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 September 30, 2004

¨	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 an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 29, 2004:

102,548,157 shares of $0.01 par value Common Stock

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain factors, including but not limited to the specific factors discussed in Part I, Item 2 of this report under the heading ‘Factors Which May Impact Future Results and Financial Condition.’ In some cases, you can identify forward-looking statements by terminology such as ‘will,’ ‘may,’ ‘should,’ ‘could,’ ‘expects,’ ‘plans,’ ‘indicates,’ ‘projects,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘appears,’ ‘predicts,’ ‘potential,’ ‘continues,’ ‘can,’ ‘hopes,’ ‘perhaps,’ ‘would,’ or ‘become’ or the negative of these terms or other comparable terminology. In addition, except for historical facts, all information provided in Part I, Item 3, under ‘Quantitative and Qualitative Disclosures About Market Risk’ should be considered forward-looking statements. Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of the Company may vary materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are based on beliefs and assumptions of the Company’s management and on information currently available to management. Forward looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events. Undue reliance should not be placed on such forward-looking statements, which are based on current expectations. Forward-looking statements are not guarantees of performance.

MPS Group, Inc. and Subsidiaries

Index


Part I	Financial Information

Item 1	Consolidated Financial Statements

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003	4

	Unaudited Condensed Consolidated Statements of Income for the Three and Nine Months ended September 30, 2004 and 2003	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2004 and 2003	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4	Controls and Procedures	22

Part II	Other Information

Item 1	Legal Proceedings	23

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

Item 3	Defaults Upon Senior Securities	23

Item 4	Submission of Matters to a Vote of Security Holders	23

Item 5	Other Information	23

Item 6	Exhibits	23

	Signatures	24

Part I. Financial Information

Item 1. Financial Statements

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


(dollar amounts in thousands except share amounts)	September 30, 2004			December 31, 2003
	(unaudited)			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	101,183		$	124,830
Accounts receivable, net of allowance of $10,826 and $12,899		204,228			159,359
Prepaid expenses		6,798			6,417
Deferred income taxes		1,594			2,200
Other		12,401			10,662

Total current assets		326,204			303,468
Furniture, equipment, and leasehold improvements, net		26,258			29,488
Goodwill, net		504,117			486,630
Deferred income taxes		52,003			62,464
Other assets, net		10,504			11,101

Total assets	$	919,086		$	893,151

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	49,209		$	32,601
Accrued payroll and related taxes		37,261			37,848
Income taxes payable		6,536			16,140

Total current liabilities		93,006			86,589
Other		13,636			13,100

Total liabilities		106,642			99,689

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; 107,092,839 and 104,576,204 shares issued, respectively		1,071			1,046
Additional contributed capital		655,463			634,492
Retained earnings		186,658			162,546
Accumulated other comprehensive income		12,272			6,933
Deferred stock compensation		(7,090	)		(2,495	)
Treasury stock, at cost (4,615,832 shares in 2004 and 1,613,400 shares in 2003)		(35,930	)		(9,060	)

Total stockholders’ equity		812,444			793,462

Total liabilities and stockholders’ equity	$	919,086		$	893,151

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Income


	Three Months Ended						Nine Months Ended
(dollar amounts in thousands except per share amounts)	September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue	$	362,332		$	274,669		$	1,006,058		$	812,099
Cost of revenue		270,659			200,972			750,994			597,816

Gross profit		91,673			73,697			255,064			214,283

Operating expenses:
General and administrative		72,901			57,957			207,284			174,007
Depreciation and intangibles amortization		3,852			4,134			11,568			12,806
Exit recapture		(225	)		—			(225	)		—

Total operating expenses		76,528			62,091			218,627			186,813

Income from operations		15,145			11,606			36,437			27,470
Other income, net		340			186			1,071			171

Income from continuing operations before provision for income taxes		15,485			11,792			37,508			27,641
Provision for income taxes		6,039			4,626			13,396			11,079

Income from continuing operations		9,446			7,166			24,112			16,562
Loss from discontinued operations (net of an income tax benefit of $634 and $978, respectively)		—			(1,177	)		—			(1,816	)

Net income	$	9,446		$	5,989		$	24,112		$	14,746

Basic net income per common share:
Income from continuing operations	$	0.09		$	0.07		$	0.23		$	0.16
Loss from discontinued operations, net of tax		—			(0.01	)		—			(0.02	)

Basic net income per common share	$	0.09		$	0.06		$	0.23		$	0.14

Average common shares outstanding, basic		103,139			101,795			103,152			101,680

Diluted net income per common share:
Income from continuing operations	$	0.09		$	0.07		$	0.23		$	0.16
Loss from discontinued operations, net of tax		—			(0.01	)		—			(0.02	)

Diluted net income per common share	$	0.09		$	0.06		$	0.23		$	0.14

Average common shares outstanding, diluted		107,065			104,866			106,992			103,515

See accompanying notes to unaudited condensed consolidated financial statements.

MPS Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows


	Nine months ended September 30,
(dollar amounts in thousands)	2004			2003
	(unaudited)			(unaudited)
Cash flows from operating activities:
Income from continuing operations	$	24,112		$	16,562
Adjustments to income from continuing operations to net cash provided by operating activities:
Deferred income taxes		11,067			11,118
Deferred compensation		2,370			1,155
Depreciation and intangibles amortization		11,568			12,806
Exit recapture		(225	)		—
Changes in certain assets and liabilities, net of acquisitions:
Accounts receivable		(49,176	)		24,945
Prepaid expenses and other assets		(234	)		(2,165	)
Accounts payable and accrued expenses		19,059			(7,827	)
Accrued payroll and related taxes		(269	)		4,897
Other, net		(1,309	)		1,521

Net cash provided by operating activities		16,963			63,012

Cash flows from investing activities:
Sale of assets		2,442			—
Purchase of furniture, equipment and leasehold improvements, net of disposals		(7,060	)		(5,552	)
Purchase of businesses, including additional consideration on acquisitions, net of cash acquired		(20,787	)		(14,945	)

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