U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 No. 0-23170
HEADWAY CORPORATE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2134871
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
850 Third Avenue, New York, New York 10022
(Address of principal executive offices)
(212) 508-3560
(Registrant's telephone number)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or
15(d) of the Exchange Act subsequent to the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
9,998,320 shares of common stock.
<PAGE>
FORM 10-Q
HEADWAY CORPORATE RESOURCES, INC. AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information
Financial Statements
Unaudited Consolidated Balance Sheets-
June 30, 1999 and December 31, 1998 3
Unaudited Consolidated Statements of Income-
Three Months and Six Months Ended
June 30, 1999 and 1998 4
Unaudited Consolidated
Statement of Stockholders'Equity-
Six Months Ended June 30, 1999 5
Unaudited Consolidated
Statements of Cash Flows-
Six Months Ended June 30, 1999 and 1998 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. Other Information 14
Signatures 14
FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities Act
of 1933 and Section 21e of the Securities Exchange Act of 1934
regarding events, conditions, and financial trends that may affect
the Company's future plans of operations, business strategy,
operating results, and financial position. Persons reviewing this
report are cautioned that any forward-looking statements are not
guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from
those included within the forward-looking statements as a result of
various factors. Such factors are discussed under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and also include general economic factors
and conditions that may directly or indirectly impact the Company's
financial condition or results of operations.
2
<PAGE>
Headway Corporate Resources, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Dollars In Thousands)
June 30,1999 December 31, 1998
Assets
Current assets:
Cash and cash equivalents $ 2,726 $ 4,157
Accounts receivable, trade, net 53,797 47,017
Prepaid expenses and other current assets 1,162 954
Prepaid income taxes 614 1,217
Total current assets 58,299 53,345
Property and equipment, net 4,932 4,566
Intangibles, net 72,728 66,388
Deferred financing costs 1,749 1,757
Other assets 852 890
Total assets $ 138,560 $ 126,946
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,341 $ 2,190
Accrued expenses 3,328 2,969
Accrued payroll 16,014 13,492
Long-term debt, current portion 155 150
Capital lease obligations, current portion 402 416
Other liabilities 727 1,989
Total current liabilities 22,967 21,206
Long-term debt, less current portion 70,331 60,959
Capital lease obligations,
less current portion 568 755
Deferred rent 1,275 1,251
Deferred income taxes 204 204
Stockholders' equity
Preferred stock---$.0001 par value,
5,000,000 shares authorized:
Series F, convertible preferred stock
-$.0001 par value, 1,000 shares
authorized, issued and outstanding
[aggregate liquidation value $20,000], 20,000 20,000
Common stock-$.0001 par value,
20,000,000 shares authorized,
10,419,220 shares and 10,036,620
shares issued and outstanding,
respectively, at June 30, 1999;
10,419,220 shares and 10,362,020
shares issued and outstanding,
respectively, at December 31, 1998 1 1
Treasury stock at cost (1,843) (290)
Additional paid-in capital 15,779 15,779
Notes receivable (147) (172)
Retained earnings 9,427 7,244
Accumulated other comprehensive (loss)
income (2) 9
Total stockholders' equity 43,215 42,571
Total liabilities and stockholders' equity $ 138,560 $ 126,946
See accompanying notes
3
<PAGE>
Headway Corporate Resources, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(Dollars In Thousands)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 92,172 $ 72,281 $ 184,826 $ 129,999
Operating expenses:
Direct costs 71,042 55,137 140,772 98,257
General and administrative 14,885 12,807 31,863 23,684
Termination of employment contact - - 2,329 -
Depreciation and amortization 1,046 611 2,062 1,100
86,973 68,555 177,026 123,041
Operating income 5,199 3,726 7,800 6,958
Other (income) expenses:
Interest expense 1,576 869 3,036 1,851
Interest income (3) (21) (30) (53)
Gain on sale of investment - (901) - (901)
1,573 (53) 3,006 897
Income before income tax and
exraordinary item 3,626 3,779 4,794 6,061
Income tax expense 1,543 1,519 2,061 2,531
Income before extraordinary item 2,083 2,260 2,733 3,530
Extraordinary item--loss on early
retirement of debt (net of income
tax benefit of $1,241) - - - $ (1,457)
Net income 2,083 2,260 2,733 2,073
Preferred dividend requirements (275) (278) (550) (315)
Net income available for
common stockholders $ 1,808 $ 1,982 $ 2,183 $ 1,758
Basic earnings (loss) per common share:
Income before extraordinary item $ .18 $ .20 $ .21 $ .34
Extraordinary item - - - (.15)
Net income $ .18 $ .20 $ .21 $ .19
Diluted earnings (loss) per common share:
Income before extraordinary item $ .15 $ .15 $ .19 $ .27
Extraordinary item - - - (.11)
Net income $ .15 $ .15 $ .19 $ .16
</TABLE>
See accompanying notes
4
<PAGE>
Headway Corporate Resources, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 1999
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Series F Convertible
Preferred Stock Common Stock Treasury Stock
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1998 1,000 $ 20,000 10,419,220 $ 1 (57,200) $ (290)
Repayment of notes receivable - - - - - -
Preferred stock dividends - - - - -
Purchase of treasury stock - - - - (325,400) (1,553)
Translation adjustment - - - - - -
Net income - - - - - -
Comprehensive income - - - - - -
Balance - June 30, 1999 1,000 $ 20,000 10,419,220 $ 1 (382,600) $ (1,843)
</TABLE>
5
<PAGE>
Headway Corporate Resources, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity, Continued
Six Months Ended June 30, 1999
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Paid-in Notes Retained Comprehensive Stockholders
Capital Receivable Earnings (Loss) Equity
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1998 $ 15,779 $ (172) $ 7,244 $ 9 $ 42,571
Repayment of notes receivable - 25 - - 25
Preferred stock dividends - - (550) - (550)
Purchase of treasury stock - - - - (1,553)
Translation adjustment - - - (11) (11)
Net income - - 2,733 - 2,733
Comprehensive income - - - - 2,722
Balance - June 30, 1999 $ 15,779 $ (147) $ 9,427 $ (2) $ 43,215
</TABLE>
6
<PAGE>
Headway Corporate Resources, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars In Thousands)
Six months ended June 30,
1999 1998
Operating activities:
Net income $ 2,733 $ 2,073
Adjustments to reconcile net
income to net cash provided
by (used in) operating activities:
Loss on early extinguishment of debt - 1,457
Depreciation and amortization 2,062 1,100
Amortization of deferred financing costs 172 239
Deferred income taxes - 96
Gain on sale of investment - (901)
Changes in assets and liabilities net of
effect of acquisitions:
Accounts receivable (6,780) (12,692)
Prepaid expenses and other assets (170) (649)
Accounts payable and accrued expenses 534 976
Accrued payroll 2,522 3,340
Prepaid income taxes/Income taxes payable 603 658
Net cash provided by (used in) operating
activities 1,676 (4,303)
Investing activities:
Expenditures for property and equipment (921) (1,267)
Repayment from notes receivable 25 99
Repayment from related party - 638
Proceeds from sale of investment - 3,178
Cash paid for acquisitions, net of cash
acquired (9,109) (29,461)
Net cash used in investing activities (10,005) (26,813)
Financing activities:
Sale of preferred stock, net - 18,633
Net change in revolving credit line - (13,404)
Proceeds from long-term debt 9,450 49,500
Repayment of long-term debt (73) (20,582)
Payment of capital lease obligations (201) (60)
Payments of loan acquisition fees (164) (1,857)
Proceeds from exercise of options and warrants - 1,841
Purchase of treasury stock (1,553) -
Cash dividends paid (550) (315)
Net cash provided by financing activities 6,909 33,756
Effect of exchange rate changes on cash and
cash equivalents (11) 46
Increase (decrease) in cash and cash
equivalents (1,431) 2,686
Cash and cash equivalents at beginning
of period 4,157 2,472
Cash and cash equivalents at end of period $ 2,726 $ 5,158
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest 2,864 1,612
Income taxes 1,441 1,974
7
<PAGE>
HEADWAY CORPORATE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(1) BASIS OF PRESENTATION
Headway Corporate Resources, Inc. and its wholly owned subsidiaries
provide strategic staffing solutions and personnel on a worldwide
basis. Its operations include information technology staffing,
temporary staffing, human resources administration, permanent
placement and executive search. Headquartered in New York, the
Company has offices in California, Connecticut, Florida, New
Jersey, North Carolina, Virginia, and Texas and executive search
offices in New York, Illinois, Massachusetts, the United Kingdom,
Japan, Hong Kong and Singapore. These consolidated financial
statements include the accounts of Headway Corporate Resources,
Inc. and its subsidiaries (collectively referred to as the
"Company").
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three months and six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for
the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Form 10-
K for the year ended December 31, 1998.
Certain reclassifications of 1998 balances have been made to
conform to the 1999 presentation.
(2) INTANGIBLES
In June 1999, the Company acquired substantially all of the assets
of a division of a North Carolina corporation resulting in goodwill
of approximately $4,024,000. The acquisition was accounted for
under the purchase method of accounting and the results of
operations have been included in the accompanying financial
statements from the respective date of acquisition. On a pro forma
basis, if the acquisition had taken place at the beginning of 1998,
the effect on the Company's total revenue, net income and earnings
per share would have been immaterial.
During the six months ended June 30, 1999, additional purchase
price of $3,823,000 was recorded as goodwill upon the determination
that the earnouts had been met on certain acquisitions made in 1998
and 1997.
(3) TERMINATION OF EMPLOYMENT CONTRACT
In March 1999, the Company incurred costs of $2,329,000 associated
with the termination of an employment contract.
8
<PAGE>
(4) DEBT TRANSACTION
In June 1999, the lender increased the amounts under its senior
credit facility to $100,000,000 from $90,000,000. The revolving
credit facility bears interest at varying rates based on LIBOR
ranging from 7.18% to 7.24% per annum at June 30, 1999. As of June
30, 1999, $60,250,000 was drawn on this facility. Substantially
all assets of the Company have been pledged as collateral for this
credit agreement. The credit agreement requires the Company to
meet certain financial ratios, as defined.
(5) EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share as follows:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
<S>
Numerator: <C> <C> <C> <C>
Income before extraordinary item $ 2,083,000 $ 2,260,000 $ 2,733,000 $ 3,530,000
Extraordinary item - - - (1,457,000)
Preferred dividend requirements (275,000) (278,000) (550,000) 315,000)
Numerator for basic earnings per
share--net income available for
common stockholders 1,808,000 1,982,000 2,183,000 1,758,000
Effect of dilutive securities:
Preferred dividend requirements 275,000 278,000 550,000 315,000
Numerator for diluted earnings
per share-net income available
for common stockholders after
assumed conversions $ 2,083,000 $ 2,260,000 $ 2,733,000 $ 2,073,000
Denominator:
Denominator for basic earnings
per share--weighted average
shares 10,165,245 9,947,050 10,259,589 9,465,438
Effect of dilutive securities:
Stock options and warrants 448,918 1,785,510 544,934 2,038,099
Convertible preferred stocks 3,584,299 3,584,229 3,584,299 1,792,115
Dilutive potential common stock 4,033,217 5,369,739 4,129,233 3,830,214
Denominator for diluted earnings
per share -- adjusted weighted-
average shares and assumed
conversions 14,198,462 15,316,789 14,388,822 13,295,652
Basic earnings per share $ .18 $ .20 $ .21 $ .19
Diluted earnings per share $ .15 $ .15 $ .19 $ .16
</TABLE>
9
<PAGE>
(6) BUSINESS SEGMENTS
The Company classifies its business into two fundamental areas,
staffing and executive search. Staffing consists of the placement
and payrolling of temporary and permanent office, clerical and
information technology professional personnel. Executive search
focuses on placing middle to upper level management positions. The
Company evaluates performance based on the segments' profit from
operations before unallocated corporate overhead.
<TABLE>
<CAPTION>
Three months ended June 30, 1999 Three months ended June 30, 1999
Staffing Executive Search Staffing Executive Search
<S> <C> <C> <C> <C>
Revenues $ 86,160,000 $ 6,012,000 $ 66,790,000 $ 5,491,000
Segment profit 1,581,000 1,016,000 1,614,000 596,000
Segment assets 126,496,000 11,390,000 - -
<CAPTION>
Six months ended June 30, 1999 Six months ended June 30, 1998
Staffing Executive Search Staffing Executive Search
<S> <C> <C> <C> <C>
Revenues $170,120,000 $ 14,706,000 $117,928,000 $12,071,000
Segment income before
extraordinary item 2,646,000 2,500,000 2,334,000 1,636,000
Extraordinary loss - - (1,457,000) -
Segment profit 2,646,000 2,500,000 877,000 1,636,000
<CAPTION>
A reconciliation of combined segment profit to consolidated net income is as follows:
Three months ended June 30 Six months ended June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Total profit for
reportable segment $ 2,597,000 $ 2,210,000 $ 5,146,000 $ 2,513,000
Interest expense (85,000) (76,000) (172,000) (239,000)
Corporate overhead (793,000) (934,000) (1,652,000) (1,678,000)
Termination of employment
contract - - (2,329,000) -
Gain on sale of investment - 901,000 - 901,000
Income tax benefit 364,000 159,000 1,740,000 576,000
Net income $ 2,083,000 $ 2,260,000 $ 2,733,000 $ 2,073,000
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Overview
The Company's financial performance was strong for the second
quarter of 1999. This can be attributed to the results of the
acquisitions completed during 1998, strong internal growth as a
result of the continued demand for contingent workers, and solid
performance in the executive search division. The Company expects
this trend to continue as long as there is no drastic change in the
economy or the financial services industry. For the six months
ended June 30, 1999, the Company achieved record revenues and
operating profits. All of the acquisitions that the Company has
made over the past twenty-four months have been integrated into the
Headway organization. The Company expects to continue to grow both
internally and through acquisitions.
Consolidated
Revenues increased $19,891,000 or 28% to $92,172,000 for the three
months ended June 30, 1999, from $72,281,000 for the same period in
1998. For the six months ended June 30, 1999, revenues were
$184,826,000, an increase of 42% from $129,999,000 a year earlier.
These increases are attributable to the staffing acquisitions
completed in the latter part of 1998, as well as strong internal
growth. For the first six months of 1999, the Company experienced a
19% internal growth rate.
The executive search subsidiary, Whitney Partners, LLC (Whitney),
contributed $6,012,000 to consolidated revenues in the second
quarter of 1999, an increase of $521,000 from $5,491,000 for the
same period in 1998. For the six months ended June 30, 1999,
Whitney revenues were $14,706,000, an increase of 22% from
$12,071,000 a year earlier. This increase is due to the strong
recovery of the financial markets in the first half of 1999, and
the related increase in the hiring activities of Whitney's clients,
as well as the contribution that Carlyle Group, Ltd. (Carlyle) has
made since its acquisition in July 1998.
The staffing subsidiary, Headway Corporate Staffing Services, Inc.
(HCSS) contributed revenues of $86,160,000 to consolidated revenues
in the second quarter of 1999, an increase of $19,370,000 from
$66,790,000 for second quarter of 1998. For the six months ended
June 30, 1999, HCSS revenues were $170,120,000, an increase of 44%
from $117,928,000 a year earlier. This increase is primarily a
result of the acquisitions completed during the latter part of
1998, as well as strong internal growth.
Total operating expenses increased $18,418,000 to $86,973,000 for
the three months ended June 30, 1999, from $68,555,000 for the same
period in 1998. Of the increase, $15,905,000 relates to the direct
costs that are the wages, taxes and benefits of work site employees
of the staffing companies. Direct costs increased as a percentage
of revenues to 77.1% in 1999 from 76.3% in 1998. For the six
months, operating expenses increased $53,985,000 to $177,026,000
from $123,041,000 for the same period in 1998. Of the increase,
$42,515,000 relates to the direct costs. For the six months,
direct costs increased as a percentage of revenues to 76.2% in 1999
from 75.6% in 1998. The increase in direct costs as a percentage
of revenues is a result of the Company's changing business mix.
Specifically, the executive search business that has no direct
costs is becoming a smaller percentage of the Company's total
revenues. Direct costs for HCSS remained relatively stable as a
percentage of HCSS revenue at 82.5% for the three months ended June
30, 1999, from 82.6% for the same period in 1998. For the six
months, direct costs for HCSS declined as a percentage of HCSS
revenue to 82.8% from 83.3% last year. This improvement is
primarily a result of the acquisitions completed in 1998 of several
information technology companies that have higher gross margin
percentages than the traditional temporary staffing companies.
General and administrative expenses
11
<PAGE>
decreased as a percentage of
revenues from 17.7% in the second quarter 1998 to 16.1% in the
second quarter 1999. For the six months, general and
administrative expenses decreased as a percentage of revenues from
18.2% in 1998 to 17.2% in 1999. The reduction in general and
administrative expenses as a percentage of revenues reflects the
operating efficiencies realized as a result of the acquisition and
integration programs in place.
Included in operating expenses for the first quarter of 1999 is a
special charge of $2,329,000 paid in connection with the
termination of an employment agreement. The balance of the
increase in the six months ended June 30, 1999 is primarily due to
operating expenses of the acquired staffing companies completed in
the latter part of 1998.
Whitney's operating expenses decreased $128,000 to $4,254,000 in
the second quarter of 1999, from $4,382,000 for the same period
last year. For the six months of 1999, Whitney's operating
expenses increased $1,339,000 to $10,396,000 in 1999 as compared to
$9,057,000 in 1998. This increase is primarily a result of higher
compensation expense directly related to the increase in revenue,
as well as the operating expenses of Carlyle that was acquired in
July 1998.
Operating income increased 40% or $1,473,000 to $5,199,000 for the
three months ended June 30, 1999, compared to $3,726,000 for the
three months ended June 30, 1998. For the six month period ended
June 30, 1999 operating income increased 12% or $842,000 to
$7,800,000 compared to $6,958,000 for the comparable period in
1998. Included in the 1999 six month operating income is the
$2,329,000 termination payment paid in the first quarter.
Excluding this payment, operating income increased 46% to
$10,129,000 for the six months ended June 30, 1999, compared to the
same period in 1998.
Net income declined $177,000 to $2,083,000 for the three months
ended June 30, 1999, compared to $2,260,000 for the same period in
1998. This decrease is a result of a gain on sale of investment of
$595,000, net of taxes in the second quarter of 1998. Excluding
this gain, net income increased 25% to $2,083,000 for the three
months ended June 30, 1999, compared to $1,665,000 for the same
period in 1998. Net income increased $660,000 to $2,733,000 for the
six months ended June 30, 1999, compared to $2,073,000 for the same
period in 1998. This increase includes the termination payment in
the first quarter of 1999, which had an after tax effect of
$1,351,000. The results for the first half of 1998 include the
gain on sale of investment of $595,000, net of taxes and the loss
on early retirement of debt of $1,457,000, net of taxes. Excluding
all of these items, net income increased 39% to $4,084,000 for the
six months ended June 30, 1999, compared to $2,935,000 for the same
period in 1998.
Liquidity and Capital Resources
Cash provided by operations during the six months ended June 30,
1999 was $1,676,000 compared with cash used by operations of
$4,303,000 for the comparable period in 1998. This was due
primarily to increased collection of accounts receivable.
For the six months ended June 30, 1999, the Company used
$10,005,000 in investing activities almost exclusively for payments
for acquisitions completed during 1997, 1998 and 1999, compared to
cash used in investing activities of $26,813,000 for the same
period in 1998. The cash used for investing activities in 1998
related to acquisitions completed during 1998 and 1997.
Total net cash provided by financing activities was $6,909,000 for
the six months ended June 30, 1999, compared to net cash provided
by financing activities of $33,756,000 for the same period in 1998.
The cash generated in 1999 was a result of additional borrowings
under the Company's senior credit facility.
12
<PAGE>
In March 1999, the Company announced its plans to step up purchases
under its stock repurchase program. The program was implemented in
October 1998 when the Company's Board of Directors authorized
purchases of up to 1.0 million shares. During the first half of
1999, the Company used $1,553,000 to repurchase 325,400 shares.
The Company expects that it will continue to purchase shares under
the program as long as the current stock price weakness continues.
The Company's working capital improved to $35,332,000 at June 30,
1999, from $32,139,000 at December 31, 1998. Management expects
that the Company's working capital position will be sufficient to
meet all of the working capital needs for the remainder of the
year.
In June 1999, the Company secured $10 million in additional
financing through expansion of its senior credit facility. The
credit facility was increased from $90 million to $100 million on
substantially the same terms as the existing facility. The Company
expects to use the proceeds of the facility for additional
acquisitions and future working capital needs. As of June 30,
1999, the Company had approximately $40 million available under its
senior credit facility.
Year 2000 Compliance
The Company's internal computer information system is Year 2000
compliant, since its database does not store dates as plain text.
The dates are converted into an internal date format that does not
rely on the year to determine the century. Any new software
purchases will conform to the same type of internal date storage
specifications, which should eliminate any internal Year 2000
issues.
The Company's Year 2000 issues and any potential business
interruptions, costs, damages or losses related thereto are
primarily dependent upon the Year 2000 compliance of third parties.
The Company's suppliers that provide mission-critical services are
primarily large companies, such as local and long distance
telephone service providers, banks, and utility companies. The
Company has no reason to believe that these suppliers will not be
Year 2000 compliant. However, the Company is in the process of
reviewing its third party relationships in order to assess and
address Year 2000 issues with respect to these third parties.
The costs associated with Year 2000 compliance have been nominal
and the Company believes that the remaining costs will be minimal
and will not have a material adverse effect on its financial
condition or results of operations.
The Company has developed a contingency plan to be able to react to
any Year 2000 problems should they arise.
13
PART II. OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS: Attached only to the electronic filing by the Company
with the Securities and Exchange Commission is the Financial Data
Schedule, Exhibit Reference Number 27, in accordance with Item
601(c) of Regulation S-K.
REPORTS ON FORM 8-K: None
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEADWAY CORPORATE RESOURCES, INC.
Date: August 12, 1999 By: /s/ Barry S. Roseman
President and Chief Operating Officer
(Duly Authorized and Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
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