10-Q

10-Q 1 d10q.htm 10-Q 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 June 30, 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 July 28, 2006:

103,570,719 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 June 30, 2006 and December 31, 2005	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2006 and 2005	4
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Six Months ended June 30, 2006	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 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	23

Item 4	Controls and Procedures	23

Part II	Other Information

Item 1A	Risk Factors	24

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 4	Submission of Matters to a Vote of Security Holders	24

Item 6	Exhibits	25

	Signatures	26

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)	June 30, 2006			December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	130,149		$	142,951
Accounts receivable, net of allowance of $13,733 and $11,872, respectively		281,715			244,506
Prepaid expenses		10,491			7,131
Deferred income taxes		3,097			5,749
Other		21,168			16,091

Total current assets		446,620			416,428
Furniture, equipment, and leasehold improvements, net		27,267			24,542
Goodwill, net		582,561			545,363
Deferred income taxes		18,239			27,277
Other assets, net		17,691			14,396

Total assets	$	1,092,378		$	1,028,006

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	82,435		$	65,869
Accrued payroll and related taxes		66,558			58,711
Income taxes payable		4,154			11,989

Total current liabilities		153,147			136,569
Other		16,595			15,397

Total liabilities		169,742			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; 114,600,791 and 111,169,227 shares issued, respectively		1,146			1,112
Additional contributed capital		710,563			687,661
Retained earnings		292,581			257,563
Deferred stock compensation		—			(4,630	)
Accumulated other comprehensive income		28,348			11,560
Treasury stock, at cost (11,045,072 and 8,834,114 shares, respectively)		(110,002	)		(77,226	)

Total stockholders’ equity		922,636			876,040

Total liabilities and stockholders’ equity	$	1,092,378		$	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				Six Months Ended
(dollar amounts in thousands except per share amounts)	June 30, 2006		June 30, 2005		June 30, 2006		June 30, 2005
Revenue	$	468,425	$	424,836	$	907,734	$	832,545
Cost of revenue		337,445		313,917		659,638		619,692

Gross profit		130,980		110,919		248,096		212,853

Operating expenses:
General and administrative		97,041		87,338		186,436		170,556
Depreciation and intangibles amortization		3,980		3,736		7,454		7,853

Total operating expenses		101,021		91,074		193,890		178,409

Income from operations		29,959		19,845		54,206		34,444
Other income, net		1,158		682		2,734		1,284

Income before provision for income taxes		31,117		20,527		56,940		35,728
Provision for income taxes		12,109		7,416		21,922		13,268

Net income	$	19,008	$	13,111	$	35,018	$	22,460

Basic net income per common share	$	0.19	$	0.13	$	0.34	$	0.22

Average common shares outstanding, basic		102,038		101,860		101,880		102,404

Diluted net income per common share	$	0.18	$	0.12	$	0.33	$	0.21

Average common shares outstanding, diluted		105,329		105,499		105,046		106,287

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)


(dollar amounts in thousands except common share amounts)	Common Stock					Additional Contributed Capital			Retained Earnings		Accumulated Other Comprehensive Income		Deferred Stock Compensation			Treasury Stock			Total
	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	—			—			—			35,018		—		—			—
Foreign currency translation	—			—			—			—		16,788		—			—
Total comprehensive income	—			—			—			—		—		—			—			51,806

Reclassification of deferred stock compensation upon adoption of SFAS 123R	—			—			(4,630	)		—		—		4,630			—			—
Excess tax benefit from share-based awards	—			—			11,756			—		—		—			—			11,756
Exercise of stock options	2,176,872			22			13,047			—		—		—			—			13,069
Purchase of treasury stock	—			—			—			—		—		—			(25,217	)		(25,217	)
Settlement of share-based awards	—			—			—			—		—		—			(7,559	)		(7,559	)
Issuance of restricted stock	1,297,828			12			(12	)		—		—		—			—			—
Cancellation of restricted stock	(43,136	)		(0	)		0			—		—		—			—			0
Share-based plans expense	—			—			2,741			—		—		—			—			2,741

Balance, June 30, 2006	114,600,791		$	1,146		$	710,563		$	292,581	$	28,348	$	—		$	(110,002	)	$	922,636

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six months ended June 30,
(dollar amounts in thousands)	2006			2005
Cash flows from operating activities:
Net income	$	35,018		$	22,460
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		10,954			9,872
Excess tax benefit from share-based awards		(11,704	)		—
Share-based plans expense		2,741			1,611
Depreciation and intangibles amortization		7,454			7,853
Changes in certain assets and liabilities, net of acquisitions:
Accounts receivable		(21,843	)		(24,779	)
Prepaid expenses and other assets		(2,396	)		(1,024	)
Accounts payable and accrued expenses		2,965			1,230
Accrued payroll and related taxes		10,851			13,145
Other, net		(3,664	)		(291	)

Net cash provided by operating activities

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