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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Commission File Number 0-20540
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ON ASSIGNMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4023433
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
26651 West Agoura Road
Calabasas, California 91302
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (818) 878-7900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title and Class)
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 of the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the 7,443,976 shares of voting stock
(based on the closing price reported by the Nasdaq Stock Market on February 27,
1998) held by non-affiliates of the registrant as of February 27, 1998 was
approximately $218,667,000. For purposes of this disclosure, shares of common
stock held by persons who own 5% or more of the shares of outstanding common
stock and shares of common stock held by each officer and director have been
excluded in that such persons may be deemed to be "affiliates" as that term is
defined under the Rules and Regulations of the Act. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.
As of February 27, 1998, the registrant had outstanding 10,790,407
shares of Common Stock, $0.01 par value.
DOCUMENT INCORPORATED BY REFERENCE
Portions of the On Assignment, Inc. Proxy Statement for the
registrant's Annual Meeting of Stockholders scheduled to be held on June 18,
1998 are incorporated by reference into Part III of this Report on Form 10-K.
Sequentially numbered page 1 of 23 pages
Exhibit index on sequentially numbered page 21
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
On Assignment, Inc.
We have audited the accompanying consolidated balance sheets of On
Assignment, Inc. and subsidiaries (the "Company") as of December 31, 1996 and
1997, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997. Our audits also included the financial statement schedule listed at Item
14. These consolidated financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
On Assignment, Inc. and subsidiaries as of December 31, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Los Angeles, California
January 23, 1998
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ON ASSIGNMENT, INC.
CONSOLIDATED BALANCE SHEETS
December 31
------------------------------
ASSETS 1996 1997
------------ ------------
Current Assets:
Cash and cash equivalents (Note 1) $ 11,102,000 $ 18,339,000
Marketable securities (Note 1) 3,000,000 5,370,000
Accounts receivable, net of allowance for doubtful
accounts of $553,000 (1996) and $734,000 (1997) 12,264,000 15,215,000
Advances and deposits 72,000 67,000
Prepaid expenses 681,000 679,000
Income taxes receivable -- 111,000
Deferred income taxes (Notes 1 and 8) 968,000 1,218,000
------------ ------------
Total current assets 28,087,000 40,999,000
------------ ------------
Office Furniture, Equipment and
Leasehold Improvements, net (Notes 1 and 2) 2,294,000 2,572,000
Workers' compensation restricted deposits (Note 6) 743,000 596,000
Goodwill, net (Note 4) 581,000 534,000
Other assets 169,000 163,000
============ ============
Total Assets $ 31,874,000 $ 44,864,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued payroll $ 2,397,000 $ 3,043,000
Accounts payable 488,000 414,000
Accrued expenses 1,348,000 2,135,000
Income taxes payable (Notes 1 and 8) 6,000 --
------------ ------------
Total current liabilities 4,239,000 5,592,000
------------ ------------
Commitments and Contingencies (Notes 5 and 6) -- --
Stockholders' Equity (Notes 3 and 9):
Preferred Stock, $0.01 par value, 1,000,000
shares authorized, no shares issued or
outstanding in 1996 and 1997 -- --
Common Stock, $0.01 par value, 25,000,000
shares authorized, 10,311,120 issued and
outstanding in 1996 and 10,727,235 issued
and outstanding in 1997 103,000 107,000
Paid-in capital 8,726,000 12,099,000
Retained earnings 18,806,000 27,072,000
Cumulative foreign currency translation adjustment 0 (6,000)
------------ ------------
Total stockholders' equity 27,635,000 39,272,000
============ ============
Total Liabilities and Stockholders' Equity $ 31,874,000 $ 44,864,000
============ ============
See accompanying Notes to Consolidated Financial Statements
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ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
------------------------------------------------
1995 1996 1997
------------ ------------ ------------
Revenues (Note 1) $ 72,617,000 $ 88,188,000 $107,849,000
Cost of services 50,812,000 61,231,000 74,748,000
------------ ------------ ------------
Gross profit 21,805,000 26,957,000 33,101,000
Operating expenses 14,950,000 17,699,000 20,714,000
------------ ------------ ------------
Operating income 6,855,000 9,258,000 12,387,000
Acquisition costs -- 401,000 --
------------ ------------ ------------
Income before interest and income taxes 6,855,000 8,857,000 12,387,000
Interest income, net (Notes 1 and 7) 410,000 549,000 833,000
------------ ------------ ------------
Income before income taxes 7,265,000 9,406,000 13,220,000
Provision for income taxes (Notes 1 and 8) 2,924,000 3,800,000 4,954,000
------------ ------------ ------------
Net income $ 4,341,000 $ 5,606,000 $ 8,266,000
============ ============ ============
Basic earnings per share (Note 1) $ 0.44 $ 0.55 $ 0.78
============ ============ ============
Weighted average number of Common
Shares Outstanding 9,974,000 10,207,000 10,561,000
============ ============ ============
Diluted earnings per share (Note 1) $ 0.41 $ 0.51 $ 0.75
============ ============ ============
Weighted average number of Common
and Common Equivalent Shares Outstanding 10,530,000 10,898,000 11,031,000
============ ============ ============
See accompanying Notes to Consolidated Financial Statements
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ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Preferred Stock Common Stock
----------------- --------------------------
Paid-In Retained
Shares Amount Shares Amount Capital Earnings
------ ------ --------- -------- ----------- -----------
Balance, January 1, 1995 0 $0 9,822,482 $ 96,000 $ 5,873,000 $ 8,859,000
Exercise of warrants -- -- 13,832 -- -- --
Exercise of common stock
options -- -- 192,746 4,000 532,000 --
Common stock issued -
Employee Stock Purchase Plan -- -- 19,862 -- 121,000 --
Disqualifying dispositions -- -- -- -- 213,000 --
Officer loans receivable -- -- -- -- 109,000 --
Net income -- -- -- -- -- 4,341,000
------- ------- ---------- -------- ----------- -----------
Balance, December 31, 1995 0 0 10,048,922 100,000 6,848,000 13,200,000
Exercise of common stock
options -- -- 249,392 3,000 1,016,000 --
Common stock issued -
Employee Stock Purchase
Plan -- -- 12,806 -- 149,000 --
Disqualifying dispositions -- -- -- -- 713,000 --
Net income -- -- -- -- -- 5,606,000
------- ------- ---------- -------- ----------- -----------
Balance, December 31, 1996 0 0 10,311,120 103,000 8,726,000 18,806,000
Exercise of common stock
options -- -- 402,563 4,000 2,321,000 --
Common stock issued -
Employee Stock Purchase
Plan -- -- 13,552 -- 172,000 --
Disqualifying dispositions -- -- -- -- 880,000 --
Translation adjustments -- -- -- -- -- --
Net income -- -- -- -- -- 8,266,000
------- ------- ---------- -------- ----------- -----------
Balance, December 31, 1997 0 $0 10,727,235 $107,000 $12,099,000 $27,072,000
======= ======= ========== ======== =========== ===========
Cumulative
Foreign
Currency
Translation
Adjustment Total
------------ ------------
Balance, January 1, 1995 $ 0 $ 14,828,000
Exercise of warrants -- --
Exercise of common stock
options -- 536,000
Common stock issued -
Employee Stock Purchase Plan -- 121,000
Disqualifying dispositions -- 213,000
Officer loans receivable -- 109,000
Net income -- 4,341,000
------- ------------
Balance, December 31, 1995 0 20,148,000
Exercise of common stock
options -- 1,019,000
Common stock issued -
Employee Stock Purchase
Plan -- 149,000
Disqualifying dispositions -- 713,000
Net income -- 5,606,000
------- ------------
Balance, December 31, 1996 0 27,635,000
Exercise of common stock
options -- 2,325,000
Common stock issued -
Employee Stock Purchase
Plan -- 172,000
Disqualifying dispositions -- 880,000
Translation adjustments (6,000) (6,000)
Net income -- 8,266,000
------- ------------
Balance, December 31, 1997 $(6,000) $ 39,272,000
======= ============
See accompanying Notes to Consolidated Financial Statements
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ON ASSIGNMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
--------------------------------------------------
1995 1996 1997
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,341,000 $ 5,606,000 $ 8,266,000
Adjustments to reconcile net income to net cash provided by
operating activities, net of acquisitions:
Depreciation and amortization 586,000 701,000 815,000
Increase in allowance for doubtful accounts 345,000 504,000 451,000
Increase in deferred income taxes (203,000) (368,000) (250,000)
Loss on disposal of furniture and equipment -- 1,000 141,000
Increase in accounts receivable (2,909,000) (2,624,000) (3,403,000)
Increase in income taxes receivable -- -- (111,000)
Increase in accounts payable and accrued expenses 300,000 1,238,000 1,360,000
Increase in income taxes payable 456,000 415,000 873,000
(Increase) Decrease in workers' compensation
restricted deposits (9,000) 117,000 147,000
(Increase) Decrease in prepaid expenses (291,000) 118,000 2,000
Increase in other assets (45,000) (30,000) (10,000)
------------ ------------ ------------
Net cash provided by operating activities 2,571,000 5,678,000 8,281,000
============ ============ ============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (4,300,000) (1,000,000) (7,250,000)
Proceeds from the maturity of marketable securities 2,580,000 3,565,000 4,880,000
Acquisition of furniture, equipment and leasehold
improvements (802,000) (1,204,000) (1,180,000)
Proceeds from sale of furniture and equipment -- 4,000 8,000
Decrease in advances and deposits 13,000 39,000 5,000
------------ ------------ ------------
Net cash provided by (used for) investing activities (2,509,000) 1,404,000 (3,537,000)
============ ============ ============
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options and warrants 536,000 1,019,000 2,325,000
Proceeds from issuance of common stock -
Employee Stock Purchase Plan 121,000 149,000 172,000
Proceeds from collection of officer loans receivable 300,000 -- --
Borrowings on line of credit 1,587,000 450,000 --
Repayments of line of credit borrowings (1,112,000) (925,000) --
------------ ------------ ------------
Net cash provided by financing activities 1,432,000 693,000 2,497,000
------------ ------------ ------------
Effect of exchange rate changes on cash and
cash equivalents (Note 1) -- -- (4,000)
------------ ------------ ------------
Net Increase in Cash and Cash Equivalents 1,494,000 7,775,000 7,237,000
Cash and Cash Equivalents at Beginning of Period 1,833,000 3,327,000 11,102,000
------------ ------------ ------------
Cash and Cash Equivalents at End of Period $ 3,327,000 $ 11,102,000 $ 18,339,000
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Tax benefit of disqualifying dispositions (Note 8) $ 213,000 $ 713,000 $ 880,000
============ ============ ============
Officer loans receivable (Note 3) $ 109,000 $ -- $ --
============ ============ ============
See accompanying Notes to Consolidated Financial Statements
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ON ASSIGNMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
On Assignment, Inc. (the "Company"), through its Lab Support division,
provides temporary and permanent placement of scientific personnel with
laboratories and other institutions. The Company's EnviroStaff division provides
temporary and permanent placement of environmental professionals to the
environmental services industry. The Company's Healthcare Financial Staffing
division provides temporary and permanent placement of medical billing and
collection professionals to the healthcare industry. Significant accounting
policies are as follows:
Principles of Consolidation. The Consolidated Financial Statements
include the accounts of the Company and its wholly owned domestic and foreign
subsidiaries (see Note 11). All significant intercompany accounts and
transactions have been eliminated.
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. ("ARI"), 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.
On May 12, 1997, the Company formed Assignment Ready Inc., a Canadian
corporation and wholly owned subsidiary of the Company, and commenced operations
in Toronto as Lab Support Canada during the third quarter of 1997.
Cash Flows and Marketable Securities. For purposes of the Consolidated
Statements of Cash Flows, the Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.
Investments having a maturity of more than three months and less than twelve
months are classified under current assets as marketable securities. Investments
having a maturity of more than twelve months are classified under non-current
assets as marketable securities. Marketable securities, which have been
classified as held to maturity, are recorded at amortized cost which
approximated market at December 31, 1996 and 1997.
Cash paid for income taxes (net of refunds) for the years ended
December 31, 1995, 1996, and 1997 was $2,671,000, $3,739,000 and $4,443,000,
respectively. Cash paid for interest for the years ended December 31, 1995,
1996, and 1997 was $25,000, $15,000 and $0, respectively.
Office Furniture, Equipment and Leasehold Improvements and
Depreciation. Office furniture, equipment and leasehold improvements are stated
at cost. Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the related assets, generally three to
five years.
Pursuant to Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets to be Disposed of," the
Company reviews long-lived assets and certain identifiable intangibles for
impairment at least quarterly. An impairment loss is recognized when the sum of
the undiscounted future cash flows is less than the carrying amount of the
asset. Adopting SFAS No. 121 during the year ended December 31, 1996 did not
have a material effect on the Company's financial statements.
Goodwill. Goodwill is being amortized on a straight-line basis over
fifteen years. The Company periodically reviews goodwill to assess
recoverability; impairments would be recognized in operating results if a
permanent diminution in value were to occur.
Income Taxes. Deferred taxes result from temporary differences between
the tax bases of assets and liabilities for financial and tax reporting
purposes. Deferred tax assets and liabilities represent future tax consequences
of these differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled.
Revenue Recognition. Revenue from temporary assignments is recognized
when earned, based on hours worked by the Company's temporary employees.
Permanent placement fees are recognized when earned, upon conversion of a
temporary employee to a client's regular employee.
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Foreign Currency Translation. Assets and liabilities of foreign
operations, where the functional currency is the local currency, are translated
into U.S. dollars at the rate of exchange in effect on the balance sheet date.
Income and expenses are translated at the average rates of exchange prevailing
during the period. The related translation adjustments are recorded as
cumulative foreign currency translation adjustments, a separate component of
stockholders' equity.
Earnings per Share. In December 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Basic earnings per
share are computed based upon the weighted average number of common shares
outstanding and diluted earnings per share are computed based upon the weighted
average number of common shares outstanding and dilutive common share
equivalents (consisting of incentive stock options, non-qualified stock options,
and warrants) outstanding during the periods using the treasury stock method.
Following is a reconciliation of the shares used to compute basic and diluted
earnings per share:
Years Ended December 31,
-----------------------------------------
1995 1996 1997
---------- ---------- ----------
Weighted average number of shares outstanding
used to compute basic earnings per share 9,974,000 10,207,000 10,561,000
Dilutive effect of stock options and warrants 556,000 691,000 470,000
---------- ---------- ----------
Number of shares used to compute diluted earnings per share 10,530,000 10,898,000 11,031,000
========== ========== ==========
Recently Issued Accounting Pronouncements. In June 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 130, "Reporting for Comprehensive Income" and No. 131, "Disclosure about
Segments of an Enterprise and Related Information." These statements are
effective for financial statements issued for periods beginning after December
15, 1997. The Company has not yet determined the impact of adopting these
statements.
Stock-Based Compensation. In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The Company has adopted only the
disclosure portion of the statement (see Note 9).
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk. Financial instruments that potentially
subject the Company to credit risks consist primarily of cash and cash
equivalents, marketable securities, and trade receivables. The Company places
its cash and cash equivalents and marketable securities with quality credit
institutions, and limits the amount of credit exposure with any one institution.
Concentration of credit risk with respect to accounts receivable are limited
because of the large number of geographically dispersed customers, thus
spreading the trade credit risk. The Company performs ongoing credit evaluations
to identify risks and maintains an allowance to address these risks.
Reclassifications. Certain reclassifications have been made to the
prior year consolidated financial statements to conform with the current year
consolidated financial statement presentation.
2. OFFICE FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS.
Office furniture, equipment and leasehold improvements at December 31,
1996 and 1997, consisted of the following:
1996 1997
----------- -----------
Furniture and fixtures $ 930,000 $ 1,018,000
Computers and related equipment 1,897,000 2,252,000
Machinery and equipment 668,000 859,000
Leasehold improvements 551,000 609,000
Construction in progress 280,000 450,000
----------- -----------
4,326,000 5,188,000
Less accumulated depreciation and amortization (2,032,000) (2,616,000)
----------- -----------
Total $ 2,294,000 $ 2,572,000
=========== ===========
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Depreciation and amortization expense for the years ended December 31, 1995,
1996 and 1997 was $511,000, $634,000 and $753,000, respectively.
3. OFFICER LOANS RECEIVABLE.
In May 1995, two officers of the company paid in full $200,000 in
promissory notes plus accrued interest of $16,000. In July 1995, a former
officer of the company paid in full the remaining $100,000 promissory note plus
accrued interest of $11,000. A portion of the loans, amounting to $109,000, were
originally treated as a reduction in stockholders' equity for financial
reporting purposes. Therefore, the payoff of the notes resulted in a
corresponding increase in stockholders' equity in the accompanying Consolidated
Balance Sheets and Consolidated Statements of Stockholders' Equity.
4. GOODWILL.
Goodwill represents the excess of the purchase price over the fair
value of the net assets acquired (see Note 11). Goodwill is stated net of
accumulated amortization of $128,000 at December 31, 1996 and $175,000 at
December 31, 1997.
5. 401(k) RETIREMENT SAVINGS PLAN.
Effective January 1, 1995, the Company adopted the On Assignment, Inc.
401(k) Retirement Savings Plan under Section 401(k) of the Internal Revenue
Code, under which eligible employees may elect to have a portion of their salary
deferred and contributed to the plan. The amount of salary deferred is not
subject to Federal and State income tax at the time of deferral. The Plan covers
all eligible employees and provides for matching or discretionary contributions
at the discretion of the Board of Directors. The Company made no matching or
discretionary contributions to the plan during the years ended December 31,
1995, 1996 and 1997.
6. COMMITMENTS AND CONTINGENCIES.
The Company leases its facilities and certain office equipment under
operating leases which expire at various dates through 2004. Certain leases
contain rent escalations and/or renewal options.
The following is a summary of future minimum lease payments by year:
Operating
Leases
-------------
1998 $ 1,105,000
1999 875,000
2000 600,000
2001 455,000
2002 389,000
Thereafter 421,000
-------------
Total Minimum Lease Payments $ 3,845,000
============
Rent expense for the years ended December 31, 1995, 1996 and 1997 was
$1,105,000, $1,153,000 and $1,433,000, respectively.
The Company and its subsidiaries are involved in various legal
proceedings, claims and litigation arising in the ordinary course of business.
However, based on the facts currently available, management believes that the
disposition of matters that are pending or asserted will not have a materially
adverse effect on the financial position of the company.
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Effective September 1, 1993, the Company became partially self-insured
for workers' compensation expense. In connection with this program, cash
deposits are required to be held by the reinsurer for the payment of losses and
as collateral amounting to $743,000 and $596,000 at December 31, 1996 and 1997,
respectively. These workers' compensation deposits are restricted as to
withdrawal and have therefore been classified as non-current assets in the
accompanying Consolidated Balance Sheets. These funds are invested primarily in
three-month treasury bills and are recorded at amortized cost which approximated
market at December 31, 1996 and 1997. In addition, the Company has provided a
stand-by letter of credit amounting to approximately $334,000 at December 31,
1996 and 1997, in connection with this program. The self-insurance claim
liability is determined based on claims filed and an estimate of claims incurred
but not yet reported.
The Company's EnviroStaff subsidiary was operating under a loss-retro
workers' compensation policy from July 1, 1995 through September 30, 1996. In
connection with this program, EnviroStaff paid a base premium with an excess
loss cap of $50,000 per occurrence. Medical and indemnity expenses are paid at
cost plus administration fees and taxes. The insurance claim liability is
determined based on claims filed and an estimate of claims incurred but not yet
reported. In addition, EnviroStaff has provided a standby letter of credit
amounting to approximately $120,000 at December 31, 1996 and 1997. This letter
of credit expires on July 1, 1998. Effective October 1, 1996, EnviroStaff was
added to the Company's workers' compensation program.
7. BORROWING ARRANGEMENTS.
Effective November 25, 1997, 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 (8.50% at December 31,
1997). The agreement expires on July 1, 1999. No borrowings were outstanding
under this credit line at December 31, 1996 and 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.
8. INCOME TAXES.
The provision for income taxes consists of the following:
Years Ended December 31,
-----------------------------------------------
1995 1996 1997
----------- ----------- -----------
Federal:
Current $ 2,406,000 $ 3,277,000 $ 4,166,000
Deferred (175,000) (296,000) (271,000)
----------- ----------- -----------
2,231,000 2,981,000 3,895,000
----------- ----------- -----------
State:
Current 721,000 891,000 1,038,000
Deferred (28,000) (72,000) 21,000
----------- ----------- -----------
693,000 819,000 1,059,000
----------- ----------- -----------
Total $ 2,924,000 $ 3,800,000 $ 4,954,000
=========== =========== ===========
Deferred income taxes arise from the recognition of certain assets and
liabilities for tax purposes in periods different from those in which they are
recognized in the financial statements. These differences relate primarily to
workers' compensation, state taxes, bad debt, and depreciation and amortization
expenses.
Deferred assets and liabilities are classified as current and
non-current according to the nature of the assets or liabilities from which they
arose.
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The components of deferred tax assets (liabilities) are as follows:
December 31, 1996 December 31, 1997
----------------------------- -----------------------------
Federal State Federal State
----------- ----------- ----------- -----------
Deferred tax assets:
Allowance for doubtful accounts $ 187,000 $ 48,000 $ 249,000 $ 33,000
Depreciation and amortization expense 107,000 32,000 158,000 24,000
Vacation accrual 30,000 8,000 58,000 8,000
State taxes 301,000 -- 221,000 --
Net operating loss carryforward 52,000 5,000 45,000 2,000
Workers' compensation loss reserve 197,000 50,000 406,000 55,000
----------- ----------- ----------- -----------
Total deferred tax assets 874,000 143,000 1,137,000 122,000
Deferred tax liabilities:
Other (49,000) -- (41,000) --
----------- ----------- ----------- -----------
Net deferred tax asset $ 825,000 $ 143,000 $ 1,096,000 $ 122,000
=========== =========== =========== ===========
The net operating loss carryforwards included in the deferred tax asset at
December 31, 1996 and 1997, were acquired through the acquisition of 1st Choice
Personnel, Inc. (see Note 11). These carryforwards are available to offset
future taxable income, subject to annual limitations, through the year 2007.
The reconciliation between the amount computed by applying the U.S.
federal statutory tax rate of 35% in 1995, 1996 and 1997 to income before income
taxes and the actual income taxes follows:
Years Ended December 31,
-----------------------------------------------
1995 1996 1997
----------- ----------- -----------
Income tax expenses at the statutory rate $ 2,543,000 $ 3,292,000 $ 4,627,000
State income taxes, net of federal income tax benefit 422,000 534,000 401,000
Other (41,000) (26,000) (74,000)
----------- ----------- -----------
Total $ 2,924,000 $ 3,800,000 $ 4,954,000
=========== =========== ===========
At December 31, 1996 and 1997, net income taxes payable and additional
paid-in capital include tax benefits amounting to $713,000 and $880,000,
respectively, resulting from disqualifying dispositions by officers and
employees of common stock of the Company acquired through the exercise of stock
options.
11
12
9. STOCK OPTION PLAN AND EMPLOYEE STOCK PURCHASE PLAN.
Under its Stock Option Plan, the Company may grant employees,
contractors, and non-employee members of the Board of Directors incentive or
non-qualified stock options to purchase an aggregate of up to 4,000,000 shares
of its Common Stock. Optionees, option prices, option amounts, grant dates and
vesting are established by the Compensation Committee of the Board of Directors.
The option prices may not be less than 85% of the fair market value of the stock
at the time the option is granted. Stock options granted to date generally
become exercisable over a pro rata period of four years and have a maximum term
of ten years measured from the grant date.
The following summarizes stock option activity for the years ended
December 31, 1995, 1996 and 1997:
Weighted
Average
Exercise
Incentive Non-qualified Price
Stock Options Stock Options Per Share
------------- ------------- ----------
Outstanding at January 1, 1995 1,088,924 115,552 $ 4.13
Granted 412,180 177,740 $ 12.21
Exercised (187,664) (5,082) $ 2.77
Canceled (121,166) (11,584) $ 7.16
--------- ----------
Outstanding at December 31, 1995 1,192,274 276,626 $ 7.31
Granted 434,324 106,640 $ 16.58
Exercised (193,054) (56,338) $ 4.20
Canceled (306,774) (5,218) $ 14.07
--------- ----------
Outstanding at December 31, 1996 1,126,770 321,710 $ 10.05
Granted 409,968 161,032 $ 20.46
Exercised (335,358) (67,201) $ 5.77
Canceled (405,573) (29,392) $ 14.14
--------- ----------
Outstanding at December 31, 1997 795,807 386,149 $ 15.04
========= ==========
The following summarizes pricing and term information for options
outstanding as of December 31, 1997:
Options Outstanding Options Exercisable
------------------------------------------------------- --------------------------------
Weighted Weighted Weighted
Number Average Average Average
Range of Outstanding at Remaining Exercise Exercisable at Exercise
Exercise Prices December 31, 1997 Contractual Life Price December 31, 1997 Price
--------------- ----------------- ---------------- -------- ----------------- ---------
$0.35 to $7.25 244,190 5.5 years $ 4.32 232,837 $ 4.22
7.75 to 15.50 239,830 8.3 years 12.26 70,149 10.73
15.75 to 17.375 245,436 8.2 years 16.30 102,526 16.27
17.5625 to 22.50 184,500 9.2 years 19.92 61,083 19.18
22.75 to 24.75 268,000 10.0 years 22.77 -- 0.00
---------------- --------- ---------- ------ ------- -------
$0.35 to $24.75 1,181,956 8.2 years $15.04 466,595 $ 9.81
================ ========= ========== ====== ======= =======
The Employee Stock Purchase Plan allows eligible employees to purchase
Common Stock of the Company, through payroll deductions, at 85% of the lower of
the market price on the first day or the last day of the semi-annual purchase
period. Eligible employees may contribute up to 10% of their base earnings
toward the purchase of the stock. During 1995, 1996 and 1997, shares issued
under the plan were 19,862, 12,806 and 13,552, respectively.
12
13
The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its Stock Option Plan and Employee
Stock Purchase Plan. The Company has adopted the disclosure only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." (SFAS No. 123). Accordingly, no compensation cost has been
recognized for its stock option and purchase plans. The estimated fair value of
options granted during 1995, 1996 and 1997 pursuant to SFAS No. 123 was
approximately $3,533,000, $4,268,000 and $5,530,000, respectively, and the
estimated fair value of stock purchased under the Company's Employee Stock
Purchase Plan was approximately $41,000, $51,000 and $60,000, respectively. Had
compensation cost for the Company's Stock Option Plan and its Employee Stock
Purchase Plan been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of SFAS No. 123, the
Company's pro forma net income would have been $4,163,000, $4,850,000 and
$7,368,000 and pro forma earnings per share would have been $0.40, $0.45 and
$0.68 for 1995, 1996 and 1997, respectively. Because the SFAS No. 123 method of
accounting has not been applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years.
The fair value of options granted under the Company's Stock Option Plan during
1995, 1996 and 1997 was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used: (i)
no dividend yield in 1995, 1996 or 1997, (ii) expected volatility of
approximately 47% in 1995 and 1996, and 48% in 1997 (iii) risk-free interest
rate of approximately 6.1% in 1995, 6.3% in 1996, and 6.2% in 1997, and (iv)
expected lives of the options of approximately 5 years in 1995, 1996 and 1997.
Pro forma compensation cost of shares purchased under the Employee Stock
Purchase Plan is measured based on the discount from market value.
10. UNAUDITED QUARTERLY RESULTS.
The following table presents unaudited quarterly financial information
for each of the eight quarters ended December 31, 1997. In the opinion of
management, the quarterly information contains all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation thereof. The
operating results for any quarter are not necessarily indicative of the results
for any future period.
(Unaudited)
(in thousands, except per share data)
Quarter Ended
--------------------------------------------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31,
1996 1996 1996 1996 1997 1997 1997 1997
------- ------- ------- ------- ------- ------- ------- -------
Revenues $18,902 $21,438 $23,303 $24,545 $23,570 $26,410 $28,854 $29,015
Cost of services 13,129 14,919 16,244 16,939 16,435 18,447 20,176 19,690
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 5,773 6,519 7,059 7,606 7,135 7,963 8,678 9,325
Operating expenses 4,070 4,332 4,554 4,743 4,661 5,090 5,449 5,514
------- ------- ------- ------- ------- ------- ------- -------
Operating income 1,703 2,187 2,505 2,863 2,474 2,873 3,229 3,811
Acquisition costs 401 -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Income before interest and
income taxes 1,302 2,187 2,505 2,863 2,474 2,873 3,229 3,811
Interest income 113 127 130 179 155 203 227 248
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes 1,415 2,314 2,635 3,042 2,629 3,076 3,456 4,059
Provision for income taxes 557 944 1,062 1,237 999 1,153 1,293 1,509
------- ------- ------- ------- ------- ------- ------- -------
Net income $ 858 $ 1,370 $ 1,573 $ 1,805 $ 1,630 $ 1,923 $ 2,163 $ 2,550
======= ======= ======= ======= ======= ======= ======= =======
Basic earnings per share $ 0.08 $ 0.13 $ 0.15 $ 0.18 $ 0.16 $ 0.18 $ 0.20 $ 0.24
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of
common shares outstanding 10,114 10,158 10,254 10,301 10,372 10,548 10,626 10,696
======= ======= ======= ======= ======= ======= ======= =======
Diluted earnings per share $ 0.08 $ 0.13 $ 0.14 $ 0.17 $ 0.15 $ 0.18 $ 0.20 $ 0.23
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of
common and common
equivalent shares outstanding 10,856 10,920 10,898 10,858 10,860 10,956 11,092 11,163
======= ======= ======= ======= ======= ======= ======= =======
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11. ACQUISITIONS.
On January 31, 1994, the Company acquired all of the outstanding shares
of the capital stock of 1st Choice Personnel, Inc. ("1st Choice"), a California
corporation, which specialized in providing employees on temporary assignments
to the mortgage banking and financial services industries. 1st Choice formed the
core of the Company's second operating division: Finance Support, which has been
renamed to Healthcare Financial Staffing. This acquisition has been accounted
for using the purchase method of accounting. Consideration for the stock
purchase consisted solely of $513,000 in cash. Effective May 17, 1995, the
Company dissolved 1st Choice Personnel, Inc. as a separate subsidiary and
continued its operations as a division of the Company.
On November 29, 1994, the Company formed Finance Support, Inc. ("FSI"),
a Delaware corporation and wholly owned subsidiary of the Company. On December
5, 1994, FSI acquired substantially all of the assets of Sklar Resource Group,
Inc. ("SRG"), a firm that provided professional personnel for temporary credit
and collection assignments. The SRG offices and operations acquired were added
to the Company's Finance Support division, which was subsequently renamed the
Healthcare Financial Staffing division. This acquisition has been accounted for
using the purchase method of accounting. Consideration for the purchase
consisted of $738,000 in cash. Effective January 1, 1997, FSI was merged with
and into ARI in accordance with the corporate reorganization (see Note 1).
On March 27, 1996, the Company issued 343,158 shares of its common
stock for all of the outstanding common stock of EnviroStaff, Inc. ("ESI"), 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 ESI. Revenues, net income and diluted earnings per share for the
individual entities are as follows:
On Assignment EnviroStaff Combined
------------- ----------- --------
Three Months Ended
March 31, 1996
Revenues $ 16,379,000 $ 2,523,000 $ 18,902,000
Net income (loss) $ 1,086,000 $ (228,000) $ 858,000
Diluted earnings (loss) per share $ 0.10 $ (0.02) $ 0.08
Year Ended
December 31, 1995
Revenues $ 62,042,000 $ 10,575,000 $ 72,617,000
Net income $ 4,330,000 $ 11,000 $ 4,341,000
Diluted earnings per share $ 0.41 $ 0.00 $ 0.41
Year Ended
December 31, 1994
Revenues $ 48,402,000 $ 5,215,000 $ 53,617,000
Net income $ 3,348,000 $ 133,000 $ 3,481,000
Diluted earnings per share $ 0.33 $ 0.01 $ 0.34
Acquisition costs of approximately $401,000 related to the acquisition of ESI
were charged to expense during the three-month period ended March 31, 1996. The
after-tax impact of these expenses on diluted earnings per share was $0.02 for
the three-month period ended March 31, 1996. Acquisition costs include legal,
accounting, financial advisory services, and other costs of the acquisition.
Effective January 1, 1997, ARI became a wholly owned subsidiary of ESI in
accordance with the corporate reorganization (see Note 1).
14
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT PAGE
1. Financial Statements:
Report of Independent Auditors 2
Consolidated Balance Sheets at December 31, 1996 and 1997 3
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1996 and 1997 4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1995, 1996 and 1997 5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997 6
Notes to Consolidated Financial Statements 7
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts 20
Schedules other than those referred to above have been omitted
because they are not applicable or not required under the
instructions contained in Regulation S-X or because the
information is included elsewhere in the financial statements
or notes thereto.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1997.
15
16
(c) EXHIBITS
NUMBER DESCRIPTION
------ -----------
2.1 (1) Agreement and Plan of Reorganization dated as of
March 27, 1996 by and among the Company, ESI
Acquisition Corporation, EnviroStaff, Inc. (ESI) and
the stockholders of ESI listed therein.
3.1 (2) Amended and Restated Certificate of Incorporation of
the Company.
3.2 (3) Amended and Restated Bylaws of the Company.
4.1 (4) Warrant Purchase Agreement dated March 28, 1991, by
and between the Company and Silicon Valley Bank;
and Warrant to Purchase 15,000 Shares of Common Stock
of the Company dated March 28, 1991.
4.2 (4) Specimen Common Stock Certificate.
10.1 (4) Form of Indemnification Agreement.
10.2 (5) Restated 1987 Stock Option Plan, as amended.
10.3 (6) 1992 Employee Stock Purchase Plan.
10.9 (7) Office lease dated December 7, 1993, by and between
the Company and Malibu Canyon Office Partners, LP
10.10 (8) Form of Loan Agreement between the Company and
executive officers of the Company, including form of
Demand Note as Exhibit A thereto.
10.12 (8) Consulting Agreement dated January 25, 1995 between
the Company and Karen Brenner.
10.13 (8) Settlement Agreement and General Release by and
between the Company and Tadeusz Czyzewski dated March
24, 1995.
10.14 (8) Offer letter agreement by and between the Company and
Ronald W. Rudolph dated March 27, 1995.
11.1 (9) Statement regarding computation of earnings per
share.
21.1 (9) Subsidiaries of the Registrant.
24.1 Consent of Deloitte & Touche LLP.
25.1 (9) Power of Attorney.
- ---------
(1) Incorporated by reference from an exhibit filed with the Company's
Current Report on Form 8-K (File No. 0-20540) filed with the Securities
and Exchange Commission on April 10, 1996.
(2) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 30, 1993.
(3) Incorporated by reference from an exhibit filed with the Company's
Current Report on Form 8-K (File No. 0-20540) filed with the Securities
and Exchange Commission on February 4, 1998.
16
17
(4) Incorporated by reference from an exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33- 50646) declared
effective by the Securities and Exchange Commission on September 21,
1992.
(5) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 28, 1997.
(6) Incorporated by reference from an exhibit filed with the Company's
Registration Statement on Form S-8 (File No. 33-57078) filed with the
Securities and Exchange Commission on January 19, 1993.
(7) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 24, 1994.
(8) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 31, 1995.
(9) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 31, 1998.
17
18
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Calabasas, California on this 27th day of April, 1998.
ON ASSIGNMENT, INC.
By: /s/ H. Tom Buelter
------------------------------------
H. Tom Buelter
Chairman of the Board and
Chief Executive Officer
18
19
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ H. Tom Buelter Chairman of the Board and April 27, 1998
- ----------------------------- Chief Executive Officer (Principal
H. Tom Buelter Executive Officer)
/s/ Ronald W. Rudolph Senior Vice President, Finance and Operations April 27, 1998
- ----------------------------- Support, and Chief Financial Officer (Principal
Ronald W. Rudolph Financial and Accounting Officer)
* Director April 27, 1998
- -----------------------------
Karen Brenner
* Director April 27, 1998
- -----------------------------
Jonathan S. Holman
* Director April 27, 1998
- -----------------------------
Jeremy M. Jones
* Director April 27, 1998
- -----------------------------
William E. Brock
* /s/ H. Tom Buelter
--------------------------------
H. Tom Buelter, Attorney in Fact
19
20
ON ASSIGNMENT, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
------------ ---------- -------------- ---------- ------------
Balance at Charged to Charged to Balance at
beginning of costs and other accounts Deductions end of period
Description period expenses
- ---------------------------------- ------------ ---------- -------------- ---------- ------------
Year ended December 31, 1995
Allowance for doubtful accounts $ 160,000 345,000 -- (70,000) $ 435,000
Year ended December 31, 1996
Allowance for doubtful accounts $ 435,000 504,000 -- (386,000) $ 553,000
Year ended December 31, 1997
Allowance for doubtful accounts $ 553,000 451,000 -- (270,000) $ 734,000
20
21
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
2.1 (1) Agreement and Plan of Reorganization dated as of March 27, 1996 by and among the Company, ESI --
Acquisition Corporation, EnviroStaff, Inc. (ESI) and the stockholders of ESI listed therein.
3.1 (2) Amended and Restated Certificate of Incorporation of the Company. --
3.2 (3) Amended and Restated Bylaws of the Company. --
4.1 (4) Warrant Purchase Agreement dated March 28, 1991, by and between the Company and Silicon Valley --
Bank; and Warrant to Purchase 15,000 Shares of Common Stock of the Company dated March 28, 1991.
4.2 (4) Specimen Common Stock Certificate. --
10.1 (4) Form of Indemnification Agreement. --
10.2 (5) Restated 1987 Stock Option Plan, as amended. --
10.3 (6) 1992 Employee Stock Purchase Plan. --
10.9 (7) Office lease dated December 7, 1993, by and between the Company and Malibu Canyon Office --
Partners, LP
10.10 (8) Form of Loan Agreement between the Company and executive officers of the Company, including form --
of Demand Note as Exhibit A thereto.
10.12 (8) Consulting Agreement dated January 25, 1995, between the Company and Karen Brenner. --
10.13 (8) Settlement Agreement and General Release by and between the Company and Tadeusz Czyzewski dated --
March 24, 1995.
10.14 (8) Offer letter agreement by and between the Company and Ronald W. Rudolph dated March 27, 1995. --
11.1 (9) Statement regarding computation of earnings per share. --
21.1 (9) Subsidiaries of the Registrant. --
24.1 Consent of Deloitte & Touche LLP. 23
25.1 (9) Power of Attorney. --
---------
(1) Incorporated by reference from an exhibit filed with the Company's
Current Report on Form 8-K (File No. 0-20540) filed with the Securities
and Exchange Commission on April 10, 1996.
(2) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 30, 1993.
(3) Incorporated by reference from an exhibit filed with the Company's
Current Report on Form 8-K (File No. 0-20540) filed with the Securities
and Exchange Commission on February 4, 1998.
21
22
(4) Incorporated by reference from an exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33- 50646) declared
effective by the Securities and Exchange Commission on September 21,
1992.
(5) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 28, 1997.
(6) Incorporated by reference from an exhibit filed with the Company's
Registration Statement on Form S-8 (File No. 33- 57078) filed with the
Securities and Exchange Commission on January 19, 1993.
(7) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 24, 1994.
(8) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 31, 1995.
(9) Incorporated by reference from an exhibit filed with the Company's
Annual Report on Form 10-K (File No. 0-20540) filed with the Securities
and Exchange Commission on March 31, 1998.
22
23
Exhibit 24.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statements
No. 33-57078 and No. 333-38849 of On Assignment, Inc. and subsidiaries on Form
S-8 of our report dated January 23, 1998, with respect to the consolidated
financial statements and financial statements schedule of On Assignment, Inc.
appearing in this Annual Report on Form 10-K/A of On Assignment, Inc. for the
year ended December 31, 1997.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
April 27, 1998
Los Angeles, California
23