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Previous: EATON VANCE MUNICIPALS TRUST, 24F-2NT, 1996-10-15 |
Next: AMERIHOST PROPERTIES INC, S-2/A, 1996-10-15 |
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5, 1996
--------------
Commission File No. 0-24300
-------
NORRELL CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-0953709
- ------------------------------- ------------------
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification No.)
3535 Piedmont Road, NE, Atlanta, GA 30305
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404)240-3000
-------------
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 5, 1996, Norrell Corporation and its affiliate N. Acquisition
Corporation (collectively "Norrell"), acquired all of the issued and
outstanding stock of American Technical Resources, Inc. ("ATR") in exchange for
1,000,000 shares of Norrell Corporation common stock in a transaction accounted
for as a pooling of interests.
Founded in 1985, ATR is an information technology staffing company that
specializes in providing computer professionals for short- and long-term
assignments. The company provides contract programming, contract recruiting,
and payrolling services to commercial clients and currently employs more than
700 professionals. In addition to its headquarters in McLean, Virginia, ATR
has branch offices in Colorado Springs and Atlanta.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
1. Financial statements of American Technical Resources,
Inc. as of July 31, 1996 (unaudited) and October 31,
1995 (audited).
(b) Pro forma financial information.
1. Norrell Corporation pro forma combined balance sheet
as of July 28, 1996 (unaudited).
2. Norrell Corporation pro forma combined statement of
income for the nine month period ended July 28, 1996
(unaudited).
3. Norrell Corporation pro forma combined statements of
income for the years ended October 29, 1995, October
30, 1994 and October 31, 1993 (unaudited).
SIGNATURE
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, thereto duly authorized.
NORRELL CORPORATION
(REGISTRANT)
Date: September 30, 1996 By: S./C. Kent Garner
-----------------
C. Kent Garner
Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Chief Accounting Officer)
<PAGE> 3
AMERICAN TECHNICAL RESOURCES, INC.
FINANCIAL STATEMENTS AS OF JULY 31, 1996
AND OCTOBER 31, 1995
TOGETHER WITH
AUDITORS' REPORT
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
American Technical Resources, Inc.:
We have audited the accompanying balance sheet of AMERICAN TECHNICAL RESOURCES,
INC. (a Virginia corporation) as of October 31, 1995 and the related statements
of income, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Technical Resources,
Inc. as of October 31, 1995 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 16, 1996
<PAGE> 5
AMERICAN TECHNICAL RESOURCES, INC.
BALANCE SHEETS
JULY 31, 1996 AND OCTOBER 31, 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
- ---------------------------------------------------------------------- ----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and short-term investments $ 31,451 $ 12,023
Accounts receivable, trade, net 5,904,949 5,478,489
Employee advances 22,222 24,772
Notes receivable 0 58,275
Prepaid expenses 319,140 21,165
Accounts receivable, other 5,035 1,320
---------- ----------
Total current assets 6,282,797 5,596,044
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION
355,567 240,326
INVESTMENTS 0 30,000
DEPOSITS 40,869 40,869
---------- ----------
Total assets $6,679,233 $5,907,239
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- ---------------------------------------------------------------------- ----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Note payable--line of credit $2,070,410 $2,194,486
Accounts payable 524,578 222,546
Accrued expenses 41,940 35,571
Accrued vacation 83,185 79,251
Accrued income taxes 75,323 25,038
Accrued salaries, wages, and bonuses 647,121 654,149
Leases payable 12,740 0
---------- ----------
Total current liabilities 3,455,297 3,211,041
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 4,000 4,000
Retained earnings 3,219,936 2,692,198
---------- ----------
Total stockholders' equity 3,223,936 2,696,198
---------- ----------
Total liabilities and stockholders' equity $6,679,233 $5,907,239
========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE> 6
AMERICAN TECHNICAL RESOURCES, INC.
STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JULY 31, 1996 AND
THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
REVENUES $27,099,877 $29,725,669
COST OF SERVICES 20,673,541 22,756,405
----------- -----------
Gross profit 6,426,336 6,969,264
----------- -----------
OPERATING EXPENSES 5,327,913 5,808,096
----------- -----------
INCOME FROM OPERATIONS 1,098,423 1,161,168
OTHER EXPENSES:
Interest 156,671 200,733
Other 53,855 74,404
----------- -----------
INCOME BEFORE INCOME TAXES 887,897 886,031
INCOME TAXES 355,159 354,412
----------- -----------
NET INCOME $ 532,738 $ 531,619
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
AMERICAN TECHNICAL RESOURCES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 1996 AND
THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------ ---------- ----------
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY, NOVEMBER 1, 1994 $4,000 $2,160,579 $2,164,579
Net income 0 531,619 531,619
------ ---------- ----------
STOCKHOLDERS' EQUITY, OCTOBER 31, 1995 4,000 2,692,198 2,696,198
Net income 0 532,738 532,738
Distributions 0 (5,000) (5,000)
------ ---------- ----------
STOCKHOLDERS' EQUITY, JULY 31, 1996
(UNAUDITED) $4,000 $3,219,936 $3,223,936
====== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
AMERICAN TECHNICAL RESOURCES, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 1996 AND
THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 532,738 $ 531,619
--------- ----------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 84,267 82,070
Changes in operating assets and liabilities:
Increase in accounts receivable (430,175) (1,055,943)
Decrease in employee advances 2,550 3,590
Decrease (increase) in notes receivable 58,275 (58,275)
(Increase) decrease in prepaid expenses (434,339) 24,025
Increase in deposits 0 (2,367)
Increase (decrease) in accounts payable and accrued expenses 308,401 (3,109)
(Decrease) increase in accrued salaries and wages (7,028) 283,565
Increase in accrued vacation 3,934 79,251
Increase in leases payable 12,740 0
Increase (decrease) in accrued income taxes 186,649 (377,606)
--------- ----------
Total adjustments (214,726) (1,024,799)
--------- ----------
Net cash provided by (used in) operating activities 318,012 (493,180)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (199,508) (164,787)
Sale (purchase) of investment 30,000 (30,000)
--------- ----------
Net cash used in investing activities (169,508) (194,787)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from line of credit (124,076) 564,120
Principal payments on term loans 0 (30,000)
Dividends paid (5,000) 0
--------- ----------
Net cash (used in) provided by financing activities (129,076) 534,120
--------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 103,522 (153,847)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,023 165,870
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,451 $ 12,023
========= ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 154,052 $ 198,594
========= ==========
Income taxes $ 305,009 $ 681,263
========= ==========
Noncash investing activities:
Equipment acquired under capitalized leases $ 16,750 $ 0
========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 9
AMERICAN TECHNICAL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996 AND OCTOBER 31, 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Technical Resources, Inc. ("ATR" or the "Company") was
established in 1985 to provide technical service personnel to various
public and private businesses and organizations requiring temporary
personnel in the areas of computer technology and engineering. The
Company's client base is located principally within the Washington,
D.C. metropolitan area; Colorado Springs, Colorado; and Atlanta,
Georgia.
The following is a summary of significant accounting policies followed
in the preparation of these financial statements:
- CASH AND CASH EQUIVALENTS. For purposes of the
statements of cash flows, the Company considers
substantially all highly liquid investments (with the
exception of certificates of deposit) with a maturity
of three months or less to be cash equivalents.
- PROPERTY AND EQUIPMENT. Property and equipment are
recorded at cost, less accumulated depreciation.
Depreciation expense is computed using both
straight-line and accelerated methods over the
estimated useful lives of the respective assets.
Expenditures for maintenance and repairs are charged
against income as incurred; betterments which
increase the values or materially extend the lives of
the related assets are capitalized.
- ESTIMATES. The preparation of financial statements
in conformity with generally accepted accounting
principles requires the use of estimates and
assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates
primarily relate to unsettled transactions and events
as of the dates of the financial statements.
Accordingly, upon settlement, actual results may
differ from estimated amounts.
- INCOME TAXES. The Company records tax expense and
tax accruals on the same basis as presented in the
corporate tax return. Timing differences between
book and tax depreciation, calculated in accordance
with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," are not material.
<PAGE> 10
-2-
2. ACCOUNTS RECEIVABLE, TRADE
Total accounts receivable, trade, consisted of the following as of
July 31, 1996 and October 31, 1995:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
(UNAUDITED)
<S> <C> <C>
Current $3,675,997 $3,516,422
30-60 days 1,771,823 1,749,944
60-90 days 482,398 145,763
Over 90 days 269,030 231,570
---------- ----------
Accounts receivable, billed 6,199,248 5,643,699
Less overpayments and allowances 173,429 93,498
---------- ----------
Total accounts receivable 6,025,819 5,550,201
Allowance for uncollectibles (120,870) (71,712)
---------- ----------
Accounts receivable, net $5,904,949 $5,478,489
========== ==========
</TABLE>
3. INVESTMENT
On November 7, 1994, the Company invested a total of $30,000 in common
stock as part of an affiliation agreement with several firms engaged
in the same type of business but in different geographical markets.
The investment was liquidated at cost in late 1995 upon disaffiliation
with the group. Expenses of $128,259 were incurred relative to the
group affiliation.
4. NOTES PAYABLE
The Company is liable for a secured note under a revolving
line-of-credit agreement with interest at the lower of a LIBOR-based
rate or a prime-based rate (8.75% at October 31, 1995), payable
monthly, with an expiration date of July 31, 1997. The maximum credit
line is $4 million, not to exceed 80% of billed accounts receivable
under 90 days old, plus 80% of unbilled billable accounts, as defined
in the loan agreement. The Company's assets have been pledged as
security for the credit line, and the note is personally guaranteed by
the Company's stockholders (Note 6). The loan agreement contains
restrictive covenants which require a debt-to-worth ratio not greater
than 2 to 1 and a ratio of current assets to current liabilities not
less than 1.1 to 1. It also restricts the Company's ability to obtain
additional financing, make loans, etc.
The Company was also liable for a note payable due in full by July 31,
1995. The note, dated July 25, 1994 and bearing interest at prime
plus 1%, has been paid in full.
<PAGE> 11
-3-
5. REVENUE
Total revenue consisted of the following as of July 31, 1996 and
October 31, 1995:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Temporary placements $26,842,214 $29,524,691
Permanent placement fees 205,913 151,890
Staffing 51,750 49,088
----------- -----------
$27,099,877 $29,725,669
=========== ===========
</TABLE>
6. RELATED-PARTY TRANSACTIONS
The stockholders are the principal guarantors of the Company's line of
credit (Note 4). As compensation for such guarantee, each stockholder
receives a quarterly fee of $2,500.
7. PROFIT-SHARING PLAN
The Company established a 401(k) profit-sharing plan, effective
January 1, 1987, which covers substantially all employees. The
original plan was replaced by a prototype plan, effective January 1,
1995, which provides for participant-directed accounts. All assets
were transferred to the prototype plan during 1995. A contribution of
$60,000 has been approved by the board of directors for the plan year
ended December 31, 1995 and was allocated totally to the 401(k)
matching accounts. This amount was funded by the Company in February
1996. The contribution for the plan year ended December 31, 1996 has
not yet been made.
8. FINANCIAL DEPENDENCE AND CREDIT RISK
Financial instruments which subject ATR to concentrations of credit
risk consist principally of trade receivables. A significant portion
of the Company's revenue was derived from one major client during the
nine months ended July 31, 1996 and the year ended October 31, 1995.
Specifically, this client accounted for approximately 26% and 32% of
total revenue for the nine months ended July 31, 1996 and the year
ended October 31, 1995, respectively. Although ATR's exposure to
credit risk associated with nonpayment by this client is affected by
conditions or occurrences within the customer's operations, 95% and
97% of trade receivables from the major client were under 90 days old
at July 31, 1996 and October 31, 1995, respectively. Although one
client accounted for 21% and 31% of ATR's receivables at July 31, 1996
and October 31, 1995, respectively, ATR performs ongoing credit
evaluations of its clients and maintains an allowance for potential
credit losses.
<PAGE> 12
-4-
9. COMMITMENTS AND CONTINGENCIES
ATR self-insures its health and life insurance up to $50,000 per
participant. The self-insurance claim liability, which is included in
accounts payable, is determined based on claims filed and an estimate
of claims incurred but not yet reported.
10. LEASE COMMITMENTS
The Company leases office space in McLean, Virginia, under a lease
agreement which expires August 31, 2004. The lease has termination
options at the end of years five and seven that require payment of a
cancellation fee and reimbursement of certain unamortized improvement
costs. The Company also leases properties in Atlanta and Colorado
Springs under lease agreements that expire in 1998. The leases for
all properties provide for the payment of a pro rata share of
operating expenses by ATR.
Future minimum payments, in the aggregate, under operating leases with
initial or remaining terms of one year or more consist of the
following at October 31, 1995:
<TABLE>
<S> <C>
1995 $ 259,954
1996 290,271
1997 264,011
1998 240,837
1999 244,111
2000 907,033
----------
THEREAFTER $2,206,217
==========
</TABLE>
<PAGE> 13
NORRELL CORPORATION AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheet as of July 28, 1996
presents the financial position of Norrell Corporation (the "Company") and
American Technical Resources, Inc. ("ATR") assuming the acquisition had been
consummated as of the balance sheet date. The following unaudited pro forma
combined statements of income for the nine months ended July 28, 1996 and for
the years ended October 29, 1995, October 30, 1994 and October 31, 1993,
present the combined results of the continuing operations of the Company and
ATR assuming the acquisition had been consummated at the beginning of the
periods indicated. The statements include all material adjustments necessary to
present the combined historical results under these assumptions.
The pro forma information should be read in conjunction with the Company's
historical Consolidated Financial Statements and Notes thereto contained in the
1995 Annual Report on Form 10-K and Form 10-Q for the third quarter of 1996.
The pro forma financial information is not necessarily indicative of the actual
financial position and results of operations of the Company, nor does it
purport to indicated the future financial position or results of operations of
the Company.
<PAGE> 14
NORRELL CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
AS OF JULY 28, 1996
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
---------------------------
Norrell Pro Forma
Corporation ATR Adjustments Pro Forma
--------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash $ 7,412 $ 31 $ 7,443
Accounts receivable, net 129,272 5,905 135,177
Deferred income taxes 6,192 0 6,192
Prepaid and refundable income taxes 996 0 996
Other current assets 3,735 346 4,081
--------- ------- ---------
Total current assets 147,607 6,282 153,889
--------- ------- ---------
PROPERTY AND EQUIPMENT, less
accumulated depreciation 12,292 356 12,648
--------- ------- ---------
NONCURRENT DEFERRED INCOME TAXES 10,763 0 10,763
--------- ------- ---------
OTHER ASSETS
Intangibles, net of amortization 45,346 0 45,346
Investments and other assets 25,844 41 25,885
--------- ------- ---------
Total other assets 71,190 41 71,231
--------- ------- ---------
TOTAL ASSETS $ 241,852 $ 6,679 $ 248,531
========= ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 575 $ 2,070 $ 2,645
Accounts payable and accrued expenses 75,651 1,323 76,974
Deferred revenue 8,480 0 8,480
Accrued income taxes 188 75 263
--------- ------- ---------
Total current liabilities 84,894 3,468 88,362
LONG-TERM DEBT, less current maturities 30,673 0 30,673
LONG-TERM ACCRUED EXPENSES 38,602 0 38,602
--------- ------- ---------
Total liabilities 154,169 3,468 157,637
--------- ------- ---------
SHAREHOLDERS' EQUITY
Common stock 225 4 6 (b) 235
Treasury stock (515) 0 (515)
Additional paid-in-capital 43,417 0 (6)(b) 43,411
Notes receivable from officers and employees (149) 0 (149)
Retained earnings 44,705 3,207 47,912
--------- ------- ---------
Total shareholders' equity 87,683 3,211 90,894
--------- ------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 241,852 $ 6,679 $ 248,531
========= ======= =========
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE> 15
NORRELL CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED OCTOBER 29, 1995
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------
Norrell Pro Forma
Corporation ATR Adjustments Pro Forma
---------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 812,635 $ 29,725 $ 842,360
COST OF SERVICES 633,761 22,756 656,517
--------- -------- ---------
Gross profit 178,874 6,969 185,843
OPERATING EXPENSES
General and administrative 143,783 5,726 149,509
Depreciation and amortization 4,415 82 4,497
--------- -------- ---------
Total operating expenses 148,198 5,808 154,006
Income from operations 30,676 1,161 31,837
OTHER EXPENSE
Interest 164 201 365
Other 1,554 74 1,628
--------- -------- ---------
INCOME BEFORE INCOME TAXES 28,958 886 29,844
INCOME TAXES 12,164 354 12,518
--------- -------- ---------
NET INCOME $ 16,794 $ 532 $ 17,326
========= ======== =========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.72 $ 0.71
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 23,356 1,000 (a) 24,356
========= ===== =========
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE> 16
NORRELL CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED OCTOBER 30, 1994
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------
Norrell Pro Forma
Corporation ATR Adjustments Pro Forma
---------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 680,807 $ 21,114 $ 701,921
COST OF SERVICES 527,256 16,074 543,330
--------- -------- ---------
Gross profit 153,551 5,040 158,591
OPERATING EXPENSES
General and administrative 124,599 3,659 128,258
Depreciation and amortization 5,280 58 5,338
--------- -------- ---------
Total operating expenses 129,879 3,717 133,596
Income from operations 23,672 1,323 24,995
OTHER (INCOME) EXPENSE
Recovery of preferred stock investment (5,000) - (5,000)
Interest 1,821 135 1,956
Other 369 39 408
--------- -------- ---------
INCOME BEFORE INCOME TAXES 26,482 1,149 27,631
INCOME TAXES 11,368 459 11,827
--------- -------- ---------
NET INCOME $ 15,114 $ 690 $ 15,804
========= ======== =========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.69 $ 0.69
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 21,782 1,000 (a) 22,782
========= ===== =========
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE> 17
NORRELL CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED JULY 28, 1996
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------
Norrell Pro Forma
Corporation ATR Adjustments Pro Forma
---------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 707,762 $ 27,100 $ 734,862
COST OF SERVICES 557,468 20,674 578,142
--------- -------- ---------
Gross profit 150,294 6,426 156,720
OPERATING EXPENSES
General and administrative 117,234 5,244 122,478
Depreciation and amortization 3,781 84 3,865
--------- -------- ---------
Total operating expenses 121,015 5,328 126,343
Income from operations 29,279 1,098 30,377
OTHER EXPENSE
Interest 442 156 598
Other 487 54 541
--------- -------- ---------
INCOME BEFORE INCOME TAXES 28,350 888 29,238
INCOME TAXES 10,913 355 11,268
--------- -------- ---------
NET INCOME $ 17,437 $ 533 $ 17,970
========= ======== =========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.72 $ 0.72
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 24,125 1,000 (a) 25,125
========= ===== =========
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE> 18
NORRELL CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED OCTOBER 31, 1993
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------
Norrell Pro Forma
Corporation ATR Adjustments Pro Forma
---------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 562,178 $ 14,570 $ 576,748
COST OF SERVICES 425,058 11,229 436,287
--------- -------- ---------
Gross profit 137,120 3,341 140,461
OPERATING EXPENSES
General and administrative 110,183 2,977 113,160
Depreciation and amortization 7,585 47 7,632
Write-off of goodwill 6,584 0 6,584
Write-off of software development costs 1,527 0 1,527
Provision for lease, legal and other charges 1,381 0 1,381
--------- -------- ---------
Total operating expenses 127,260 3,024 130,284
Income from operations 9,860 317 10,177
OTHER EXPENSE
Interest 3,716 81 3,797
Other 389 9 398
--------- -------- ---------
INCOME BEFORE INCOME TAXES 5,755 227 5,982
INCOME TAXES 2,609 90 2,699
--------- -------- ---------
NET INCOME $ 3,146 $ 137 $ 3,283
========= ======== =========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.13 $ 0.13
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 23,872 1,000 (a) 24,872
========= ===== =========
</TABLE>
See accompanying notes to pro forma financial information.
<PAGE> 19
NORRELL CORPORATION AND SUBSIDIARIES
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(a) To reflect the increase in the number of common shares outstanding for
the issuance of Company stock to effect the pooling of ATR.
(b) To eliminate the shareholders' equity of the acquired company and to
reflect the issuance of additional shares of common stock to effect
the pooling of ATR.
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