<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 JUNE 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 June 30, 1996, the total number of outstanding shares of the Company's
Common Stock ($0.01 par value) was 5,088,467.
Sequentially Numbered Page 1 of 19 pages
Exhibit Index on Sequentially Numbered Page 18
<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 June 30, 1996
and December 31, 1995 (Unaudited) 3
Consolidated Statements of Income for the three months
ended June 30, 1996 and June 30, 1995 (Unaudited) 4
Consolidated Statements of Income for the six months
ended June 30, 1996 and June 30, 1995 (Unaudited) 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and June 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 16
Signatures 17
Index to Exhibits 18
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------- ----------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 6,509,000 $ 3,327,000
Marketable securities, current 4,940,000 3,565,000
Accounts receivable, net (note 4) 10,222,000 10,144,000
Advances and deposits 101,000 111,000
Prepaid expenses 626,000 799,000
Income taxes receivable 2,000 0
Deferred income taxes 634,000 600,000
--------------- --------------
Total current assets 23,034,000 18,546,000
--------------- --------------
OFFICE FURNITURE, EQUIPMENT and
LEASEHOLD IMPROVEMENTS, net (note 5) 2,010,000 1,730,000
Marketable securities, non-current 0 2,000,000
Workers' compensation deposits 760,000 860,000
Goodwill, net (note 6) 605,000 628,000
Other assets 147,000 158,000
--------------- --------------
TOTAL ASSETS $ 26,556,000 $ 23,922,000
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Note payable - bank $ 0 $ 475,000
Accrued payroll 1,949,000 1,647,000
Accounts payable 317,000 495,000
Accrued expenses 1,228,000 853,000
Income taxes payable 0 304,000
--------------- --------------
Total current liabilities 3,494,000 3,774,000
--------------- --------------
STOCKHOLDERS' EQUITY:
Preferred stock (note 7) 0 0
Common stock (note 8) 51,000 50,000
Paid-in capital 7,583,000 6,898,000
Retained earnings 15,428,000 13,200,000
--------------- --------------
Total stockholders' equity 23,062,000 20,148,000
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,556,000 $ 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 June 30,
-------------------------------------
1996 1995
--------------- --------------
<S> <C> <C>
REVENUES $21,438,000 17,812,000
COST OF SERVICES 14,919,000 12,420,000
--------------- --------------
GROSS PROFIT 6,519,000 5,392,000
OPERATING EXPENSES 4,332,000 3,753,000
--------------- --------------
OPERATING INCOME 2,187,000 1,639,000
INTEREST INCOME, NET 127,000 101,000
--------------- --------------
INCOME BEFORE INCOME TAXES 2,314,000 1,740,000
PROVISION FOR INCOME TAXES 944,000 705,000
--------------- --------------
NET INCOME $ 1,370,000 $ 1,035,000
=============== ==============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.25 $ 0.20
=============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 5,460,000 5,251,000
=============== ==============
</TABLE>
4
<PAGE> 5
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
REVENUES $ 40,340,000 $ 33,329,000
COST OF SERVICES 28,048,000 23,298,000
---------------- ---------------
GROSS PROFIT 12,292,000 10,031,000
OPERATING EXPENSES 8,402,000 7,091,000
---------------- ---------------
OPERATING INCOME 3,890,000 2,940,000
NON RECURRING ACQUISITION COSTS (Note 2) 401,000 0
---------------- ---------------
INCOME BEFORE INTEREST AND INCOME TAXES 3,489,000 2,940,000
INTEREST INCOME, NET 240,000 188,000
---------------- ---------------
INCOME BEFORE INCOME TAXES 3,729,000 3,128,000
PROVISION FOR INCOME TAXES 1,501,000 1,251,000
---------------- ---------------
NET INCOME $ 2,228,000 $ 1,877,000
================ ===============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.41 $ 0.36
================ ===============
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 5,439,000 5,223,000
================ ===============
</TABLE>
5
<PAGE> 6
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,228,000 $ 1,877,000
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 321,000 274,000
Increase in allowance for doubtful accounts 5,000 75,000
Increase in deferred income taxes (34,000) (86,000)
Increase in accounts receivable (83,000) (2,002,000)
Increase in income taxes receivable (2,000) (2,000)
Increase in accounts payable and accrued expenses 499,000 50,000
(Decrease) increase in income taxes payable (204,000) 49,000
Decrease (increase) in workers' compensation deposits 100,000 (133,000)
Decrease (increase) in prepaid expenses 173,000 (157,000)
Increase in other assets (1,000) (40,000)
--------------- -------------
Net cash provided by (used for) operating activities 3,002,000 (95,000)
--------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities 0 (2,300,000)
Proceeds from the maturity of marketable securities 625,000 2,080,000
Acquisition of office furniture, equipment and
leasehold improvements (566,000) (358,000)
Decrease in advances and deposits 10,000 84,000
--------------- -------------
Net cash provided by (used for) investing activities 69,000 (494,000)
--------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options 506,000 357,000
Proceeds from issuance of common stock -
Employee Stock Purchase Plan 80,000 56,000
Proceeds from collection of officer loans receivable 0 200,000
Borrowings on line of credit 450,000 347,000
Repayments of line of credit borrowings (925,000) (122,000)
--------------- -------------
Net cash provided by financing activities 111,000 838,000
--------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,182,000 249,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,327,000 1,833,000
--------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,509,000 $ 2,082,000
=============== =============
</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>
Six Months Ended June 30,
---------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
Cash paid during the period for income taxes, net of refunds $ 1,740,000 $ 1,290,000
=============== =============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS:
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
Tax benefit of disqualifying dispositions $ 100,000 $ 110,000
=============== =============
Officer loans receivable $ 0 $ 96,000
=============== =============
</TABLE>
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 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 June
30, 1996 or the six months ended June 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 six-month period
ended June 30, 1996. The after-tax impact of these expenses on primary and
fully diluted earnings per share was $0.04 for the six-month period ended June
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 $440,000 and $435,000 at June 30, 1996 and December 31, 1995,
respectively.
5. Office furniture, equipment and leasehold improvements are stated net
of accumulated depreciation and amortization of $1,687,000 and $1,403,000 at
June 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
$104,000 and $81,000 at June 30, 1996 and December 31, 1995, respectively.
7. At June 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
<PAGE> 9
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
ON ASSIGNMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
8. At June 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 5,088,467 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 JUNE 30, 1996 AND 1995:
REVENUES - Revenues increased by 20.4% from $17,812,000 for the three months
ended June 30, 1995, to $21,438,000 for the three months ended June 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 the contribution of new Lab Support offices
opened in the past year. 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 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 20.1% from
$12,420,000 for the three months ended June 30, 1995 to $14,919,000 for the
three months ended June 30, 1996. Cost of services as a percentage of revenues
decreased from 69.7% in the 1995 period to 69.6% in the 1996 period. This
decrease was primarily attributable to 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. This decrease
was principally 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 JUNE 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 15.4% from
$3,753,000 for the three months ended June 30, 1995 to $4,332,000 for the three
months ended June 30, 1996. Operating expenses as a percentage of revenues
decreased from 21.1% in the 1995 period to 20.2% in the 1996 period. This
result was primarily attributable to the increased productivity of the Lab
Support division Account Managers and leveraging centralized support functions
over a larger revenue base.
INTEREST - Interest income, net increased 25.7% from $101,000 for the three
months ended June 30, 1995 to $127,000 for the three months ended June 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 33.9% from $705,000 for the
three months ended June 30, 1995 to $944,000 for the three months ended June
30, 1996. The effective tax rate increased slightly from 40.5% in the 1995
period to 40.8% 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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995:
REVENUES - Revenues increased by 21.0% from $33,329,000 for the six months
ended June 30, 1995, to $40,340,000 for the six months ended June 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 the contribution of new Lab Support offices
opened in the past year. However, revenue growth was tempered by an unusually
high number of conversions of temporary employees to permanent status during
the first quarter and the impact of severe winter weather in several key
markets. 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 increased 20.4% from $23,298,000 for the
six months ended June 30, 1995 to $28,048,000 for the six months ended June 30,
1996. Cost of services as a percentage of revenues decreased from 69.9% in the
1995 period to 69.5% in the 1996 period. This decrease was primarily
attributable to 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,
an increase in average gross margins of EnviroStaff as a result of a decrease
in average pay rates in the 1996 period, and an increase in conversion fee
revenue of the Lab Support division in the 1996 period. This decrease was
principally offset by an increase in employer payroll taxes and employer paid
benefits.
OPERATING EXPENSES - Operating expenses increased 18.5% from $7,091,000 for
the six months ended June 30, 1995 to $8,402,000 for the six months ended June
30, 1996. Operating expenses as a percentage of revenues decreased from 21.3%
in the 1995 period to 20.8% in the 1996 period. This result was primarily
attributable to the increased productivity of the Lab Support division Account
Managers and leveraging centralized support functions over a larger revenue
base.
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 SIX MONTHS ENDED JUNE 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 27.7% from $188,000 for the six
months ended June 30, 1995 to $240,000 for the six months ended June 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 20.0% from $1,251,000 for
the six months ended June 30, 1995 to $1,501,000 for the six months ended June
30, 1996. The effective tax rate increased slightly from 40.0% 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 six months ended June 30, 1996
were funds provided by operating activities. For the six months ended June 30,
1995, cash used for operating activities was $95,000 as compared to cash
provided by operating activities of $3,002,000 for the six months ended June
30, 1996. This increase was primarily attributable to 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 the
1995 period. 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 $494,000 for the six months ended
June 30, 1995, compared to cash provided by investing activities of $69,000 for
the six months ended June 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 $838,000 for the six months ended
June 30, 1995, compared to $111,000 for the six months ended June 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.
The Company maintains an unsecured bank line of credit that expires on July 1,
1997. The maximum borrowings allowable under this agreement are $5,000,000 and
bear interest at the bank's reference rate (8.25% at June 30, 1996). No
borrowings were outstanding under this credit line at June 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 the next twelve months.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS
TO A VOTE OF SECURITY-HOLDERS
The Company's 1996 annual meeting of stockholders was held on May 30, 1996.
Jonathan S. Holman, who served as a director prior to the meeting, was
re-elected as a director by the stockholders. Of the total shares voting on
this matter, 3,915,003 shares voted for the election of Mr. Holman and 58,626
shares withheld authority to vote. Karen Brenner, Jeremy M. Jones, H. Tom
Buelter and the Honorable William E. Brock, all of whom were directors prior to
the meeting, continued to serve as directors after the annual meeting.
The following additional matters were submitted to the stockholders for vote at
the meeting:
1. Approval of an amendment to the Company's Restated 1987 Stock
Option Plan to amend the automatic grant program under the Option Plan
to increase the size of annual grants and eliminate minimum service
requirements for receiving an annual grant, for non-employee members
of the Board of Directors. Of the total shares voting on this matter,
2,418,311 shares voted for the proposal, 1,353,078 shares voted
against the proposal, 8,140 shares abstained from such vote, and
there were 194,100 broker non-votes.
2. Ratification of the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
December 31, 1996. Of the total shares voting on this matter,
3,965,095 shares voted for the proposal, 3,111 shares voted against
the proposal, 5,423 shares abstained from such vote and there were no
broker non-votes.
ITEM 5 - OTHER INFORMATION
None
15
<PAGE> 16
PART II - OTHER INFORMATION
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
(1) Current Report on Form 8-K, reporting the Company's March 27,
1996 acquisition of EnviroStaff, Inc., was filed with the
Commission on April 10, 1996.
(2) Current Report on Form 8-K/A-1, amending the Company's Form
8-K filed on April 10, 1996, was filed with the Commission on
May 3, 1996 and included the following
financial statements:
i. Financial Statements of Businesses Acquired.
EnviroStaff, Inc., a Minnesota corporation.
1. Independent Auditor's report, Larson, Allen,
Weishair & Co., LLP;
2. Balance Sheets as of December 31, 1995 and
1994;
3. Statements of Income for the years ended
December 31, 1995 and 1994;
4. Statements of Stockholders' Equity for the
years ended December 31, 1995 and 1994;
5. Statements of Cash Flows for the years ended
December 31, 1995 and 1994; and
6. Notes to Financial Statements for the years
ended December 31, 1995 and 1994.
ii. Pro Forma Financial Information. On Assignment, Inc.,
and Subsidiaries.
1. Pro Forma Unaudited Consolidated Balance Sheet
as of December 31, 1995;
2. Pro Forma Unaudited Consolidated Statement of
Income for the year ended December 31, 1995;
and
3. Notes to Pro Forma Unaudited Consolidated
Financial Statements.
16
<PAGE> 17
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: August 12, 1996 By: /s/ H. Tom Buelter
---------------------- --------------------------
H. Tom Buelter
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1996 By: /s/ Ronald W. Rudolph
---------------------- --------------------------
Ronald W. Rudolph
Sr. Vice President, Finance &
Administration and Chief
Financial Officer (Principal
Financial and Accounting
Officer)
17
<PAGE> 18
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
Statement regarding computation 19
11.1 of earnings per share
18
<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 Six Months Ended
June 30, June 30,
------------------------------------------------------
1996 1995 1996 1995
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net income used to compute primary and
fully diluted earnings per share $ 1,370,000 $ 1,035,000 $2,228,000 $1,877,000
=========== =========== ========== ==========
Weighted average number of shares outstanding 5,079,000 4,982,000 5,068,000 4,958,000
Dilutive effect of stock options and warrants 381,000 269,000 371,000 265,000
----------- ----------- ---------- ----------
Number of shares used to compute primary 5,460,000 5,251,000 5,439,000 5,223,000
and fully diluted earnings per share =========== =========== ========== ==========
Net earnings per share $ 0.25 $ 0.20 $ 0.41 $ 0.36
=========== =========== ========== ==========
</TABLE>
19
<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 JUNE 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,269,000
<SECURITIES> 4,940,000
<RECEIVABLES> 10,662,000
<ALLOWANCES> 440,000
<INVENTORY> 0
<CURRENT-ASSETS> 23,034,000
<PP&E> 3,697,000
<DEPRECIATION> 1,687,000
<TOTAL-ASSETS> 26,556,000
<CURRENT-LIABILITIES> 3,494,000
<BONDS> 0
0
0
<COMMON> 51,000
<OTHER-SE> 22,831,000
<TOTAL-LIABILITY-AND-EQUITY> 26,556,000
<SALES> 0
<TOTAL-REVENUES> 40,340,000
<CGS> 0
<TOTAL-COSTS> 28,340,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 141,000
<INTEREST-EXPENSE> 11,000
<INCOME-PRETAX> 3,729,000
<INCOME-TAX> 1,501,000
<INCOME-CONTINUING> 2,228,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,228,000
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
