proposal for university of central florida
TRANSCRIPT
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Proposal for University of Central Florida
Temporary Labor Services ITN No. 1602JCSA
Submitted by
September 22, 2016
Proposed by: Andrew Graziani Account Manager
11486 Corporate Boulevard Orlando Florida 32817
Office: (407) 264-7001 | Mobile: (813) 451-6925 Email: [email protected]
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Table of Contents
TABLE OF CONTENTS .........................................2
CONTRACTUAL SERVICES ACKNOWLEDGEMENT FORM ........3A. EXPERIENCE AND QUALIFICATIONS .........................5
B. PROJECT STAFF QUALIFICATIONS/EXPERIENCE ......... 14
C. OVERALL RESPONSIVENESS OF PROPOSAL ............... 32
D. OTHER REQUIREMENTS .................................. 39
Addendum 1 ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Appendix II - V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SUBMIT OFFER TO:
PURCHASING DEPARTMENT
UNIVERSITY OF CENTRAL FLORIDA
12479 RESEARCH PARKWAY, BLDG. 600
ORLANDO, FL 32826
Phone:(407) 823-2661 – Fax (407) 823-5551
https://ucfpurchasing.bonfirehub.com/projects/view/1552
University of Central Florida
INVITATION TO NEGOTIATE
Contractual Services
Acknowledgement Form
Page 1 of 38 Pages OFFERS WILL BE OPENED September 22, 2016 @ 2:00 PM EST
and may not be withdrawn within 120 days after such date and time.
ITN NO: 1602JCSA
UNIVERSITY MAILING DATE:
August 19, 2016 ITN TITLE: Temporary Labor Services
FEDERAL EMPLOYER IDENTIFICATION NUMBER OR S.S. NUMBER
54-1773546
VENDOR NAME
Apex Systems, LLC
REASON FOR NO OFFER
VENDOR MAILING ADDRESS
11486 Corporate Boulevard
CITY - STATE - ZIP CODE
Orlando, Florida 32817
P O S T I N G O F P R O P O S A L
T A B U L A T I O N S
AREA CODE
(407)
TELEPHONE NO.
264-7001
Proposal tabulations with intended award(s) will be
posted for review by interested parties at the
Purchasing Department and our solicitation web
page and will remain posted for a period of 72 hours.
Failure to timely file a protest or failure to timely
deliver the required bond or other security in
accordance with the Board of Governors’
Regulations 18.002 and 18.003 shall constitute a
waiver of protest proceedings.
(866)
TOLL FREE NO. 638-2739
(407)
FAX NO. 264-7002
EMAIL ADDRESS:
Government Classifications Check all applicable
□ African American □ American Women
□ Asian-Hawaiian □ Government Agency
□ Hispanic □ MBE Federal
□ Native American □ Non-Minority
□ Non-Profit Organization □ Pride
□ Small Business Federal □ Small Business State
I certify that this offer is made without prior understanding, agreement, or connection with any corporation, firm or person submitting an offer for the same materials, supplies, or equipment and is in all respects fair and without collusion or fraud. I agree to abide by all conditions of this offer and certify that I am authorized to sign this offer for the vendor and that the
vendor is in compliance with all requirements of the Invitation To Negotiate, including but not limited to, certification requirements. In submitting an offer to an agency for the State of Florida, the vendor offers and agrees that if the offer is accepted, the vendor will convey, sell, assign or transfer to the State of Florida all rights, title and interest in and to all causes of action it may now or hereafter acquire under the Anti-trust laws of the United States and the State of Florida for price fixing relating to the particular commodities or services purchased or acquired by the state of Florida. At the State’s discretion, such assignment shall be made and become effective at the time the purchasing agency tenders final payment to the vendor.
GENERAL CONDITIONS
1. SEALED OFFERS: All offer sheets and this form must be executed and submitted in a sealed envelope. (DO NOT INCLUDE MORE THAN ONE OFFER PER ENVELOPE.) The face of the envelope should contain, in addition to the above address, the date, and time of the solicitation opening and the solicitation number. Offer prices not submitted on any attached price sheets when required shall be rejected. All offers are subject to the terms
3. NO OFFER SUBMITTED: If not submitting an offer, respond by
returning only this offer acknowledgment form, marking it "NO OFFER," and
explain the reason in the space provided above. Failure to respond without
justification may be cause for removal of the company’s name from the
solicitation mailing list. NOTE: To qualify as a respondent, vendor must
submit a "NO OFFER," and it must be received no later than the stated offer
opening date and hour.
and conditions specified herein. Those which do not comply with these terms and conditions are either automatically rejected with respect to non- compliance with non-negotiable terms and conditions or may be rejected, at UCF’s sole discretion, with respect to any other terms and conditions.
2. EXECUTION OF OFFERS: Offers must contain a manual signature of the representative authorized to legally bind the Respondent to the provisions herein. Offers must be typed or printed in ink. Use of erasable ink is not permitted. All corrections to prices made by vendor are to be initialed.
AUTHORIZED SIGNATURE (MANUAL)
Chris Smith, Senior Managing Director
AUTHORIZED SIGNATURE (TYPED), TITLE
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September 22, 2016
University of Central Florida
Email: [email protected]
Dear Cali,
Apex Systems (Apex) is pleased to submit our response to the University of Central
Florida’s (UCF) Invitation to Negotiate for Temporary Labor Services, No. 1602JCSA.
Leveraging 21 years’ of IT Staffing and services experience, our enclosed proposal
responds to your requirements for qualified professionals.
As the optimal partner to support UCF with IT professionals, Apex will drive
efficiencies for UCF through superior candidate quality, customer service, and
competitive pricing. UCF will receive focused, skill-based recruiting support for staff
augmentation requirements across a wide range of IT areas. Apex will adhere to
UCF’s recruiting process given our delivery model offers technical-based and
customizable screening to ensure our candidates exceed your requirements.
Apex has established relationships with vetted IT professionals across all major skill
areas and industries; we have access to over three million active and passive job
seekers in our Applicant Tracking System (ATS). Our client portfolio is expansive and
includes 70 education institutions and organizations with which we have placed
1,084 professionals since 2010.
In addition, Apex is a major supplier to a large local County in Florida. We are one of
three approved term contract vendors and have held this partnership over the last
seven years. UCF will receive the following benefits from a partnership with Apex:
► Local presence and dedicated account teams – Apex has a geographic presencenationwide with over 65 branch locations
► Apex’s ATS has over three million technical professionals and is supplemented
with over 5,000 new resumes of potential candidates
► With the support of over 600 skill-focused recruiters nationwide, Apex provides
strategic and streamlined skill-focused recruiting and customized screening thatfits UCF’s needs
► Reliability and delivery responsiveness with prompt placement of qualifiedtechnical professionals
We look forward to the next steps to build a professional partnership with UCF.
Please do not hesitate to contact me using the information below. We are truly
excited about the opportunity to partner with UCF and look forward to supporting
your upcoming staffing initiatives.
Respectfully,
Andrew Graziani
Account Manager
(813) 451-6925
11486 Corporate Boulevard
Orlando, Florida 32817
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A. Experience and Qualifications
1. Describe why your company believes it can provide and is qualified toprovide temporary labor services as described in this ITN. Highlight anymajor features, functions, value-adds, and areas of support thatdifferentiate your service from your competition.
As the 2nd largest IT staffing provider in the United States, Apex is an industry
leader.
Apex’s portfolio includes partnership and support of over 200 Fortune 500
corporations as well as government entities and educational institutions. Since 2010,
Apex has placed over 120,000 technical professionals and has delivered over 3,000
SOW’s. We have worked with over 70 education institutions and organizations for the
placement of 1,084 professionals, where 80% of these placements were for colleges
and universities. Furthermore, our placements resulted in an 84% retention rate
across all universities. The success of these endeavors stems from incorporating best
practices and processes that included, but are not limited to the following:
► Apex’s Applicant Tracking System
(ATS), Bullhorn – a database of
over three million candidates,
supplemented with over 5,000
resumes weekly
► 15 Skills Expertise Practices – IT
skill-focused recruiting efforts
primarily in infrastructure,
applications, and project
management; efforts in each area
are led by a Practice Director with a
strong technical background and a
team of over 600 technical
recruiters throughout North
America.
► Local Account Teams – Situated
to locally serve UCF with locations
in Orlando, Tampa, Jacksonville and Miami. Apex has over 65 branch office
locations strategically located throughout North America. These teams are
further supported by national delivery teams.
► Compliance – Apex’s corporate administrative teams include staff with expertise
in Legal, Contracting, Information Technology, Finance, Human Resource,
Contractor Care, etc.
► Customizable Delivery Model that further sets us apart from other staffing
firms by providing the following (Table 1.):
Figure 1. U.S. Locations
Apex has over 65 North American branch offices.
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Table 1.
Phase Apex Delivery Model Others’ Staffing Model
1. Qualify Requirement
Technical Practice Director reviews and qualifies requirement with hiring manager
Non-technical sales lead qualifies requirements with hiring manager
2. Screening Customization
Practice Director creates a customized screening based on requirements from the client
X
3. Initial Screening
Practice Director relays requirement information to Apex Recruiter, trained in required skills
X
4. Candidate Matching
Technical Recruiter uses local & national network to match candidates to client requirements
Non-technical recruiter source candidates with “key word” searches
5. Technical Evaluation
Candidates are technically screened by Apex Practice Directors ensuring skills match the requirements of the position, then are further vetted for organizational / environmental fit once a req has been identified
X
6. Reference Check
Recruiter checks references on the candidate Reference check on the candidate
Differentiators
Apex has achieved growth that has outperformed the staffing industry due to our
high performance and customer satisfaction. In addition, few can match our bottom-
line performance or the health of our balance sheet.
Figure 2. Apex Systems Growth
0%
5%
10%
15%
20%
25%
30%
35%
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Apex Growth IT Staffing Industry Growth
29%
15%
10% 7%
19%
7%
19%
15% 13%
6%
Annual Revenue Growth: Apex vs. IT Staffing Industry
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Apex further differentiates itself from competitors in the marketplace for contingent
labor services by the following:
► A more robust skill and industry focused account approach leads to a greater
level of expertise compared to our competition. Few companies are specialized in
areas such as PMO, Infrastructure, and Application within each unique subsector
such as education and business services. Apex partners with our clients to gain a
deeper understanding of current trends within their niche industry. This industry
approach also allows us to leverage our deep knowledge of your business to
identify the right talent with education industry experience.
► Diverse account portfolio comprising some of the most recognizable and largest
companies in the world. In addition, Apex is considered a “prime supplier” for
94% to these clients.
► Collective experience of our company’s leadership (100 years) of both our
staffing and managed services divisions that enables us to provide best-in-class
IT services that encompass the right balance of cost, project control, risk
management, and work quality.
► A 21-year history of growth through account performance as opposed to growth
through mergers and acquisitions.
Experience
Since 2010 Apex has placed more than 1,084 professionals with over 70 educational
institutions and organizations across America. Over the last three years Apex has
seen a 50% growth in the educational sector from 151 placements in 2012 to 228
last year.
Our top two educational clients include the following:
► A medical university ranked in the Top 20 for Best Biological Sciences
► An online institution with annual profits exceeding $400 million
Past Performance – Education
The highest filled skill sets that we have placed within education are as follows:
► Helpdesk Support
► EHR/EMR
► Developer
► Desktop Support
► Net/Sys Admin
► Project Managers
► PC Tech
► Business Analyst
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The following Table 2 shows Apex’s placements with educational clients made
nationally since 2010.
Table 2.
Practice Areas National Educational
Placements
Tech Support 336
PM/BA 245
EHR 120
Networking 92
Java/Open Source 72
Data/BI 47
Telecom 31
ERP 30
Microsoft 25
QA 15
Information Security 6
Legacy 4
Cloud/Mobile Development 2
Total 1,084
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Past Performance - Overall
Since 2014, we have placed over 53,068 placements in the following practice areas,
Table 3:
Table 3.
Practice Area Placements Since 2014
Tech Support 12,433
Non-Technical 11,396
PM/BA 9,446
Networking 4,533
Data/BI 3,590
Java/Open Source 2,700
Microsoft 1,854
Telecom 1,783
QA 1,747
Information Security 1,337
EHR 1,177
ERP 440
Legacy 237
Mobile Development 214
Cloud 104
Digital 77
Total
53,068
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Value Added Services
Apex achieves project efficiencies and cost savings for our clients through our
consulting services offerings. We take an innovative consulting approach to
each client project and determine the Apex resources best suited for client
success. By augmenting our traditional staffing services with consulting
services offerings, Apex provides full teams and/or managed projects in the
areas of:
The prevailing strengths of our consulting practice include:
Consulting Services, the ’New Normal’ for IT services
► IT services at half the price of traditional firms
► Teams assembled to fit the purpose, as compared with clearing the bench
► Seasoned consulting professionals leading project teams
Workforce Strategies for IT talent Optimization
► IT workforce strategy planning anticipates upcoming needs
► Sole Supplier capabilities
► Domestic sourcing options for reduced cost onshore projects
Support Service Centers User Support, Desktop Support,
Data Center with Workforce Management
Centers of Excellence Onshore Development Centers, QA &
Testing, Project Management with Workforce Management
Managed
Projects
Digital Enterprise Digital Marketing, Digital
Healthcare, Digital Workforce, Digital Finance, and Digital
Enterprise Software
Migration Services Windows Migrations, Data Center
and Office Migrations, Server Consolidation
IT Strategy Consulting IT Governance, IT Assessments,
Future State Visioning
IT Security Cybersecurity Assessments
and Security-Related Projects
Managed
Services Workforce Management
Enabling An On-demand Workforce With World Class Human Capital
Management Processes
Domestic Sourcing Domestic Location
Modeling and Analysis
Figure 3. Value Added Services
Apex also offers managed services and projects.
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2. Provide an overview and history of your company. Describe the organization of your company that includes the organizational structure.
Founded in 1995 and headquartered in Richmond, VA, Apex’s Founders pledged to
only hire the most motivated, friendly, and capable staff. People committed to
excellence in all they do and go above and beyond to meet the needs of others.
Today, our Founders are still fully integrated and hold true to their pledge. Over the
last 21 years, Apex, a division of On Assignment, has grown to be one of the top IT
Solutions and Staffing Firm in the U.S., with local account and recruiting teams in
over 65 branch offices throughout the United States and Canada.
We provide a scalable continuum of
services that includes IT staffing
solutions, workforce management
strategies, and deliverable-based
solutions designed to drive better
business performance. Apex is fully
integrated within each market and
community and has been supporting
local clients with a local presence and
national support for IT staffing and
professional services. Apex provides
IT staffing services on a contract,
contract-to-hire, project based (Bulk
Buy or SOW), and/or direct hire basis.
Acquired in 2012 by On Assignment,
Apex is now a large company and is
publicly traded on the NYSE: ASGN
and remains autonomously managed.
On Assignment, is a leading global provider of in-demand, skilled professionals in the
growing technology, healthcare, and life sciences sectors. The Company has a
network of approximately 130 branch offices throughout the United States, Canada,
United Kingdom, Netherlands, Ireland, Belgium, and Spain. Central operating
segments that comprise several dedicated divisions and Apex sister companies
include:
► Technology Staffing: Cyber Coders and Oxford Global Resources
► Life Sciences Staffing: Lab Support and Valesta
► Creative Staffing: Creative Circle
3. Provide information on your company size, industrial track record, financial stability, and years in business, etc.
Apex is the second largest IT staffing and services firm in the United States. Apex, a
division of On Assignment, boasted revenue of $1.48 billion in 2015. Our 21 years of
IT staffing industry experience coupled with our financial strength, allows us to
invest in the success of our clients as they grow, without the need of financial
support from our parent company.
Talent & Retention
Technical Screening & Selection
Skill-Based Recruiting
Understanding of Business & Technical Requirements
Local Market Expertise
Adaptable to UCF’s
Requirements
Figure 4. Flexible Processes Apex can adapt our processes to your requirements.
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Our client portfolio comprises some of the world's leading companies and
government organizations, including over 200 of the Fortune 500 companies. Our
commitment to client satisfaction strengthens our relationships and ensures that we
deliver a service effort designed to support UCF’s organizational objectives.
Accreditations and Associations
Apex accolades and professional associations include, but are
not limited to the following:
► Inavero’s 2015 Best of Staffing® Client award, the fifth year
in a row Apex has won the award
► Staffing Industry Analyst’s : 2nd Largest IT Staffing Firm
► TAPFIN Partner of the Year
► TAPFIN Elite Partner of 2015
► Agile-1 Supplier Excellence Awards : Gold Award
► ZeroChaos Proven Performer
► Apex received the Virginia Values Veterans (V3) Award from Virginia
Governor Terry McAuliffe commemorating ‘Most Veterans hired in an
Enterprise Company (1001+ employees)’
► Apex was recently awarded Top 10 Diversity Leading Employer
from a pool of 2200 vendors
4. Provide financial information on your company (e.g.,annual report, 10-K).
Apex has provided financial statements in Section D Other Requirements.
Further financial and public information can be accessed via On Assignment’s
Investor Relations web page, http://phx.corporate-
ir.net/phoenix.zhtml?c=105477&p=irol-irhome.
5. List three accounts that have similar needs to UCF. University and/orCollege accounts would be a plus.
Apex supports over 1,200 clients nationwide with local account teams strategically
situated in over 65 branch office locations in the United States and Canada. Over the
last five years, Apex has placed over 120,000 professionals in varying industries;
including 1,084 placements with reputable educational institutions and university
clients.
To speak on behalf of our quality service, we have provided client references listed in
the following Table 4.
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Table 4. References
APEX CLIENT REFERENCE NO. 1
Company/University Name & Address Orange County, Florida
Services Rendered & Length of Service Staffing Services, 7 Year Partnership
Contact Information for Reference
Kris Richarde
(407) 836-5209
APEX CLIENT REFERENCE NO. 2
Company/University Name & Address University of Texas Southwestern Medical
Center
Services Rendered & Length of Service Staffing Services – Partnership since 2010
Contact Information for Reference
Randy Pillow, I/R Manager
(214) 648-3111
APEX CLIENT REFERENCE NO. 3
Company/University Name & Address * University of Virginia, 915 Emmet St,
Charlottesville, VA
Services Rendered & Length of Service Staffing Services,
Contact Information for Reference
Teresa Wimmer
(434) 243-6861
* Please inform Andrew Graziani prior to contacting the University of Virginia reference. This will ensure
they are readily available for UCF’s call/email.
Case Study – Capacity Ramp-Up
Scope
Our client, an academic and research hospital, needed to migrate thousands of users
from GroupWise to Outlook quickly in order to maintain efficiency. This project would
require a staffing vendor to quickly ramp up a team of resources in order to
complete the migration, as well as a Helpdesk group to respond to issues regarding the transition.
Solution
Apex proactively sent in a tiger team of five professionals to assess the requirements
and begin preparation for the migration to Outlook. These five resources stayed
onboard during the duration of the project, providing guidance to ensure the
transition was seamless. Weekly meetings between Apex managers and client
stakeholders guaranteed that timelines were met and the project was running ahead of schedule.
Result
Within one day, Apex migrated 1,500 users from GroupWise to Outlook. Apex placed
36 contract employees on the project and slowly ramped down as the transition
required less support. Several of the contract employees were hired permanently to
safeguard the quality of the project.
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B. Project Staff Qualifications/Experience
1. List the total number of employees, include job titles and experience of individual(s) who will be assigned to the UCF account; include resume(s).
Apex employs 1,574 internal employees and has 9,575 active technical professionals.
We maintain a customized pipeline of candidates based on the unique needs of each
of our clients. By accessing our Applicant Tracking System, Bullhorn, a database of
over three million candidates that is supplemented with over 5,000 new professional
resumes on a weekly basis; Apex is capable of delivering qualified professionals that
are a best-match for their given assignment. Furthermore, Apex will utilize Bullhorn
to develop and maintain a customized UCF pipeline. By maintaining a pipeline of pre-
screened candidates, Apex can identify and provide UCF with candidate’s best
matching your requisites within 48-72 hours, on average and depending on
requirement.
Account Team
The Southeast market is Apex’s second largest U.S. market; as such we have
dedicated 18 of our prime branch offices to reside and locally support our clients
throughout the Southeast. Notably, our Orlando branch ranks in the top five out of
these 18 branch offices. The dedicated account team for UCF is locally situated in our
local Orlando branch office. Key account team members are listed in the
organizational chart below, followed by resumes.
Figure 5. Apex Account Team Organizational Chart
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Resumes for dedicated UCF account team members follow:
ANDREW MARK GRAZIANI
Account Manager
EXPERIENCE
Account Manager – Apex Systems
August 2015 – Present
Facilitated exponential growth of state and local government business by
successfully winning a bid through the State of Florida Department of
Management Services
Managing a portfolio of enterprise level corporations with 70% annual sales
growth with largest client
Successfully completed an advanced sales training program focused on
understanding IT industry trends and client retention and development
Contributed to a record setting year for the local Apex office in sales growth
from previous year
Participated in several local IT networking and user groups with a goal of
identifying top talent in the Orlando Market
Proactively Identified three new prospective clients and placed over a dozen
new contactors in the last 6 months
Account Executive – Markel Corporation
January 2015 - August 2015
Responsible for agency management and production of Florida, Tennessee
and Kentucky
Successfully launched state entry into Kentucky by actively recruiting new
agency base and establishing profitable relationships with independent agents
in that region
Increased year over year premium in designated states by more than 10%
Lead the sales team in production calls and onsite agency visits resulting in
largest Premium growth in the eastern region
Achieved monthly budget in designated states by continually looking for
opportunities to insure all lines for clients
Gathered valuable market and competitor research in order to be more
competitive with independent agents
Uncovered grow opportunities with underperforming independent agents to
help drive overall premium up
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Licensed Relationship Banker/ Manager on Duty – JPMorgan Chase & CO.
August 2011 – January 2015
Continually recognized as a top performing banker in the district by exceeding
$1 million in balance and investment growth annually
Manage a client book of business in excess of $6 million in customer assets by
meeting regularly with clients and taking a personalized approach to each
relationship
Contributed to exceeding new customer branch acquisition goal for 2013 by
115%
Primary focus of managing Private Client relationships through attracting new
customers as well as expanding existing client base by providing top tier
service and financial expertise
Increased referral business by 30% in 2013 through performing routine follow
up and cold calls with clients
Responsible for managing highest volume branch in district by performing
leadership duties including conflict resolution and overseeing the client
experience
Partner daily with JPMorgan financial advisor during client meetings to identify
needs and uncover growth opportunities to drive account balance growth for
the firm
Supervise daily branch operations including opening and closing procedures,
branch security, and overseeing cash vault access
EDUCATION, LICENSING AND SPECIALIZED TRAINING
Florida Gulf Coast University – July 2011
Bachelors of Science in Political Science
Series 6 Securities License – August 2012
Selected and sponsored by JPMorgan Chase to enter the firm’s securities
licensing program
Rigorous 3 month training program resulting in a passing score in the top 1%
of participants
State Of Florida Resident Health & Life Agent License – August 2012
License allows for variable and fixed annuity contracts
JPMorgan Chase Management Development Program – December 2012
Selected as one of thirty nationwide to pilot the management development
program
Extensive leadership training focused on ethics, branch security, peer
development and profit and loss management.
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CHRIS SMITH
Senior Managing Director
PROFESSIONAL EXPERIENCE
APEX SYSTEMS APRIL 2006 – PRESENT
SR. MANAGING DIRECTOR
Responsible for management, organizational development, training and
development, and operations for the Orlando market.
Manage a team including; Account Managers, Recruiters and a Delivery
Manager to support our clients in the area of technical staffing solutions.
Responsible for market strategy, account saturation, account penetration and
the overall customer/contractor experience.
Act as a business partner and subject matter expert to Director and C-Level
client managers with the objective of achieving a best-in-class staffing
solution for Information Technology and Engineering Departments.
Educate and engage clients in the areas of contract staffing, RPO, SOW, MSP
and VMS.
SR. ACCOUNT MANAGER
Effectively mastered the recruiter role and completed the Pre-Sales Development
Program with astonishing results. Nationally recognized to open the Orlando Branch
of Apex Systems due to proven results, management skills, resiliency, and more.
Manages staff of full time IT recruiters with high expectations for results.
Prospects new clients, establishes relationships, and maintains current
accounts.
Effectively taking part in contract negotiation, understanding business needs,
and ensuring overall client satisfaction.
Participates in key role for new internal hiring, development of recruiters, and
responsible for a successful the Pre-Sales Development Program.
Effectively sell key aspects and values of Apex Systems to potential clients
and identify ways that Apex can add value to the firm.
EDUCATION
COLORADO STATE UNIVERSITY
B.A. BUSINESS MANAGEMENT
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WILLIAM DAVIS
Vice President
PROFESSIONAL EXPERIENCE
Apex Systems
Vice President of Operations, Principal November 2011 – July 2013
Effectively build sales/delivery teams resulting in a Top 3 Account for Apex
Ability to grow local accounts into key National accounts with placements in 20 U.S.
markets
Partner with procurement executives to acquire Tier I vendor status
Develop and maintain VP and other key client relationships to ensure account
strategy is effectively communicated to all local branches and stakeholder
Mentor, coach, develop and drive a network of 25+ Account Managers to
exceed existing sales goals and help identify new opportunities
POC for all RFI/RFP/SOW to advise clients on the appropriate staffing model
based on IT goals
Apex Systems
Lead Account Executive January 2009 – November 2011
Responsible for overall success of Key Accounts Nationwide.
Develop and maintain VP and above level relationships to ensure the delivery
of accurate information to the corresponding Account Managers, Managing
Directors and offices nationwide
Lead monthly conference calls discussing metrics, best practices, upcoming
trends etc.
Mentor, motivate and educate AMs and TRs on how to be successful in
specific accounts and markets within the Healthcare Industry
Apex Systems
Account Manager August 2006 – January 2009
Engage in Business to Business sales with new and existing clients for supplemental
staffing or long-term consulting engagements in the fields of Information Technology, Business Applications and Telecommunications.
Act as business partner to advise clients on the appropriate staffing model
(staff augmentation, SOW, RPO, MSP, VMS) based on IT goals
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Possess sales skills in the areas of cold calling, closing, contract negotiating,
prospecting, client management, customer service and delivery
Maintain vendor relations by providing ongoing communication and problem
resolution for internal and external employee conflicts and deficiencies
Work closely with Delivery (Recruiting) Team to identify, screen and place
technical resources at clients throughout the state of Colorado
Consistently evaluate client base and future business opportunities to ensure
and validate an efficient strategy, growth and profitability
Apex Systems
Technical Recruiter February 2006 – August 2006
Work with local and national technical consultants to identify contract, contract-to-
permanent and permanent positions in the areas of IT, Business Applications, Telecommunications and Engineering.
Network with local User Groups, Technical Schools and Technology
Evangelists to grow and enhance the technical personnel community.
Source potential candidates by utilizing Apex’s proprietary database, referrals,
User Groups, job boards and advertising.
Maintain a best in class screening process by meeting all candidates for face-
to-face interviews, conducting reference checks and administering technical
tests.
Maintain strong relationships with technical personnel through consistent
communication, honesty and loyalty.
Serve as point of contact for career coaching, resume enhancements, pay
rate negotiations, benefits and payroll questions.
Work closely with Sales and Management Team to understand and deliver on
client’s needs.
EDUCATION
Metropolitan State College of Denver
Bachelor of Science, Journalism with emphasis in Public Relations
2000 – 2005
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JASON HANSEN
Senior Delivery Manager II
PROFESSIONAL EXPERIENCE
Sr. Delivery Manager-II January 2016-Present
Apex Systems
Tampa, FL
Same role as below, just promoted based on growth of Florida.
Responsible for overseeing recruiting (Delivery) throughout the 4 branches in
our Florida Market.
Responsible for evaluating business that comes in and allocating our delivery
team to support
Responsible for training new employees, new Account Managers, and Sales
Training employees
Working with recruiters on search techniques, “lock-Up” calls, and strategies
on finding available for talent for all IT requirements we take on.
Take part in meetings with AM’s to discuss open positions with clients and
breaking down the requirements from a technical standpoint to understand
what the client is looking for.
Responsible for analyzing performance data and putting together PowerPoint
Presentations to present to C level executives
Responsible for performance reviews and goal setting.
Sr. Delivery Manager July 2013-December 2015
Apex Systems
Tampa, FL
Responsible for overseeing recruiting (Delivery) throughout the 4 branches in
our Florida Market.
Responsible for evaluating business that comes in and allocating our delivery
team to support
Responsible for training new employees, new Account Managers, and Sales
Training employees
Working with recruiters on search techniques, “lock-Up” calls, and strategies
on finding available for talent for all IT requirements we take on.
Take part in meetings with AM’s to discuss open positions with clients and
breaking down the requirements from a technical standpoint to understand
what the client is looking for.
Responsible for performance reviews and goal setting.
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Sr. Professional Recruiter July 2011-June 2013
Apex Systems
Tampa, FL
Lead Recruiter supporting the Tampa branch of our IT business.
Focused on various skillsets including but not limited to: Data/BI, QA, App
Dev, Infrastructure, and Engineering.
Responsible for training junior TR’s new to Apex and mentoring TR’s with
more than 1 year of experience.
Responsible for putting together meeting agendas and allocation for TR’s in
Tampa
Qualified for 14 consecutive Quarterly Bonuses and 2 consecutive Founder’s
Club Trips for the top 15% of TR’s within the company.
Technical Recruiter October 20007-June 2011
Apex Systems
Tampa, FL
Focused on various skillsets including but not limited to: Data/BI, QA, App
Dev, Infrastructure, and Engineering.
Took part in tech training for App Dev (java. Microsoft, Data/BI, and QA)
Participated in multiple networking events throughout each year to help grow
my pipeline of candidates and learn more about the industry.
Took part in Culture/Team Building committee for Apex Tampa to try and
help build a culture amongst the AM’s and TR’s in the branch.
Served as Philanthropic Chair for Tampa in arranging our office participation
and fund raising efforts for Relay for Life and Metropolitan Ministries.
EDUCATION:
Florida State University
April 2007
BS-English with Emphasis on Business
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WENDY E. HARRIS
Senior Professional Recruiter
SUMMARY
Performance driven Professional Recruiter with 5+ years of experience in full lifecycle
recruiting including qualifying positions with clients, understanding client’s
requirements, determining the optimal search strategy, utilizing various recruiting
tools, qualifying candidates including conducting technical screenings, assessments,
and reference checks, seeing the candidate through the interviewing and onboarding
process, as well as maintaining an ongoing relationship with the contractor after they
start the assignment including giving performance reviews. Very active in the
technical community and maintain ongoing relationships with user groups to find new
talent and stay up to date on technical trends within the market.
CORE COMPETENCIES
Recruiting, Sourcing, &
Interviewing
Leadership & Training Contractor & Client
Relationships
Recruiting Tools
(LinkedIn, Monster,
CareerBuilder, Dice,
Ladders, Indeed,
Craigslist, etc.)
Client Compliance &
Background Checks
Planning &
Organization
Identifying Quality
Candidates
Hiring / Training /
Coaching
Extending Offers &
Onboarding
PROFESSIONAL EXPERIENCE
Apex Systems Inc. (Orlando, FL) March 2011-Present
Senior Professional Recruiter & Delivery Lead (July 2015 – Present)
Professional Recruiter & Delivery Lead (January 2015-July 2015)
Professional Recruiter (January 2014 – January 2015)
Technical Recruiter (March 2011- January 2014)
Provide strategic and high quality staffing services for Fortune 500 companies
in the IT industry
Responsible for full life cycle recruiting for sourcing and placing candidates in
contract, contract to hire, and direct hire positions
Recruit prospective candidates utilizing multiple recruiting resources
including: Apex’s Bullhorn Database, job posting websites (Monster,
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CareerBuilder, Dice, etc.), user group meetings, job fairs, networking events,
symposiums, 3rd party vendors and referrals
Screen and vet prospective candidates to ensure their qualifications meet the
client’s requirements and expectations through phone screens, in person
interviews, technical phone screens with seasoned experts, skills
assessments, and reference checks
Present job opportunities to qualified candidates and negotiate contract terms
including salary, benefits, and expected start date
Establish and maintain relationships with current contractors and large
candidate pipeline through frequent communication, lunches, and networking
events
Work directly with clients and account managers to qualify position
requirements prior to deploying recruitment efforts
Act as the liaison between the candidate and the client by coordinating
schedules, setting up interviews, and providing guidance and feedback
throughout the process
Document candidate information, progression, and client feedback in the
Apex Database
Assist in training and mentoring the recruitment team by providing guidance
on best practices, company policies, client expectations, performance
standards, and database usage
Ravgen Diagnostics (Orlando, FL) October 2010-February 2011
Account Manager
Created and implemented business plan to maximize time and cost efficiency
for the Central Florida region
Presented noninvasive prenatal diagnostic testing technology to
knowledgeable professionals in the field.
Set up infrastructure in territory by establishing regional blood drawing sites
with providers to enable patients to use testing technology
Utilized excel skills to create and manage spreadsheets documenting daily
sales plans and strategies
Infiltrated 86% of the target practices within the first month of managing the
region and made sales visits to an average of 10 sites per day
Successfully completed comprehensive 6 week training program in sales and
biomedical engineering at headquarters in Columbia, Maryland
INTERNSHIPS
Energizer Battery Company (St. Louis, MO) March 2008-June 2008
Intern - Transportation and Logistics
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Presented and implemented project proposal to change shipping lanes for
Sam’s DCs resulting in savings of $328,000
Managed the daily load planning for all DC shipments while utilizing Red
Prairie’s Transportation Management System (TMS)
Participated in a kaizen for integrating Energizer’s transportation systems for
Hawaiian Tropic, Schick, Playtex, and Energizer Brands
Utilized excel and access skills to create tools for reports and analysis
Calculated and analyzed data to find opportunities to decrease spending in
the transportation department
Created daily cut reports using SAP and OTC
Analyzed data derived from Manugistics and the low stock report to monitor
inventory levels
Quadax Incorporated (Cleveland, OH) June 2007-September 2007
Intern - Account Receivables Services
Directed customer workflows through the Quadax intranet HARP system
(Healthcare Accounts Receivable Processor)
Resolved patient inquiries and filed appeals for denied claims
Communicated with insurance companies to ensure payment of patient
procedures
Completed Health Insurance Portability and Accountability (HIPAA) training
EDUCATION
The Ohio State University (2005-2009)
Graduated with a Bachelor’s Degree from the Fisher College of Business,
Majors: Marketing, Logistics
Magna Cum Laude, Cumulative GPA: 3.71
University Honor’s Program & Dean’s List (10 quarters)
Student Leadership Experience: Undergraduate Women’s Business
Association (UBWA) , The Logistics Association (TLA), American Marketing
Association (AMA), Net Impact
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CARL DUNN
Technical Recruiter
SUMMARY
Charismatic, energetic, critical thinker with solid experience of Leadership,
Recruiting, Sales, Business Development, Marketing, and Training experience
coupled with undergraduate degree and proven track record of success.
AWARDS/AFFILIATIONS
Received COMSYS Chairman’s Club Award in April 2008 (top performers)
Graduate of the Edward R. Murrow School of Communications.
Held leadership positions in the Pi Kappa Alpha Fraternity.
PROFESSIONAL EXPERIENCE
Apex Systems, Inc. Orlando, FL
Technical Recruiter January 2012 to Present
Utilized established, proven recruiting resources to attract qualified
professionals interested in contract, contract-to-hire and direct hire
employment.
Screened candidates to ensure their qualifications met open positions.
Conducted skills testing, office interviews, reference checks and background
investigations.
Presented job opportunities to qualified candidates and negotiated contract
terms.
Prepared candidates for the client interview process.
Built professional relationships with contract employees through lunch
meetings and on-site visits.
Networked with professionals for new business opportunities and referrals.
Software Resources Lake Mary, FL
Technical Recruiter February 2011 to December
2011
Utilized direct sourcing, industry networking, the internet, proprietary
database, job boards and referrals to recruit candidates for various Fortune
500 companies nationwide.
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Managed relationships with approved 3rd party vendors.
Worked with Account Managers to identify top accounts, target skill sets, key
market segments, and to assess clients’ staffing requirements.
Developed staffing plans to generate a qualified pool of applicants for current
and future openings.
Presented job opportunities to qualified candidates and negotiate contract
terms.
Evaluated candidates’ strengths compared with clients’ requirements by
screening, interviewing, and testing the candidate technically through
Brainbench or PreVisor.
Continued relationships with newly hired consultants and permanent
placements once on board to assure smooth transition to the client.
Coached/prepped candidates on interview best practices to ensure they made
a favorable impression to hiring managers.
Completed necessary pre-employment processes including reference,
background and drug tests.
Kforce Professional Staffing Maitland, FL
Technical Recruiter September 2009 to February 2011
Utilized internal database to identify potential candidates.
Placed job requirements on the Internet to increase available candidate pool.
Developed creative recruiting resources to attract qualified professionals
interested in contract, contract to hire and direct placement employment.
Identify networking activities such as attending career fairs, professional
association meetings, calling on technical schools and outplacement services.
Screened candidates to ensure their qualifications meet open positions.
Conducted skills testing, office interviews, reference checks and background
investigations.
Presented job opportunities to qualified candidates and negotiate contract
terms.
Prepared resumes for presentation to clients.
Coached candidates through the client interview process.
Meet contractors on the first day of their assignment at the client site.
Built relationships with contract employees through different activities
including weekly lunch meetings and monthly calls.
Comsys IT Services Orlando, FL
Placement Manager December 2007 to
August 2009
Performed full lifecycle recruiting utilizing a combination of referrals,
networking, the Internet, job postings and a proprietary database.
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Recruited, interviewed, and reference checked contractors and permanent
candidates from entry level to executive positions.
Conduct pre-screening phone/in-person interviews on selected applicants to
ensure candidates met minimum job requirements.
Coached and prepared candidates for in-person and phone interviews.
Posted, updated, and maintained Internet job postings for current jobs on all
the major job boards.
Generated detailed leads which allowed the sales team to solicit new business
and obtain new job orders.
Continued relationships with newly hired consultants and permanent
placements once on board to assure smooth transition to the client.
Managed relationships with approved 3rd party vendors.
Generated $420,949 in revenue for the company.
ABTSolutions Orlando, FL
Technical Recruiter/Account Executive February 2007 to December
2007
Started this position with no experience in the staffing industry and soon
became a contributing member of the recruiting team.
Managed a full staffing desk-both candidate recruiting and client sales.
Recruited IT professionals by sourcing, interviewing, reference verification,
and placing for temporary and permanent positions.
Qualified candidates through telephone and in-person interviews.
Negotiate contracts, salaries, and hourly rates for all IT resources hired.
Contact hiring managers concerning new positions, clarification on new
requirements, feedback on candidates, setting up interviews and acceptance
offers from candidates.
Partnered with hiring managers on new requisitions and headcount
forecasting.
Test potential candidates’ technical competency using on-line testing
resources.
EDUCATION
Washington State University Pullman, WA
Bachelor of Arts degree from the Edward R. Murrow School of
Communications.
Emphasis on Advertising with a minor in Business Administration
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ERIC PEACOTT
Technical Recruiter
SUMMARY High Energy professional with experience in full lifecycle staffing. Experience
working with individuals of all levels to provide exceptional customer service to meet
clients criteria. A background that encompasses sales, service industry experience
and customer service allow for a versatile skill set that can help aid within your
company.
PROFESSIONAL EXPERIENCE Apex Systems, Inc. – Orlando, FL April 2012 to Present Professional Recruiter (January 2015-Present)
Technical Recruiter (April 2012-December 2014)
Provide staffing and recruitment solutions for Fortune 500, mid-market, and
emerging companies specializing in placing IT professionals in contracts,
contract to hires and direct permanent placement roles.
Utilize recruitment tools and databases, in combination with networking, to
identify qualified potential candidates for placement.
Initiate contact with job seekers, build relationships and provide quality
assurance by reviewing resumes, conducting phone screens followed by
internal interviews, completing reference checks and candidate skill testing.
Set up on site interviews for quality, qualified candidates; prep candidates for
interviews, set up timelines in terms of availability, start dates, and potential
end dates; build and maintain relationships with candidates and clients,
perform constant check-in’s, and act as a liaison between the two parties.
Personally responsible and accountable for finding leads, establishing
connections, and placing candidates while promoting company image and
building candidate pipelines.
Achieved Founders’ Club for Company’s Top Performers 2014
EDUCATION George Mason University- Fairfax, Virginia; May 2010
Bachelor of Arts in Communications- Concentration in Public Relations OPERATING SYSTEMS & APPLICATIONS Microsoft Office- Excel, Outlook, PowerPoint and Word; Recruiting Tools and
Databases- Bullhorn, CareerBuilder, Monster, Dice, and LinkedIn Professional
Recruiter
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2. Clearly identify the skill sets your staff is capable of providing, and clearly indicate if subcontractors or sub-consultants will be used. Identify special projects they have staffed, any membership in professional organizations relevant to the performance of this
As a full service IT and professional staffing firm, specializing in 15 skill areas within
all major IT disciplines, Apex can support UCF’s IT staffing initiatives. Apex will use
these practices to source niche skillsets and qualify highly technical UCF
requirements. These practices also drive Apex’s efforts to maintain knowledge of the
latest technology trends across North America within their respective disciplines.
To ensure that UCF’s niche or hard-to-fill requirements are addressed successfully,
Apex will adjust and customize our specialization areas based on trends and UCF’s
demand. Using this guidance, along with our Skill Expertise Practices, Apex can
source candidates locally, throughout Florida and on a national basis for in demand
skill sets. Using these practices, we currently support over 1,200 clients and had
over 27,000 technical professionals on assignment in 2015 to a wide variety of
skillsets. If necessary, Apex has an Associate Vendor Program and has the ability to
engage subcontractors to supplement staffing and diversity initiatives.
Table 5. Skill Disciplines
Technical Support Mobile Application Security
Microsoft Healthcare IT QA & SW Testing
Networking Digital Enterprise Java & Open Source
Project Management Cloud Computing Legacy
Telecom Packaged Software BI & Data Warehousing
Table 5. Each skill area is based on client demand and led by a Practice Director with relevant subject matter expertise.
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Skill Focused Practices and Recruiting Methodology
Apex recruiters are skill focused instead of account focused to ensure a
greater technical match. This means that UCF’s needs will be quickly attended
to by a dedicated and knowledgeable resource with actual knowledge of the
required skill set. Being skill focused provides UCF with a:
► Higher caliber of candidates through a better understanding of
requirements
► Stronger applicant pipeline when our delivery teams focus on specific skills
► Shorter response time results from more efficient and knowledgeable skill
screening
A skill-focused approach has proven to improve candidate quality when
recruiters are able to provide technical expertise. Our Practice Directors and
leaders are experts in major IT skill areas and disciplines that fall under
Applications, Infrastructure, and PMO.
Apex's Skills Expertise Practices are led by Practice Directors with extensive
skill-focused backgrounds resulting in increased technical knowledge across
the company and thorough skill-focused screening of candidates. They lead
teams of recruiters that solely concentrate on proactively identifying and
screening candidates within specific technologies, while assist our recruiting
teams by providing advanced technical screening and testing to identify the
best candidates. Candidates that have been vetted by our Practice Directors
are 35% more likely to be selected by our clients.
Apex has a geographic depth with over 65 branch offices throughout North
America that service over 60 markets. Locally, Apex has four prominent
offices strategically located throughout Florida in Jacksonville, Orlando,
Tampa, and Miami. A combined placement for the branches includes 3,901
professionals, since 2010.
Apex is a member of the following professional organizations:
► American Staffing Association (ASA); promoting legal, ethical, and
professional practices for the staffing industry
https://americanstaffing.net/
► Staffing Industry Analyst (SIA); the Global Advisor on Staffing and
Workforce Solutions http://www.staffingindustry.com/
► The College of Healthcare Information Management Executives (CHIME)
Following, we have provided a case study for one of the special projects that
our local Florida account teams supported.
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Case Study – Staff Augmentation Services
Scope and Objectives
As a result of strong performance staffing our client’s call centers in four
Florida markets, Apex was selected to propose a cost-effective solution as the
sole supplier for 325 customer services advocates. The program required
resources to complete an eight-week training to provide top quality service,
while maintaining a high level of retention.
Solution
Apex developed a customized screening and interview process with local and
national support. We dedicated two account managers, seven skill-focused
recruiters, two delivery managers, contractor support, and an administrative
assistant. Apex’s account managers worked closely with our client’s key
stakeholders to understand the requirements and allow the recruiters to
create a robust screening strategy. To further enhance our screening process,
Apex dedicated national support to find the best available talent in each
market.
To alleviate attrition during enrollment and training, we developed rate
increase and awards programs for our resources. The rate increase program
offered built-in increases, given upon completing training and then 60 days of
a resource actively being in their role. The rewards program included top
assessment scores, best attendance and most valuable team player.
Result
Apex developed a strong relationship with this client and partnered with them
to develop an orientation package for this large scale project. Apex was
responsible for sourcing, screening, interviewing, onboarding and managing
the orientation and successful placement of 325 customer service advocates.
Once implemented, our solution proved to be cost-effective by streamlining
the hiring process and improving the attrition rate. Attrition decreased to
24% compared to the industry average of 34% and costs were maintained as
required.
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C. Overall Responsiveness of Proposal
1. Describe your company’s capacity in providing services in all temporary labor areas, including non- management, management and technical categories. Also, how do you propose to deliver these services to UCF in a timely manner?
Apex has the capacity to support all UCF’s staffing initiatives that includes, but are
not limited to technical, managerial and non-managerial professionals. We will utilize
our proven best practices, dedicated recruiting and account teams, as well as a
database of over three million candidates that is supplemented with over 5,000 new
resumes on a weekly basis.
Over the past five years, Apex has placed over 120,000 professionals to more than
1,200 clients nationwide. In 2015 alone, we had over 27,000 professionals on
assignment with a current overall retention rate of 82%.
The following Table 6 is a representative of candidate placements:
Table 6. Practice Area Placements
PRACTICE AREA
PLACEMENTS SINCE 2010 GROUP
Tech Support 27,638 Technical
PM/BA 18,551 Managerial
Non-Technical 17,055 Non-Technical
Networking 9,730 Technical
Data/BI 6,303 Technical
Java/Open Source 4,822 Technical
Telecom 3,835 Technical
QA 3,811 Technical
Microsoft 3,675 Technical
Information Security 2,099 Technical
EHR 1,899 Technical
ERP 1,076 Technical
Legacy 701 Technical
Mobile Development 306 Technical
Cloud 145 Technical
Digital 77 Technical
TOTAL
101,723
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The following Table 7 is representative of placements made by our Florida
branches offices since 2010:
Table 7. Apex’s Florida Branch Offices - Placements
GROUP
PLACEMENTS
Technical 2,211
Non-Technical 935
Managerial 755
TOTAL 3,901
To delivery compliant and timely services, Apex will use a customized recruiting
strategy for UCF that will be utilized by all branches where we support UCF job
requirements. Our recruiting strategy for UCF will be to proactively source candidates
that possess both the technical and soft skills necessary to work at UCF. This
strategy will maximize our job fill rate and increase both performance and retention
once onsite at UCF.
In addition, by understanding UCF requirements and environment, our recruiters will
continuously source candidates with these qualities and generate a “UCF Pipeline" of
custom-fit individuals. Client partnerships start with total transparency and are
followed through with a planned level and frequency of communication to stay
abreast of current and future staffing initiatives and workloads. This approach
dramatically reduces the time it will take Apex to fill a requirement and will increase
the fill rate.
Identify Need
Once Account Manager Andrew Graziani receives a UCF requisition, he disseminates
the job description, environment, contract length, and budget to the UCF Account
and Delivery Team. Apex’ staffing process is designed to provide qualified candidates
in a timely manner. On average, candidates are submitted to UCF within 48 to 72
hours.
Sourcing
Apex’ skill-based recruiters source custom-fit candidates utilizing a variety of
sourcing strategies, such as our ATS database of over three million candidates
nationwide, referrals, open houses/networking, social networking, and diversity-
based job fairs to ensure that we have sufficient professionals available to rapidly
respond to UCF’s requirements. We will also use these sourcing tools to develop and
maintain a “UCF Pipeline" of prescreened candidates.
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Referrals
As one of the largest employers of IT professionals in the United States, we
have either direct or indirect relationships with a significant percentage of the
IT talent available. By offering our technical professionals a strong referral
bonus program, we are able to use our extensive relationships with IT
professionals to access a significant number of technical professionals that
may be interested in a new career but have not posted on job boards.
Apex has local Contractor Relationship Coordinators in each major branch as
well as a national Contractor Care Center to ensure all technical professionals
have access to the resources and information required for a positive
professional experience. This positive experience often results in many
contractors referring there colleagues to work with Apex.
Networking
An important part of Apex’s local recruiting approach is building links between
our recruiting teams and local technical communities such as technical
schools and universities. Apex recruiters frequently attend local user groups
within their assigned skill areas to meet with and identify talented local
technical professionals. Apex branches also support and host local technical
community events for user groups and provide open house meetings as a
means for networking. Apex also participates in several national
organizations, such as MSSQLTips.com, to build knowledge of our firm
amongst technical communities. We also leverage social networking sites
such as LinkedIn, Facebook, and Twitter. We use specific, technology-focused
job boards and attend targeted job fairs.
Applicant Tracking System (ATS), Bullhorn Candidate Database
Our Applicant Tracking System (ATS), Bullhorn currently hosts over three
million candidates nationwide and is supplemented with over 5,000 new
resumes on a weekly basis. Our ATS tracks each technical professional’s
experience, preferences, and past assignment performance. In addition, our
ATS is integrated with five major professional networking and employment
search sites: Monster, CareerBuilder, LinkedIn, Dice, and Indeed, as well our
technical aptitude verification partner, Prove It!. This streamlined process
makes it possible for our delivery teams to see similar job openings
nationwide and view prescreened candidates for those openings.
Selection
The Apex recruiter that identified the candidate will meet with Andrew to conduct a
submittal review. This process validates that the candidates match all of the
requirements and allows for additional quality control. Once the recruiter meets with
Andrew, he will decide on the best overall candidate(s) to be submitted to UCF. We
make recommendations based on three criteria:
► Do they fit the UCF environment?
► Does the candidate have the skills necessary to do the job?
► Is the candidate reliable?
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Finally, Andrew submits two to three candidates per opening and helps facilitate the
UCF interview process. This is dependent on the required processes outlined by UCF.
Our philosophy is that every candidate must meet all three of the above criteria. This
is essential to appropriately assess the candidate’s commitment to the project and to
ensure a custom fit with UCF’s culture. We feel our job is to facilitate these
discussions and provide the hiring manager the best candidate for the position.
Figure 7 below demonstrates Apex’s proven and customizable screening and
onboarding process.
Apex Screening and Onboarding
Figure 7. Recruiting Process. This proven process is designed to take each candidate through the recruiting lifecycle quickly, while ensuring candidate quality. Steps are customized
specifically to UCF, allowing your managers to focus on critical business needs while, Apex handles the recruiting functions.
2. Describe how urgent requests are handled.
The service model described above is designed to be flexible. While our goal for the
UCF account will be to maintain a compliant job fill rate, we are realistic in our
understanding that spikes in volume and nationwide job requests may pose a
challenge throughout the duration of our relationship. As a best practice, your local
account team will devote time to UCF in preparation of urgent requests, high volume
projects, and any requests outside of our normal scope. This will eliminate any ramp-
up needed to understand your technical and business requirements.
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Local Support
The primary responsibility for supplying candidates to UCF will be designated
to local account teams and recruiters depending on select markets. However,
as main point of contact and for the purposes of this solicitation, we have
dedicated our local Orland account team, that is led by Senior Managing
Director Chris Smith and Account Manager, Andrew Graziani. They will
coordinate with the appropriate local account, recruiting and delivery team(s)
as these teams have intimate familiarity with local talent pools and work to
build upon existing and new relationships within the local technical
community.
National Delivery Center
In addition to the local recruiting teams, we can draw on the strength of
Apex’s National Delivery Centers and a recruiting engine of over 600 full time
technical and skill-focused recruiters. These two Delivery Centers house
nearly 200 of over 600 recruiters that are available to assist our local
recruiting teams when client needs dictate. UCF will have full access to these
resources if Apex is awarded this contract. Our model will ensure that UCF
receives local, personalized service, while also having access to expedited
resources as needed with the expertise of a leading IT staffing and services
firm. All Apex delivery teams will have access to and utilize the following tools
as a best practice.
UCF Candidate Pipeline
Apex’s recruiting methodology for UCF will be centered on a pipeline of
custom-fit, prescreened candidates specific to your business, technical, and
cultural needs. To accomplish this, we will match all UCF requirements to our
candidate search and maximize all recruiting channels to provide the most
qualified custom-fit candidates. By building and maintaining a pipeline of
prescreened candidates affords us the opportunity to submit the best fit
candidate almost immediately, thereby reducing the time it takes to have a
candidate onsite and working. Using this approach, Apex has developed a
target of submitting a candidate to clients within 48 to 72 hours of receiving a
request. Apex local recruiting teams use their technical knowledge to
constantly search for technical professionals with key skills for their clients
and add to our candidate database/ATS. The three most critical components
to building a “UCF Pipeline” are the following:
1 Match all UCF requirements to our candidate search
2 Maximize all recruiting channels to provide the most qualified custom-fit
candidate including:
Applicant Tracking System
Job boards
Candidate referrals
Previously employed technical professionals
Local technical associations and user groups
3 Constantly augment our candidate pool through social networking,
referrals, and local user groups
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Applicant Tracking System (ATS)
As previously discussed, Apex’s ATS currently hosts over three million
candidates nationwide and is supplemented with over 5,000 new resumes
weekly. This streamlined process makes it possible for our delivery teams to
see similar job openings nationwide and view prescreened candidates for
those openings.
Associate Vendor Program (AVP)
To supplement our IT staffing services, Apex maintains a best-in-class vendor
community comprised of a pool of diverse suppliers. Our AVP enables Apex to
support all of our clients’ diversity initiatives as well as help our clients reduce
financial and legal exposure by utilizing the services of one vendor. Currently,
86% of AVP vendors are certified as minority and/or women owned firms.
3. Provide an explanation of how background checks will be processed.
Apex’s dedicated Compliance Department manages our background checks and drug
screenings. Daily monitoring of the screening process ensures proper turnaround
time. Once a background check is completed, we will review the results in
accordance with UCF’s criteria. The Compliance Department will also track all of our
professionals’ screenings, and will maintain the most recent documentation, as well
as communicate the results with UCF’s dedicated Account Manager, Andrew Graziani.
Weekly audits will be performed to ensure that all compliance requirements are
being adhered to by our front office teams.
4. Describe your process of vetting employees to meet the needs of the university; including professional appearance, reliability and workplace skills.
Our proactive recruiting approach and our thorough screening process are the
backbone of our organization. To screen candidates and ensure UCF compliance for
professional appearance, reliability, and workplace skills, our dedicated account team
will use a best practice process that includes, but is not limited to, the following:
Telephone Screening
Apex uses this initial screen to verify candidates’ basic skill proficiencies,
availability, and overall interest in a position to establish a pool of potential
candidates.
In-Person or Skype Interview
During this interview, our technical recruiter and/or technical analyst evaluate
the candidate’s technical aptitude, professional demeanor, and overall
commitment to the proposed assignment.
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Skill Proficiency Testing
Using the services of our technical aptitude verification partner, Prove It!, our
recruiters are able to further assess a candidate’s skill proficiency by testing
the candidate’s skills.
Technical Reference Checks
Apex recruiters request and verify a minimum of two technical, managerial
references to verify candidates’ past performance and job history.
Drug Testing
Apex uses the services available through SterlingBackcheck; however, we will
be happy to utilize UCF’s preferred vendor if required.
Criminal Background Checks
Apex uses the services available through SterlingBackcheck; however, we will
be happy to utilize UCF’s preferred vendor if required.
Advanced Screening
Apex’s delivery and recruiting team will conduct an in depth screening to
ensure the candidate’s familiarity with the required skillsets they will be
supporting, as well as training and other pertinent processes/roles required
by UCF.
5. What is your company’s fill percentage and lead time to get an employee ready to work?
On an annual basis, Apex receives more than 100,000 requests spread over 60
markets. For the first three quarters of 2016, Apex’s Florida markets received 3,100
requests achieving a 65 percentage fill ratio on qualified requests. Currently, Apex’s
Florida markets have 520 active contractors/consultants supporting local clients.
Apex will utilize our ATS to develop and maintain a customized UCF pipeline. By
maintaining a pipeline of pre-screened candidates, Apex can identify and provide
UCF with candidate’s best matching your requirements within 48 to 72 hours, on
average and depending on type of requirement.
39
D. Other Requirements
The following section includes Addendum 1, forms Appendix II through V, as well as
Apex Systems, division of On Assignment 2015 financials. The remainder of this
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Addendum 1
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1
IMPORTANT DOCUMENT – INVITATION TO BID REVISION
ITB NUMBER: 1602JCSA OPENING DATE & TIME: September 22, 2016 @ 2:00 p.m.
ITB TITLE: Temporary Labor Services
ADDENDUM NUMBER: 1 ADDENDUM DATE: September 9, 2016
The purpose of this addendum is to answer questions submitted by vendors during the open
question period.
See below addendum continuation sheet.
Andrew Graziani BIDDER SIGNATURE PRINT OR TYPE PROPOSER’S NAME
Apex Systems, LLC [email protected] COMPANY NAME EMAIL ADDRESS
September 19, 2016 DATE
PLEASE ACKNOWLEDGE RECEIPT OF THIS ADDENDUM BY SIGNING AND RETURNING IT, AND
ALL OTHER REQUIREMENTS WITH YOUR PROPOSAL. FAILURE TO SIGN AND RETURN WITH
YOUR PROPOSAL COULD RESULT IN REJECTION OF YOUR PROPOSAL.
2
Answers to Questions ITN 1602JCSA
Temporary Labor Services
1. What is the budget limitation of this RFP? UCF Answer: Positions will be identified and filled on an as needed basis.
2. Is it a single or multiple award? UCF Answer: We anticipate a multiple award.
3. Is there any service provider of the same services in the past, if yes then please share the details of the service provider along with the last year’s outlay? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
4. Present vendor(s)?
UCF Answer: This will be a new contract.
5. Award date(s)?
UCF Answer: However, we estimate approximately December 1, 2016. This is a three year contract
with two additional one year renewals.
6. Hourly billing rates for each category at the time of award?
UCF Answer: We are not asking for billing rates at this time.
7. Prevailing/Living wage requirements at time of award?
UCF Answer: Since the ITN is to secure hires through a temporary staffing agency where there will
not be an employer-employee relationship established with UCF, we do not feel the pay rates the
institution is utilizing for the time being are applicable and agree with your suggestion that we
decline to respond to this question.
8. Current billing rates?
UCF Answer: This will be a new contract.
9. Bid tabulation from current award?
UCF Answer: This will be a new contract.
10. What is the current budget for the contract?
UCF Answer: There is no budget limitation.
11. How much was spent (dollar value) on this service last year?
UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
12. How much is intended to be spent once the contract is awarded?
UCF Answer: We cannot estimate how much will be spent at this time. Positions will me identified
and filled on an as needed basis as determined by individual departments and work locations.
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13. How many temporary employees currently work under this contract?
UCF Answer: This will be a new contract.
14. How many vendors will be awarded as a result of this solicitation?
UCF Answer: We do not know how many suppliers will be awarded.
15. The document describes a very high level of the scope of temporary service categories such as
accounting, training, support staff, information technologies, etc. Can you provide a more detail list of
skills or technologies required?
UCF Answer: We are looking to cover all the areas mentioned in the ITN. The list of skills and specific
scope of work requirements will be provided at the time the need is identified.
16. We specialize in all IT products and services, so I wanted to get a better idea of what type of
information technology services this ITN consists of?
UCF Answer: We are looking for all areas of IT.
17. Is the job order request a competitive billing rate bid for each new job request? Is it an auction for
the lowest rate?
UCF Answer: Yes.
18. We will submit items to be review in the Terms & Conditions section. When can we expect a
response to negotiate the terms?
UCF Answer: Please refer to Appendix II Supplemental Offer Sheet Terms and Conditions.
19. How many vendors will be selected? Our organization provides, light industrial, maintenance,
clerical, contact center, administrative, finance, accounting, IT and engineering talent. Will a full
service organization be weighted higher than a niche specialty or vice versa?
UCF Answer: We do not know how many suppliers will be awarded.
20. Do you require monthly invoicing?
UCF Answer: The Scope of Work in the IT says monthly invoicing and provides the details of what is
to be noted on the invoice.
21. Are your payment terms 30 days?
UCF Answer: All payment terms will be addressed after an award is made.
22. What information needs to be on the invoice? UCF Answer: See #20.
23. Does the university prefer an excel spreadsheet for billing? UCF Answer: All billing questions will be addressed after an award is made.
24. Does the invoice need to be emailed to the Accounts Payable department?
UCF Answer: All invoice questions will be addressed after an award is made.
4
25. Do you have any drug testing requirements? If so do you require a 5 or 10 panel screen?
UCF Answer: We do not at this time.
26. Are all the background screens listed in the Scope of Work necessary for all positions?
UCF Answer: Yes, background checks will be required for any temporary position filled.
27. What is your payment method i.e. check, ACH, credit card?
UCF Answer: All payment terms will be addressed after an award is made.
28. Would you please provide your current contract pricing
UCF Answer: This will be a new contract since June 2011.
29. What was your 2015 spend on temporary labor?
UCF Answer: We do not have this information at this time.
30. How many temporary workers are currently assigned at UCF?
UCF Answer: We do not have this information at this time.
31. How many incumbent vendors are there?
UCF Answer: None
32. Will you be transitioning temporary employees if a new vendor is chosen?
UCF Answer: N/A
33. Are there any vendor guarantees?
UCF Answer: No.
34. Why are you going out to bid at this time?
UCF Answer: We would like to have our own contract in place for temporary labor.
35. What are your challenges today?
UCF Answer: We do not have any temporary labor challenges at the moment.
36. Can you provide job descriptions?
UCF Answer: We can provide job descriptions at the time of award.
37. Do you have M/WBE requirements or considerations?
UCF Answer: While the university supports the use of MWBEs and all small and diverse vendors, we
do not have any specific requirements or considerations allotted.
38. Parking fees/rates: would the vendor’s staffing associates fall under “vendor parking”? If so,
please clarify if the fee of $51.01 is paid monthly or per semester. If not, please clarify what the
charge is per staffing associate.
UCF Answer: The monthly fee of $47.89 plus tax is paid monthly. An annual costs $478.87 plus tax,
it would need to be paid as an annual lump sum. This will be confirmed with Parking Services at
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time of award.
39. Can you provide job descriptions or at least job titles for the positions? UCF Answer: We do not have a bank of job descriptions for positions that are not posted
40. Can you provide numbers on estimated usage per description? If not, do you have a budget for this service and if so what it is? UCF Answer: We do not know the estimated usage for each job description.
41. Have you contracted for this service in the past? UCF Answer: Yes, the last contract ended in June 2011.
42. The job descriptions will answer this one, but in lieu of them, will there be lifting over 50 lbs. required, or working at a height over 6 ft.? UCF Answer: It’s possible.
43. If many of the temporary staff will be returning each day can we buy staff permits in lieu of vendor permits? UCF Answer: We do not have an answer at this time.
44. We are a staffing/consulting firm specializing primarily in technology-related (IT
Applications/systems, etc.) skills, and I wanted to get an idea if there were any specifics or lists of
technologies, skills, systems, or applications that UCF historically needs help with that we can tailor
our proposal to. IT skills such as PeopleSoft, Microsoft, etc…. The list in the advertisement is a bit
broad and all-encompassing.
UCF Answer: We do not have any specifics or a lists of skills at this time. When we fill an IT position,
a SOW or requisition will be issued to the vendor.
45. How much labor (in dollars) was ordered on this contract annually, estimated?
UCF Answer: This will be a new contract since June 2011.
46. Will the past performance of the company in this industry be heavily weighted in the evaluation?
UCF Answer: Please refer to section 3.2 Respondent/Offer Submittal Sections.
47. Will the labor prices of the bid be negotiated after the award of the contract?
UCF Answer: Please refer to the Scope of Work paragraph 2 in the ITN.
48. What is the estimated annual spend for this contract? How much spend is budgeted for IT? UCF Answer: We do not have an answer at this time.
49. How many vendors make the approved list? How many are specific to IT? UCF Answer: We do not know how many suppliers will be awarded.
50. How many positions do you foresee opening within the calendar year? How many within IT? UCF Answer: We do not have an answer at this time.
51. Are you looking for a vendor to participate in all categories or will you be selecting specialized vendors for specific categories?
UCF Answer: If you are able to participate in all categories, please make sure to state it in your proposal.
52. Will this contract replace the CS&T Vendor Program? If not, how can we bid to get on this list? UCF Answer: No
53. Is the University under contract with a vendor right now? If so, what is the budget amount and
how much has the contractor billed so far?
UCF Answer: We do not have an active contract.
54. What is the negotiated amount?
UCF Answer: We do not have an answer at this time.
55. What is the budget for this year?
UCF Answer: We do not have an answer at this time.
56. How much is left on the budgeted amount?
UCF Answer: N/A
57. How often does the University use Temporary laborers?
UCF Answer: As needed.
58. What type of temporary laborers were used the most?
UCF Answer: clerical, accounting and custodial.
59. What was the annual spend for temporary staffing in previous years for this contract? UCF Answer: This will be a new contract since June 2011.
60. Who is the current vendor and what is their current mark up? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
61. Would they allow the awarded vendor to have an onsite office to provide recruiting support on campus? UCF Answer: No.
62. Do you know how many service providers you are seeking? UCF Answer: We do not know how many suppliers will be awarded.
63. Are you seeking service providers who can provide all of the labor services as outlined in para 1.1 or should the contractor only bid against those labor categories they traditionally support (e.g., training, professionals, information technology, administrative)? UCF Answer: If you are able to participate in all categories, please make sure to state it in your proposal.
64. Can you provide the exact labor categories you are seeking to fill with temporary labor services? Per para 1.1, it states "...to provide temporary labor services in numerous categories including, but not limited to..." Without clear delineation of the specific labor categories and the work to be performed, it will be difficult to provide a specific and relevant response to para 3.2. B. Project
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Staff Qualifications/Experience. UCF Answer: We are looking for all possible categories, in the event that a temporary employee is needed. A SOW/requisition will be issued when services are requested.
65. The required OFFER format does not include an area to expand upon our firms rates. Will rates be negotiated after vendor selection? UCF Answer: Please refer to the Scope of Work paragraph 2 in the ITN.
66. According to Section 1. Sealed Offers of the ITN’s Acknowledgment Form, “all offer sheets and this form must be executed and submitted in a sealed envelope. (DO NOT INCLUDE MORE THAN ONE OFFER PER ENVELOPE.) The face of the envelope should contain, in addition to the above address, the date, and time of the solicitation opening and the solicitation number.” In addition to the online submission of the proposal, is a hard copy of the proposal also required for submission? UCF Answer: All submissions must be through Bonfire, please refer to Appendix VI: Submission Instructions for Suppliers. We will NOT accept any mailed or emailed proposals.
67. In response to Section 4. Pricing, Terms, and Payment, Subsection (c) Invoicing and Payment of the ITN’s Acknowledgement Form, are Respondents required to submit a completed W-9 form in their proposals or is the W-9 only provided by the Successful Respondent upon contract award? UCF Answer: A W-9 will be required if you are selected to fulfill a position and my submitted at the time of award.
68. Who is the incumbent(s) and how long were they in service of the contract? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
69. When does UCF plan to make the award? UCF Answer: See #5.
70. How many contract awards will be made? UCF Answer: We do not know how many suppliers will be awarded.
71. What is the historical usage and yearly spend of this contract during the past three (3) years? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
72. What specific drug screenings are required? UCF Answer: None at this time.
73. Will Respondents be allowed to pass through the costs for background checks and drug screenings (at no additional markup) to UCF? UCF Answer: Yes, that is correct.
74. According to Section 1.2 Contract Award and 4.0 Other Requirements of the ITN, a sample of UCF’s standard terms and conditions can be viewed in the UCF website. With regard to UCF’s standard terms and conditions (which is separate from this ITN), are Respondents allowed to submit exceptions to these terms to UCF? UCF Answer: Per section 2.3 B: Respondent Communications and/or Inquiries: Any Respondent
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disagreeing with any terms and conditions, not including non-negotiable terms, set forth in this ITN is to indicate on Appendix II, Terms and Conditions Supplemental Offer Sheet, the specific ITN section(s) the Respondent disagrees with and is to provide a clear and detailed reason for the disagreement and a solution to the disagreement, in his/her offer, all PRIOR TO the deadline stated in Section 2.2 “Calendar of Events. The deadline was September 2, 2016 by 2:00 p.m.
75. If so, would Respondents be disqualified or adversely impacted during the evaluation process if they were to submit exceptions to UCF’s separate standard terms and conditions? UCF Answer: A proposal will be automatically rejected if you do not agree with the non-negotiable terms of the contract.
76. If in the case that UCF accepts/rejects certain ITN redlines/exceptions from Respondents (for terms and conditions that are considered negotiable) during the Questions Period, would those accepted/rejected terms need to be mentioned again within Appendix II – Supplemental Offer Sheet, Terms and Conditions? UCF Answer: Yes.
77. If so, would the newly UCF-accepted redlines/exceptions need to be classified by Respondents under the “No” category within Appendix II – Supplemental Offer Sheet, Terms and Conditions (due to the fact that they essentially changed the original language of the terms and conditions)? UCF Answer: Yes – but only as it relates to Negotiable terms and conditions. Checking NO to a non- negotiable item maybe cause for rejection of your submittal.
78. What are UCF’s current rates for each of the categories listed under Section 1.1 Statement of Objective of the ITN? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
79. If government-mandated costs or expenses are enacted during the contract term, will Respondents be allowed to request rate increases to cover these higher rates? UCF Answer: All prices will be negotiated at the time a work request is placed. This ITN is for qualifications only.
80. With respect to Affordable Care Act (ACA) costs, would UCF prefer these charges as a separate line item on the invoices, or instead incorporated directly into each Respondent’s bill rates (during the price quotation phase)? Please clarify. UCF Answer: Please incorporate into the bill rates, while providing bill detail to show all components to the actual or proposed rates.
81. Are there any surety/bid/performance bonds required for this contract? UCF Answer: No.
82. Could UCF provide a list detailing the laws, regulations, statues and ordinances that regulate the performance of the resultant contract (i.e., Living Wage Ordinance, Prevailing Wage, SCA, ACA, etc.)? UCF Answer: We do not have an answer at this time.
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83. In response to Section 2.15 State Licensing Requirements of the ITN, are Respondents required to submit a copy of their licenses in their proposals or are these licenses only provided to UCF upon contract award? UCF Answer: Please submit with your proposal.
84. According to Section 2.36 Equal Opportunity Statement, Subsection C. of the ITN, “If the Respondent anticipates receiving $10,000 in orders during the first 12 months of the contract, if any, resulting from this ITN, Respondent must complete a Certificate of Non-Segregated Facilities form and attach the form to the offer. A sample certificate is attached as APPENDIX III.” Is Appendix III – Certificate of Non-Segregated Facilities (that is included within this ITN) required to be completed and included within each proposal submittals? UCF Answer: Yes.
85. Is there any way to understand the volume of positions or hours budgeted in each of the labor
categories referred to in Section 1.1?
UCF Answer: We do not know the volume at this time.
86. In the last contract for temporary services who were the vendors and under freedom of
information is it possible to see pricing that was approved and utilized?
UCF Answer: UCF Answer: We haven’t had a temporary labor contract in place since June 2011. So,
the information would be irrelevant.
87. What were the hours by position exercised in the last fiscal year? Reason for ask is for budgeting
and resource allocation planning on our end.
UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
88. Can we get a complete list of positions and job descriptions for each of the positions falling under
this contract's umbrella in 1.1?
UCF Answer: See #39.
89. Can we politely refuse certain positions due to our own internal workman comp insurance
restrictions yet still service a majority of positions in the bid? For example we do not cover roofers or
longshoreman as a simple example.
UCF Answer: Yes.
90. Just to confirm this bid does not include pricing, as this exercise is to identify quality providers and
the pricing will be handed by request as per the SOW. Correct?
UCF Answer: Yes.
91. Can you please provide in detail billing requirements? As an example, does UCF require Monthly
Invoicing; Consolidated invoice; categorized by department/cost center.
UCF Answer: All billing questions will be addressed after an award is made.
92. Are the terms 30 days net?
UCF Answer: All payment terms will be addressed after an award is made.
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93. Are vendors allowed to respond solely to individual labor categories or is it a requirement to respond to all, (i.e. administrative, accounting, training, support staff, information technology, professionals, light industrial, technical, skilled trades, and general maintenance)? UCF Answer: Please respond to the categories you are capable of providing temporary labor.
94. Please provide a breakdown of typical job categories/skillsets that would reside within each labor category? UCF Answer: We do not have an answer at this time.
95. Please distinguish between technical vs information technology, professional, administrative, and support staff, etc.? UCF Answer: These categories are meant to be generic and can be interchangeable (i.e., technical/IT).
96. Can UCF provide percentage of breakdown for resources in former years? If available, Can you provide the demand over the last six months by functional area? UCF Answer: We haven’t had a temporary labor contract in place since June 2011.
97. Please provide a breakdown of spend (dollar and/or percentage) by job category. UCF Answer: We do not have an answer at this time.
98. What was last years’ IT spend? UCF Answer: We do not have an answer at this time.
99. What is the anticipated total value of the contract? UCF Answer: We do not have an answer at this time.
100. How many IT vendors resided in the current program? UCF Answer: None.
101. Can UCF please also provide the number of labor categories and number of vendors appointed for each? UCF Answer: N/A.
102. How many vendors are anticipated to partake in this solicitation? UCF Answer: We do not know how many suppliers will be awarded.
103. Is there an ideal number of vendors UCF is targeting for the program and if possible, how many will be dedicated/appointed to IT specific categories? UCF Answer: We do not know how many suppliers will be awarded.
104. Can UCF please elaborate on the following statement pulled from the ITN: Project Manager - After contract award a liaison from the user department will oversee the Contractor’s performance and report as needed to the contract administrator? The Project Manager is Renée Grigor. Specifically, what KPI’s does UCF anticipate vendors to be measured? Can you share the current SLAs used to manage your suppliers? UCF Answer: We do not have an answer at this time.
105. What are the top three challenges your managers face in your current staffing program? UCF Answer: We do not have an answer at this time.
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106. What is the current process for supplier and UCF engagement? UCF Answer: We do not have an answer at this time .
107. Please clarify the amount and duration of required travel, if any? UCF Answer: None.
108. How do requirements get distributed to Vendors? UCF Answer: A SOW or a requisition.
109. Does each labor category have an independent KPI? UCF Answer: The more global key performance indicators we would be looking for are the obvious: speed of response, time to locate candidates, time to hire, candidate fit and quality, general customer service and bill accuracy. Beyond that, to granular levels of individual department and college temporary staffing needs, there may be additional KPIs added into the scenario based on the location of the temporary hire placement and the specifics of the needed hire.
110. What motivators will be considered when selecting one vendor over another? UCF Answer: The ITN will be evaluated in accordance with the requirements listed in the ITN.
111. Does the term "knowingly" in Section 2.34 (page 19) mean that hiring an individual who voluntarily
responds to general/untargeted employment advertisements would not be a breach of this Section?
UCF Answer: UCF’s prior written consent would be required in any case, during the period of this ITN
and during the period of any resulting contract for those individuals who are employees during such
period.
112. End of Section 2.48 Work for Hire (page 23) has language regarding: Payee will indemnify UCF for
any liabilities connected with "the use or reproduction in any manner, whatsoever." This is a little
unclear, can UCF please clarify?
UCF Answer: Yes, the use and reproduction is supposed to mean “use and reproduction of the
Materials”.
a. Is it for "The use or reproduction in any manner" of what exactly?
UCF Answer: see above.
b. The use or reproduction of the Materials?
UCF Answer: see above.
c. The use or reproduction of the contract?
UCF Answer: see above.
d. Would our indemnification obligation under this Section extend to claims that are connected with
performance of a UCF order, but caused by negligence or willful misconduct on the part of UCF?
UCF Answer: The indemnification obligations should not extend to claims caused by the
negligence or willful misconduct on the part of UCF
113. Regarding Appendix V – Secure Handling of Data. If we were to subcontract to another vendor
would job titles, addresses etc. for UCF be considered data?
UCF Answer: Yes, that is correct.
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114. 3.2 ITEM 4, exactly what financial information is needed?
UCF Answer: Annual report, 10-K, bank reference letter, etc. This is for informational purposes only.
115. 3.2 ITEM 3, Industrial track record, does this mean how many positions we have staffed and where,
types of positions over the years etc. and company size, are you talking about internal staff, branches,
locations or employees we place and have available for just Orlando, FL?
UCF Answer: You can include all of the above.
116. 3.2 ITEM 5, can we still bid if we do not have long term college accounts but other types of accounts
that are not schools? Like airports for example?
UCF Answer: Yes.
117. SCOPE OF WORK- background checks, when will driver’s license checks be needed? What is the
requirement on point on the license?
UCF Answer: A driver’s license check is consistent with the background investigation that we run on our
current employees and was one of the items we mentioned for the background check in the ITN. We are
specifically looking to see if the applicant has a valid driver’s license in case they would need to travel in a
university vehicle/gem or in their own vehicle for university business. These checks can also reveal if there
is a recent DUI.
118. How many positions are you anticipating on filling on average, weekly, monthly? UCF Answer: We do not have an answer at this time.
119. What is the average length of the assignments? UCF answer: It will vary.
120. Will there be any direct hire or temp to hire positions? UCF Answer: No.
121. What is the typical time between a request for a temp from the University and the start date for the temp? UCF Answer: We do not have an answer at this time.
122. If I gave you 20 chips to allocate the value of these 4 metrics into a bucket, how would you allocate the chips when your options are price, retention, speed, quality? UCF Answer: We will evaluate the proposals in accordance to the ITN requirements. Vendor performance after contract award is monitored by the Contract Liaison and/or the ordering department.
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Appendix II - V
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Financials
The following pages include Apex Systems, division of On Assignment 2015 Financial
10-K. The remainder of this page has been intentionally left blank.
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K xx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
oo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-20540
ON ASSIGNMENT, INC.(Exact name of registrant as specified in its charter)
Delaware 95-4023433(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.)
26745 Malibu Hills RoadCalabasas, California 91301
(Address of Principal Executive Offices)Registrant’s telephone number, including area code: (818) 878-7900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registeredCommon Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:None
(Title of Class)Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý
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 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements of the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesý No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
As of June 30, 2015, the aggregate market value of our common stock held by non-affiliates of the registrant was approximately $1,888,588,488.
As of February 22, 2016, the registrant had 53,200,487 outstanding shares of Common Stock, $0.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
We are incorporating by reference into Part III of this Annual Report on Form 10-K portions of the registrant’s proxy statement for the 2016 Annual Meeting of Stockholders, to befiled within 120 days of the close of the registrant’s fiscal year 2015.
1
ON ASSIGNMENT, INC.ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015
TABLE OF CONTENTS
PART I Item 1. Business 2Item 1A. Risk Factors 6Item 1B. Unresolved Staff Comments 12Item 2. Properties 12Item 3. Legal Proceedings 13Item 4. Mine Safety Disclosures 13
PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14Item 6. Selected Financial Data 15Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18Item 7A. Quantitative and Qualitative Disclosures About Market Risk 25Item 8. Financial Statements and Supplementary Data 26Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 50Item 9A. Controls and Procedures 50Item 9B. Other Information 51
PART III Item 10. Directors, Executive Officers and Corporate Governance 52Item 11. Executive Compensation 52Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52Item 13. Certain Relationships and Related Transactions and Director Independence 52Item 14. Principal Accounting Fees and Services 52
PART IV Item 15. Exhibits and Financial Statement Schedule 52
SIGNATURES 53
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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations, as well as management’s beliefs and assumptions, andinvolve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statementsthat include the words “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions that convey uncertainty of future events or outcomes are forward-lookingstatements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differmaterially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include, but are not limited to, thefollowing: (1) actual demand for our services; (2) the general political and economic environment; (3) our ability to attract, train and retain qualified staffing consultants; (4) ourability to remain competitive in obtaining and retaining clients; (5) the availability of qualified contract professionals; (6) our ability to manage our growth efficiently and effectively;(7) continued performance and improvement of our enterprise-wide information systems; (8) our ability to manage potential or actual litigation matters; (9) the successful integrationof our recently acquired businesses; (10) the successful implementation of our five-year strategic plan; and the factors described in Item 1A of this Annual Report on Form 10-K("2015 10-K") under the section titled “Risk Factors.” Other factors also may contribute to the differences between our forward-looking statements and our actual results. Inaddition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in thisdocument are based on information available to us as of the date we file this 2015 10-K, and we assume no obligation to update any forward-looking statement or the reasons whyour actual results may differ.
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PART IItem 1. Business
Overview and History
On Assignment, Inc. (NYSE: ASGN), is a leading global provider of highly skilled, hard-to-find professionals in the growing technology, life sciences, and creative sectors, wherequality people are the key to success. We go beyond matching résumés with job descriptions to match people we know into positions we understand, for contract, contract-to-hire,and direct hire assignments.
We were incorporated in 1985 and commenced operation of our first contract staffing line of business, Lab Support. Expansion into other professional staffing markets has beenachieved through acquisitions and internal growth. The following is a summary of significant acquisitions in the past five years:
• On June 5, 2015, we acquired the holding company of Creative Circle, LLC (“Creative Circle”). Creative Circle, which is headquartered in Los Angeles, California, waspurchased to expand the Company’s technical and creative staffing services. Creative Circle is included in the Apex operating segment.
• On December 5, 2013, we acquired the holding company of CyberCoders, Inc. ("CyberCoders"), a privately-owned provider of permanent placement servicesheadquartered in Irvine, California. CyberCoders is included in the Oxford operating segment.
• On May 15, 2012, we acquired Apex Systems, Inc., now Apex Systems, LLC ("Apex Systems"), a privately-owned provider of information technology staffing andservices headquartered in Richmond, Virginia. Apex Systems is in the Apex operating segment.
Significant divestitures in the past five years include the sale of our Physician segment on February 1, 2015 and the sale of our Nurse Travel division and our Allied Healthcaredivision in 2013. In this 2015 10-K, these businesses are presented as discontinued operations in our consolidated statements of operations and comprehensive income for allperiods presented.
Financial information regarding our operating segments and our domestic and international revenues is included under “Financial Statements and Supplementary Data” in Part II,Item 8 of this 2015 10-K.
Our principal office is located at 26745 Malibu Hills Road, Calabasas, California 91301 and our telephone number is (818) 878-7900. We have approximately 157 branch officeswithin the United States and in seven foreign countries. Industry and Market Dynamics
Based on December 2015 projections, the U.S. Bureau of Labor Statistics (“BLS”) estimates total U.S. employment will grow by 9.8 million jobs, or 6.5% percent, between 2014and 2024. By comparison, under the previous estimate for 2012 to 2022, BLS projected total employment would grow by 15.6 million jobs, or 11% percent. The decrease inprojected growth from the prior period is primarily due to the aging of the U.S. population and more people retiring, resulting in a decrease in the labor force participation rate andgrowth rate.
In their September 2015 Staffing Industry Forecast report, Staffing Industry Analysts (“SIA”) estimated total U.S. staffing industry revenues were $124.9 billion in 2014, and wereprojected to be $133.9 billion in 2015 and $142.4 billion in 2016. The largest industry segment, temporary staffing, is forecast to grow at an annual rate of six percent in 2016 withrevenues of $123.0 billion, while permanent placement is forecast to grow 11 percent in 2016 with revenues of $19.5 billion. Within the temporary segment, professional staffing isexpected to grow at an annual rate of seven percent in 2016 to revenues of $68.8 billion. The temporary staffing industry is historically cyclical and typically has a strong correlationto employment and GDP growth.
Specific to the professional temporary staffing markets where On Assignment’s businesses are concentrated, the SIA report projects the U.S. IT and the marketing/creativetemporary staffing markets will each increase six percent, engineering/design will increase five percent and clinical/scientific will increase four percent in 2016.
We anticipate clients for our technology, life sciences, and creative staffing services will increase their use of contract labor through professional staffing firms to meet the need forincreases in capacity of their workforce. By using outsourced labor, these clients will benefit from cost structure advantages, improved flexibility to address fluctuating demand inbusiness, and access to greater expertise.
Clients
We serve our clients by effectively understanding their staffing needs and providing them qualified professionals with the unique combination of skills, experience, and expertise tomeet those needs. We believe effective engagements of contract technology, life sciences, and creative professionals require the people involved in making assignments to havesignificant knowledge of the client’s industry and the ability to assess the specific needs of the client as well as the contract professionals’ qualifications. During the year endedDecember 31, 2015, we provided contract professionals to approximately 12,500 clients. In 2015, no single client represented more than 5% of our revenues.
When clients use independent contractors, they face the potential risk of worker misclassification and resulting liability of federal and state taxes, wage and hour laws, immigration,diversity, employee rights, and other regulations. That risk can be significantly mitigated and clients can stay compliant with ever-changing employment laws and regulations byworking with a reputable staffing firm like On Assignment.
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Our clients set rigorous requirements for the talent they are seeking, and we use our extensive database and deep relationships with our contract professionals to quickly identify andpre-screen candidates whose qualifications meet those requirements. We are responsible for recruiting, verifying credentials, hiring, training, administering pay and benefits, andcompliance. Clients select the candidate and control and direct the work of contract professionals and approve hours worked. Once on their assignment, contract professionals aregenerally our employees, although clients provide on-the-job supervision of these professionals.
Candidates
The candidates we recruit are technical, scientific, and creative professionals looking for either contract work or permanent placement opportunities.
Hourly wage or contract rates for our contract professionals are established based on their specific skills and whether or not the assignment involves travel away from their primaryresidence. For our contract employees, we pay the related costs of employment including social security taxes, federal and state unemployment taxes, workers’ compensationinsurance, and other similar costs. After achieving minimum service periods and/or hours worked, our contract employees are offered access to medical and other voluntary benefitprograms (e.g., dental, vision, disability) and the right to participate in our 401(k) Retirement Savings Plan. Each contract professional’s employment relationship with us isterminable at will.
Professionals looking for a permanent placement may apply directly for open positions within a company or partner with a staffing agency to ensure they receive the bestopportunities available in their industry. Candidates may work with one or more staffing companies during this process and often develop long-term relationships with theirrecruiter for future career advancement. Once placed in a permanent position, the professional is paid and receives benefits directly through the employer.
Strategy
On Assignment’s strategy is to identify, enter and be a dominant player in the most attractive segments of the professional staffing market through acquisition, organic growth andeffective execution. Our financial goals are to grow our business to $3.0 billion in revenues by 2018 while maintaining attractive margins and EPS growth. To achieve these goalswe will continue our specialization in the large and growing technology, life sciences, and creative segments of the professional staffing market; reinforce our position as a dominantcompetitor in each; invest primarily in domestic markets; and pursue further disciplined acquisitions.
Our strategic innovation efforts and technology investments focus on putting the best productivity tools in the hands of our Account Executives and Recruiters, and we continuedelivering world class services that make working with On Assignment easy for our clients.
We consolidate our corporate support services - finance, accounting, human resources, legal, marketing, and IT - in centralized locations where we can most effectively andefficiently perform these functions, allowing us to leverage our fixed costs and generate higher incremental earnings as our revenues grow. In addition, we invest in leaseholdimprovements as we expand, relocate, and rationalize our branch facilities to increase the productivity of our staffing consultants.
In 2015, we continued to focus on increasing market share in each of our businesses, expanding our service offerings, and controlling our operating costs. We also substantiallyadded to the number of staffing consultants employed by the company. Over the course of the year, the average number of recruiters and sales personnel we employed increased16% in our existing businesses, and 22% overall when our June 2015 acquisition of Creative Circle is included.
Competition
We compete with other large publicly-held and privately-owned staffing companies on an international, national, regional, and local basis. Each of our businesses has uniquecompetitors, and further details are provided within the Operating Segments section below.
The principal competitive factors in attracting qualified candidates for temporary employment or permanent placements are contract rates, salaries, and benefits; availability andvariety of opportunities; quality, duration, and location of assignments; and responsiveness to requests for placement. Many people seeking temporary employment or permanentplacements through us are also pursuing employment through other means, including other staffing agencies. Therefore, the speed at which we assign prospective professionals andthe availability of attractive and appropriate assignments are important factors in our ability to fill open positions. In addition to having high quality candidates to assign in a timelymanner, the principal competitive factors in obtaining and retaining clients in the staffing industry are properly assessing the clients’ specific job requirements, the appropriateness ofthe professional assigned to the client, the price of services, and monitoring our clients’ satisfaction. Although we believe we compete favorably with respect to these factors, weexpect competition to continue to increase.
Tradenames
On Assignment maintains registered trademarks, trade names and service marks in the United States, Canada, the European Community, and various other countries. The currentmarks and tradenames we have registered include On Assignment®, Apex Systems®, Creative Circle®, CyberCoders®, Lab Support®, LabResource®, Oxford GlobalResources®, Oxford International®, Oxford Healthcare IT®, Valesta®, The
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Right Talent. Right Now.®, and Because People Are The Future of Technology®. We believe they carry significant value, differentiate our brands in the marketplace, and areimportant to our business. In addition, we maintain other intangible property rights.
Operating Segments
On Assignment provides services through two operating segments, the Apex Segment and the Oxford Segment, with each addressing different sectors of the professional staffingmarket with distinct business models attuned to those sectors. Businesses in the Apex Segment predominately serve markets with a large and local talent pool, and provide a fullrange of skills through a network of local offices where clients most value relationship, speed, reliability, and price. Businesses in the Oxford Segment predominately serve marketswith higher-end, specialized skills through a combination of national recruiting centers and local offices where clients most value the unique skill of the candidate and speed ofresponse.
Apex Segment
The Apex Segment provides a broad spectrum of technical, scientific, and creative professionals for contract, contract-to-hire, and permanent placement positions to Fortune 1000and mid-market clients across the United States. Our businesses in this segment include Apex Systems, Lab Support, LLC (“Lab Support”), and Creative Circle. Apex Segmentrevenues for 2015 were $1.5 billion and represented 72.0 percent of our total revenues.
Apex Systems
Apex Systems provides IT operations professionals across 13 primary skill disciplines that cover the entire IT project life-cycle, including IT infrastructure, applicationdevelopment, project management, and healthcare IT. These contract professionals encompass a wide variety of backgrounds and levels of experience within informationtechnology. Apex Systems also has a growing Consulting Services group that provides deliverable-based projects to help clients drive better business performance. These serviceofferings include managed processes, such as support service centers, and managed projects, such as software development. Clients primarily include organizations in the followingindustries: technology, financial services, healthcare, business services, telecommunications, government services and consumer/industrials. Assignments for Apex Systemstypically vary from four to 12 months.
Corporate support services for Apex Systems and Lab Support are based in Richmond, Virginia, and 85 branch offices across the United States and one branch in Canada supportour sales, recruiting, and field activities. Competitors include TEKsystems® (Allegis Group Inc.), Randstad Technologies (Randstad Holding N.V.), Insight Global Inc., Experis™(ManpowerGroup Inc.), and Kforce Inc.
Lab Support
Lab Support provides locally-based contract and permanent life science professionals to biotechnology, pharmaceutical, food and beverage, personal care, chemical, medical device,automotive, municipal, education, and environmental industry clients in North America. Primary client contacts include a mix of end users and process facilitators. End users consistof lab directors, managers and department heads. Facilitators consist of human resource managers, procurement departments and administrators. Scientific professionals includechemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, biostatisticians, drug safety specialists, SASprogrammers, medical writers, food scientists, regulatory affairs specialists, lab assistants, and other skilled scientific professionals. Their experience ranges from technicians withentry-level chemistry or biology backgrounds and lab experience to individuals with bachelors and/or master’s degrees and considerable experience. Assignments for Lab Supporttypically vary from one to six months. Main competitors include ManpowerGroup Inc., Kelly Services Inc., Adecco S.A., Yoh Services LLC, and Allegis Group Inc.
Creative Circle
Creative Circle provides creative, marketing, advertising, and digital talent to a wide range of companies in North America. Consumers’ rapidly growing demand for real-timeinformation and services requires an increase in both creative and technical professionals to support these digital platforms. To help our clients effectively respond to this demand,Creative Circle offers talent across the spectrum of traditional advertising and digital marketing skill sets. Creative and digital marketing professionals include account planners andstrategists, information architects, content strategists, copywriters, interactive art directors and designers, and front-end developers. Creative Circle’s clients include advertisingagencies and company marketing departments in retail, entertainment, technology, food and beverage, education, and other industries. Assignments for Creative Circle typically varyfrom one to seven weeks. Creative Circle’s corporate support activities are based in Los Angeles, California and field activities are located in 25 branch offices across the UnitedStates and one branch in Canada. Main competitors include Aquent LLC, 24 Seven Inc., and The Creative Group (Robert Half Inc.).
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Oxford Segment
The Oxford Segment provides specialized, niche staffing and consulting services in select skill and geographic markets. Our businesses in this segment include Oxford GlobalResources, LLC (“Oxford”), CyberCoders, Inc. (“CyberCoders”), and Life Sciences Europe. Segment revenues for 2015 were $578.0 million and represented 28.0 percent of ourtotal revenues.
Oxford Global Resources
Oxford specializes in recruiting and delivering experienced IT, engineering, and regulatory and compliance consultants to clients for temporary assignments. These consultantstypically have a great deal of knowledge and experience in specialized technical fields which make them uniquely qualified to fill a given assignment. Our competitive advantagecomes from our recruiting-driven business process that results in our ability to respond very quickly with high quality candidates to a client's request, thus Oxford's tagline “TheRight Talent. Right Now®.” Demand for Oxford's services is driven by a shortage of experienced consultants with specialized technical skills that organizations need quickly butcannot find on their own. Additionally, the push for adoption of health information technology, compliance with FDA regulations, and increasing digitization of business processesis accelerating the demand for services. Our services are provided to clients in a wide range of industries and range from large companies that may, for example, be installing newenterprise-wide computer systems and have a need for a subject matter expert with a specific technical and industry-specific experience, to small and mid-sized companies, such as amedical device manufacturer who needs a specialized hardware engineer. Assignments for Oxford typically vary from two to eight months.
Oxford's sales and recruiting activities are delivered through eight recruiting centers across the United States and two in Europe, along with 17 local offices serving majormetropolitan markets in the United States. Corporate support activities for Oxford and CyberCoders are based in Beverly, Massachusetts. Oxford’s competition varies across theirservice lines, and includes local, regional and national specialty staffing companies as well as small boutique and large international IT and engineering consulting firms. Examplesof Oxford competitors include Accenture PLC, Cap Gemini S.A., Robert Half Technology (Robert Half Inc.), Validant (Kinsale Holdings Inc.), Nordic Consulting Partners Inc.,and K2 Partnering Solutions Inc.
CyberCoders
CyberCoders specializes in recruiting professionals for permanent placements in engineering, technology, sales, executive, financial, accounting, scientific, legal and operationspositions. CyberCoders’ proprietary software and unique matching algorithm combine to deliver an impressive turnaround time for employers and help candidates find jobs thattruly fit their background and career goals. Our permanent placements are typically subject to a contingency period; if the candidate leaves the company during the contingencyperiod, we will find a replacement at no cost to the client. Although the contingency period can vary by contract, it is typically 90 days or less. CyberCoders’ is based in Irvine, CA,with sales and recruiting operating from three hub locations in the United States. Other companies that have large permanent placement divisions include Robert Half Inc.,Management Recruiters International Inc., Allegis Group Inc., Randstad Holding N.V., and Adecco S.A.
Life Sciences Europe
Life Sciences Europe includes the brands Lab Support, LabResource, and Valesta, which provide locally-based contract and permanent life science professionals to clients withresearch and development projects in the biotechnology, pharmaceutical, food and beverage, personal care, chemical, medical device, automotive, municipal, education andenvironmental industries. Assignments for Life Sciences Europe typically vary from five to 18 months, although they can be longer. Life Sciences Europe sales and recruitingservices are delivered in eight local branch offices in the United Kingdom, The Netherlands, Belgium and Spain, and corporate services are based in Cork, Ireland. Competitorsinclude Hays Life Sciences (Korn/Ferry International), Randstad Life Sciences (Randstad Holding N.V.), and Science Recruitment Group Ltd.
Employees
At December 31, 2015, we employed approximately 3,320 full-time regular employees, including staffing consultants, regional sales directors, account managers, recruiters andcorporate office employees. Throughout 2015 we placed approximately 47,600 contract professionals on assignments with clients. Those assignments varied in length as describedin the Operating Segments discussion above.
Government Regulation We take reasonable steps to ensure that our contract professionals possess all current licenses and certifications required for each placement. We provide state mandated workers’compensation insurance, unemployment insurance and professional liability insurance for our contract professionals who are employees and our regular employees. These expenseshave a direct effect on our costs of services, margins and likelihood of achieving or maintaining profitability.
For a further discussion of government regulation associated with our business, see “Risk Factors” within Item 1A of Part I of this 2015 10-K.
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Available Information and Access to Reports We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and all amendments to those reportsand statements with the Securities and Exchange Commission ("SEC"). You may read and copy any of our reports that are filed with the SEC in the following manner:
• At the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by callingthe SEC at (800) SEC-0330;
• At the SEC’s website, http://www.sec.gov;• At our website, http://www.onassignment.com; or• By contacting our Investor Relations Department at (818) 878-7900.
Our reports are available through any of the foregoing means and are available free of charge on our website as soon as practicable after such material is electronically filed with orfurnished to the SEC. Also available on our website (http://www.onassignment.com), free of charge, are copies of our Code of Ethics for the Principal Executive Officer and SeniorFinancial Officers, Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters for the committees of our Board of Directors. We intend to discloseany amendment to, or waiver from, a provision of our Code of Ethics for Principal Executive Officer and Senior Financial Officers on our website promptly after the amendment orwaiver has been granted.
Item 1A. Risk Factors
Our business is subject to a number of risks including, but not limited to, the following:
U.S. and global market and economic developments could adversely affect our business, financial condition and results of operations.
In the past few years, global macroeconomic conditions and trends have been uncertain and difficult to predict, particularly within the United States and Europe, which haveexperienced a period of slow growth and recession, respectively. Demand for our staffing services is significantly affected by the general level of economic activity and employmentin the United States and Europe. As economic activity slows, companies may defer projects for which they utilize our services or reduce their use of temporary employees beforelaying off full-time employees. We may also experience more competitive pricing pressure during periods of economic downturn. Approximately 96 percent of our revenues in2015 were generated by our business operations in the United States. Any significant economic downturn in the United States or other countries in which we operate could have amaterial adverse effect on our business, financial condition and results of operations.
Demand for the contract staffing services that we provide is significantly affected by global market and economic conditions. As economic activity slows, particularly any negativeeffect on research and development, quality control and capital spending, many clients or potential clients reduce their use of and reliance upon contract professionals. Duringperiods of reduced economic activity, we may also be subject to increased competition for market share and pricing pressure. As a result, a recession or periods of reducedeconomic activity could harm our business and results of operations.
If we are not able to remain competitive in obtaining and retaining temporary staffing clients, our future growth will suffer. Agreements may be terminated by clients andcontract professionals at will and the termination of a significant number of such agreements would adversely affect our revenues and results of operations.
The contract staffing industry is highly competitive and fragmented with limited barriers to entry. We compete in national, regional and local markets with full-service agencies, andin regional and local markets with specialized contract staffing agencies. The success of our business depends upon our ability to continually secure new orders from clients and tofill those orders with our contract professionals.
Our agreements with clients do not provide for exclusive use of our services and in some instances we provide services without entering into contracts. As such, clients are free toplace orders with our competitors. Each contract professional’s employment or independent contractor’s relationship with us is terminable at will. All contract assignments,regardless of their planned length, may be terminated with limited notice by the client or the contract professional. The duration of agreements with clients are generally dictated bythe contract. Usually, contracts with clients may be terminated with 30 day's notice by us or by the clients and, oftentimes, assignments may be terminated with less than one week’snotice. If clients terminate a significant number of our staffing agreements or assignments and we are unable to generate new contract staffing orders to replace lost revenues, or asignificant number of our contract professionals terminate their employment with us and we are unable to find suitable replacements, the growth of our business could be adverselyaffected and our revenues and results of operations could be harmed. As a result, it is imperative to our business that we maintain positive relationships with our clients and contractprofessionals.
To the extent that competitors seek to gain or retain market share by reducing prices or increasing marketing expenditures, we could lose revenues and our margins could decline,which could seriously harm our operating results and cause the trading price of our stock to decline. As we expand into new geographic markets, our success will depend in part onour ability to gain market share from competitors. We expect competition for clients to increase in the future, and the success and growth of our business depends on our ability toremain competitive. In addition, we participate in a number of third party contracts as a subcontractor, and that requires us to participate in vendor management contracts, which maysubject us to greater risks or lower margins.
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If we are unable to meet our expectations for growth our future results of operations are likely to be adversely affected.
Over the past several years, we have experienced revenue and earnings growth. Our five-year business strategy includes the expectation of future internal growth supplemented byacquisitions to attain $3 billion in revenues by 2018. There is no assurance that we will be able to continue this pace of growth in the future or meet our strategic objectives forgrowth. Our growth could be negatively affected by many factors, including future technology industry conditions, macroeconomic events, competition and labor market trends orregulations. If our growth rate slows, or if it fails to grow at the pace anticipated, and we are unable to be successful in our growth initiatives and strategies, our financial results arelikely to be adversely affected and could be less than our expectations or those of investors or analysts.
Our business strategy also includes continuing efforts to restructure our organization, programs, technology and delivery of services to make us a more agile and effectivecompetitor, to reduce the cost of operating our business and to increase our operating profit and operating profit margin. We may not be successful in our continuing restructuringefforts, and they may fail to achieve the cost savings we anticipate. Further, we may fail to prevent the return of costs eliminated in these efforts. If we are not successful inimplementing our restructuring efforts, our business, financial condition and results of operations could be materially adversely affected.
If we are unable to attract and retain qualified contract professionals, our business could be negatively impacted.
Our business is substantially dependent upon our ability to attract and retain contract professionals who possess the skills, experience, and licenses, as required, to meet thespecified requirements of our clients. We compete for such contract professionals with other temporary staffing companies and with our clients and potential clients. There can be noassurance that qualified professionals will be available to us in adequate numbers to staff our operating segments. Moreover, our contract professionals are often hired to becomeregular employees of our clients. Attracting and retaining contract professionals depends on several factors, including our ability to provide contract professionals with desirableassignments and competitive wages and benefits. The cost of attracting and retaining contract professionals in the future may be higher than we anticipate if there is an increase incompetitive wages and benefits (including costs associated with recent federal healthcare reform legislation) and, as a result, if we are unable to pass these costs on to our clients,our likelihood of achieving or maintaining profitability could decline. In periods of high unemployment, contract professionals frequently opt for full-time employment directly withclients and, due to a large pool of available candidates, clients are able to directly hire and recruit qualified candidates without the involvement of staffing agencies. If we are unableto attract and retain a sufficient number of contract professionals to meet client demand, we may be required to forgo staffing and revenue opportunities, which may hurt the growthof our business.
The loss of key members of our senior management team could adversely affect the execution of our business strategy and our financial results.
We believe that the successful execution of our business strategy and our ability to build upon the significant recent investments in our business and acquisitions of new businessesdepends on the continued employment of key members of our senior management team. We have provided short and long-term incentive compensation to our key management inan effort to retain them. However, if any members of our senior management team become unable or unwilling to continue in their present positions, we could incur significant costsand experience business disruption related to time spent on efforts to replace them, and our financial results and our business could be materially adversely affected.
Reclassification of our independent contractors by tax or regulatory authorities could materially and adversely affect our business model and could require us to paysignificant retroactive wages, taxes and penalties.
We may place individuals who work for their own corporations to provide services in connection with our business as independent contractors rather than employees. As such, wedo not withhold or pay income or other employment related taxes, or provide workers’ compensation insurance for them. We believe that our classification of those individuals ortheir corporations as independent contractors is consistent with general industry standard and applicable guidelines from the U.S. Department of Labor and the Internal RevenueService, but can nonetheless be challenged by the contractors themselves or by relevant taxing authorities. If federal or state taxing authorities determine that individuals employedby their own corporations engaged as independent contractors are employees, our business model could be adversely affected.
Our business is subject to government regulation, which may restrict the types of employment services we are permitted to offer or result in additional or increased costs thatreduce our revenues and earnings.
The temporary staffing services industry is regulated in the United States and other countries in which we operate. In most countries, including the United States where most of ourbusiness is conducted, we are considered the legal employer of our temporary personnel. Therefore, we are subject to federal, state and local laws and regulations governing theemployer/employee relationship, such as those related to tax withholding or reporting, social security or retirement benefits, licensing, wage and hour requirements, paid sick leave,employee benefits, non-discrimination, sexual harassment, workers’ compensation, compliance with immigration laws and a wide variety of administrative requirements, such asrecord keeping, written contracts and reporting. We are also subject to U.S. laws and regulations relating to government contracts with federal agencies. In other countries, while wemay not be considered the legal employers of our temporary personnel, we are still responsible for collecting taxes and social security deductions and transmitting these amounts tothe taxing authorities.
Changes in laws or government regulations may result in the prohibition or restriction of certain types of employment services that we are permitted to offer or the imposition ofnew or additional legal requirements that could reduce our revenues and earnings. There can be no assurance that we will be able to increase the fees charged to our customers in atimely manner and in a sufficient amount to fully cover increased costs as
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a result of any changes in laws or government regulations. In addition, due to the substantial number of state and local jurisdictions in which we operate, there is a risk that we maybe unaware of, or unable to adequately monitor, actual or proposed changes in the laws or governmental regulations of such states and localities, which could delay our compliancewith such laws or governmental regulations and result in potential fines, penalties or other sanctions for non-compliance.
Any future changes in laws or government regulations, or interpretations thereof, especially at the state and local level, may make it more difficult for us to track such developmentsand delay compliance, which, in turn, may make it more difficult and expensive to provide staffing services and could have a material adverse effect on our business, financialcondition and results of operations.
We are in the business of providing employees to clients, and significant legal actions and claims could subject us to substantial uninsured liabilities, result in damage to ourbusiness reputation, result in the discontinuation of our client relationships, and adversely affect our recruitment and retention efforts.
We employ people internally and in the workplaces of other businesses. Our ability to control the workplace environment of our clients is limited. Further, many of these individualshave access to client information systems and confidential information. As the employer of record of our contract professionals, we incur a risk of liability to our contractprofessionals for various workplace events, including claims of physical injury, discrimination, harassment or failure to protect confidential personal information. Other inherentrisks include possible claims of errors and omissions; intentional misconduct; release, misuse or misappropriation of client intellectual property; employment of illegal aliens;criminal activity; torts; or other claims. In recent years, we have been subject to an increasing number of legal actions alleging, vicarious liability, intentional torts, negligent hiring,discrimination, sexual harassment, retroactive entitlement to employee benefits, violation of wage and hour requirements, and related legal theories. We may be subject to liability insuch cases even if the contribution to the alleged injury was minimal. These types of actions could involve large claims and significant defense costs. In most instances, we arerequired to indemnify clients against some or all of these risks. A failure of any of our employees internally or contract professionals in the workplace to observe our policies andguidelines intended to reduce these risks could result in negative publicity, injunctive relief, criminal investigations and/or charges, payment of monetary damages or fines, or othermaterial adverse effects on our business. Claims raised by clients stemming from the improper actions of our contract professionals, even if without merit, could cause us to incursignificant expense associated with the costs or damages related to such claims. Further, such claims by clients could damage our business reputation and result in thediscontinuation of client relationships. Any associated negative publicity could adversely affect our ability to attract and retain qualified contract professionals in the future.
To protect ourselves from the cost of these types of claims, we maintain workers’ compensation, errors and omissions, employment practices and general liability insurancecoverage in amounts and with deductibles that we believe are appropriate for our operations. Our coverage includes a retention amount, and our insurance coverage may not coverall claims against us or continue to be available to us at a reasonable cost. If we are unable to maintain adequate insurance coverage, we may be exposed to substantial liabilities. Inthis regard, we face various employment-related risks not covered by insurance, such as wage and hour laws and employment tax responsibility. U.S. courts in recent years havebeen receiving large numbers of wage and hour class action claims alleging misclassification of overtime eligible workers and/or failure to pay overtime-eligible workers for allhours worked.
U.S. healthcare legislation could negatively impact our results of operations by increasing the cost of providing temporary staffing services.
In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) were signed into U.S. law.The ACA represents comprehensive healthcare reform legislation that, in addition to other provisions, requires that we provide healthcare coverage to our eligible employees andtemporary contract professionals in the United States or potentially pay a penalty. Although we believe we have properly identified eligible employees, a later determination that wefailed to offer the required health coverage to eligible employees could result in penalties that may materially harm our business. We expect that the costs associated with the ACAmay have less impact on us than our competitors due to the level and scope of benefits we currently offer, and our intention is to bill certain additional costs related to the ACA toour customers. However, there can be no assurance that we will be able to increase client bill rates in a sufficient amount to cover the increased costs. This may reduce our gross andoperating margins and negatively impact our financial results. Any future changes to the ACA or their implementation, through regulations or otherwise, could significantly impactour costs related to the ACA.
In addition, certain of our clients currently require, and other clients in the future may require, that we indemnify them against losses in the event that the client is determined to benon-compliant with the ACA with respect to one or more of our temporary contract professionals assigned to such client. Although we believe that we are currently in compliancewith the requirements of the ACA and we have not received notice from any client that acts or omissions by us may have resulted in losses to the client relating to non-compliancewith the ACA, any future liabilities that may be incurred by us pursuant to such indemnification provisions could affect our results of operations.
We may be subject to increases in payroll-related costs and unemployment insurance taxes, resulting in lower margins.
We currently pay federal, state and local payroll costs and taxes for our corporate employees and contract professional employees. If we are subject to significant increases in costsassociated with payroll and unemployment taxes, we may not be able to increase client bill rates to cover the additional expense and this may reduce our gross and operating marginsand affect our financial results.
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We may not successfully make or integrate acquisitions, which could harm our business and growth.
As part of our growth strategy, we intend to opportunistically pursue selected acquisitions. We compete with other companies in the professional staffing and consulting industriesfor acquisition opportunities, and we cannot assure that we will be able to affect future acquisitions on commercially reasonable terms or at all. To the extent we enter intoacquisition transactions in the future, we may experience:
• delays in realizing or a failure to realize the benefits, cost savings and synergies that we anticipate;• difficulties or higher-than-anticipated costs associated with integrating any acquired companies into our businesses;• attrition of key personnel from acquired businesses;• diversion of management’s attention from other business concerns;• inability to maintain the business relationships and reputation of the acquired companies;• difficulties in integrating the acquired companies into our information systems, controls, policies and procedures;• additional risks relating to the businesses or industry of the acquired companies that are different from ours;• unexpected liabilities, costs or charges;• unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of
our existing operations; and• impairment related to goodwill and other identifiable intangible assets acquired.
To undertake more transactions, additional financing may be necessary and, if used, would result in additional debt, dilution of outstanding equity, or both. We may face unexpectedcontingent liabilities arising from these or future acquisitions that could harm our business.
We have indemnification obligations related to the sales of three of our business units, and there is litigation risk associated with merger and acquisition activity which couldnegatively impact our financial results.
In 2013 we divested of two of our business units, our Nurse Travel business and our Allied Healthcare business. In February 2015, we sold our Physician business. We haveongoing indemnification obligations with respect to liabilities of the sold businesses, and merger and sale activity in general correlates with higher litigation risk. We have notreceived any material claims for indemnification under the applicable sale agreements governing the dispositions, nor have we received notice of any litigation claims related to thesale activities; however, if any significant claims are made and become due and payable, we could incur additional costs and our financial results could be negatively impacted.
Impairment of goodwill or identifiable intangible assets could materially impact future results of operations.
We had approximately $874.9 million in goodwill and $417.9 million in identifiable intangible assets at December 31, 2015. As part of the testing of goodwill impairment,Accounting Standards Codification Topic 350, Intangibles - Goodwill and Other, requires us to estimate the fair value of our reporting units on at least an annual basis and morefrequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment testsconsist of comparing the fair value of a reporting unit with its carrying amount including goodwill. We determine the fair value of each reporting unit based upon a weighted averagecalculation using the fair value derived from a discounted cash flow analysis, a guideline company market approach, and a similar transactions market approach. Discounted cashflows are developed for each reporting unit based on assumptions including revenue growth expectations, gross margins, operating expense projections, working capital, capitalexpense requirements and tax rates. The multi-year financial forecasts for each reporting unit used in the cash flow models considered several key business drivers such as newproduct lines, historical performance and industry and economic trends, among other considerations. The market approach considers multiple financial metrics, primarily EBITDA,based on trading multiples of a group of guideline public companies in the staffing industry, which multiples are then applied to the corresponding financial metrics of our reportingunits to derive an indication of fair value. The similar transaction method considers multiple financial metrics, primarily EBITDA, based on trading multiples of actual transactionsthat have occurred, which multiples are then applied to the corresponding financial metrics of our reporting units to derive an indication of fair value. There are inherent uncertaintiesrelated to the factors, and management's judgment in applying these factors. At October 31, 2015, we performed our annual goodwill impairment test and concluded that there wasno impairment. Future declines in our market capitalization or any other impairment indicators subsequent to the balance sheet date could be an early indication that remaininggoodwill may become impaired in the future. Although a future impairment of goodwill and indefinite lived identifiable intangible assets would not affect our cash flow, it wouldnegatively impact our operating results.
Intangible assets with indefinite lives consist of trademarks. We test trademarks for impairment on an annual basis, on October 31. In order to test the trademarks for impairment,we determine the fair value of the trademarks and compare such amount to their carrying values. We determine the fair value of the trademarks using a projected discounted cashflow analysis based on the relief-from-royalty approach. The principal factors used in the discounted cash flow analysis requiring judgment are projected net sales, discount rate,royalty rate and terminal value assumption. The royalty rate used in the analysis is based on transactions that have occurred in our industry. Intangible assets having finite lives areamortized over their useful lives and are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Customerrelationships are amortized using an accelerated method. Contractor relationships and non-compete agreements are amortized using the straight-line method.
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We are subject to business risks associated with international operations, which could make our international operations significantly more costly.
Although we have limited experience in marketing, selling and supporting our services outside of the United States, we had international sales in Canada, the European Union andSwitzerland in 2015. Our international operations comprised approximately 4.5 percent of total sales in 2015 compared with 4.7 percent in 2014 and 5.0 percent in 2013.
Operations in certain markets are subject to risks inherent in international business activities, including:• fluctuations in currency exchange rates;• complicated work permit requirements;• varying economic and political conditions;• overlapping or differing tax structures;• difficulties collecting accounts receivable; and• regulations concerning pay rates, benefits, vacation, union membership, redundancy payments and the termination of employment.
Our inability to effectively manage our international operations could result in increased costs and adversely affect our results of operations.
An information technology system failure may adversely affect our business.
In 2015, we continued to upgrade our information technology systems, including our PeopleSoftTM and other enterprise-wide information systems that are used in daily operationsto identify and match staffing resources and client assignments, and manage scheduling. We also rely on our information systems in managing our accounting, including our payand bill functions, and financial reporting. If the systems fail or are otherwise unable to function in a manner that properly supports our business operations, or if these systemsrequire significant costs to repair, maintain or further develop, we could experience business interruptions or delays that could materially and adversely affect our business andfinancial results. Our information systems are vulnerable to fire, storm, flood, power loss, telecommunications failures, terrorist attacks, physical or software break-ins, viruses,security breaches and similar events. Any system failure or service outage at the facilities where our network infrastructure is located could result in a loss of service for the durationof the failure or the outage. If our primary and backup information systems fail or are otherwise unavailable, these functions would have to be accomplished manually, which couldimpact our ability to respond to business opportunities quickly, to pay our staff in a timely fashion, and to bill for services efficiently.
Our collection, use and retention of personal information and personal health information create risks that may harm our business.
In the ordinary course of our business, we collect and retain personal information of our employees and contract professionals and their dependents including, without limitation,full names, social security numbers, addresses, birth dates, and payroll-related information. Our employees may also have access to, receive and use personal health information inthe ordinary course of our Health Information Management businesses. We use commercially available information security technologies to protect such information in digitalformat. We also use security and business controls to limit access to such information. However, employees or third parties may be able to circumvent these measures and acquireor misuse such information, resulting in breaches of privacy, and errors in the storage, use or transmission of such information. Privacy breaches may require notification and otherremedies, which can be costly, and which may have other serious adverse consequences for our business, including regulatory penalties and fines, claims for breach of contract,claims for damages, adverse publicity, reduced demand for our services by clients and/or flex employment candidates, harm to our reputation, and regulatory oversight by state orfederal agencies.
The possession and use of personal information and data in conducting our business subjects us to legislative and regulatory burdens. We may be required to incur significantexpenses to comply with mandatory privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations with our clients.
Cybersecurity risks and cyber incidents could adversely affect our business and disrupt operations.
Cyber incidents can result from deliberate attacks or unintentional events. These incidents can include, but are not limited to, gaining unauthorized access to digital systems forpurposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Because the techniques used to obtain unauthorized access, disableor degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timelydiscover them, or implement adequate preventative measures. Our information technology may not provide sufficient protection, and as a result we may lose significant informationabout us or our employees or customers. Other results of these incidents could include, but are not limited to, disrupted operations, liability for stolen assets or the disclosure ofpersonally identifiable information of our employees or independent contractors, misstated financial data, increased cybersecurity protection costs, litigation and reputational damageadversely affecting customer or investor confidence.
Failure of internal controls may leave us susceptible to errors and fraud.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and internal controls will prevent all errors and allfraud. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met. Furthermore, becauseof the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, would be detected.
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As of December 31, 2015, we had $774.0 million of total debt, which could adversely affect our operating flexibility, and the restrictive covenants under our debt instrumentscould trigger prepayment obligations or additional costs.
Our level of debt and the limitations imposed on us by our credit agreements could have important consequences for investors, including the following:• we will have to use a portion of our cash flow from operations for debt service rather than for our operations;• we may not be able to obtain additional debt financing for future working capital, capital expenditures or other corporate purposes or may have to pay more for such
financing;• some or all of the debt under our current or future credit facilities may be at a variable interest rate, making us more vulnerable to increases in interest rates;• we could be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions;
and• we may be disadvantaged compared to competitors with less leverage.
Our failure to comply with restrictive covenants under our credit facilities and other debt instruments could result in an event of default, which, if not cured or waived, could resultin the requirement to repay such borrowings before their due date. Some covenants are tied to our operating results and thus may be breached if we do not perform as expected.Further, the terms of our credit facility permit additional borrowings, subject to certain conditions. If new debt is added to our current debt levels, the related risks we now facecould intensify.
We expect to obtain the money to pay our expenses and to repay borrowings under our credit facility primarily from our operations. Our ability to meet our expenses thus dependson our future performance, which will be affected by financial, business, economic and other factors. If we do not have enough money, we may be required to refinance all or partof our existing debt, sell assets or borrow additional funds. We may not be able to take such actions on terms that are favorable to us, if at all. The lenders may require fees andexpenses to be paid or other changes to terms in connection with waivers or amendments. If we are forced to refinance these borrowings on less favorable terms, our results ofoperations and financial condition could be adversely affected by increased costs and/or rates. The lenders may require fees and expenses to be paid or other changes to terms inconnection with waivers or amendments. If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be adverselyaffected by increased costs and/or rates.
The trading price of our common stock has experienced significant fluctuations, which could make it difficult for us to access the public markets for financing or use ourcommon stock as consideration in a strategic transaction.
In 2015, the trading price of our common stock experienced significant fluctuations, ranging from a high of $51.00 to a low of $30.60. The closing price of our common stock onthe NYSE was $32.56 on February 22, 2016. Our common stock may continue to fluctuate widely as a result of a large number of factors, many of which are beyond our control,including:
• period to period fluctuations in our financial results or those of our competitors;• failure to meet previously announced guidance or analysts’ expectations of our quarterly results;• announcements by us or our competitors of acquisitions, significant contracts, commercial relationships or capital commitments;• commencement of, or involvement in, litigation;• any major change in our board or management;• changes in government regulations;• recommendations by securities analysts or changes in earnings estimates;• the volume of shares of common stock available for public sale;• announcements by our competitors of their earnings that are not in line with analyst expectations;• sales of stock by us or by our stockholders;• short sales, hedging and other derivative transactions in shares of our common stock; and• general economic conditions, slow or negative growth of unrelated markets and other external factors.
Our results of operations may vary from quarter to quarter as a result of a number of factors, including, among other things, the level of demand for our temporary staffing services,changes in our pricing policies or those of our competitors, our ability to control costs, and our ability to manage our accounts receivable balances, which may make it difficult toevaluate our business and could cause instability in the trading price of our common stock. In addition, the stock market has experienced extreme price and volume fluctuations thathave affected the trading prices of the common stock of many companies involved in the temporary staffing industry. As a result of these fluctuations, we may encounter difficultyshould we determine to access the public markets for financing or use our common stock as consideration in a strategic transaction.
A significant loss or suspension of our business with the federal government or government contractors could lead to a material reduction in our revenues, cash flows andoperating results.
We contract with and serve the U.S. federal government and its agencies as a prime contractor. We also provide staffing services as a subcontractor to federal prime contractors. Inthese capacities, we must comply with complex laws and regulations relating to the formation, administration, and performance of federal government contracts. These laws andregulations create compliance risk and may impose added costs on our business. If a government review, investigation or audit uncovers improper or illegal activities, we may besubject to civil and criminal penalties and
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administrative sanctions, including termination of contracts, forfeiture of profits, harm to our reputation, suspension of payments, fines, and suspension or debarment from doingbusiness with federal government agencies.
There is often intense competition to win federal agency contracts. Even when a contract is awarded to us, competitors may protest such awards. If we are unable to successfullycompete for new business or win competitions to maintain existing business, our business could be materially adversely affected. After a government contract is awarded andfunded by the federal government, we are dependent upon the ability of the relevant agency to administratively manage the contract. We can be adversely impacted by delays in thestart-up of already awarded and funded projects, including delays due to shortages of acquisition and contracting personnel within the federal government agencies.
Contracts awarded pursuant to GSA Schedules with certain terms previously negotiated with the federal government constitute a significant percentage of revenues from our federalagency clients. If we were to lose one or more of these Schedules or other contracting vehicles, we could lose revenues and our operating results could be materially adverselyaffected. These Schedules or contracts typically have an initial term with multiple options that may be exercised by our government agency clients to extend the contract forsuccessive periods of one or more years. We can provide no assurance that our clients will exercise these options.
Some government contracts require us to maintain facility security clearances and require some of our employees to maintain individual security clearances. If our employees lose orare unable to timely obtain security clearances, or we lose a facility clearance, a government agency client may terminate the contract or decide not to renew it upon its expiration. Inaddition, a security breach by us could cause serious harm to our business, damage our reputation, and prevent us from being eligible for further work on sensitive or classifiedsystems for federal government clients.
Provisions in our corporate documents and Delaware law may delay or prevent a change in control that our stockholders consider favorable.
Provisions in our certificate of incorporation and bylaws could have the effect of delaying or preventing a change of control or changes in our management. These provisionsinclude the following:
• Our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of the Board of Directors up to nine members, or the resignation, death orremoval of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors.
• Stockholders must provide advance notice to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders’meeting. Further, our Board of Directors is divided into three classes, and only one class is up for election each year. These provisions may discourage or deter a potentialacquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
• Our Board of Directors may issue, without stockholder approval, up to one million shares of undesignated or “blank check” preferred stock. The ability to issueundesignated or “blank check” preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that couldimpede the success of any attempt or make it more difficult for a third party to acquire us.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions, including Section 203 of the Delaware General Corporation Law. Under theseprovisions, a corporation may not engage in a business combination with any large stockholders who hold 15 percent or more of our outstanding voting capital stock in a merger orbusiness combination unless the holder has held the stock for three years, the board of directors has expressly approved the merger or business transaction or at least two-thirds ofthe outstanding voting capital stock not owned by such large stockholder approve the merger or the transaction. These provisions of Delaware law may have the effect of delaying,deferring or preventing a change of control, and may discourage bids for our common stock at a premium over its market price. In addition, our Board of Directors could rely onthese provisions of Delaware law to discourage, prevent or delay an acquisition of us.
Item 1B. Unresolved Staff Comments
Not applicable. Item 2. Properties As of December 31, 2015, we leased approximately 37,200 square feet of office space through November 2021 for our corporate headquarters in Calabasas, California. Additionally, we leased approximately 48,600 square feet of office space through December 2025 at our Oxford headquarters in Beverly, Massachusetts; and 55,900 square feet ofoffice space through October 2024 at our Apex headquarters in Richmond, Virginia. In addition, as of December 31, 2015, we leased approximately 781,200 square feet of total office space in approximately 157 branch office locations in the United States, UnitedKingdom, Netherlands, Belgium, Ireland, Switzerland, Spain and Canada. A branch office typically occupies space ranging from approximately 860 to 23,200 square feet with leaseterms that typically range from six months to 10 years. We believe that our facilities are suitable and adequate for our current operations.
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Item 3. Legal Proceedings We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe thatthe disposition of matters that are pending or asserted will have a material effect on our financial position, results of operations or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Price Range of Common Stock Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol ASGN. The following table sets forth the range of high and low sales prices asreported on the NYSE for each quarterly period within the two most recent years. At February 22, 2016 we had approximately 36 holders of record, approximately 14,586beneficial owners of our common stock, and 53,200,487 shares outstanding.
Price Range ofCommon Stock
High LowYear Ended December 31, 2015
First Quarter $ 39.70 $ 30.98Second Quarter $ 40.75 $ 30.60Third Quarter $ 41.49 $ 34.25Fourth Quarter $ 51.00 $ 35.49
Year Ended December 31, 2014 First Quarter $ 38.93 $ 29.32Second Quarter $ 39.86 $ 32.70Third Quarter $ 37.09 $ 26.23Fourth Quarter $ 34.29 $ 25.98
Dividend Information
Since inception, we have not declared or paid any cash dividends on our common stock, and we have no present intention of paying any dividends on our common stock in theforeseeable future, though we have implemented stock repurchase programs in the past, and the Board of Directors has authorized an additional $100 million share repurchaseprogram. Our Board of Directors periodically reviews our dividend policy to determine whether the declaration of dividends is appropriate. Terms of our senior credit facilityrestrict our ability to pay dividends. The restriction is variable based upon our leverage ratio and certain other circumstances, as outlined in the agreement.
Common Stock Repurchases
On January 16, 2015 the Company's Board of Directors approved a new $100.0 million share repurchase program that went into effect on February 23, 2015, and continues fortwo years thereafter. There were no repurchases under this program during the three months ended December 31, 2015.
The Company's stock-based compensation plans accept shares of the Company's common stock as payment for the exercise price of stock options. During the three months endedDecember 31, 2015, we received 46,174 shares, with a $2.2 million value, as payment for the exercise of stock options; these shares were retired upon receipt.
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Item 6. Selected Financial Data The following table presents selected financial data that should be read in conjunction with the consolidated financial statements and notes thereto included under “FinancialStatements and Supplementary Data” in Part II, Item 8 of this report.
Year Ended December 31,
2015(4) 2014 2013 2012 2011 (in thousands, except per share data)Summary Results of Operations(1): Revenues $ 2,065,008 $ 1,724,741 $ 1,523,101 $ 1,031,935 $ 429,756Costs of services 1,386,263 1,167,306 1,068,226 710,681 282,777Gross profit 678,745 557,435 454,875 321,254 146,979Selling, general and administrative expenses 492,170 397,523 317,345 231,194 113,466Amortization of intangible assets 34,467 22,130 20,943 17,047 1,729Operating income 152,108 137,782 116,587 73,013 31,784Interest expense, net (26,444) (12,730) (13,931) (12,595) (2,936)Write-off of loan costs (3,751) — (14,958) (813) —Income before income taxes 121,913 125,052 87,698 59,605 28,848Provision for income taxes 50,491 51,557 36,558 26,142 12,356Income from continuing operations 71,422 73,495 51,140 33,463 16,492Gain on sale of discontinued operations, net of income taxes 25,703 — 30,840 — —Income from discontinued operations, net of income taxes 525 3,689 2,532 9,190 7,805
Net income $ 97,650 $ 77,184 $ 84,512 $ 42,653 $ 24,297
Basic earnings per common share:
Income from continuing operations $ 1.37 $ 1.38 $ 0.96 $ 0.72 $ 0.45Income from discontinued operations 0.50 0.06 0.62 0.19 0.21
Net income $ 1.87 $ 1.44 $ 1.58 $ 0.91 $ 0.66
Diluted earnings per common share:
Income from continuing operations $ 1.35 $ 1.35 $ 0.94 $ 0.70 $ 0.44Income from discontinued operations 0.49 0.07 0.61 0.19 0.20
Net income $ 1.84 $ 1.42 $ 1.55 $ 0.89 $ 0.64Number of shares and share equivalents used to calculate earnings
per share: Basic 52,259 53,437 53,481 46,739 36,876
Diluted 53,005 54,294 54,555 47,826 37,758
Balance Sheet Data (at end of year): Cash and cash equivalents(2) $ 23,869 $ 28,860 $ 35,024 $ 24,849 $ 13,416Working capital(3) 253,858 201,271 167,768 164,451 61,111Total assets(3) 1,767,307 1,251,839 1,240,746 1,088,310 412,103Long-term liabilities(3) 822,163 452,676 433,040 425,347 97,078Stockholders' equity 784,794 634,408 640,133 532,723 246,743_____(1) Results of Operations have been restated to give retrospective effect to the sale of the Physician Segment on February 1, 2015, and the closure of the European retained search unit in December 2014. The results of
those businesses are included in discontinued operations for all periods presented (see "Note 5. Discontinued Operations" in Item 8).(2) Excludes cash and cash equivalents from the Physician Segment of $2.9 million, $2.3 million, $2.6 million, and $4.3 million as of December 31, 2014, 2013, 2012, and 2011, respectively. The Physician Segment was
sold in February 2015 and is reported in discontinued operations (see "Note 5. Discontinued Operations" in Item 8).(3) Retrospective adjustments have been made for the effects of early adopting Accounting Standards Updates No. 2015-3 and No. 2015-7 (see "Note 2. Accounting Standards Update" in Item 8).(4) Summary results of operations in 2015 include the results of Creative Circle since its acquisition on June 5, 2015. Creative Circle contributed $167.2 million and $22.9 million of revenues and income before income
taxes, respectively. Total assets at December 31, 2015 included $587.2 million from Creative Circle.
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Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the other sections of this 2015 10-K, including the Special Note on Forward-looking Statements and Part I, "Item 1A— Risk Factors."
OVERVIEW On Assignment, Inc., is a leading global provider of highly skilled, hard-to-find professionals in the growing technology, life sciences, and creative sectors, where quality peopleare the key to success. We go beyond matching résumés with job descriptions to match people we know into positions we understand, for contract, contract-to-hire and direct hireassignments.
On Assignment provides services through two operating segments, the Apex Segment and the Oxford Segment, with each addressing different sectors of the professional staffingmarket with distinct business models attuned to those sectors. Businesses in the Apex Segment predominately serve markets with a large and local talent pool, and provide a fullrange of skills through a network of local offices where clients most value relationship, speed, reliability and price. The Apex Segment provides a broad spectrum of technical,scientific, and creative professionals for contract, contract-to-hire and permanent placement positions to Fortune 1000 and mid-market clients across the United States. Ourbusinesses in this segment include Apex Systems, Lab Support and Creative Circle. Businesses in the Oxford Segment predominately serve markets with higher-end, specializedskills through a combination of national recruiting centers and local offices where clients most value the unique skill of the candidate and speed of response. The Oxford Segmentprovides specialized, niche staffing and consulting services in select skill and geographic markets. Our businesses in this segment include Oxford, CyberCoders and Life SciencesEurope.
Critical Accounting Policies Our accounting policies are described in "Note 1. Summary of Significant Accounting Policies," in Item 8 of this report. We prepare our financial statements in conformity withaccounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differfrom those estimates. We consider the following policies to be most critical in understanding the judgments that are involved in preparing our financial statements and theuncertainties that could impact our results of operations, financial condition and cash flows.
Allowance for Doubtful Accounts and Billing Adjustments. We estimate an allowance for doubtful accounts and an allowance for billing adjustments related to trade receivablesbased on an analysis of historical collection and billing adjustment experience. We apply bad debt percentages based on experience to the outstanding accounts receivable balances atthe end of the period. We also analyze specific reserves as needed. The allowance for billing adjustments includes a reserve for fallouts which is also based on historical experience.Receivables are written-off when deemed uncollectible. If we experience a significant change in collections or billing adjustment experience, our estimates of the recoverability ofaccounts receivable could change by a material amount. Workers’ Compensation Loss Reserves. We carry retention policies for its workers’ compensation liability exposures. In connection with these programs, the Company pays a basepremium plus actual losses incurred, not to exceed certain stop-loss limits. We are insured for losses above these limits, both per occurrence and in the aggregate. The workers'compensation loss reserves are based upon an actuarial report obtained from a third party and determined based on claims filed and claims incurred but not reported. We account forclaims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates and differences inestimates and actual payments for claims are recognized in the period that the estimates changed or the payments were made. Income taxes. We account for income taxes using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that aportion of the deferred tax asset will not be realized.
We make a comprehensive review of our uncertain tax positions regularly. In this regard, an uncertain tax position represents our expected treatment of a tax position taken in a filedreturn, or planned to be taken in a future tax return or claim that has not been reflected in measuring income tax expense for financial reporting purposes. In general, until thesepositions are sustained by the taxing authorities or statutes expire for the year that the position was taken, we do not recognize the tax benefits resulting from such positions andreport the tax effects as a liability for uncertain tax positions in our consolidated balance sheets.
Business Combinations. The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the dateof acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated togoodwill. We determine the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices and estimates madeby management. Accordingly, these can be affected by contract performance and other factors over time, which may cause final amounts to differ materially from original estimates.We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date if we obtain more information regarding asset valuations andliabilities assumed.
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Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. Acquisition related costs arerecognized separately from the acquisition and are expensed as incurred.
Goodwill and Identifiable Intangible Assets. Goodwill and indefinite-lived intangible assets (consisting entirely of trademarks) are tested for impairment on an annual basis as ofOctober 31. Interim testing of goodwill and indefinite-lived intangible assets for impairment is also required whenever an event occurs or circumstances change that would morelikely than not reduce the fair value of a reporting unit or asset below its carrying amount.
In order to test the trademarks for impairment, we estimate the fair value of the trademarks and compare such amount to their carrying value. We estimate the fair value of thetrademarks using a projected discounted cash flow analysis, specifically a relief-from-royalty approach. The principal factors used in the discounted cash flow analysis requiringjudgment are projected net sales, discount rate, royalty rate and terminal growth assumption. The royalty rates used in the analyses are based on royalty agreements and franchiseagreements that have occurred in the staffing and services industries. Based upon the annual trademark impairment tests completed in 2015, 2014 and 2013, there were noindications of impairment of the trademarks, and no impairment charges.
Intangible assets having finite lives are amortized over their useful lives and are tested for recoverability whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. Customer relationships are amortized using an accelerated method based on the annual cash flow observed in the initial valuation of the asset.Contractor relationships and non-compete agreements are amortized using the straight-line method.
Goodwill is tested for impairment using a two-step process. The first step (Step 1) compares the fair value of a reporting unit to the reporting unit's carrying value. A reporting unitis generally an operating segment or one level below the operating segment level where a business operates and for which discrete financial information is available and reviewed bysegment management. We determine the fair value of each reporting unit based upon weighted fair value estimates using three accepted valuation methodologies: i) The IncomeApproach, specifically a discounted cash flow (DCF) analysis, (ii) a Market Approach, specifically the guideline company method (GCM) and (iii) a Market Approach, specificallythe similar transactions method (STM). In the DCF approach, cash flows are developed for each reporting unit based on assumptions including revenue growth expectations, grossmargins, operating expense projections, working capital, fixed assets and capital expenditure requirements, and tax rates. Cash flows are discounted using the discount rateestimated for the reporting unit. The multi-year financial forecasts for each reporting unit used in the DCF analyses considered several key business drivers such as planned serviceofferings, historical performance and industry and economic trends, among other considerations.
The GCM considers market multiples, including total invested capital (TIC):Revenue, TIC:EBITDA and TIC:EBIT, based on recent financial performance of a selected group ofguideline public companies operating within in the staffing industry. Multiples are then applied to the corresponding financial results of our reporting units to derive indications offair value.
The STM considers similar multiples based on trading multiples of actual transactions. Multiples are then applied to the corresponding financial results of our reporting units toderive indications of fair value.
The value indications using the DCF, GCM and STM approaches are then weighted to estimate the fair value of equity of each reporting unit. If after performing Step 1 of thegoodwill impairment test, the fair value of equity of any reporting unit does not exceed its carrying value, we perform a second step (Step 2) of the goodwill impairment test for thatreporting unit. Step 2 measures the amount of goodwill impairment by comparing the implied fair value of the respective reporting unit goodwill with the carrying value of thatgoodwill. The implied fair value of goodwill is determined under the same approach utilized to estimate the amount of goodwill recognized in a business combination. This approachrequires we allocate the fair value of the respective reporting unit as calculated in Step 1 of the goodwill impairment test to the fair value of the reporting unit’s current, fixed andintangible assets and its liabilities. Identifiable intangible assets typically include trademarks, staffing databases and customer relationships. The reporting unit fair value estimated inStep 1, less the estimated fair values of identified assets and liabilities as of the test date, provides an estimate of the implied fair value of goodwill for that reporting unit. Thereporting unit goodwill impairment loss, if any, is measured as the amount by which the carrying value of goodwill exceeds the implied fair value of goodwill calculated in Step 2 ofthe goodwill impairment test.
The principal factors used in the discounted cash flow analysis requiring judgment are the projected results of operations, discount rate, and terminal growth assumptions. Thediscount rate is determined using the weighted average cost of capital ("WACC"). The WACC takes into account the relative weights of each component of an average marketparticipant's capital structure (equity and debt) and beta. It also considers the current risk-free rate of return, and risk premia including the equity risk premium, a size premium andunsystematic risk. A range of discount rates could be applicable to the reporting units based on the specific risk premia considered in the estimate of the WACC of each reportingunit.
The terminal growth assumptions are considered at the end of the DCF discrete period at which time the reporting unit is expected to have reached a sustainable long term growthrate. Terminal value is estimated by capitalizing the terminal period cash flow and discounting that value to present using the WACC. Based upon the annual goodwill impairmenttests completed in 2015, 2014 and 2013, there were no indications of impairment of goodwill and no goodwill impairment charges.
The discounted cash flows and the resulting fair value estimates of our reporting units are sensitive to changes in assumptions. Holding all other assumptions and approachesconstant, an increase of more than 400 basis points, representing a 30% increase in the selected discount rate in the 2015 analysis, could cause the fair value of certain significantreporting units to be below their carrying value. Changes in the timing of growth and the impact on our operations and costs may also affect the sensitivity of the projectionsincluding achieving future cost savings resulting
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from initiatives which contemplate further synergies from system and operational improvements in infrastructure and field support which were included in our forecasts used in theDCF analysis. Ultimately, future changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below itscarrying value, which would require a Step 2 analysis and may result in impairment of goodwill. Changes in market data, including the performance of guideline companies, and ourown market capitalization, could impact the estimated value indications.
Due to the many variables inherent in the estimation of a reporting unit's fair value and the relative size of recorded goodwill, changes in assumptions may have a material effect onthe results of our impairment analysis. Downward revisions of our forecasts or a decline of our stock price resulting in market capitalization significantly below book value couldlead to an impairment of goodwill or indefinite-lived intangible assets in future periods.
Stock-Based Compensation. We record compensation expense for restricted stock units based on the fair market value of the awards on the date of grant. Compensation expense forperformance-based awards is measured based on the amount of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regardingthe relevant performance criteria. We account for stock options granted and employee stock purchase plan shares based on an estimated fair market value using a Black-Scholesoption pricing model. This methodology requires the use of subjective assumptions, including expected stock price volatility and the estimated life of each award. The fair value ofequity-based compensation awards less the estimated forfeitures is amortized over the service period of the award.
Results of Operations
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015COMPARED WITH THE YEAR ENDED DECEMBER 31, 2014
The tables and discussion below include pro forma and constant currency data. Pro forma assumes the acquisitions of Creative Circle and LabResource, which were acquired in thesecond quarter of 2015 (the "Acquisitions"), occurred at the beginning of 2014. Operating results of Creative Circle are included in the Apex Segment, and the operating results ofLabResource are included in the Oxford Segment. Constant currency data (a non-GAAP measure) shown below are on a pro forma basis and were calculated using the foreignexchange rates from the prior year.
As Reported Pro Forma Year-Over-Year Growth Rates
2015 2014 2015 2014 As Reported Pro Forma ConstantCurrency
(Dollars in millions) Revenues by segment:
Apex: Assignment $ 1,455.6 $ 1,174.3 $ 1,557.7 $ 1,383.1 24.0% 12.6% 12.6% Permanent placement 31.4 15.7 40.7 32.9 100.0% 23.7% 23.7%
1,487.0 1,190.0 1,598.4 1,416.0 25.0% 12.9% 12.9% Oxford:
Assignment 491.4 467.4 494.0 476.9 5.1% 3.6% 7.1% Permanent placement 86.6 67.3 86.6 68.0 28.7% 27.4% 28.0%
578.0 534.7 580.6 544.9 8.1% 6.6% 9.7% Consolidated:
Assignment 1,947.0 1,641.7 2,051.7 1,860.0 18.6% 10.3% 11.2% Permanent placement 118.0 83.0 127.3 100.9 42.2% 26.2% 26.7%
$ 2,065.0 $ 1,724.7 $ 2,179.0 $ 1,960.9 19.7% 11.1% 12.0% Percentage of total revenues:
Apex 72.0% 69.0% 73.4% 72.2% Oxford 28.0% 31.0% 26.6% 27.8%
100.0% 100.0% 100.0% 100.0%
Assignment 94.3% 95.2% 94.2% 94.9% Permanent placement 5.7% 4.8% 5.8% 5.1%
100.0% 100.0% 100.0% 100.0%
Domestic 95.5% 95.3% 95.6% 95.3% Foreign 4.5% 4.7% 4.4% 4.7%
100.0% 100.0% 100.0% 100.0%
Revenues on an as reported basis increased $340.3 million, or 19.7 percent, as a result of (i) the contribution of $174.9 million in revenues from the Acquisitions and (ii) year-overyear organic revenue growth of 9.6 percent (10.5 percent on a constant currency basis). Assignment revenues were $1.9 billion, up from $1.6 billion in 2014. Permanent placementrevenues, comprised of direct hire and conversion fees, were $118.0 million, up from $83.0 million in 2014. Permanent placement revenues accounted for 5.7 percent of totalrevenues, up from 4.8 percent of total revenues in 2014. On a pro forma basis, revenues were up $218.1 million, or 11.1 percent (12.0 percent on a constant currency basis).
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The Apex Segment accounted for 72.0 percent of consolidated revenues in 2015. Its revenues on an as reported basis were $1.5 billion, up 25.0 percent year-over-year. Thisincrease was a result of (i) the contribution of $167.2 million in revenues from Creative Circle and (ii) year-over-year organic revenue growth of 10.9 percent. On a pro forma basis,revenues were up 12.9 percent. Apex’s year-over-year pro forma growth rate increased over the course of 2015 from 8.6 percent in the first quarter to 17.4 percent in the fourthquarter. This resulted mainly from the accelerating growth rate of Apex Systems, the Segment's core IT services business (which accounted for 73.8 percent of the segment’s proforma revenues), and continued high growth from Creative Circle. The accelerating revenue growth of Apex Systems reflected, among other things, higher demand in our endmarkets and improved productivity from our sales consultants, including the contribution from headcount added during the hiring surge in the second half of 2014.
The Oxford Segment accounted for 28.0 percent of consolidated revenues in 2015. Its revenues on an as reported basis were $578.0 million, up 8.1 percent year-over-year. Thisincrease was a result of (i) year-over year organic revenue growth of 6.7 percent (9.5 percent on a constant currency basis) and (ii) the contribution of $7.7 million in revenues fromLabResource. On a pro forma basis, Oxford’s revenues were $580.6 million, up 6.6 percent year-over-year (9.7 percent on a constant currency basis). Oxford’s assignmentrevenues were $494.0 million on a pro forma basis, up 3.6 percent year-over-year (7.1 percent on a constant currency basis). Its permanent placement revenues grew 27.4 percentyear-over-year on a pro forma basis and accounted for 14.9 percent of its total revenues.
Gross Profit and Gross Margins
As Reported Pro Forma Year-Over-Year Change 2015 2014 2015 2014 As Reported Pro Forma (Dollars in millions) Gross profit:
Apex $ 437.5 $ 335.3 $ 484.9 $ 430.8 30.5% 12.6 % Oxford 241.2 222.1 242.1 226.0 8.6% 7.1 %
Consolidated $ 678.7 $ 557.4 $ 727.0 $ 656.8 21.8% 10.7 % Gross margin(1):
Apex 29.4% 28.2% 30.3% 30.4% 1.2% (0.1)% Oxford 41.7% 41.5% 41.7% 41.5% 0.2% 0.2 %
Consolidated 32.9% 32.3% 33.4% 33.5% 0.6% (0.1)%
(1) The year-over-year change in gross margin is the absolute change in the margin.
Gross profit is comprised of revenues less costs of services. Costs of services consist primarily of compensation for our contract professionals and assignment related expenses.Gross profit for the year was $678.7 million on an as reported basis, up 21.8 percent year-over-year. Gross margin was 32.9 percent, an expansion of 60 basis points over 2014.This expansion related to the higher mix of permanent placement revenues and the inclusion of Creative Circle, which has a higher assignment gross margin than our otherdivisions. On a pro forma basis, our consolidated gross margin was 33.4 percent down approximately 10 basis points year-over-year.
The Apex Segment accounted for 64.5 percent of consolidated gross profit in 2015. Its gross profit on an as reported basis was $437.5 million, up 30.5 percent, as a result of (i)contribution of $71.4 million from Creative Circle and (ii) year-over-year organic revenue growth of 10.9 percent. Gross margin for the segment was 29.4 percent, an expansion of120 basis points year-over-year due to the inclusion of Creative Circle. On a pro forma basis, gross margin was 30.3 percent, down slightly from 2014 primarily due to changes inbusiness mix.
The Oxford Segment accounted for 35.5 percent of consolidated gross profit in 2015. Its gross profit on an as reported basis was $241.2 million, up 8.6 percent year-over-year as aresult of the increase in revenues. Its gross margin was 41.7 percent, an expansion of 20 basis points year-over-year due to the higher mix of permanent placement revenues.
Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses consists primarily of compensation for our field operations and corporatestaff, rent, information systems, marketing, telecommunications, public company expenses and other general and administrative expenses. SG&A expenses in 2015 were $492.2million, or 23.8 percent of revenues, up from $397.5 million or 23.0 percent of revenues in 2014. The increase in SG&A expenses was due to (i) $35.3 million from the operationsof Creative Circle and LabResource, (ii) $14.9 million of acquisition, integration and strategic planning expenses and (iii) higher compensation costs due to an increase in headcount.
Amortization of Intangible Assets. Amortization of intangible assets was $34.5 million compared with $22.1 million in 2014. The increase related to amortization from theAcquisitions.
Interest Expense. Interest expense (net of interest income) was $26.4 million compared with $12.7 million in 2014. The increase in interest expense was primarily due to higherdebt levels and an increase in the effective interest rate. Interest expense was comprised of (i) interest on the credit facility of $22.3 million, (ii) amortization of deferred loan costs of$2.7 million, and (iii) accretion of $1.4 million on the contingent consideration liability related to acquisitions. The effective interest rate was 4.2 percent in 2015, compared with 3.3percent in 2014.
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Write-Off of Loan Costs. Write-off of loan costs in 2015 was $3.8 million and related to the refinancing of our credit facility in June 2015. Provision for Income Taxes. The provision for income taxes was $50.5 million compared with $51.6 million in 2014. The annual effective tax rate was 41.4 percent for 2015, upfrom 41.2 percent for 2014. The year-over-year increase in the effective tax rate primarily related to non-deductible expenses of $2.8 million for the increase in the earnout obligationfor CyberCoders.
Income from Continuing Operations. Income from continuing operations was $71.4 million compared with $73.5 million in 2014.
Discontinued Operations. Discontinued operations include the net operating results of our Physician Segment (which was sold in February 2015) and our European retainedsearch business (which was shut down in December 2014). Discontinued operations for 2015 included the net of tax gain of $25.7 million from the sale of the Physician Segment.Income from discontinued operations, net of income taxes, was $0.5 million in 2015 and $3.7 million in 2014.
Net Income. Net income was $97.7 million in 2015, compared with $77.2 million in 2014. Net income for 2015 included the net of tax gain of $25.7 million from the sale of thePhysician Segment.
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RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014COMPARED WITH THE YEAR ENDED DECEMBER 31, 2013
The tables and discussion below include pro forma information. Pro forma assumes the acquisition of CyberCoders, which was acquired in the fourth quarter of 2013, occurred atthe beginning of 2013. Operating results of CyberCoders are included in the Oxford Segment.
As Reported Pro Forma Year-Over-Year Growth Rates
2014 2013 2013 As Reported Pro Forma
(Dollars in millions) Revenues by segment:
Apex: Assignment $ 1,174.3 $ 1,047.2 $ 1,047.2 12.1% 12.1% Permanent placement 15.7 12.8 12.8 22.7% 22.7%
1,190.0 1,060.0 1,060.0 12.3% 12.3% Oxford:
Assignment 467.4 453.0 465.3 3.2% 0.5% Permanent placement 67.3 10.1 57.4 566.3% 17.2%
534.7 463.1 522.7 15.5% 2.3% Consolidated:
Assignment 1,641.7 1,500.2 1,512.5 9.4% 8.5% Permanent placement 83.0 22.9 70.2 262.4% 18.2%
$ 1,724.7 $ 1,523.1 $ 1,582.7 13.2% 9.0% Percentage of total revenues:
Apex 69.0% 69.6% 67.0% Oxford 31.0% 30.4% 33.0%
100.0% 100.0% 100.0%
Assignment 95.2% 98.5% 95.6% Permanent placement 4.8% 1.5% 4.4%
100.0% 100.0% 100.0%
Domestic 95.3% 95.0% 95.2% Foreign 4.7% 5.0% 4.8%
100.0% 100.0% 100.0%
Revenues increased $201.6 million, or 13.2 percent, on a reported basis in 2014 compared to 2013. On a pro forma basis, consolidated revenues increased $142.0 million, or 9.0percent year-over-year. The increase in revenues is due to year-over-year organic growth of 8.4 percent and the acquisition of CyberCoders, which contributed $77.1 million ofrevenues. Permanent placement revenues were $83.0 million, or 4.8 percent of total revenues, up from $22.9 million, or 1.5 percent of total revenues in 2013. The increase is due toCyberCoders, which accounted for $61.6 million of permanent placement revenues in 2014.
The Apex Segment accounted for 69.0 percent of consolidated revenues in 2014. Revenues for the Apex Segment were $1.2 billion, up 12.3 percent year-over-year, reflecting a 9.0percent increase in the average number of contract professionals on assignment and a 1.0 percent increase in the average bill rate.
The Oxford Segment accounted for 31.0 percent of consolidated revenues in 2014. Revenues for the Oxford Segment were $534.7 million, up 15.5 percent year-over-year on areported basis and up 2.3 percent on a pro forma basis. Revenues for the Oxford Segment include CyberCoders. Revenues from CyberCoders were $77.1 million in 2014, up 22.0percent year-over-year on a pro forma basis.
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Gross Profit and Gross Margins
As Reported Pro Forma Year-Over-Year Change 2014 2013 2013 As Reported Pro Forma (Dollars in millions) Gross profit:
Apex $ 335.3 $ 294.6 $ 294.6 13.8% 13.8% Oxford 222.1 160.3 211.1 38.6% 5.2%
Consolidated $ 557.4 $ 454.9 $ 505.7 22.5% 10.2% Gross margin(1):
Apex 28.2% 27.8% 27.8% 0.4% 0.4% Oxford 41.5% 34.6% 40.4% 6.9% 1.1%
Consolidated 32.3% 29.9% 32.0% 2.4% 0.3%
(1) The year-over-year change in gross margin is the absolute change in the margin.
Gross profit was $557.4 million in 2014, up 22.5 percent year-over-year as a result of the increase in revenues and expansion in gross margin. Gross margin was 32.3 percent, upapproximately 2.4 percentage points year-over-year. The expansion in gross margin was due to the higher mix of permanent placement revenues (4.8 percent of revenues in 2014 upfrom 1.5 percent in 2013) and higher assignment gross margins. The higher mix of permanent placement revenues was attributable to CyberCoders, which accounted for 74.1percent of permanent placement revenues in 2014.
The Apex Segment accounted for 60.2 percent of consolidated gross profit in 2014. The Apex Segment's gross profit was $335.3 million in 2014, up 13.8 percent year-over-year asa result of the increase in revenues and expansion in its gross margin. Gross margin was 28.2 percent, up approximately 40 basis points year-over-year. The expansion in grossmargin is due to a 2.2 percent increase in bill/pay spread and a slightly higher mix of permanent placement revenues.
The Oxford Segment accounted for 39.8 percent of consolidated gross profit in 2014. The Oxford Segment's gross profit was $222.1 million in 2014, up 38.6 percent year-over-year on a reported basis and 5.2 percent on a pro forma basis. Gross margin was 41.5 percent, an expansion of 6.9 percentage points year-over-year on a reported basis and up 1.1percentage points on a pro forma basis. The expansion in gross margin is due to a higher mix of permanent placement revenues related to CyberCoders.
Selling, General and Administrative Expenses. SG&A expenses were $397.5 million in 2014, an increase of $80.2 million year-over-year. SG&A expenses as a percentage ofrevenues were 23.0 percent for 2014, up from 20.8 percent in 2013. The year-over-year increase in SG&A expenses was due to the inclusion of CyberCoders (which has a highergross margin and higher SG&A as a percentage of revenues than our other business), and higher branch expenses related to the acceleration in hiring of additional sales consultantsand recruiters. SG&A expenses in 2014 also included acquisition, integration and strategic planning expenses of $5.3 million.
Amortization of Intangible Assets. Amortization of intangible assets in 2014 was $22.1 million compared with $20.9 million in 2013. The increase is related to amortization fromCyberCoders, which was acquired in December 2013.
Interest Expense. Interest expense (net of interest income) for 2014 was $12.7 million compared with $13.9 million in 2013. Interest expense in 2014 was comprised of interest onthe credit facility of $11.3 million and amortization of capitalized loan costs of $1.4 million. In February 2014, we amended our credit facility resulting in an increase in borrowingsunder our term A loan facility of $82.5 million to $175.0 million and a pay down on the term B loan facility by the same amount. The effective interest in 2014 was 3.3 percent,compared with 4.4 percent in 2013.
Write-Off of Loan Costs. Write-off of loan costs in 2013 was $15.0 million related to the refinancing of our credit facility in May 2013. The refinancing was treated as an earlyextinguishment of debt resulting in a full write-off of the loan costs associated with the previous facility.
Provision for Income Taxes. The provision for income taxes in 2014 was $51.6 million compared with $36.6 million in 2013. The annual effective tax rate was 41.2 percent for2014 and 41.7 percent for 2013. The improvement in the effective tax rate relates to higher growth of pre-tax income relative to growth of permanent differences between financialand tax income.
Income from Continuing Operations. Income from continuing operations was $73.5 million in 2014 compared with $51.1 million in 2013. On a pro forma basis, which assumesthe acquisition of CyberCoders occurred at the beginning of 2012, income from continuing operations increased by $18.5 million, or 33.8 percent.
Discontinued Operations. Discontinued operations include the net operating results of our Physician Segment (which was sold in February 2015), our European retained searchbusiness (which was shut down in December 2014), and our Allied Healthcare and Nurse Travel divisions (which were sold in 2013). Discontinued operations for 2013 alsoincludes the net of tax gain of $30.8 million on the sale of the Nurse Travel and Allied Healthcare divisions. Income from discontinued operations, net of income taxes, was $3.7million in 2014 and $2.5 million in 2013.
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Net Income. Net income was $77.2 million in 2014, compared with $84.5 million in 2013. Net income in 2013 included a net of tax gain of $30.8 million from the sale of ourAllied Healthcare and Nurse Travel divisions.
Liquidity and Capital Resources Our working capital as of December 31, 2015 was $253.9 million and our cash and cash equivalents were $23.9 million, of which $6.1 million was held in foreign countries. Cashheld in foreign countries is not available to fund domestic operations unless repatriated. We do not intend to repatriate cash held in foreign countries.
Our operating cash flows and borrowings under our credit facilities have been our primary source of liquidity and have been sufficient to fund our working capital and capitalexpenditure needs. We believe that our working capital, availability under our credit facility and expected operating cash flows will be sufficient to meet our future debt obligations,working capital requirements and capital expenditures for the next 12 months.
Net cash provided by operating activities was $117.5 million in 2015 compared with $96.0 million in 2014. Net cash provided by operating activities in 2015 was comprised of netincome of $97.7 million, non-cash items of $76.3 million (e.g., depreciation, amortization, stock-based compensation, etc.) and an increase of $56.5 million in net operating assets.Net cash provided by operating activities in 2014 was comprised of net income of $77.2 million, non-cash items of $77.2 million and an increase of $58.4 million in net operatingassets.
Net cash used in investing activities was $461.5 million in 2015, compared with $19.6 million in 2014. Net cash used in investing activities in 2015 was comprised of the cashportion of our Creative Circle and LabResource acquisitions of $552.8 million and cash paid for capital expenditures for information technology projects, leasehold improvementsand various property and equipment purchases of $24.7 million, partially offset by the net proceeds from the sale of the Physician Segment of $115.4 million. Net cash used ininvesting activities in 2014 was primarily comprised of cash paid for capital expenditures for information technology projects, leasehold improvements and various property andequipment purchases of $19.7 million.
Net cash provided by financing activities was $337.7 million in 2015 compared with $81.1 million used by financing activities in 2014. Net cash provided by financing activities in2015 was primarily comprised of proceeds of $875.0 million from new borrowings on the new credit facility, partially offset by $516.1 million in principal payments of long-termdebt and $23.9 million debt issuance costs. Net cash used in financing activities in 2014 was primarily comprised of $148.7 million in principal payments of long-term debt and$100.0 million used in stock repurchases, partially offset by proceeds of $164.0 million from new borrowings on the new credit facility.
On June 5, 2015, the Company entered into a new $975.0 million credit facility. The funds were used to repay the old credit facility and to fund the cash portion of the purchase ofCreative Circle (see "Note 4. Acquisitions"). This facility consists of (i) an $825.0 million seven-year term B loan facility and (ii) a $150.0 million five-year revolving loan facility.Under terms of the credit facility, we are required to make minimum quarterly payments of $2.1 million. However, through December 31, 2015, we have repaid $101.0 million, andas a result, the next required payments will be on the maturity dates. We are also required to make mandatory prepayments, subject to specified exceptions, from excess cash flowand with the proceeds of asset sales, debt issuances and specified other events. The outstanding balance on the facility at December 31, 2015 was $774.0 million (see "Note 6.Long-Term Debt"). The maximum leverage ratio of consolidated funded debt to consolidated EBITDA steps down at regular intervals from 4.50 to 1.00 as of December 31, 2015,to 3.25 to 1.00 as of March 31, 2018 and thereafter. As of December 31, 2015, the actual leverage ratio was 3.02 to 1.00. Additionally, the credit facility, which is secured bysubstantially all of our assets, provides for certain limitations on our ability to, among other things, incur additional debt, offer loans, and declare dividends. As of December 31,2015, we had $96.5 million of borrowings available under our revolving credit facility.
On January 16, 2015 the Company's Board of Directors approved a new $100.0 million share repurchase program. During 2015, the Company repurchased 43,000 shares of itscommon stock at a cost of $1.6 million. All shares repurchased under this program were retired.
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Commitments and Contingencies We lease space for our corporate and branch offices. Rent expense was $21.6 million in 2015, $17.6 million in 2014, and $15.4 million in 2013.
The following table sets forth, on an aggregate basis, excluding discontinued operations, at December 31, 2015, the amounts of specified contractual cash obligations required to bepaid in the future periods shown (in thousands):
Contractual Obligations Less than 1 year 1-3 years 3-5 years More than 5 years TotalLong-term debt obligations 1 $ 28,612 $ 57,224 $ 106,371 $ 762,462 $ 954,669Operating lease obligations 18,369 28,527 17,562 11,854 76,312Related party leases 1,190 2,471 2,596 5,346 11,603
Total $ 48,171 $ 88,222 $ 126,529 $ 779,662 $ 1,042,584 ____________(1) Long term debt obligations include interest calculated based on the rates in effect at December 31, 2015.
For additional information about these contractual cash obligations, see "Note 6. Long-Term Debt" and "Note 8. Commitments and Contingencies" in Item 8.
We have large retention policies for our workers’ compensation liability exposures. The workers' compensation loss reserves are based upon an actuarial report obtained from athird party and determined based on claims filed and claims incurred but not reported. We account for claims incurred but not yet reported based on estimates derived from historicalclaims experience and current trends of industry data. Changes in estimates, differences in estimates, and actual payments for claims, are recognized in the period that the estimateschanged or the payments were made. The workers' compensation loss reserves were approximately $1.8 million and $2.2 million, net of anticipated insurance and indemnificationrecoveries of $13.2 million and $13.4 million, at December 31, 2015 and 2014, respectively. We have unused stand-by letters of credit outstanding to secure obligationsfor workers’ compensation claims with various insurance carriers. The unused stand-by letters of credit at December 31, 2015 and 2014 were $3.5 million and $3.2 million,respectively.
As of December 31, 2015 and 2014, we have a $0.8 million long term liability related to our uncertain tax positions. We have omitted this liability from the table above due to theinherent uncertainty regarding the timing and amount of payments related to uncertain tax positions. We are unable to make reasonably reliable estimates of the period of cashsettlement since the statute of limitations might expire without examination by the respective tax authority.
We are involved in various other legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do notbelieve that the disposition of matters that are pending or asserted will have a material effect on our consolidated financial statements.
We are subject to earn-out obligations entered into in connection with acquisitions. If the acquired businesses meet predetermined targets, we are obligated to make additional cashpayments in accordance with the terms of such earn-out obligations, see "Note 15. Fair Value Measurements" in Item 8 of this report.
Off-Balance Sheet Arrangements As of December 31, 2015, the Company had no significant off-balance sheet arrangements other than operating leases and unused stand-by letters of credit outstanding. Accounting Standards Updates See "Note 2. Accounting Standards Update," in Item 8 for a discussion of new accounting pronouncements.
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to certain market risks arising from transactions in the normal course of business, principally risks associated with foreign currency fluctuations and interest rates.
Foreign Currency Fluctuations. Our exposure to fluctuations in foreign currency exchange rates relates primarily to our foreign subsidiaries. Exchange rates impact the U.S. dollarvalue of our reported earnings, investments in our foreign subsidiaries, and intercompany transactions with our foreign subsidiaries. Fluctuations in currency exchange rates impactthe U.S. dollar amount of our stockholders’ equity. The assets and liabilities of our non-U.S. subsidiaries are translated into U.S. dollars at the exchange rates in effect at period end.The resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive income. Based on the relative size and nature of ourforeign operations, we do not believe that a 10 percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our financial statements.
Interest Rate Risk. Our exposure to interest rate risk is associated with our debt instruments. See "Note 6. Long-Term Debt" in Part II, Item 8 of this 2015 10-K for a furtherdescription of our debt instruments. A hypothetical 100 basis point change in interest rates on variable rate debt would have resulted in interest expense fluctuating approximately$7.7 million based on $774.0 million of debt outstanding for any 12-month period. We have not entered into any market risk sensitive instruments for trading purposes.
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Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of On Assignment, Inc.
Calabasas, California
We have audited the accompanying consolidated balance sheets of On Assignment, Inc. and subsidiaries (the "Company") as of December 31, 2015 and2014, and the related consolidated statements of operations and comprehensive income, stockholders' equity, and cash flows for each of the three years in theperiod ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements andfinancial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements andfinancial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of On Assignment, Inc. and subsidiaries asof December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, inconformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, whenconsidered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal controlover financial reporting as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2016 expressed an unqualified opinion on theCompany's internal control over financial reporting.
DELOITTE & TOUCHE LLP
Los Angeles, CaliforniaFebruary 29, 2016
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ON ASSIGNMENT, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
December 31,
2015 2014ASSETS Current assets:
Cash and cash equivalents $ 23,869 $ 28,860Accounts receivable, net of allowance of $6,682 and $4,404, respectively 354,808 277,146Prepaid expenses and income taxes 12,686 13,308Workers’ compensation receivable 13,238 13,370Other current assets 9,607 2,310Current assets of discontinued operations — 31,032
Total current assets 414,208 366,026Property and equipment, net 53,196 44,311Goodwill 874,906 512,060Identifiable intangible assets, net 417,925 250,609Other non-current assets 7,072 5,160Non-current assets of discontinued operations — 73,673
Total assets $ 1,767,307 $ 1,251,839
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Current portion of long-term debt $ — $ 17,439Accounts payable 9,132 7,925Accrued payroll and contract professional pay 88,100 82,563Workers’ compensation loss reserves 15,020 15,564Income taxes payable 673 340Other current liabilities 47,425 20,729Current liabilities of discontinued operations — 20,195
Total current liabilities 160,350 164,755Long-term debt 755,508 394,418Deferred income tax liabilities 61,539 48,075Other long-term liabilities 5,116 7,937Long-term liabilities of discontinued operations — 2,246
Total liabilities 982,513 617,431Commitments and contingencies (Note 8) Stockholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued — —Common stock, $0.01 par value, 75,000,000 shares authorized, 53,024,972 and 51,386,693 issued andoutstanding, respectively 530 514Paid-in capital 542,859 483,902Retained earnings 249,567 154,562Accumulated other comprehensive income (loss) (8,162) (4,570)
Total stockholders’ equity 784,794 634,408
Total liabilities and stockholders’ equity $ 1,767,307 $ 1,251,839
See notes to consolidated financial statements.
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ON ASSIGNMENT, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
Year Ended December 31,
2015 2014 2013Revenues $ 2,065,008 $ 1,724,741 $ 1,523,101Costs of services 1,386,263 1,167,306 1,068,226Gross profit 678,745 557,435 454,875Selling, general and administrative expenses 492,170 397,523 317,345Amortization of intangible assets 34,467 22,130 20,943Operating income 152,108 137,782 116,587Interest expense, net (26,444) (12,730) (13,931)Write-off of loan costs (3,751) — (14,958)Income before income taxes 121,913 125,052 87,698Provision for income taxes 50,491 51,557 36,558Income from continuing operations 71,422 73,495 51,140Gain on sale of discontinued operations, net of income taxes 25,703 — 30,840Income from discontinued operations, net of income taxes 525 3,689 2,532
Net income $ 97,650 $ 77,184 $ 84,512
Basic earnings per common share:
Continuing operations $ 1.37 $ 1.38 $ 0.96Discontinued operations 0.50 0.06 0.62
Net income $ 1.87 $ 1.44 $ 1.58
Diluted earnings per common share: Continuing operations $ 1.35 $ 1.35 $ 0.94Discontinued operations 0.49 0.07 0.61
Net income $ 1.84 $ 1.42 $ 1.55
Number of shares and share equivalents used to calculate earnings per share: Basic 52,259 53,437 53,481
Diluted 53,005 54,294 54,555
Reconciliation of net income to comprehensive income: Net income $ 97,650 $ 77,184 $ 84,512Changes in fair value of derivative, net of tax 122 86 193Foreign currency translation adjustment (3,714) (4,772) 1,128
Comprehensive income $ 94,058 $ 72,498 $ 85,833
See notes to consolidated financial statements.
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ON ASSIGNMENT, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)
Common Stock Paid-inCapital
RetainedEarnings
Accumulated OtherComprehensive Income
(Loss)
Total Shares Amount Balance at December 31, 2012 52,960,570 $ 530 $ 471,711 $ 61,687 $ (1,205) $ 532,723
Exercise of stock options 393,183 3 3,195 — — 3,198Employee stock purchase plan 203,200 2 3,854 — — 3,856Stock-based compensation expense — — 13,911 — — 13,911Vesting of restricted stock units 369,572 4 (4,697) — — (4,693)Tax benefit from stock-based compensation — — 5,305 — — 5,305Fair value adjustment of derivatives, net ofincome tax — — — — 193 193Translation adjustments — — — — 1,128 1,128Net income — — — 84,512 — 84,512
Balance at December 31, 2013 53,926,525 539 493,279 146,199 116 640,133Exercise of stock options 147,163 1 1,104 — — 1,105Employee stock purchase plan 207,805 2 5,251 — — 5,253Stock repurchase and retirement of shares (3,359,604) (33) (31,194) (68,821) — (100,048)Stock-based compensation expense — — 17,246 — — 17,246Vesting of restricted stock units and restrictedstock awards 464,804 5 (6,502) — — (6,497)Tax benefit from stock-based compensation — — 4,718 — — 4,718Fair value adjustment of derivatives, net ofincome tax — — — — 86 86Translation adjustments — — — — (4,772) (4,772)Net income — — — 77,184 — 77,184
Balance at December 31, 2014 51,386,693 514 483,902 154,562 (4,570) 634,408Exercise of stock options 329,502 3 3,469 — — 3,472Employee stock purchase plan 204,401 2 5,291 — — 5,293Stock repurchase and retirement of shares (89,174) (1) (1,173) (2,645) — (3,819)Stock-based compensation expense — — 23,471 — — 23,471Vesting of restricted stock units and stockawards 398,850 4 (8,827) — — (8,823)Tax benefit from stock-based compensation — — 6,551 — — 6,551Acquisition of Creative Circle 794,700 8 30,175 — — 30,183Fair value adjustment of derivatives, net ofincome tax — — — — 122 122Translation adjustments — — — — (3,714) (3,714)Net income — — — 97,650 — 97,650
Balance at December 31, 2015 53,024,972 $ 530 $ 542,859 $ 249,567 $ (8,162) $ 784,794
See notes to consolidated financial statements.
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ON ASSIGNMENT, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2015 2014 2013Cash Flows from Operating Activities: Net income $ 97,650 $ 77,184 $ 84,512
Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of discontinued operations, net of income taxes (25,703) — (30,840)Depreciation and amortization 51,569 38,296 29,882Provision for doubtful accounts and billing adjustments 10,486 7,047 1,787Provision for deferred income taxes 11,549 15,948 4,111Stock-based compensation 22,018 16,199 14,411Write-off of loan costs 3,751 — 14,958Gross excess tax benefits from stock-based compensation (6,551) (4,943) (5,308)Workers’ compensation and medical malpractice provision 2,117 3,321 5,956Other 7,136 1,408 (1,853)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable (53,775) (45,361) (20,155)Prepaid expenses and income taxes 100 (8,304) 6,628Income taxes payable (7,679) (8,023) (5,759)Accounts payable 1,684 (1,693) (1,580)Accrued payroll and contract professional pay 242 11,275 17,554Workers' compensation and medical malpractice loss reserve (901) (2,192) (2,348)Deferred compensation — (20) (9,980)Other 3,800 (4,120) 8,548
Net cash provided by operating activities 117,493 96,022 110,524Cash Flows from Investing Activities:
Cash paid for property and equipment (24,689) (19,729) (16,531)Cash paid for acquisitions, net of cash acquired (552,777) — (110,700)Cash received from sale of discontinued operations, net 115,440 — 59,899Other 496 169 (1,023)
Net cash used in investing activities (461,530) (19,560) (68,355)Cash Flows from Financing Activities:
Principal payments of long-term debt (516,125) (148,688) (456,275)Proceeds from long-term debt 875,000 164,000 429,500Proceeds from option exercises and employee stock purchase plan 6,591 6,358 7,054Payment of employment taxes related to release of restricted stock awards (8,823) (6,498) (7,600)Gross excess tax benefits from stock-based compensation 6,551 4,943 5,308Repurchase of common stock (1,645) (100,049) —Debt issuance or amendment costs (23,890) (467) (6,938)Payments of accrued earn-outs — (691) (3,425)Other — — (14)
Net cash provided by (used in) financing activities 337,659 (81,092) (32,390)Effect of exchange rate changes on cash and cash equivalents (1,467) (1,006) 92Net Increase (Decrease) in Cash and Cash Equivalents (7,845) (5,636) 9,871Cash and Cash Equivalents at Beginning of Year (1) 31,714 37,350 27,479
Cash and Cash Equivalents at End of Year (1) $ 23,869 $ 31,714 $ 37,350(1) Cash and cash equivalents at December 31, 2014 and 2013 include $2.9 million, and $2.3 million, respectively, from the Physician Segment (see "Note 5. Discontinued Operations" in Item 8).
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Supplemental Disclosure of Cash Flow Information Cash paid for:
Income taxes $ 45,478 $ 56,320 $ 32,350
Interest $ 22,282 $ 11,559 $ 15,158
Non-Cash Investing and Financing Activities: Equity consideration for acquisition $ 30,183 $ — $ —
Stock option exercises $ 2,174 $ — $ —
Acquisition of property and equipment through accounts payable $ 989 $ 2,932 $ 594
See notes to consolidated financial statements.
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ON ASSIGNMENT, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts andtransactions have been eliminated.
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Revenues from contract assignments, net of sales adjustments and discounts, are recognized when earned, based on hours worked by the Company’s contractprofessionals on a weekly basis. Permanent placement revenues are derived from direct hire and conversion fees. Direct hire fees relate to employment candidates that the Companydirectly places as permanent employees at a client organization. Conversion fees relate to contract professionals on assignment that convert to be permanent employees of the client.Direct hire and conversion fees are recognized as revenues when employment candidates or contract professionals begin permanent employment. The Company records a salesallowance against consolidated revenues, which is an estimate based on historical billing adjustment experience. The billing adjustment reserve includes an allowance for fallouts.Fallouts are permanent placements that do not complete the contingency period, which is typically 90 days or less. The Company includes reimbursed expenses, in revenues and theassociated amounts of reimbursable expenses in costs of services.
The Company records revenues on a gross basis as a principal or on a net basis as an agent depending on the arrangement. The key indicators as to whether it acts as a principal oran agent are whether the Company (i) has the direct contractual relationships with its customers, (ii) bears the risks and rewards of the transactions and (iii) has the discretion toselect the contract professionals and establish their price.
Costs of Services. Costs of services include direct costs of contract assignments consisting primarily of payroll, payroll taxes and benefit costs for the Company’s contractprofessionals. Costs of services also include assignment expenses, many of which are reimbursable by the client.
Income Taxes. Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that aportion of the deferred tax asset will not be realized.
The Company makes a comprehensive review of its uncertain tax positions regularly. An uncertain tax position represents the Company’s expected treatment of a tax position takenin a filed return, or planned to be taken in a future tax return or claim that has not been reflected in measuring income tax expense for financial reporting purposes. In general, untilthese positions are sustained by the taxing authorities or statutes expire for the year that the position was taken, the Company does not recognize the tax benefits resulting from suchpositions and reports the tax effects as a liability for uncertain tax positions.
Foreign Currency Translation. The functional currency of the Company’s foreign operations is their local currency, and as such, their assets and liabilities are translated into U.S.dollars at the rate of exchange in effect on the balance sheet date. Revenues and expenses are translated at the average rates of exchange prevailing during each monthly period. Therelated translation adjustments are recorded as cumulative foreign currency translation adjustments in accumulated other comprehensive income (loss) as a separate component ofstockholders’ equity. Gains and losses resulting from foreign currency transactions, which are not material, are included in SG&A expenses in the Consolidated Statements ofOperations and Comprehensive Income.
Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity of three months or less on the date of purchase to be cash equivalents.
Allowance for Doubtful Accounts and Billing Adjustments. The Company estimates an allowance for doubtful accounts and an allowance for billing adjustments related to tradereceivables based on an analysis of historical collection and billing adjustment experience. The Company applies bad debt percentages based on experience to the outstandingaccounts receivable balances at the end of the period. The Company also analyzes specific reserves as needed. The allowance for billing adjustments includes a reserve for falloutswhich is also based on historical experience. Receivables are written-off when deemed uncollectible.
Property and Equipment. Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of therelated assets, generally three to five years. Leasehold improvements are amortized over the shorter of the life of the related asset or the remaining term of the lease. Costs associatedwith customized internal-use software systems that have reached the application development stage and meet recoverability tests are capitalized. Such capitalized costs includeexternal direct costs utilized in developing or obtaining the applications and payroll and payroll-related expenses for employees who are directly associated with the applicationdevelopment.
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Business Combinations. The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the dateof acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated togoodwill. The Company determines the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices andestimates made by management. Accordingly, these can be affected by contract performance and other factors over time, which may cause final amounts to differ materially fromoriginal estimates. The Company adjusts the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date if it obtains more informationregarding asset valuations and liabilities assumed.
Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. Acquisition-related costs arerecognized separately from the acquisition and are expensed as incurred.
Goodwill and Identifiable Intangible Assets. Goodwill and indefinite-lived intangible assets (consisting entirely of trademarks) are tested for impairment on an annual basis as ofOctober 31. Interim testing of goodwill and indefinite-lived intangible assets for impairment is also required whenever an event occurs or circumstances change that would morelikely than not reduce the fair value of a reporting unit or asset below its carrying amount.
In order to test the trademarks for impairment, the Company estimates the fair value of the trademarks and compares such amount to their carrying value. The Company estimatesthe fair value of the trademarks using a projected discounted cash flow analysis, specifically a relief-from-royalty approach. The principal factors used in the discounted cash flowanalysis requiring judgment are projected net sales, discount rate, royalty rate and terminal growth assumption. The royalty rates used in the analysis are based on royaltyagreements and franchise agreements that have occurred in the staffing and services industries. Based upon the annual trademark impairment tests completed in 2015, 2014 and2013, there were no indications of impairment of the trademarks, and no impairment charges.
Intangible assets having finite lives are amortized over their useful lives and are tested for recoverability whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. Customer relationships are amortized using an accelerated method based on the annual cash flow observed in the initial valuation of the asset.Contractor relationships and non-compete agreements are amortized using the straight-line method.
Goodwill is tested for impairment using a two-step process. The first step (Step 1) compares the fair value of a reporting unit to the reporting unit's carrying value. A reporting unitis generally an operating segment or one level below the operating segment level where a business operates and for which discrete financial information is available and reviewed bysegment management. If after performing Step 1 of the goodwill impairment test, the fair value of equity of any reporting unit does not exceed its carrying value, the Companyperforms a second step (Step 2) of the goodwill impairment test for that reporting unit. Step 2 measures the amount of goodwill impairment by comparing the implied fair value ofthe respective reporting unit goodwill with the carrying value of that goodwill. The reporting unit goodwill impairment loss, if any, is measured as the amount by which the carryingvalue of goodwill exceeds the implied fair value of goodwill calculated in Step 2 of the goodwill impairment test.
Impairment or Disposal of Long-Lived Assets. The Company evaluates long-lived assets, other than goodwill and identifiable intangible assets with indefinite lives, for impairmentwhenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of theundiscounted future cash flows is less than the carrying amount of the asset, in which case a write-down is recorded to reduce the related asset to its estimated fair value. There wereno significant impairments of long-lived assets in 2015, 2014 and 2013.
Workers’ Compensation Loss Reserves. The Company carries retention policies for its workers’ compensation liability exposures. In connection with these programs, the Companypays a base premium plus actual losses incurred, not to exceed certain stop-loss limits. The Company is insured for losses above these limits, both per occurrence and in theaggregate. The workers' compensation loss reserves are based upon an actuarial report obtained from a third party and determined based on claims filed and claims incurred but notreported. The Company accounts for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changesin estimates and differences in estimates and actual payments for claims are recognized in the period that the estimates changed or the payments were made.
Contingencies. The Company records an estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates it is probable thatan asset has been impaired or a liability has been incurred at the date of the financial statements, and the amount of the loss can be reasonably estimated. Accounting forcontingencies, such as legal settlements, and workers’ compensation matters, requires the Company to use judgment.
Stock-Based Compensation. The Company records compensation expense for restricted stock awards and restricted stock units based on the fair market value of the awards on thedate of grant. Compensation expense for performance-based awards is measured based on the amount of shares ultimately expected to vest, estimated at each reporting date basedon management’s expectations regarding the relevant performance criteria. The Company accounts for stock options granted and employee stock purchase plan shares based on anestimated fair market value using a Black-Scholes option valuation model. This methodology requires the use of subjective assumptions including expected stock price volatility andthe estimated life of each award. The fair value of equity-based compensation awards less the estimated forfeitures is amortized over the vesting period of the award.
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Concentration of Credit Risk. Financial instruments that potentially subject the Company to credit risks consist primarily of cash, cash equivalents and trade receivables. TheCompany places its cash and cash equivalents in low risk investments with quality credit institutions and limits the amount of credit exposure with any single institution aboveFDIC insured limits. Concentration of credit risk with respect to accounts receivable is limited because of the large number of geographically dispersed customers, thus spreadingthe trade credit risk. The Company performs ongoing credit evaluations to identify risks and maintains an allowance to address these risks.
Advertising Costs. Advertising costs, which are expensed as incurred, were $3.6 million in 2015, $4.8 million in 2014, and $4.0 million in 2013, and are included in SG&Aexpenses.
2. Accounting Standards Update
In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-01, Income Statement - Extraordinary and Unusual Items(Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU No. 2015-01”). ASU No. 2015-01 eliminates fromaccounting principles generally accepted in the United States of America the concept of extraordinary items to simplify income statement presentation. Under the guidance an entitywill no longer be able to segregate an extraordinary item from the results of operations, separately present an extraordinary item on the income statement, or disclose income taxes orearnings-per-share data applicable to an extraordinary item. The ASU is effective for all entities for reporting periods (including interim periods) beginning after December 15,2015, and early adoption is permitted. The Company will adopt the standard effective January 1, 2016. The Company does not expect the adoption of this standard to have amaterial effect on its consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”).ASU No. 2015-03 requires that deferred loan costs be presented in the balance sheet as a direct deduction from the carrying amount of debt, consistent with debt discounts. TheCompany retrospectively adopted this new standard in 2015 (see "Note 6. Long-Term Debt)."
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU No. 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in whichthe adjustment amounts are determined. The acquirer must record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or otherincome effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting has been completed at the acquisition date. This new guidance is effectivefor fiscal years beginning after December 15, 2015. The Company will adopt this standard on January 1, 2016. The Company does not expect the adoption this standard to have amaterial effect on its consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU No. 2015-17requires that deferred tax assets and deferred tax liabilities be presented as noncurrent in a classified balance sheet. The Company adopted this new guidance as of December 31,2015, and it is applied retrospectively for all periods presented. Adoption resulted in a $15.7 million decrease in deferred income tax assets and deferred income tax liabilities, and adecrease of $3.3 million current assets of discontinued operations and long-term liabilities of discontinued operations in our Consolidated Balance Sheet at December 31, 2014.Adoption had no impact on the Consolidated Statements of Operations and Comprehensive Income, see "Note 9. Income Taxes."
3. Property and Equipment Property and equipment at December 31, 2015 and 2014 consisted of the following (in thousands):
2015 2014Furniture, fixtures and equipment $ 14,445 $ 10,957Computers and related equipment 33,121 21,741Computer software 52,929 41,416Leasehold improvements 10,551 5,637Work-in-progress 4,139 11,943 115,185 91,694Less -- accumulated depreciation (61,989) (47,383)
$ 53,196 $ 44,311 Depreciation expense related to property and equipment was $16.8 million in 2015, $12.3 million in 2014 and $7.2 million in 2013, and is included in SG&A expenses.
The Company has capitalized costs related to its various technology initiatives. At December 31, 2015 and 2014, the net book value of the property and equipment related tosoftware development was $15.7 million and $14.0 million, respectively, which included work-in-progress of $2.5 million and $9.0 million, respectively.
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4. Acquisitions
On June 5, 2015, the Company acquired all of the outstanding shares of the holding company for Creative Circle. Creative Circle, which is headquartered in Los Angeles,California, was purchased to expand the Company’s technical and creative staffing services . The purchase price consisted of $540.0 million cash, $30.2 million of common stock(794,700 shares of the Company’s common stock), and estimated future contingent consideration which was valued at $13.8 million. Goodwill related to this acquisition totaled$358.0 million, and is deductible for income tax purposes. Acquisition expenses of approximately $5.7 million were expensed in 2015 and are included in SG&A. The results ofoperations for the acquisition have been combined with those of the Company from the acquisition date. Creative Circle revenues and income before income taxes included in theconsolidated statement of operations and comprehensive income for the year-ended December 31, 2015 were $167.2 million and $22.9 million, respectively.
On April 14, 2015, the Company acquired all of the outstanding shares of LabResource B.V. ("LabResource") headquartered in Amsterdam, Netherlands for $12.7 million.LabResource was purchased to expand the Company's life sciences staffing business in Europe. Goodwill associated with this acquisition is not deductible for tax purposes.Acquisition expenses of approximately $0.4 million were expensed in 2015 and are included in SG&A. The results of operations for this acquisition have been combined with thoseof the Company from the acquisition date. LabResource revenues and income before income taxes included in the consolidated statement of operations and comprehensive incomefor 2015 were $7.7 million and $1.0 million, respectively.
On December 5, 2013, the Company acquired the holding company of CyberCoders, a provider of permanent placement services headquartered in Irvine, California. The primaryreason for the acquisition was to expand the Company's permanent placement services. The purchase price was $96.6 million, comprised of $93.6 million in cash paid at closing andestimated future contingent consideration of $3.0 million, which is based on estimated financial performance of CyberCoders through 2015 (the maximum contingent considerationopportunity is $11.0 million). Acquisition costs of approximately $1.5 million were expensed in 2013. Goodwill deductible for tax purposes is $10.3 million for this transaction.The results of operations for the acquisition have been combined with those of the Company from 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 tangibleassets and identifiable intangible assets acquired has been allocated to goodwill. The fair value assigned to identifiable intangible assets was determined primarily by using adiscounted cash flow method. The Company's allocation of the purchase price of Creative Circle, LabResource and CyberCoders has been finalized and the following tablesummarizes the allocations (in thousands):
2015 Acquisitions 2013 Acquisition
Creative Circle LabResource CyberCodersCash $ 4,840 $ 187 $ 1,192Accounts receivable 34,386 1,643 4,298Prepaid expenses and other current assets 4,462 — 5,839Property and equipment 5,077 12 3,327Goodwill 358,029 6,449 69,018Identifiable intangible assets 194,500 7,528 37,860Other 651 — 915
Total assets acquired $ 601,945 $ 15,819 $ 122,449
Current liabilities $ 12,254 $ 1,482 $ 9,022Other — 1,882 16,839
Total liabilities assumed 12,254 3,364 25,861
Total purchase price (1) (2) $ 589,691 $ 12,455 $ 96,588
(1) Excluding cash acquired and a $0.9 million adjustment for net working capital in excess of the targeted amount (thereby increasing the actual purchase price paid), the purchase price for Creative Circle was $584.0million as described in the discussion above.
(2) Excluding cash acquired and a $0.4 million adjustment for net working capital that was less than the targeted amount (thereby reducing the actual purchase price paid), the purchase price for LabResource was $12.7million as described in the discussion above.
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The following table summarizes (in thousands) the allocation of the purchase price among the identifiable intangible assets for the acquisitions:
Identifiable Intangible Asset Value
2015 Acquisitions 2013 Acquisition
Useful life Creative Circle LabResource CyberCodersContractor relationships 2 - 4 years $ 29,500 $ 947 $ 4,000Customer relationships 2 - 10 years 90,700 5,421 860Non-compete agreements 2 - 6 years 7,300 20 800Favorable contracts 5 years 900 — —In-use software 6 years — — 18,900Trademarks indefinite 66,100 1,140 13,300
Total identifiable intangible assets acquired $ 194,500 $ 7,528 $ 37,860
The summary below (in thousands, except for per share data) presents pro forma unaudited consolidated results of operations as if the acquisitions of Creative Circle and LabResource occurred on January 1, 2014, and the acquisition of CyberCoders occurred on January 1, 2012. The pro forma financial information gives effect to certain adjustments,including amortization of intangible assets, interest expense on acquisition-related debt, provision for income taxes, changes in the management fees, and increased number ofcommon 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 financialinformation is not necessarily indicative of the operating results that would have occurred if the acquisitions had been consummated as of the date indicated, nor are they necessarilyindicative of future operating results.
Year Ended December 31,
2015 2014 2013Revenues $ 2,178,954 $ 1,960,851 $ 1,582,699Income from continuing operations $ 79,159 $ 65,152 $ 54,947Net income $ 105,387 $ 68,841 $ 88,319 Basic earnings per share:
Income from continuing operations $ 1.50 $ 1.20 $ 1.03Net income $ 2.00 $ 1.27 $ 1.65
Diluted earnings per share:
Income from continuing operations $ 1.48 $ 1.18 $ 1.01Net income $ 1.97 $ 1.25 $ 1.62
Number of shares and share equivalents used to calculate earnings per share:
Basic 52,632 54,232 53,481
Diluted 53,411 55,124 54,555
5. Discontinued Operations
On February 1, 2015, the Company completed the sale of its Physician Segment for $123.0 million. The gain on the sale was $25.7 million (net of income taxes of $14.4 million).The operating results of this segment are presented as discontinued operations in the consolidated statements of operations and comprehensive income for all periods presented. Theconsolidated balance sheet at December 31, 2014 separately states the assets and liabilities of the Physician Segment as discontinued operations.
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The following table is a reconciliation of the major classes of assets and liabilities of the Physician Segment that are presented separately in the consolidated balance sheet atDecember 31, 2014 (in thousands):
December 31, 2014
As Previously
Reported (1) Physician Segment As AdjustedCash and cash equivalents $ 31,714 $ (2,854) $ 28,860Accounts receivable, net 298,761 (21,615) 277,146Prepaid expenses and income taxes 14,513 (1,205) 13,308Workers' compensation and medical malpractice receivable 18,728 (5,358) 13,370Other current assets 2,310 — 2,310Current assets of discontinued operations — 31,032 31,032
Total current assets 366,026 — 366,026
Property and equipment, net 46,819 (2,508) 44,311Goodwill 570,697 (58,637) 512,060Identifiable intangible assets, net 262,569 (11,960) 250,609Other non-current assets 5,728 (568) 5,160Non-current assets of discontinued operations — 73,673 73,673
Total assets $ 1,251,839 $ — $ 1,251,839
Current portion of long-term debt $ 17,439 $ — $ 17,439Accounts payable 8,876 (951) 7,925Accrued payroll and contract professional pay 87,189 (4,626) 82,563Workers’ compensation and medical malpractice loss reserves 29,135 (13,571) 15,564Income taxes payable 340 — 340Other current liabilities 21,776 (1,047) 20,729Current liabilities of discontinued operations — 20,195 20,195
Total current liabilities 164,755 — 164,755
Long-term debt 394,418 — 394,418Deferred income tax liabilities 48,842 (767) 48,075Other long-term liabilities 9,416 (1,479) 7,937Long-term liabilities of discontinued operations — 2,246 2,246
Total liabilities $ 617,431 $ — $ 617,431
(1) Retrospective adjustments have been made for the effects of early adopting Accounting Standards Updates No. 2015-3 and No. 2015-7 (see "Note 2. Accounting Standards Update").
Cash flows from discontinued operations are included in the accompanying consolidated statements of cash flows. The cash flows that are attributable to the Physician Segment areas follows (in thousands):
Year Ended December 31,
2015 2014 2013Net cash provided by (used in) operating activities $ (1,778) $ 836 $ (108) Net cash provided by (used in) investing activities:
Cash received from sale of discontinued operations, net $ 115,440 $ — $ —Other (14) (308) (183)
Total cash provided by (used in) investing activities $ 115,426 $ (308) $ (183)
As of December 31, 2014, the Company closed its European retained search unit. Results for this European retained search unit, previously included in the Life Sciences EuropeSegment, have been presented as discontinued operations in the consolidated statements of operations and comprehensive income for all periods presented.
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During 2013 the Company completed the sales of its Allied Healthcare and Nurse Travel divisions. Combined, these divisions were sold for $62.4 million in cash and generatedgains totaling $30.8 million (net of income taxes of $19.5 million). These divisions have been presented as discontinued operations in the consolidated statements of operations andcomprehensive income for all periods presented.
The following is a summary of the operating results of all of the Company's discontinued operations (in thousands):
Year Ended December 31,
2015 2014 2013Revenues $ 12,068 $ 137,166 $ 153,465Costs of services 8,653 94,848 106,728Gross profit 3,415 42,318 46,737Selling, general and administrative expenses 2,385 33,078 38,991Amortization of intangible assets 155 2,721 808Operating income 875 6,519 6,938Interest expense, net — — (2,456)Income before income taxes 875 6,519 4,482Provision for income taxes 350 2,830 1,950
Income from discontinued operations, net of income taxes $ 525 $ 3,689 $ 2,532
6. Long-Term Debt At December 31, 2015 and 2014, long-term debt consisted of the following (in thousands):
2015 2014$150 million revolving credit facility, due June 2020 $ 50,000 $ —$825 million Term B loan facility, due June 2022 724,000 —$125 million revolving credit facility, repaid June 2015 — 76,000Term A loan facility, repaid June 2015 — 158,813Term B loan facility, repaid June 2015 — 180,312
774,000 415,125Unamortized deferred loan costs (18,492) (3,268)
$ 755,508 $ 411,857
On June 5, 2015, the Company entered into a new $975.0 million credit facility. The funds were used to repay the old credit facility and to fund the cash portion of the purchase ofCreative Circle (see "Note 4. Acquisitions"). The new facility consists of (i) an $825.0 million seven-year term B loan facility and (ii) a $150.0 million five-year revolving loanfacility. Under terms of the new facility, the Company has the ability to increase the principal amount of the loan facilities.
Borrowings under the term B loan bear interest at LIBOR (floor of 75 basis points), plus 3.0 percent and borrowings under the revolving credit facility bear interest at LIBOR (orthe bank’s base rate) plus 0.75 to 2.5 percent depending on leverage levels. A commitment fee of 0.25 to 0.40 percent is payable on the undrawn portion of the revolving creditfacility. At December 31, 2015, the weighted average interest rate was 3.7 percent.
Under terms of the credit facility, the Company is required to make minimum quarterly payments of $2.1 million. Through December 31, 2015, the Company repaid $101.0 millionand, as a result, the next required payments will be on the maturity dates. The Company is also required to make mandatory prepayments, subject to specified exceptions, fromexcess cash flow and with the proceeds of asset sales, debt issuances and specified other events.
The Company's obligations under the credit facility are guaranteed by substantially all of its direct and indirect domestic subsidiaries and are secured by a lien on substantially all ofthe Company's tangible and intangible property and by a pledge of all of the equity interests in its direct and indirect domestic subsidiaries.
The credit facility includes various restrictive covenants including the maximum ratio of consolidated funded debt to consolidated EBITDA (4.50 to1.00 as of December 31, 2015decreasing to 3.25 to 1.00 on March 31, 2018). The credit facility also contains certain customary limitations
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including, among other terms and conditions, the Company's ability to incur additional indebtedness, engage in mergers and acquisitions, and declare dividends. At December 31,2015, the Company had a ratio of consolidated funded debt to consolidated EBITDA of 3.02 to 1.00.
At December 31, 2015 the Company was in compliance with all of its debt covenants and had $96.5 million of borrowing available under the revolving credit facility.
7. Goodwill and Other Identifiable Intangible Assets The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows (in thousands):
Apex Oxford TotalBalance as of December 31, 2013 $ 289,712 $ 224,714 $ 514,426
Translation adjustment (1,761) (605) (2,366)Balance as of December 31, 2014 287,951 224,109 512,060
Creative Circle Acquisition 358,029 — 358,029LabResource Acquisition — 6,449 6,449Translation adjustment (1,363) (269) (1,632)
Balance as of December 31, 2015 $ 644,617 $ 230,289 $ 874,906
As of December 31, 2015 and 2014, the Company had the following acquired intangible assets (in thousands):
2015 2014
Estimated Useful
Life Gross Carrying
Amount AccumulatedAmortization
Net CarryingAmount
Gross CarryingAmount
AccumulatedAmortization
Net CarryingAmount
Subject to amortization: Customer relationships 2 - 10 years $ 196,472 $ 74,640 $ 121,832 $ 101,141 $ 53,434 $ 47,707Contractor relationships 2 - 5 years 69,764 40,124 29,640 39,332 32,021 7,311Non-compete agreements 2 - 7 years 10,874 3,163 7,711 3,654 1,922 1,732Favorable contracts 5 years 900 172 728 — — —In-use software 6 years 18,900 6,516 12,384 18,900 3,366 15,534
296,910 124,615 172,295 163,027 90,743 72,284Not subject to amortization:
Trademarks 245,630 — 245,630 178,325 — 178,325
Total $ 542,540 $ 124,615 $ 417,925 $ 341,352 $ 90,743 $ 250,609
Amortization expense for intangible assets with finite lives was $34.5 million in 2015, $22.1 million in 2014 and $20.9 million in 2013. Estimated amortization for each of the nextfive years and thereafter are as follows (in thousands):
2016 $ 39,6572017 33,0292018 28,9042019 22,0082020 14,496Thereafter 34,201
$ 172,295
8. Commitments and Contingencies The Company leases its facilities and certain office equipment under operating leases, which expire at various dates through 2025. Certain leases contain rent escalations or renewaloptions or both. Rent expense for all significant leases is recognized on a straight-line basis. The balance of the deferred rent liability reflected in other current liabilities in theaccompanying consolidated balance sheets was $0.5 million and $0.3 million at December 31, 2015 and 2014, respectively, and the balance reflected in other long-term liabilitieswas $4.3 million and $4.0 million, at December 31, 2015 and 2014, respectively.
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The following is a summary of specified contractual cash obligation payments by the Company, as of December 31, 2015 (in thousands):
Operating Leases Related Party Leases Total2016 $ 18,369 $ 1,190 $ 19,5592017 15,533 1,169 16,7022018 12,994 1,302 14,2962019 9,989 1,282 11,2712020 7,573 1,314 8,887Thereafter 11,854 5,346 17,200
Total $ 76,312 $ 11,603 $ 87,915 Rent expense is included in SG&A expenses and was $21.6 million, $17.6 million and $15.4 million in 2015, 2014 and 2013, respectively.
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 aresult of the Apex Systems acquisition, the Company leases two properties owned by related parties. Rent expense for these two properties was $1.3 million for each of the years2015, 2014 and 2013.
The Company carries large retention policies for its workers’ compensation liability exposures. The workers' compensation loss reserves are based upon an actuarial report obtainedfrom a third party and determined based on claims filed and claims incurred but not reported. The Company accounts for claims incurred but not yet reported based on estimatesderived from historical claims experience and current trends of industry data. Changes in estimates, differences in estimates, and actual payments for claims, are recognized in theperiod that the estimates changed or the payments were made. The workers' compensation loss reserves were approximately $1.8 million and $2.2 million, net of anticipatedinsurance and indemnification recoveries of $13.2 million and $13.4 million, at December 31, 2015 and 2014, respectively. The Company has unused stand-by letters of creditoutstanding to secure obligations for workers’ compensation claims with various insurance carriers. The unused stand-by letters of credit at December 31, 2015 and December 31,2014 were $3.5 million and $3.2 million, respectively.
The Company is subject to contingent consideration agreements entered into in connection with certain of its acquisitions. If the acquired businesses meet predetermined targets, theCompany is obligated to make additional cash payments in accordance with the terms of such contingent consideration agreements, see "Note 15. Fair Value Measurements."
Certain employees participate in the Company’s Change in Control Severance Plan, or have separate agreements that provide for certain benefits in the event of termination at theCompany's convenience or following a change in control, as defined by the plan or agreement. Generally, these benefits are based on the employee’s length of service and positionwith the Company and include, severance, continuation of health insurance and in certain cases acceleration of vesting of option or stock awards.
Legal Proceedings 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 notbelieve that the disposition of matters that are pending or asserted will have a material effect on its consolidated financial statements.
9. Income Taxes The provision for income taxes consists of the following (in thousands):
Year Ended December 31,
2015 2014 2013Current:
Federal $ 31,295 $ 28,581 $ 26,284State 5,837 5,060 4,910Foreign 2,048 2,181 1,204
39,180 35,822 32,398Deferred:
Federal & State 11,520 15,991 4,244Foreign (209) (256) (84)
11,311 15,735 4,160
$ 50,491 $ 51,557 $ 36,558
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Income from continuing operations before income taxes consists of the following (in thousands):
Year Ended December 31,
2015 2014 2013United States $ 116,011 $ 122,496 $ 82,970Foreign 5,902 2,556 4,728
$ 121,913 $ 125,052 $ 87,698
The components of deferred tax assets (liabilities) are as follows (in thousands):
December 31,
2015 2014Intangibles $ (70,588) $ (59,226)Depreciation expense (14,369) (13,405)Allowance for doubtful accounts 2,607 2,027Employee related accruals 7,573 7,240Workers’ compensation and medical malpractice loss reserves 720 4,068Stock-based compensation 7,354 3,022Other 5,061 7,286Net operating loss carryforwards 1,147 1,260Valuation allowance (1,044) (1,114)
$ (61,539) $ (48,842) The table above includes non-current deferred income tax liabilities of $0.8 million for the Physician Segment as of December 31, 2014 (see "Note 5. Discontinued Operations").
The reconciliation between the amount computed by applying the U.S. federal statutory tax rate of 35.0 percent to income before income taxes and the income tax provision is asfollows (in thousands):
Year Ended December 31,
2015 2014 2013Income tax provision at the statutory rate $ 42,669 $ 43,768 $ 30,694State income taxes, net of federal benefit 4,559 4,674 3,807Disallowed meals and entertainment expenses 1,718 1,608 1,592Other 1,545 1,507 465
$ 50,491 $ 51,557 $ 36,558 As of December 31, 2015, the Company had no federal net operating losses, $8.8 million of state net operating losses, and $4.9 million of foreign net operating losses. The state netoperating losses can be carried forward up to 20 years and begin expiring in 2016. The foreign net operating losses in the United Kingdom and Spain can be carried forwardindefinitely. The Company has a valuation allowance of approximately $1.0 million related to net operating loss carryforwards at December 31, 2015 and 2014.
The Company has not provided deferred income taxes on $11.0 million of undistributed earnings of its foreign subsidiaries as of December 31, 2015 since the Company intends toreinvest these earnings indefinitely. Those earnings are considered to be indefinitely reinvested; accordingly, no provision for U.S. federal and state income taxes has been providedthereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreigntax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due tothe complexities associated with its hypothetical calculation; however, unrecognized foreign tax credit carryforwards would be available to reduce some portion of the U.S. liability.
The Company had gross deferred tax assets of $29.2 million and $24.1 million, and gross deferred tax liabilities of $89.7 million and $71.4 million, at December 31, 2015 and2014, respectively. Management has determined the gross deferred tax assets are realizable, with the exception of foreign net operating losses discussed above.
At December 31, 2015, 2014 and 2013, there were $0.8 million to $0.9 million of unrecognized tax benefits that if recognized would affect the annual effective tax rate. The grossunrecognized tax benefit is carried in other long-term liabilities. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The amountof interest and penalties recognized in the financial statements is
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not significant. The Company believes that there will be no significant increases or decreases to unrecognized tax benefits within the next 12 months. The following is areconciliation of the total amounts of unrecognized tax benefits (in thousands):
Year Ended December 31,
2015 2014 2013Unrecognized tax benefit beginning of year $ 848 $ 979 $ 376Gross increases - tax positions in prior year — 126 1,240Gross decreases - tax positions in prior year (34) — (177)Lapse of the statute of limitations — (131) —Discontinued operations — (126) (460)
Unrecognized tax benefit end of year $ 814 $ 848 $ 979 The Company is subject to taxation in the United States and various states and foreign jurisdictions. The Company remains subject to U.S. Federal income tax examinations for2012 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2011 and subsequent years. Generally, for the foreign taxjurisdictions, the Company remains subject to examination for 2011 and subsequent years.
10. Earnings per Share Basic earnings per share are computed using the weighted average number of shares outstanding and diluted earnings per share are computed using the weighted average number ofshares and dilutive share equivalents (consisting of incentive stock options, non-qualified stock options, restricted stock units and employee stock purchase plan contributions)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):
Year Ended December 31,
2015 2014 2013Weighted average number of common shares outstanding used to compute basic earnings per share 52,259 53,437 53,481Dilutive effect of stock-based awards 746 857 1,074
Number of shares used to compute diluted earnings per share 53,005 54,294 54,555 There were no significant share equivalents outstanding as of December 31, 2015, 2014 and 2013 that were anti-dilutive when applying the treasury stock method.
11. Stockholders' Equity
On July 21, 2014, the Board of Directors approved a program authorizing the Company to repurchase up to $100.0 million of the Company’s common stock. The authorization waseffective August 4, 2014. During 2014, the Company repurchased 3.4 million shares of its common stock under this program at a cost of $100 million. All shares repurchasedunder this program were retired. This resulted in a reduction of $31.2 million in paid-in capital and a reduction of $68.8 million in retained earnings.
On January 16, 2015, the Company's Board of Directors approved a new $100.0 million share repurchase program. During 2015, the Company repurchased 43,000 shares of itscommon stock at a cost of $1.6 million. All shares repurchased under this program were retired, which resulted in a reduction of $0.4 million in paid-in capital and a reduction of$1.2 million in retained earnings. This repurchase program is effective through February 23, 2017, and as of December 31, 2015, the remaining authorization for share repurchasesis $98.4 million.
On June 5, 2015, the Company issued 794,700 shares of its common stock valued at $30.2 million, in connection with the acquisition of Creative Circle.
The Company's stock-based compensation plans accept shares of the Company's common stock as payment for the exercise price of stock options. During the three months endedDecember 31, 2015, we received 46,174 shares, with a $2.2 million value, as payment for the exercise of stock options. Those shares were retired upon receipt.
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12. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) were as follows (in thousands):
Foreign currency
translation adjustment Changes in fair value of
derivative, net of tax
Accumulated othercomprehensive income
(loss)Balance at December 31, 2012 $ (804) $ (401) $ (1,205)Other comprehensive income 1,128 193 1,321Balance at December 31, 2013 324 (208) 116Other comprehensive income (4,772) 86 (4,686)Balance at December 31, 2014 (4,448) (122) (4,570)Other comprehensive income (3,714) 122 (3,592)
Balance at December 31, 2015 $ (8,162) $ — $ (8,162)
13. Stock-Based Compensation and 401(k) Retirement Savings Plan The Company believes that stock-based compensation aligns the interests of its employees and directors with those of its stockholders. Stock-based compensation providesincentives to retain and motivate executive officers and key employees responsible for driving Company performance and maintaining important relationships that contribute to thegrowth of the Company. In 2015, the Company issued shares for restricted stock units ("RSUs"), stock options, and a stock award.
Stock-based compensation expense is included in SG&A expenses in the accompanying consolidated statements of operations and comprehensive income and was classified asfollows (in thousands):
Year Ended December 31,
2015 2014 2013
Continuing operations $ 22,018 $ 15,623 $ 13,533Discontinued operations — 576 878
Total $ 22,018 $ 16,199 $ 14,411
The Company recognized an income tax benefit for stock-based compensation arrangements of $6.6 million, $4.7 million and $5.1 million in 2015, 2014 and 2013, respectively. Asof December 31, 2015, there were 2,546,962 shares available for issuance under the Company's stock- based compensation plans.
Restricted Stock Units The fair value of each RSU is based on the fair market value of the awards on the grant date and the Company records compensation expense based on this value, net of a forfeiturerate. The forfeiture rate estimates the number of awards that will eventually vest and is based on historical vesting patterns for RSUs.
A summary of the status of the Company’s unvested RSUs as of December 31, 2015 and changes during the year then ended are presented below:
Service Conditions Performance and
Service Conditions Total Weighted Average Grant-Date
Fair Value Per Unit
Unvested RSUs outstanding at December 31, 2014 705,373 381,188 1,086,561 $ 24.88 Granted 213,649 712,108 925,757 $ 40.49 Market value share count adjustment for liability awards — 18,619 18,619 $ 35.09 Vested (423,280) (204,936) (628,216) $ 24.76 Forfeited (30,373) (25,728) (56,101) $ 31.38
Unvested RSUs outstanding at December 31, 2015 465,369 881,251 1,346,620 $ 36.31 Unvested and expected to vest RSUs outstanding at December 31, 2015 437,699 826,620 1,264,319 $ 36.05
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The total number of shares vested in the table above includes 229,366 shares surrendered by the employees to the Company for payment of income taxes. The surrendered sharesare available for issuance under the Plan. The weighted-average grant-date fair value of RSUs granted during 2015, 2014 and 2013 was $40.49, $33.66 and $26.17 per award, respectively. The total intrinsic value of RSUsthat vested during 2015, 2014 and 2013, was $24.3 million, $21.3 million and $15.0 million, respectively. As of December 31, 2015, there was unrecognized compensation expense of $30.9 million related to unvested RSUs based on awards that are expected to vest. The unrecognizedcompensation expense is expected to be recognized over a weighted-average period of two years.
Liability Awards
Liability awards have a performance component and vest over one to three years. The performance goals are approved by the Compensation Committee of the Company’s Board ofDirectors. The Company classifies these awards as liabilities until the number of shares is determined, in accordance with the grant. The number of shares is determined by dividingthe final award liability balance by the Company’s closing stock price on the settlement dates. This liability is included in other accrued expenses in the accompanying ConsolidatedBalance Sheets.
The following table summarizes the balance of liability awards and changes during the years presented (in thousands):
2015 2014 2013 Balances of liability awards at beginning of year $ 1,453 $ 2,500 $ 2,000
Granted — 500 1,000 Settled (1,453) (1,497) (500) Canceled — (50) —
Balance of liability awards end of year $ — $ 1,453 $ 2,500
There was no expense related to liability awards during 2015 and the expense in 2014 and 2013 was $0.5 million and $1.0 million, respectively. There was no unrecognizedcompensation expense for liability awards as of December 31, 2015.
Stock Options Subsequent to 2012 the Company has not granted any stock options. The fair value of stock option grants was estimated on the grant date using the Black-Scholes option pricingmodel. The Company records compensation expense based on this value, net of a forfeiture rate. The forfeiture rate estimates the number of awards that will eventually vest and isbased on historical vesting patterns for stock options. The following summarizes pricing and term information for options outstanding as of December 31, 2015:
Options Outstanding Options Exercisable
Number Outstanding
at Weighted Average
Remaining ContractualLife (years)
Weighted AverageExercise Price
Number
Exercisable at Weighted AverageExercise PriceRange of Exercise Prices December 31, 2015 December 31, 2015
$ 4.44 - $ 8.26 73,901 4.0 $ 6.96 73,305 $ 6.95 $ 10.46 - $ 11.75 61,885 4.3 $ 10.88 60,755 $ 10.89 $ 12.90 - $ 12.90 120,000 1.1 $ 12.90 120,000 $ 12.90 $ 13.31 - $ 13.58 25,600 1.4 $ 13.33 25,506 $ 13.32 $ 16.51 - $ 16.51 75,000 6.7 $ 16.51 60,937 $ 16.51 $ 4.44 - $ 16.51 356,386 3.5 $ 12.11 340,503 $ 11.94
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The following table is a summary of stock option activity during 2015:
Incentive Stock
Options Non- QualifiedStock Options Total
WeightedAverage
Exercise PricePer Share
Weighted AverageRemainingContractual
Term (Years) Aggregate
Intrinsic Value
Outstanding at December 31, 2014 4,267 690,614 694,881 $ 11.33 3.5 $ 15,189,000Exercised (4,267) (325,235) (329,502) $ 10.54 Canceled — (8,993) (8,993) $ 9.81
Outstanding at December 31, 2015 — 356,386 356,386 $ 12.11 3.5 $ 11,705,000
Vested and Expected to Vest at December 31, 2015 — 356,386 356,386 $ 12.11 3.5 $ 11,705,000
Exercisable at December 31, 2015 — 340,503 340,503 $ 11.94 3.3 $ 11,241,000 The total intrinsic value of options exercised during 2015, 2014 and 2013 was $10.9 million, $3.9 million, and $7.6 million, respectively. Employee Stock Purchase Plan The On Assignment 2010 Employee Stock Purchase Plan, as amended ("ESPP") allows eligible employees to purchase common stock of the Company at a 15 percent discount tothe market price as stipulated by the plan. Under the ESPP, 3,500,000 shares of common stock were reserved for issuance when it was approved on June 3, 2010 by the Company'sstockholders. Shares of common stock are transferred to participating employees at the conclusion of each six-month offering period, which ends on the last business day of themonth in March and September each year. Compensation expense is measured using a Black-Scholes option-pricing model. The table below presents the average fair value pershare of shares purchased, and the compensation expense under the ESPP (dollars in thousands, except per share amounts):
Year EndedDecember 31,
Average fair valueper share Shares Expense
2015 $7.77 204,401 $ 1,586 2014 $8.35 207,805 $ 1,756 2013 $7.16 203,200 $ 1,195
401(k) Retirement Savings Plan
The Company maintains various 401(k) retirement savings plans for the benefit of eligible employees. Under terms of these plans, eligible employees are able to make contributionsto these plans on a tax-deferred basis. The Company makes matching contributions, some of which are discretionary. The Company made contributions to the 401(k) plans of $7.6million, $7.5 million and $6.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.
14. Business Segments On Assignment provides services through two operating segments, the Apex Segment and the Oxford Segment, with each addressing different sectors of the professional staffingmarket with distinct business models attuned to those sectors. Businesses in the Apex Segment predominately serve markets with a large and local talent pool, and provide a fullrange of skills through a network of local offices where clients most value relationship, speed, reliability and price. The Apex Segment provides a broad spectrum of technical,scientific and creative professionals for contract, contract-to-hire and permanent placement positions to Fortune 1000 and mid-market clients across the United States. Ourbusinesses in this segment include Apex Systems, Lab Support and Creative Circle. Businesses in the Oxford Segment predominately serve markets with higher-end, specializedskills through a combination of national recruiting centers and local offices where clients most value the unique skill of the candidate and speed of response. The Oxford Segmentprovides specialized, niche staffing and consulting services in select skill and geographic markets. Our businesses in this segment include Oxford, CyberCoders and Life SciencesEurope.
The Company’s management evaluates the performance of each segment primarily based on revenues, gross profit and operating income. The information in the following tables isderived directly from the segments’ internal financial reporting used for corporate management purposes. The Company's management does not evaluate, manage or measureperformance of segments using asset information, and such information is not readily available. Accordingly, assets by reportable segment are not disclosed.
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The following tables present revenues, gross profit, operating income and amortization by reportable segment (in thousands):
Year ended December 31, 2015
Apex Oxford Corporate(1) TotalRevenues $ 1,487,042 $ 577,966 $ — $ 2,065,008Gross Profit 437,507 241,238 — 678,745Operating income 151,559 70,385 (69,836) 152,108Amortization 28,371 6,096 — 34,467
Year ended December 31, 2014
Apex Oxford Corporate(1) TotalRevenues $ 1,190,052 $ 534,689 $ — $ 1,724,741Gross Profit 335,322 222,113 — 557,435Operating income 121,334 70,193 (53,745) 137,782Amortization 16,356 5,765 9 22,130
Year ended December 31, 2013
Apex Oxford Corporate(1) TotalRevenues $ 1,059,993 $ 463,108 $ — $ 1,523,101Gross Profit 294,611 160,264 — 454,875Operating income 98,588 66,118 (48,119) 116,587Amortization 19,524 1,329 90 20,943
(1) Corporate expenses primarily consist of compensation for our corporate staff which includes personnel that have a shared service role and support certain of our businesses. It also includes all of the Company'sacquisition, integration and strategic planning expenses; depreciation expense for corporate facilities; and public company expenses.
The following table presents revenues by type (in thousands):
Year Ended December 31,
2015 2014 2013Revenues:
Assignment $ 1,947,001 $ 1,641,706 $ 1,500,157Permanent placement 118,007 83,035 22,944
$ 2,065,008 $ 1,724,741 $ 1,523,101
The Company operates internationally, with operations in the United States, Europe and Canada. The following table presents revenues by geographic location (in thousands):
Year Ended December 31,
2015 2014 2013Revenues:
Domestic $ 1,972,888 $ 1,643,598 $ 1,446,805Foreign 92,120 81,143 76,296
$ 2,065,008 $ 1,724,741 $ 1,523,101 The following table presents long-lived assets by geographic location (in thousands):
December 31,
2015 2014Long-lived Assets:
Domestic $ 52,228 $ 43,659Foreign 968 652
$ 53,196 $ 44,311
46
15. Fair Value Measurements 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 Consolidated Balance Sheets at December 31, 2015 was $755.5 million (net of $18.5 million of unamortized deferred loan costs, see "Note 6.Long-Term Debt"). The fair value of the long-term debt at that same date was $779.8 million as determined using the quoted price technique, based on Level 2 inputs (significantobservable inputs other than quoted prices for identical assets in active markets) from the fair value hierarchy, and included the yields of comparable companies with similar creditcharacteristics.
Related to its acquisitions, at December 31, 2015, the Company had obligations to pay contingent consideration in cash if certain performance targets were met. The fair value of thiscontingent consideration was determined using an expected present value technique. Expected cash flows were determined using the probability-weighted average of possibleoutcomes that would occur should certain financial metrics be reached. There is no market data available to use in valuing the contingent consideration, therefore, the Companydeveloped 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 isclassified within Level 3 inputs (unobservable inputs) from the fair value hierarchy. The fair value of the liability for contingent consideration is established at the time of theacquisition and finalized by the end of the measurement period. Its fair value is then remeasured on a recurring basis with changes due to the accretion of the present value discount,recorded in interest expense and changes related to new developments in expected performance, recorded in SG&A. In 2015 there was discount accretion totaling $1.4 million andexpense of $2.8 million related to an increase in the obligation. The performance period for these contingent consideration arrangements ended on December 31, 2015; the liabilitywas estimated to be $21.0 million and is included in other current liabilities. At December 31, 2014, contingent consideration was estimated to be $3.0 million and was included inother long-term liabilities (refer to "Note 4. Acquisitions" for further information).
The reconciliation of contingent consideration liability measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) are as follows(in thousands):
Year Ended December 31,
2015 2014Balance at beginning of year $ (3,000) $ (3,667)Additions for acquisitions (13,814) —Payments on contingent consideration — 691Fair value adjustments (4,167) —Foreign currency translation adjustment — (24)
Balance at end of year $ (20,981) $ (3,000)
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 thereis evidence of impairment). For 2015 and 2014, no fair value adjustments were required for non-financial assets or liabilities.
47
16. Unaudited Quarterly Results The following tables present unaudited quarterly financial information. In the opinion of the Company’s management, the quarterly information contains all adjustments, consistingonly of normal recurring accruals, necessary for a fair presentation thereof. The operating results for any quarter are not necessarily indicative of the results for any future periods. The Company's Physician Segment and European retained search unit are reported as discontinued operations for all periods presented, see "Note 5. Discontinued Operations" forfurther information regarding the divestitures.
Quarter Ended Year Ended Dec.31,2015 Mar. 31, June 30, Sept. 30, Dec. 31,
(in thousands, except per share amounts) Revenues $ 430,045 $ 485,323 $ 572,123 $ 577,517 $ 2,065,008Gross profit 135,875 158,534 191,404 192,932 678,745Income from continuing operations 13,023 14,335 24,891 19,173 71,422Income from discontinued operations, net of income taxes 26,112 (83) 34 165 26,228
Net income $ 39,135 $ 14,252 $ 24,925 $ 19,338 $ 97,650
Basic earnings per common share: Continuing operations $ 0.25 $ 0.28 $ 0.47 $ 0.36 $ 1.37Discontinued operations 0.51 (0.01) — 0.01 0.50
Net income $ 0.76 $ 0.27 $ 0.47 $ 0.37 $ 1.87
Diluted earnings per common share: Continuing operations $ 0.25 $ 0.27 $ 0.47 $ 0.36 $ 1.35Discontinued operations 0.50 — — — 0.49
Net income $ 0.75 $ 0.27 $ 0.47 $ 0.36 $ 1.84
Quarter Ended Year Ended Dec.31,2014 Mar. 31, June 30, Sept. 30, Dec. 31,
(in thousands, except per share amounts) Revenues $ 406,851 $ 434,424 $ 442,443 $ 441,023 $ 1,724,741Gross profit 128,155 141,905 144,838 142,537 557,435Income from continuing operations 13,605 19,641 20,723 19,526 73,495Income from discontinued operations, net of income taxes 312 1,148 1,282 947 3,689
Net income $ 13,917 $ 20,789 $ 22,005 $ 20,473 $ 77,184
Basic earnings per common share:
Continuing operations $ 0.25 $ 0.36 $ 0.39 $ 0.38 $ 1.38Discontinued operations 0.01 0.02 0.02 0.01 0.06
Net income $ 0.26 $ 0.38 $ 0.41 $ 0.39 $ 1.44
Diluted earnings per common share: Continuing operations $ 0.25 $ 0.36 $ 0.38 $ 0.37 $ 1.35Discontinued operations — 0.02 0.03 0.02 0.07
Net income $ 0.25 $ 0.38 $ 0.41 $ 0.39 $ 1.42
48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of On Assignment, Inc.Calabasas, California We have audited the internal control over financial reporting of On Assignment, Inc. and subsidiaries (the "Company") as of December 31, 2015, based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report onInternal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Creative Circle, LLC which was acquired onJune 5, 2015 and whose financial statements constitute 33.2% of total assets, and 18.8% of income before taxes of the consolidated financial statement amounts as of and for theyear ended December 31, 2015. Accordingly, our audit did not include the internal control over financial reporting at Creative Circle, LLC. The Company's management isresponsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in theaccompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financialreporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and performthe audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis forour opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, orpersons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactionsand dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assetsthat could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, materialmisstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financialreporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financialstatement schedule as of and for the year ended December 31, 2015 of the Company and our report dated February 29, 2016 expressed an unqualified opinion on those financialstatements and financial statement schedule.
DELOITTE & TOUCHE LLP
Los Angeles, CaliforniaFebruary 29, 2016
49
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.
Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of ourPrincipal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act).Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are effective as of the end ofthe period covered by this report. The term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that informationrequired to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to bedisclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principalexecutive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) for the Company.The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, our Principal Executive and Principal Financial Officers, orpersons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and proceduresthat:
• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;• Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and• Provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to futureperiods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
Management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal controlover financial reporting as of December 31, 2015. In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the TreadwayCommission in Internal Control-Integrated Framework (2013). Based on our assessment and those criteria, management believes that the Company maintained effective internalcontrol over financial reporting as of December 31, 2015. Our independent registered public accounting firm, Deloitte & Touche LLP, has included an attestation report on ourinternal control over financial reporting, which is included above.
For purposes of conducting its 2015 evaluation of the effectiveness of the Company's internal control over financial reporting, management has excluded the acquisition of CreativeCircle, completed on June 5, 2015, whose financial statements constitute 33.2% percent of total assets and 18.8% percent of income before income taxes, of the consolidatedfinancial statement amounts as of and for the year ended December 31, 2015. Refer to "Note 4. Acquisitions" in Part II, Item 8 of this report for further discussion of the acquisitionand its impact on the Company's Consolidated Financial Statements.
Changes in Internal Controls There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fourth quarter that have materially affected, or are reasonablylikely to materially affect, the Company’s internal control over financial reporting.
50
Item 9B. Other Information None.
51
PART III
Item 10. Directors, Executive Officers and Corporate Governance Information responsive to this item will be set forth in the Company’s proxy statement for use in connection with its 2016 Annual Meeting of Stockholders (the "2016 ProxyStatement") and is incorporated herein by reference. The 2016 Proxy Statement will be filed with the SEC within 120 days after the end of the Company’s fiscal year.
Item 11. Executive Compensation Information responsive to this item will be set forth in the 2016 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year and isincorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information responsive to this item will be set forth in the 2016 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year and isincorporated herein by reference.
Item 13. Certain Relationships and Related Transactions and Director Independence Information responsive to this Item will be set forth in the 2016 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year and isincorporated herein by reference.
Item 14. Principal Accounting Fees and Services Information responsive to this Item will be set forth in the 2016 Proxy Statement, to be filed with the SEC within 120 days after the end of the Company’s fiscal year and isincorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedule
(a) List of documents filed as part of this report
1. Financial Statements:Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets at December 31, 2015 and 2014Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2015, 2014 and 2013Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013Notes to Consolidated Financial Statements
2. Financial Statement Schedule:
Schedule II—Valuation and Qualifying AccountsSchedules other than those referred to above have been omitted because they are not applicable or not required under the instructions contained in Regulation S-X
or because the information is included elsewhere in the financial statements or notes thereto.
52
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto dulyauthorized, on this 25th day of February, 2016.
ON ASSIGNMENT, INC. /s/ Peter T. Dameris Peter T. Dameris Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacitiesindicated and on the dates indicated.
Signature Title Date/s/ Peter T. Dameris Chief Executive Officer, President and Director February 25, 2016
Peter T. Dameris (Principal Executive Officer) /s/ Edward L. Pierce Executive Vice President and Chief Financial Officer February 29, 2016
Edward L. Pierce (Principal Financial and Accounting Officer) /s/ William E. Brock Director February 24, 2016
William E. Brock /s/ Jonathan S. Holman Director February 24, 2016
Jonathan S. Holman /s/ Marty R. Kittrell Director February 24, 2016
Marty R. Kittrell /s/ Jeremy M. Jones Director February 24, 2016
Jeremy M. Jones /s/ Brian J. Callaghan Director February 24, 2016
Brian J. Callaghan /s/ Edwin A. Sheridan IV Director February 24, 2016
Edwin A. Sheridan IV /s/ Arshad Matin Director February 24, 2016
Arshad Matin
53
ON ASSIGNMENT, INC. AND SUBSIDIARIESSCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Year Ended December 31, 2015, 2014 and 2013(In thousands)
Description Balance at beginning of
year Provisions Deductions from
reserves Balance at end of yearYear ended December 31, 2015
Allowance for doubtful accounts and billing adjustments $ 4,404 10,486 (8,208) $ 6,682Workers’ compensation loss reserves $ 15,564 2,117 (2,661) $ 15,020
Year ended December 31, 2014
Allowance for doubtful accounts and billing adjustments $ 2,465 6,680 (4,741) $ 4,404Workers’ compensation loss reserves $ 17,123 2,211 (3,770) $ 15,564
Year ended December 31, 2013
Allowance for doubtful accounts and billing adjustments $ 3,395 1,474 (2,404) $ 2,465Workers’ compensation loss reserves $ 17,037 5,850 (5,764) $ 17,123
54
INDEX TO EXHIBITS
Number Footnote Description
2.1
(1)
Agreement of Merger, dated as of March 20, 2012, by and among On Assignment, Inc., Apex Systems, Inc., OA Acquisition Corp. and JeffreyE. Veatch, as the Shareholder Representative.
2.2
(2)
Stock Purchase Agreement, dated as of November 25, 2013, by and among CyberCoders Holdings, Inc., the shareholders of CyberCodersHoldings, Inc. as set forth in the agreement, Riordan, Lewis & Haden, Inc., and the On Assignment, Inc.
2.3
(3)
Purchase Agreement, dated as of May 9, 2015, by and among On Assignment, Inc., MSCP V CC Parent LLC, each of the Sellers listed onExhibit B thereto, Lawrence Serf, as Founders' Representative, and MSCP V CC Hold Co, LLC, as the Sellers' Representative
3.1 (4) Amended and Restated Certificate of Incorporation of On Assignment, Inc., effective June 23, 20143.2 (4) Amended and Restated Bylaws of On Assignment, Inc., effective June 23, 20144.1 (5) Specimen Common Stock Certificate.
10.1
(6)
Second Amended and Restated Credit Agreement, dated June 5, 2015 (the “Credit Agreement”), among On Assignment, Inc., as the Borrower,Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto
10.2 (7) Office Lease, dated August 18, 2010, by and between On Assignment, Inc. and Calabasas BCD, Inc.10.3 (8) On Assignment, Inc. Restated 1987 Stock Option Plan, as amended and restated April 7, 2006 †10.4 (9) First Amendment to the On Assignment, Inc. Restated 1987 Stock Option Plan, dated January 23, 2007 †10.5 (8) Second Amendment to the On Assignment, Inc. Restated 1987 Stock Option Plan, dated April 17, 2007 †10.6 (10) Third Amendment to the On Assignment, Inc. Restated 1987 Stock Option Plan, dated December 11, 2008 †10.7 (11) On Assignment, Inc. Restated 1987 Stock Option Plan Form of Option Agreement †10.8 (12) On Assignment, Inc. Restated 1987 Stock Option Plan Form of Stock Unit Agreement †10.9 (13) On Assignment, Inc. 2010 Employee Stock Purchase Plan, dated March 18, 2010 †
10.10 (14) First Amendment to On Assignment, Inc. 2010 Employee Stock Purchase Plan, dated September 8, 2013 †10.11 (15) On Assignment, Inc. 2010 Incentive Award Plan, dated March 18, 2010 †10.12 (15) First Amendment to the On Assignment, Inc. 2010 Incentive Award Plan, dated March 27, 2013 †10.13 (16) On Assignment, Inc. 2010 Incentive Award Plan Form of Stock Option Notice and Agreement †10.14 (16) On Assignment, Inc. 2010 Incentive Award Plan Form of Restricted Stock Unit Award Notice and Agreement †10.15 (17) On Assignment, Inc. 2010 Incentive Award Plan Form of Performance-Based Restricted Stock Unit Award Notice and Agreement10.16 (18) On Assignment, Inc. 2010 Incentive Award Plan Form of Restricted Stock Award Grant Notice and Agreement †10.17 (19) On Assignment, Inc. 2010 Incentive Award Plan Form of Tranche A Award Notice and Agreement for Peter T. Dameris10.18 (*) On Assignment, Inc. 2010 Incentive Award Plan Form of Tranche B Award Notice and Agreement for Peter T. Dameris10.19 (19) On Assignment, Inc. 2010 Incentive Award Plan Form of Tranche C Award Notice and Agreement for Peter T. Dameris10.20 (*) On Assignment, Inc. 2010 Incentive Award Plan Form of Additional RSU Award Notice and Agreement for Peter T. Dameris10.21
(20)
On Assignment, Inc. 2010 Incentive Award Plan Form of Senior Executive EBITDA and Performance-Based Restricted Stock Unit AwardNotice and Agreement
10.22 (21) On Assignment, Inc. Amended and Restated 2012 Employment Inducement Incentive Award Plan †10.23
(22)
On Assignment, Inc. Amended and Restated 2012 Employment Inducement Incentive Award Plan Form of Restricted Stock Unit AwardAgreement †
10.24 (23) On Assignment, Inc. Nonqualified Inducement Stock Option Grant Agreement between On Assignment, Inc. and Michael McGowan †10.25 (*) On Assignment, Inc. Amended and Restated Change in Control Severance Plan, as amended and restated on December 10, 2015 †10.26
(24)
Second Amended and Restated Executive Change in Control Agreement between On Assignment, Inc. and Peter T. Dameris, dated November17, 2015 †
10.27 (24) Second Amended and Restated Senior Executive Agreement between On Assignment, Inc. and Peter Dameris, dated November 17, 2015 †10.28 (25) Employment Agreement, by and between On Assignment, Inc. and Edward Pierce, dated September 1, 2012 †
55
10.29 (25) Executive Change of Control Agreement, by and between On Assignment, Inc. and Edward Pierce, dated September 1, 2012 †10.30
(24)
Amended and Restated Employment Agreement between Oxford Global Resources, Inc., On Assignment, Inc. and Michael J. McGowan, datedDecember 30, 2008 †
10.31 (21) Employment Agreement between Rand Blazer and Apex Systems, Inc., dated January 8, 2007 †10.32 (21) Amendment No. 1 to the Employment Agreement between Rand Blazer and Apex Systems, Inc., dated December 31, 2008 †10.33 (21) Amendment No. 2 to the Employment Agreement between Rand Blazer and Apex Systems, Inc. dated August 3, 2008 †10.34
(21)
Amendment No. 3 to the Employment Agreement by and between Rand Blazer, On Assignment, Inc. and Apex Systems, Inc., dated May 15,2012 †
10.35
(21)
Amendment No. 4 to the Employment Agreement by and between Rand Blazer, On Assignment, Inc. and Apex Systems, Inc., dated May 15,2012 †
10.36 (21) Employment Agreement between Theodore S. Hanson and Apex Systems, Inc., dated January 15, 2008 †10.37 (21) Amendment No. 1 to the Employment Agreement between Theodore S. Hanson and Apex Systems, Inc., dated December 31, 2008 †10.38 (21) Amendment No. 2 to the Employment Agreement between Theodore S. Hanson and Apex Systems, Inc., dated February 12, 2011 †10.39
(21)
Amendment No. 3 to the Employment Agreement between On Assignment, Inc., Theodore S. Hanson, and Apex Systems, Inc., dated May 15,2012 †
10.40
(21)
Amendment No. 4 to the Employment Agreement between On Assignment, Inc., Theodore S. Hanson and Apex Systems, Inc., dated May 15,2012 †
10.41 (9) Form of Indemnification Agreement †21.1 (*) Subsidiaries of the Registrant23.1 (*) Consent of Independent Registered Public Accounting Firm31.1 (*) Certification of Peter T. Dameris, Chief Executive Officer and President pursuant to Rule 13a-14(a) or 15d-14(a)31.2 (*) Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)32.1 (*) Certification of Peter T. Dameris, Chief Executive Officer and President pursuant to 18 U.S.C. Section 135032.2 (*) Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS (*) XBRL Instance Document101.SCH (*) XBRL Taxonomy Extension Schema Document101.CAL (*) XBRL Taxonomy Extension Calculation Linkbase Document101.DEF (*) XBRL Taxonomy Extension Definition Linkbase Document101.LAB (*) XBRL Taxonomy Extension Label Linkbase Document101.PRE (*) XBRL Taxonomy Extension Presentation Linkbase Document
____ * Filed herewith.†
These exhibits relate to management contracts or compensatory plans, contracts or arrangements in which directors and/or named executiveofficers of the Registrant may participate.
(1) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on March 26, 2012.(2) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on December 2, 2013.(3) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on May 12, 2015.(4) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on June 25, 2014.(5)
Incorporated by reference from an exhibit to our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the SEC onSeptember 21, 1992.
(6) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on June 5, 2015.(7) Incorporated by reference from an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on November 8, 2010.
56
(8)
Incorporated by reference from an exhibit to our Registration Statement on Form S-8 (File No. 333-143907) filed with the SEC on June 20,2007.
(9) Incorporated by reference from an exhibit to our Annual Report on Form 10-K filed with the SEC on March 16, 2007.(10) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on December 16, 2008.(11) Incorporated by reference from an exhibit to our Annual Report on Form 10-K filed with the SEC on March 16, 2005.(12) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on August 8, 2005.(13) Incorporated by reference from an exhibit to our Annual Report on Form 10-K filed with the SEC on March 3, 2014.(14) Incorporated by reference from an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on November 5, 2013.(15) Incorporated by reference from an exhibit to our Form S-8 (File No. 333-168041) filed with the SEC on June 13, 2013.(16) Incorporated by reference from an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 9, 2010.(17) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on January 3, 2014(18) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on December 18, 2012.(19) Incorporated by reference from an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2014.(20) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on December 16, 2014.(21) Incorporated by reference from an exhibit to our Annual Report on Form 10-K filed with the SEC on March 18, 2013.(22)
Incorporated by reference from an exhibit to our Registration Statement on Form S-8 (File No. 333-183863) filed with the SEC on September12, 2012.
(23)
Incorporated by reference from an exhibit to our Registration Statement on Form S-8 (File No. 333-148000) filed with the SEC on December12, 2007.
(24) Incorporated by reference from an exhibit to our Annual Report on Form 10-K filed with the SEC on November 23, 2015.(25) Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on September 7, 2012.
57
Exhibit 10.18
On Assignment, Inc.
2010 INCENTIVE AWARD PLAN
RESTRICTED STOCK UNIT AWARD NOTICE
On Assignment, Inc., a Delaware corporation, (the “Company”), pursuant to its 2010 Incentive Award Plan, as amended fromtime to time (the “Plan”), hereby grants to the holder listed below (“Participant”), an award of restricted stock units (“Restricted StockUnits” or “RSUs”). Each Restricted Stock Unit represents the right to receive one Share upon vesting of such Restricted Stock Unit. Thisaward of Restricted Stock Units is subject to all of the terms and conditions set forth herein and in the Restricted Stock Unit AwardAgreement attached hereto as Exhibit A (the “Restricted Stock Unit Award Agreement ”) and the Plan, each of which are incorporatedherein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this GrantNotice and the Restricted Stock Unit Award Agreement.
Participant: Peter T. DamerisGrant Date: Grant Number: _________ (“20__ Tranche B Award”)Target Number of RSUs: _______ (“Target RSUs”)Maximum Number of RSUs: _______
Earned RSUs:
The number of RSUs that are earned (the “Earned 20__ Tranche B RSUs” )shall be determined based on achievement of performance target(s) forcalendar year 20__ determined by the Compensation Committee of theCompany’s Board of Directors on or prior to March 31, 20__.
Vesting Schedule
Any Earned 20__ Tranche B RSUs shall vest in substantially equal installmentson January 2 of each of the following three years, subject to the Participant’scontinued employment through the applicable vesting date. If the performance target is not attained in full and some or all RSUs do notbecome Earned 20__ Tranche B RSUs, then any portion which fails to beearned shall roll forward for one year only and will be added to the Tranche Baward that is granted to the Participant in the following year. Vesting of suchcarried forward portion will be determined in the following year by referenceto the attainment of the performance targets applicable to the Tranche B awardfor the following year.
Termination:
The RSUs will be subject to forfeiture upon a Termination of Services as setforth in Section 2.5 of the Restricted Stock Unit Award Agreement (after takinginto consideration any vesting that may occur in connection with suchTermination of Services, if any), provided, however, that if Participantexperiences a Qualifying Termination (as defined in that certain SecondAmended and Restated Senior Executive Agreement between the Companyand Participant, dated November 17, 2015 (the “Employment Agreement”)),the RSUs shall remain outstanding and eligible to vest in accordance withSection 2.3(b) of the Restricted Stock Unit Award Agreement.
By his or her signature and the Company’s signature below, Participant agrees to be bound by the terms and conditions of thePlan, the Restricted Stock Unit Award Agreement and this Grant Notice. Participant has reviewed the Restricted Stock Unit AwardAgreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executingthis Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Unit Award Agreement and the Plan.Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon anyquestions arising under the Plan, this Grant Notice or the Restricted Stock Unit Award Agreement. If Participant is married and living inone of the following states: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, hisor her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.
On Assignment, Inc.: PARTICIPANT:By: By:Print Name: Jon Holman Print Name: Peter T. Dameris
Title:Chairman, Compensation Committee of theBoard of Directors Date:
Address: 26745 Malibu Hills Road Address:
Calabasas, CA 91301
EXHIBIT ATO RESTRICTED STOCK UNIT AWARD GRANT NOTICE
ON ASSIGNMENT, INC. RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Restricted Stock Unit Award Grant Notice (the “ Grant Notice”) to which this Restricted Stock Unit AwardAgreement (this “Agreement”) is attached, On Assignment, Inc., a Delaware corporation (the “Company”), has granted to Participant anaward of restricted stock units (“Restricted Stock Units” or “RSUs”) under the On Assignment, Inc. 2010 Incentive Award Plan, asamended from time to time (the “Plan”).
ARTICLE 1.
GENERAL
1.1 Defined Terms. Wherever the following terms are used in this Agreement they shall have the meanings specifiedbelow, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein shall have the meaningsspecified in the Plan and the Grant Notice. As used herein, the term “stock unit” shall mean a non-voting unit of measurement whichis deemed for bookkeeping purposes to be equivalent to one outstanding Share (subject to adjustment as provided in Section 13.2 ofthe Plan) solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for thedetermination of the payment to eventually be made to Participant if such Restricted Stock Units vest pursuant to Section 2.3 hereof.The Restricted Stock Units shall not be treated as property or as a trust fund of any kind.
(a) “Termination of Consultancy” shall mean the time when the engagement of Participant as a Consultant to theCompany or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation,discharge, death, Disability or retirement, but excluding: (a) terminations where there is a simultaneous employment or continuingemployment of Participant by the Company or any Subsidiary, and (b) terminations where there is a simultaneous re-establishment ofa consulting relationship or continuing consulting relationship between Participant and the Company or any Subsidiary. TheAdministrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Consultancy,including, but not by way of limitation, the question of whether a particular leave of absence constitutes a Termination ofConsultancy. Notwithstanding any other provision of the Plan, the Company or any Subsidiary has an absolute and unrestricted rightto terminate a Consultant’s service at any time for any reason whatsoever, with or without cause, except to the extent expresslyprovided otherwise in writing.
(b) “Termination of Directorship” shall mean the time when Participant, if he or she is or becomes a Non-Employee Director, ceases to be a Director for any reason, including, but not by way of limitation, a termination by resignation,failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters andquestions relating to Termination of Directorship with respect to a Non-Employee Director.
(c) “Termination of Employment” shall mean the time when the employee-employer relationship betweenParticipant and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way oflimitation, a termination by resignation, discharge, death, Disability or retirement; but excluding: (a) terminations where there is asimultaneous reemployment or continuing employment of Participant by the Company or any Subsidiary, and (b) terminations wherethere is a simultaneous establishment of a consulting relationship or continuing consulting relationship between Participant and theCompany or any Subsidiary. The Administrator, in its absolute discretion, shall determine the effect of all matters and questionsrelating to Termination of Employment, including, but not by way of limitation, the question of whether a particular leave of absenceconstitutes a Termination of Employment.
(d) “Termination of Services” shall mean Participant’s Termination of Consultancy, Termination of Directorshipor Termination of Employment, as applicable.
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1.2 Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions of the Plan which are incorporatedherein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE 2.
GRANT OF RESTRICTED STOCK UNITS
2.1 Grant of RSUs. In consideration of Participant’s past and/or continued employment with or service to the Company ora Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “GrantDate”), the Company grants to Participant an award of RSUs as set forth in the Grant Notice, upon the terms and conditions set forthin the Plan and this Agreement.
2.2 Company’s Obligation to Pay. Each RSU has a value equal to the Fair Market Value of a Share on the date it becomesvested. Unless and until the RSUs will have vested in the manner set forth in Article 2 hereof, Participant will have no right topayment of any such RSUs. Prior to actual payment of any vested RSUs, such RSUs will represent an unsecured obligation of theCompany, payable (if at all) only from the general assets of the Company.
2.3 Vesting Schedule.
(a) Subject to Sections 2.3(b) and 2.5 hereof, the RSUs awarded by the Grant Notice will vest and becomenonforfeitable with respect to the applicable portion thereof according to the vesting schedule set forth on the Grant Notice to whichthis Agreement is attached (the “Vesting Schedule ”), subject to Participant’s continued employment through the applicable vestingdates, as a condition to the vesting of the applicable installment of the RSUs and the rights and benefits under this Agreement. Unlessotherwise determined by the Administrator, partial employment or service, even if substantial, during any vesting period will notentitle Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following aTermination of Services as provided in Section 2.5 hereof or under the Plan.
(b) In addition, (i) upon a Qualifying Termination (as defined in the Participant’s Employment Agreement) priorto January 2 of the following year, the RSUs shall remain outstanding and eligible to vest (without the requirement of continuedemployment beyond such termination) as set forth in the Grant Notice to which this Agreement is attached (i.e., subject to theachievement of the applicable performance goal(s) during calendar year 20__) on a pro-rated basis (based on employment during the20__ calendar year) on January 2 of the following year and (ii) upon a Qualifying Termination on or after January 2 of the followingyear, any Earned 20__ Tranche B RSUs (as defined in the Grant Notice to which this Agreement is attached) shall automatically vestin full.
2.4 Consideration to the Company. In consideration of the grant of the award of RSUs by the Company, Participantagrees to render faithful and efficient services to the Company or any Subsidiary. Nothing in the Plan or this Agreement shall conferupon Participant any right to continue in the employ or service of the Company or any Subsidiary or shall interfere with or restrict inany way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate theservices of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwisein a written agreement between the Company or a Subsidiary and Participant.
2.5 Forfeiture, Termination and Cancellation upon Termination of Services.
(a) In the event that the Participant experiences a Termination of Services that is not a Qualifying Termination,RSUs that have not vested as of the date of termination (after taking into account any accelerated vesting that may occur inconnection with such Termination of Services) shall thereupon automatically be forfeited, terminated and cancelled as of the date oftermination without payment of any consideration by the Company, and
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the Participant (or the Participant’s beneficiary or personal representative, as the case may be) shall have no further rights hereunder.
(b) In the event that the Participant experiences a Qualifying Termination (i) prior to January 2 of the followingyear, the RSUs shall remain outstanding and eligible to vest in accordance with Section(s) 2.3(b) hereof or (ii) on or after January 2 ofthe following year, any Earned 20__ Tranche B RSUs shall automatically vest in full.
2.6 Payment upon Vesting.
(a) As soon as administratively practicable following the vesting of any Restricted Stock Units pursuant to Section2.3 hereof, but in no event later than sixty (60) days after such vesting date (for the avoidance of doubt, this deadline is intended tocomply with the “short-term deferral” exemption from Section 409A of the Code), the Company shall deliver to Participant (or anytransferee permitted under Section 3.2 hereof) a number of Shares (either by delivering one or more certificates for such shares or byentering such shares in book entry form, as determined by the Company in its sole discretion) equal to the number of Restricted StockUnits subject to this award that vest on the applicable vesting date, unless such Restricted Stock Units terminate prior to the givenvesting date pursuant to Section 2.5 hereof. Notwithstanding the foregoing, in the event Shares cannot be issued pursuant to Section2.7(a), (b) or (c) hereof, then the Shares shall be issued pursuant to the preceding sentence as soon as administratively practicableafter the Administrator determines that Shares can again be issued in accordance with Sections 2.7(a), (b) and (c) hereof.
(b) Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to require paymentby Participant of any sums required by applicable law to be withheld with respect to the grant of RSUs or the issuance of Shares. Suchpayment shall be made by deduction from other compensation payable to Participant or in such other form of considerationacceptable to the Company which may, in the sole discretion of the Administrator, include:
(i) Cash or check;
(ii) Surrender of Shares (including, without limitation, Shares otherwise issuable under the RSUs) held forsuch period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a FairMarket Value on the date of delivery equal to the minimum amount required to be withheld by statute; or
(iii) Other property acceptable to the Administrator (including, without limitation, through the delivery ofa notice that Participant has placed a market sell order with a broker with respect to Shares then issuable under the RSUs, and that thebroker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of its withholdingobligations; provided that payment of such proceeds is then made to the Company at such time as may be required by the Company,but in any event not later than the settlement of such sale).
The Company shall not be obligated to deliver any new certificate representing Shares to Participant or Participant’s legal representativeor enter such Share in book entry form unless and until Participant or Participant’s legal representative shall have paid or otherwisesatisfied in full the amount of all federal, state and local taxes applicable to the taxable income of Participant resulting from the grant orvesting of the RSUs or the issuance of Shares.
2.7 Conditions to Delivery of Stock. Subject to Section 2.6, the Shares deliverable hereunder, or any portion thereof, maybe either previously authorized but unissued Shares or issued Shares which have then been reacquired by the Company. Such Sharesshall be fully paid and nonassessable. The Company shall not be required to issue or deliver any Shares deliverable hereunder orportion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such Shares to listing on all stock exchanges on which such Shares are then listed;
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(b) The completion of any registration or other qualification of such Shares under any state or federal law orunder rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which theAdministrator shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which theAdministrator shall, in its absolute discretion, determine to be necessary or advisable;
(d) The receipt by the Company of full payment for such Shares, including payment of any applicablewithholding tax, which may be in one or more of the forms of consideration permitted under Section (c) hereof; and
(e) The lapse of such reasonable period of time following the vesting of any Restricted Stock Units as theAdministrator may from time to time establish for reasons of administrative convenience.
2.8 Rights as Stockholder. The holder of the RSUs shall not be, nor have any of the rights or privileges of, a stockholderof the Company, including, without limitation, voting rights and rights to dividends, in respect of the RSUs and any Shares underlyingthe RSUs and deliverable hereunder unless and until such Shares shall have been issued by the Company and held of record by suchholder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except asprovided in Section 13.2 of the Plan.
ARTICLE 3.
OTHER PROVISIONS
3.1 Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt suchrules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke anysuch rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final andbinding upon Participant, the Company and all other interested persons. Neither any person or persons acting as the Administratorand nor any member of the Committee or the Board shall be personally liable for any action, determination or interpretation made ingood faith with respect to the Plan, this Agreement or the RSUs.
3.2 Grant is Not Transferable. During the lifetime of Participant, the RSUs may not be sold, pledged, assigned ortransferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUshave been issued, and all restrictions applicable to such Shares have lapsed. Neither the RSUs nor any interest or right therein shall beliable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition bytransfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary orinvoluntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (includingbankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition ispermitted by the preceding sentence.
3.3 Binding Agreement. Subject to the limitation on the transferability of the RSUs contained herein, this Agreement willbe binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
3.4 Adjustments Upon Specified Events. The Administrator may accelerate payment and vesting of the Restricted StockUnits in such circumstances as it, in its sole discretion, may determine. In addition, upon the occurrence of certain events relating tothe Shares contemplated by Section 13.2 of the Plan (including, without limitation, an extraordinary cash dividend on such Stock), theAdministrator shall make such adjustments the
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Administrator deems appropriate in the number of Restricted Stock Units then outstanding and the number and kind of securities thatmay be issued in respect of the Restricted Stock Units. Participant acknowledges that the RSUs are subject to amendment,modification and termination in certain events as provided in this Agreement and under the Plan, including without limitation, underSection 13.2 of the Plan.
3.5 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to theCompany in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shallbe addressed to Participant at Participant’s last address reflected on the Company’s records. By a notice given pursuant to this Section3.5, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed dulygiven when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a postoffice or branch post office regularly maintained by the United States Postal Service.
3.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or constructionof this Agreement.
3.7 Governing Law. The laws of the State of California shall govern the interpretation, validity, administration,enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflictsof laws.
3.8 Conformity to Securities Laws. Participant acknowledges that the Plan and this Agreement are intended to conform tothe extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgatedby the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein tothe contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules andregulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessaryto conform to such laws, rules and regulations.
3.9 Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly orpartially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; providedthat, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreementshall adversely affect the RSUs in any material way without the prior written consent of Participant.
3.10 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multipleassignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions ontransfer herein set forth in Section 3.2 hereof, this Agreement shall be binding upon Participant and his or her heirs, executors,administrators, successors and assigns.
3.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, ifParticipant is subject to Section 16 of the Exchange Act, the Plan, the RSUs and this Agreement shall be subject to any additionallimitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, thisAgreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
3.12 Entire Agreement. The Plan, the Grant Notice and this Agreement constitute the entire agreement of the parties andsupersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matterhereof.
3.13 Section 409A. The RSUs are not intended to constitute “nonqualified deferred compensation” within the meaning ofSection 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder,including without limitation any such regulations or other guidance that may be issued
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after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement,if at any time the Administrator determines that the RSUs (or any portion thereof) may be subject to Section 409A, the Administratorshall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure todo so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (includingamendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessaryor appropriate either for the RSUs to be exempt from the application of Section 409A or to comply with the requirements of Section409A.
3.14 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as hereinprovided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not beconstrued as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant shall have onlythe rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respectto the RSUs, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to RSUs, as andwhen payable hereunder.
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EXHIBIT BTO RESTRICTED STOCK UNIT AWARD NOTICE
CONSENT OF SPOUSE
I, ____________________, spouse of ____________________, have read and approve the foregoing On Assignment, Inc.Restricted Stock Unit Award Agreement (the “ Agreement”). In consideration of issuing to my spouse the shares of the common stockof On Assignment, Inc. set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of anyrights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in saidAgreement or any shares of the common stock of On Assignment, Inc. issued pursuant thereto under the community property laws orsimilar laws relating to marital prop-erty in effect in the state of our residence as of the date of the signing of the foregoing Agreement.
Dated: ________________________ Signature of Spouse
Exhibit 10.20
ON ASSIGNMENT, INC.2010 INCENTIVE AWARD PLAN
RESTRICTED STOCK UNIT AWARD GRANT NOTICE
On Assignment, Inc., a Delaware corporation, (the “Company”), pursuant to its 2010 Incentive Award Plan, as amended from time totime (the “Plan”), hereby grants to the holder listed below (“Participant”), an award of restricted stock units (“Restricted Stock Units”or “RSUs”). Each Restricted Stock Unit represents the right to receive one Share upon vesting of such Restricted Stock Unit. This awardof Restricted Stock Units is subject to all of the terms and conditions set forth herein and in the Restricted Stock Unit Award Agreementattached hereto as Exhibit A (the “Restricted Stock Unit Award Agreement”) and the Plan, each of which are incorporated herein byreference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice andthe Restricted Stock Unit Award Agreement.
Participant: Peter T. DamerisGrant Date: January 4, 2016Grant Number: __________ (“Additional RSU Award”)Total Number of RSUs: __________
Vesting Schedule:
The Additional RSU Award shall vest and become nonforfeitable in substantially equalinstallments on January 2 of each of calendar years 2017, 2018, 2019 and 2020, subject toParticipant’s continued employment with the Company through such date and furthersubject to the attainment of the following performance goal: the Company achievingpositive Adjusted EBITDA (as defined in that certain Second Amended and Restated SeniorExecutive Agreement between the Company and Participant, dated November 17, 2015(the “Employment Agreement”)), for calendar year 2016 (the “Performance Period”).
Termination:
If Participant experiences a Termination of Service prior to the applicable vesting date, allRSUs that have not become vested on or prior to the date of such Termination of Service(after taking into consideration any vesting that may occur in connection with suchTermination of Service, if any), will thereupon be automatically forfeited by Participantwithout payment of any consideration therefor; provided, however, that if Participantexperiences a termination of employment due to Participant’s death, Disability or due to atermination by the Company without Cause (in each case, as defined in the EmploymentAgreement), the RSUs shall vest in full upon such termination; provided, further , that theRSUs may also be subject to accelerated vesting provisions set forth in that certain SecondAmended and Restated Executive Change of Control Agreement between the Companyand Participant, dated November 17, 2015.
By his or her signature and the Company’s signature below, Participant agrees to be bound by the terms and conditions of the Plan, theRestricted Stock Unit Award Agreement and this Grant Notice. Participant has reviewed the Restricted Stock Unit Award Agreement,the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this GrantNotice and fully understands all provisions of this Grant Notice, the Restricted Stock Unit Award Agreement and the Plan. Participanthereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arisingunder the Plan, this Grant Notice or the Restricted Stock Unit Award Agreement. If Participant is married and living in one of thefollowing states: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, his or herspouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.
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ON ASSIGNMENT, INC.: PARTICIPANT:By: By:Print Name: Jonathan S. Holman Print Name: Peter T. Dameris
Title:Chairman, Compensation Committee of theBoard of Directors Date:
Address: 26745 Malibu Hills Road
Calabasas, CA 91301
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EXHIBIT ATO RESTRICTED STOCK UNIT AWARD GRANT NOTICE
ON ASSIGNMENT, INC. RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Restricted Stock Unit Award Grant Notice (the “ Grant Notice”) to which this Restricted Stock Unit AwardAgreement (this “Agreement”) is attached, On Assignment, Inc., a Delaware corporation (the “Company”), has granted to Participant anaward of restricted stock units (“Restricted Stock Units” or “RSUs”) under the On Assignment, Inc. 2010 Incentive Award Plan, asamended from time to time (the “Plan”).
ARTICLE 1.
GENERAL
1.1 Defined Terms. Wherever the following terms are used in this Agreement they shall have the meanings specifiedbelow, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein shall have the meaningsspecified in the Plan and the Grant Notice. As used herein, the term “stock unit” shall mean a non-voting unit of measurement whichis deemed for bookkeeping purposes to be equivalent to one outstanding Share (subject to adjustment as provided in Section 13.2 ofthe Plan) solely for purposes of the Plan and this Agreement. The Restricted Stock Units shall be used solely as a device for thedetermination of the payment to eventually be made to Participant if such Restricted Stock Units vest pursuant to Section 2.3 hereof.The Restricted Stock Units shall not be treated as property or as a trust fund of any kind.
(a) “Termination of Consultancy” shall mean the time when the engagement of Participant as a Consultant to theCompany or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation,discharge, death, disability or retirement, but excluding: (i) terminations where there is a simultaneous employment or continuingemployment of Participant by the Company or any Subsidiary, and (ii) terminations where there is a simultaneous re-establishment ofa consulting relationship or continuing consulting relationship between Participant and the Company or any Subsidiary. TheAdministrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Consultancy,including, but not by way of limitation, the question of whether a particular leave of absence constitutes a Termination ofConsultancy. Notwithstanding any other provision of the Plan, the Company or any Subsidiary has an absolute and unrestricted rightto terminate a Consultant’s service at any time for any reason whatsoever, with or without cause, except to the extent expresslyprovided otherwise in writing.
(b) “Termination of Directorship” shall mean the time when Participant, if he or she is or becomes a Non-Employee Director, ceases to be a Director for any reason, including, but not by way of limitation, a termination by resignation,failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters andquestions relating to Termination of Directorship with respect to a Non-Employee Director.
(c) “Termination of Employment” shall mean the time when the employee-employer relationship betweenParticipant and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way oflimitation, a termination by resignation, discharge, death, disability or retirement; but excluding: (i) terminations where there is asimultaneous reemployment or continuing employment of Participant by the Company or any Subsidiary, and (ii) terminations wherethere is a simultaneous establishment of a consulting relationship or continuing consulting relationship between Participant and theCompany or any Subsidiary. The Administrator, in its absolute discretion, shall determine the effect of all matters and questionsrelating to Termination of Employment, including, but not by way of limitation, the question of whether a particular leave of absenceconstitutes a Termination of Employment.
(d) “Termination of Services” shall mean Participant’s Termination of Consultancy, Termination of Directorshipor Termination of Employment, as applicable.
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1.2 Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions of the Plan which are incorporatedherein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE 2.
GRANT OF RESTRICTED STOCK UNITS
2.1 Grant of RSUs. In consideration of Participant’s past and/or continued employment with or service to the Companyor a Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “GrantDate”), the Company grants to Participant an award of RSUs as set forth in the Grant Notice, upon the terms and conditions set forthin the Plan and this Agreement.
2.2 Company’s Obligation to Pay. Each RSU has a value equal to the Fair Market Value of a Share on the date itbecomes vested. Unless and until the RSUs will have vested in the manner set forth in Article 2 hereof, Participant will have no rightto payment of any such RSUs. Prior to actual payment of any vested RSUs, such RSUs will represent an unsecured obligation of theCompany, payable (if at all) only from the general assets of the Company.
2.3 Vesting Schedule . Subject to Section 2.5 hereof, the RSUs awarded by the Grant Notice will vest and becomenonforfeitable with respect to the applicable portion thereof according to the vesting schedule set forth on the Grant Notice to whichthis Agreement is attached, subject to Participant’s continued employment through the applicable vesting dates, as a condition to thevesting of the applicable installment of the RSUs and the rights and benefits under this Agreement. Unless otherwise determined bythe Administrator, partial employment or service, even if substantial, during any vesting period will not entitle Participant to anyproportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a Termination of Services asprovided in Section 2.5 hereof or under the Plan.
2.4 Consideration to the Company. In consideration of the grant of the award of RSUs by the Company, Participantagrees to render faithful and efficient services to the Company or any Subsidiary. Nothing in the Plan or this Agreement shall conferupon Participant any right to continue in the employ or service of the Company or any Subsidiary or shall interfere with or restrict inany way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate theservices of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwisein a written agreement between the Company or a Subsidiary and Participant.
2.5 Forfeiture, Termination and Cancellation upon Termination of Services . Notwithstanding any contrary provision ofthis Agreement, upon Participant’s Termination of Services for any or no reason, all then unvested RSUs subject to this Agreement(after taking into account any accelerated vesting that may occur in connection with such Termination of Service) will thereupon beautomatically forfeited, terminated and cancelled as of the applicable termination date without payment of any consideration by theCompany, and Participant, or Participant’s beneficiary or personal representative, as the case may be, shall have no further rightshereunder.
2.6 Payment upon Vesting.
(a) As soon as administratively practicable following the vesting of any Restricted Stock Units pursuant toSection 2.3 hereof, but in no event later than sixty (60) days after such vesting date (for the avoidance of doubt, this deadline isintended to comply with the “short-term deferral” exemption from Section 409A of the Code), the Company shall deliver toParticipant (or any transferee permitted under Section 3.2 hereof) a number of Shares (either by delivering one or more certificates forsuch shares or by entering such shares in book entry form, as determined by the Company in its sole discretion) equal to the numberof Restricted Stock Units subject to this award that vest on the applicable vesting date, unless such Restricted Stock Units terminateprior to the given vesting date pursuant to Section 2.5 hereof. Notwithstanding the foregoing, in the event Shares cannot be issuedpursuant
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to Section 2.7 hereof, then the Shares shall be issued pursuant to the preceding sentence as soon as administratively practicable afterthe Administrator determines that Shares can again be issued in accordance with Sections 2.7 hereof.
(b) Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to require paymentby Participant of any sums required by applicable law to be withheld with respect to the grant of RSUs or the issuance of Shares. Suchpayment shall be made by deduction from other compensation payable to Participant or in such other form of considerationacceptable to the Company which may, in the sole discretion of the Administrator, include:
(i) Cash or check;
(ii) Surrender of Shares (including, without limitation, Shares otherwise issuable under the RSUs) held forsuch period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a FairMarket Value on the date of delivery equal to the minimum amount required to be withheld by statute; or
(iii) Other property acceptable to the Administrator (including, without limitation, through the delivery ofa notice that Participant has placed a market sell order with a broker with respect to Shares then issuable under the RSUs, and that thebroker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of its withholdingobligations; provided that payment of such proceeds is then made to the Company at such time as may be required by the Company,but in any event not later than the settlement of such sale).The Company shall not be obligated to deliver any new certificate representing Shares to Participant or Participant’s legal representativeor enter such Share in book entry form unless and until Participant or Participant’s legal representative shall have paid or otherwisesatisfied in full the amount of all federal, state and local taxes applicable to the taxable income of Participant resulting from the grant orvesting of the RSUs or the issuance of Shares.
2.7 Conditions to Delivery of Stock. Subject to Section 2.6 hereof, the Shares deliverable hereunder, or any portionthereof, may be either previously authorized but unissued Shares or issued Shares which have then been reacquired by the Company.Such Shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any Shares deliverablehereunder or portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such Shares to listing on all stock exchanges on which such Shares are then listed;(b) The completion of any registration or other qualification of such Shares under any state or federal law or
under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which theAdministrator shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which theAdministrator shall, in its absolute discretion, determine to be necessary or advisable;
(d) The receipt by the Company of full payment for such Shares, including payment of any applicablewithholding tax, which may be in one or more of the forms of consideration permitted under Section 2.6 hereof; and
(e) The lapse of such reasonable period of time following the vesting of any Restricted Stock Units as theAdministrator may from time to time establish for reasons of administrative convenience.
2.8 Rights as Stockholder. The holder of the RSUs shall not be, nor have any of the rights or privileges of, a stockholderof the Company, including, without limitation, voting rights and rights to dividends, in respect of the RSUs and any Shares underlyingthe RSUs and deliverable hereunder unless and until such Shares shall have been issued by the Company and held of record by suchholder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except asprovided in Section 13.2 of the Plan.
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ARTICLE 3.
OTHER PROVISIONS
3.1 Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt suchrules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke anysuch rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final andbinding upon Participant, the Company and all other interested persons. Neither any person or persons acting as the Administratorand nor any member of the Committee or the Board shall be personally liable for any action, determination or interpretation made ingood faith with respect to the Plan, this Agreement or the RSUs.
3.2 Grant is Not Transferable. During the lifetime of Participant, the RSUs may not be sold, pledged, assigned ortransferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUshave been issued, and all restrictions applicable to such Shares have lapsed. Neither the RSUs nor any interest or right therein shall beliable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition bytransfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary orinvoluntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (includingbankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition ispermitted by the preceding sentence.
3.3 Binding Agreement. Subject to the limitation on the transferability of the RSUs contained herein, this Agreement willbe binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
3.4 Adjustments Upon Specified Events. The Administrator may accelerate payment and vesting of the Restricted StockUnits in such circumstances as it, in its sole discretion, may determine. In addition, upon the occurrence of certain events relating tothe Shares contemplated by Section 13.2 of the Plan (including, without limitation, an extraordinary cash dividend on such Stock), theAdministrator shall make such adjustments the Administrator deems appropriate in the number of Restricted Stock Units thenoutstanding and the number and kind of securities that may be issued in respect of the Restricted Stock Units. Participantacknowledges that the RSUs are subject to amendment, modification and termination in certain events as provided in this Agreementand under the Plan, including without limitation, under Section 13.2 of the Plan.
3.5 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to theCompany in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shallbe addressed to Participant at Participant’s last address reflected on the Company’s records. By a notice given pursuant to this Section3.5, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed dulygiven when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a postoffice or branch post office regularly maintained by the United States Postal Service.
3.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation orconstruction of this Agreement.
3.7 Governing Law. The laws of the State of California shall govern the interpretation, validity, administration,enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflictsof laws.
3.8 Conformity to Securities Laws. Participant acknowledges that the Plan and this Agreement are intended to conform tothe extent necessary with all provisions of the Securities Act and the Exchange Act and any
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and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws andregulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such amanner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreementshall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
3.9 Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly orpartially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; providedthat, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreementshall adversely affect the RSUs in any material way without the prior written consent of Participant.
3.10 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multipleassignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions ontransfer herein set forth in Section 3.2 hereof, this Agreement shall be binding upon Participant and his or her heirs, executors,administrators, successors and assigns.
3.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, ifParticipant is subject to Section 16 of the Exchange Act, the Plan, the RSUs and this Agreement shall be subject to any additionallimitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, thisAgreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
3.12 Entire Agreement. The Plan, the Grant Notice and this Agreement constitute the entire agreement of the parties andsupersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matterhereof.
3.13 Section 409A. The RSUs are not intended to constitute “nonqualified deferred compensation” within the meaning ofSection 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder,including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”).However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administratordetermines that the RSUs (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its solediscretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt suchamendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policiesand procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate eitherfor the RSUs to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreementcreates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.Neither the Plan nor any underlying program, in and of itself, has any assets. Participant shall have only the rights of a generalunsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs, and rightsno greater than the right to receive the Shares as a general unsecured creditor with respect to RSUs, as and when payable hereunder.
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EXHIBIT BTO RESTRICTED STOCK UNIT AWARD NOTICE
CONSENT OF SPOUSE
I, ____________________, spouse of Peter Dameris, have read and approve the foregoing On Assignment, Inc. Restricted Stock UnitAward Agreement (the “Agreement”). In consideration of issuing to my spouse the shares of the common stock of On Assignment, Inc.set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under theAgreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any sharesof the common stock of On Assignment, Inc. issued pursuant thereto under the community property laws or similar laws relating tomarital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.
Dated: ________________________ Signature of Spouse
Exhibit 10.25
ON ASSIGNMENT, INC.
AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE PLAN
AND
SUMMARY PLAN DESCRIPTION
Plan Effective Date: February 12, 2004As Amended and Restated: December 9, 2015
The On Assignment, Inc. Change in Control Severance Plan (the “Plan”) is primarily designed to provide certain eligible employees of OnAssignment, Inc. and its subsidiaries (together, the “Company”) whose employment is terminated on or after February 12, 2004 with separation payin the event of an involuntary termination. This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of1974, as amended (“ERISA”). This Plan is governed by ERISA and, to the extent applicable, the laws of the State of California. This documentconstitutes both the official plan document and the required summary plan description under ERISA.
I. ELIGIBILITY You can be designated as an Eligible Employee for purposes of receiving severance benefits under the Plan if:
• you are a regular, full-time employee of the Company and are identified on Exhibit A (to be supplied separately);
• your active employment with the Company is Involuntarily Terminated (within the meaning set forth below) within the 18-month periodfollowing a Change in Control;
• you execute a General Release of All Claims (a “General Release”), within five business days after your termination date or, if you are age40 or over, you execute a General Release within 45 business days after your termination and any rescission period specified therein haselapsed without you having rescinded said General Release; and
• you are not in one of the excluded categories listed below.
Excluded Categories of Employees. You are not eligible for severance benefits under this Plan if:
• you are a temporary employee, part-time employee working fewer than 30 hours per week (no minimum number of hours shall apply tosalaried employees), probationary employee or student employee hired to be placed on assignment with clients of the Company;
• you have a separate change in control, severance or similar agreement or arrangement with the Company that specifically provides thatyou are not eligible to participate in the Plan;
• you voluntarily terminate your employment, unless your termination constitutes an “Involuntary Termination” as defined below;
• you are employed with a successor employer which directly or indirectly acquires (i) all or any portion of the assets or operations of theCompany or any subsidiary, (ii) all or any portion of the outstanding capital stock of the Company, or (iii) fifty percent (50%) or more of thecapital stock of any subsidiary of the Company. However, you would be eligible for severance benefits pursuant to the terms of the Planupon a subsequent termination by the successor employer within 18 months following a Change in Control; or
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• you are dismissed for Cause, whether or not prior to your dismissal you received notice of a termination which would otherwise qualify youfor severance benefits.
II. HOW THE PLAN WORKS
If you are eligible for severance benefits under the Plan, the amount of your severance pay will be determined in accordance with the guidelinesset forth below, subject to the Golden Parachute Tax limitation set forth below. Subject to the Potential Six-Month Delay set forth below, you willreceive your severance pay in lump-sum payment (with appropriate taxes deducted or withheld) which will be made as soon as administrativelypracticable after you experience a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, asamended, and Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”) as a result of your Involuntary Termination within 18 monthsafter a Change in Control, but in no event later than 30 days following the date of your Separation from Service, subject in all cases to theCompany’s receipt of your executed General Release and the expiration of any rescission period applicable to your executed General Release.
In the event an Eligible Employee is Involuntarily Terminated within 18 months after a Change in Control and such Eligible Employee is or maybecome entitled to cash separation payments or benefits (other than with respect to compensation accrued prior to termination) under anyemployment, consulting or severance agreement or other plan, program, policy or arrangement of the Company, then such Eligible Employee shallbe entitled to the severance benefits and payments under this Plan and not under such other agreement, plan, program, policy or arrangement.
Severance Guidelines. If your employment is Involuntarily Terminated within 18 months after a Change in Control and you are an EligibleEmployee, you will be paid all Accrued Compensation and the following severance pay: (A) A Pro-Rata Bonus; (B) Payments
(i) Chief Executive Officer: If the Eligible Employee was the Chief Executive Officer of the Company immediately before the Changein Control: (1) the Eligible Employee will receive 300% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2) for 18months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health,vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for theEligible Employee, and if applicable, spouse and dependents, under the Consolidated Omnibus Budget Reconciliation Act of 1985(“COBRA”) A separate election form and notice outlining continuation coverage under COBRA will be provided to the EligibleEmployee (and, if applicable, his or her eligible dependents) and must be timely returned to effect enrollment., and (3) to assistthe Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum paymentin an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees ofthe Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected underthe Company’s group health plan at the time of the Eligible Employees Separation from Service, for 18 months (rounded up, ifapplicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under themedical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation fromService, then the Eligible Employee is not eligible for this additional payment.
(ii) Chief Operating Officer: If the Eligible Employee was an executive vice president and Chief Operating Officer of the Company (or
equivalent designated by the Board of Directors) immediately before the Change in Control: (1) 275% of the Eligible Employee’sAnnual Base Pay and Target Bonus; (2) for 18 months following the Eligible Employee’s Separation from Service, the EligibleEmployee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation fromService (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under COBRA1;and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive alump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time totime for employees of the Company (or any successor) generally for
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the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the timeof the Eligible Employees Separation from Service, for 18 months (rounded up, if applicable, to the next full month). Forclarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of theCompany’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is noteligible for this additional payment.
(iii) Chief Financial Officer: If the Eligible Employee was an executive vice president and Chief Financial Officer of the Company
immediately before the Change in Control: (1) 250% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2) for 18months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health,vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for theEligible Employee, and if applicable, spouse and dependents, under COBRA1; and (3) to assist the Eligible Employee in offsettingthe cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculatedbased upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor)generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health planat the time of the Eligible Employees Separation from Service, for 18 months (rounded up, if applicable, to the next full month).For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions ofthe Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is noteligible for this additional payment.
(iv) Senior Vice President or Division President: If the Eligible Employee was a senior vice president of the Company and/or presidentof a division of the Company (whether or not an executive officer) immediately before the Change in Control: (1) 200% of theEligible Employee’s Annual Base Pay and Target Bonus; (2) for 18 months following the Eligible Employee’s Separation fromService, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as ofthe Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse anddependents, under COBRA1; and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the EligibleEmployee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may becharged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or visioncoverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible EmployeesSeparation from Service, for 18 months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt,if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’sgroup health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.
(v) Vice President or Corporate Controller: If the Eligible Employee was a vice president or corporate controller (or equivalentdesignated by the Board of Directors), of the Company immediately before the Change in Control: (1) 75% of the EligibleEmployee’s Annual Base Pay and Target Bonus; (2) for 18 months following the Eligible Employee’s Separation from Service, theEligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separationfrom Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, underCOBRA1; and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shallreceive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged fromtime to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage theEligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation fromService, for 18 months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the EligibleEmployee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health planas of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment;
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(vi) Certain Designated Employees: One month of the Eligible Employee’s Annual Base Pay and Incentive Compensation for eachyear or partial year of service to the Company as an employee, up to a maximum of six months of Annual Base Pay, with aminimum of two months of Annual Base Pay, if the Eligible Employee was a “director,” “assistant-director,” “manager,” “regionalmanager,” or “Senior Staffing Consultant” immediately before the Change in Control;
(vii) Exempt Employees: One month of the Eligible Employee’s Annual Base Pay for each year or partial year of service to the
Company as an employee, up to a maximum of three months of Annual Base Pay, with a minimum of one month of Annual BasePay, if the Eligible Employee was an exempt employee of the Company (other than those employees described above)immediately before the Change in Control; or
(viii) Other Eligible Employees: One week of the Eligible Employee’s Annual Base Pay for each year or partial year of service to the
Company as an employee, up to a maximum of three months of Annual Base Pay, with a minimum of one week of Annual BasePay, for all other Eligible Employee not included in the above categories.
“Accrued Compensation” shall mean an amount which shall consist of all amounts earned or accrued through the termination date but not paid asof the termination date including (i) Annual Base Pay, (ii) reimbursement for reasonable and necessary expenses incurred by you on behalf of theCompany during the period ending on the termination date, (iii) vacation and sick leave pay (to the extent provided by Company policy orapplicable law), and (iv) incentive compensation (if any) earned in respect of any period ended prior to the termination date. It is expresslyunderstood that incentive compensation shall have been “earned” as of the time that the conditions to such incentive compensation have beenmet, even if not calculated or payable at such time. “Annual Base Pay” generally means your annualized base salary at the rate in effect during the last regularly scheduled payroll period immediatelypreceding the occurrence of the Change in Control and does not include, for example, bonuses, overtime compensation, incentive pay, fringebenefits, sales commissions or expense allowances.
“Cause” means your willful breach of duty unless waived by the Company (which willful breach is limited to your deliberate and consistent refusalto perform your duties or the deliberate and consistent refusal to conform to or follow any reasonable policy adopted by the Company provided youhave had prior written notice of such refusal and an opportunity of at least 30 days to cure such refusal), your unauthorized use or disclosure ofconfidential information or trade secrets of the Company, your breach of non-competition or non-solicitation agreements, your conviction of afelony under the laws of the United States or any state thereof, or your gross negligence. “Change in Control” shall be deemed to occur upon the consummation of any of the following transactions: (A) a change in the ownership of Company whereby one person, or more than one person acting as a group, acquires ownership of the
outstanding voting stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the totalfair market value or total voting power of the stock of Company, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v). If aperson or group is considered either to own more than 50% of the total fair market value or total voting power of the Company’s stock, orto have effective control of the Company within the meaning of part 2 of the definition, and such person or group acquires additional stockof the Company, the acquisition of the additional stock shall not be considered to cause a change in the ownership of the Company; or
(B) a change in the effective control of the Company whereby one person, or more than one person acting as a group, acquires (or hasacquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of Companystock possessing 30% or more of the total voting power of the Company stock, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi). However, if a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, andsuch person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not beconsidered to cause a change in the effective control of Company; or
(C) a change in the effective control of the Company whereby a majority of the members of the Company’s
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board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of themembers of the Company’s board of directors before the date of the appointment or election, as determined in accordance with Treas.Reg. §1.409A-3(i)(5)(vi). In determining whether the event described in the preceding sentence has occurred, the Company to which theevent must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporationis a majority stockholder; or
(D) a change in the ownership of a substantial portion of the assets of the Company, whereby any one person, or more than one person actingas a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person orpersons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market valueof all Company assets immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a change in the ownership of a substantial portion of the assets when such transfer ismade to an entity that is controlled by the stockholders of the Company, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).
“Incentive Compensation” shall mean 100% of the commission, bonus or other incentive-type pay paid to you (excluding stock options) for thefiscal year immediately preceding the Change in Control.
“Involuntary Termination” shall mean the termination of your employment with the Company (or, if applicable, successor entity) other than byreason of death or disability: (A) involuntarily upon your discharge or dismissal other than for Cause, or
(B) upon your resignation following (i) a reduction in your level of Annual Base Pay or any Target Bonus, (ii) a material reduction in yourbenefits or (iii) a relocation of your place of employment which is more than 35 miles from your place of employment prior to the Change inControl, such that it constitutes a material change in the geographic location at which you must perform services (within the meaning ofSection 409A), provided and only if such change or reduction is effected without your written concurrence, or
(C) upon your resignation in the case of an employee who was an executive officer or vice president immediately before the applicableChange in Control following a change in the employee’s position with the Company (or, if applicable, with the successor entity) that iseffected without the employee’s consent and materially reduces his or her level of responsibility or authority.
“Pro Rata Bonus” means an amount equal to 100% of the target bonus that you would have been eligible to receive for the Company’s fiscal yearin which your employment terminates following a Change of Control, multiplied by a fraction, the numerator of which is the number of days in suchfiscal year through the Termination Date and the denominator of which is 365. “Target Bonus” shall mean the bonus which would have been paid to you for full achievement of specific performance objectives pertaining to thebusiness of the Company or any of its specific business units or divisions, or to individual performance criteria applicable to you, which objectiveshave been established by the Board of Directors (or the Compensation Committee thereof) for the year in question. “Target Bonus” shall notmean the “maximum bonus” which you might have been paid for overachievement of such performance objectives or criteria or any purelydiscretionary bonus. Golden Parachute Tax Limitation. In the event that any payment or benefit made or provided to or for your benefit in connection with this Planand/or your employment with the Company or the termination thereof (a “Payment”) is determined to be subject to any excise tax (“Excise Tax”)imposed by Section 4999 of the Code (or any successor to such Section), then you will receive one dollar less than the amount of any Payment(s)that would subject you to the Excise Tax (the “Safe Harbor Amount”). If a reduction in the Payment(s) is necessary so that the Payment(s) equalthe Safe Harbor Amount and none of the Payments constitutes a “deferral of compensation” within the meaning and subject to Section 409A(“Nonqualified Deferred Compensation”), then the reduction shall occur in the order you elect in writing prior to the date of payment. If any Paymentconstitutes Nonqualified Deferred Compensation or if you fail to elect an order, then the Payment(s) to be reduced will be determined in a mannerwhich has the least economic cost to you and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when paymentwould have been made to you, until the reduction is achieved. All determinations required to be
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made under this paragraph, including whether and when the Safe Harbor Amount is required and the amount of the reduction of the Payment(s) andthe assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Company(the “Accounting Firm”). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the AccountingFirm shall be binding upon the Company and you.
Potential Six-Month Delay. Notwithstanding anything to the contrary in this Plan, no compensation or Benefits, shall be paid to you during the six-month period following your “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, asamended (the “Code”)) to the extent the Plan Administrator determines Executive is a “specified employee” at the time of such Separation fromService (within the meaning of Section 409A) and that that paying such amounts at the time or times indicated in this Plan would be a prohibiteddistribution under Section 409A(a)(2)(b)(i) of the Code and/or cause you to incur additional taxes under Section 409A of the Code. If the payment ofany such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period, (orsuch earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result ofyour death), the Company shall pay you a lump-sum amount equal to the cumulative amount that would have otherwise been payable to you duringsuch six-month period, without interest thereon.
III. OTHER IMPORTANT INFORMATION
Plan Administration. As the Plan Administrator, the Company has full discretionary authority to administer and interpret the Plan, includingdiscretionary authority to determine eligibility for benefits under the Plan and the amount of benefits (if any) payable per participant. Anydetermination by the Plan Administrator will be final and conclusive upon all persons. When benefits are due, they will be paid from the generalassets of the Company. The Company is not required to establish a trust to fund the Plan. The benefits provided under this Plan are notassignable and may be conditioned upon your compliance with any confidentiality agreement you have entered into with the Company or upon yourcompliance with any Company policy or program communicated to you in writing. Claims Procedure. If you believe you are incorrectly denied a benefit or are entitled to a greater benefit than the benefit you receive under thePlan, you may submit a signed, written application to the Plan Administrator within ninety (90) days of your termination. You will be notified of theapproval or denial of this claim within ninety (90) days of the date that the Plan Administrator receives the claim, unless special circumstancesrequire an extension of time for processing the claim. If your claim is denied, the notification will state specific reasons for the denial and you willhave sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a review of the denial withthe Plan Administrator. This request should include the reasons you are requesting a review, facts supporting your request and any other relevantcomments. Pursuant to its discretionary authority to administer and interpret the Plan and to determine eligibility for benefits under the Plan, thePlan Administrator will generally make a final, written determination of your eligibility for benefits within sixty (60) days of receipt of your request forreview. Plan Terms. Except as otherwise set forth herein, this Plan supersedes any and all prior separation, severance and salary continuationarrangements, programs and plans which were previously offered by the Company for the purpose of paying benefits to any Eligible Employeeupon a termination following a Change in Control, including pursuant to an employment agreement or offer letter. Nothing in this Plan shall affectan Eligible Employee’s right to severance benefits under circumstances not involving a termination following a Change in Control. In no event,however, shall any individual receive severance benefits under both this Plan and any other separation, severance pay or salary continuationprogram, plan or other arrangement with the Company.
Plan Amendment or Termination. The Company reserves the right to terminate or amend the Plan at any time upon the vote of a two-thirdsmajority of the Board of Directors; provided, however, that no amendment which materially impairs the rights of an Eligible Employee under thePlan may be made after the occurrence of a Change in Control or after discussions have commenced with another entity which results in theoccurrence of a Change in Control within 270 days of when such discussions commenced. Any termination or amendment of the Plan may bemade effective immediately with respect to any benefits not yet paid, whether or not prior notice of such amendment or termination has been givento affected employees.
Taxes. The Company will withhold all applicable taxes and other payroll deductions from any payment made pursuant to this Plan.
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No Right to Employment. This Plan does not provide you with any right to continue employment with the Company or affect the Company’s right,which right is hereby expressly reserved, to terminate the employment of any individual at any time for any reason with or without Cause. IV. STATEMENT OF ERISA RIGHTS
As a participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants shall beentitled to: (A) Examine, without charge, at the Plan Administrator’s office, all Plan documents, including all documents filed by the Plan with the U.S.
Department of Labor.
(B) Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administratormay make a reasonable charge for the copies.
(C) Receive a summary of the Plan’s annual financial report.
(D) File suit in a federal court, if you, as a participant, request materials and do not receive them within 30 days of your request. In such acase, the court may require the Plan Administrator to provide the materials and to pay you a fine of up to $110 for each day’s delay untilthe materials are received, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
In addition to creating rights for certain employees of the Company under the Plan, ERISA imposes obligations upon the people who areresponsible for the operation of the Plan. The people who operate the Plan (called “fiduciaries”) have a duty to do so prudently and in the interestof the Company’s employees who are covered by the Plan. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaininga benefit to which you are entitled under the Plan or from exercising your rights under ERISA. If your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to file suit in a federal or a state court. If Planfiduciaries are misusing the Plan’s assets (if any) or if you are discriminated against for asserting your rights, you may seek assistance from theU.S. Department of Labor or file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful inyour lawsuit, the court may, if it so decides, order the party you have sued to pay your legal costs, including attorney fees. However, if you lose,the court may order you to pay these costs and fees, for example, if it finds that your claim or suit is frivolous.
If you have any questions about the Plan, this statement or your rights under ERISA, you should contact the Plan Administrator or the nearestArea Office of the Employee Benefits Security Administration, listed in your telephone directory, or the Division of Technical Assistance andInquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.
I. SECTION 409A
The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.Notwithstanding any provision of this Plan to the contrary, in the event that following the effective date hereof, the Company reasonablydetermines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Companyreserves the right (without any obligation to do so or to indemnify you for failure to do so), in its discretion, to amend this Plan, or adopt such otherpolicies and procedures (including amendments to policies and procedures with retroactive effect), or take any other actions, that the Companyreasonably determines to be necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder,to preserve the economic benefits with respect to such payments and benefits, and/or to avoid less favorable accounting or tax consequencesand/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid theapplication of penalty taxes thereunder.
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To the extent that any reimbursements hereunder constitute taxable compensation to you, such reimbursements shall be made to you promptly,but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursedin one year shall not affect the amount eligible for reimbursement in any subsequent year, and your right to reimbursement of any such expensesshall not be subject to liquidation or exchange for any other benefit.
Additional Plan Information.
Name of Plan: On Assignment, Inc. Change in Control Severance PlanCompany Sponsoring Plan: On Assignment, Inc.
26745 Malibu Hills RoadCalabasas, California 91301
Employer Identification Number: 95-4023433Plan Number: 505Plan Year: Calendar yearPlan Administrator: On Assignment, Inc.
26745 Malibu Hills RoadCalabasas, CA 91301(818) 878-7900
Agent for Service of Legal Process: Plan AdministratorType of Plan: Severance Plan/Employee Welfare Benefit PlanPlan Costs: The cost of the Plan is paid by On Assignment, Inc.
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Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
Apex Systems, LLC, a Virginia limited liability companyCyberCoders, Inc., a California corporationCreative Circle, LLC, a Delaware limited liability companyLab Support, LLC, a Delaware limited liability companyOn Assignment Staffing Services, LLC, a Delaware limited liability companyOxford Global Resources, LLC, a Delaware limited liability companyOther subsidiaries of the Registrant are omitted from this exhibit pursuant to Regulation S-K 601(b)(21)(ii)
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-20476, 333-38849, 333-61998, 333-106203, 333-143907, 333-148000, 333-168041, 333-181426, 333-183863, and 333-189287 on Form S-8 and 333-142382 and 333-182277 on Form S-3 of our reports dated February 29, 2016, relating to the financial statements andfinancial statement schedule of On Assignment, Inc. and subsidiaries (which report expresses an unqualified opinion), and the effectiveness of On Assignment, Inc.’s internalcontrol over financial reporting, appearing in this Annual Report on Form 10-K of On Assignment, Inc. for the year ended December 31, 2015.
DELOITTE & TOUCHE LLP
Los Angeles, CaliforniaFebruary 29, 2016
Exhibit 31.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Peter T. Dameris, certify that:
1. I have reviewed this annual report on Form 10-K of On Assignment, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.
Date: February 25, 2016 /s/ Peter T. Dameris Peter T. Dameris Chief Executive Officer and President
Exhibit 31.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Edward L. Pierce certify that:
1. I have reviewed this annual report on Form 10-K of On Assignment, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.
Date: February 29, 2016 /s/ Edward L. Pierce Edward L. Pierce Executive Vice President and Chief Financial Officer
Exhibit 32.1
Written Statement of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
The undersigned, the Chief Executive Officer of On Assignment, Inc. (the "Company"), hereby certifies that, to his knowledge on the date hereof:(a) the Annual Report on Form 10-K of the Company for the period ended December 31, 2015 filed on the date hereof with the Securities and
Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended; and
(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 25, 2016 /s/ Peter. T. Dameris Peter T. Dameris Chief Executive Officer and President
Exhibit 32.2
Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
The undersigned, the Chief Financial Officer of On Assignment, Inc. (the "Company"), hereby certifies that, to his knowledge on the date hereof:
(a) the Annual Report on Form 10-K of the Company for the period ended December 31, 2015 filed on the date hereof with the Securities andExchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended; and
(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 29, 2016 /s/ Edward L. Pierce Edward L. Pierce Executive Vice President and Chief Financial Officer