Form 10-Q

10-Q 1 d10q.htm FORM 10-Q Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

¨	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: 0-24484

MPS GROUP, INC.

(Exact name of registrant as specified in its charter)


Florida		59-3116655
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 Independent Drive, Jacksonville, FL		32202
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number including area code): (904) 360-2000

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 ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s class of common stock as of April 28, 2006:

103,175,388 shares of $0.01 par value common stock

MPS Group, Inc. and Subsidiaries

Index


Part I	Financial Information

Item 1	Consolidated Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2006 and December 31, 2005	3
	Unaudited Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2006 and 2005	4
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2006	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2006 and 2005	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4	Controls and Procedures	22

Part II	Other Information

Item 1A	Risk Factors	23

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6	Exhibits	23

	Signatures	24

Part I. Financial Information

Item 1.

Financial Statements

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)


(dollar amounts in thousands except share amounts)	March 31, 2006			December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	144,401		$	142,951
Accounts receivable, net of allowance of $12,213 and $11,872, respectively		249,808			244,506
Prepaid expenses		8,313			7,131
Deferred income taxes		4,264			5,749
Other		18,522			16,091

Total current assets		425,308			416,428
Furniture, equipment, and leasehold improvements, net		25,291			24,542
Goodwill, net		559,644			545,363
Deferred income taxes		22,958			27,277
Other assets, net		15,738			14,396

Total assets	$	1,048,939		$	1,028,006

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	68,414		$	65,869
Accrued payroll and related taxes		61,511			58,711
Income taxes payable		5,731			11,989

Total current liabilities		135,656			136,569
Other		16,285			15,397

Total liabilities		151,941			151,966

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares issued		—			—
Common stock, $.01 par value; 400,000,000 shares authorized; 112,454,094 and 108,434,541 shares issued, respectively		1,125			1,112
Additional contributed capital		699,832			687,661
Retained earnings		273,573			257,563
Deferred stock compensation		—			(4,630	)
Accumulated other comprehensive income		13,756			11,560
Treasury stock, at cost (9,771,772 and 8,834,114 shares, respectively)		(91,288	)		(77,226	)

Total stockholders’ equity		896,998			876,040

Total liabilities and stockholders’ equity	$	1,048,939		$	1,028,006

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended
(dollar amounts in thousands except per share amounts)	March 31, 2006		March 31, 2005
Revenue	$	439,309	$	407,709
Cost of revenue		322,193		305,775

Gross profit		117,116		101,934

Operating expenses:
General and administrative		89,395		83,218
Depreciation and intangibles amortization		3,474		4,117

Total operating expenses		92,869		87,335

Income from operations		24,247		14,599
Other income, net		1,576		602

Income before provision for income taxes		25,823		15,201
Provision for income taxes		9,813		5,852

Net income	$	16,010	$	9,349

Basic net income per common share	$	0.16	$	0.09

Average common shares outstanding, basic		101,722		102,948

Diluted net income per common share	$	0.15	$	0.09

Average common shares outstanding, diluted		104,764		107,074

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)


	Common Stock					Additional Contributed Capital			Retained Earnings		Accumulated Other Comprehensive Income		Deferred Stock Compensation			Treasury Stock			Total
(dollar amounts in thousands except common share amounts)	Shares		Amount			Additional Contributed Capital			Retained Earnings		Accumulated Other Comprehensive Income		Deferred Stock Compensation			Treasury Stock			Total
Balance, December 31, 2005	111,169,227		$	1,112		$	687,661		$	257,563	$	11,560	$	(4,630	)	$	(77,226	)	$	876,040
Comprehensive Income:
Net income	—			—			—			16,010		—		—			—
Foreign currency translation	—			—			—			—		2,196		—			—
Total comprehensive income	—			—			—			—		—		—			—			18,206

Reclassification of Deferred Stock Compensation upon adoption of SFAS 123R	—			—			(4,630	)		—		—		4,630			—			—
Excess tax benefit from share-based awards	—			—			7,589			—		—		—			—			7,589
Exercise of stock options	1,171,039			12			7,967			—		—		—			—			7,979
Purchase of treasury stock	—			—			—			—		—		—			(6,503	)		(6,503	)
Settlement of share-based awards	—			—			—			—		—		—			(7,559	)		(7,559	)
Issuance of restricted stock	144,828			1			(1	)		—		—		—			—			—
Cancellation of restricted stock	(31,000	)		(0	)		0			—		—		—			—			0
Share-based plans expense	—			—			1,246			—		—		—			—			1,246

Balance, March 31, 2006	112,454,094		$	1,125		$	699,832		$	273,573	$	13,756	$	—		$	(91,288	)	$	896,998

See accompanying notes to consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three months ended March 31,
(dollar amounts in thousands)	2006			2005
Cash flows from operating activities:
Net income	$	16,010		$	9,349
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		5,804			4,205
Excess tax benefit from share-based awards		(7,583	)		—
Share-based plans expense		1,246			888
Depreciation and intangibles amortization		3,473			4,117
Changes in certain assets and liabilities, net of acquisitions:
Accounts receivable		(1,045	)		(23,762	)
Prepaid expenses and other assets		(1,044	)		671
Accounts payable and accrued expenses		(6,026	)		3,874
Accrued payroll and related taxes		9,461			11,673
Other, net		(1,874	)		(583	)

Net cash provided by operating activities		18,422			10,432

Cash flows from investing activities:
Sale of assets		—			3,674
Purchase of furniture, equipment and leasehold improvements, net of disposals		(3,171	)		(3,396	)
Purchase of businesses, including additional consideration on acquisitions, net of cash acquired		(15,990	)		(540	)

Net cash used in investing activities		(19,161	)		(262	)

Cash flows from financing activities:
Excess tax benefit from share-based awards		7,583			—
Settlement of share-based awards		(7,559	)		—
Repurchases of common stock		(6,503	)		—
Discount realized on employee stock purchase plan		—			(89	)
Proceeds from stock options exercised		7,979			768
Repayments on indebtedness		—			(1,283	)

Net cash provided by (used in) financing activities		1,500			(604	)

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