<PAGE> 1
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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE OF 1934
For the quarterly period ended May 3, 1998
-----------
Commission File No. 1-14018
--------
NORRELL CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-0953079
- ------------------------------- -------------------
(State or other jurisdiction of (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.
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 27,384,176 shares on May 1,
1998.
<PAGE> 2
Norrell Corporation and Subsidiaries
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
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PART I FINANCIAL INFORMATION
<S> <C>
ITEM 1. Financial Statements
Consolidated Balance Sheets - 2
May 3, 1998 (Unaudited) and November 2, 1997
Consolidated Statements of Income 3
(Unaudited) - Six months ended May 3, 1998
and April 27, 1997
Consolidated Statements of Cash Flows 4
(Unaudited) - Six months ended May 3, 1998
and April 27, 1997
Notes to Consolidated Financial Statements 5
(Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 10
(a) Exhibit 27 Financial Data Schedule (for SEC use only)
(b) No Reports on Form 8-K were filed for the period
covered under this quarterly filing.
SIGNATURE 11
</TABLE>
<PAGE> 3
PART I
ITEM 1.
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS May 3, 1998 November 2, 1997
- ------ ----------- ----------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 5,331 $ 6,678
Accounts receivable trade,
less allowances of $7,073 in 1998
and $6,497 in 1997 201,140 215,463
Prepaid expenses 4,241 2,915
Other 8,540 12,823
----------- ----------------
Total current assets 219,252 237,879
----------- ----------------
PROPERTY AND EQUIPMENT, less
accumulated depreciation 22,964 19,759
NONCURRENT DEFERRED INCOME TAXES 11,908 12,690
OTHER ASSETS
Goodwill and other intangibles, net of amortization 150,457 136,358
MIS development costs, net of amortization 22,243 19,486
Investments and other assets 12,366 12,672
----------- ----------------
Total other assets 185,066 168,516
----------- ----------------
TOTAL ASSETS $ 439,190 $ 438,844
=========== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 793 $ 12,881
Accounts payable 16,168 12,390
Accrued expenses 76,738 90,515
Deferred revenue and gain 7,131 8,779
----------- ----------------
TOTAL CURRENT LIABILITIES 100,830 124,565
LONG-TERM DEBT, less current maturities 60,743 60,129
LONG-TERM DEFERRED GAIN 9,239 9,983
LONG-TERM ACCRUED EXPENSES 40,530 36,961
----------- ----------------
Total liabilities 211,342 231,638
----------- ----------------
SHAREHOLDERS' EQUITY
Common stock, stated value $.01 per share;
50,000,000 shares authorized, with shares
issued and outstanding of 27,364,675 in
1998 and 26,903,738 in 1997 274 269
Treasury stock, at cost; 19,501 shares in 1998
and 34,457 shares in 1997 (425) (1,062)
Additional paid-in capital 137,461 133,220
Notes receivable from officers and employees (174) (125)
Retained earnings 90,712 74,904
----------- ----------------
Total shareholders' equity 227,848 207,206
----------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 439,190 $ 438,844
=========== ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 4
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------------------------------------
May 3, 1998 April 27, 1997 May 3, 1998 April 27, 1997
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
REVENUES $ 352,295 $ 317,943 $ 686,571 $ 599,177
COST OF SERVICES 273,710 248,032 533,736 468,377
----------- -------------- ----------- --------------
Gross profit 78,585 69,911 152,835 130,800
OPERATING EXPENSES 58,137 50,686 115,039 96,642
YEAR 2000 REMEDIATION EXPENSES 365 -- 405 --
DEPRECIATION AND AMORTIZATION 3,097 2,598 6,141 4,519
----------- -------------- ----------- --------------
Income from operations 16,986 16,627 31,250 29,639
INTEREST EXPENSE (1,141) (2,548) (2,420) (3,486)
OTHER INCOME (EXPENSE) 56 (401) (51) (860)
----------- -------------- ----------- --------------
INCOME BEFORE INCOME TAXES 15,901 13,678 28,779 25,293
INCOME TAXES 5,966 5,199 10,795 9,613
----------- -------------- ----------- --------------
NET INCOME $ 9,935 $ 8,479 $ 17,984 $ 15,680
=========== ============== =========== ==============
PER COMMON SHARE (BASIC):
BASIC EARNINGS PER COMMON SHARE $ 0.36 $ 0.35 $ 0.66 $ 0.66
=========== ============== =========== ==============
SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE 27,287 23,959 27,165 23,839
=========== ============== =========== ==============
PER COMMON SHARE (DILUTED):
DILUTED EARNINGS PER COMMON SHARE $ 0.35 $ 0.33 $ 0.63 $ 0.61
=========== ============== =========== ==============
SHARES USED IN COMPUTING DILUTED
EARNINGS PER SHARE 28,674 25,944 28,617 25,837
=========== ============== =========== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 5
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Eended
-----------------------------
May 3, 1998 April 27, 1997
----------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 17,984 $ 15,680
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization - operating expenses 6,141 4,519
Depreciation and amortization - cost of services/other expenses 561 275
Gain on retirement of common stock (942) (942)
Provision for doubtful accounts 1,110 942
Deferred income taxes (287) (6,106)
Deferred gain on sale of building (744) (744)
Long term accrued expenses 2,327 4,526
Other 852 3,671
Change in current assets and current liabilities
Accounts receivable, trade 20,548 (46,803)
Deferred revenue (706) 285
Accounts payable 3,047 (6,096)
Accrued expenses (13,953) 19,793
Other 4,095 264
----------- --------------
Net cash provided by (used in) operating activities 40,033 (10,736)
----------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of acquisitions, net of cash acquired (21,117) (76,806)
Additions to property and equipment, net (5,093) (3,853)
Increase in mis development costs, net (3,863) (8,830)
Increase in investments and other non-current assets (586) (2,112)
Increase in goodwill and other intangibles, net (160) (565)
----------- --------------
Net cash used in investing activities (30,819) (92,166)
----------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 14,745 233,091
Repayments of long-term debt (26,969) (133,939)
Stock option exercises, including related tax benefits 2,761 2,439
Proceeds from the issurance of common stock 1,456 2,474
Dividends paid on common stock (2,176) (1,908)
Acquisition of treasury stock (329) (263)
(Increase) decrease in receivables from officers and employees (49) 26
----------- --------------
Net cash (used in) provided by financing activities (10,561) 101,920
----------- --------------
NET INCREASE IN CASH AND SHORT-TERM
INVESTMENTS (1,347) (982)
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 6,678 8,876
----------- --------------
CASH AND SHORT-TERM INVESTMENTS AT END
OF PERIOD $ 5,331 $ 7,894
=========== ==============
SUPPLEMENTARY CASH FLOW DISCLOSURES
Cash payments during the period for
Interest $ 2,412 $ 2,528
Income taxes, net of refunds 4,525 13,858
Noncash investing and financing activity
Issuance of options to benefit plan 993 842
Exercise of benefit plan stock options 882 780
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 6
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission,
although the Company believes that the disclosures are adequate to make
the information presented not misleading. These consolidated financial
statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form
10-K. The information furnished reflects all adjustments which, in the
opinion of management, are necessary for a fair statement of the
results of operations for the periods presented. Such adjustments are
of a normal recurring nature.
2. Financial Instruments
The Company maintains four interest rate swap agreements in order to
manage exposure to fluctuations in interest rates. The difference
between fixed and variable interest amounts calculated by reference to
agreed-upon principal notional amounts is recognized as an adjustment
to interest expense over the life of the swap agreements. Two of the
swap agreements are each for notional principal amounts of $20,000,000,
the remaining two agreements are for notional principal amounts of
$12,000,000 and $8,000,000. The Company exchanges floating interest
rates based on LIBOR for an average fixed rate of 6.43% at quarterly
settlement dates. The swap agreements terminate between November 2001
and January 2002. At May 3, 1998, if the Company had terminated each of
the swap agreements, the estimated termination payments by the Company
would have totaled approximately $1,107,000. The Company does not
expect to terminate these agreements and expects them to expire as
originally contracted.
3. Earnings Per Share
In 1998, the Company adopted SFAS 128, "Earnings Per Share." In
accordance with this standard, basic earnings per share is computed on
the basis of the weighted average number of shares outstanding during
the year. Diluted earnings per share is computed giving effect to
dilutive stock options. The income amount used in the Company's
earnings per share calculations is the same for both basic and diluted
earnings per share. A reconciliation of the average outstanding shares
used in the two calculations is as follows:
<TABLE>
<CAPTION>
Per Share Data: Three Months Ended Six Months Ended
--------------------------- -----------------------------------
(In thousands) 5/3/98 4/27/97 5/3/98 4/27/97
--------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Weighted Average Shares 27,287 23,959 27,165 23,839
Dilutive stock Options 1,387 1,985 1,452 1,998
=========================== ===================================
Weighted average shares 28,674 25,944 28,617 25,837
=========================== ===================================
Anti-dilutive options not included 882 144 899 152
=========================== ===================================
</TABLE>
5
<PAGE> 7
PART I
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATING RESULTS SECOND QUARTER MAY 3, 1998 COMPARED TO SECOND QUARTER APRIL
27, 1997
Revenues increased 10.8% or $34.4 million to $352.3 million in 1998.
Staffing Services revenues grew 8.6% to $232.9 million, and accounted for 66.1%
and 67.4% of total 1998 and 1997 revenues, respectively. Staffing Services
volume, as measured by hours that staffing employees worked, increased 4.2% and
prices rose 4.0% compared to 13.2% and 4.5% for 1997. Staffing Services includes
the results of M. David Lowe, Inc., ("M. David Lowe") a Houston based company
acquired in December 1997. Outsourcing Services revenues grew 10.3% to $67.5
million. Outsourcing Services revenues from customers other than IBM increased
11.5% or $24.2 million from 1997. Professional Services revenues were $51.9
million in 1998 compared to $42.4 million in 1997, a 22.5% increase. The
Company's Professional Services group includes Norrell Information Services,
Norrell Financial Staffing and IMCOR, Inc. ("IMCOR"), an interim executive
staffing company acquired in October 1997. Norrell Information Services was
augmented by the April 1998 acquisition of Trattner Network Ltd., ("Trattner") a
California based information technology company.
Gross profit increased 12.4%, or $8.7 million, to $78.6 million in
1998. Gross margin (gross profit as a percent of revenues) increased from 22.0%
in 1997 to 22.3% in 1998. Staffing Services gross margin increased from 21.1% in
1997 to 21.2% in 1998. This increase is due to the favorable impact of permanent
placement business in the 1998 period. Outsourcing Services gross margin
increased from 18.4% in 1997 to 18.6% in 1998. Professional Services gross
margin increased from 31.6% in 1997 to 32.3% in 1998 due principally to the
favorable impact of Norrell Information Services. This higher end consulting
business typically commands relatively higher margins.
Operating expenses increased 14.7%, or $7.5 million. Of the 14.7%
operating expense increase, over 7% resulted from increased operating costs
associated with the acquisitions of IMCOR, M. David Lowe, Inc., and Trattner.
The Company also added costs in the 1998 period to support organic growth and to
provide increased client support. Operating costs, as a percentage of revenue
increased from 15.9% in the 1997 period to 16.5% in the 1998 period. The Company
incurred costs of $365,000 in the 1998 period related to the Year 2000
assessment project (see Year 2000 Issues). Depreciation and amortization expense
increased 19.2%, or $499,000 due to increased investment in desktop computers to
support management information systems and amortization of goodwill from
acquisitions.
Interest expense decreased from $2.5 million in 1997, to $1.1 million
in 1998 as a result of the proceeds from the Company's July 28, 1997 stock
offering net of borrowings to fund the acquisitions discussed above.
Other expense was $401,000 in 1997 compared to income of $56,000 in
1998. The 1997 period expense included the Company's share of losses from its
50% ownership in a joint venture formed in October 1995 to provide
administrative outsourcing for health care facilities. This joint venture was
terminated in the fiscal fourth quarter of 1997.
The effective income tax rate declined from 38.0% in 1997 to 37.5% in
1998 primarily as a result of reduced state income taxes.
Net income rose from $8.5 million in 1997 to $9.9 million in 1998, a
17.2% increase.
Year 2000 remediation expense totaled $365,000 in the 1998 period. If
these costs had been excluded from the 1998 period, net income would have been
$10.2 million, a $1.7 million or 19.9% increase over the prior year quarter.
6
<PAGE> 8
PART I
ITEM 2.
Diluted earnings per share increased from $0.33 in 1997 to $0.35 in
1998.
OPERATING RESULTS SIX MONTHS ENDED MAY 3, 1998 COMPARED TO SIX MONTHS ENDED
APRIL 27, 1997
Revenues increased 14.6%, or $87.4 million, to $686.6 million in 1998.
Staffing Services revenues grew 11.3% to $455.1 million, and accounted for 66.3%
and 68.3% of total 1998 and 1997 period revenues, respectively. Staffing
Services volume, as measured by hours that staffing employees worked, increased
7.0% and prices rose 3.9% compared to 12.0% and 4.9%, respectively, for the 1997
period. Outsourcing Services revenues grew 12.8% to $132.4 million. Outsourcing
Services revenues from customers other than IBM increased $8.5 million from 1997
to $48.5 million. Professional Services revenues were $99.0 million in the 1998
period compared to $72.7 million in the 1997 period, a 36.2% increase.
Gross profit increased 16.9%, or $22.0 million, to $152.8 million in
1998. Gross margin increased from 21.8% in the 1997 period to 22.3% in the 1998
period. Staffing Services gross margin increased from 21.3% in 1997 to 21.4% in
1998. Outsourcing Services gross margin declined from 18.2% in 1997 to 17.9% in
the 1998 period due primarily to recognizing payroll expense without the related
revenue for two paid holidays on the IBM account in the first quarter of 1998.
Professional Services gross margin increased from 30.7% in the 1997 period to
32.0% in the 1998 period. Margins increased as a result of adding higher margin
information technology consulting services in the 1998 period through the
acquisitions of Comtex, Trattner and IMCOR. The 1997 period included the results
of ATR, which was accounted for as a pooling of interests, Financial Staffing
and IMCOR.
Operating expenses increased 19.0%, or $18.4 million, primarily as a
result of the added operating costs associated with the acquisitions of Comtex,
IMCOR, M. David Lowe, Inc., and Trattner. The Company also added costs in the
1998 period to support organic growth and to provide increased client support.
The Company incurred $1.2 million of incremental costs for business process
reengineering work. During the 1998 period, the Financial Accounting Standards
Board Emerging Issues Task Force issued an accounting ruling requiring companies
to expense as incurred costs associated with business process reengineering.
Operating expenses, as a percentage of revenues, increased from 16.1% in the
1997 period to 16.7% in the 1998. The Company incurred costs of $405,000 in the
1998 period related to the Year 2000 assessment project (see Year 2000 Issues).
Depreciation and amortization expense increased $1.6 million, or 35.9%, from the
1997 period due to increased investment in MIS and goodwill from acquisitions.
Interest expense decreased from $3.5 million in the 1997 period to $2.4
million in the 1998 period as a result of the proceeds from the Company's July
28, 1997 stock offering net of borrowings to fund the acquisitions discussed
above.
Other expense decreased from $860,000 in the 1997 period to $51,000 in
the 1998 period. The 1997 period expense included the Company's share of losses
from its 50% ownership in a joint venture formed in October 1995 to provide
administrative outsourcing for health care facilities. This joint venture was
terminated in the fiscal fourth quarter of 1997.
Net income rose from $2.3 million in 1997 to $18.0 million in 1998, a 14.7%
increase.
Year 2000 remediation expense totaled $405,000 in the 1998 period. If
these costs had been excluded from the 1998 period, net income would have been
$18.2 million, a $2.6 million or 16.3% increase over the prior year
7
<PAGE> 9
PART I
ITEM 2.
quarter. Diluted earnings per share would have increased by $0.01 to $0.64,
resulting in a 4.9% increase over prior year diluted earnings per share.
Diluted earnings per share increased from $0.61 in 1997 to $0.63 in
1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations in 1998 was $40.0 million compared to cash
used of $10.7 million in 1997. The 1998 period included a decrease of $20.5
million in trade accounts receivable compared to an increase of $46.8 million in
1997. The 1998 decrease was due principally to a decline in days sales
outstanding. During the 1998 period, cash provided by operating activities was
partially offset by a decrease in accounts payable and accrued expenses (a
decrease in cash) of $10.9 million compared to an increase of $13.7 million in
1997. The 1998 amount included payments that were made in the second quarter
related to the acquisition of the Orlando franchise. The 1997 amount included an
accrual of $9.2 million for the contingent payment associated with the
acquisition of Anatec.
Investing activities used cash of $30.8 million in 1998 compared to
cash used of $92.2 million in 1997. The purchases of Trattner, in April 1998 and
M. David Lowe in December 1997 resulted in cash uses of $21.1 million. The
fiscal year 1997 purchases of Comtex Information Systems, Inc., Accounting
Resources Inc., and IMCOR, resulted in cash uses of $76.8 million. In addition
to the initial cash purchase price paid at closing for Imcor and Trattner, the
sellers have the right to receive contingent payments based on its achieving a
specified level of operating profit, with final payment dates between 2000 and
2001. The Company does not expect these contingent payments to have a material
impact on the its operations. Investing activities for 1998 and 1997 included
MIS development costs of $3.9 million and $8.8 million, respectively.
Financing activities used cash of $10.6 million in 1998 compared to
cash provided of $101.9 million in 1997. Long-term debt used cash in 1998 of
$12.2 million compared to net cash provided from the issuance of long term debt
of $99.2 million in 1997. The 1997 issuance of long-term debt was used to fund
the acquisitions discussed above; spending on MIS development; property and
equipment; and the cost associated with carrying a higher 1997 trade accounts
receivable balance. In July 1997 the Company reduced its outstanding long-term
debt by its secondary stock offering.
At May 3, 1998, the Company had $61.5 million of total debt
outstanding.
With the assistance of outside consultants the Company has completed an
information systems plan to address the Company's long-term business needs. The
plan includes three major initiatives: 1) Development of a new weekly payroll
system which will enhance capacity, flexibility and speed to support anticipated
volumes, 2) Replacement of the highly customized billing system with a version
more closely resembling the vendor delivered software in order to reduce cost
and improve efficiency of applying vendor upgrades through business process
improvements, and 3) Continue the roll out of the revised branch office order
entry system. Anticipated capital spending for the payroll and branch office
systems projects during fiscal 1998 and 1999 is in the range of $18 million to
$23 million. The new weekly payroll system is expected to be complete in the
first fiscal quarter of 1999. The branch office order entry system will be
implemented in a phased roll out approach and is expected to be complete in the
third fiscal quarter of 1999. The remaining costs related to the billing system
replacement will be absorbed in operating expenses and are not expected to
significantly impact the Company's normal operating costs as a percentage of
revenue.
8
<PAGE> 10
PART I
ITEM 2.
NEW ACCOUNTING PRONOUNCEMENT
In 1998, the Company adopted SFAS 128, "Earnings Per Share." In
accordance with this standard, basic earnings per share is computed on the basis
of the weighted average number of shares outstanding during the year. Diluted
earnings per share is computed giving effect to dilutive stock options. See Note
3 of Notes to Consolidated Financial Statements where discussed.
YEAR 2000 ISSUES
The Company is currently in the process of addressing a problem that
is facing all users of automatic information systems. The Year 2000 Issue is
the result of computer programs being written using two digits rather than four
to define the applicable year. Any of the Company's programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations.
Based on a recent assessment, the Company determined that it will be
required to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. This modification and replacement process will be implemented by the
Company's Information Systems team with assistance from outside consultants.
The Company presently believes that, with planned modifications to existing
software and conversions to new software, the Year 2000 Issue will not pose
significant operational problems for its computer systems.
The Company is developing an implementation plan to resolve the Year
2000 Issue. This plan includes assessment, modification and testing of
identified core and other systems. Preliminary estimates for these one time
Year 2000 project costs are in the range of $12 million to $18 million. This
estimate excludes Year 2000 system modification which may be required for the
Company's subsidiaries not using the Company's core systems and the replacement
of embedded systems found to be non-compliant. The Company expects the majority
of these costs to be incurred in 1999. The Company's Year 2000 project costs are
not expected to have a material impact on its liquidity or capital resources.
SPECIAL NOTE REGARDING "FORWARD-LOOKING" INFORMATION
The foregoing section contains "forward-looking" statements which
represent the Company's expectations or beliefs concerning future events,
including the sufficiency of funds from operations and available borrowings to
meet the Company's working capital and capital expenditure needs for 1998. A
number of important factors could, individually or in the aggregate, cause
actual results to differ materially from those forming the basis of the
forward-looking statements, including changes in the Company's relationship with
its largest customers and increased competition in, and changes in laws and
regulations relating to, the temporary services, professional services and
outsourcing industry.
9
<PAGE> 11
PART II
ITEM 6
(a) Exhibit 27 Financial Data Schedule (for SEC use only)
(b) No Reports on Form 8-K were filed for the period covered under this
quarterly filing.
10
<PAGE> 12
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, thereunto duly authorized.
<TABLE>
NORRELL CORPORATION
(REGISTRANT)
<S> <C>
Date: June 4, 1998 By: S/C. Scott L. Colabuono
-------------------------
Scott L. Colabuono
Senior Vice President and Chief Financial Officer
(On behalf of the Registrant and as Chief Accounting Officer)
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-01-1998
<PERIOD-START> NOV-03-1997
<PERIOD-END> MAY-03-1998
<EXCHANGE-RATE> 1
<CASH> 5,331
<SECURITIES> 0
<RECEIVABLES> 208,213
<ALLOWANCES> 7,073
<INVENTORY> 0
<CURRENT-ASSETS> 219,252
<PP&E> 35,849
<DEPRECIATION> 12,885
<TOTAL-ASSETS> 439,190
<CURRENT-LIABILITIES> 100,830
<BONDS> 0
0
0
<COMMON> 274
<OTHER-SE> 227,574
<TOTAL-LIABILITY-AND-EQUITY> 439,190
<SALES> 686,571
<TOTAL-REVENUES> 686,571
<CGS> 0
<TOTAL-COSTS> 533,763
<OTHER-EXPENSES> 121,636
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,420
<INCOME-PRETAX> 28,779
<INCOME-TAX> 10,795
<INCOME-CONTINUING> 17,984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,984
<EPS-PRIMARY> .66
<EPS-DILUTED> .63
</TABLE>
