<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
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: 0-20540
ON ASSIGNMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4023433
(State of Incorporation) (IRS Employer Identification No.)
26651 WEST AGOURA ROAD, CALABASAS, CA 91302
(Address of principal executive offices)
(Zip Code)
(818) 878-7900
(Registrant's telephone number, including area code)
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
----- -----
At September 30, 1996, the total number of outstanding shares of the Company's
Common Stock ($0.01 par value) was 5,147,199.
Page 1 of 18 pages
Exhibit index on page 17
<PAGE> 2
ON ASSIGNMENT, INC.
INDEX
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION PAGE NUMBER
<S> <C>
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets at September 30, 1996
and December 31, 1995 (Unaudited) 3
Consolidated Statements of Income for the three months
ended September 30, 1996 and September 30, 1995 (Unaudited) 4
Consolidated Statements of Income for the nine months
ended September 30, 1996 and September 30, 1995 (Unaudited) 5
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996 and September 30, 1995 (Unaudited) 6, 7
Notes to Consolidated Financial Statements (Unaudited) 8, 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10, 11, 12, 13, 14
PART II - OTHER INFORMATION
Item 4 - Submission of Matters
to a Vote of Security-Holders 15
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
Index to Exhibits 17
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,940,000 $ 3,327,000
Marketable securities, current 4,990,000 3,565,000
Accounts receivable, net (note 4) 11,869,000 10,144,000
Advances and deposits 157,000 111,000
Prepaid expenses 622,000 799,000
Deferred income taxes 873,000 600,000
------------- -------------
Total current assets 26,451,000 18,546,000
------------- -------------
Office Furniture, Equipment and
Leasehold Improvements, net (note 5) 2,269,000 1,730,000
Marketable securities, non-current 0 2,000,000
Workers' compensation deposits 760,000 860,000
Goodwill, net (note 6) 593,000 628,000
Other assets 147,000 158,000
------------- -------------
TOTAL ASSETS $ 30,220,000 $ 23,922,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - bank $ 0 $ 475,000
Accrued payroll 2,756,000 1,647,000
Accounts payable 468,000 495,000
Accrued expenses 1,263,000 853,000
Income taxes payable 546,000 304,000
------------- -------------
Total current liabilities 5,033,000 3,774,000
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock (note 7) 0 0
Common stock (note 8) 51,000 50,000
Paid-in capital 8,135,000 6,898,000
Retained earnings 17,001,000 13,200,000
------------- -------------
Total stockholders' equity 25,187,000 20,148,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,220,000 $ 23,922,000
============= =============
</TABLE>
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
------------- -------------
<S> <C> <C>
REVENUES $ 23,303,000 $ 19,201,000
COST OF SERVICES 16,244,000 13,486,000
------------- -------------
GROSS PROFIT 7,059,000 5,715,000
OPERATING EXPENSES 4,554,000 3,923,000
------------- -------------
OPERATING INCOME 2,505,000 1,792,000
INTEREST INCOME, NET 130,000 97,000
------------- -------------
INCOME BEFORE INCOME TAXES 2,635,000 1,889,000
PROVISION FOR INCOME TAXES 1,062,000 746,000
------------- -------------
NET INCOME $ 1,573,000 $ 1,143,000
============= =============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.29 $ 0.21
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 5,449,000 5,328,000
============= =============
</TABLE>
4
<PAGE> 5
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------- -------------
1996 1995
------------- -------------
<S> <C> <C>
REVENUES $ 63,643,000 $ 52,530,000
COST OF SERVICES 44,292,000 36,784,000
------------- -------------
GROSS PROFIT 19,351,000 15,746,000
OPERATING EXPENSES 12,956,000 11,014,000
------------- -------------
OPERATING INCOME 6,395,000 4,732,000
NON-RECURRING ACQUISITION COSTS (Note 2) 401,000 0
------------- -------------
INCOME BEFORE INTEREST AND INCOME TAXES 5,994,000 4,732,000
INTEREST INCOME, NET 370,000 285,000
------------- -------------
INCOME BEFORE INCOME TAXES 6,364,000 5,017,000
PROVISION FOR INCOME TAXES 2,563,000 1,997,000
------------- -------------
NET INCOME $ 3,801,000 $ 3,020,000
============= =============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.70 $ 0.57
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 5,445,000 5,244,000
============= =============
</TABLE>
5
<PAGE> 6
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,801,000 $ 3,020,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 499,000 430,000
Increase in allowance for doubtful accounts 63,000 203,000
Increase in deferred income taxes (273,000) (147,000)
Increase in accounts receivable (1,788,000) (2,834,000)
Increase in accounts payable and accrued expenses 1,492,000 469,000
Increase in income taxes payable 392,000 252,000
Decrease (increase) in workers' compensation deposits 100,000 (144,000)
Decrease (increase) in prepaid expenses 177,000 (82,000)
Increase in other assets (5,000) (48,000)
------------ ------------
Net cash provided by operating activities 4,458,000 1,119,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (1,000,000) (2,800,000)
Proceeds from the maturity of marketable securities 1,575,000 2,580,000
Acquisition of office furniture, equipment and
leasehold improvements (987,000) (560,000)
Decrease (increase) in advances and deposits (46,000) 78,000
------------ ------------
Net cash used for investing activities (458,000) (702,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options 939,000 476,000
Proceeds from issuance of common stock -
Employee Stock Purchase Plan 149,000 121,000
Proceeds from collection of officer loans receivable 0 300,000
Borrowings on line of credit 450,000 1,347,000
Repayments of line of credit borrowings (925,000) (687,000)
------------ ------------
Net cash provided by financing activities 613,000 1,557,000
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,613,000 1,974,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,327,000 1,833,000
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,940,000 $ 3,807,000
============ ============
</TABLE>
6
<PAGE> 7
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash paid during the period for income taxes, net of refunds $ 2,429,000 $ 1,892,000
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Tax benefit of disqualifying dispositions $ 150,000 $ 110,000
=========== ===========
Officer loans receivable $ 0 $ 109,000
=========== ===========
</TABLE>
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
- --------------------------------------------------------------------------------
1. The accompanying consolidated financial statements have been prepared by
the Company, pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). This Report on Form 10-Q should be read in
conjunction with the Company's annual report on Form 10-K for the year ended
December 31, 1995, and Current Reports on Form 8-K and 8-K/A-1, filed with the
Securities and Exchange Commission on April 10, 1996 and May 3, 1996,
respectively. Certain information and footnote disclosures which are normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations. The information reflects all normal and recurring adjustments
which, in the opinion of Management, are necessary for a fair presentation of
the financial position of the Company and its results of operations for the
interim periods set forth herein. The results for the three months ended
September 30, 1996 or the nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year or any
other period.
2. On March 27, 1996, the Company issued 171,579 shares of its common stock
for all of the outstanding common stock of EnviroStaff, Inc. ("EnviroStaff"),
a Minnesota corporation, which specializes in providing employees on temporary
assignments to the environmental services industry. The acquisition has been
accounted for as a pooling-of-interests and, accordingly, the Company's
consolidated financial statements have been restated for all periods prior to
the acquisition to include the results of operations, financial positions, and
cash flows of EnviroStaff.
Non-recurring acquisition costs of approximately $401,000 related to the
acquisition of EnviroStaff were charged to expense during the nine-month period
ended September 30, 1996. The after-tax impact of these expenses on primary
and fully diluted earnings per share was $0.04 for the nine-month period ended
September 30, 1996. Acquisition costs include legal, accounting, financial
advisory services, and other costs of the acquisition.
3. The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
4. Accounts receivable are stated net of an allowance for doubtful accounts of
$498,000 and $435,000 at September 30, 1996 and December 31, 1995,
respectively.
5. Office furniture, equipment and leasehold improvements are stated net of
accumulated depreciation and amortization of $1,846,000 and $1,403,000 at
September 30, 1996 and December 31, 1995, respectively.
6. Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired. It is being amortized on a straight-line basis over
15 years. Goodwill is stated net of accumulated amortization of $116,000 and
$81,000 at September 30, 1996 and December 31, 1995, respectively.
8
<PAGE> 9
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
- --------------------------------------------------------------------------------
7. At September 30, 1996 and December 31, 1995, Preferred Stock at a par value
of $0.01 per share consisted of 1,000,000 shares authorized and 0 shares issued
and outstanding.
8. At September 30, 1996 and December 31, 1995, Common Stock at a par value of
$0.01 per share consisted of 25,000,000 shares authorized and 5,147,199 and
5,024,461 shares issued and outstanding, respectively.
9. In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company has elected to adopt the disclosure portion of the
statement and therefore will provide the required disclosures in its financial
statements for the year ending December 31, 1996.
10. Certain reclassifications have been made to the 1995 consolidated
financial statements to conform with the 1996 consolidated financial statement
presentation.
9
<PAGE> 10
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion in this Report contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially
from those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, the integration of acquired
operations, management of growth and other risks discussed in "Risk Factors
That May Affect Future Results" in the Business Section of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, as well as those
discussed elsewhere in this Report and from time to time in the Company's other
reports filed with the Securities and Exchange Commission.
CHANGES IN RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
- --------------------------------------------------------------------------------
REVENUES - Revenues increased by 21.4% from $19,201,000 for the three months
ended September 30, 1995, to $23,303,000 for the three months ended September
30, 1996, primarily as a result of the increase in the number of temporary
employees on assignment in the Lab Support division and to a lesser extent from
the increase in revenues generated by EnviroStaff and the Finance Support
division.
Lab Support's revenue growth was primarily attributable to the strong
performance in most of the markets in which the Lab Support division has older,
better established branches and to a lesser extent the contribution of new Lab
Support offices opened in the past year. Average hourly billing rates of the
Lab Support division did not vary significantly between the two periods.
The growth of EnviroStaff's revenues were primarily attributable to the
contribution of new EnviroStaff offices opened in the past year, as well as the
growth of most existing offices. Average hourly billing rates of EnviroStaff
did not vary significantly between the two periods.
The growth of the Finance Support division's revenues were primarily
attributable to higher average hourly billing rates, which were principally
attributable to a concentration on new business with a higher price structure,
and to a lesser extent from the contribution of new offices opened in the past
year.
COST OF SERVICES - Cost of services consists solely of compensation for
temporary employees and payroll taxes and benefits paid by the Company in
connection with such compensation. Cost of services increased 20.5% from
$13,486,000 for the three months ended September 30, 1995 to $16,244,000 for
the three months ended September 30, 1996. Cost of services as a percentage of
revenues decreased from 70.2% in the 1995 period to 69.7% in the 1996 period.
This decrease was primarily attributable to an increase in conversion fee
revenue of the Lab Support division in the 1996 period. In addition, an
increase in average gross margins of the Finance Support division as a result
of a shift to higher margin business in the 1996 period, and an increase in
average gross margins of EnviroStaff as a result of a decrease in average pay
rates in the 1996 period, was offset by an increase in employer payroll taxes
and employer paid benefits.
10
<PAGE> 11
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CHANGES IN RESULTS OF OPERATIONS (CONTINUED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
- --------------------------------------------------------------------------------
OPERATING EXPENSES - Operating expenses include the costs associated with the
Company's network of Account Managers and branch offices, including Account
Manager compensation, rent, other office expenses and advertising for temporary
employees, and corporate office expenses, including corporate operations and
support personnel, management compensation, Account Manager recruiting and
training expenses, corporate advertising and promotion, rent and other general
and administrative expenses. Operating expenses increased 16.1% from
$3,923,000 for the three months ended September 30, 1995 to $4,554,000 for the
three months ended September 30, 1996. Operating expenses as a percentage of
revenues decreased from 20.4% in the 1995 period to 19.5% in the 1996 period.
This result was primarily attributable to the increased productivity of the
Account Managers in all three divisions.
INTEREST - Interest income, net increased 34.0% from $97,000 for the three
months ended September 30, 1995 to $130,000 for the three months ended
September 30, 1996, primarily as a result of interest earned on higher
interest-bearing cash, cash equivalent and marketable security account balances
in the 1996 period.
PROVISION FOR INCOME TAXES - Income taxes increased 42.4% from $746,000 for the
three months ended September 30, 1995 to $1,062,000 for the three months ended
September 30, 1996. The effective tax rate increased from 39.5% in the 1995
period to 40.3% in the 1996 period.
11
<PAGE> 12
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CHANGES IN RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
- --------------------------------------------------------------------------------
REVENUES - Revenues increased by 21.2% from $52,530,000 for the nine months
ended September 30, 1995, to $63,643,000 for the nine months ended September
30, 1996, primarily as a result of the increase in the number of temporary
employees on assignment in the Lab Support division and to a lesser extent from
the increase in revenues generated by EnviroStaff and the Finance Support
division.
Lab Support's revenue growth was primarily attributable to the strong
performance in most of the markets in which the Lab Support division has older,
better established branches and to a lesser extent the contribution of new Lab
Support offices opened in the past year. However, Lab Support's revenue growth
was tempered by an unusually high number of conversions of temporary employees
to permanent status and the impact of severe winter weather in several key
markets during the first quarter. Average hourly billing rates of the Lab
Support division decreased slightly during the 1996 period.
The growth of EnviroStaff's revenues were primarily attributable to the
contribution of new EnviroStaff offices opened in the past year, as well as the
growth of most existing offices. Average hourly billing rates of EnviroStaff
did not vary significantly between the two periods.
The growth of the Finance Support division's revenues were primarily
attributable to higher average hourly billing rates, which were principally
attributable to a concentration on new business with a higher price structure,
and to a lesser extent from the contribution of new offices opened in the past
year.
COST OF SERVICES - Cost of services increased 20.4% from $36,784,000 for the
nine months ended September 30, 1995 to $44,292,000 for the nine months ended
September 30, 1996. Cost of services as a percentage of revenues decreased
from 70.0% in the 1995 period to 69.6% in the 1996 period. This decrease was
primarily attributable to an increase in conversion fee revenue of the Lab
Support division in the 1996 period. In addition, an increase in average gross
margins of the Finance Support division as a result of a shift to higher margin
business in the 1996 period, and an increase in average gross margins of
EnviroStaff as a result of a decrease in average pay rates in the 1996 period,
was offset by an increase in employer payroll taxes and employer paid benefits.
OPERATING EXPENSES - Operating expenses increased 17.6% from $11,014,000 for
the nine months ended September 30, 1995 to $12,956,000 for the nine months
ended September 30, 1996. Operating expenses as a percentage of revenues
decreased from 21.0% in the 1995 period to 20.4% in the 1996 period. This
result was primarily attributable to the increased productivity of the Account
Managers in all three divisions.
12
<PAGE> 13
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CHANGES IN RESULTS OF OPERATIONS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995:
- --------------------------------------------------------------------------------
NON-RECURRING ACQUISITION COSTS - Non-recurring acquisition costs consisted
principally of legal, accounting, financial advisory services and other
expenses related to the initial combination of EnviroStaff and the Company.
The combined companies incurred approximately $401,000 in non-recurring
acquisition costs during the quarter ended March 31, 1996.
INTEREST - Interest income, net increased 29.8% from $285,000 for the nine
months ended September 30, 1995 to $370,000 for the nine months ended September
30, 1996, primarily as a result of interest earned on higher interest-bearing
cash, cash equivalent and marketable security account balances, partially
offset by interest expense charged on EnviroStaff's line of credit borrowings
in the 1996 period.
PROVISION FOR INCOME TAXES - Income taxes increased 28.3% from $1,997,000 for
the nine months ended September 30, 1995 to $2,563,000 for the nine months
ended September 30, 1996. The effective tax rate increased from 39.8% in the
1995 period to 40.3% in the 1996 period.
13
<PAGE> 14
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------------------------------------------------------
The Company's primary sources of cash for the nine months ended September 30,
1996 were funds provided by operating activities. For the nine months ended
September 30, 1995, operating activities provided $1,119,000 of cash compared
to $4,458,000 for the nine months ended September 30, 1996. This increase was
primarily attributable to higher net income and a smaller increase in accounts
receivable in the 1996 period compared to the 1995 period, which was
principally due to an expected temporary reduction in billing activity as a
result of the conversion to a new payroll processing and billing system in
June, 1995. In addition, an increase in accounts payable and accrued expenses
and a decrease in workers' compensation deposits and prepaid expenses in the
1996 period, contributed to net cash provided by operating activities.
Cash used for investing activities totaled $702,000 for the nine months ended
September 30, 1995, compared to $458,000 for the nine months ended September
30, 1996. This was primarily attributable to cash used to purchase marketable
securities exceeding cash proceeds from the maturity of marketable securities
in the 1995 period, partially offset by higher purchases of fixed assets in the
1996 period.
Cash provided by financing activities was $1,557,000 for the nine months ended
September 30, 1995, compared to $613,000 for the nine months ended September
30, 1996. The decrease was primarily attributable to repayments of
EnviroStaff's line of credit borrowings exceeding the related borrowings during
the 1996 period compared to the 1995 period, and the proceeds from the
collection of officer loans receivable in the 1995 period. The decrease was
partially offset by higher proceeds from the sale of common stock in connection
with the exercise of stock options and the Employee Stock Purchase Plan during
the 1996 period.
Effective September 30, 1996, the Company renewed its unsecured bank line of
credit. The maximum borrowings allowable under this agreement are $7,000,000
and bear interest at the bank's reference rate (8.25% at September 30, 1996).
The agreement expires on July 1, 1998. No borrowings were outstanding under
this credit line at September 30, 1996.
In addition, the Company's EnviroStaff subsidiary had a $1,000,000 line of
credit with a bank. Borrowings accrued interest at prime plus 1.25%. Advances
were secured by all of the assets of EnviroStaff and the agreement included
requirements for minimum operating ratios and tangible net worth and restricted
the payment of dividends. On April 19, 1996, the Company paid the outstanding
balance in full and the line of credit agreement was terminated.
The Company believes that its cash balances, together with funds from
operations and its borrowing capacity, will be sufficient to meet its cash
requirements through at least the next twelve months.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS
TO A VOTE OF SECURITY-HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - 11.1
Statement regarding computation of earnings per share
(b) Reports on Form 8-K - None
15
<PAGE> 16
PART II - OTHER INFORMATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ON ASSIGNMENT, INC.
Date: November 13, 1996 By: /s/ H. Tom Buelter
------------------------ ---------------------------------
H. Tom Buelter
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 1996 By: /s/ Ronald W. Rudolph
------------------------ ---------------------------------
Ronald W. Rudolph
Sr. Vice President, Finance &
Administration
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- ------------------------------------------------------------------------------
<S> <C> <C>
Statement regarding computation
11.1 of earnings per share 18
</TABLE>
17
<PAGE> 1
EXHIBIT 11.1
ON ASSIGNMENT, INC.
STATEMENT OF COMPUTATION OF NET EARNINGS PER
COMMON AND COMMON EQUIVALENT SHARES (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income used to compute primary and
fully diluted earnings per share $ 1,573,000 $ 1,143,000 $ 3,801,000 $ 3,020,000
=========== =========== =========== ===========
Weighted average number of shares outstanding 5,127,000 5,009,000 5,088,000 4,976,000
Dilutive effect of stock options and warrants 322,000 319,000 357,000 268,000
----------- ----------- ----------- -----------
Number of shares used to compute primary
and fully diluted earnings per share 5,449,000 5,328,000 5,445,000 5,244,000
=========== =========== =========== ===========
Net earnings per share $ 0.29 $ 0.21 $ 0.70 $ 0.57
=========== =========== =========== ===========
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS (UNAUDITED) AND CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,700,000
<SECURITIES> 4,990,000
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<DEPRECIATION> 1,846,000
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0
0
<COMMON> 51,000
<OTHER-SE> 25,136,000
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<CGS> 0
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<INCOME-PRETAX> 6,364,000
<INCOME-TAX> 2,563,000
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<NET-INCOME> 3,801,000
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
</TABLE>
