UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 27, 2004
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CENTURY BUSINESS SERVICES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2769024
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
0-25890
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(Commission File Number)
6050 Oak Tree Boulevard South, Suite 500
Cleveland, Ohio 44131
(Address of Principal Executive Offices)
(Zip Code)
Registrant's Telephone Number, Including Area Code 216-447-9000
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Item 7(c). Exhibits
Exhibit 99.1 Press Release of Century Business Services, Inc. dated April 27,
2004, announcing its financial results for the first quarter
ended March 31, 2004.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 27, 2004, Century Business Services, Inc. (CBIZ) announced its earnings
for the first quarter ended March 31, 2004. A copy of the press release is filed
herewith as Exhibit 99.1. In addition, on April 27, 2004, Century conducted its
earnings conference call for the quarter ended March 31, 2004. On this
conference call, CBIZ disclosed the following additional information:
- Goals for revenue growth in the 4% to 6% range, EPS growth in the 25%
to 30% range and EBITDA of approximately $50 million for fiscal year
2004 are unchanged and are believed to be attainable. Revenue growth
in the Benefits and Insurance segment is expected to be in the
mid-single digits in 2004 over 2003. Our goal for acquisitions
completed during 2004 is to generate revenue growth of at least 3%
over our existing revenue base.
- The full year 2004 cross-serving goal is $9 million in first year
revenue. Year to date, CBIZ has generated approximately $3.5 million
of first year revenue, and we expect to meet or exceed the goal.
- CBIZ divested Health Administration Services (a benefits and insurance
operation), during the second quarter of 2003, which generated $3.2
million and $2.2 million of revenue during the first and second
quarters of 2003, respectively. The operation was marginally
profitable with a margin of less than 10%, and contributed $0.5 to
$0.6 million of pretax income for the year ended December 31, 2003.
- Approximately $1.5 million of the favorable variance in gross margin
from March 31, 2003 to March 31, 2004 in the National Practices -
Other segment, was the direct result of a mergers and acquisitions
transaction.
- Net of $33 million that was drawn on the credit facility to fund the
share repurchase that occurred during the third quarter of 2003, the
cash flow used to pay down bank debt was approximately $27 million
during the twelve months ended March 31, 2004.
- The credit facility was utilized to fund the $37.5 million share
repurchase that occurred during the first week in April 2004. As a
result, borrowings under the facility peaked at approximately $60
million when the share repurchase was completed, and have been reduced
to $54 million as of April 27, 2004. CBIZ expects to continue reducing
the balance on the credit facility throughout 2004 as we continue to
generate strong cash flow.
- Cash spent on capital expenditures during the three months ended March
31, 2004, was approximately $2 million. Capital expenditures are
expected to be $8 million to $10 million for the twelve months ended
December 31, 2004.
- Bad debt expense for the quarter ended March 31, 2004 was $1.4
million.
SIGNATURES
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.
CENTURY BUSINESS SERVICES, INC.
Date: May 3, 2004
/s/ Ware H. Grove
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Ware H. Grove
Chief Financial Officer
Exhibit 99.1
[CENTURY BUSINESS SERVICES, INC. LOGO] PRESS
RELEASE
FOR IMMEDIATE RELEASE CONTACT: WARE H. GROVE
Chief Financial Officer
-or-
LORI NOVICKIS
Century Business Services, Inc.
Cleveland, Ohio
(216) 447-9000
CBIZ REPORTS FIRST-QUARTER 2004 RESULTS
SAME UNIT REVENUE GROWS 4.2%; NET EARNINGS UP 14.3%
Cleveland, Ohio (April 27, 2004)--CBIZ (Century Business Services, Inc.)
(NASDAQ: CBIZ) today announced its financial results for the first quarter of
2004.
CBIZ reported revenue of $148.0 million for the first quarter ended March 31,
2004, an increase of 2.2% over the $144.8 million recorded for the first quarter
of 2003. Same-unit revenue for the quarter increased 4.2%, or by $5.8 million.
Since the beginning of 2003, newly acquired businesses have contributed $2.5
million to revenue. Divestitures that have occurred since a year ago resulted in
a revenue decline of $5.1 million. CBIZ posted net income from continuing
operations for the quarter of $11.6 million, or $0.13 per diluted share, up
14.3% from the $10.2 million, or $0.10 per diluted share, recorded for the first
quarter of 2003.
As of March 31, 2004, bank debt stood at $23.4 million compared with $14.0
million at the end of the fourth quarter and $17.0 million a year earlier. At
the end of the first quarter, the debt-to-equity ratio was 8.1%. During the
first quarter CBIZ commenced a Tender Offer which was successfully concluded in
April, 2004 with the purchase of 7.5 million shares. The total paid was $37.5
million which was funded through borrowings from the Company's credit facility.
"Results for the first quarter of 2004 are in line with our expectations with
continued growth in revenue, margin and net income," remarked Steven L. Gerard,
Chairman and Chief Executive Officer. "The strength of our balance sheet
combined with our strong cash flow has allowed us to successfully conclude our
second tender offer within the past twelve months. Combined with the tender
offer concluded last July, CBIZ has now purchased approximately 17.5 million
shares, or approximately 18% of the outstanding shares at prices ranging between
$3.30 and $5.00 per share within the past year. Our positive cash flow has
enabled us to accomplish these accretive transactions and continue to support
the growth of the business," concluded Gerard.
Page 1 of 4
6050 Oak Tree Boulevard, South - Suite 500 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
CBIZ will host a conference call later this morning to discuss its results. The
call will be webcast in a listen-only mode over the Internet for the media and
the public, and can be accessed at www.cbiz.com. Investors and analysts can
participate in the conference call by dialing 1-866-297-6391 several minutes
before 11:00 a.m. (ET). If you are dialing from outside the United States, dial
1-847-944-7313. A replay of the call will be available starting at 1:00 p.m.
(ET) April 27 through midnight (ET), April 30, 2004. The dial-in number for the
replay is 1-877-213-9653. If you are listening from outside the United States,
dial 1-630-652-3041. The access code for the replay is 8770537. A replay of the
webcast will also be available on the Company's web site at www.cbiz.com.
CBIZ is a provider of outsourced business services to small and medium-sized
companies throughout the United States. As the largest benefits specialist and
one of the largest accounting, valuation and medical practice management
companies in the United States, CBIZ provides integrated services in the
following areas: accounting and tax; employee benefits; wealth management;
property and casualty insurance; payroll; IS consulting; and HR consulting. CBIZ
also provides valuation; litigation advisory; government relations; commercial
real estate advisory; wholesale life and group insurance; healthcare consulting;
medical practice management; worksite marketing; and capital advisory services.
These services are provided throughout a network of more than 160 Company
offices in 34 states and the District of Columbia.
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Such risks
and uncertainties include, but are not limited to, the Company's ability to
adequately manage its growth; the Company's dependence on the current trend of
outsourcing business services; the Company's dependence on the services of its
CEO and other key employees; competitive pricing pressures; general business and
economic conditions; and changes in governmental regulation and tax laws
affecting its insurance business or its business services operations. A more
detailed description of such risks and uncertainties can be found in the
Company's filings with the Securities and Exchange Commission.
For further information regarding CBIZ, call the Investor Relations Office at
(216) 447-9000 or visit
www.cbiz.com.
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6050 Oak Tree Boulevard, South - Suite 500 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
CENTURY BUSINESS SERVICES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------------------------
2004 % 2003 %
--------- ----- --------- -----
Revenue ................................................... $ 147,977 100.0% $ 144,758 100.0%
Operating expenses ........................................ 119,336 80.6% 116,692 80.6%
--------- ----- --------- -----
Gross margin .............................................. 28,641 19.4% 28,066 19.4%
Corporate general and administrative expense .............. 5,315 3.6% 5,249 3.6%
Depreciation and amortization expense ..................... 3,987 2.7% 4,272 3.0%
--------- ----- --------- -----
Operating income .......................................... 19,339 13.1% 18,545 12.8%
Other income (expense):
Interest expense ....................................... (240) -0.2% (323) -0.2%
Gain on divested operations, net ....................... 383 0.3% - 0.0%
Other income (expense), net ............................ 472 0.3% (538) -0.4%
--------- ----- --------- -----
Total other income (expense), net .............. 615 0.4% (861) -0.6%
Income from continuing operations before income tax expense 19,954 13.5% 17,684 12.2%
Income tax expense ........................................ 8,341 7,525
--------- ----- --------- -----
Income from continuing operations ......................... 11,613 7.8% 10,159 7.0%
Loss from operations of discontinued businesses, net of tax (32) (158)
--------- ----- --------- -----
Net income ................................................ $ 11,581 7.8% $ 10,001 6.9%
========= =========
Diluted earnings per share:
Continuing operations .................................. $ 0.13 $ 0.10
Discontinued operations ................................ - -
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Net income ............................................. $ 0.13 $ 0.10
========= =========
Diluted shares outstanding ............................. 87,912 96,956
OTHER DATA FROM CONTINUING OPERATIONS:
EBIT(1) ................................................... $ 19,811 $ 19,632
EBITDA(1) ................................................. $ 23,798 $ 23,904
(1) EBIT represents income from continuing operations before income taxes,
interest expense, gain on divested operations, and impairment charges for a
note receivable related to the divestiture of an operation in 1997.
Impairment charges for the three months ended March 31, 2004 and 2003 were
$0 and $1,625, respectively.
EBITDA represents EBIT as defined above before depreciation and amortization
expense. The Company has included EBIT and EBITDA data because such data is
commonly used as a performance measure by analysts and investors and as a
measure of the Company's ability to service debt. EBIT and EBITDA should
not be regarded as an alternative or replacement to any measurement of
performance under generally accepted accounting principles (GAAP).
Page 3 of 4
6050 Oak Tree Boulevard, South - Suite 500 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
CENTURY BUSINESS SERVICES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(IN THOUSANDS, EXCEPT PERCENTAGES AND RATIOS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
--------- ---------
REVENUE
Accounting, Tax & Advisory Services .............. $ 70,730 $ 68,974
Benefits & Insurance Services .................... 38,040 39,881
National Practices - Other ....................... 18,667 18,325
Medical Practice Management ...................... 20,540 17,578
Total ......................................... $ 147,977 $ 144,758
GROSS MARGIN
Accounting, Tax & Advisory Services .............. $ 21,392 $ 21,068
Benefits & Insurance Services .................... 5,915 7,798
National Practices - Other ....................... 2,160 (742)
Medical Practice Management ...................... 3,143 2,423
Total (1)...................................... $ 28,641 $ 28,066
SELECT BALANCE SHEET DATA AND RATIOS
MARCH 31, DECEMBER 31,
2004 2003
--------- ---------
Cash and cash equivalents ........................ $ 3,344 $ 3,791
Restricted cash .................................. $ 10,357 $ 10,880
Accounts receivable, net ......................... $ 134,255 $ 111,556
Total current assets before funds held for clients $ 162,006 $ 139,840
Funds held for clients ........................... $ 45,068 $ 44,917
Goodwill and other intangible assets ............. $ 168,696 $ 167,280
TOTAL ASSETS ..................................... $ 428,582 $ 402,145
Current liabilities before client fund obligations $ 65,150 $ 63,487
Client fund obligations .......................... $ 45,068 $ 44,917
Bank debt ........................................ $ 23,400 $ 14,000
TOTAL LIABILITIES ................................ $ 138,629 $ 124,307
Treasury stock ................................... $ (35,087) $ (35,087)
TOTAL STOCKHOLDERS' EQUITY ....................... $ 289,953 $ 277,838
Bank debt to equity .............................. 8.1% 5.0%
Days sales outstanding(2) ........................ 86 82
Shares outstanding ............................... 85,532 85,371
========= =========
Basic shares outstanding ......................... 85,437 90,400
========= =========
Diluted shares outstanding ....................... 87,912 92,762
========= =========
(1) Includes operating expenses recorded by corporate and not directly
allocated to the business units of $3,969 and $2,481 for the three months
ended March 31, 2004, and 2003, respectively.
(2) Days sales outstanding (DSO) represent accounts receivable at the end of
the period (before the allowance for doubtful accounts) divided by daily
revenue (year-to-date revenue divided by number of days in the period). The
Company has included DSO data because such data is commonly used as a
performance measure by analysts and investors and as a measure of the
Company's ability to collect on receivables in a timely manner. DSO should
not be regarded as an alternative or replacement to any measurement of
performance under generally accepted accounting principles (GAAP).
Page 4 of 4
6050 Oak Tree Boulevard, South - Suite 500 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
