<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, 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: 0-20540
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, 1997, the total number of outstanding shares of the Company's Common
Stock ($0.01 par value) was 5,286,779.
Page 1 of 18 pages
Exhibit index on page 17
<PAGE> 2
ON ASSIGNMENT, INC.
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets at June 30, 1997
and December 31, 1996 (Unaudited) 3
Consolidated Statements of Income for the three months
ended June 30, 1997 and June 30, 1996 (Unaudited) 4
Consolidated Statements of Income for the six months
ended June 30, 1997 and June 30, 1996 (Unaudited) 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and June 30, 1996 (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,
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,405,000 $ 11,102,000
Marketable securities, current 2,050,000 3,000,000
Account receivable, net (note 5) 12,631,000 12,264,000
Advances and deposits 59,000 72,000
Prepaid expenses 589,000 681,000
Deferred income taxes 1,029,000 968,000
--------------- --------------
Total current assets 34,763,000 28,087,000
--------------- --------------
Office Furniture, Equipment and
Leasehold Improvements, net (note 6) 2,501,000 2,294,000
Workers' compensation deposits 619,000 743,000
Goodwill, net (note 7) 557,000 581,000
Other assets 162,000 169,000
--------------- --------------
TOTAL ASSETS $ 38,602,000 $ 31,874,000
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued payroll $ 3,257,000 $ 2,397,000
Accounts payable 592,000 488,000
Accrued expenses 1,591,000 1,348,000
Income taxes payable 466,000 6,000
--------------- --------------
Total current liabilities 5,906,000 4,239,000
--------------- --------------
STOCKHOLDERS' EQUITY:
Preferred stock (note 8) 0 0
Common stock (note 9) 53,000 52,000
Paid-in capital 10,284,000 8,777,000
Retained earnings 22,359,000 18,806,000
--------------- --------------
Total stockholders' equity 32,696,000 27,635,000
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 38,602,000 $ 31,874,000
=============== ==============
</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,
------------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
REVENUES $ 26,410,000 $ 21,438,000
COST OF SERVICES 18,447,000 14,919,000
--------------- --------------
GROSS PROFIT 7,963,000 6,519,000
OPERATING EXPENSES 5,090,000 4,332,000
--------------- --------------
OPERATING INCOME 2,873,000 2,187,000
INTEREST INCOME, NET 203,000 127,000
--------------- --------------
INCOME BEFORE INCOME TAXES 3,076,000 2,314,000
PROVISION FOR INCOME TAXES 1,153,000 944,000
--------------- --------------
NET INCOME $ 1,923,000 $ 1,370,000
=============== ==============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.35 $ 0.25
=============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 5,478,000 5,460,000
=============== ==============
</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,
------------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
REVENUES $ 49,980,000 $ 40,340,000
COST OF SERVICES 34,882,000 28,048,000
--------------- --------------
GROSS PROFIT 15,098,000 12,292,000
OPERATING EXPENSES 9,751,000 8,402,000
--------------- --------------
OPERATING INCOME 5,347,000 3,890,000
ACQUISITION COSTS (Note 3) 0 401,000
--------------- --------------
INCOME BEFORE INTEREST AND INCOME TAXES 5,347,000 3,489,000
INTEREST INCOME, NET 358,000 240,000
--------------- --------------
INCOME BEFORE INCOME TAXES 5,705,000 3,729,000
PROVISION FOR INCOME TAXES 2,152,000 1,501,000
--------------- --------------
NET INCOME $ 3,553,000 $ 2,228,000
=============== ==============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $ 0.65 $ 0.41
=============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 5,453,000 5,439,000
=============== ==============
</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,
------------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,553,000 $ 2,228,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 375,000 321,000
Increase in allowance for doubtful accounts 210,000 140,000
Increase in deferred income taxes (61,000) (34,000)
Loss on disposal of furniture and equipment 36,000 0
Increase in accounts receivable (577,000) (218,000)
Increase in income taxes receivable 0 (2,000)
Increase in accounts payable and accrued expenses 1,207,000 499,000
Increase (decrease) in income taxes payable 760,000 (204,000)
Decrease in workers' compensation deposits 124,000 100,000
Decrease in prepaid expenses 92,000 173,000
Increase in other assets (1,000) (1,000)
--------------- --------------
Net cash provided by operating activities 5,718,000 3,002,000
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (1,050,000) 0
Proceeds from the maturity of marketable securities 2,000,000 625,000
Acquisition of office furniture, equipment and
leasehold improvements (592,000) (566,000)
Proceeds from sale of furniture and equipment 6,000 0
Decrease in advances and deposits 13,000 10,000
--------------- --------------
Net cash provided by investing activities 377,000 69,000
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options 1,123,000 506,000
Proceeds from issuance of common stock -
Employee Stock Purchase Plan 85,000 80,000
Borrowings on line of credit 0 450,000
Repayments of line of credit borrowings 0 (925,000)
--------------- --------------
Net cash provided by financing activities 1,208,000 111,000
--------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,303,000 3,182,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,102,000 3,327,000
--------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,405,000 $ 6,509,000
=============== ==============
</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,
------------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
Cash paid during the period for income taxes, net of refunds $ 1,453,000 $ 1,740,000
=============== ==============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS:
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
Tax benefit of disqualifying dispositions $ 300,000 $ 100,000
=============== ==============
</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, 1997 AND 1996
- --------------------------------------------------------------------------------
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, 1996.
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 or the six months ended June
30, 1997 are not necessarily indicative of the results to be expected for the
full year or any other period.
2. On January 1, 1997, the Company effected a corporate reorganization resulting
in a consolidation of the Company's divisional field operations into Assignment
Ready, Inc., a Delaware corporation and wholly-owned subsidiary of the Company,
in order to centralize management functions into one entity, to optimize
regional activities and achieve economies of scale.
3. 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 specialized 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.
Acquisition costs of approximately $401,000 related to the acquisition of
EnviroStaff were charged to expense during the three-month period ended March
31, 1996. The after-tax impact of these expenses on primary and fully diluted
earnings per share was $0.04 for the three-month period ended March 31, 1996.
Acquisition costs included legal, accounting, financial advisory services, and
other costs of the acquisition.
4. The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
5. Accounts receivable are stated net of an allowance for doubtful accounts of
$728,000 and $553,000 at June 30, 1997 and December 31, 1996, respectively.
8
<PAGE> 9
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, 1997 AND 1996 (continued)
- --------------------------------------------------------------------------------
6. Office furniture, equipment and leasehold improvements are stated net of
accumulated depreciation and amortization of $2,330,000 and $2,032,000 at June
30, 1997 and December 31, 1996, respectively.
7. 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 $152,000 and
$128,000 at June 30, 1997 and December 31, 1996, respectively.
8. At June 30, 1997 and December 31, 1996, Preferred Stock at a par value of
$0.01 per share consisted of 1,000,000 shares authorized and 0 shares issued and
outstanding.
9. At June 30, 1997 and December 31, 1996, Common Stock at a par value of $0.01
per share consisted of 25,000,000 shares authorized and 5,286,779 and 5,155,560
shares issued and outstanding, respectively.
10. In December 1997, the Company will be required to adopt Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." The provisions of
this statement will require a change in the method of calculating earnings per
share. The Company has not yet determined the effect, if any, that this
statement will have on currently reported earnings per share.
11. Certain reclassifications have been made to the 1996 consolidated financial
statements to conform with the 1997 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 management of growth, risks
inherent in expansion into new professions and new markets, the Company's
ability to attract and retain qualified scientific, environmental and financial
personnel, 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, 1996, 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, 1997 AND 1996:
- --------------------------------------------------------------------------------
REVENUES - Revenues increased by 23.2% from $21,438,000 for the three months
ended June 30, 1996, to $26,410,000 for the three months ended June 30, 1997,
primarily as a result of the increase in the number of temporary employees on
assignment in the Lab Support and Healthcare Financial Staffing divisions,
partially offset by a decrease in the number of temporary employees on
assignment in the EnviroStaff division.
The growth of the Lab Support division's revenues were primarily attributable to
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 offices opened in the past year, and an increase in average hourly billing
rates during the 1997 period.
The decrease in the EnviroStaff division's revenues were primarily attributable
to the continuing transition of the division's business away from remediation
and the resulting planned decline in remediation assignments, partially offset
by increases in revenues from the division's higher margin core business and an
increase in average hourly billing rates during the 1997 period.
The growth of the Healthcare Financial Staffing division's revenues were
primarily attributable to strong performance in most of the markets in which the
Healthcare Financial division has older, better established branches and to a
lesser extent the contribution of new offices opened in the past year, and an
increase in average hourly billing rates, which were principally attributable to
a concentration on new business with a higher price structure.
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, 1997 AND 1996:
- --------------------------------------------------------------------------------
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 23.6% from
$14,919,000 for the three months ended June 30, 1996, to $18,447,000 for the
three months ended June 30, 1997. Cost of services as a percentage of revenues
increased from 69.6% in the 1996 period to 69.8% in the 1997 period. This
increase was primarily attributable to an increase in employer paid benefits and
workers' compensation expense reserves, partially offset by an increase in
conversion fee revenue (which has no associated cost of service) of the Lab
Support and Healthcare Financial Staffing divisions in the 1997 period.
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 17.5% from $4,332,000
for the three months ended June 30, 1996, to $5,090,000 for the three months
ended June 30, 1997. Operating expenses as a percentage of revenues decreased
from 20.2% in the 1996 period to 19.3% in the 1997 period. This result was
primarily attributable to improved Account Manager productivity in all three
divisions and increased leverage of the Company's operations support
infrastructure.
INTEREST - Interest income, net increased 59.8% from $127,000 for the three
months ended June 30, 1996 to $203,000 for the three months ended June 30, 1997,
primarily as a result of interest earned on higher interest-bearing cash, cash
equivalent and marketable security account balances in the 1997 period.
PROVISION FOR INCOME TAXES - Income taxes increased 22.1% from $944,000 for the
three months ended June 30, 1996 to $1,153,000 for the three months ended June
30, 1997. The effective tax rate decreased from 40.8% in the 1996 period to
37.5% in the 1997 period. This decrease was primarily attributable to the
consolidation of divisional field operations into Assignment Ready, Inc., a
wholly-owned subsidiary of the Company, which resulted in a lower overall
effective state tax rate.
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, 1997 AND 1996:
- --------------------------------------------------------------------------------
REVENUES - Revenues increased by 23.9% from $40,340,000 for the six months ended
June 30, 1996, to $49,980,000 for the six months ended June 30, 1997, primarily
as a result of the increase in the number of temporary employees on assignment
in the Lab Support and Healthcare Financial Staffing divisions, partially offset
by a decrease in the number of temporary employees in the EnviroStaff division.
The growth of the Lab Support division's revenues were primarily attributable to
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 offices opened in the past year, and an increase in average hourly billing
rates during the 1997 period.
The decrease in the EnviroStaff division's revenues were primarily attributable
to the continuing transition of the division's business away from remediation
and the resulting planned decline in remediation assignments, partially offset
by increases in revenues from the division's higher margin core business and an
increase in average hourly billing rates. In addition, severe winter weather in
several key markets contributed to the decrease in revenues in the 1997 period.
The growth of the Healthcare Financial Staffing division's revenues were
primarily attributable to strong performance in most of the markets in which the
Healthcare Financial Staffing division has older, better established branches
and to a lesser extent the contribution of new offices opened in the past year,
and an increase in average hourly billing rates, which were principally
attributable to a concentration on new business with a higher price structure.
COST OF SERVICES - Cost of services increased 24.4% from $28,048,000 for the six
months ended June 30, 1996, to $34,882,000 for the six months ended June 30,
1997. Cost of services as a percentage of revenues increased from 69.5% in the
1996 period to 69.8% in the 1997 period. This increase was primarily
attributable to an increase in employer paid benefits and workers' compensation
expense reserves, and a decrease in conversion fee revenue of the Lab Support
and EnviroStaff divisions in the 1997 period.
OPERATING EXPENSES - Operating expenses increased 16.1% from $8,402,000 for the
six months ended June 30, 1996, to $9,751,000 for the six months ended June 30,
1997. Operating expenses as a percentage of revenues decreased from 20.8% in the
1996 period to 19.5% in the 1997 period. This result was primarily attributable
to improved Account Manager productivity in all three divisions and increased
leverage of the Company's operations support infrastructure.
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, 1997 AND 1996:
- --------------------------------------------------------------------------------
ACQUISITION COSTS - 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 acquisition costs during the quarter ended
March 31, 1996.
INTEREST - Interest income, net increased 49.2% from $240,000 for the six months
ended June 30, 1996 to $358,000 for the six months ended June 30, 1997,
primarily as a result of interest earned on higher interest-bearing cash, cash
equivalent and marketable security account balances in the 1997 period, and
interest expense charged on EnviroStaff's line of credit borrowings in the 1996
period.
PROVISION FOR INCOME TAXES - Income taxes increased 43.4% from $1,501,000 for
the six months ended June 30, 1996 to $2,152,000 for the six months ended June
30, 1997. The effective tax rate decreased from 40.3% in the 1996 period to
37.7% in the 1997 period. This decrease was primarily attributable to the
consolidation of divisional field operations into Assignment Ready, Inc., a
wholly-owned subsidiary of the Company, which resulted in a lower overall
effective state tax rate.
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, 1997
were funds provided by operating activities. For the six months ended June 30,
1996, operating activities provided $3,002,000 of cash compared to $5,718,000
for the six months ended June 30, 1997. This increase was primarily attributable
to higher net income. In addition, an increase in income taxes payable, accounts
payable and accrued expenses in the 1997 period contributed to net cash provided
by operating activities.
Cash provided by investing activities totaled $69,000 for the six months ended
June 30, 1996, compared to $377,000 for the six months ended June 30, 1997. This
was primarily attributable to cash proceeds from the maturity of marketable
securities exceeding cash used to purchase marketable securities in the 1997
period.
Cash provided by financing activities was $111,000 for the six months ended June
30, 1996, compared to $1,208,000 for the six months ended June 30, 1997. The
increase was primarily attributable to higher proceeds from the sale of common
stock in connection with the exercise of stock options and the Employee Stock
Purchase Plan during the 1997 period, and repayments of EnviroStaff's line of
credit borrowings exceeding the related borrowings 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 (8.5% at June 30, 1997). The
agreement expires on July 1, 1998. No borrowings were outstanding under this
credit line at June 30, 1997.
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
The Company's 1997 annual meeting of stockholders was held on June 9, 1997.
Karen Brenner and Jeremy M. Jones, both of whom served as directors prior to the
meeting, were re-elected as directors by the stockholders. Of the total shares
voting on this matter, 4,235,840 shares voted for the election of Ms. Brenner
and Mr. Jones, and 143,214 shares withheld authority to vote. Jonathan S.
Holman, 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 increase the number of shares of the Company's
Common Stock reserved for issuance under the Option Plan by
500,000 shares. Of the total shares voting on this matter,
2,322,362 shares voted for the proposal, 1,480,756 shares voted
against the proposal, 7,556 shares abstained from such vote, and
there were 568,380 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, 1997. Of the total shares voting on this matter,
4,372,065 shares voted for the proposal, 2,486 shares voted
against the proposal, 4,503 shares abstained from such vote and
there were no broker non-votes.
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: August 12, 1997 By: /s/ H. TOM BUELTER
--------------- ---------------------------------------
H. Tom Buelter
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1997 By: /s/ RONALD W. RUDOLPH
--------------- ---------------------------------------
Ronald W. Rudolph
Sr. Vice President, Finance & Operations
Support, and Chief Financial Officer
(Principal Financial and Accounting
Officer)
16
<PAGE> 17
PART II - OTHER INFORMATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ----
<S> <C> <C>
11.1 Statement regarding computation 18
of earnings per share
</TABLE>
17
<PAGE> 18
EXHIBIT 11.1
ON ASSIGNMENT, INC.
STATEMENTS OF COMPUTATION OF NET EARNINGS PER
COMMON AND COMMON EQUIVALENT SHARES (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1997 1996 1997 1996
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net income used to compute primary and
fully diluted earnings per share $ 1,923,000 $ 1,370,000 $ 3,553,000 $ 2,228,000
============= ============ ============ =============
Weighted average number of shares
outstanding 5,274,000 5,079,000 5,230,000 5,068,000
Dilutive effect of stock options and
warrants 204,000 381,000 223,000 371,000
------------- ------------ ------------ -------------
Number of shares used to compute
primary and fully diluted earnings
per share 5,478,000 5,460,000 5,453,000 5,439,000
============= ============ ============ =============
Net earnings per share $ 0.35 $ 0.25 $ 0.65 $ 0.41
============= ============ ============ =============
</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 JUNE 30, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 19,024,000
<SECURITIES> 2,050,000
<RECEIVABLES> 13,359,000
<ALLOWANCES> 728,000
<INVENTORY> 0
<CURRENT-ASSETS> 34,763,000
<PP&E> 4,831,000
<DEPRECIATION> 2,330,000
<TOTAL-ASSETS> 38,602,000
<CURRENT-LIABILITIES> 5,906,000
<BONDS> 0
0
0
<COMMON> 53,000
<OTHER-SE> 32,643,000
<TOTAL-LIABILITY-AND-EQUITY> 38,602,000
<SALES> 0
<TOTAL-REVENUES> 49,980,000
<CGS> 0
<TOTAL-COSTS> 34,882,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 210,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,705,000
<INCOME-TAX> 2,152,000
<INCOME-CONTINUING> 3,553,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,553,000
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>