UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2007

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number: 000-20540

ON ASSIGNMENT, INC.

(Exact name of registrant as specified in its charter)

 

(818) 878-7900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   x   No   o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer 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   x.

At July 31, 2007, the total number of outstanding shares of the Company’s Common Stock ($0.01 par value) was 35,241,809.

ON ASSIGNMENT, INC.

Index

PART I – FINANCIAL INFORMATION
Item 1 – Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets at June 30, 2007 and December 31, 2006 (unaudited)
Condensed Consolidated Statements of Income and Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2007 and June 30, 2006 (unaudited)
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3 – Quantitative and Qualitative Disclosures about Market Risks
Item 4 — Controls and Procedures
PART II – OTHER INFORMATION
Item 1 – Legal Proceedings
Item 1A – Risk Factors
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 – Defaults Upon Senior Securities
Item 4 – Submission of Matters to a Vote of Security Holders
Item 5 – Other Information
Item 6 – Exhibits
Signatures

 

2

PART I - FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (unaudited)

ON ASSIGNMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

		June 30, 2007			December 31, 2006
ASSETS
Current Assets:
Cash and cash equivalents		$	29,383,000		$	105,483,000
Restricted cash		—			4,678,000
Accounts receivable, net		78,023,000			39,107,000
Advances and deposits		438,000			343,000
Prepaid expenses		3,451,000			2,630,000
Income taxes receivable		13,000			19,000
Deferred income taxes		5,365,000			3,624,000
Other current assets		989,000			41,000
Total Current Assets		117,662,000			155,925,000
Property and equipment, net		14,424,000			9,116,000
Goodwill		187,004,000			17,109,000
Identifiable intangible assets, net		48,664,000			667,000
Deferred income taxes, long-term		494,000			865,000
Other assets		6,497,000			3,313,000
Total Assets		$	374,745,000		$	186,995,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	5,389,000		$	2,867,000
Accrued payroll		18,981,000			8,426,000
Notes payable – current portion		1,450,000			—
Deferred compensation		1,810,000			1,360,000
Income taxes payable		119,000			876,000
Accrued workers’ compensation and medical malpractice insurance		8,182,000			3,551,000
Other accrued expenses		4,426,000			3,250,000
Other current liabilities		624,000			94,000
Total Current Liabilities		40,981,000			20,424,000
Deferred income taxes – long term		3,769,000			—
Notes payable – less current portion		142,825,000			—
Other long-term liabilities		1,580,000			627,000
Total Liabilities		189,155,000			21,051,000
Stockholders’ Equity:
Preferred stock		—			—
Common stock		379,000			367,000
Paid-in capital		215,487,000			199,355,000
Accumulated deficit		(8,228,000		)	(11,860,000		)
Accumulated other comprehensive income		1,748,000			1,562,000
		209,386,000			189,424,000
Less: Treasury shares, at cost		23,796,000			23,480,000
Total Stockholders’ Equity		185,590,000			165,944,000
Total Liabilities and Stockholders’ Equity		$	374,745,000		$	186,995,000

 

SEE NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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ON ASSIGNMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		Three Months Ended June 30,
		2007			2006
Revenues		$	143,854,000		$	68,636,000
Cost of services		97,613,000			49,368,000
Gross profit		46,241,000			19,268,000
Selling, general and administrative expenses		38,992,000			16,644,000
Operating income		7,249,000			2,624,000
Interest expense		(2,988,000		)	—
Interest income		220,000			256,000
Other income		431,000			—
Income before income taxes		4,912,000			2,880,000
Provision for income taxes		1,974,000			966,000
Net income		$	2,938,000		$	1,914,000
Earnings per share:
Basic earnings per share		$	0.08		$	0.08
Weighted average number of shares outstanding		35,176,000			26,149,000
Diluted earnings per share		$	0.08		$	0.07
Weighted average number of shares and dilutive shares outstanding		35,813,000			26,974,000

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

		Three Months Ended June 30,
		2007			2006
Net income		$	2,938,000		$	1,914,000
Other comprehensive income:
Foreign currency translation adjustment		95,000			255,000
Comprehensive income		$	3,033,000		$	2,169,000

 

SEE NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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ON ASSIGNMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		Six Months Ended June 30,
		2007			2006
Revenues		$	266,483,000		$	135,359,000
Cost of services		182,782,000			99,107,000
Gross profit		83,701,000			36,252,000
Selling, general and administrative expenses		73,253,000			33,430,000
Operating income		10,448,000			2,822,000
Interest expense		(5,123,000		)	(3,000		)
Interest income		637,000			493,000
Other income		431,000			—
Income before income taxes		6,393,000			3,312,000
Provision for income taxes		2,544,000			1,096,000
Net income		$	3,849,000		$	2,216,000
Earnings per share:
Basic earnings per share		$	0.11		$	0.09
Weighted average number of shares outstanding		34,929,000			25,976,000
Diluted earnings per share		$	0.11		$	0.08
Weighted average number of shares and dilutive shares outstanding		35,660,000			26,820,000

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

		Six Months Ended June 30,
		2007			2006
Net income		$	3,849,000		$	2,216,000
Other comprehensive income:
Foreign currency translation adjustment		186,000			343,000
Comprehensive income		$	4,035,000		$	2,559,000

 

SEE NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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ON ASSIGNMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		Six months Ended June 30,
		2007			2006
Cash Flows From Operating Activities:
Net income		$	3,849,000		$	2,216,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,892,000			2,486,000
Amortization of intangibles		7,943,000			472,000
Provision for doubtful accounts and billing adjustments		341,000			8,000
Stock-based compensation		3,337,000			1,014,000
Income related to market value of swap agreement		(431,000		)	—
Excess tax benefits from stock-based compensation		(756,000		)	—
Amortization of deferred loan costs		245,000			—
Gain on officers’ life insurance policies		(116,000		)	—
(Gain) loss on disposal of property and equipment		(2,000		)	10,000
Changes in operating assets and liabilities:
Accounts receivable		(6,179,000		)	403,000
Prepaid expenses		639,000			744,000
Income taxes receivable		357,000			—
Income taxes payable		(72,000		)	1,000,000
Accounts payable		531,000			(391,000		)
Accrued payroll		970,000			648,000
Deferred compensation		450,000			237,000
Accrued workers’ compensation and medical malpractice insurance		35,000			346,000
Other accrued expenses		(187,000		)	162,000
Net cash provided by operating activities		13,846,000			9,355,000
Cash Flows From Investing Activities:
Acquisition of property and equipment		(2,654,000		)	(2,254,000		)
Proceeds from sale of property and equipment		10,000			1,000
Decrease (Increase) in restricted cash		4,678,000			(300,000		)
(Increase) Decrease in advances and deposits		(77,000		)	12,000
Increase in other assets		(317,000		)	(351,000		)
Cash paid for acquisitions		(233,207,000		)	(430,000		)
Net cash used for investing activities		(231,567,000		)	(3,322,000		)
Cash Flows From Financing Activities:
Capital lease payments		(71,000		)	—
Net proceeds from stock transactions		1,687,000			1,839,000
Excess tax benefits from stock-based compensation		756,000			—
Accrued shelf offering costs		(300,000		)	—
Debt issuance costs		(4,153,000		)	—
Proceeds from issuance of long-term debt		145,000,000			—
Principal payments of long-term debt		(1,434,000		)	—
Net cash provided by financing activities		141,485,000			1,839,000
Effect of exchange rate changes on cash and cash equivalents		136,000			252,000
Net Increase (Decrease) in Cash and Cash Equivalents		(76,100,000		)	8,124,000
Cash and Cash Equivalents at Beginning of Period		105,483,000			20,487,000
Cash and Cash Equivalents at End of Period		$	29,383,000		$	28,611,000
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Income taxes, net of refunds		$	2,252,000		$	40,000
Interest		$	4,856,000		$	—
Acquisitions:
Goodwill		$	169,895,000		$	—
Intangible assets acquired		55,940,000			—
Net tangible assets acquired		17,495,000			—
Fair value of assets acquired		$	243,330,000		$	—
Supplemental Disclosure of Non-Cash Transactions:
Issuance of common stock for acquisition		$	10,000,000		$	—
Acquisition of property and equipment through accounts payable		$	240,000		$	90,000

 

SEE NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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ON ASSIGNMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

1. Financial Statement Presentation. The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). This Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Certain information and footnote disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to SEC rules and regulations. The information reflects all normal and recurring adjustments which, in the opinion of the Company’s management, are necessary for a fair presentation of the financial position of the Company and its results of operations for the interim periods set forth herein. The results for the three and six months ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year or any other period.

2. Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions have been eliminated.

3. 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.

4. Accrued Workers’ Compensation and Medical Malpractice Insurance. The Company is partially self-insured for its workers’ compensation liability related to the Life Sciences and Healthcare segments as well as its medical malpractice liability in relation to the Physician segment. In connection with these programs, the Company pays 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 the aggregate. The self-insurance claim liability is determined based on claims filed and claims incurred but not reported. In conjunction with the $165,000,000 senior secured credit facility entered into by the Company on January 31, 2007, the restricted cash and cash equivalents of $4,678,000 previously collateralized in association with three letters of credit related to the Company’s workers’ compensation program were released.

5. Accounts Receivable. Accounts receivable are stated net of an allowance for doubtful accounts and billing adjustments of $2,222,000 and $1,380,000 at June 30, 2007 and December 31, 2006, respectively.

6. Acquisitions. On January 3, 2007, the Company acquired VSS Holding, Inc. and its subsidiaries, which includes VISTA Staffing Solutions, Inc. (VISTA), a privately-owned leading provider of physician staffing, known as locum tenens, and permanent physician search services. VISTA is headquartered in Salt Lake City, Utah and works with more than 1,300 physicians covering approximately thirty medical specialties. On a daily basis, VISTA has over 200 physicians on assignment. VISTA provides its staffing solutions in all fifty states and international markets for organizations ranging from large urban hospitals to small practice groups in rural areas. VISTA’s CEO and management team have remained with On Assignment after the acquisition. The primary reasons for the VISTA acquisition were to diversify our existing healthcare offerings, to compliment our existing Nurse Travel business line with cross-selling opportunities and to leverage our selling, general and administrative (SG&A) expenses, including housing, travel and credentialing costs.

The total purchase price of $41,990,000 consisted of (i) an initial price of $41,141,000, paid in cash, excluding a $4,100,000 holdback for potential claims indemnifiable by the VISTA shareholders and (ii) $849,000 in direct acquisition costs. There is potential for additional consideration of $8,000,000 that is contingent upon the 2007 and 2008 financial performance of VISTA. This earn-out will be recorded as additional purchase price in the future at such time when the targets are met and the consideration is earned. The holdback, net of the amount of certain claims that may be made against the selling shareholders, will be released from escrow to the selling shareholders on January 3, 2009.

The Company recorded the acquisition using the purchase method of accounting and thus the results of operations from VISTA are included in the Company’s consolidated financial statements (Physician segment) from the acquisition date. Pursuant to FAS No. 141, “Business Combinations” (FAS 141), the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition. The Company is currently reviewing preliminary fair value adjustments associated with purchased intangibles, fixed assets and lease obligations, as well as related income tax impacts. The ultimate allocation of the purchase price may differ from the amounts included in these financial statements. Adjustments to the purchase price allocations, if any, are expected to be finalized by the third quarter of 2007 and will be reflected in future filings. The purchase price was allocated as follows: $695,000 to net tangible assets acquired, $3,140,000 to identified intangible assets with definite lives, $6,500,000 to identified intangible assets with indefinite lives and $31,655,000 to goodwill. The weighted average amortization period for the identifiable intangible assets with definite lives is estimated to be 1.1 years. Goodwill is not expected to be deductible for tax purposes.

On January 31, 2007, the Company acquired Oxford Global Resources, Inc. (Oxford), a leading provider of high-end

7

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information technology and engineering staffing services. The primary reasons for the Oxford acquisition were to enter the markets for information technology and engineering staffing services and to leverage our existing SG&A infrastructure.

The total purchase price of $201,340,000 consisted of (i) an initial price of $200,072,000, approximately $190,072,000 paid in cash, excluding a $20,000,000 holdback for potential claims indemnifiable by the Oxford shareholders, (ii) 795,292 unregistered shares of the Company’s common stock valued at approximately $10,000,000 and (iii) $1,268,000 in direct acquisition costs. There is potential for additional consideration of $12,000,000 that is contingent upon the 2007 and 2008 financial performance of Oxford. This earn-out will be recorded as additional purchase price in the future at such time when the targets are met and the consideration is earned. The holdback, net of the amount of certain claims that may be made against the selling shareholders, will be released from escrow to the selling shareholders by August 3, 2008.

The Company recorded the acquisition using the purchase method of accounting and thus the results of operations from Oxford are included in the Company’s consolidated financial statements (IT and Engineering segment) from the acquisition date. Pursuant to FAS No. 141, “Business Combinations” (FAS 141), the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition. The Company is currently reviewing preliminary fair value adjustments associated with purchased intangibles, fixed assets, lease obligations and certain other liabilities related to health and dental self-insurance, as well as related income tax impacts. The ultimate allocation of the purchase price may differ from the amounts included in these financial statements. Adjustments to the purchase price allocations, if any, are expected to be finalized by the third quarter of 2007 and will be reflected in future filings. Currently, the Company is assessing the longevity of the customer relationships related to the Oxford acquisition. The purchase price was allocated as follows: $16,800,000 to net tangible assets acquired, $30,600,000 to identified intangible assets with definite lives, $15,700,000 to identified intangible assets with indefinite lives and $138,240,000 to goodwill. The weighted average amortization period for the identifiable intangible assets with definite lives is estimated to be 2.1 years. The Company expects to reduce its federal and state income tax liability by approximately $5,000,000 per year over fifteen years as a result of an election to classify the Oxford acquisition as an asset sale for tax purposes under section 338(h)(10) of the Internal Revenue Code of 1986, as amended.

On Assignment utilized its existing cash and proceeds from a new $165,000,000 senior secured credit facility to finance the acquisitions. See Note 7 for discussion of the credit facility.

The summary below presents the amounts assigned to each major asset and liability caption of VISTA and Oxford as of the acquisition dates and presents pro-forma consolidated results of operations for the three and six months ended June 30, 2007 and 2006 as if the acquisition of VISTA and Oxford described above had occurred at the beginning of that period. The unaudited pro-forma financial information presented below gives effect to certain adjustments, the amortization of intangible assets and interest expense on acquisition related debt and other non-recurring expenses related to the Company’s former owner. The pro-forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.

		Purchase Price Allocation
		VISTA January 3, 2007			Oxford January 31, 2007
Current assets		$	11,676,000		$	24,938,000
Property and equipment		2,221,000			3,434,000
Goodwill		31,655,000			138,240,000
Identifiable intangible assets		9,640,000			46,300,000
Long-term deposits and other long-term assets		58,000			644,000
Total assets acquired		$	55,250,000		$	213,556,000
Current liabilities		$	12,898,000		$	11,363,000
Long-term liabilities		362,000			853,000
Total liabilities assumed		13,260,000			12,216,000
Total purchase price		$	41,990,000		$	201,340,000

 

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		Unaudited Pro-Forma Consolidated Statements of Income
		For the Three Months Ended June 30,						For the Six Months Ended June 30,
		2007			2006			2007			2006
Revenues		$	143,854,000		$	128,213,000		$	282,015,000		$	250,618,000
Cost of service		97,613,000			88,106,000			192,667,000			174,056,000
Gross profit		46,241,000			40,107,000			89,348,000			76,562,000
Selling, general and administrative		38,992,000			35,167,000			78,417,000			71,168,000
Operating income		$	7,249,000		$	4,940,000		$	10,931,000		$	5,394,000
Net income (loss)		$	2,938,000		$	1,102,000		$	3,446,000		$	(1,072,000	)
Basic earnings (loss) per share		$	0.08		$	0.04		$	0.10		$	(0.04	)
Weighted average number of shares outstanding		35,176,000			26,944,000			35,065,000			26,771,000
Diluted earnings (loss) per share		$	0.08		$	0.04		$	0.10		$	(0.04	)
Weighted average number of shares and dilutive shares outstanding		35,813,000			27,769,000			35,796,000			26,771,000

 

7. Bank Debt. On January 31, 2007, On Assignment entered into a credit agreement to obtain a $165,000,000 senior secured credit facility. The new facility includes a 5-year $20,000,000 revolving credit facility, which was un-drawn at closing and as of June 30, 2007, and a 7-year $145,000,000 funded term loan facility. The term loan is repayable at the rate of $363,000 per quarter. In addition, within ninety days of each of the Company’s fiscal year ends, On Assignment is required to reduce the term loan by up to 50% of its excess cash flow, as defined under the credit facility. The Company is required to maintain certain financial covenants, including a minimum total leverage ratio, a minimum interest coverage ratio and a limitation on capital expenditures. As of June 30, 2007, the Company was in compliance with all such covenants. The facility is secured by the assets of the Company.

On May 2, 2007, the Company entered into a transaction with a financial institution to fix the underlying rate on $73,000,000 of its outstanding bank loan for a period of two years beginning June 30, 2007. This transaction, commonly known as a swap, essentially fixes the Company’s base borrowing rate at 4.9425% as opposed to a floating rate, which resets at selected periods. The current base rate, which will be reset on September 28, 2007, is 5.36%. The new base rate for the amount of the loan outstanding in excess of $73,000,000 will depend on the tenor the Company chooses at the time. The borrowing rate consists of the base rate plus an incremental rate, currently 2.25%, which is dependent on several factors, including the amount the Company borrowed and the amount of earnings before interest, taxes, depreciation and amortization (EBITDA) it is generating. On June 30, 2007, the value of the swap was marked-to-market, and the Company recorded a gain of $431,000. The gain is shown in the Consolidated Statements of Income as other income, and the related asset is shown in the Consolidated Balance Sheets in other current assets for the current portion of $76,000 and other assets for the long-term portion of $355,000.

8. Goodwill and Identifiable Intangible Assets. Pursuant to FAS No. 142, “Goodwill and Other Intangible Assets,” (FAS 142) goodwill and indefinite-lived intangible assets are tested for impairment at least annually and more frequently if an event occurs that indicates the assets may be impaired. The test for impairment is performed at one level below the operating segment level, which is defined in FAS 142 as the reporting unit.

Pursuant to FAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Asset,” and FAS 142, the Company determined there were no events or changes in circumstances that indicated that carrying values of goodwill or other intangible assets subject to amortization may not be recoverable as of June 30, 2007.

Goodwill was $187,004,000 at June 30, 2007 and $17,109,000 at December 31, 2006. As of June 30, 2007, the Goodwill balance was allocated $15,912,000, $1,197,000, $31,655,000 and $138,240,000 to the Healthcare, Life Sciences, Physician and IT and Engineering segments, respectively. As of December 31, 2006, the Goodwill balance was allocated $15,912,000 and $1,197,000 to the Healthcare and Life Sciences segments, respectively.

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In the second quarter of 2007, there were adjustments to goodwill for a decrease to the Physician segment of $299,000 related to a change in the estimate of the fair value of fixed assets acquired and an increase to the IT and Engineering segment of $65,000 for costs incurred related to the acquisition. The changes in the carrying amount of goodwill for the three and six months ended June 30, 2007 are as follows:

Balance as of January 1, 2007		$	17,109,000
Goodwill resulting from acquisitions		170,129,000
Balance as of March 31, 2007		187,238,000
Purchase price adjustments and fair value adjustment related to fixed assets acquired		(234,000		)
Balance as of June 30, 2007		$	187,004,000

 

As of June 30, 2007 and December 31, 2006, the Company had the following acquired identifiable intangible assets:

				June 30, 2007									December 31, 2006
		Estimated Useful Life		Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Customer relations		3 months - 7 years		$	17,615,000		$	9,777,000		$	7,838,000		$	7,515,000		$	7,082,000		$	433,000
Contractor relations		3 - 7 years		26,096,000			8,438,000			17,658,000			3,596,000			3,397,000			199,000
Non-compete agreements		2 - 3 years		690,000			118,000			572,000			50,000			15,000			35,000
In-use software		2 years		500,000			104,000			396,000			—			—			—
Subtotal				44,901,000			18,437,000			26,464,000			11,161,000			10,494,000			667,000
Intangible assets not subject to amortization:
Trademarks				22,200,000			—			22,200,000			—			—			—
Goodwill				187,004,000			—			187,004,000			17,109,000			—			17,109,000
Total				$	254,339,000		$	18,437,000		$	235,668,000		$	28,270,000		$	10,494,000		$	17,776,000

 

Amortization expense for intangible assets with definite lives was $3,778,000 and $237,000 for the three months ended June 30, 2007 and 2006, respectively. Amortization expense for intangible assets with definite lives was $7,943,000 and $472,000 for the six months ended June 30, 2007 and 2006, respectively. Estimated amortization for the remainder of 2007 and each of the years ended December 31, 2008 through December 31, 2013 is $7,491,000; $9,609,000; $6,196,000; $1,715,000; $730,000; $363,000 and $360,000, respectively.

9. Information Systems, Property and Equipment. Property and equipment are stated net of accumulated depreciation of $17,449,000 and $15,737,000 at June 30, 2007 and December 31, 2006, respectively.

The Company capitalizes costs associated with customized internal-use software systems that have reached the application stage and meet recoverability tests under the provisions of Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” (SOP 98-1). All software costs capitalized under SOP 98-1 are depreciated over an estimated useful life of three to five years.

During 2005, the Company began implementing an enhanced front-office software application. Phase I of the new front office enhancement was completed in the second quarter of 2006. Subsequent phases of this software implementation were substantially completed in the first quarter of 2007. The new application interfaces with the existing enterprise-wide information system, PeopleSoft, used in the Life Sciences and IT and Engineering segments and Allied Healthcare line of business and provides additional functionality, including applicant tracking and search tools, customer and candidate contact management and sales management tools.

The Company has capitalized costs related to its various technology initiatives, including the implementation of PeopleSoft and Vurv Technology in accordance with SOP 98-1. The net book value of the property and equipment related to software development was $4,026,000 as of June 30, 2007, which includes development-in-progress of $1,529,000, primarily related to the implementation of PeopleSoft finance and payroll modules for our Nurse Travel line of business and certain foreign operations. In addition, the Company has capitalized website development costs in accordance with Emerging Issues Task Force Issue No. 00-02, “Accounting for Web Site Development Costs.” The net book value of capitalized website development costs was $596,000 as of June 30, 2007, of which no costs are currently in development-in-progress.

10. Revenues. Revenues from contract assignments, net of sales adjustments and discounts, are recognized when earned, based on hours worked by the Company’s contract professionals on a weekly basis. Conversion and direct hire fees are recognized when earned, upon conversion or direct hire of a contract professional to a client’s regular employment. In addition, the Company records a sales allowance against consolidated revenues, which is estimated based on historical billing adjustment experience. The sales allowance is recorded as a reduction to revenues and an increase to the allowance

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for billing adjustments. The billing adjustment reserve includes an allowance for fallouts. Fallouts are direct hire fees that do not complete the contingency period. The contingency period is typically ninety days or less. Reimbursed expenses, including those related to travel and out-of-pocket expenses, are included in revenues and the associated amounts of reimbursable expenses are included in cost of services.

11. Stock Option Plan and Employee Stock Purchase Plan.

As of June 30, 2007, the Company had a single Restated 1987 Stock Option Plan as amended and restated on April 7, 2006 and approved by shareholders on May 22, 2006, further amended on January 23, 2007 and further amended on April 17, 2007 and approved by shareholders on June 1, 2007 (the Plan). The Company issues stock options, restricted stock units (RSU’s) and restricted stock awards (RSA’s) in accordance with the Plan and records compensation expense in accordance with FAS No. 123 (revised 2004), “Share-Based Payment,” (FAS 123R). The Company has also issued inducement grants outside of the Plan. Compensation expense charged against income related to stock-based compensation was $2,231,000 and $3,337,000 for the three and six months ended June 30, 2007, respectively, and $555,000 and $1,014,000 for the three and six months ended June 30, 2006, respectively. For the three and six months ended June 30, 2007, the Company recognized an income tax benefit of $752,000 and $1,089,000 in the income statement for stock-based compensation arrangements. A tax benefit of $190,000 was recorded for both the three and six months ended June 30, 2006.

The Plan, which is shareholder-approved, permits the grant of stock options, RSU’s and RSA’s to its employees for up to 13,900,000 shares of common stock, as well as certain other awards. The Company believes that stock-based compensation better aligns the interests of its employees and directors with those of its shareholders. Stock option awards are generally granted with an exercise price equal to the closing market price of the Company’s stock at the date of grant. Stock option awards and RSU’s generally vest over 4 years of continuous service with the Company, and stock options have generally 10-year contractual terms. Certain stock option awards and RSU’s provide for accelerated vesting in the event of a change in control.

The preceding paragraph accurately describes the general terms of most stock-based incentives awarded  by the Company, however, in January 2007, the Company issued a discrete set of stock-based awards to its Chief Executive Officer that differ from those generally stated terms. The terms were as follows: On January 2, 2007, the Chief Executive Officer, was granted (1) 42,553 RSU’s valued at $500,000, which vest on the third anniversary of the date of the grant, (2) 42,553 shares of RSA’s valued at $500,000, which vest December 31, 2009 contingent upon meeting certain performance objectives approved by the Compensation Committee (based on adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA) and (3) 42,553 RSU’s valued at $500,000, which vest December 31, 2009 contingent upon the Company meeting certain stock price performance objectives relative to its peers over three years from the date of grant. All awards are subject to the executive’s continued employment through such vesting dates. The grant-date fair-value of these awards, which was determined by applying certain provisions of FAS 123R relative to performance-based and market-based awards, is being expensed over the three-year vesting term. The impact of these awards in reflected in the disclosures that follow.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that incorporates assumptions disclosed in the following table. Expected volatility is based on historical volatility of the underlying stock for a period consistent with the expected lives of the stock options because the Company believes this is a reasonable representation of future volatility. Additionally, the stock option valuation model selected by the Company uses historical data and management judgment to estimate stock option exercise behavior and employee turnover rates to estimate the number of stock option awards that will eventually vest. The Company evaluated the impact of grouping employees with similar historical exercise behavior and determined that there were no notable differences in exercise behavior across various employee groups and, as a result, all employees are included in a single group for valuation purposes. The expected life, or term, of options granted is derived from historical exercise behavior and represents the period of time that stock option awards are expected to be outstanding. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury Securities with an equivalent expected term.

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Stock Options

The following table displays the assumptions that have been applied to estimate the fair value of stock option awards on the date of grant for the three and six months ended June 30, 2007 and 2006:

		Three Months Ended June 30,				Six Months Ended June 30,
		2007		2006		2007		2006
Dividend yield		—		—		—		—
Risk-free interest rate		4.7	%	5.1	%	4.6	%	5.0	%
Expected volatility		46.8	%	52.8	%	47.1	%	52.7	%
Expected lives		3.4 years		4.0 years		3.4 years		4.0 years

 

The following summarizes pricing and term information for options outstanding as of June 30, 2007:

							Options Outstanding							Options Exercisable
Range of Exercise Prices							Number Outstanding at June 30, 2007		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Exercisable at June 30, 2007		Weighted Average Exercise Price
$	3.97		—	$	5.11		777,945		7.0 years		$	4.88		537,242		$	4.88
	5.14		—		10.69		780,753		7.2 years		6.80			513,252		6.31
	10.72		—		11.75		936,977		9.4 years		11.47			176,055		11.46
	11.76		—		13.31		966,756		9.2 years		13.17			80,788		12.65
	13.69		—		33.00		394,736		3.6 years		19.10			394,633		19.10
$	3.97		—	$	33.00		3,857,167		7.8 years		$	10.40		1,701,970		$	9.66

 

The following table is a summary of stock option activity under the Plan as of June 30, 2007 and changes for the period then ended:

		Incentive Stock Options		Non- Qualified Stock Options		Weighted Average Exercise Price Per Share			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2006		1,102,251		1,486,748		$	8.66
Granted		—		411,074		$	12.67
Exercised		(44,193	)	(147,803	)	$	5.29
Canceled		(23,839	)	(9,956	)	$	10.09
Outstanding at March 31, 2007		1,034,219		1,740,063		$	9.47		7.1		$	11,313,000
Granted		—		1,298,200		$	12.35
Exercised		(26,985	)	(80,957	)	$	6.30
Canceled		(40,473	)	(66,900	)	$	14.02
Outstanding at June 30, 2007		966,761		2,890,406		$	10.40		7.8		$	7,610,000
Vested or Expected to Vest at June 30, 2007		872,926		1,901,438		$	9.89		7.2		$	7,091,000
Exercisable at June 30, 2007		641,920		1,060,050		$	9.66		6.1		$	5,404,000

 

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The table above includes 240,000 of non-employee director stock options outstanding as of June 30, 2007 and 273,000 as of both March 31, 2007 and December 31, 2006.

The weighted-average grant-date fair value of options granted during the three months ended June 30, 2007 and 2006 was $3.86 and $5.15 per option, respectively. The weighted-average grant-date fair value of options granted during the six months ended June 30, 2007 and 2006 was $4.12 and $5.12 per option, respectively. The total intrinsic value of options exercised during the three months ended June 30, 2007 and 2006 was $547,000 and $580,000, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2007 and 2006 was $2,027,000 and $1,085,000, respectively.

As of June 30, 2007, there was unrecognized compensation expense of $5,582,000 related to unvested stock options based on options that are expected to vest. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 3.3 years.

Restricted Stock Units and Restricted Stock Awards

A summary of the status of the Company’s unvested RSU’s and RSA’s as of June 30, 2007 and changes during the six months then ended are presented below:

		Restricted Stock Units		Weighted Average Grant-Date Fair Value Per Unit
Unvested RSU’s and RSA’s outstanding at December 31, 2006		380,662		$	9.40
Granted		120,000		12.33
Vested and issued		(33,223	)	9.45
Forfeited		—		—
Unvested RSU’s and RSA’s outstanding at March 31, 2007		467,439		$	10.15
Granted		132,659		12.17
Vested and issued		(36,959	)	9.80
Forfeited		(10,191	)	7.97
Unvested RSU’s and RSA’s outstanding at June 30, 2007		552,948		$	10.70

 

The table above excludes 11,695 RSA’s that were awarded to non-employee directors on August 1, 2006, of which 9,356 vested on August 1, 2007. The weighted average grant-date fair value of these awards was $8.55. In accordance with FAS 123R, the Company recorded compensation expense based on the fair market value of the awards on the grant date. There was unrecognized compensation of $7,000 as of June 30, 2007 related to these RSA’s that will be recorded over the remaining term of one month.

As of June 30, 2007, there was unrecognized compensation expense of $5,220,000 related to unvested RSU’s and RSA’s based on awards that are expected to vest. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.7 years.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase common stock of the Company, through payroll deductions, at eighty-five percent of the lower of the market price on the first day or the last day of semi-annual purchase periods. Eligible employees may contribute multiples of one percent of their eligible earnings toward the purchase of the stock (subject to certain IRS limitations). Under this plan, 37,696 and 43,337 shares of common stock were issued to employees for the three and six months ended June 30, 2007 and 2006, respectively.

In accordance with the ESPP, shares of common stock are transferred to participating employees at the conclusion of each six month enrollment period, which end on the last business day of the month in February and August each year. The estimated fair value of stock purchased under the Company’s ESPP was approximately $308,000 and $258,000 for the three and six months ended June 30, 2007 and 2006, respectively. Compensation expense of shares purchased under the ESPP is measured based on a fair-value option-pricing model. The model accounts for the discount from market value and applies an expected life in line with each six month purchase period. The amounts recognized as stock-based compensation expense related to the ESPP for the three months ended June 30, 2007 and 2006 were $167,000 and $58,000, respectively, and $227,000 and $96,000 for the six months ended June 30, 2007 and 2006, respectively.

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12. Commitments and Contingencies. The Company accounts for contingencies in accordance with FAS No. 5, “Accounting for Contingencies” (FAS 5). FAS 5 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates it is probable that an 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.

The Company issued stock-based awards to its Chief Executive Officer with terms as follows: On January 2, 2008 and 2009, the Chief Executive Officer, pending continued employment through such grant dates, will be granted (1) RSU’s valued at $500,000, which vest on the third anniversary of the date of the grant, (2) RSA’s valued at $500,000, which vest December 31, 2010 and 2011 contingent upon meeting certain performance objectives approved by the Compensation Committee (based on adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA) and (3) RSU’s valued at $500,000, which vest December 31, 2010 and 2011 contingent upon the Company meeting certain stock price performance objectives relative to its peers over three years from the date of grant. All awards are subject to the executive’s continued employment through such vesting dates.

Oxford vs. Black Diamond, et. al.

In September, 2005 Oxford commenced suit in Massachusetts Superior Court against two former Oxford employees and their new employer, Black Diamond Networks Inc., (“Black Diamond”) and its President. Oxford later amended the complaint at various times to add seven other former employees (all collectively “Former Employees”) and three other additional defendants. The claims involve breach of the Former Employees’ confidentiality, non-solicitation and non-competition agreements, misappropriation of proprietary information, as well as tortious interference with such contracts and advantageous relations and unfair competition. Certain Defendants have filed counterclaims, which the Company believes to be without legal merit. The court has granted Oxford’s six requests for preliminary injunction orders, which have been issued against eight of the Former Employee defendants and Black Diamond. Discovery is ongoing and is extensive. Discovery is scheduled to end on October 31, 2007 with an anticipated trial in late January 2008. Oxford expects the matter to be tried. Accordingly, legal and expert fees may be significant.

The Company is partially self-insured for workers’ compensation liability related to the Life Sciences and Healthcare segments as well as its medical malpractice liability in relation to the Physician segment. In connection with this program, the Company pays a base premium plus actual losses incurred up to certain levels and is insured for losses greater than certain levels per occurrence and in the aggregate. The self-insurance claim liability is determined based on claims filed and claims incurred but not yet reported. On Assignment accounts for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates and differences in estimates and actual payments for claims are recognized in the period that the estimates changed or payments were made. The net self-insurance claim liability was approximately $8,182,000 and $3,551,000 at June 30, 2007 and December 31, 2006, respectively.

At December 31, 2006, on an aggregate basis, the amounts of specified contractual cash obligations required to be paid related to the acquisitions of VISTA and Oxford for each of the years ended December 31, 2007 through December 31, 2011 is $3,594,000; $2,310,000; $1,936,000; $590,000; and $223,000, respectively.

13. Recent Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board issued FAS No. 157 ”Fair Value Measurements” (FAS 157), which defines fair value, establishes a framework for consistently measuring fair value under GAAP, and expands disclosures about fair value measurements. FAS 157 is effective for the Company beginning January 1, 2008, and the provisions of FAS 157 will be applied prospectively as of that date. Management is currently evaluating the effect that adoption of this statement will have on the Company’s consolidated financial position and results of operations when it becomes effective in 2008.

In February 2007, the Financial Accounting Standards Board issued FAS No. 159 “The Fair Value Option for Financial Assets and Liabilities – Including an amendment of FASB Statement No. 115” (FAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value. FAS 159 is effective beginning January 1, 2008, and the provisions of FAS 159 will be applied prospectively as of that date. Management is currently evaluating the effect that adoption of this statement will have on the Company’s consolidated financial position and results of operations when it becomes effective in 2008.

The disclosure requirements and cumulative effect of adoption of FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” are presented in Note 15.

14. Earnings per share. Basic earnings per share are computed based upon the weighted average number of common shares outstanding, and diluted earnings per share are computed based upon the weighted average number of common shares outstanding and dilutive common share equivalents (consisting of incentive stock options, non-qualified stock options and restricted stock awards) 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:

		Three Months Ended June 30,				Six Months Ended June 30,
		2007		2006		2007		2006
Weighted average number of shares outstanding used to compute basic earnings per share		35,176,000		26,149,000		34,929,000		25,976,000
Dilutive effect of restricted stock awards		64,000		124,000		83,000		126,000
Dilutive effect of stock options		573,000		701,000		648,000		718,000
Number of shares used to compute diluted earnings per share		35,813,000		26,974,000		35,660,000		26,820,000

 

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The following table outlines the weighted average common share equivalents outstanding as of June 30, that were excluded from the computation of diluted earnings per share because they were anti-dilutive during the respective periods:

		Three Months Ended June 30,				Six Months Ended June 30,
		2007		2006		2007		2006
Anti-dilutive common share equivalents outstanding		1,652,000		750,000		1,258,000		754,000

 

15. Income Taxes. In the fourth quarter of 2004, the Company established a valuation allowance against its net deferred income tax assets. The valuation allowance was estimated pursuant to FAS No. 109, “Accounting for Income Taxes” (FAS 109), which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. Such evidence includes the Company’s past and projected future performance, the market environment in which the Company operates, the utilization of past tax credits and the length of the carryback and carryforward periods. At the end of 2006, the Company evaluated the need for the valuation allowance in accordance with its valuation allowance reversal methodology and in conjunction with FAS 109. At the end of 2006, the Company concluded that as a result of sustained profitability, which was evidenced by consecutive quarters of pre-tax net income along with projections of pre-tax net income in future years, that the criteria had been met for the full reversal of the valuation allowance. Due to the full reversal of the valuation allowance as of December 31, 2006, the Company is providing for income tax expense in 2007.

Adoption of a new standard. The Company adopted the provisions of FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48) on January 1, 2007. As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by FIN 48. In this regard, an uncertain tax position represents the Company’s expected tax treatment of a tax position taken in a filed tax return, or planned to be taken in a future return, that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company adjusted the estimated value of its uncertain tax positions by recognizing additional liabilities totaling $217,000, including an accrual for interest and penalties of $21,000, through a charge to retained earnings. Upon the adoption of FIN 48, the estimated value of the Company’s uncertain tax positions is a liability of $567,000, of which $197,000 is carried in other long term liabilities and $370,000 is carried as a reduction to non-current deferred tax assets in the consolidated condensed statement of financial position as of June 30, 2007. If the Company’s positions are sustained by the taxing authority in favor of the Company, the entire $567,000 would reduce the Company’s effective tax rate. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with its uncertain tax positions through January 1, 2008.

The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Internal Revenue Service (IRS) has examined and substantially concluded all tax matters for years through 2004. In addition, open tax years related to state and foreign jurisdictions remain subject to examination but are not considered material.

During the six months ended June 30, 2007, there have been no material changes to the liability for uncertain tax positions.

16. Segment Reporting. Indicated below is the information required to comply with FAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.”

The Company has four reportable operating segments: Healthcare, Life Sciences, IT and Engineering, and Physician. The Healthcare segment includes the combined results of the Nurse Travel and Allied Healthcare lines of business. The Healthcare segment provides contract, contract-to-permanent and direct placement of professionals from more than ten healthcare, medical financial and allied occupations. These contract staffing specialties include nurses, specialty nurses, respiratory therapists, surgical technicians, imaging technicians, x-ray technicians, medical technologists, phlebotomists, coders, billers, claims processors and collections staff. The Life Sciences (formerly Lab Support) segment provides contract, contract-to-permanent and direct placement services of laboratory and scientific professionals to the biotechnology, pharmaceutical, food and beverage, medical device, personal care, chemical and environmental industries. These contract staffing specialties include chemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, food scientists, regulatory affairs specialists, lab assistants and other skilled scientific professionals. The IT and Engineering segment, comprised of Oxford Global Resources, Inc., provides high-end contract placement services of information technology and engineering professionals with expertise in specialized information technology; software and hardware engineering; and mechanical, electrical, validation and telecommunications engineering fields. The Physician segment, comprised of VISTA Staffing Solutions, Inc., provides

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contract and direct placement physicians to healthcare organizations. The Physician segment works with nearly all medical specialties, placing them in hospitals, community-based practices, and federal, state and local facilities.

The Company’s management evaluates the performance of each segment primarily based on revenues, gross profit and operating income. The information in the following table is derived directly from the segments’ internal financial reporting used for corporate management purposes.

All revenues, gross profit and operating income (loss) disclosed in the tables below include activity for the Physician and IT and Engineering segments from January 3, 2007 and January 31, 2007, respectively.

The following table represents revenues, gross profit and operating income by operating segment:

		Three Months Ended  June 30,						Six Months Ended  June 30,
		2007			2006			2007			2006
Revenues:
Life Sciences		$	33,388,000		$	29,070,000		$	65,057,000		$	55,528,000
Healthcare		43,668,000			39,566,000			86,301,000			79,831,000
Physician		18,120,000			—			36,099,000			—
IT and Engineering		48,678,000			—			79,026,000			—
Total Revenues		$	143,854,000		$	68,636,000		$	266,483,000		$	135,359,000
Gross Profit:
Life Sciences		$	11,369,000		$	9,723,000		$	21,776,000		$	17,798,000
Healthcare		11,087,000			9,545,000			21,587,000			18,454,000
Physician		5,662,000			—			10,947,000			—
IT and Engineering		18,123,000			—			29,391,000			—
Total Gross Profit		$	46,241,000		$	19,268,000		$	83,701,000		$	36,252,000
Operating Income (Loss):
Life Sciences		$	3,717,000		$	1,495,000		$	6,612,000		$	1,490,000
Healthcare		629,000			1,129,000			589,000			1,332,000
Physician		405,000			—			(366,000		)	—
IT and Engineering		2,498,000			—			3,613,000			—
Total Operating Income		$	7,249,000		$	2,624,000		$	10,448,000		$	2,822,000

 

The Company does not report Life Sciences and Healthcare segments’ total assets separately as the operations are largely centralized. The following table represents total assets as allocated by segment:

		June 30, 2007			December 31, 2006
Total Assets:
Life Sciences and Healthcare		$	98,445,000		$	186,995,000
Physician		55,286,000			—
IT and Engineering		221,014,000			—
Total Assets		$	374,745,000		$	186,995,000

 

The Company does not report total assets by segment for all reportable segments. The following table represents certain identifiable assets by operating segment:

		June 30, 2007			December 31, 2006
Gross Accounts Receivable:
Life Sciences		$	19,127,000		$	17,576,000
Healthcare		23,585,000			22,911,000
Physician		9,551,000			—
IT and Engineering		27,982,000			—
Total Gross Accounts Receivable		$	80,245,000		$	40,487,000

 

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The Company operates internationally, with operations in the United States, Europe, Australia and New Zealand. The following table represents revenues by geographic location:

		Three Months Ended  June 30,						Six Months Ended  June  30,
		2007			2006			2007			2006
Revenues:
Domestic		$	137,270,000		$	64,385,000		$	253,729,000		$	127,505,000
Foreign		6,584,000			4,251,000			12,754,000			7,854,000
Total Revenues		$	143,854,000		$	68,636,000		$	266,483,000		$	135,359,000

 

The following table represents long-lived and indefinite-lived assets by geographic location:

		June 30,  2007			December 31, 2006
Long-Lived Assets:
Domestic		$	256,487,000		$	30,605,000
Foreign		596,000			465,000
Total Long-Lived Assets		$	257,083,000		$	31,070,000

 

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