1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 -------------- 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 1-5519 ------ CDI CORP. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Pennsylvania 23-2394430 - - ------------------------- ----------------------- (State or other jurisdic- (I.R.S. Employer tion of incorporation or Identification Number) organization) 1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768 ---------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (215) 569-2200 -------------- Indicate 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 ----- ----- Outstanding shares of each of the Registrant's classes of common stock as of April 29, 1994 were: Common stock, $.10 par value 19,714,828 shares Class B common stock, $.10 par value None 2 PART 1. FINANCIAL INFORMATION CDI CORP. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) March 31, December 31, Assets 1994 1993 ------ --------- ------------ Current assets: Cash $ 2,871 20,361 Accounts receivable, less allowance for doubtful accounts of $1,911 - March 31, 1994; $1,785 - December 31, 1993 192,417 168,051 Prepaid expenses 4,123 4,581 ------- ------- Total current assets 199,411 192,993 Fixed assets, at cost: Land 3,377 3,377 Buildings 11,716 11,179 Computer-aided design systems 24,692 24,554 Equipment and furniture 72,901 70,965 Leasehold improvements 11,108 11,053 ------- ------- 123,794 121,128 Accumulated depreciation 81,235 78,442 ------- ------- Net fixed assets 42,559 42,686 Deferred income taxes 2,061 1,724 Goodwill and other intangible assets 23,167 23,791 Other assets 5,769 5,516 ------- ------- $ 272,967 266,710 ======= ======= 3 CDI CORP. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share data) March 31, December 31, Liabilities and Shareholders' Equity 1994 1993 - - ------------------------------------ --------- ------------ Current liabilities: Current portion of long-term debt $ - 16,000 Obligations not liquidated because of outstanding checks 7,765 4,038 Accounts payable 6,594 6,836 Withheld payroll taxes 3,588 1,425 Accrued expenses 52,706 46,731 Currently payable income taxes 6,576 7,516 Deferred income taxes 5,791 2,525 ------- ------- Total current liabilities 83,020 85,071 Long-term debt 66,270 62,021 Deferred compensation 2,741 2,649 Minority interests 489 466 Shareholders' equity: Preferred stock, $.10 par value - authorized 1,000,000 shares; none issued - - Common stock, $.10 par value - authorized 100,000,000 shares; issued 19,739,983 shares 1,974 1,974 Class B common stock, $.10 par value - authorized 3,174,891 shares; none issued - - Additional paid-in capital 11,361 11,361 Retained earnings 107,705 103,761 Less 25,155 shares of common stock in treasury, at cost (593) (593) ------- ------- Total shareholders' equity 120,447 116,503 ------- ------- $ 272,967 266,710 ======= ======= 4 CDI CORP. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except per share data) Three months ended March 31, ---------------------------- 1994 1993 ------- ------- Revenues $ 249,231 217,467 Cost of operations 229,883 203,461 ------- ------- Gross profit 19,348 14,006 General and administrative expenses 11,759 11,624 ------- ------- Operating profit 7,589 2,382 Interest expense 976 832 ------- ------- Earnings before income taxes and minority interests 6,613 1,550 Income taxes 2,646 651 ------- ------- Earnings before minority interests 3,967 899 Minority interests 23 2 ------- ------- Net earnings $ 3,944 897 ======= ======= Per share $ .20 .05 5 CDI CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Three months ended March 31, ---------------------------- 1994 1993 ------ ------ Operating activities: Net earnings $ 3,944 897 Minority interests 23 2 Depreciation 3,062 2,848 Amortization of intangible assets 658 773 Income tax provision greater (less) than tax payments and refunds 1,989 (933) Change in assets and liabilities net of effects from acquisitions: Increase in accounts receivable (24,381) (8,514) Increase in other assets (253) (37) Increase in payables and accrued expenses 7,896 6,251 Other 531 (33) ------ ------ (6,531) 1,254 ------ ----- Investing activities: Purchases of fixed assets (2,956) (4,474) Acquisitions net of cash acquired - (4,137) Other 21 (82) ------ ----- (2,935) (8,693) ------ ----- Financing activities: Borrowings long-term debt 5,180 4,310 Payments long-term debt (16,931) (2,197) Obligations not liquidated because of outstanding checks 3,727 2,631 ------ ----- (8,024) 4,744 ------ ----- Decrease in cash (17,490) (2,695) Cash at beginning of period 20,361 6,245 ------ ----- Cash at end of period $ 2,871 3,550 ====== ===== 6 CDI CORP. AND SUBSIDIARIES Comments to Financial Statements Earnings per share of common stock are based on the weighted average number of shares of common stock and dilutive common share equivalents (which arise from stock options) outstanding during the periods. No further dilution resulted from a computation of fully diluted earnings per share. The number of shares used to compute earnings per share was 19,761,221 for the three months ended March 31, 1994 and 19,727,999 for the three months ended March 31, 1993. Revenues and operating profit attributable to the business segments of the Company for the three months ended March 31, 1994 and 1993 follows ($000s): 1994 1993 ------- ------- Revenues: Technical Services $ 209,818 183,273 Temporary Services 28,297 26,501 Management Recruiters 11,116 7,693 ------- ------- $ 249,231 217,467 ======= ======= Operating profit: Technical Services $ 7,006 2,773 Temporary Services 717 64 Management Recruiters 1,351 917 Corporate expenses (1,485) (1,372) ------- ------- $ 7,589 2,382 ======= ======= Certain prior year's amounts have been reclassified to conform to current year presentation. These comments contain only the information which is required by Form 10-Q. Further reference should be made to the comprehensive disclosures contained in the Company's annual report on Form 10-K for the year ended December 31, 1993. The financial statements included in this report reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations --------------------- Consolidated revenues for the quarter ended March 31, 1994 were 15% above the comparable quarter a year ago. Operating profit margins were 3.0% of revenues for the first quarter of this year compared to 1.1% for the same period in 1993. Technical Services' revenues increased 14% over the first quarter a year ago. Operating profit margins for Technical Services' were 3.3% in the first quarter of 1994 compared to 1.5% for the 1993 first quarter. Technical Services achieved excellent gains in revenues and profits in the automotive sector. Customers across a broad range of industries are starting to award larger scale projects, embracing the emerging concept of "outsourcing," yielding increased revenues in this year's first quarter. Temporary Services' revenues were up 7% over last year's first quarter. Operating profit margins for Temporary Services were 2.5% for the first quarter of 1994, compared to slightly above breakeven for the first quarter a year ago. This improved performance continues the trend established in 1993 and also reflects strength in the office/clerical temporary services markets. Management Recruiters' revenues for the first quarter of 1994 grew 44% over last year's first quarter. Operating profit margins were 12% of revenues for both the first quarter of this year and the first quarter of last year. This segment has had increased demand for its middle-management search services. Financial Condition ------------------- The ratio of current assets to current liabilities was 2.4 to 1 as of March 31, 1994 compared to 2.3 to 1 as of December 31, 1993. The ratio of long-term debt to total capital (long-term debt plus shareholders' equity) was 35% for both March 31, 1994 and at December 31, 1993. The abnormally high cash balance on December 31, 1993 was reduced during the first quarter ended March 31, 1994 coincident with the repayment of $16 million of current debt that was outstanding on December 31, 1993. Long-term debt increased from December 31, 1993 by approximately $4 million because of additional working capital arising primarily from the increased level of business activity during the first quarter of 1994 and to a lesser degree from an increase in the number of days outstanding in receivables from customers. The Company believes that capital resources available from operations and financing arrangements are adequate to support the Company's businesses. 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11. Statement re computation of per share earnings. (b) The Registrant was not required to file a Form 8-K during the quarter ended March 31, 1994. 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. CDI CORP. -------------------------------------- May 9, 1994 By: /s/ Edgar D. Landis ----------------------------------- EDGAR D. LANDIS Executive Vice President, Finance (Duly authorized officer and principal financial officer of Registrant) 9 INDEX TO EXHIBITS Number Exhibits Page - - ------ ----------------------------------------------- ---- 11. Statement re computation of per share earnings. 10