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 September 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:
11,247,561 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-
September 30, 1999 and December 31, 1998 3
Unaudited Consolidated Statements of Income-
Three Months and Nine Months Ended September 30, 1999
and 1998 4
Unaudited Consolidated Statement of Stockholders'Equity-
Nine Months Ended September 30, 1999 5
Unaudited Consolidated Statements of Cash Flows-
Nine Months Ended September 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.
Consolidated Balance Sheets
(Unaudited)
(Dollars In Thousands)
September 30, 1999 December 31,1998
Assets:
Current assets:
Cash and cash equivalents $ 558 $ 4,157
Accounts receivable, trade, net 53,152 47,017
Prepaid expenses and other current assets 1,077 954
Prepaid income taxes 598 1,217
Total current assets 55,385 53,345
Property and equipment, net 5,103 4,566
Intangibles, net 77,089 66,388
Deferred financing costs 1,657 1,757
Other assets 857 890
Total assets $ 140,091 $ 126,946
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 3,005 $ 2,190
Accrued expenses 2,995 2,969
Accrued payroll 16,398 13,492
Long-term debt, current portion and line of 152 150
credit
Capital lease obligations, current portion 400 416
Other liabilities 5,540 1,989
Total current liabilities 28,490 21,206
Long-term debt, less current portion 64,000 60,959
Capital lease obligations, less current portion 471 755
Deferred rent 1,267 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, 10,822,451 shares and
10,311,751 shares issued and outstanding,
respectively, at September 30, 1999; 1 1
10,419,220 shares and 10,362,020 shares
issued and outstanding, respectively, at
December 31, 1998.
Treasury Stock at cost (2,511) (290)
Additional paid-in capit 17,375 15,779
Notes receivable (139) (172)
Retained earnings 10,929 7,244
Accumulated other comprehensive income 4 9
Total stockholders' equity 45,659 42,571
Total liabilities and stockholders' equity $ 140,091 $ 126,946
See accompanying notes
3
<PAGE>
Headway Corporate Resources, Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars In Thousands)
Three months ended Nine months ended
September 30 September 30,
1999 1998 1999 1998
Revenues $ 90,229 $ 78,078 $ 275,055 $ 208,077
Operating expenses:
Direct costs 68,075 60,183 208,847 158,440
General and administrative 16,333 13,513 48,196 37,197
Termination of employment
contract 2,329
Depreciation and amortization 1,168 873 3,230 1,973
85,576 74,569 262,602 197,610
Operating income 4,653 3,509 12,453 10,467
Other (income)expenses:
Interest expense 1,626 1,236 4,662 3,088
Interest and dividend income (58) (72) (88) (125)
Gain on sale of investment - - - (901)
1,568 1,164 4,574 2,062
Income before income tax expense 3,085 2,345 7,879 8,405
and extraordinary item
Income tax expense 1,308 899 3,369 3,429
Income before extraordinary item 1,777 1,446 4,510 4,976
Extraordinary item--loss on
early retirement of debt - - - (1,457)
(net of income tax benefit
of $1,241)
Net income 1,777 1,446 4,51 3,519
Preferred dividend requirments (275) (275) (825) (590)
Net income available for common
stockholder $ 1,502 $ 1,171 $ 3,685 $ 2,929
Basic earnings (loss) per
common share:
Income before extrodinary
item $ .15 $ .11 $ .36 $ .45
Extraordinary item - - - (.15)
Net income $ .15 $ .11 $ .36 $ .30
Diluted earnings (loss) per
common share:
Income before extraordinary
item $ .13 $ .10 $ .31 $ .36
Extraordinary item - - - (.11)
Net income $ .13 $ .10 $ .31 $ .25
See accompanying notes
4
<PAGE>
Headway Corporate Resources, Inc.
Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 1999
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Series F
Convertible Common Stock Treasury Stock
Preferred 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 - - - - (453,500) (2,221)
Exercise of stock options 403,231
Translation adjustment - - - - - -
Net income - - - - - -
Comprehensive income - - - - - -
Balance - September 30, 1999 1,000 $20,000 10,822,451 $ 1 (510,700) $(2,511)
</TABLE>
5
<PAGE>
Headway Corporate Resources, Inc.
Consolidated Statement of Stockholders' Equity, Continued
Nine Months Ended September 30, 1999
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Paid-in Notes Retained Comprehensive Stockholders'
Captial Recievable 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 - 33 - - 33
Preferred stock dividends - - (825) - (825)
Purchase of treasury stock - - - - (2,221)
Exercise of stock options 1,596 1,596
Translation adjustment - - - (5) (5)
Net income - - 4,510 - 4,510
Comprehensive income - - - - 4,510
Balance ---September 30, 1999 $ 17,375 $ (139) $ 10,929 $ 4 $ 45,659
</TABLE>
See accompanying notes
6
<PAGE>
Headway Corporate Resources, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended September 30,
1999 1998
Operating activities:
Net income $ 4,510 $ 3,519
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 3,230 1,973
Amortization of deferred financing costs 277 312
Deferred income taxes - 63
Gain on sale of investment - (901)
Changes in assets and liabilities net of effect
of acquisitions:
Accounts receivable (6,135) (17,201)
Prepaid expenses and other assets (90) (605)
Accounts payable and accrued expenses 857 1,424
Accrued payroll 2,906 4,806
Prepaid income taxes/Income taxes payable 619 (617)
Net cash provided by (used in) operating activities 6,174 (5,770)
Investing activities:
Expenditures for property and equipment (1,401) (1,844)
Repayment from notes receivable 33 97
Repayment from related party - 638
Proceeds from sale of investment - 3,178
Cash paid for acquisitions, net of cash acquired (9,516) (31,587)
Net cash used in investing activities (10,884) (29,518)
Financing activities:
Sale of preferred stock,net - 18,633
Net change in revolving credit line 3,200 (13,404)
Proceeds from long-term debt 56,100
Repayment of long-term debt (157) (23,608)
Payment of capital lease obligations (300) (173)
Payments of loan acquisition fees (177) (1,873)
Proceeds from exercise of options and warrants 1,596 2,041
Purchase of treasury stock (2,221) -
Cash dividends paid (825) (590)
Net cash provided by financing activities 1,116 37,126
Effect of exchange rate changes on cash and cash
equivalents (5) -
Increase (decrease) in cash and cash equivalents (3,599) 1,838
Cash and cash equivalents at beginning of period 4,157 2,472
Cash and cash equivalents at end of period $ 558 $ 4,310
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 4,385 $ 2,776
Income taxes $ 2,404 $ 4,174
See accompanying notes
7
<PAGE>
HEADWAY CORPORATE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 nine months ended September 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 for cash 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 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 nine months ended September 30, 1999, additional purchase
price of $9,043,000 was recorded as goodwill upon the determination
that the earnouts had been met on certain acquisitions made in 1998
and 1997. Other liabilities represent such earnouts not paid as of
September 30, 1999.
(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
In June 1999, the amount available under the Company's senior credit
facility was increased to $100,000,000 from $90,000,000. The
revolving credit facility bears interest at varying rates based on
LIBOR ranging from 7.20% to 7.36% per annum at September 30, 1999.
As of September 30, 1999, $54,000,000 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 Nine months ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary item $ 1,777,000 $ 1,446,000 $ 4,510,000 $ 4,976,000
Extraordinary item - (1,457,000)
Preferred dividend requirements (275,000) (275,000) (825,000) (590,000)
Numerator for basic earnings per
share--net income available for
common stockholders 1,502,000 1,717,000 3,685,000 2,929,000
Effect of dilutive securities:
Preferred dividend requirements 275,000 275,000 825,000 590,000
Numerator for diluted earnings per
share - net income available for
common stockholders after
assumed conversions 1,777,000 1,446,000 4,510,000 3,519,000
Denominator:
Denominator for basic earnings per
share--weighted average shares 10,108,813 10,253,163 10,208,778 9,767,785
Effect of dilutive securities:
Stock options and warrants 501,373 1,346,326 530,413 1,795,523
Convertible preferred stock 3,584,299 3,584,229 3,584,299 2,389,486
Dilutive potential common stock 4,085,672 4,930,555 4,114,712 4,185,009
Denominator for diluted earnings
per share --adjusted weighted-average
shares and assumed conversions 14,194,485 15,183,718 14,323,490 13,952,794
Basic earnings per share $ .15 $ .11 $ .36 $ .30 .11 .36
Diluted earnings per share $ .13 $ .10 $ .31 $ .25
</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 Three months ended
Sept. 30, 1999 Sept. 30, 1998
Staffing Executive Staffing Executive
Search Search
<S> <C> <C> <C> <C>
Revenues $ 83,775,000 $ 6,454,000 $ 73,160,000 $ 4,918,000
Segment profit 1,200,000 985,000 1,357,000 445,000
Segment assets 128,915,000 10,082,000
Nine months ended Nine months ended
Sept. 30, 1999 Sept. 30, 1998
Staffing Executive Staffing Executive
Search Search
Revenues $ 253,895,000 $ 21,160,000 $ 191,088,000 $ 16,989,000
Segment income before extraordinary item 3,846,000 3,485,000 3,691,000 2,081,000
Extraordinary loss - - (1,457,000) -
Segment profit 3,846,000 3,485,000 2,234,000 2,081,000
</TABLE>
A reconciliation of combined segment profit to consolidated net income
is as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
Sept. 30 Sept. 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Total profit for reportable segments $ 2,185,000 $ 1,802,000 $ 7,331,000 $ 4,315,000
Interest expense (105,000) (75,000) (277,000) (314,000)
Corporate overhead (630,000) (582,000) (2,282,000) (2,260,000)
Termination of employment contract - - (2,329,000) -
Gain on sale of investment - - - 901,000
Income tax benefit 327,000 301,000 2,067,000 877,000 0
Net income $ 1,777,000 $ 1,446,000 $ 4,510.000 $ 3,519,000
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Overview
Overall, the results for the Company for the third quarter were very
strong. The performance of the executive search segment was
particularly positive, reflecting the strength of the financial
services industry and the continued demand for the Company's
services. The Company experienced some softness in its staffing
business specifically in the area of information technology
staffing. As the Year 2000 approaches, many companies have put
their information technology initiatives on hold. The Company
believes that the staffing requirements will increase in the first
and second quarter as concerns over Year 2000 issues are alleviated.
Management believes that the Company is in a very good position in
all of its businesses going into next year.
Consolidated
Revenues increased $12,151,000 or 16% to $90,229,000 for the three
months ended September 30, 1999, from $78,078,000 for the same
period in 1998. For the nine months ended September 30, 1999,
revenues were $275,055,000, an increase of 32% from $208,077,000 a
year earlier. These increases are attributable to the staffing
acquisitions completed in the latter part of 1998, as well as
internal growth. For the first nine months of 1999, the Company
experienced a 16% internal growth rate.
The executive search subsidiary, Whitney Partners, LLC (Whitney),
contributed $6,454,000 to consolidated revenues in the third quarter
of 1999, an increase of 31% from $4,918,000 for the same period in
1998. For the nine months ended September 30, 1999, Whitney
revenues were $21,160,000, an increase of 25% from $16,989,000 a
year earlier. This increase is due to the strong recovery of the
financial markets in the first nine months of 1999 following a brief
downturn in the financial services industry in the second half of
1998, 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 $83,775,000 to consolidated revenues
in the third quarter of 1999, an increase of $10,615,000 from
$73,160,000 for third quarter of 1998. For the nine months ended
September 30, 1999, HCSS revenues were $253,895,000, an increase of
33% from $191,088,000 a year earlier. This increase is primarily a
result of the acquisitions completed during the latter part of 1998.
Total operating expenses increased $11,007,000 to $85,576,000 for
the three months ended September 30, 1999, from $74,569,000 for the
same period in 1998. Of the increase, $7,892,000 relates to the
direct costs that are the wages, taxes and benefits of work site
employees of the staffing companies. Direct costs decreased as a
percentage of revenues to 75.4% in 1999 from 77.1% in 1998. For the
nine months, operating expenses increased $64,992,000 to
$262,602,000 from $197,610,000 for the same period in 1998. Of the
increase, $50,407,000 relates to the direct costs. For the nine
months, direct costs decreased slightly as a percentage of revenues
to 75.9% in 1999 from 76.1% in 1998. The fluctuation in the direct
cost percentage of revenues is a result of the Company's business
mix. Specifically, the executive search business has no direct
costs while the payrolling business has very high direct costs.
Direct costs as a percentage of HCSS revenue declined to 81.3% for
the three months ended September 30, 1999, from 82.3% for the same
period in 1998. For the nine months, direct costs for HCSS declined
as a percentage of HCSS revenue to 82.3% from 82.9% last year. This
improvement is primarily the result of the Company's acquisitions of
information technology businesses that have higher gross margin than
the clerical or payrolling business. General and administrative
expenses increased as a percentage of revenues from 17.3% in the
third quarter of 1998 to 18.1% in the third quarter of 1999. The
11
<PAGE>
increase in general and administrative expenses as a percentage of
revenues related to several one-time expenses and is a trend that is
not expected to continue. For the nine months, general and
administrative expenses decreased as a percentage of revenues from
17.9% in 1998 to 17.5% in 1999.
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 nine
months ended September 30, 1999 is primarily due to operating
expenses of the acquired staffing companies completed in the latter
part of 1998.
Whitney's operating expenses increased $571,000 to $4,714,000 in the
third quarter of 1999, from $4,143,000 for the same period last
year. For the nine months of 1999, Whitney's operating expenses
increased $1,909,000 to $15,109,000 in 1999 as compared to
$13,200,000 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 33% or $1,144,000 to $4,653,000 for the
three months ended September 30, 1999, compared to $3,509,000 for
the three months ended September 30, 1998. For the nine month
period ended September 30, 1999 operating income increased 19% or
$1,986,000 to $12,453,000 compared to $10,467,000 for the comparable
period in 1998. Included in the 1999 nine month operating income is
the $2,329,000 termination payment paid in the first quarter.
Excluding this payment, operating income increased 41% to
$14,782,000 for the nine months ended September 30, 1999, compared
to the same period in 1998.
Net income increased $331,000 to $1,777,000 for the three months
ended September 30, 1999, compared to $1,446,000 for the same period
in 1998. Net income increased $991,000 to $4,510,000 for the nine
months ended September 30, 1999, compared to $3,519,000 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 nine months of 1998 include
the gain on sale of investment net of taxes of $595,000 and the loss
on early retirement of debt, net of taxes of $1,457,000. Excluding
all of these items, net income increased 34% to $5,861,000 for the
nine months ended September 30, 1999, compared to $4,381,000 for the
same period in 1998.
Liquidity and Capital Resources
Cash provided by operations during the nine months ended September
30, 1999 was $6,174,000 compared with cash used by operations of
$5,770,000 for the comparable period in 1998. This was due
primarily to increased collection of accounts receivable.
For the nine months ended September 30, 1999, the Company used
$10,884,000 in investing activities almost exclusively for payments
for acquisitions completed during 1997, 1998 and 1999, compared to
cash used in investing activities of $29,518,000 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 $1,116,000 for
the nine months ended September 30, 1999, compared to net cash
provided by financing activities of $37,126,000 for the same period
in 1998. The cash generated in 1999 was a result of additional
borrowings under the Company's senior credit facility and proceeds
from the exercise of stock options, offset in part by treasury stock
purchases.
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 nine months
of 1999, the Company used $2,221,000 to repurchase 453,500 shares.
The Company expects that it will continue to purchase shares under
the program as long as the current stock price weakness continues.
12
<PAGE>
The Company's working capital declined to $26,895,000 at September
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 September 30,
1999, the Company had approximately $46 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
<PAGE>
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: November 9, 1999 By: /s/ Barry S. Roseman, President
and Chief Operating Officer
(Duly Authorized and Principal Financial Officer)
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 558
<SECURITIES> 0
<RECEIVABLES> 53,152
<ALLOWANCES> 1,006
<INVENTORY> 0
<CURRENT-ASSETS> 55,385
<PP&E> 7,890
<DEPRECIATION> (2,787)
<TOTAL-ASSETS> 140,091
<CURRENT-LIABILITIES> 28,490
<BONDS> 64,471
20,000
0
<COMMON> 1
<OTHER-SE> 25,658
<TOTAL-LIABILITY-AND-EQUITY> 140,091
<SALES> 0
<TOTAL-REVENUES> 275,055
<CGS> 0
<TOTAL-COSTS> 262,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 472
<INTEREST-EXPENSE> 4,662
<INCOME-PRETAX> 7,879
<INCOME-TAX> 3,369
<INCOME-CONTINUING> 4,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,510
<EPS-BASIC> .36
<EPS-DILUTED> .31
</TABLE>
