1
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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-21533
TEAM AMERICA CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-1209872
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 EAST WILSON BRIDGE ROAD 43085
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (614) 848-3995
(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 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
--- ---
THE NUMBER OF SHARES OF REGISTRANT'S ONLY CLASS OF COMMON STOCK OUTSTANDING ON
JULY 31, 1997 WAS 3,375,703
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
JUNE 30, 1997
INDEX
PART I. FINANCIAL INFORMATION
PAGE
NO.
----
Item 1. Financial Statements:
Consolidated Statements of Income -- Three-month periods
ended June 30, 1997 and 1996 (unaudited) - 3 -
Consolidated Statements of Income -- Six-month periods
ended June 30, 1997 and 1996 (unaudited) - 4 -
Consolidated Balance Sheets -- June 30, 1997 (unaudited)
and December 31, 1996 - 5 -
Consolidated Statements of Cash Flows -- Six-month periods
ended June 30, 1997 and 1996 (unaudited) - 7 -
Consolidated Statement of Changes in Shareholders' Equity-
Six-month period ended June 30, 1997 (unaudited) - 8 -
Notes to Consolidated Financial Statements - 9 -
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - 10 -
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders - 16 -
Item 6. Exhibits and Reports on Form 8-K - 16 -
Signature - 17 -
Exhibit Index - 18 -
Exhibits - 19 -
- ----------
Note: Items 1 through 3 and 5 of Part II are omitted because they
are not applicable.
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PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
1997 1996
(unaudited)
REVENUES $31,812,348 $23,441,256
DIRECT COSTS:
Salaries and wages 27,243,193 19,859,168
Payroll taxes, workers' compensation premiums,
employee benefits and other 2,756,449 2,199,527
----------- -----------
Total direct costs 29,999,642 22,058,695
----------- -----------
Gross profit 1,812,706 1,382,561
EXPENSES:
Administrative salaries, wages and employment taxes 836,795 627,521
Other general and administrative expenses 395,610 328,372
Advertising 107,867 85,397
Depreciation and amortization 51,024 19,623
----------- -----------
Total operating expenses 1,391,296 1,060,913
----------- -----------
Income from operations 421,410 321,648
OTHER INCOME 140,622 5,758
----------- -----------
Income before income taxes 562,032 327,406
INCOME TAX EXPENSE 230,192 147,185
----------- -----------
Net income $ 331,840 $ 180,221
=========== ===========
Earnings per share $ 0.10 $ 0.09
=========== ===========
Weighted average shares outstanding 3,375,703 2,087,848
=========== ===========
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996
(unaudited)
REVENUES $57,354,716 $44,902,660
DIRECT COSTS:
Salaries and wages 48,840,893 37,887,367
Payroll taxes, workers' compensation premiums,
employee benefits and other 5,301,928 4,562,402
----------- -----------
Total direct costs 54,142,821 42,449,769
----------- -----------
Gross profit 3,211,895 2,452,891
EXPENSES:
Administrative salaries, wages and employment taxes 1,560,115 1,254,587
Other general and administrative expenses 749,042 552,385
Advertising 159,619 121,681
Depreciation and amortization 86,702 34,473
----------- -----------
Total operating expenses 2,555,478 1,963,126
----------- -----------
Income from operations 656,417 489,765
OTHER INCOME 291,684 5,758
----------- -----------
Income before income taxes 948,101 495,523
INCOME TAX EXPENSE 384,742 224,520
----------- -----------
Net income $ 563,359 $ 271,003
=========== ===========
Earnings per share $ 0.17 $ 0.13
=========== ===========
Weighted average shares outstanding 3,355,396 2,090,608
=========== ===========
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents:
Cash $ 1,782,682 $ 1,383,023
Temporary cash investments 7,416,838 6,717,497
----------- -----------
Total cash and cash equivalents 9,199,520 8,100,520
Short-term investments 5,784,347 7,499,375
Receivables:
Trade, net 782,581 263,351
Employee advances 108,773 48,487
Unbilled revenues 3,639,252 2,550,854
----------- -----------
Total receivables 4,530,606 2,862,692
Prepaid income taxes 41,205 -
Prepaid expenses 303,400 267,784
Deferred income tax asset 120,000 120,000
----------- -----------
Total current assets 19,979,078 18,850,371
PROPERTY AND EQUIPMENT, NET 606,631 492,335
OTHER ASSETS:
Goodwill and non-compete agreements, net 671,758 -
Cash surrender value of life insurance policies 333,073 259,895
Mandated benefit/security deposits 140,499 129,500
Deferred income tax asset 102,000 102,000
Other assets 65,156 65,155
----------- -----------
Total other assets 1,312,486 556,550
----------- -----------
Total assets $21,898,195 $19,899,256
=========== ===========
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade $ 216,346 $ 254,181
Related parties - 24,768
------------ ------------
Total accounts payable 216,346 278,949
Accrued compensation 3,310,435 2,440,708
Accrued payroll taxes 1,032,045 670,952
Accrued workers' compensation premiums 1,136,593 839,117
Federal and state income taxes payable - 389,275
Other accrued expenses 190,037 265,433
Client deposits 478,254 470,135
Capital lease obligation, current portion 6,388 11,461
------------ ------------
Total current liabilities 6,370 098 5,366,030
CAPITAL LEASE OBLIGATION, net of current portion - -
DEFERRED RENT 112,479 126,125
DEFERRED COMPENSATION LIABILITY 331,743 259,895
------------ ------------
Total liabilities 6,814,320 5,752,050
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock:
Class A, no par value; 500,000 shares authorized; - -
none issued; (aggregate liquidation preference $0)
Class B, no par value; 500,000 shares authorized;
none issued - -
Common Stock, no par value:
Common Stock, 10,000,000 shares authorized
3,478,976 shares issued; 3,375,703 and
3,335,088 shares outstanding, respectively 13,994,661 13,629,005
Excess purchase price (83,935) (83,935)
Retained earnings 1,192,610 629,251
------------ ------------
15,103,336 14,174,321
Less - Treasury stock, 103,273 and 143,888 shares
respectively, at cost (19,461) (27,115)
------------ ------------
Total shareholders' equity 15,083,875 14,147,206
------------ ------------
Total liabilities and shareholders' equity $ 21,898,195 $ 19,899,256
============ ============
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 563,359 $ 271,003
Adjustments to reconcile net income to
net cash provided by (used in) operating activities
Depreciation and amortization 86,702 34,473
Deferred tax expense (benefit) - -
(Increase) decrease in operating assets:
Receivables (1,667,914) (534,999)
Prepaid expenses (76,821) 29,204
Mandated benefit/security deposits (11,000) (26,070)
Other - (23,465)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (62,603) 64,657
Accrued expenses and other payables 1,063,625 446,275
Client deposits 8,119 33,576
Deferred liabilities 58,202 31,731
----------- -----------
Net cash provided by (used in) operating activities (38,331) 326,387
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (189,381) (166,158)
Increases in cash surrender value of life insurance policies (73,178) (44,422)
Decrease in short-term investments 1,715,028 -
AEM Acquisition (289,485) -
----------- -----------
Net cash provided by (used in) investing activities 1,162,984 (210,580)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable - (14,000)
Payments on capital lease obligation (5,073) (4,811)
Purchase of treasury stock - (2,600)
Offering costs incurred (20,580) -
----------- -----------
Net cash used in financing activities (25,653) (21,411)
----------- -----------
Net increase in cash and cash equivalents 1,099,000 94,396
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,100,520 1,938,253
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,199,520 $ 2,032,649
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the period for: Interest $ 713 $ 1,740
=========== ===========
Income Taxes $ 718,000 $ 309,000
=========== ===========
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Common Stock Treasury Stock Excess
------------------------ ---------------------- Purchase Retained
Number Value Number Value Price Earnings Total
--------------------------------------------------------------------------------------------
Balance 3,478,976 $ 13,629,005 143,888 $ (27,115) $ (83,935) $ 629,251 $ 14,147,206
December 31, 1996
AEM Acquisition 386,236 (40,615) 7,654 393,890
Offering Costs (20,580) (20,580)
Net Income 563,359 563,359
--------------------------------------------------------------------------------------------
Balance 3,478,976 $ 13,994,661 103,273 $ (19,461) $ (83,935) $ 1,192,610 $ 15,083,875
============================================================================================
June 30, 1997
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TEAM AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- Unaudited Interim Consolidated Financial Statements
The accompanying interim consolidated financial statements as of June
30, 1997 and for the three-month and six-month periods then ended are unaudited.
However, in the opinion of management these interim statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position, results of operations and cash
flows of TEAM America Corporation.
NOTE 2 -- Accounting Policies
The financial statements should be read in conjunction with the audited
financial statements contained in TEAM America Corporation's Form 10-K Annual
Report for the year ended December 31, 1996. Since December 31, 1996 the
Company, effective April 1, 1997, acquired a PEO business in a transaction
accounted for as a purchase. Intangible assets recorded as a result of the
purchase were covenants not to compete, which are amortized over their stated
life of seven years, and goodwill. Goodwill was recorded as the amount by which
the consideration paid, including the value of stock issued and liabilities
assumed, exceeded the fair market value of assets acquired. Goodwill is being
amortized over a twenty-five year period.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth results of operations for the
three-month and six-month periods ended June 30, 1997 and 1996 expressed as a
percentage of revenues:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenues 100% 100% 100% 100%
Direct Costs:
Salaries and wages 85.6 84.7 85.2 84.4
Payroll taxes, workers' 8.7 9.4 9.2 10.1
compensation premiums,
employee benefits and other
costs
Gross Profit 5.7 5.9 5.6 5.5
Operating Expenses:
Administrative salaries, 2.6 2.7 2.7 2.8
wages and employment taxes
Other general and 1.2 1.4 1.3 1.2
administrative
Advertising 0.3 0.4 0.3 0.3
Depreciation and amortization 0.2 0.1 0.2 0.1
Total Operating Expenses 4.3 4.6 4.5 4.4
Other income (expense), net 0.4 - - 0.5 - -
Income before taxes 1.8 1.4 1.6 1.1
Provision for income taxes 0.7 0.6 0.6 0.5
Net income 1.1 0.8 1.0 0.6
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
REVENUES
Revenues increased $8,371,000 or 36% in the three months ended June 30,
1997 compared to the three months ended June 30, 1996. $4,042,000 of the
increase came from Alternative Employee Management, Inc. which was acquired
April 1, 1997, ("the AEM Acquisition"). Worksite employees, excluding certain
seasonal employees, increased 30 % from 3,149 at June 30, 1996 to 4,089 at June
30, 1997. Without the AEM Acquisition, worksite employees increased by 9% from
June 30, 1996 to June 30, 1997.
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Average annualized wages per worksite employee increased 5.6 % to $26,650 in the
second quarter of 1997 from $25,225 in the second quarter of 1996. The increase
in revenues per employee was the result of continued emphasis on attracting
clients in higher paying industries and full time positions. The average
annualized wage per employee was $27,168 in the fourth quarter of 1996. The
decline in the average annualized wage per employee was due to the AEM
Acquisition as the acquired client base had a higher mix of lower paid
manufacturing and retail businesses.
DIRECT COSTS
Salaries and wages rose 37.2% to $27,243,000 in the three months ended
June 30, 1997 from $19,859,000 in the three months ended June 30, 1996. Payroll
taxes, etc., rose 25.3% to $2,756,000 in the second quarter of 1997 from
$2,199,000 in the second quarter of 1996. The increase in salaries and wages in
1997's second quarter was in line with the increased headcount and the higher
wage client base. Payroll taxes and benefits costs rose only 25.3% as a result
of the Company's risk management efforts and a 20% premium credit dividend from
the State of Ohio workers' compensation fund.
EXPENSES
Administrative salaries expense rose 33.3% to $837,000 for the three
months ended June 30, 1997 from $627,000 for the three months ended June 30,
1996 as the Company continued to add headcount to support the growth of the
Company. Other general and administrative expenses rose 20.5% from the second
quarter of 1996 to the second quarter of 1997 as the result of higher external
expenses related to being a public company and higher facilities costs.
INCOME FROM OPERATIONS
As a result of the 36% increase in revenues, income from operations
increased 31% to $421,000 in the three months ended June 30, 1997 from $321,000
in the three months ended June 30, 1996.
OTHER INCOME
Other income of $141,000 consists principally of interest income and
earnings on short-term investments and temporary cash investments. The
investments represent the cash proceeds from the initial public offering of TEAM
America stock in December, 1996. There were no excess cash investments in the
corresponding second quarter of 1996.
INCOME TAX EXPENSE
Income tax expense rose 56.4% from the second quarter of 1996 to the
second quarter of 1997. The effective tax rate was 41% for the three months
ended June 30, 1997 compared to 45% for the three months ended June 30, 1996.
The effective tax rate for all of calendar 1996 was 42.3%. The lower tax rate in
1997 reflects the tax-exempt investment income in 1997 and the lessened impact
of non-deductible life insurance premiums due to increased pre-tax income in
1997.
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NET INCOME AND EARNINGS PER SHARE
Net income increased $151,000 or 84% from the three months ended June
30, 1996 to the three months ended June 30, 1997 due to the higher revenues and
investment income. Earnings per share in the second quarter of 1997 increased
only 11% over the second quarter of 1996 because average shares outstanding
increased from 2,087,000 in the second quarter of 1996 to 3,376,000 in the
second quarterof 1997, or 61.7%, following the initial public offering of
1,250,000 shares of TEAM America stock in December, 1996. Basic earnings per
share, as calculated in accordance with FASB Statement No. 128, is the same as
earnings per share presented in the accompanying financial statements.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES
Revenues increased $12,452,000 or 27.7% in the six months ended June
30, 1997 compared to the six months ended June 30, 1996. $4,042,000 of the
increase came from the AEM Acquisition. Worksite employees, excluding certain
seasonal employees, increased 30% from 3,149 at June 30, 1996 to 4,089 at June
30, 1997, primarily as the result of the addition of 659 worksite employees due
to the AEM Acquisition. Average annualized wages per worksite employee increased
9.3% to $26,625 in the first half of 1997 from $24,350 in the first half of
1996. The increase in revenues per employee was the result of continued emphasis
on attracting clients in higher paying industries and full time positions. The
average annualized payroll per employee was $27,168 in the fourth quarter of
1996. The decline from the fourth quarter of 1996 is due to the addition of AEM
which has a lower paid client base.
DIRECT COSTS
Salaries and wages rose 28.9% to $48,841,000 in the six months ended
June 30, 1997 from $37,887,000 in the six months ended June 30, 1996. Payroll
taxes, etc., rose only 16.2% to $5,302,000 in the first half of 1997 from
$4,562,000 in the first half of 1996. The increase in salaries and wages in the
first six months of 1997 was in line with the increased headcount. Payroll taxes
and benefits costs rose only 16.2% as a result of the Company's risk management
efforts and a 20% premium credit dividend from the State of Ohio worker's
compensation fund.
EXPENSES
Administrative salaries expense rose 24.4% to $1,560,000 for the six
months ended June 30, 1997 from $1,255,000 for the six months ended June 30,
1996 as the Company continued to add headcount to support the growth of the
Company. Other general and administrative expenses rose 35.6% from the first
half of 1996 to the first half of 1997 as the result of higher external expenses
related to being a public company and higher facilities costs.
INCOME FROM OPERATIONS
As a result of the 28% increase in revenues, income from operations
increased 34% to $656,000 in the six months ended June 30, 1997 from $490,000 in
the six months ended June 30, 1996.
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OTHER INCOME
Other income of $292,000 consists principally of interest income and
earnings on short-term investments and temporary cash investments. The
investments represent the cash proceeds from the initial public offering of TEAM
America stock in December, 1996. There were no excess cash investments in the
corresponding first half of 1996.
INCOME TAX EXPENSE
Income tax expense rose 71.4% from the first half of 1996 to the first
half of 1997. The effective tax rate was 40.5% for the six months ended June 30,
1997 compared to 45.3% for the six months ended June 30, 1996. The effective tax
rate for all of calendar 1996 was 42.3%. The lower tax rate in 1997 reflects the
tax-exempt investment income in 1997 and the lessened impact of non-deductible
life insurance premiums due to increased pre-tax income in 1997.
NET INCOME AND EARNINGS PER SHARE
Net income increased $292,000 or 108% from the six months ended June
30, 1996 to the six months ended June 30, 1997 due to the higher revenues and
investment income. Earnings per share in the first half of 1997 increased only
31% over the first half of 1996 because average shares outstanding increased
from 2,091,000 in 1996's first six months to 3,355,000 in 1997's first six
months, or 60.5%, following the initial public offering of 1,250,000 shares of
TEAM America stock in December, 1996. Basic earnings per share, as calculated in
accordance with FASB Statement No. 128, is the same as earnings per share
presented in the accompanying financial statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997 and 1996, the Company had a working capital surplus
(deficit) in the amounts of $13,609,000 and $(6,000), respectively. At December
31, 1996, the working capital surplus was $13,484,000.
The Company's primary source of liquidity and capital resources has
historically been its internal cash flow from operations. In addition, in
December 1996, net cash of $13,314,000 was provided from an initial public
offering of Company stock. Net cash provided by (used in) operating activities
was $(38,000) and $326,000 for the six month periods ended June 30, 1997 and
1996, respectively.
The Company recognizes as revenue and as unbilled receivables, on an
accrual basis, any such amounts which relate to services performed by worksite
employees as of the end of each accounting period which have not yet been billed
to the client because of timing differences between the day the Company's
accounting period ends and the billing dates for client payroll periods that
include the day the Company's accounting period ends. The amount of unbilled
receivables, as well as accrued liabilities and client deposits, have increased
with the general growth of the Company.
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For work performed prior to the termination of a client agreement, the
Company may be obligated, as an employer, to pay the gross salaries and wages of
the client's worksite employees and the related employment taxes and workers'
compensation costs, whether or not the Company's client pays the Company on a
timely basis or at all. The Company, however, historically has not incurred
significant bad debt expenses because the Company generally collects from its
clients all revenues with respect to each payroll period in advance of the
Company's payment of the direct costs associated therewith. The Company attempts
to minimize its credit risk by investigating and monitoring the credit history
and financial strength of its clients and by generally requiring payments to be
made by wire transfer, immediately available funds or ACH transfer. With respect
to ACH transfers, the Company is obligated to pay the client's worksite
employees if there are insufficient funds in the client's bank account on the
payroll date. The Company's policy, however, is only to permit clients with a
proven credit history with the Company to pay by ACH transfer. In addition, in
the rare event of nonpayment by a client, the Company has the ability to
terminate immediately its contract with the client. The Company also protects
itself by obtaining unconditional personal guaranties from the owners of a
client and/or a cash security deposit, bank letter of credit or pledge of
certificates of deposit. As of June 30, 1997 and 1996, the Company held cash
security deposits in the amounts of $478,000 and $461,000, respectively.
Additional sources of funds to the Company are advance payments of
employment taxes and insurance premiums which the Company holds until they are
due and payable to the respective taxing authorities and insurance providers.
Net cash provided by (used in) investing activities was $1,163,000 and
$(211,000) for the six month periods ended June 30, 1997 and 1996, respectively.
The principal use of cash from investing activities was the purchase of
additional computer equipment and software to support the growth of the
business. Also in March and April, 1997 $289,485 was paid for the acquisition of
a PEO located in Dover, Ohio. 40,615 shares of Common Stock with a value of
$394,000 were also issued from treasury stock to the shareholders of AEM as part
of the purchase price. Fifty percent of the shares of Company stock has been
deposited in an escrow account at a bank. The shares will be released from
escrow in 1998, 1999 and 2000 subject to the satisfaction of covenants
pertaining to retention of worksite employees and fees.
The principal source of cash provided by investing activities was the
maturation of short-term investment instruments which were reinvested in
temporary cash investments at June 30, 1997.
Financing activities are not material as the Company has no debt or
significant capital leases.
Presently, the Company has no material commitments for capital
expenditures. Primary new uses of cash may include acquisitions, the size and
timing of which cannot be predicted.
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The Company has executed a $500,000 promissory note to a bank which, at
the bank's sole discretion, would allow the Company to obtain loans up to such
amount without negotiating or executing any further agreements. Borrowings under
this credit facility are payable upon demand and bear interest at the bank's
prime rate (8.25% at June 30, 1997). As of June 30, 1997 and 1996, no borrowings
were outstanding under this credit facility. In July, 1997 this credit facility
was replaced by a $5,000,000 revolving credit agreement with a bank. The credit
agreement provides for borrowings at the prime rate or LIBOR plus 2%. The credit
agreement requires the Company to maintain certain financial standards as to net
worth, current ratio and cash position and also requires the bank's consent to
acquisitions.
The Company believes that the net proceeds from the sale of the common
shares in December 1996 which were invested in marketable securities and
certificates of deposit, together with existing cash, cash equivalents and
internally generated funds will be sufficient to meet the Company's presently
anticipated working capital and capital expenditure requirements both for the
next twelve months and for the foreseeable future thereafter. To the extent that
the Company needs additional capital resources, the Company believes that it
will have access to both bank financing and capital leasing for additional
facilities and equipment. However, there can be no assurance that additional
financing will be available on terms favorable to the Company or at all.
The Company did not pay dividends in 1996, or thus far in 1997, and
does not expect to pay a dividend in the foreseeable future.
The Company believes the effects of inflation have not had a
significant impact on its results of operations or financial condition.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-Q including, without
limitation, statements containing the words "believes", "anticipates",
"intends", "expects", and words of similar import, constitute "forward-looking
statements" within the meaining of the Private Securities Litigation Reform Act.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company or the PEO industry to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
(i) potential for unfavorable interpretation of government regulations relating
to labor, tax, insurance and employment matters; (ii) changes in the laws
regulating collection and payment of payroll taxes and employee benefits,
including 401(k) plans; (iii) potential loss of qualified status for the
Company's 401(k) plan as a result of request by Internal Revenue Service ("IRS")
for Tax Advice Memorandum ("TAM"); (iv) general market conditions, including
demand for the Company's products and services, competition and price levels or
adverse economic developments in Ohio where a substantial portion of the
Company's business is concentrated; (v) the Company's ability to offer its
services in states other than Ohio where it has little or no market penetration;
(vi) higher than expected workers' compensation claims, increases in rates, or
changes in applicable laws or regulations; (vii) the level and quality of
acquisition opportunities available to the Company and the ability to properly
manage growth when acquisitions are made; (viii) short-term nature of client
agreements and the financial condition of the Company's clients; (ix) liability
for employment practices of clients; and (x) additional regulatory requirements
affecting the Company.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on June 11,
1997. At the close of business on the record date of May 9, 1997, 3,375,703
common shares were outstanding and entitled to vote at the meeting. At the
Annual Meeting, 3,157,196 or 93.5% of the outstanding common shares entitled to
vote were represented in person or by proxy.
The Board of Directors is divided into two classes. Three directors
positions, to serve for a term of two years, were up for election. Directors
elected at the Annual Meeting were:
Paul M. Cash
William W. Johnston
M. R. Swartz
The voting for each director was as follows:
For Withheld
Paul M. Cash 3,140,146 17,050
William W. Johnston 3,139,146 18,050
M. R. Swartz 3,140,146 17,050
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
None
(b) Exhibits
10 Revolving Credit Agreement and Commercial Note Addendum dated
July 18, 1997
11 Computation of Earnings per Common and common Equivalent
Share
27 Financial Data Schedule
16
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SIGNATURE
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 hereunto duly authorized.
TEAM AMERICA CORPORATION
/s/MICHAEL R. GOODRICH
--------------------------------------
Chief Financial Officer and Authorized
Signing Officer
August 8 , 1997
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EXHIBIT INDEX
Exhibit Number Description Page #
- -------------- ----------- ------
10 Revolving Credit and Commercial Note - 19 -
Addendum dated July 18, 1997
11 Computation of Earnings per Common and
Common Equivalent Share - 33 -
27 Financial Data Schedule - - *
* In SEC EDGAR-filed document only
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