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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- ----- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
| X | EXCHANGE ACT OF 1934
- -----
For the quarterly period ended April 2, 1995
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Commission File No. 0-3532
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OLSTEN CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 13-2610512
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Broad Hollow Road, Melville, New York 11747-8905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 844-7800
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The Olsten Corporation
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(Former name, former address and former fiscal year, if changed since last
report)
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
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 2, 1995
- ------------------------------------ ---------------------------
Common Stock, $.10 par value 32,456,574 shares
Class B Common Stock, $.10 par value 9,251,718 shares
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INDEX
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Page No.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets -
April 2, 1995 (Unaudited) and January 1, 1995 2
Consolidated Statements of Income (Unaudited) -
Quarters Ended April 2, 1995 and
April 3, 1994, respectively 3
Consolidated Statements of Cash Flows
(Unaudited) - Quarters Ended
April 2, 1995 and April 3, 1994 4
Notes to Consolidated Financial Statements
(Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 6 - 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 7
SIGNATURES 8
1
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
---------------------
Olsten Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
ASSETS April 2, 1995 January 1, 1995
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(Unaudited)
CURRENT ASSETS:
Cash (Note 2) $ 89,131 $ 68,338
Receivables, net 323,238 319,613
Other current assets 40,745 51,575
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Total current assets 453,114 439,526
FIXED ASSETS, NET 81,556 72,543
INTANGIBLES, NET 197,130 200,972
OTHER ASSETS 6,087 12,917
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$737,887 $725,958
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 66,746 $ 71,889
Insurance costs 41,224 47,301
Payroll and related taxes 33,986 30,241
Accounts payable 13,856 15,625
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Total current liabilities 155,812 165,056
LONG-TERM DEBT (Note 3) 125,000 125,000
OTHER LIABILITIES 53,378 49,899
SHAREHOLDERS' EQUITY:
Common stock $.10 par value; authorized
110,000,000 shares; issued 32,445,354 and
32,257,321 shares, respectively 3,245 3,226
Class B common stock $.10 par value;
authorized 50,000,000 shares; issued
9,252,717 and 9,266,496 shares,
respectively 925 927
Additional paid-in capital 234,499 232,594
Retained earnings 165,875 150,506
Cumulative translation adjustment (847) (1,250)
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Total shareholders' equity 403,697 386,003
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$737,887 $725,958
========= =========
See notes to consolidated financial statements.
2
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Olsten Corporation and Subsidiaries
Consolidated Statements of Income
(In thousands, except share amounts)
(Unaudited)
First Quarter Ended
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April 2, April 3,
1995 1994
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Service sales, franchise fees,
management fees and other income $575,503 $537,483
Cost of services sold 402,602 375,533
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Gross profit 172,901 161,950
Selling, general and
administrative expenses 140,157 134,715
Interest expense, net (Note 3) 646 2,155
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Income before income taxes 32,098 25,080
Income taxes 13,385 10,734
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Net income from operations
before minority interest 18,713 14,346
Minority interest 11 --
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Net income $ 18,702 $ 14,346
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SHARE INFORMATION:
-----------------
Primary:
Net income $ .44 $ .35
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Average shares outstanding 42,328 41,463
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Filly diluted:
Net income $ .43 $ .34
========= =========
Average shares outstanding 45,977 45,720
========= =========
See notes to consolidated financial statements.
3
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Olsten Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
First Quarter Ended
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April 2, 1995 April 3, 1994
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OPERATING ACTIVITIES:
Net income $ 18,702 $ 14,346
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,356 6,000
Deferred income taxes 4,100 15,500
Changes in assets and liabilities:
Accounts receivable, and other
current assets 3,105 (9,413)
Current liabilities (9,244) 4,260
Other, net 13,901 (14,576)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 36,920 16,117
INVESTING ACTIVITIES:
Purchases of fixed assets (13,294) (4,276)
Acquisitions of businesses and
reacquisitions of franchises (1,246) (679)
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NET CASH USED IN INVESTING ACTIVITIES (14,540) (4,955)
FINANCING ACTIVITIES:
Net repayments of line of credit
agreements -- (3,000)
Cash dividends (3,333) (2,435)
Issuances of common stock under stock plans 1,746 4,013
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NET CASH USED IN FINANCING ACTIVITIES (1,587) (1,422)
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NET INCREASE IN CASH 20,793 9,740
CASH AT BEGINNING OF PERIOD 68,338 24,709
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CASH AT END OF PERIOD $ 89,131 $ 34,449
========= =========
See notes to consolidated financial statements.
4
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Olsten Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(In thousands)
(Unaudited)
1. Accounting Policies
--------------------
The consolidated financial statements have been prepared by Olsten
Corporation (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission and, in the opinion of
management, include all adjustments necessary for a fair presentation
of results of operations, financial position and cash flows for each
period presented.
2. Investment in Norsk Personal A.S.
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On March 30, 1995, the Company entered into an agreement to acquire a
50.1 percent interest in Norsk Personal A.S. for $24.8 million.
At April 2, 1995, these funds were held in escrow pending Norwegian
government approval of the transaction and are included in cash.
3. Long-Term Debt
---------------
Interest expense, net, consists of interest on long-term debt for the
quarter of $1.4 million in 1995 and $2.5 million in 1994 offset by
interest income from investments of $759 thousand and $386 thousand,
respectively.
5
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Item 2. Management's Discussion and Analysis of Financial Condition and
-----------------------------------------------------------------
Results of Operations.
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Results of Operations
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Net income for the first quarter increased 30.4% to $18.7 million, or $.44
per share, compared to $14.3 million or $.35 per share. The increases over
1994 resulted from increased profit growth in each of its businesses, as the
Company capitalized on continuing strong demand for Staffing Services and its
strategic positioning of HealthCare Services.
Revenues increased $38 million or 7% to $575.5 million for the first quarter,
as compared to $537.5 million for last year's first quarter. Staffing
Services reported increased revenues of 26%, reflecting gains in volume and
bill rates, as major corporate clients utilize the Company's services on an
increasing basis. As anticipated, revenues for HealthCare Services declined 8%
primarily due to the sale in the fourth quarter of operations to Columbia HCA
and the resulting shift in certain Medicare business from company-owned to a
managed operation under the Hospital Contract Program.
Costs of services increased $27.1 million, or 7.2%, to $402.6 million for the
quarter due primarily to the growth in revenues. As a percentage of
revenues, such expenses increased .1% to 70% for the quarter. Gross
margins as a percentage of revenues decreased to 30% for the quarter from
30.1% for last year's first quarter primarily as a result of the faster rate of
growth of Staffing Services which operates at lower gross margins than
HealthCare Services.
Selling, general and administrative expenses for the first quarter
increased $5.4 million, or 4%, to $140.2 million from $134.7 million last year.
As a percentage of revenues, such expenses decreased .7% to 24.4% for the
quarter as a result of the Company's ability to effectively manage operating
costs and the transfer of former company-owned HealthCare operations to a
managed business under the Hospital Contract Program.
Net interest expense was $646 thousand and $2.2 million for the first
quarters of 1995 and 1994, respectively. This primarily reflects borrowing
costs on long-term debt offset by interest income on investments. The
decrease resulted from repayment of debt in the second quarter of 1994 and
increased income on investments from improved concentration and investment
of operating cash.
Liquidity and Capital Resources
- --------------------------------
Working capital at April 2, 1995, including $89.1 million in cash, was $297.3
million. The Company has temporarily invested available funds primarily in
short-term, interest-bearing investments. Included in cash was $24.8 million
held in escrow pending approval by the Norwegian government of the acquisition
of Norsk Personal A.S.
6
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The Company has a revolving credit agreement with six banks for up to $200
million in borrowings and letters of credit. At April 2, 1995, there were no
borrowings and $65 million in standby letters of credit outstanding. The
Company believes that its levels of working capital and liquidity and its
available sources of funds are sufficient to support present operations and
to continue to fund future growth and business opportunities as the Company
increases its scope of services.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
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(a) The following exhibit is filed herewith:
Exhibit 27 - Financial Data Schedule
(b) The Company has not filed any report on Form 8-K during the
period for which this report is filed.
7
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SIGNATURES
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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 thereunto duly authorized.
OLSTEN CORPORATION
(REGISTRANT)
Date: May 8, 1995 By: /s/ Frank N. Liguori
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Frank N. Liguori
Chairman and Chief
Executive Officer
Date: May 8, 1995 By: /s/ Anthony J. Puglisi
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Anthony J. Puglisi
Senior Vice President - Finance
Chief Financial Officer
8
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EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at April 2, 1995
(unaudited) and The Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the three months ended April 2, 1995 (unaudited) and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 89,131
<SECURITIES> 0
<RECEIVABLES> 336,197
<ALLOWANCES> 12,959
<INVENTORY> 0
<CURRENT-ASSETS> 453,114
<PP&E> 136,953
<DEPRECIATION> 55,397
<TOTAL-ASSETS> 737,887
<CURRENT-LIABILITIES> 155,812
<BONDS> 0
<COMMON> 4,170
0
0
<OTHER-SE> 399,527
<TOTAL-LIABILITY-AND-EQUITY> 737,887
<SALES> 575,503
<TOTAL-REVENUES> 575,503
<CGS> 402,602
<TOTAL-COSTS> 402,602
<OTHER-EXPENSES> 139,422
<LOSS-PROVISION> 735
<INTEREST-EXPENSE> 1,405
<INCOME-PRETAX> 32,098
<INCOME-TAX> 13,385
<INCOME-CONTINUING> 18,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,702
<EPS-PRIMARY> .44
<EPS-DILUTED> .43
</TABLE>
