<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 January 31, 1999
----------------
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: 26,633,705 shares on February
26, 1999.
<PAGE> 2
Norrell Corporation and Subsidiaries
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
- ------
ITEM 1. Financial Statements
Consolidated Balance Sheets - 2
January 31, 1999 (Unaudited) and November 1, 1998
Consolidated Statements of Income 3
(Unaudited) - Three months ended January 31, 1999
and February 1, 1998
Consolidated Statements of Cash Flows 4
(Unaudited) - Three months ended January 31, 1999
and February 1, 1998
Notes to Consolidated Financial Statements 5
(Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II OTHER INFORMATION
- -------
ITEM 6. Exhibits and Reports on Form 8-K 11
(b) No Reports on Form 8-K were filed for the period
covered under this quarterly filing.
SIGNATURE 12
</TABLE>
<PAGE> 3
PART I
ITEM 1.
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS January 31, 1999 November 1, 1998
- ------ ---------------- ----------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 8,012 $ 9,871
Accounts receivable trade,
less allowances of $8,584 in 1999
and $7,351 in 1998 208,314 220,573
Prepaid expenses 3,727 4,816
Other 6,751 6,500
-------- --------
Total current assets 226,804 241,760
-------- --------
PROPERTY AND EQUIPMENT, less
accumulated depreciation 30,580 27,923
NONCURRENT DEFERRED INCOME TAXES 14,530 14,657
OTHER ASSETS
Goodwill and other intangibles, net of amortization 186,568 188,265
MIS development costs, net of amortization 24,448 23,973
Investments and other assets 13,757 12,706
-------- --------
Total other assets 224,773 224,944
-------- --------
TOTAL ASSETS $496,687 $509,284
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 24,057 $ 32,690
Accounts payable 12,409 13,066
Accrued expenses 77,631 87,365
Deferred revenue and gain 4,574 4,505
-------- --------
Total current liabilities 118,671 137,626
LONG-TERM DEBT, less current maturities 91,817 92,510
LONG-TERM DEFERRED GAIN 8,123 8,495
LONG-TERM ACCRUED EXPENSES 42,759 40,354
-------- --------
Total liabilities 261,370 278,985
-------- --------
SHAREHOLDERS' EQUITY
Common stock, stated value $.01 per share;
50,000,000 shares authorized, with 28,011,596 shares issued
and 26,624,677 shares outstanding in 1999 and 27,550,286
shares issued and 26,252,554 shares outstanding in 1998 280 276
Treasury stock, at cost; 1,386,919 shares in 1999
and 1,297,732 shares in 1998 (18,707) (17,438)
Additional paid-in capital 145,811 139,772
Notes receivable from officers and employees (37) (80)
Accumulated other comprehensive (loss) income (70) 442
Unearned compensation (4,523) --
Retained earnings 112,563 107,327
-------- --------
Total shareholders' equity 235,317 230,299
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $496,687 $509,284
======== ========
</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
------------------------------------
January 31, 1999 February 1, 1998
---------------- ----------------
<S> <C> <C>
REVENUES $ 354,619 $ 334,276
COST OF SERVICES 274,481 260,026
--------- ---------
Gross profit 80,138 74,250
OPERATING EXPENSES 60,865 56,902
YEAR 2000 REMEDIATION EXPENSES 3,149 40
DEPRECIATION AND AMORTIZATION 4,196 3,044
--------- ---------
Income from operations 11,928 14,264
INTEREST EXPENSE (1,867) (1,279)
OTHER INCOME (EXPENSE) 80 (107)
--------- ---------
INCOME BEFORE INCOME TAXES 10,141 12,878
INCOME TAXES 3,803 4,829
--------- ---------
NET INCOME $ 6,338 $ 8,049
========= =========
PER COMMON SHARE (BASIC):
BASIC EARNINGS PER COMMON SHARE $ 0.24 $ 0.30
========= =========
SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE 26,273 27,044
========= =========
PER COMMON SHARE (DILUTED):
DILUTED EARNINGS PER COMMON SHARE $ 0.23 $ 0.28
========= =========
SHARES USED IN COMPUTING DILUTED
EARNINGS PER SHARE 27,156 28,553
========= =========
</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>
Three Months Ended
----------------------------------------
January 31, 1999 February 1, 1998
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,338 $ 8,049
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization - operating expenses 4,196 3,044
Depreciation and amortization - cost of services/other expenses 615 252
Provision for doubtful accounts 648 503
Deferred income taxes (251) (37)
Deferred gain on sale of building (372) (372)
Long-term accrued expenses 2,495 1,707
Other (123) 262
Change in current assets and current liabilities:
Accounts receivable, trade 11,498 18,235
Accounts payable (638) (722)
Accrued expenses (9,647) (11,962)
Other 1,632 3,304
-------- --------
Net cash provided by operating activities 16,391 22,263
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of acquisitions, net of cash acquired (8,397) (13,000)
Additions to property and equipment, net (5,047) (3,095)
Increase in MIS development costs, net (1,446) (1,475)
Increase in investments and other non current assets (1,283) (665)
Increase in goodwill and other intangibles, net (41) (205)
-------- --------
Net cash used in investing activities (16,214) (18,440)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 11,250 14,844
Repayments of long-term debt (12,180) (18,323)
Acquisition of treasury stock (1,404) (180)
Dividends paid on common stock (1,102) (1,086)
Other stock activity 43 --
Proceeds from the issuance of common stock 577 687
Stock option exercises, including related tax benefits 781 1,831
-------- --------
Net cash used in financing activities (2,035) (2,227)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1) --
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM
INVESTMENTS (1,859) 1,596
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 9,871 6,678
-------- --------
CASH AND SHORT-TERM INVESTMENTS AT END
OF PERIOD $ 8,012 $ 8,274
======== ========
SUPPLEMENTARY CASH FLOW DISCLOSURES
Cash payments during the period for
Interest $ 1,847 $ 1,289
Income taxes, net of refunds 1,000 202
Noncash investing and financing activity
Issuance of options to benefit plan 152 790
Exercise of benefit plan stock options 104 459
</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 January 31, 1999, if the Company
had terminated each of the swap agreements, the estimated termination
payments by the Company would have totaled approximately $2,329,000.
The Company does not expect to terminate these agreements and expects
them to expire as originally contracted.
During the first fiscal quarter of 1999, the Company entered into a
three-month forward contract to manage exposure to fluctuations in
foreign currency exchange rates related to a $1.7 million receivable
from one of its subsidiaries. This contract terminates at the end of
the Company's second fiscal quarter. Changes in the exchange rate
giving rise to a gain or loss on the contract will be deferred and
recorded in income in the period that the contract is settled.
3. Earnings Per Share
In 1998, the Company adopted Statement of Financial Accounting
Standards ("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:
5
<PAGE> 7
<TABLE>
<CAPTION>
Per Share Data:
(In thousands)
1999 1998
------ ------
<S> <C> <C>
Weighted average shares outstanding (basic) 26,273 27,044
Potential dilutive common shares 883 1,509
------ ------
Weighted average shares outstanding (diluted) 27,156 28,553
------ ======
Anti-dilutive options not included 1,250 914
====== ======
</TABLE>
4. New Accounting Standard
During the first fiscal quarter of 1999, the Company adopted SFAS
No. 130, "Reporting Comprehensive Income." This statement
establishes the standards for the reporting and display of
comprehensive income and its components. Comprehensive income is
the total of net income and all other non-owner changes in
shareholders' equity. Total comprehensive income is as follows:
<TABLE>
<CAPTION>
Three Months Ended
------------------
(In thousands) 1/31/99 2/1/98
------- ------
<S> <C> <C>
Net Income $6,338 $8,049
Other Comprehensive Income:
Change in cumulative foreign currency
translation adjustments, net of tax (320) --
------ ------
Total Comprehensive Income $6,018 $8,049
====== ======
</TABLE>
6
<PAGE> 8
PART I
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATING RESULTS FIRST QUARTER JANUARY 31, 1999 COMPARED TO FIRST QUARTER
FEBRUARY 1, 1998
Revenues increased 6.1% or $20.3 million to $354.6 million in 1999.
Revenue mix in the first fiscal quarter of 1999 shows a shift in the mix of
revenues generated by each business group. Specifically, Professional Services
increased its proportionate contribution to consolidated revenue, while there
was a corresponding decline in relative Staffing Services revenue.
<TABLE>
<CAPTION>
Business Group 1999 % of Consolidated Revenue 1998 % of Consolidated Revenue
- -------------- ------------------------------- ------------------------------
<S> <C> <C>
Staffing Services 60.1% 66.5%
Professional Services 20.0% 14.1%
Outsourcing Services 19.9% 19.4%
----- -----
Total 100.0% 100.0%
</TABLE>
Staffing Services revenues declined 4.1% to $213.1 million. Staffing
Services volume, as measured by hours that staffing employees worked, decreased
6.3% and rates rose 2.7% compared to a volume increase of 10.2% and a rate
increase of 3.6% for 1998. The growth in Staffing Services was impacted by two
primary factors, difficulty in recruiting large volumes of employees due to
tight labor markets and temporary sales coverage challenges resulting from the
recent organizational realignment. These factors resulted in some loss of
mid-market and local accounts. The Company has continued specific recruiting
activities to mitigate labor market challenges. The Company has also augmented
its sales and service delivery functions through a central management focus and
target market area coverage. The rate increases over prior year reflect changes
in business mix to higher priced services. Staffing Services includes the
results of M. David Lowe, Inc., ("MD Lowe") a Houston based company acquired in
December 1997. Outsourcing Services revenues grew 8.8% to $70.6 million.
Outsourcing Services revenues from customers other than IBM increased 14.0% or
$3.4 million over 1998, while revenues from IBM increased $2.3 million or 5.7%.
Professional Services revenues were $70.9 million in 1999 compared to $47.1
million in 1998, a 50.4% increase. The Company's Professional Services group
includes Norrell Information Services, Norrell Financial Staffing, IMCOR and
FSS International Limited ("FSS"), a London based financial and information
technology ("IT") recruitment and international search and selection business
acquired in August 1998. Norrell Information Services was augmented by the
April 1998 acquisition of Trattner Network Ltd., ("Trattner") a California
based information technology company and the July 1998 acquisition of W.E.
Carson Associates, Inc., ("Carson") an information systems consulting firm
based in Atlanta, Georgia.
Gross profit increased 7.9%, or $5.9 million, to $80.1 million in
1999. Gross margin (gross profit as a percent of revenues) increased from 22.2%
in 1998 to 22.6% in the 1999 period. The Professional Services group, which
typically generates higher margins, accounts for a growing percentage of total
gross margin. Staffing Services gross margin decreased from 21.7% in 1998 to
20.3% in 1999 due to changes in business mix. Outsourcing Services gross margin
increased from 17.2% in 1998 to 18.5% in 1999 due to the ramp up of several new
call center projects. Professional Services gross margin increased from 31.8%
in 1998 to 33.6% in 1999 as a result of adding higher margin information
technology consulting services and high end financial staffing services.
Operating expenses increased 7.0%, or $4.0 million. The increase is
primarily due to incremental operating expenses resulting from the acquisitions
of MD Lowe, Trattner, Carson and FSS. If incremental expenses related to these
acquisitions were excluded, operating expenses would have decreased $3.5
million or 6.4%. The decrease is due in part to cost containment efforts in the
field and headquarters operations. Also, during the 1998 period, the Financial
Accounting Standards Board Emerging Issues Task Force issued an accounting
ruling requiring companies to expense as
7
<PAGE> 9
PART I
ITEM 2.
incurred costs associated with business process reengineering. The Company
incurred $1.2 million of incremental costs for business process reengineering
work in 1998. Operating costs, as a percentage of revenue increased from 17.0%
in the 1998 period to 17.2% in the 1999 period. Depreciation and amortization
expense increased 37.8%, or $1.2 million due to increased investment in desktop
computers to support management information and field operating systems and
amortization of goodwill from acquisitions.
Interest expense increased from $1.3 million in 1998, to $1.9 million
in 1999. This increase resulted from carrying a higher debt balance as a result
of acquisitions completed during the latter part of fiscal year 1998. See
Liquidity and Capital Resources where discussed.
Other income (expense) changed from an expense of $107,000 in 1998 to
income of $80,000 in 1999. The 1998 period 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 remained constant year over year at
37.5%.
Net income decreased from $8.0 million in 1998 to $6.3 million in
1999, a 21.3% decrease. Diluted earnings per share decreased from $0.28 in the
1998 period to $0.23 in 1999.
Year 2000 remediation expense increased from $40,000 in 1998 to $3.1
million in the 1999 period. If these costs had been excluded from the 1999
period, net income would have been $8.3 million, a $232,000 or 2.9% increase
over the prior year quarter. Diluted earnings per share would have increased to
$0.31, resulting in a 10.7% increase over first quarter 1998 diluted earnings
per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations in 1999 was $16.4 million compared to cash
provided of $22.3 million in 1998. The 1999 period included a decrease of $11.5
million in trade accounts receivable (an increase in cash) compared to a
decrease of $18.2 million in 1998. The 1998 collections of accounts receivable
were higher due to the completion of a large call center staffing project
during the first quarter of 1998. During the 1998 and 1999 periods, cash
provided by operating activities was partially offset by a decrease in accounts
payable and accrued expenses (a decrease in cash) of $12.7 million and $10.3
million, respectively. The decrease was primarily due to the payment of bonuses
in the first quarter of both years and the first quarter 1998 installment
payment for the fiscal 1997 Orlando franchise repurchase.
Investing activities used cash of $16.2 million in 1999 compared to
cash used of $18.4 million in 1998. The 1999 period included the repayment of
notes payable for two prior acquisitions, the NorCross Teleservices, Inc.
minority interest in fiscal 1998 and MD Lowe in fiscal 1997. The notes payable
repayments resulted in cash uses of $8.4 million. The acquisition of MD Lowe in
December 1997 used cash of $13.0 million. Investing activities for 1999 and
1998 included MIS development costs of $1.5 million in each year. The 1999
period also included approximately $2.7 million for capital costs incurred for
two new call centers in Tucson, Arizona and Victoria, Texas.
Financing activities used cash of $2.0 million in 1999 compared to
cash used of $2.2 million in 1998. Long-term debt used cash in 1999 of $930,000
compared to net cash used of $3.5 million in 1998. The 1998 and 1999 long-term
debt issuance was for the acquisitions discussed above, spending on MIS
development and property and equipment.
At January 31, 1999, the Company had $115.9 million of total debt
outstanding.
8
<PAGE> 10
PART I
ITEM 2.
Consistent with the Company's information systems plan to address
long-term business needs, the Company completed required work on its new weekly
payroll system in its first fiscal quarter. The Company continues the roll out
of the revised branch office order entry system. Anticipated capital spending
for the branch office systems project during fiscal 1999 is in the range of $9
million to $12 million. 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.
OTHER EVENTS
During the first quarter of 1999, the Company purchased 93,000 shares
of its common stock for an aggregate price of $1.4 million. The periodic
purchases were made in the open market and were financed through the Company's
normal operating cash flows.
In December 1998, the Company issued 333,500 shares of restricted
stock to certain employees. These shares will vest to the employees upon the
completion of a 9 year service requirement or as soon as the year 2001 if
certain performance criteria are met. The transaction resulted in $4.6 million
of compensation expense, which has been deferred and will be recognized on a
straight-line basis over 9 years. The balance of deferred compensation expense
is shown in the equity section of the consolidated balance sheet as Unearned
Compensation. In the first fiscal quarter of 1999, $63,000 of compensation
expense was recognized.
NEW ACCOUNTING STANDARD
In June 1997, the Financial Accounting Standards Board issued Standard
No. 130, "Reporting Comprehensive Income." This standard is effective for
fiscal years beginning after December 15, 1997 and was adopted by the Company
in the first fiscal quarter of 1999. See Note 4 to Consolidated Financial
Statements where discussed.
YEAR 2000 ISSUES
The following represents an update to the Company's Year 2000
plan detailed in the 1998 form 10-K filing:
STATE OF READINESS
The Company met its anticipated Strategy phase deadline during the
first fiscal quarter of 1999, but expects to complete mission critical systems
testing by mid August rather than late June.
ESTIMATED COSTS
Total estimates for Year 2000 costs continue to be $18 million
to $25 million. Of the total estimated costs, $7.0 million has been incurred
and expensed since the inception of the Year 2000 project. During fiscal 1999,
$3.1 million has been incurred and expensed.
YEAR 2000 CONTINGENCY PLANS
The Company has secured the services of a consultant who has been
working on Year 2000 projects for the last four years specializing in business
continuity planning. This consultant will assist the Company with contingency
planning and business continuity planning for Year 2000 for all of the Company's
business units.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in the company's market risk
exposure.
9
<PAGE> 11
PART I
ITEM 2.
SPECIAL NOTE REGARDING "FORWARD-LOOKING" INFORMATION
The foregoing section contains forward-looking statements, including
statements regarding, among other matters: (i) the Company's plans, intentions
and expectations with respect to its future prospects, including its business
and growth strategies and its relationships with its major clients; (ii)
industry trends, competitive conditions and client preferences; (iii) expected
capital expenditures to be made in the future, including investments in its
computerized management information systems; (iv) the sufficiency of funds from
operations and available borrowings to meet the Company's working capital and
capital expenditure needs for fiscal 1999; (v) the Company's plans, beliefs and
expectations with respect to changes which have been or will be made to its
computerized management information systems, including modifications to its
payroll and billing systems and other modifications to address Year 2000
issues; and (vi) resolution of pending litigation without material adverse
effect on the Company. This notice is intended to take advantage of the " safe
harbor" provided by the Private Securities Litigation Reform Act of 1995 with
respect to such forward-looking statements. These forward-looking statements
involve a number of risks and uncertainties. Among others, factors that could
cause actual results to differ materially from the Company's beliefs or
expectations are the following: industry trends and trends in the general
economy or in industries in which the Company's major clients operate;
competitive factors in the markets in which the Company or its major clients
operate; the loss or reduction of revenues generated by the Company's major
clients; the variability of quarterly results and seasonality of the Company's
business; the dependence on key personnel who have been hired or retained by
the Company; changes in regulatory requirements which are applicable to the
Company's business; the availability of strategic acquisitions or joint venture
partners; and other factors referenced herein or from time to time in this
document.
10
<PAGE> 12
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.
11
<PAGE> 13
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.
NORRELL CORPORATION
(REGISTRANT)
Date: March 16, 1999 By: /s/ Scott L. Colabuono
-----------------------
Scott L. Colabuono
Vice President and Chief Financial Officer
(On behalf of the Registrant and as Chief
Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-02-1998
<PERIOD-END> JAN-31-1999
<EXCHANGE-RATE> 1
<CASH> 8,012
<SECURITIES> 0
<RECEIVABLES> 216,898
<ALLOWANCES> 8,584
<INVENTORY> 0
<CURRENT-ASSETS> 226,804
<PP&E> 51,992
<DEPRECIATION> 21,412
<TOTAL-ASSETS> 496,687
<CURRENT-LIABILITIES> 118,671
<BONDS> 0
0
0
<COMMON> 280
<OTHER-SE> 235,037
<TOTAL-LIABILITY-AND-EQUITY> 496,687
<SALES> 0
<TOTAL-REVENUES> 354,619
<CGS> 0
<TOTAL-COSTS> 274,481
<OTHER-EXPENSES> 3,149<F1>
<LOSS-PROVISION> 641
<INTEREST-EXPENSE> 1,867
<INCOME-PRETAX> 10,141
<INCOME-TAX> 3,803
<INCOME-CONTINUING> 6,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,338
<EPS-PRIMARY> .24
<EPS-DILUTED> .23
<FN>
<F1>AMOUNT SHOWN IN OTHER EXPENSES REPRESENTS YEAR 2000 COSTS FOR THE PERIOD.
</FN>
</TABLE>
