.
The Company did not pay dividends in 1996, 1997, or thus far in 1998,
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.
13
<PAGE> 14
QUARTERLY RESULTS
The following table sets forth certain unaudited operating results of each of
the six consecutive quarters for the period ended March 31, 1998 which comprise
all of the quarterly periods following the Company's initial public offering of
its Common Stock in December 10, 1996.
The information is unaudited, but in the opinion of management, includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results of operations of such periods. This information
should be read in conjunction with the Company's Consolidated Financial
Statements and the Notes thereto.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------------------------------
Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31
1996 1997 1997 1997 1997 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $25,762 $25,542 $31,812 $36,697 $61,812 $70,034
------------------------------------------------------------------------------------------------------------------
Direct costs: 24,218 24,143 30,000 35,000 58,402 66,624
------------------------------------------------------------------------------------------------------------------
Net Income: 167 232 332 173 193 1
------------------------------------------------------------------------------------------------------------------
Earnings Per
Share:
------------------------------------------------------------------------------------------------------------------
Basic $ .07 $ .07 $ .10 $ .05 $ .04 $ .00
------------------------------------------------------------------------------------------------------------------
Diluted $ .07 $ .07 $ .10 $ .05 $ .04 $ .00
------------------------------------------------------------------------------------------------------------------
</TABLE>
AMOUNTS IN $000'S EXCEPT PER SHARE AMOUNTS
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 meaning 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 Services
("IRS") for Tax Advice memorandum ("TMAM"); (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.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
None
(b) Exhibits
27 Financial Data Schedule
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEAM AMERICA CORPORATION
/s/MICHAEL R. GOODRICH
--------------------------------------
Chief Financial Officer and Authorized
Signing Officer
May 11, 1998
16
<PAGE> 17
EXHIBIT INDEX
Exhibit Number Description Page #
- -------------- ----------- ------
27 Financial Data Schedule - -*
*In SEC EDGAR-filed document only
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,618,076
<SECURITIES> 515,000
<RECEIVABLES> 9,974,728
<ALLOWANCES> 50,000
<INVENTORY> 0
<CURRENT-ASSETS> 16,945,871
<PP&E> 1,875,237
<DEPRECIATION> 595,637
<TOTAL-ASSETS> 44,086,208
<CURRENT-LIABILITIES> 14,108,411
<BONDS> 0
0
0
<COMMON> 27,949,006
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 44,086,208
<SALES> 0
<TOTAL-REVENUES> 70,034,431
<CGS> 0
<TOTAL-COSTS> 66,624,461
<OTHER-EXPENSES> 3,309,911
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<INCOME-TAX> 142,000
<INCOME-CONTINUING> 1,418
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,418
<EPS-PRIMARY> 0.00
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</TABLE>
