NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
Financial Statement Presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The information reflects all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of On Assignment, Inc. and its subsidiaries (the Company) and its results of operations for the interim dates and periods set forth herein. The results for the
three months ended
March 31, 2013
are not necessarily indicative of the results to be expected for the full year or any other period. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012
.
2.
Acquisitions.
On
May 15, 2012
, the Company acquired all of the outstanding shares of
Apex Systems, Inc.
,
a privately-owned provider of information technology staffing services headquartered in Richmond, Virginia (Apex)
.
The primary reason for the acquisition was to expand the Company's information technology staffing services.
The purchase price totaled approximately
$610.8 million
, comprised of
$385.3 million
paid in cash and issuance of
14.3 million
shares of common stock of the Company. Acquisition costs were approximately
$9.8 million
and were expensed in 2012. Goodwill is deductible for tax purposes. The results of operations of Apex have been combined with those of the Company since the acquisition date.
Assets and liabilities of the acquired companies were recorded at their estimated fair values at the dates of acquisition. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill
. The fair value assigned to identifiable intangible assets was determined primarily by using a discounted cash flow method.
The Company's allocation of the purchase price for Apex has been finalized, except for the pre-acquisition contingencies and income taxes related to the acquisition.
Any material measurement period adjustments will be recorded retrospectively to the acquisition date.
The following tables summarize (in thousands) the purchase price allocation for the acquisition of Apex, which is subject to adjustment for pre-acquisition contingencies and income taxes related to the acquisition during the measurement period:
|
|
|
|
|
|
|
|
Apex
|
Current assets
|
|
$
|
169,844
|
|
Property and equipment
|
|
902
|
|
Goodwill
|
|
266,788
|
|
Identifiable intangible assets
|
|
251,555
|
|
Other
|
|
494
|
|
Total assets acquired
|
|
$
|
689,583
|
|
|
|
|
Current liabilities
|
|
$
|
77,905
|
|
Other
|
|
850
|
|
Total liabilities assumed
|
|
78,755
|
|
Total purchase price
|
|
$
|
610,828
|
|
The following table summarizes (in thousands) the allocation of the purchase price among the identifiable intangible assets for the acquisition of Apex:
|
|
|
|
|
|
|
|
|
|
Identifiable Intangible Asset Value
|
|
Useful life
|
|
Apex
|
Contractor relationships
|
5 years
|
|
$
|
10,589
|
|
Customer relationships
|
10 years
|
|
92,147
|
|
Non-compete agreements
|
7 years
|
|
2,076
|
|
Trademarks
|
indefinite
|
|
146,743
|
|
Total identifiable intangible assets acquired
|
|
|
$
|
251,555
|
|
The summary below (in thousands, except for per share data) presents unaudited pro forma consolidated results of operations for the
three months ended
March 31,
2012
as if the acquisition of Apex occurred on January 1, 2011.
The pro forma financial information gives effect to certain adjustments, including: the amortization of intangible assets and interest expense on acquisition-related debt, and increased number of common shares as a result of the acquisition. Acquisition-related costs are assumed to have occurred at the beginning of the year prior to acquisition.
The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition had been consummated as of the date indicated, nor are they necessarily indicative of future operating results.
|
|
|
|
|
Revenues
|
$
|
342,721
|
|
Operating income
|
$
|
13,464
|
|
Income from continuing operations
|
$
|
7,839
|
|
Net income
|
$
|
8,175
|
|
|
|
Basic earnings per share:
|
|
Income from continuing operations
|
$
|
0.15
|
|
Net income
|
$
|
0.16
|
|
|
|
Diluted earnings per share:
|
|
Income from continuing operations
|
$
|
0.15
|
|
Net income
|
$
|
0.16
|
|
|
|
Weighted average number of shares outstanding
|
51,574
|
|
Weighted average number of shares and dilutive shares outstanding
|
52,459
|
|
3.
Discontinued Operations.
On February 12, 2013, the Company completed the sale of the Nurse Travel division for
$31.0 million
in cash and recognized a gain of
$14.4 million
, net of tax. Under terms of the purchase agreement, the Company is required to deliver net working capital of
$5.7 million
. The Nurse Travel division, previously included in the Healthcare segment, has been presented as discontinued operations in our Condensed Consolidated Statement of Operations for all periods presented. The following is a summary of the Nurse Travel division's operating results, (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Revenues
|
$
|
6,432
|
|
|
$
|
10,318
|
|
Income (loss) before income taxes
|
$
|
(513
|
)
|
|
$
|
577
|
|
Provision (benefit) for income taxes
|
$
|
(104
|
)
|
|
$
|
241
|
|
Net income (loss)
|
$
|
(409
|
)
|
|
$
|
336
|
|
4.
Long-Term Debt.
Long-term debt as of
March 31, 2013
and
December 31, 2012
, consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
March 31,
2013
|
|
December 31, 2012
|
Senior Secured Debt --
|
|
|
|
$75 million revolving credit facility, due May 2017
|
$
|
—
|
|
|
$
|
—
|
|
$100 million term A loan facility, due May 2017
|
90,000
|
|
|
92,500
|
|
$365 million term B loan facility, due May 2019
|
293,588
|
|
|
334,088
|
|
|
$
|
383,588
|
|
|
$
|
426,588
|
|
At
March 31, 2013
, borrowings on the term A loan bore interest at
3.2
percent, and borrowings on the term B loan bore interest at
5.0
percent. The weighted average interest rate at
March 31, 2013
was
4.6
percent. As of
March 31, 2013
and
December 31, 2012
, the Company was in compliance with all of its debt covenants. As of
March 31, 2013
, the Company had
$72.0 million
of borrowing available under our credit facility.
5.
Derivative Instruments.
The Company utilizes derivative financial instruments to manage interest rate risk. The Company does not use derivative financial instruments for trading or speculative purposes, nor does it use leveraged financial instruments. The Company reports its derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master netting agreement enforceable by law. The Company’s derivative instruments are recorded at their fair value, and are included in other long-term assets, other long-term liabilities and other liabilities in the Condensed Consolidated Balance Sheets.
The Company's Interest Rate Caps and the Interest Rate Swap were designated as hedging instruments for accounting purposes and are accounted for as cash flow hedges. The effective portion of unrealized losses on cash flow hedges are included in accumulated other comprehensive income until the periodic interest settlements occur, at which time they will be recorded as interest expense in the Consolidated Statements of Operations and Comprehensive Income. The Company expects to reclassify losses of
$0.3 million
(pretax) from accumulated other comprehensive income to interest expense in the Consolidated Statements of Operation within the next twelve months.
As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company only enters into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and continually assesses the creditworthiness of counterparties. As of
March 31, 2013
, the counterparty to the interest rate contracts had investment grade ratings and has performed in accordance with their contractual obligations.
The fair values of derivative instruments in the Consolidated Balance Sheets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Derivative designated as hedging instrument under ASC 815
|
|
|
|
|
|
Balance Sheet Classification
|
|
March 31,
2013
|
|
December 31, 2012
|
Interest rate contracts
|
Other long-term assets
|
|
$
|
73
|
|
|
$
|
69
|
|
Interest rate contracts
|
Other liabilities
|
|
(327
|
)
|
|
(362
|
)
|
Interest rate contracts
|
Other long-term liabilities
|
|
—
|
|
|
(55
|
)
|
|
|
|
$
|
(254
|
)
|
|
$
|
(348
|
)
|
The following tables reflect the effect of derivative instruments on the Consolidated Statements of Operations and Comprehensive Income for the three months ended
March 31, 2013
and
2012
(in thousands):
|
|
|
|
|
|
|
|
|
Derivatives in Cash Flow Hedging Relationships
|
Amount of Gain/Loss Recognized in Accumulated Other Comprehensive Income on Derivative
|
|
Three Months Ended
|
March 31,
|
|
2013
|
|
2012
|
Interest rate contracts
|
$
|
67
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/Loss Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Location of Gain/Loss Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
Interest rate contracts
|
Interest expense
|
|
$
|
90
|
|
|
$
|
90
|
|
6.
Fair Value Measurements.
The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The recorded values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value based on their short-term nature. Long-term debt recorded in the Company’s Condensed Consolidated Balance Sheets at
March 31, 2013
was
$383.6 million
. The f
air value of the long-term debt was determined using the quoted price technique, based on Level 2 inputs including the yields of comparable companies with similar credit characteristics
, was
$406.1 million
.
The interest rate swap and interest rate caps are measured using the income approach. The fair value reflects the estimated amounts that the Company would pay or receive based on the present value of the expected cash flows derived from market rates and prices. As such, these derivative instruments are classified within Level 2.
The Company has obligations, to be paid in cash, to the former owners of Valesta and HCP, if certain future financial goals are met. The fair value of this contingent consideration is determined using an expected present value technique. Expected cash flows are determined using the probability - weighted average of possible outcomes that would occur should certain financial metrics be reached. There is no market data available to use in valuing the contingent consideration, therefore, the Company developed its own assumptions related to the future financial performance of the businesses to evaluate the fair value of these liabilities. As such, the contingent consideration is classified within Level 3.
In connection with estimating the fair value of the contingent consideration, the Company develops various scenarios (base case, downside case, and upside case) and weights each according to the probability of occurrence. The probabilities range from
5 percent
to
80 percent
, with the most significant weighting given to the base case between
75 percent
and
80 percent
. These scenarios are developed based on the expected financial performance of the acquired companies, with revenue growth rates being a primary input to the calculation. These revenue growth rates range from
(7.0) percent
to
7.9 percent
. An increase or decrease in the probability of achievement of any of these scenarios could result in a significant increase or decrease to the estimated fair value.
The fair value is reviewed on a quarterly basis based on most recent financial performance of the most recent fiscal quarter. An analysis is performed at the end of each fiscal quarter to compare actual results to forecasted financial performance. If performance has deviated from projected levels, the valuation is updated for the latest information available.
The significant assumptions that may materially affect the fair value are developed in conjunction with the guidance of the division presidents, division vice presidents, and chief financial officer to ensure that the most accurate and latest financial projections are used and compared with the most recent financial results in the fair value measurement.
The liabilities for the contingent consideration were established at the time of the acquisition and are evaluated at each reporting period. The current liability is included in the Condensed Consolidated Balance Sheets in the current portion of accrued earn-outs and the non-current portion is included in other long-term liabilities. Fair value adjustments are included in the Condensed Consolidated Statements of Operations and Comprehensive Income in selling, general and administrative expenses.
The assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2013
|
|
Fair Value Measurements Using
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
(254
|
)
|
|
$
|
—
|
|
|
$
|
(254
|
)
|
Contingent consideration to be paid in cash for the acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,544
|
)
|
|
$
|
(6,544
|
)
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012
|
|
Fair Value Measurements Using
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
(348
|
)
|
|
$
|
—
|
|
|
$
|
(348
|
)
|
Contingent consideration to be paid in cash for the acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7,577
|
)
|
|
$
|
(7,577
|
)
|
Reconciliations of liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Contingent consideration for acquisitions
|
|
|
|
Balance at beginning of period
|
$
|
(7,577
|
)
|
|
$
|
(9,856
|
)
|
Fair value adjustment
|
830
|
|
|
(32
|
)
|
Foreign currency translation adjustment
|
203
|
|
|
(203
|
)
|
Balance at end of period
|
$
|
(6,544
|
)
|
|
$
|
(10,091
|
)
|
Certain assets and liabilities, such as goodwill, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). For
the three mon
ths ended
March 31, 2013
,
no
fair value adjustments were required for non-financial assets or liabilities.
7.
Goodwill and Identifiable Intangible Assets
.
The changes in the carrying amount of goodwill for the year ended
December 31, 2012
and the
three months ended
March 31, 2013
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apex
|
|
Oxford
|
|
Life Sciences
|
|
Healthcare
|
|
Physician
|
|
Total
|
Balance as of December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
Gross goodwill
|
$
|
—
|
|
|
$
|
149,483
|
|
|
$
|
27,668
|
|
|
$
|
122,230
|
|
|
$
|
51,570
|
|
|
$
|
350,951
|
|
Accumulated impairment loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(121,717
|
)
|
|
—
|
|
|
(121,717
|
)
|
|
—
|
|
|
149,483
|
|
|
27,668
|
|
|
513
|
|
|
51,570
|
|
|
229,234
|
|
Apex acquisition
|
266,788
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
266,788
|
|
Acquisition accounting
|
—
|
|
|
—
|
|
|
1,814
|
|
|
—
|
|
|
(9
|
)
|
|
1,805
|
|
Translation adjustment
|
—
|
|
|
—
|
|
|
529
|
|
|
—
|
|
|
—
|
|
|
529
|
|
Balance as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Gross goodwill
|
266,788
|
|
|
149,483
|
|
|
30,011
|
|
|
122,230
|
|
|
51,561
|
|
|
620,073
|
|
Accumulated impairment loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(121,717
|
)
|
|
—
|
|
|
(121,717
|
)
|
|
266,788
|
|
|
149,483
|
|
|
30,011
|
|
|
513
|
|
|
51,561
|
|
|
498,356
|
|
Divestiture - gross goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|
(121,717
|
)
|
|
—
|
|
|
(121,717
|
)
|
Divestiture - accumulated impairment loss
|
—
|
|
|
—
|
|
|
—
|
|
|
121,717
|
|
|
—
|
|
|
121,717
|
|
Translation adjustment
|
—
|
|
|
—
|
|
|
(776
|
)
|
|
—
|
|
|
—
|
|
|
(776
|
)
|
Balance as of March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Gross goodwill
|
266,788
|
|
|
149,483
|
|
|
29,235
|
|
|
513
|
|
|
51,561
|
|
|
497,580
|
|
Accumulated impairment loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
266,788
|
|
|
$
|
149,483
|
|
|
$
|
29,235
|
|
|
$
|
513
|
|
|
$
|
51,561
|
|
|
$
|
497,580
|
|
As of
March 31, 2013
and
December 31, 2012
, the Company had the following acquired intangible assets (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
December 31, 2012
|
|
Estimated Useful Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relations
|
3 months – 10 years
|
|
$
|
103,223
|
|
|
$
|
27,819
|
|
|
$
|
75,404
|
|
|
$
|
103,285
|
|
|
$
|
23,338
|
|
|
$
|
79,947
|
|
Contractor relations
|
2 - 7 years
|
|
37,848
|
|
|
28,466
|
|
|
9,382
|
|
|
37,871
|
|
|
27,754
|
|
|
10,117
|
|
Non-compete agreements
|
2 - 7 years
|
|
2,972
|
|
|
1,183
|
|
|
1,789
|
|
|
2,986
|
|
|
1,062
|
|
|
1,924
|
|
|
|
|
144,043
|
|
|
57,468
|
|
|
86,575
|
|
|
144,142
|
|
|
52,154
|
|
|
91,988
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
171,749
|
|
|
—
|
|
|
171,749
|
|
|
171,852
|
|
|
—
|
|
|
171,852
|
|
Goodwill
|
|
|
497,580
|
|
|
—
|
|
|
497,580
|
|
|
498,356
|
|
|
—
|
|
|
498,356
|
|
Total
|
|
|
$
|
813,372
|
|
|
$
|
57,468
|
|
|
$
|
755,904
|
|
|
$
|
814,350
|
|
|
$
|
52,154
|
|
|
$
|
762,196
|
|
Amortization expense for intangible assets with finite lives was
$5.4 million
and
$0.6 million
for the
three months ended
March 31, 2013
and
2012
, respectively. Estimated amortization for the remainder of this fiscal year, each of the next four fiscal years and thereafter follows (in thousands):
|
|
|
|
|
2013
|
$
|
15,588
|
|
2014
|
16,817
|
|
2015
|
14,300
|
|
2016
|
12,365
|
|
2017
|
8,993
|
|
Thereafter
|
18,512
|
|
|
$
|
86,575
|
|
Goodwill and other intangible assets having an indefinite useful life are not amortized for financial statement purposes. Goodwill and intangible assets with indefinite lives are reviewed for impairment on an annual basis as of December 31 and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were
no
triggering events that required an interim impairment analysis during the current period.
8.
Incentive Award Plan and Employee Stock Purchase Plan
.
On
March 4, 2013
, the CEO was awarded
143,182
restricted stock units (RSUs) with a grant date fair market value of
$3.2 million
, which will vest in
three
equal annual increments
on January 4, 2014, January 4, 2015 and January 4, 2016, conting
ent upon the Company achieving certain performance objectives based on Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization of identifiable intangible assets, plus equity-based compensation expense, impairment charges and acquisition related costs) during 2013. On
March 4, 2013
, the CEO was awarded a performance based award which had a grant date fair market value of
$1.0 million
. The number of shares will be determined by dividing
$0.5 million
by the closing price of the Company’s stock on each of February 1, 2014 and February 1, 2015, contingent upon the Company meeting certain financial performance objectives during 2013. The Company classifies this awards as a liability award until the number of shares is determined. The gra
nt-date fair market value of the RSUs described in this paragraph is expensed over the vesting term, based on an estimate of the percentage achievement of the applicable performance targets. All awards are subject to the CEO’s continued employment through applicable vesting dates. All awards may vest on an accelerated basis in part or in full upon the occurrence of certain events.
In the first quarter of 2013, the Company granted RSUs to certain other executive officers with an aggregate grant-date fair value of
$2.0 million
. Of the
$2.0 million
,
$1.0 million
will vest in
three
equal annual increments subject to continued employment on each succeeding grant-date anniversary. The remaining
$1.0 million
vests on January 2, 2014, subject to continued employment and the Company attaining certain performance objectives during 2013, as approved by the Compensation Committee. Compensation expense for the performance-based component of these awards is recognized over the vesting period, based on an estimate of the percentage achievement of the targets for these awards.
On
March 31, 2013
the Company issued
104,328
shares of common stock under the On Assignment 2010 Employee Stock Purchase Plan (the ESPP).
Compensation expense related to stock-based compensation, including the ESPP, was
$2.7 million
and
$1.2 million
for the
three months ended
March 31, 2013
and
2012
, respectively. Stock-based compensation is included in the Condensed Consolidated Statements of Operations and Comprehensive Income in selling, general and administrative expenses.
9.
Commitments and Contingencies
.
The Company is partially self-insured for its workers’ compensation and medical malpractice liabilities. The Company accounts for claims incurred, but not reported based on estimates derived from historical claims experience and current trends of industry data. Changes or differences in estimates and actual payments for claims are recognized in the period that the estimates changed or the payments were made. The self-insurance claim liability was approximately
$10.5 million
and
$10.3 million
as of
March 31, 2013
and
December 31, 2012
, respectively. The Company also has outstanding letters of credit securing obligations for workers’ compensation claims with various insurance carriers of
$3.0 million
as of
March 31, 2013
and
$2.8 million
as of
December 31, 2012
.
The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. Based on the facts currently available, the Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its financial position, results of operations or cash flows.
The Company is subject to earn-out obligations entered into in connection with certain of its acquisitions. If the acquired businesses
meet predetermined targets, the Company is obligated to make additional cash payments in accordance with the terms of such earn-out obligations. As of
March 31, 2013
, the Company has potential future earn-out obligations of approximately
$8.9 million
through
2013
.
The Company has entered into various non-cancelable operating leases, primarily related to its facilities and certain office equipment used in the ordinary course of business. As a result of the Apex acquisition, the Company leases
two
properties owned by related parties.
10.
Earnings per share.
Basic earnings per share are computed based upon the weighted average number of common shares outstanding. 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 restricted stock awards and units and employee stock purchase plan shares) outstanding during the periods using the treasury stock method.
The following is a reconciliation of the shares used to compute basic and diluted earnings per share (in thousands):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Weighted average number of common shares outstanding used to compute basic earnings per share
|
53,046
|
|
|
37,269
|
|
Dilutive effect of stock-based awards
|
990
|
|
|
885
|
|
Number of shares used to compute diluted earnings per share
|
54,036
|
|
|
38,154
|
|
The following table presents the weighted average share equivalents outstanding during each period that were excluded from the computation of diluted earnings per share because the exercise price for these options was greater than the average market price of the Company’s shares of common stock during the respective periods that became anti-dilutive when applying the treasury stock method (in thousands):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Anti-dilutive common share equivalents outstanding
|
77
|
|
|
710
|
|
11
.
Income Taxes.
For interim reporting periods, the Company prepares an estimate of the full-year income and the related income tax expense for each jurisdiction in which the Company operates. Changes in the geographical mix, permanent differences or estimated level of annual pretax income can impact the Company’s actual effective rate.
12.
Segment Reporting.
The Company has
five
reportable segments: Apex, Oxford, Life Sciences, Healthcare, and Physician. The Company’s management evaluates the performance of each segment primarily based on revenues, gross profit and operating income. The information in the following table is derived directly from the segments’ internal financial reporting used for corporate management purposes.
The following table presents revenues, gross profit and operating income by reportable segment (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
Apex
|
$
|
212,728
|
|
|
$
|
—
|
|
Oxford
|
95,262
|
|
|
78,759
|
|
Life Sciences
|
40,473
|
|
|
41,351
|
|
Physician
|
26,302
|
|
|
24,089
|
|
Healthcare
|
14,428
|
|
|
12,561
|
|
|
$
|
389,193
|
|
|
$
|
156,760
|
|
Gross Profit:
|
|
|
|
Apex
|
$
|
55,619
|
|
|
$
|
—
|
|
Oxford
|
32,150
|
|
|
27,370
|
|
Life Sciences
|
13,384
|
|
|
13,839
|
|
Physician
|
7,483
|
|
|
7,499
|
|
Healthcare
|
4,638
|
|
|
4,041
|
|
|
$
|
113,274
|
|
|
$
|
52,749
|
|
Operating Income (Loss):
|
|
|
|
Apex
|
$
|
10,079
|
|
|
$
|
—
|
|
Oxford
|
11,405
|
|
|
7,235
|
|
Life Sciences
|
692
|
|
|
2,308
|
|
Physician
|
2,154
|
|
|
1,078
|
|
Healthcare
|
(596
|
)
|
|
(1,251
|
)
|
|
$
|
23,734
|
|
|
$
|
9,370
|
|
The Company operates internationally, with operations mainly in the United States, Europe, Canada, Australia and New Zealand. The following table presents domestic and foreign revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
Domestic
|
$
|
368,797
|
|
|
$
|
137,444
|
|
Foreign
|
20,396
|
|
|
19,316
|
|
|
$
|
389,193
|
|
|
$
|
156,760
|
|
The Company does not report Life Sciences and Healthcare segments’ total assets separately as the field operations are largely combined. The following table presents total assets as allocated by reportable segment (in thousands):
|
|
|
|
|
|
|
|
|
|
March 31,
2013
|
|
December 31, 2012
|
Total Assets:
|
|
|
|
Apex
|
$
|
647,463
|
|
|
$
|
642,594
|
|
Oxford
|
235,846
|
|
|
231,211
|
|
Life Sciences and Healthcare
|
127,431
|
|
|
139,601
|
|
Physician
|
82,696
|
|
|
84,615
|
|
|
$
|
1,093,436
|
|
|
$
|
1,098,021
|
|