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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): . . . . . . . February 3, 1998
STAFFMARK, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20971 71-0788538
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
302 East Millsap Road
Fayetteville, Arkansas 72703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: . . . . . . . (501) 973-6000
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Item 5. Other Events
On February 3, 1998, StaffMark, Inc. (the "Company") released its
financial results for the fiscal year ended December 31, 1997.
Item 7. Financial Statements and Exhibits
(c) Exhibits. The following exhibits are filed with this Form 8-K:
99.1 Press Release dated February 3, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STAFFMARK, INC.
(Registrant)
Date: February 23, 1998 By: /s/ Terry C. Bellora
---------------------------------
Terry C. Bellora
Chief Financial Officer
EXHIBIT INDEX
99.1 Press Release dated February 3, 1998.
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EXHIBIT 99.1
NEWS RELEASE
StaffMark Announces Record Fourth Quarter and Year-End Results
Fourth Quarter Net Income Rises 122% on Revenue Increase of 149%
FAYETTEVILLE, AR--StaffMark, Inc. (NASDAQ/NM:STAF), a national staffing,
professional and consulting services company, today announced record financial
results for the fourth quarter and year ended December 31, 1997.
Revenues increased 149% to $139.2 million for the recent quarter, compared to
$55.9 million of revenue in the fourth quarter a year ago. Operating income for
the quarter rose 139% to $9.7 million compared to operating income of $4.1
million for the same period last year. Net income for the quarter reached $5.8
million or $0.30 per share on 19.1 million basic shares outstanding and $0.29
per share on 19.9 million diluted shares outstanding, compared to the fourth
quarter of 1996 net income of $2.6 million or $0.20 basic and diluted earnings
per share on 13.2 million shares.
For the year ended December 31, 1997, revenues rose 115% to $426.5 million
compared to combined revenue of $198.4 million for 1996. Operating income rose
to $28.4 million, a 153% increase over the combined operating income of $11.2
million in 1996. Net income for the year reached $16.5 million or $1.03 per
share on 16.0 million basic shares outstanding and $1.00 per share on 16.5
million shares on a diluted basis, compared to pro forma net income for 1996 of
$6.4 million or $0.67 basic and diluted earnings per share on 9.6 million
shares.
Commenting on the announcement, Clete T. Brewer, president and chief executive
officer, said, "StaffMark set ambitious goals for 1997 and we not only met, but
exceeded those goals. We completed 19 acquisitions last year, and continued to
exhibit internal growth above industry averages. With each acquisition we are
integrating and building an infrastructure that enables us to both manage today
and lay the groundwork for future growth. In August, we successfully completed a
secondary stock offering that provided additional resources for our acquisition
program. This combined growth resulted in net income increasing 122% for the
fourth quarter and 159% when compared to pro forma 1996 net income. Our diluted
earnings per share rose 49% in 1997 when compared to pro forma 1996 diluted
earnings per share."
The acquisitions completed by the Company during 1997, had aggregate annual
revenues of $226 million during their most recent fiscal year prior to becoming
a StaffMark company. Acquisitions completed in the fourth quarter 1997 targeted
the information technology and professional services area and included: RHS
Associates, headquartered in Birmingham, Alabama; EMJAY Contract Services,
headquartered in Houston, Texas; Structured Logic, headquartered in New York,
New York; and ClinForce, headquartered in Morristown, New Jersey. RHS, EMJAY,
and Structured Logic all provide information technology consulting services
while ClinForce specializes in the clinical trials research support area. Since
year end, StaffMark has acquired Strategic Legal Resources, a professional
services firm specializing in the placement of junior and senior level attorneys
to many of the top companies and law firms in the New York metropolitan area.
Brewer continued, noting that, "These acquisitions continue to diversify our
revenue mix while expanding our geographic presence and our ability to deliver
new services to our clients. One year ago, our information technology and
professional services division accounted for only 5% of annual revenue. Today,
that division accounts for approximately 30% of total annual revenue and has
operations in 20 states, South Africa, and the United Kingdom."
"StaffMark remains committed to a growth strategy that includes both strategic
acquisitions and strong internal growth," added Brewer. "We continue to maintain
a strong capital and liquidity position and have a commitment from our bank
group to increase our credit facility from $100 to $150 million to ensure
adequate resources to carry out our growth strategy during 1998."
StaffMark, Inc., is a leading national provider of diversified staffing,
professional, and consulting services to businesses, professional and service
organizations, medical niches, and governmental agencies. Since its initial
public offering in October 1996, StaffMark has acquired 23 staffing and
professional services companies that have allowed the company to grow
geographically and expand its presence in the rapidly growing professional,
information technology, and specialty niche areas. The Company intends to
continue its acquisition program by aligning itself with quality organizations
that have strong management, good growth opportunities, and recognized local and
regional presence. StaffMark operates over 190 offices in 27 states, Canada,
South Africa, and the United Kingdom.
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STAFFMARK, INC.
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996(a)
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Service revenues $139,233 $55,901 $426,496 $198,444
Cost of services 106,344 43,344 329,727 155,472
-------- ------- -------- --------
Gross profit 32,889 12,557 96,769 42,972
Operating expenses:
Selling, general and administrative 21,051 7,971 63,013 29,840
Depreciation and amortization 2,100 509 5,317 1,911
-------- ------- -------- --------
Operating income $ 9,738 $ 4,077 $ 28,439 $ 11,221
======== ======= ======== ========
Net income $ 5,773 $ 2,597 $ 16,469 $ 6,368(b)
======== ======= ======== ========
Basic earnings per share $ 0.30 $ 0.20 $ 1.03 $ 0.67(b)
======== ======= ======== ========
Dilutive earnings per share $ 0.29 $ 0.20 $ 1.00 $ 0.67(b)
======== ======= ======== ========
</TABLE>
(a) Operating results for the year ended December 31, 1996 are reported to the
Securities and Exchange Commission ("SEC") in accordance with the
provisions of the SEC Staff Accounting Bulletin No. 97. The pronouncement
requires that one of the founding companies of StaffMark be identified as
the acquirer for financial reporting purposes. Therefore, results reported
for the year ended December 31, 1996 represent only the operations of the
identified acquiring company rather than the combined operating results as
presented above.
(b) Pro forma net income and earnings per share reflect the financial results
of the operations of the companies which merged effective with the initial
public offering as if the companies had been members of the same operating
group, adjusted to reflect the effect of significant acquisitions,
adjustments for corporate income taxes, and reductions in owner's
compensation.
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STAFFMARK, INC.
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT SHARES AND PAR VALUE)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 1996
- ----------------------------------------------------------------------- --------- --------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 305 $13,856
Accounts receivable, net of allowance for
doubtful accounts of $1,227 and $441, respectively 56,707 21,065
Deferred income taxes 851 --
Prepaid expenses and other current assets 4,706 1,578
-------- -------
Total current assets 62,569 36,499
PROPERTY AND EQUIPMENT, net 9,536 4,003
INTANGIBLE ASSETS, net 172,808 30,513
OTHER ASSETS 3,736 483
-------- -------
TOTAL ASSETS $248,649 $71,498
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other accrued liabilities $ 19,606 $ 2,083
Payroll and related liabilities 11,581 3,516
Reserve for workers' compensation claims 6,109 3,771
Income taxes payable 2,677 2,415
Deferred income taxes -- 663
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Total current liabilities 39,973 12,448
LONG-TERM DEBT 12,000 --
OTHER LONG-TERM LIABILITIES 76 519
DEFERRED INCOME TAXES 1,315 421
Common stock, $.01 par value; authorized shares of 26,000,000; shares
issued and outstanding of 19,077,715 and 13,417,012 at
December 31, 1997 and 1996, respectively 191 134
Paid-in capital 176,195 55,379
Retained earnings 18,899 2,597
-------- -------
Total stockholders' equity 195,285 58,110
-------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $248,649 $71,498
======== =======
</TABLE>
This release contains forward-looking statements which involve risk and
uncertainties with respect to growth opportunities and their impact on 1997
earnings. The Company's actual results could differ materially from the results
anticipated in these forward-looking statements as a result of loss of existing
customers, loss of key management, unexpected costs, or operational problems in
addition to those certain risk factors set forth under "Risk Factors" and
elsewhere in the Company's Registration Statement filed with the Securities and
Exchange Commission on August 6, 1997, under the Securities Act of 1933, and
in the Company's reports on Forms 10-K, 10-Q, and 8-K, made under the
Securities Exchange Act of 1934.
