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CORPORATE FOCUS—‘Knowledge Workers’ Are Still Good For Bottom Line

Calabasas-based On Assignment, Inc. has outpaced analysts’ predictions for 2000 year-end revenues and, despite a slowing economy, the company and industry experts say it should see a continued strong-growth pattern in the year ahead. On Assignment, which specializes in supplying temporary professional and technical “knowledge workers” for the scientific, health care and environment industries, reported a 20-percent increase in revenues for the fourth quarter ending in December 2000. Chairman and Chief Executive Officer H. Tom Buelter said it should come as no surprise to Wall Street that his company continues to operate with zero debt and more than $65 million in cash flow. “We have had 34 quarters in a row of achieving growth in revenue,” said Buelter. “Forbes Magazine has repeatedly named us one of the 200 best small companies in America. We went public in 1992 and we’ve had a tremendous run ever since.” On Assignment’s lab support and health care staffing division revenues grew by 31 percent during the fourth quarter, compared to 16 percent in the same quarter in 1999. The company has 176 branches across the U.S., Canada and in Europe. It expanded its branch network overseas in 2000 with the addition of two lab support divisions in Great Britain and new operations in the Netherlands and Switzerland. Buelter is projecting revenue of between $235 million and $239 million for the year. There also are plans to add branches in lab support, health care financial staffing and clinical lab staff. On Assignment reported record revenues for the quarter ending Dec. 31, 2000 of $51.8 million, up from $43.2 million for the same quarter in 1999. The company’s net income for the quarter rose by 30 percent to $5.42 million from $4.17 million in the same quarter the previous year, resulting in a 23-cent-a-share jump compared to a 19-cent jump the year prior. Operating income for the quarter rose 27 percent to $7.8 million from $6.2 million in the same quarter of 1999. Judith Scott, analyst with Robert W. Baird & Co., said the company has carefully crafted its operating model and, as a result, established itself as a player in a highly specialized market niche. “This is an extremely high quality company, because they’ve had tremendous returns,” said Scott. “I think the markets they have gone after are pretty much insulated from the broader economic market and I think that will really help them. They’ve never bet the farm on anything, they start slow and test out markets, and they don’t invest a lot of money up front.” Scott predicted On Assignment would continue to see growth rates somewhere between 20 percent and 30 percent this year. For the 12 months ending Dec. 31, 2000, revenues were $195 million, compared to $159.5 million for 1999, representing a 22-percent increase. The company’s operating income for the year increased by 32 percent to $28.2 million from $21.4 million the previous year. Buelter said 2000 growth patterns for On Assignment are partially linked to overseas expansion. But he went on to say that demand for temporary workers across the board increased over the last few years due to low unemployment rates and a robust economy. “In 2000 what we were seeing was virtually something like a hiring frenzy,” he said. Stronger economic forecasts and a flush job market typically result in the hiring of more permanent workers. And, one could make the argument that soaring conversion rates of employees from temporary to permanent status, should they continue, could be threatening. Not so, said Buelter. “What we do in terms of our specialization, no one so far has been able to duplicate,” Buelter said. “And, this is not the same workforce it was a decade or two ago. A person will have a minimum of 12 employers over a lifetime. A lot of our people were converted from temporary to permanent status, and two years later they were back looking for another placement.”

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