<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1996
REGISTRATION NO. 333-09109
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
INTERIM SERVICES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-3536544
(State of incorporation) (IRS E.I.N.)
</TABLE>
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FL 33309, (954) 938-7600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN B. SMITH, ESQ.
SENIOR VICE PRESIDENT
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FL 33309
(954) 938-7600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
COPIES TO:
<TABLE>
<S> <C>
KENDRICK T. WALLACE, ESQ. EDWIN D. WILLIAMSON, ESQ.
BRYAN CAVE LLP SULLIVAN & CROMWELL
1200 MAIN STREET, SUITE 3500 1701 PENNSYLVANIA AVE., N.W.
KANSAS CITY, MO 64105 WASHINGTON, D.C. 20006
(816) 374-3200 (202) 956-7500
</TABLE>
----------------
AS SOON AS POSSIBLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
(Approximate date of commencement of proposed sale to the public)
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE TO BE PER OFFERING REGISTRATION
REGISTERED REGISTERED (1)(2) SHARE (2) PRICE (2) FEE (2)
<S> <C> <C> <C> <C>
Common Stock, Par Value $.01 Per 4,887,500
Share.............................. Shares........... $44.00 $185,740,000 $45.00
</TABLE>
(1) Includes 637,106 shares of Common Stock subject to the Underwriters
over-allotment option. Of the Common Stock being registered, 4,885,000
Shares were registered by the initial filing of this registration statement
and 2,500 Shares are being registered hereby.
(2) Estimated solely for calculating the registration fee pursuant to Rule
457(c). The calculation of the initial registration fee was based on the
average of the bid and ask price of the Common Stock as reported on the
Nasdaq National Market on July 26, 1996, which was 38.00. The calculation of
the registration fee for the 2,500 shares registered hereby is based on the
average of the high and low prices of the Common Stock on the New York Stock
Exchange on September 13, 1996 which was $44.00. $64,011 of the filing fee
was paid with the initial filing and $45.00 is paid herewith.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 16, 1996
4,250,000 SHARES
[LOGO]
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 4,250,000 shares of Common Stock offered, 3,400,000 shares are being
offered hereby in the United States and 850,000 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting".
Of the 4,250,000 shares of Common Stock offered, 3,950,000 shares are being
sold by the Company and 300,000 shares are being sold by the Selling
Stockholders. See "Selling Stockholders". The Company will not receive any of
the proceeds from the sale of the shares being sold by the Selling Stockholders.
The last reported sale price of the Common Stock, which is quoted under the
symbol "IS", on the New York Stock Exchange on September 13, 1996 was $44.00 per
share. See "Price Range of Common Stock".
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT (1) COMPANY (2) STOCKHOLDERS(2)
---------------- ------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Per Share...................................... $ $ $ $
Total (3)...................................... $ $ $ $
</TABLE>
- --------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
(2) Before deducting estimated expenses of $480,000 payable by the Company and
$35,000 payable by the Selling Stockholders.
(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 510,000 shares at the initial public offering
price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to 127,500 shares as part of the
concurrent international offering. If such options are exercised in full,
the total initial public offering price, underwriting discount and proceeds
to the Company will be $ , $ and $ , respectively.
See "Underwriting".
-------------------
The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
, 1996 against payment therefor in immediately available funds.
-------------------
GOLDMAN, SACHS & CO.
ROBERT W. BAIRD & CO.
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
------------------------
The date of this Prospectus is , 1996.
<PAGE>
[INSIDE COVER PAGE]
[PHOTOGRAPH COLLAGE DEPICTING INTERIM EMPLOYEES IN VARIOUS WORK SETTINGS]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND THE SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. REFERENCES
TO THE COMPANY'S "SALES" IN THIS PROSPECTUS REFER TO THE AGGREGATE SYSTEM-WIDE
SALES OF ALL COMPANY-OWNED, FRANCHISED AND LICENSED OFFICES. SALES DATA OF THE
COMPANY'S FRANCHISED OFFICES USED IN DETERMINING SALES ARE DERIVED FROM REPORTS
PROVIDED BY THE FRANCHISEES AND ARE NOT AUDITED. REFERENCES TO THE COMPANY'S
"REVENUES" INCLUDE SALES FROM COMPANY-OWNED AND LICENSED OFFICES AND ROYALTIES
AND OTHER INCOME FROM FRANCHISED OFFICES.
THE COMPANY
Interim Services Inc. ("Interim" or the "Company") is a leader in providing
a comprehensive range of customized staffing solutions, including flexible
staffing, home care, full-time placement, consulting and other value-added
services on a national basis to businesses, professional and service
organizations, governmental agencies, health care facilities and individuals. As
of June 28, 1996, the Company operated through a network of 974 offices in the
U.S., Canada and the United Kingdom. Management believes that, based on
system-wide sales, the Company is currently the fourth largest provider of
staffing services in the United States and is the seventh largest provider in
the world.
The Company provides commercial and health care services through two
divisions, each offering numerous specialized skills. The Commercial Services
Division is divided into two units, Commercial Staffing and Professional
Services, which currently represent approximately 50% and 30% of total Company
revenues, respectively. Commercial Staffing fulfills client requirements for
temporary clerical and light industrial skills, in addition to temporary and
permanent workforce management. Professional Services offers consulting and
staffing services in the areas of information technology ("IT"), legal,
accounting, search and human resources. The HealthCare Division provides
physicians, nurses, therapists, home health aides and home companions and
currently represents approximately 20% of total Company revenues.
BUSINESS STRATEGY
The Company's goal is to drive revenue and earnings growth by providing the
most innovative human resource solutions worldwide. The Company's strategy
emphasizes broad geographic coverage, a comprehensive range of services and
customized client solutions. Management believes that the Company's proven
earnings performance, brand identity, aggressive growth strategy and
entrepreneurial operating environment are key competitive advantages. The
following details the major elements of the Company's strategy.
INCREASE REVENUE THROUGH OFFICE EXPANSION. The Company maintains an
aggressive growth strategy which includes establishing Company-owned branches,
adding licensed and franchised offices and making strategic acquisitions. This
diversified growth strategy provides Interim with significant flexibility in
evaluating alternative methods for expansion. Since the initial public offering
of the Company's Common Stock in January 1994 (the "IPO"), Interim has increased
its office base approximately 38% through the addition of 105 greenfield offices
and 71 franchised offices and the acquisition of 90 offices with approximately
$250 million in revenues.
DISPROPORTIONATELY GROW PROFESSIONAL SERVICES. As part of its acquisition
focus, Interim plans to continue to target disproportionate growth in its
Professional Services businesses, as these offer higher margins than traditional
staffing and provide numerous opportunities to cross-sell other services. The
merger with Brandon Systems Corporation, an IT consulting and staffing company,
is the most recent and significant such acquisition to date. Since the IPO,
approximately $210 million of the $250 million in acquired revenues have been in
Professional Services.
3
<PAGE>
LEVERAGE COMMON BRAND IDENTITY. Interim is the only national staffing
company which provides commercial, professional and health care services under
the same brand name (e.g., Interim HealthCare, Interim Technology, Interim
Accounting Professionals). This common brand identity facilitates closer client
relationships and cross-selling of services.
PROVIDE INNOVATIVE VALUE-ADDED CLIENT SOLUTIONS. Interim is committed to
developing innovative human resource solutions to meet the evolving needs of its
clients and providing quality care for its patients. For example, in 1993
Interim pioneered the concept of dedicated, on-site workforce management with
Interim On-Premise ("On-Premise").
DELIVER SERVICES THROUGH SPECIALIZED OFFICES. Each of the Company's offices
is focused on providing staff with a particular skill set to meet customer
needs. It has been the Company's experience that clients prefer dealing with an
office that "speaks their language" and understands their staffing requirements.
SUPPORT ENTREPRENEURIAL ENVIRONMENT. All Interim managers are compensated
based on profits generated within their scope of responsibility. Management
believes the Company's decentralized approach provides strong incentives to
manage expenses and increase profits at each office and results in a creative
and committed management team.
THE FLEXIBLE STAFFING INDUSTRY
In 1995, STAFFING INDUSTRY REPORT estimated that temporary staffing industry
revenues would be approximately $41 billion and that, from 1991 to 1995, such
revenues would have grown at a compound annual rate of approximately 17.5%.
Demand for staffing services has grown significantly as businesses continue to
increase reliance on temporary personnel in order to manage personnel costs and
meet fluctuating staffing requirements. In addition, many companies use flexible
staffing to reduce administrative overhead by outsourcing operations that are
not part of their core business competencies.
The flexible staffing industry is highly fragmented and is currently
experiencing a trend toward consolidation. The key forces driving consolidation
include the growth of regional or national contracts, expansion of professional
specialties and the need for sophisticated management information systems.
Smaller staffing companies that have limited capital and management resources
are finding it increasingly difficult to compete.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company:
U.S. Offering......................................... 3,160,000 shares
International Offering................................ 790,000 shares
Total (1)......................................... 3,950,000 shares
Common Stock offered by the Selling Stockholders:
U.S. Offering......................................... 240,000 shares
International Offering................................ 60,000 shares
Total (2)......................................... 300,000 shares
Total Common Stock to be outstanding after the
Offering (1)(3)........................................ 19,414,351 shares
New York Stock Exchange Symbol.......................... IS
Use of Proceeds......................................... Repayment of debt and general
corporate purposes including
acquisitions
</TABLE>
- --------------
(1) Does not include 637,500 shares of Common Stock that are subject to the
over-allotment options granted by the Company to the U.S. and International
Underwriters. See "Underwriting".
(2) See "Selling Stockholders".
(3) For information regarding Common Stock issuable upon exercise of outstanding
options, see footnote (1) to "Capitalization". As of June 28, 1996, the
Company had 15,464,351 shares of Common Stock outstanding.
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The Company's 52/53 week fiscal year ends on the last Friday of December.
Fiscal years 1993, 1994 and 1995 ended on December 24, December 30 and December
29, respectively. The Company completed a merger with Brandon Systems
Corporation ("Brandon") on May 23, 1996, whereby 4,401,146 outstanding shares of
Brandon and 235,900 Brandon stock options were exchanged for 3,872,690 shares of
Interim Common Stock and 207,592 Interim stock options (the "Brandon Merger").
This transaction was accounted for as a pooling-of-interests and accordingly,
all historical information has been restated as though the companies had been
combined for all periods prior to the Brandon Merger.
Brandon's fiscal year ended on the Sunday nearest to the end of the month of
September. For restatement purposes, Brandon's historical information has been
converted to a calendar year end to coincide with the Company's fiscal year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER, JUNE,
-------------------------------------------------------- --------------------
1991 1992 1993 1994 (1) 1995 1995 1996
--------- --------- ---------- ---------- ---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
System-wide Sales (2)......... $ 904,994 $ 973,099 $1,085,759 $1,279,339 $1,494,260 $ 701,469 $ 879,529
--------- --------- ---------- ---------- ---------- --------- ---------
--------- --------- ---------- ---------- ---------- --------- ---------
Revenues:
Commercial Services Division
Commercial Staffing....... $ 234,773 $ 281,982 $ 347,189 $ 431,348 $ 515,454 $ 238,524 $ 282,276
Professional Services..... 43,967 55,785 79,691 99,935 138,140 57,346 147,376
HealthCare Division......... 138,215 135,956 143,209 165,614 205,719 99,205 113,359
Other Income................ 3,114 3,740 4,171 7,799 4,934 2,021 2,902
--------- --------- ---------- ---------- ---------- --------- ---------
Total Revenues................ $ 420,069 $ 477,463 $ 574,260 $ 704,696 $ 864,247 $ 397,096 $ 545,913
Total Expenses (3)(4)......... 402,946 457,125 549,846 669,212 822,443 379,003 532,008
--------- --------- ---------- ---------- ---------- --------- ---------
Earnings Before Taxes (4)..... $ 17,123 $ 20,338 $ 24,414 $ 35,484 $ 41,804 $ 18,093 $ 13,905
Taxes on Earnings (3)......... 8,260 9,855 11,564 16,028 18,071 7,932 8,762
--------- --------- ---------- ---------- ---------- --------- ---------
Net Earnings (4).............. $ 8,863 $ 10,483 $ 12,850 $ 19,456 $ 23,733 $ 10,161 $ 5,143
--------- --------- ---------- ---------- ---------- --------- ---------
--------- --------- ---------- ---------- ---------- --------- ---------
Net Earnings Per Share (5).... $ 0.64 $ 0.76 $ 0.93 $ 1.26 $ 1.52 $ 0.65 $ 0.32
Net Earnings Per Share
(excluding merger
expenses).................... $ 0.80
Weighted Average Shares....... 13,832 13,846 13,873 15,391 15,662 15,659 15,916
System-wide Offices (6)....... 677 674 728 796 940 871 974
</TABLE>
- ------------------
(1) The 1994 fiscal year contained 53 weeks. All other years contained 52
weeks.
(2) Includes sales of all Company-owned, franchised and licensed offices. Sales
data for franchised offices are derived from reports provided by
franchisees, which are not audited.
(3) Prior to September 25, 1993, the Company's working capital and acquisition
financing were provided by H&R Block, Inc. ("Block"). There was no interest
charged on intercompany debt. In conjunction with the IPO, effective
September 25, 1993, Block formalized this arrangement by (i) providing a
revolving credit facility in the amount of $20,000 to fund the operating
requirements of the Company; (ii) converting $30,000 of intercompany
indebtedness on such date to a term loan and (iii) contributing $51,289 to
the capital of the Company. The earnings data for fiscal 1991, 1992 and
1993 give effect to this arrangement as if it occurred at the beginning of
the periods. Interest expense has been computed at 6% and income taxes at
the statutory rate.
(4) Reflects merger expenses of $8,600 incurred in the six months ended June
28, 1996.
(5) No cash dividend has ever been paid by Interim. However, prior to the
Brandon Merger, Brandon paid cash dividends.
(6) At end of period.
6
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN SHARES OF
THE COMMON STOCK OFFERED HEREBY.
COMPETITIVE MARKET
The flexible staffing industry is highly competitive with limited barriers
to entry. The Company competes in national, regional and local markets with full
service agencies and with specialized staffing service agencies and home care
providers. The majority of competitors are significantly smaller than the
Company. However, several competitors have greater marketing and financial
resources than those of the Company. The Company expects the level of
competition to remain high in the future. See "Description of Operations --
Competition".
ABILITY TO GROW AND MANAGE GROWTH
The Company has experienced significant growth in the past through the
acquisition of existing businesses and the opening of new offices, as well as
through licensing and franchising. The ability of the Company to continue to
grow and to manage its growth will depend on a number of factors, including
existing and emerging competition for acquisitions, the availability of capital,
and the Company's ability to successfully recruit and train staff. There can be
no assurance that the Company will continue to be able to establish and expand
its market presence or successfully identify suitable acquisition candidates
and/or complete the acquisitions on terms favorable to the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Business Strategy".
RELIANCE ON KEY PERSONNEL
The Company is highly dependent on its management. The continued success of
the Company will depend in large part on the abilities and continued services of
Raymond Marcy, its President and Chief Executive Officer, and certain other
officers and key employees. The loss of Mr. Marcy or other officers and key
employees could have a material adverse effect on the Company's operations.
INFORMATION TECHNOLOGY TRENDS
Growth in the use of flexible staffing in the IT area in recent years has
been driven largely by rapid technological advances. As the sophistication and
complexity of business information systems increase, and as the general
corporate trend toward downsizing continues, businesses are increasingly turning
to specialized, outside technical personnel to support their IT operations. The
Company's success in the IT area depends in large part on its ability to keep
pace with existing technology, predict new technological advancements and
recruit and train based on these trends. See "Description of Operations --
Commercial Services Division".
HEALTH CARE COMPETITION
The Company faces increasing competition in health care staffing from
providers such as hospitals, other primary care institutions and stand-alone
home care agencies. As it becomes evident that home care is an efficient
substitute to hospital care, hospitals are experiencing pressure to integrate
the home care services that their doctors may otherwise refer to outsiders.
Today more than half of U.S. hospitals offer home care, according to the
American Hospital Association ("AHA"). Although federal law imposes significant
restrictions on the ability of physicians employed by a hospital to refer
patients to a home health agency owned by or affiliated with the hospital, the
AHA is lobbying for a moratorium on the law and the Health Care Financing
Administration has been slow to undertake enforcement activities. The growth of
hospital-owned home care agencies and the potential for self-referral business
could hinder the growth of the HealthCare Division.
DEPENDENCE ON AVAILABILITY OF QUALIFIED PERSONNEL
The Company depends upon its ability to attract qualified personnel who
possess the skills and experience necessary to meet the staffing requirements of
its clients. The Company must continually
7
<PAGE>
evaluate and upgrade its base of available qualified personnel to keep pace with
changing client needs and emerging technologies. Competition for individuals
with proven professional skills is intense. See "Description of Operations --
Commercial Services Division" and "-- HealthCare Division".
EFFECT OF FLUCTUATIONS IN THE GENERAL ECONOMY
Demand for traditional flexible staffing is significantly affected by the
general level of economic activity. When economic activity increases, flexible
staff are often added before full-time employees are hired. In addition, in the
early stages of a recovery, before employment returns to previous levels, it is
easier to hire employees for placement on a temporary basis. However, as
economic activity slows, many companies reduce their usage of flexible staff
before undertaking layoffs of their regular employees. While traditionally the
demand for the health care services of the Company has not been directly
affected by the overall state of the economy, the Company's HealthCare Division
may in the future be affected by decreases in economic activity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality and Cyclicality of Business".
EMPLOYER RISKS
Flexible staffing providers employ and place people in the workplace of
other businesses. Attendant risks of such activity which could increase the
Company's cost of doing business include possible claims of discrimination and
harassment, employment of illegal aliens, errors and omissions by the Company's
flexible staff, particularly for the acts of temporary professionals (e.g.,
accountants and attorneys), misuse or misappropriation of client funds or
proprietary information, and other similar claims. While the Company maintains
insurance coverage for general liability, errors and omissions and employee
theft, such insurance coverage may not be adequate in scope or amount to cover
any such liability.
GOVERNMENTAL REGULATION
A number of states have adopted laws regulating companies that provide
health care services which could adversely affect the Company's profit margins.
In many of the states with such laws, the Company need only be licensed.
However, in 21 states and the District of Columbia, home care providers must
receive a certificate of need ("CON") from the state. CON laws restrict the
types of care that may be provided and can limit or prohibit a company's ability
to provide certain services and to establish or expand its operations within
such state. CON requirements and restrictions vary substantially from state to
state. See "Description of Operations -- Governmental Regulations".
FRANCHISING RISKS
Approximately 40% of system-wide sales, representing approximately 2.4% of
Company revenues, were derived from franchised operations in the first half of
1996. Moreover, the largest 10 franchisees (based on sales volume) accounted for
16% of system-wide sales in the first half of 1996. Franchisees may leave the
franchise system at the end of the term of their franchise agreements and have
occasionally terminated their franchise agreements before the end of the
agreement term. While the Company's agreements contain non-competition
covenants, such covenants may not be enforceable nor prevent the loss of sales.
See "Description of Operations -- Office Structure".
INSURANCE
The Company is required to pay unemployment insurance premiums and workers'
compensation costs for its flexible staff. Unemployment insurance premiums paid
by employers have continued to increase as a result of increased levels of
unemployment and the extension of periods of time for which benefits are
available. Workers' compensation costs have continued to increase as states have
raised benefit levels and liberalized allowable claims. In addition, the
Company's cost of providing health benefits could increase as the result of
future health care reforms. Specifically, certain federal and state legislative
proposals have included provisions requiring employers to extend health
insurance benefits to flexible staff who do not presently receive such benefits.
Future results of operations could be adversely affected if the Company is not
able to increase the fees charged to its clients to absorb the
8
<PAGE>
increased costs related to unemployment insurance, workers' compensation, or
employer-paid health insurance benefits that must be extended to flexible staff.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
STOCK PRICE VOLATILITY
The price of the Company's Common Stock has increased significantly since
its IPO in January 1994. The market price of the Common Stock could be subject
to significant fluctuations in response to operating results of the Company,
changes in general conditions in the economy, the financial markets, the
staffing industry or other developments affecting the Company, its competitors,
or clients which may be unrelated to the Company's performance. See "Price Range
of Common Stock".
ANTI-TAKEOVER CONSIDERATIONS
The Company's Restated Certificate of Incorporation and the Delaware General
Corporation Law contain certain provisions that are intended to make it more
difficult for a party to acquire, and/or to discourage a party from attempting
to acquire, control of the Company without approval of the Company's Board of
Directors. In addition, the Company's Board of Directors has adopted a
stockholder rights plan. The foregoing may discourage unsolicited tender offers
or other bids for the Company's Common Stock at a premium over the prevailing
market price. In addition, the requirement that a change of control of the
Company be approved by the Public Health Council of the New York State
Department of Public Health may have a similar effect. See "Description of
Operations -- Governmental Regulation".
9
<PAGE>
THE COMPANY
The Company was founded in 1946 to provide temporary industrial staffing
services. Nursing and home care services were added in 1966. On August 16, 1978,
the Company, then known as Personnel Pool of America, Inc., was acquired by H&R
Block, Inc. ("Block"). On January 22, 1991, Block acquired another temporary
service business, Interim Systems Corporation ("ISC"). At the time of the
acquisition, ISC was providing clerical, light industrial and health care
personnel through 178 branch offices in 20 states and three Canadian provinces.
The businesses of the Company and ISC were combined on December 31, 1991. On
June 15, 1992, the Company changed its name to "Interim Services Inc.".
On January 27, 1994, Block completed the sale at $20 per share of 10 million
shares of Interim, its entire holding. Since its IPO, the Company has acquired
12 flexible staffing companies including five in 1994, five in 1995 and two
companies thus far in 1996.
The Company is a Delaware corporation whose corporate headquarters are
located at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309. The
Company's telephone number is (954) 938-7600.
USE OF PROCEEDS
The net proceeds to the Company from the Offering are estimated to be
approximately $165.9 million (approximately $192.8 million if the U.S. and
International Underwriters' over-allotment option is exercised in full) (at an
assumed initial public offering price of $44.00 and after deducting the
estimated underwriting discount and offering expenses). Approximately $120.0
million of such proceeds will be used to repay principal and interest under the
Company's Credit Facilities (as defined below) with the remainder to be used for
general corporate purposes including future acquisitions. To the extent the
Underwriters' over-allotment option is exercised, net proceeds from such
exercise will also be used for general corporate purposes including future
acquisitions. The Company will not receive any proceeds from the sale of shares
by the Selling Stockholders.
The Company maintains a $150.0 million committed senior revolving credit
agreement and has also established short-term, unsecured, uncommitted lines of
credit with certain banks (collectively, the "Credit Facilities"). The Company
utilizes the Credit Facilities to fund acquisitions, to supply working capital
and to provide for general corporate needs. As of June 28, 1996, the total
outstanding debt under all of the Company's Credit Facilities was $120.0 million
with an effective interest rate of 5.98%. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations Description of Company
Financing".
10
<PAGE>
PRICE RANGE OF COMMON STOCK
Since August 7, 1996, the Company's Common Stock has been traded on the New
York Stock Exchange under the symbol "IS". Prior thereto, the Common Stock
traded on the Nasdaq National Market under the symbol "INTM". The following
table sets forth for the periods indicated the high and low closing prices of
the Common Stock as reported by the Nasdaq National Market and the New York
Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1994
First Quarter (from January 27, 1994)....................................................... $ 27 1/8 $ 23 1/4
Second Quarter.............................................................................. 27 1/4 22 1/8
Third Quarter............................................................................... 25 1/8 21 3/8
Fourth Quarter.............................................................................. 26 1/8 22 1/2
1995
First Quarter............................................................................... $ 29 3/4 $ 23 1/4
Second Quarter.............................................................................. 31 23 1/8
Third Quarter............................................................................... 28 1/8 23 5/8
Fourth Quarter.............................................................................. 35 3/8 26 1/2
1996
First Quarter............................................................................... $ 40 3/4 $ 34 1/4
Second Quarter.............................................................................. 50 1/4 34 3/4
Third Quarter -- through August 6, 1996..................................................... 43 36 1/2
-- August 7, 1996 through September 13, 1996.................................... 44 36 5/8
</TABLE>
On September 13, 1996, the closing price of the Common Stock on the New York
Stock Exchange was $44.00. As of June 28, 1996, there were 609 Common
Stockholders of record.
DIVIDEND POLICY
No cash dividend or other cash distribution with respect to the Company's
Common Stock has ever been paid by the Company, although Brandon paid cash
dividends prior to the Brandon Merger. The Company currently intends to retain
any earnings for use in its business and does not anticipate paying any cash
dividends in the foreseeable future.
11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
28, 1996 and as adjusted to reflect the sale of 3,950,000 shares of Common Stock
by the Company at the public offering price of $ per share and the
application of the net proceeds therefrom. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations Description of Company Financing". The table should be read in
conjunction with the selected consolidated financial and operating data, the
consolidated financial statements and the related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 28, 1996
-------------------------
AS
ACTUAL ADJUSTED
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and marketable securities....................................... $ 2,062 $
----------- ------------
----------- ------------
Short-term debt........................................................................ $ 60,000 $ --
Long-term debt......................................................................... 60,000 --
----------- ------------
Total debt......................................................................... $ 120,000 $ --
Stockholders' equity:
Preferred stock, par value $.01 per share; 2,500,000 shares authorized; none issued
or outstanding...................................................................... -- --
Common stock, par value $.01 per share; 25,000,000 shares authorized; 15,464,351
shares issued and outstanding (actual); 19,414,351 (as adjusted)(1)(2).............. 155
Additional paid-in capital........................................................... 86,697
----------- ------------
Retained earnings.................................................................... 145,761
----------- ------------
Total stockholders' equity......................................................... $ 232,613 $
----------- ------------
Total capitalization, including short-term debt.................................... $ 352,613 $
----------- ------------
----------- ------------
</TABLE>
- --------------
(1) An additional 1,915,931 shares of Common Stock are reserved for issuance
upon the exercise of stock options that have been or may be granted under
the Company's stock option plans.
(2) On September 12, 1996, the Company's Restated Certificate of Incorporation
was amended to increase the number of authorized shares of Common Stock to
50,000,000.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated financial statement data for each of the three
years in the period ended December 29,1995 and as of December 30, 1994 and
December 29, 1995 are derived from, and are qualified by reference to, the
Company's audited consolidated financial statements and related notes thereto,
which together with the related report of Deloitte & Touche LLP, independent
auditors, are included elsewhere in this Prospectus. The consolidated financial
statements reflect the combined entities of Interim and Brandon at such dates
and for such periods, consistent with pooling-of-interests treatment. The
selected consolidated financial statement data for the fiscal years ended
December 27, 1991 and December 25, 1992 and as of December 27, 1991, December
25, 1992 and December 24, 1993 are derived from audited consolidated financial
statements of Interim and Brandon not included herein, and have been restated
consistent with pooling-of-interests treatment. The selected consolidated
financial statement data for the six months ended June 30, 1995 and June 28,
1996 and as of June 30, 1995 and June 28, 1996 are derived from the Company's
and Brandon's unaudited consolidated financial statements and, in the opinion of
the Company, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such information and have been
restated consistent with pooling-of-interests treatment. Results for the six
months ended June 28, 1996 are not necessarily indicative of results that may be
expected for a full year. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
thereto included elsewhere in this Prospectus.
13
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER, JUNE,
----------------------------------------------------------- --------------------
1991 1992 1993 1994 (1) 1995 1995 1996
--------- --------- ----------- ----------- ----------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
System-wide Sales (2)......... $ 904,994 $ 973,099 $ 1,085,759 $ 1,279,339 $ 1,494,260 $ 701,469 $ 879,529
--------- --------- ----------- ----------- ----------- --------- ---------
--------- --------- ----------- ----------- ----------- --------- ---------
INCOME STATEMENT DATA:
Revenues:
Commercial Services Division
Commercial Staffing......... $ 234,773 $ 281,982 $ 347,189 $ 431,348 $ 515,454 $ 238,524 $ 282,276
Professional Services....... 43,967 55,785 79,691 99,935 138,140 57,346 147,376
HealthCare Division........... 138,215 135,956 143,209 165,614 205,719 99,205 113,359
Other Income.................. 3,114 3,740 4,171 7,799 4,934 2,021 2,902
--------- --------- ----------- ----------- ----------- --------- ---------
Total Revenues.............. $ 420,069 $ 477,463 $ 574,260 $ 704,696 $ 864,247 $ 397,096 $ 545,913
Expenses:
Cost of Services.............. 288,979 331,782 402,039 491,404 600,169 275,135 380,232
--------- --------- ----------- ----------- ----------- --------- ---------
Gross Profit................ $ 131,090 $ 145,681 $ 172,221 $ 213,292 $ 264,078 $ 121,961 $ 165,681
Selling, General & Admin...... 104,260 106,346 119,763 137,859 177,105 82,462 116,741
Licensee Commissions.......... 4,022 12,142 20,586 33,796 37,295 18,157 18,657
--------- --------- ----------- ----------- ----------- --------- ---------
Results of Operations....... $ 22,808 $ 27,193 $ 31,872 $ 41,637 $ 49,678 $ 21,432 $ 30,283
Merger Expense................ -- -- -- -- -- -- 8,600
Amort. of Intangibles......... 4,243 5,285 5,671 6,041 6,884 3,291 4,337
Interest Expense (3)(4)....... 1,442 1,570 1,787 112 990 (42) 3,441
--------- --------- ----------- ----------- ----------- --------- ---------
Earnings Before Taxes....... $ 17,123 $ 20,338 $ 24,414 $ 35,484 $ 41,804 $ 18,093 $ 13,905
Taxes on Earnings............. 8,260 9,855 11,564 16,028 18,071 7,932 8,762
--------- --------- ----------- ----------- ----------- --------- ---------
Net Earnings................ $ 8,863 $ 10,483 $ 12,850 $ 19,456 $ 23,733 10,161 $ 5,143
--------- --------- ----------- ----------- ----------- --------- ---------
--------- --------- ----------- ----------- ----------- --------- ---------
Net Earnings Per Share (5).... $ 0.64 $ 0.76 $ 0.93 $ 1.26 $ 1.52 $ 0.65 $ 0.32
Net Earnings Per Share
(excluding merger expenses)... $ 0.80
Weighted Average Shares....... 13,832 13,846 13,873 15,391 15,662 15,659 15,916
BALANCE SHEET DATA:
Total Assets.................. $ 226,453 $ 241,616 $ 253,978 $291,650 $441,628 $ 321,133 $ 463,905
OPERATING INFORMATION:
Total Offices (6)............. 677 674 728 796 940 871 974
</TABLE>
- ------------------
(1) The 1994 fiscal year contained 53 weeks. All other years contained 52 weeks.
(2) Includes sales of all Company-owned, franchised and licensed offices. Sales
data for franchised offices are derived from reports provided by
franchisees, which are not audited.
(3) Interest expense is net of interest income earned by Brandon.
(4) Prior to September 25, 1993, the Company's working capital and acquisition
financing were provided by Block. There was no interest charged on
intercompany debt. In conjunction with the IPO, effective September 25,
1993, Block formalized this arrangement by (i) providing a revolving credit
facility in the amount of $20,000 to fund the operating requirements of the
Company; (ii) converting $30,000 of intercompany indebtedness on such date
to a term loan and (iii) contributing $51,289 to the capital of the Company.
The earnings data for fiscal 1991, 1992, and 1993 give effect to this
arrangement as if it occurred at the beginning of the periods. Interest
expense has been computed at 6% and income taxes at the statutory rate.
(5) No cash dividend has ever been paid by Interim. However, prior to the
Brandon Merger, Brandon paid cash dividends.
(6) At end of period.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
"SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA" AND NOTES THERETO INCLUDED
ELSEWHERE IN THIS PROSPECTUS AND THE CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED NOTES INCLUDED ELSEWHERE IN THIS PROSPECTUS.
INTRODUCTION
The Company operates within one industry segment, providing flexible
staffing in the United States, Canada and parts of the United Kingdom. The
Company's business is organized into two divisions, Commercial Services and
HealthCare.
The Company completed a merger with Brandon, a strategic IT staffing
company, on May 23, 1996, which was accounted for under the pooling-of-interests
method of accounting. Accordingly, the historical information has been restated
for all periods prior to the Brandon Merger. All other acquisitions to date have
been accounted for under the purchase method of accounting.
During the nine months ended December 30, 1994, the Company changed its
fiscal year from a 52 or 53-week year ending on the last Friday in March to a 52
or 53-week year ending on the last Friday in December. The change in fiscal year
was made to align the Company's year end more closely with the standard for
companies in the flexible staffing industry. The financial statements have been
restated, for all years presented, to a 52 or 53-week year ending on the last
Friday in December.
GENERAL INDUSTRY TRENDS
Demand for staffing services has grown significantly as businesses continue
to increase reliance on temporary personnel to manage operating costs and meet
fluctuating staffing requirements. In addition, many companies use flexible
staffing to reduce administrative overhead by outsourcing operations that are
not part of their core business competencies. Furthermore, the flexible staffing
industry is highly fragmented and is currently experiencing a trend toward
consolidation, which is contributing to above-market rates of growth for a
number of companies in the industry.
SALES OVERVIEW
System-wide sales data includes sales from all Company-owned, franchised and
licensed offices. Sales data for franchised offices are derived from reports
provided by franchisees, which are not audited. During 1995, Company sales
increased by 16.8% to $1,494.3 million. From fiscal 1993 to 1995, system-wide
sales increased by 37.6%. Sales growth from 1993 through 1995 is due primarily
to the rapidly growing markets in which the Company operates, new branch
openings, growth in licensing and most recently, growth in Professional Services
through the acquisition of IT, legal and accounting branch offices.
Franchisee sales have decreased as a percentage of total sales due to a
slower rate of growth among franchisees and the repurchase of franchises by the
Company. Licensee sales in the six months ended June 28, 1996 decreased as a
percentage of total sales as a result of the conversion of a large license to a
franchise.
The following table summarizes the Company's sales mix for the last three
fiscal years and the six months ended June 30, 1995 and June 28, 1996:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER, ------------------------
------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Branch............................................... 39.4% 37.6% 40.8% 39.7% 47.5%
Franchise............................................ 49.3 47.2 43.9 45.1 39.5
License.............................................. 11.3 15.2 15.3 15.2 13.0
--------- --------- --------- ----- -----
Total Sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- ----- -----
--------- --------- --------- ----- -----
</TABLE>
15
<PAGE>
REVENUE OVERVIEW
From 1993 through 1995 Commercial Services Division revenue increased as a
percentage of total Company revenue principally due to the accelerated growth
rate and acquisition activity in Professional Services. For the six months ended
June 28, 1996, Professional Services revenues increased over the prior year
period primarily as a result of acquisitions.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER, ------------------------
------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Commercial Services Division
Commercial Staffing..................................... 60.5% 61.2% 59.6% 60.1% 51.7%
Professional Services................................... 13.9 14.2 16.0 14.4 27.0
HealthCare Division....................................... 24.9 23.5 23.8 25.0 20.8
Other..................................................... 0.7 1.1 0.6 0.5 0.5
--------- --------- --------- ----- -----
Total Revenues.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- ----- -----
--------- --------- --------- ----- -----
</TABLE>
RESULTS FROM OPERATIONS OVERVIEW
During the past three years, the Company's gross profit margin remained
relatively stable as higher gross margins in Professional Services were
partially offset by (i) the growth of Commercial Staffing revenues, which have
lower gross profit margins, and (ii) the decline of franchise royalties (which
essentially contribute 100% to gross profit) as a percent of total Company
revenue.
The following table sets forth operational results as a percentage of total
revenues for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER, ------------------------
------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenues.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Services........................................ 70.0 69.7 69.4 69.3 69.7
--------- --------- --------- ----- -----
Gross Profit (1)........................................ 30.0 30.3 30.6 30.7 30.3
Selling, General & Administrative....................... 20.9 19.6 20.5 20.8 21.4
Licensee Commissions.................................... 3.6 4.8 4.3 4.5 3.4
--------- --------- --------- ----- -----
Results from Operations................................. 5.5 5.9 5.8 5.4 5.5
Merger Costs............................................ -- -- -- -- 1.6
Amortization of Intangibles............................. 1.0 0.8 0.8 0.8 0.8
Interest................................................ 0.3 -- 0.1 -- 0.6
Taxes................................................... 2.0 2.3 2.1 2.0 1.6
--------- --------- --------- ----- -----
Net Earnings............................................ 2.2% 2.8% 2.8% 2.6% 0.9%
</TABLE>
- --------------
(1) During 1995, the Company reclassified certain non-payroll related costs from
cost of services to selling, general and administrative expenses to conform
to industry norms. The effect of this reclassification is to increase gross
profit by 0.4% in 1995.
SIX MONTHS ENDED JUNE 28, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
REVENUES
For the six months ended June 28, 1996, revenues increased 37.5% to $545.9
million from $397.1 million in the prior year period. Commercial Staffing
revenues increased 18.3% reflecting the expansion of the On-Premise program and
an increase in the number of offices and services provided. Professional
Services revenues increased 157.0% reflecting significant acquisition activity
and internal growth, primarily in IT. HealthCare Division revenues increased
14.3% due to increases in number of offices and expansion of Occupational Health
and Physicians services.
16
<PAGE>
GROSS PROFIT
Gross profit increased 35.8% to $165.7 million from $122.0 million in the
prior year period. Increases in gross profit and cost of services are associated
with the increase in revenues. Gross profit margin decreased to 30.3% from 30.7%
in the prior year principally due to a decline in franchise royalties as a
percent of total Company revenue. Franchise royalties essentially contribute
100% to gross profit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 41.6% to $116.7
million from $82.5 million in the prior year period. Selling, general and
administrative expenses as a percentage of revenues were 21.4% compared to 20.8%
a year ago due to the higher relative costs associated with Professional
Services.
LICENSEE COMMISSIONS
Licensee commissions increased 2.8% to $18.7 million from $18.2 million in
the prior year period. Licensee commissions as a percent of revenues decreased
from 4.6% to 3.4% due to acquisition activity.
AMORTIZATION OF INTANGIBLES
Amortization expense increased 31.8% to $4.3 million from $3.3 million in
the prior year period reflecting the increase in intangible assets arising from
acquisitions.
TAXES ON EARNINGS
The effective tax rate of 63.0% for the first six months of 1996 results
from a large portion of merger costs being non-deductible. The effective tax
rate, excluding the effects of non-recurring merger charges, was 43.6% compared
to 43.8% in the prior year period. The decline in the effective tax rate is due
primarily to the fact that during these periods amortization of certain
non-deductible intangibles remained relatively fixed while earnings before taxes
increased. Management anticipates that the Company's effective income tax rate
will continue to decrease slightly as non-deductible amortization decreases as a
percentage of earnings before taxes.
NET EARNINGS
Net earnings for the six months excluding merger costs (net of taxes)
increased 25.0% to $12.7 million, or $0.80 per share, from $10.2 million, or
$0.65 per share in the prior year period. This represents a 23.1% increase in
per share earnings. Including merger costs, net earnings decreased 49.4% to $5.1
million, or $0.32 per share from $10.2 million or $0.65 per share in the prior
year period. The weighted average number of shares outstanding was 15,916,000
compared to 15,659,000 in the prior year period.
FISCAL 1995 COMPARED TO 1994
REVENUES
Revenues in 1995 increased 22.6% (24.3% excluding the 53rd week in 1994) to
$864.2 million from $704.7 million in 1994. Commercial Staffing revenues
increased 19.5% (21.1% excluding the 53rd week in 1994) due to an increase in
the number of billed hours, offices acquired and continued internal office
expansion. Professional Services revenues increased 38.2% (38.9% excluding the
53rd week in 1994) primarily related to acquisitions that occurred in 1995.
HealthCare Division revenues increased 24.2% (26.8% excluding the 53rd week in
1994) due to continued expansion in home care.
GROSS PROFIT
Gross profit in 1995 increased 23.8% to $264.1 million from $213.3 million
in 1994 (22.4% excluding reclassifications adopted in 1995 in which certain
non-payroll related costs were removed from cost of services to conform to
industry norms). The gross profit margin was 30.6% (30.2% excluding
reclassifications) as compared with 30.3% in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 28.5% to $177.1
million from $137.9 million in 1994. Selling, general and administrative
expenses as a percentage of total revenue increased to 20.5% in 1995 from 19.6%
in 1994 as a result of a full year of HealthCare Division acquisitions made in
17
<PAGE>
1994 and a partial year of Professional Services acquisitions made in 1995.
Professional Services such as executive search, human resources, accounting and
therapy have a higher gross profit margin but require higher selling, general
and administrative expenditures as a percentage of revenue.
LICENSEE COMMISSIONS
In 1995, licensee commissions increased 10.4% to $37.3 million from $33.8
million in 1994 as a result of an increased number of licensees.
AMORTIZATION OF INTANGIBLES
For 1995, amortization expense increased 14.0% to $6.9 million from $6.0
million in the prior year period reflecting the increase in intangible assets
arising from acquisitions.
TAXES ON EARNINGS
The provision for income taxes for 1995 reflects an effective tax rate of
43.2%, which is less than the 45.2% rate for 1994. The lower effective tax rate
for 1995 is the result of (i) a decrease in the effective rate relating to state
income taxes and (ii) non-deductible amortization of intangible assets remaining
fixed while earnings before income taxes increased.
NET EARNINGS
In 1995, net earnings increased 22.0% to $23.7 million from $19.5 million in
1994. Net earnings per share increased 20.6% to $1.52 in 1995 from $1.26 in
1994. The weighted average shares outstanding was 15,662,000 in 1995 compared to
15,391,000 in 1994.
FISCAL 1994 COMPARED TO 1993
REVENUES
Revenues in 1994 increased 22.7% (21.1% excluding the 53rd week in 1994) to
$704.7 million from $574.3 million in 1993. Commercial Staffing revenues
increased 24.2% (22.6% excluding the 53rd week in 1994) due to an increase in
the number of billed hours, the continued economic recovery and increases in the
number of licensed offices. Professional Services revenues increased 25.4%
(24.9% excluding the 53rd week in 1994) due to acquisitions. HealthCare Division
revenues increased 15.6% (13.3% excluding the 53rd week in 1994) due to growth
in the home care market and the addition of more offices.
GROSS PROFIT
Gross profit for 1994 increased 23.8% to $213.3 million from $172.2 million
in 1993. The gross profit margin increased to 30.3% in 1994 from 30.0% in 1993,
primarily as a result of increased HealthCare revenues which typically have
higher gross profit margins than Commercial Staffing. Franchise royalties
increased from the comparable prior year period due to increases in hourly
rates.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 15.1% to $137.9
million from $119.8 million in 1993. Selling, general and administrative
expenses as a percentage of total revenue decreased to 19.6% in 1994 from 20.9%
in 1993 as a result of a decrease in bad debt expenses and acquisitions of
customer lists increasing revenues without commensurate increases in selling,
general and administrative expenses.
LICENSEE COMMISSIONS
In 1994, licensee commissions increased 64.2% to $33.8 million from $20.6
million in 1993 as a result of an increased number of licensees.
AMORTIZATION OF INTANGIBLES
Amortization expense increased 6.5% to $6.0 million from $5.7 million in the
prior year period reflecting the increase in intangible assets arising from
acquisitions.
18
<PAGE>
TAXES ON EARNINGS
The provision for income taxes for 1994 reflects an effective tax rate of
45.2%, which is less than the 47.4% rate for 1993 (adjusted to reflect the Block
financing arrangement as if it occurred at the beginning of the period). The
decline in the effective tax rate is due primarily to the fact that, during
these periods, amortization of certain non-deductible intangibles has remained
relatively fixed while earnings before taxes increased.
NET EARNINGS
Net earnings increased 51.4% to $19.5 million in 1994 from $12.9 million in
1993. Net earnings per share increased 35.5% to $1.26 in 1994 from $0.93 in
1993. The weighted average number of shares outstanding was 15,391,000 in 1994
compared to 13,873,000 in 1993.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through cash generated
by operating activities and bank lines of credit. The Company's principal uses
of cash are funding acquisitions, capital expenditures, working capital needs
and repayment of debt. The nature of the Company's business requires payment of
wages to its flexible staff on a weekly, or bi-weekly basis, while payments from
clients are generally received 30-60 days after billing for Commercial Staffing
and Professional Services and 50 or more days for HealthCare clients. The
Company believes that its internally generated funds and lines of credit are
sufficient to support anticipated levels of growth of the Company.
Net cash flow from operating activities was $14.3 million, $10.1 million and
$6.6 million in years 1993, 1994 and 1995, respectively, and $7.4 million and
($5.8) million for the first six months of 1995 and 1996, respectively. The
decrease in cash flow from operating activities was due to increased funding of
accounts receivable resulting from strong revenue growth during the year and an
increase in loans outstanding to franchisees that are included in other assets.
Accounts receivable increased to $143.2 million at the end of 1995 from $101.7
million at the end of 1994 as a result of an increase in revenues (with
comparable days outstanding) over the previous year and a higher level of health
care receivables as compared to the prior year. Additionally, merger costs paid
in the six months ended June 28, 1996 contributed to net cash being used in
operating activities.
The Company's capital expenditures (excluding acquisitions) during 1993,
1994 and 1995 were funded through internally generated funds. The Company
anticipates increased expenditures to continue development and implementation of
its information technologies. Additionally, the Company has committed
approximately $7.6 million to build and furnish an addition to its corporate
headquarters. As of June 28, 1996, approximately $3.2 million of this amount had
been spent.
Historically, Brandon invested its cash in excess of immediately foreseeable
requirements principally in interest-bearing marketable securities. As a result
of the Brandon Merger, these investments were liquidated to pay down debt.
DESCRIPTION OF COMPANY FINANCING
On April 6, 1994, the Company replaced a $30 million term loan and a $20
million revolving credit facility with Block with a new $50 million committed
senior revolving credit agreement. In November 1995, this facility was increased
to $150 million. The credit facility is available to fund the Company's
acquisitions, to supply working capital and to provide for general corporate
needs. Interest charged on the facility is based, at the Company's option, on
either the banks' base rate or LIBOR plus an applicable margin. The margin
changes based on the Company's leverage and fixed charge ratios. The facility,
which terminates April 6, 1999, contains customary covenants, including the
maintenance of certain financial ratios such as minimum net worth and
restrictions on the incurrence of liens and additional indebtedness.
In addition, the Company has established short term, unsecured, uncommitted
lines of credit with certain banks. These lines of credit are based on LIBOR and
are available to fund the Company's short term capital requirements. As of June
28, 1996, the total outstanding debt under all of the Company's
19
<PAGE>
credit agreements was $120.0 million with an effective interest rate of 5.98%
Approximately $100.0 million of the Company's total outstanding debt was
incurred in connection with acquisitions made by the Company.
INFLATION
The effects of inflation on the Company's operations were not significant
during the periods presented in the financial statements.
SEASONALITY AND CYCLICALITY OF BUSINESS
The Company's businesses are not seasonal in nature. The Company's
commercial business has historically been considered to be cyclical, often
acting as a coincidental indicator of both economic downswings and upswings.
However, as a result of general shifting of employment patterns and the growth
in On-Premise, management believes that the Company's commercial business is
becoming less cyclical. In addition, the Company's health care business is not
cyclical and tends to dampen any cyclical effects from the commercial sector. No
single customer accounts for more than 1% of the Company's revenues.
OTHER MATTERS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".
SFAS No. 121 establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 will apply to the Company for the
year ended December 27, 1996. The adoption of this statement has not had a
material impact on the Company's financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective for the Company beginning January 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25 to its
stock-based compensation awards to employees and Interim will disclose the
required pro forma effect on net income and earnings per share in its 1996 Form
10-K and Annual Report.
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<PAGE>
BUSINESS
COMPANY OVERVIEW
The Company is a leader in providing a comprehensive range of customized
staffing solutions, including flexible staffing, home care, full-time placement,
consulting and other value-added services on a national basis to businesses,
professional and service organizations, governmental agencies, health care
facilities and individuals. As of June 28, 1996, the Company operated through a
network of 974 offices in the U.S., Canada and the United Kingdom. Management
believes that, based on system-wide sales, the Company is currently the fourth
largest provider of staffing services in the United States and is the seventh
largest provider in the world.
The Company provides commercial and health care services through two
divisions, each offering numerous specialized skills. The Commercial Services
Division is divided into two units, Commercial Staffing and Professional
Services, which currently represent approximately 50% and 30% of total Company
revenues, respectively. Commercial Staffing fulfills client requirements for
temporary clerical and light industrial skills, in addition to temporary and
permanent workforce management. Professional Services offers consulting and
staffing services in the areas of IT, legal, accounting, search and human
resources. The HealthCare Division provides physicians, nurses, therapists, home
health aides and home companions and currently represents approximately 20% of
total Company revenues.
THE FLEXIBLE STAFFING INDUSTRY
Demand for staffing services has grown significantly as businesses continue
to increase reliance on temporary personnel to manage operating costs and meet
fluctuating staffing requirements. In addition, many companies use flexible
staffing to reduce administrative overhead by outsourcing operations that are
not part of their core business competencies. Furthermore, the flexible staffing
industry is highly fragmented and is currently experiencing a trend toward
consolidation. The key forces driving consolidation include the growth of
regional or national contracts, expansion of professional specialties and the
need for sophisticated management information systems. Smaller staffing
companies that have limited capital and management resources are increasingly
finding it difficult to compete.
TRADITIONAL FLEXIBLE STAFFING MARKET
In 1995, STAFFING INDUSTRY REPORT estimated that temporary staffing industry
revenues would be approximately $41 billion and that, from 1991 to 1995, such
revenues would have grown at a compound annual rate of approximately 17.5%. The
Bureau of Labor Statistics forecasts that the flexible staffing industry will be
the seventh fastest growing employment category in the United States, increasing
over four times faster than the general labor force from 1994 to 2005.
PROFESSIONAL AND IT STAFFING MARKETS
Certain categories of professional staffing services are experiencing
considerable growth, in excess of the industry as a whole, as companies realize
they can enjoy the same type of flexibility for personnel such as computer
programmers, accountants, paralegals and attorneys as they do with traditional
flexible staff. Furthermore, the use of technology has led to a dramatic rise in
demand for technical project support, software development and other
computer-related services. Corporations are outsourcing many of these
departments and/or utilizing flexible staffing to attempt to keep pace with
rapidly changing technology and increasing demand for these types of technical
skills.
Revenues from professional/specialty temporary staffing were estimated to
grow from $2.4 billion in 1993 to $4.0 billion in 1995, which would represent a
compound annual growth rate of approximately 30% according to STAFFING INDUSTRY
REPORT. In addition, revenues from technical/computer temporary staffing were
estimated to grow from $5.7 billion in 1993 to $8.9 billion in 1995, which would
represent a compound annual growth rate of approximately 25%.
HEALTH CARE STAFFING INDUSTRY
Health care staffing services include providing general and specialized
health care skills and companionship in the home environment, as well as
providing the same health care skills in hospitals,
21
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nursing homes, HMOs and other health care facilities. Home care is one of the
fastest growing sectors of the health care industry and has grown at an
estimated average annual rate of 16% since 1988 according to the Bureau of Labor
Statistics.
Contributing to the growth of home care is national pressure to reduce
health care costs. Studies indicate that the cost of home care averages 40% to
70% of that of institutional care. In addition, industry growth is driven by the
increase in overall demand for health care for the aging American population and
by technological advances which have made it possible to perform many
sophisticated medical procedures in the home.
BUSINESS STRATEGY
The Company's goal is to drive revenue and earnings growth by providing the
most innovative human resource solutions worldwide. The Company's strategy
emphasizes broad geographic coverage, a comprehensive range of services and
customized client solutions. Management believes that the Company's proven
earnings performance, brand identity, aggressive growth strategy and
entrepreneurial operating environment are key competitive advantages. The
following details the major elements of the Company's strategy.
INCREASE REVENUE THROUGH OFFICE EXPANSION
The Company maintains an aggressive growth strategy which includes
establishing Company-owned branches, adding licensed and franchised offices and
making strategic acquisitions. Growth through acquisition is generally preferred
when building experience in a particular professional service area or when an
acquisition in traditional commercial staffing or home care business will enable
Interim to fill-in or expand into an important geographic market. The Company's
successful diversified growth strategy provides Interim with significant
flexibility in evaluating alternative methods for expansion.
Since the IPO, the Company has increased its office base by approximately
38% to 974, adding approximately $250 million in revenues from 12 acquired
flexible staffing companies. The following table provides detail of the
Company's acquisitions since the IPO.
<TABLE>
<CAPTION>
ACQUISITION NUMBER OF REVENUES
ACQUIRED COMPANY DATE OFFICES (1) IN MILLIONS(2) PRIMARY SERVICES
- ---------------------------------------- ------------- --------------- -------------- ------------------------------------
<S> <C> <C> <C> <C>
PROFESSIONAL SERVICES
Brandon Systems Corporation............. 5/96 32 $ 89.0 IT Consulting and Staffing
Of-Counsel.............................. 5/96 1 1.0 Attorney, Paralegal and Legal
Secretary Staffing
Computer Power Group.................... 12/95 17 81.0 IT Consulting and Staffing
Hernand & Partners...................... 11/95 3 2.7 Attorneys Staffing
Juntunen................................ 10/95 2 13.6 IT Staffing, HR Consulting and
Retained Search
OCS Services & Group.................... 6/95 5 16.1 IT Consulting and Staffing
Career Associates/Career Temps.......... 6/95 5 5.6 Accounting Staffing/Search
HEALTHCARE
Therapy Staff Services/Gulf Rehab....... 10/94 1 $ 12.1 Therapy Staffing
Hospital Staffing Services.............. 9/94 18 23.5 Home care
Med South Health Care................... 8/94 1 1.2 Home care
Community Home Health Professionals..... 6/94 4 3.0 Home care
COMMERCIAL STAFFING
ICS Temporary Services.................. 12/94 1 $ 1.6 Clerical and Light Industrial
-- --------------
TOTAL............................... 90 $ 250.4
</TABLE>
- ------------------
(1) Office count at the time of acquisition.
(2) Revenues shown for 1995 and 1994 acquisitions reflect annualized results for
the year. 1996 acquisitions reflect revenues for the year ended prior to
acquisition.
In addition to external acquisitions, Interim usually purchases franchises
and licenses which are for sale. The Company is generally the purchaser of
choice when an Interim franchisee or licensee decides to sell its business. The
Company has a first right of refusal on any franchise sale at the same terms and
conditions as may be agreed with another purchaser and has a standard purchase
option on licenses. Overall, Company-owned branches yield higher profits than
franchised or licensed offices and therefore the purchase of these offices is
accretive to overall earnings.
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<PAGE>
DISPROPORTIONATELY GROW PROFESSIONAL SERVICES
As part of its acquisition focus, Interim plans to continue to target
disproportionate growth in its Professional Services businesses. Demand
continues to expand for professional staffing services, reflecting changing
attitudes toward workforce management and the proliferation of technical skills
required in an office environment. The Company believes that such services tend
to provide higher margins and to be less cyclical than traditional flexible
staffing and to provide attractive opportunities to cross-sell other Interim
services. Since the IPO, approximately $210 million of the $250 million in
acquired revenues have been in Professional Services.
LEVERAGE COMMON BRAND IDENTITY
Interim is the only national staffing company which provides commercial,
professional and health care services under the same brand name (e.g., Interim
HealthCare, Interim Technology, Interim Accounting Professionals). Such brand
identity facilitates cross-selling as management has found that customers
appreciate the ability to do business with a familiar company while also having
access to a broad range of specialists. The common Company identity also
facilitates information flow and smooth interaction among the various Interim
offices. In addition, through its common brand identity the Company and its
franchisees are better able to benefit from national media advertising.
Accordingly, all acquisitions are converted to the Interim name as soon as
practicable. The increasing demand by large companies for centralized staffing
services is increasing the importance of being able to offer a high-profile,
wide range of services over a broad geographic area. Interim is well-positioned
to capitalize on this trend.
PROVIDE INNOVATIVE VALUE-ADDED CLIENT SOLUTIONS
Interim is committed to developing innovative human resource solutions to
meet the evolving needs of its clients and providing quality care for its
patients. For example, in 1993 Interim pioneered the concept of dedicated,
on-site workforce management with Interim On-Premise. Interim On-Premise
accounted for 18% of the Commercial Services Division's revenue for the six
months ended June 28, 1996. Executive search, placement and human resource
consulting services have similarly been added in response to client needs.
Recognizing the changing needs of the health care marketplace and anticipating
the demands of health care payors, Interim developed InterPath, a proprietary
medical record documentation and outcome measurement system for home care
services.
DELIVER SERVICES THROUGH SPECIALIZED OFFICES
Each of the Company's offices is focused on providing staff with a
particular skill set to meet customer needs. The managers and sales people in
these offices have training and experience in the relevant field and are able to
establish relationships with those individuals making the buying decisions for
that service at a client organization. For example, the IT offices market their
services directly to the information resources department head, the accounting
offices market to the controller and the HealthCare offices market to the care
manager. It has been the Company's experience that clients prefer dealing with
an office that "speaks their language" and understands their staffing
requirements.
SUPPORT ENTREPRENEURIAL ENVIRONMENT
The Company seeks highly talented managers who are capable of operating
independently and who will succeed within the Company's decentralized structure.
All Interim managers are compensated based on profits generated within their
scope of responsibility. Branch, area and regional managers are responsible for
their own hiring, pricing, business mix and local promotion. The Company's use
of franchising and licensing contributes to this entrepreneurial environment.
Management believes the Company's decentralized approach provides strong
incentives to manage expenses and increase profits at each office and results in
a creative and committed management team. In addition, the Company has granted
stock-based compensation in the form of options, representing 8% of the
Company's outstanding Common Stock on a fully-diluted basis.
23
<PAGE>
DESCRIPTION OF OPERATIONS
COMMERCIAL SERVICES DIVISION
The Commercial Services Division provides skills in two primary areas,
traditional commercial flexible staffing and professional services. Each area
offers a comprehensive range of skills to fulfill client requirements and are
described below.
Commercial Staffing offers personnel with traditional temporary clerical and
light industrial skills on a flexible basis. In addition to traditional flexible
staffing, Interim provides value-added staffing services to large clients
through its On-Premise product. Approximately 50% of the Company's total
revenues are currently derived from Commercial Staffing.
Professional Services offers a comprehensive range of consulting and
staffing services in the areas of IT, legal, accounting, search and human
resources. The Company provides personnel with skills in specialized
professional areas, including software analysts, computer programmers, network
administrators, attorneys, paralegals, court reporters, accountants and human
resource managers. In addition, the Company offers full-time placement,
recruiting, consulting and executive retained search services. Approximately 30%
of the Company's current total revenues are derived from Professional Services.
COMMERCIAL STAFFING
The traditional flexible staffing business entails providing a wide variety
of clerical, administrative, assembly and light industrial skills. In addition
to supplying personnel to perform general office tasks such as reception,
copying and filing, the Company provides personnel who are proficient in word
processing, graphics, spreadsheets or database management. In the light
industrial area, Interim supplies personnel to perform light industrial tasks
such as electronic and precision assembly, PC board assembly, packaging,
shipping and receiving, warehousing, landscaping, construction and equipment
operation. The Company also offers full-time placement of these skills.
INTERIM ON-PREMISE
Four years ago, the Company introduced a new staffing concept, Interim
On-Premise, whereby a client delegates management of its flexible staffing needs
to the Company, allowing the client to focus on its core business activities.
On-Premise has evolved to include managing a client's entire workforce on-site,
a significant portion of which is permanent staff. To better serve its
On-Premise clients, the Company has developed proprietary software that is
designed to facilitate managing the productivity of personnel at the client's
work site. On-Premise offices are predominantly Company-owned. Since the concept
was introduced, revenues from On-Premise clients have grown to 18% of Commercial
Services revenues for the six months ended June 28, 1996.
The Company has found that Interim On-Premise clients, which currently tend
to utilize Commercial Staffing services, are very receptive to other Interim
services, particularly in the Professional Services area. On-Premise managers
are well positioned to build on established relationships with key people at
client organizations to introduce Professional Services. Conversely,
Professional Services' employees often can identify instances where clients need
additional staffing services and introduce Interim On-Premise. Management
believes the Company's geographic and service breadth provide a strong
competitive advantage in securing such broad-reaching assignments.
PROFESSIONAL SERVICES
Professional Services offers a comprehensive range of consulting and
staffing services in the areas of IT, legal, accounting, search and human
resources. The Company provides personnel with skills in specialized
professional areas, including software analysts, computer programmers, network
administrators, attorneys, paralegals, court reporters, accountants and human
resource managers. In addition, the Company offers full-time placement,
recruiting, consulting and executive retained search services. The Company
believes that Professional Services tend to be less cyclical than traditional
flexible staffing
24
<PAGE>
and that higher margins and cross-selling opportunities are associated with
these services. Management believes that Professional Services has substantial
growth opportunities, and therefore the Company will continue to target
disproportionate growth in these areas. Approximately 30% of the Company's total
revenues are currently derived from Professional Services.
INFORMATION TECHNOLOGY. Through acquisitions made since the IPO, Interim has
built a leading information consulting and staffing services group operating
through 51 offices in the United States and two locations in the United Kingdom.
Now consolidated as Interim Technology, they provide a spectrum of strategic IT
services including consulting, flexible staffing and outsourcing services.
Interim Technology services can be subdivided into three specialty offerings,
Interim Search Solutions, the Consulting Group and the Staffing Solutions Group.
Interim Search Solutions provides a range of search services for technology
specialties in positions up to and including Chief Information Officer. The
group offers both contingency and fully retained search services. Contingency
search results in payment only when a candidate has been placed at a company
whereas retained search, which is generally for senior management positions,
results in payments for services rendered, irrespective of placement.
The Consulting Group specializes in the areas of software design,
development, quality assurance, implementation and management. The Group has
separate practices to supply specialized skills in the areas of client/server,
legacy systems, network integration, software quality management, systems
engineering and technical communications, and is a preferred skills provider for
leading IT product companies such as Microsoft, SAP and Novell. In addition, the
Consulting Group provides management of the significant conversions necessary to
correct many mainframe software's inability to recognize dates after December
31, 1999, the "millennium problem". The Consulting Group provides longer term
staffing and consulting services utilizing highly trained employees.
The Staffing Solutions Group provides operations-based technical and
professional staffing and support for IT operations including help desk and data
center operations, operations analysis, communications, operations and PC
support. This group also offers a unique outsourcing service whereby its clients
maintain complete strategic control of their IT functions but are relieved of
technology staffing and performance issues. Management believes that this
service engenders a partnering relationship by providing the traditional savings
of outsourcing while enabling clients to preserve strategic control over their
information systems and data. The Staffing Solutions Group generally provides
large numbers of personnel for shorter assignments.
LEGAL SERVICES. The Company's legal offices provide attorneys, paralegals,
court reporters, legal secretaries and deposition summary services predominantly
to law firms and corporations. In addition, the Company has a "Depolab" at its
corporate headquarters which utilizes proprietary software that permits law
firms to have depositions summarized into 13 different formats. The centralized
Depolab concept enhances supervision, confidentiality and quality control while
making better use of human resources which would otherwise be located in various
local offices.
ACCOUNTING. Interim Accounting Professionals provides accounting and finance
personnel at all levels including bookkeepers, degreed accountants, certified
public accountants, auditors and controllers. The Company provides flexible
staffing and full-time placement capabilities for its clients.
HUMAN RESOURCE SERVICES. Interim HR Solutions offices provide human resource
consulting and project management at client locations or on an outsourced basis.
In addition, skilled professionals such as contract recruiters and human
resource directors are available for project assignments. This group's expertise
ranges from organizational development and training to compensation, plan design
and benefits analysis.
HEALTHCARE DIVISION
Health care staffing services includes providing general and specialized
health care skills and companionship in the home environment, as well as
providing the same health care skills in hospitals, nursing homes, HMOs and
other health care facilities. Management believes Interim is the second
25
<PAGE>
largest health care staffing company in North America, based on sales. The
HealthCare Division provides a broad range of personnel including physicians,
nurses, therapists, home health aides and companions, occupational health and
on-site medical personnel. During 1995, 80% of the HealthCare Division's
revenues were derived from home care services, with the balance being derived
from Health Care Special Services for hospitals, clinics, nursing homes and
corporations with occupational health programs. Approximately 20% of the
Company's total revenues are currently derived from the HealthCare Division.
HOME CARE
Interim provides a comprehensive, integrated approach to home care. Primary
services include health aides, home companions and skilled nursing services.
Additional services include activities such as home infusion services and the
delivery of home medical equipment. Registered nurses and licensed practical
nurses perform full clinical procedures, including dispensing medication,
administering intravenous therapy and providing post-surgery wound care. In
addition, nurses examine and record patients' progress, provide patient
instructions and teaching, make periodic reports to the physicians in charge and
carry out physicians' instructions. Home health aides are trained to assist the
ill, elderly or disabled. Home companions visit patients in their homes to
provide companionship and attend to other social and personal needs.
The trend towards home care services has resulted in an increase in the
portion of HealthCare revenues being remitted through Medicare and Medicaid.
Medicare business, for which the Company is only reimbursed for its costs, is
not a principal focus of the Company's strategy and represents approximately 5%
of the Company's revenues. Management believes that maintaining federal Medicare
certification is important, however, as it serves as a widely recognized
indicator of quality and standing in local communities and is important in
obtaining more profitable business.
HEALTHCARE SPECIAL SERVICES
INSTITUTIONAL STAFFING. The institutional staffing sector provides licensed
health care personnel for hospitals, nursing homes, HMOs and other health care
facilities. Hospitals utilize temporary nurses to augment core nursing staff
based on the number and condition of hospital patients, and for specialized
staffing needs such as in the intensive care unit, surgery or emergency room.
LOCUM TENENS PHYSICIANS. Interim supplies temporary physicians to physician
groups and clinics, HMOs, and other facilities through nine regionally based
offices which provide complete coverage of the United States. With more offices
than any competitor, Interim is among the largest locum tenens staffing firms
providing primary care physicians in North America. This is a growing, high
margin business, and an example of the type of emerging special opportunities in
the health care industry on which the Company is focusing.
THERAPY SERVICES. The Company's physical and respiratory therapists and
other similar health care professionals provide both home care and health care
staffing services to rehabilitation facilities, school systems, hospitals,
clinics, nursing homes and individuals needing home care all over the country.
These specially trained, licensed personnel are often in short supply, and as a
result, Interim recruits physical, occupational and speech therapists on a
world-wide basis. Interim also offers IN-STEP, a program through which the
Company helps finance overseas training of American students, who would
otherwise be unable to pursue a therapy degree because of the shortage of U.S.
schools offering therapy studies. Upon returning to the U.S. with their degree
and being licensed, these students become members of the Interim workforce for a
minimum of two years.
OCCUPATIONAL HEALTH. In 1995, the Company launched Interim Occupational
Health which manages and staffs on-site clinics and medical health programs for
corporate clients, primarily Fortune 500 companies. Interim Occupational Health
assists companies in enhancing employee safety procedures, developing wellness
programs and implementing aggressive return-to-work policies. Such on-site
management is another example of the Company's services that allow its clients
to focus on their core competencies by reducing job related injuries, thereby
lowering costs and increasing productivity.
26
<PAGE>
OFFICE STRUCTURE
Interim offices are Company-owned, franchised and licensed. Most offices
serve multiple clients in their respective geographic area, with the exception
of Interim On-Premise sites which are established at the client's location to
serve only that client. The following table details the number of offices which
are Company-owned, franchised and licensed as of the end of the periods listed.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER,
SIX MONTHS
------------------------------------- ENDED PERCENT
NUMBER OF OFFICES 1993 1994 1995 JUNE 28, 1996 OF TOTAL
- ------------------------------------------------------ ----------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Company-owned Offices................................. 253 273 342 370 38.0%
Franchised Offices.................................... 355 369 414 426 43.7
Licensed Offices...................................... 120 154 184 178 18.3
--- --- --- --- -----
Total Offices......................................... 728 796 940 974 100.0%
--- --- --- --- -----
--- --- --- --- -----
</TABLE>
OWNED OFFICES
As of June 28, 1996, the Company owned and operated 370 branch offices.
Branch office expansion is generally pursued in new markets or in markets where
Interim has an established presence and is used to increase market penetration.
Additional expansion is achieved by establishing On-Premise locations which tend
to be Company-owned. The Company intends to continue to expand Company-owned
branches in those locations where it can "cluster" multiple offices in close
geographic proximity to utilize centralized regional and area management and
other administrative functions, which leverages growth and increases
profitability.
FRANCHISED OFFICES
The Company has been granting franchises for more than 37 years. The average
tenure of franchise ownership exceeds 13 years, and a number of franchisees are
second generation owners. Most franchisees operate more than one franchise and
franchises are granted for the services offered by both Commercial Services and
HealthCare Divisions. While historically Commercial Services Division franchises
tend to be Commercial Staffing offices, the Company is beginning to offer
franchises for Professional Services offices as well. As of June 28, 1996, the
Company's 85 franchisees operated 426 franchised offices.
The Company grants franchisees the exclusive right to market and furnish
commercial flexible staffing services, health care services or a particular
specialty or niche service within a designated geographic area using the
Company's trade names, service marks, advertising materials, sales programs,
operating procedures, manuals and forms. The Company provides franchises with
its national, regional and local advertising. Franchisees operate their
businesses autonomously within the framework of the Company's policies and
standards and recruit, employ and pay their own full-time and flexible staff.
The Company receives royalty fees from each franchise based upon its sales, and
in return supplies a variety of support and marketing services.
For many years, the Company has had a secured loan program available to
franchisees for working capital or acquisition loans. The Company believes this
loan program has been an important factor in enhancing franchise growth. As of
June 28, 1996, the aggregate balance outstanding on all franchise loans was
$20.5 million.
LICENSED OFFICES
The Company also grants licenses, primarily in its Commercial Services
Division, which give the licensee the right to establish a business utilizing
the Company's trade names, service marks, advertising materials, sales programs,
operating procedures, manuals and forms within a designated territory. As of
June 28, 1996, the Company operated 178 licensed offices.
Licensees are required to observe the Company's operating procedures and
standards and act as representatives of the Company in recruiting, screening,
classifying, employing and placing flexible staff
27
<PAGE>
in response to client orders. The licensee is responsible for establishing the
office and paying related administrative and operating expenses, such as rent,
utilities and salaries of full-time employees. The Company is responsible for
paying the wages of the flexible staff and all related payroll taxes and
insurance. As a result, the Company provides a substantial portion of the
working capital needed for the licensed businesses. The Company has made a loan
program available to licensees similar to that available to franchisees,
although few licensees have accessed it to date.
Sales by the licensed offices are included in the Company's revenues, and
the direct costs of services are included in the Company's cost of services. The
licensee receives a commission from the Company, which presently is equivalent
to 75% of the licensed offices' gross profits. The licensee is required to
participate in the Company's national advertising program and use the Company's
billing, payroll and other data processing services for which a separate fee is
paid to the Company.
CORPORATE SUPPORT SERVICES
FIELD SUPPORT. The Company maintains a strong national support system to
provide services, coordinate marketing and maintain consistent quality standards
throughout the Interim office network. The Company offers a variety of skill
development training for its personnel through Company-generated manuals and
corporate training programs for office management.
CORPORATE SERVICE CENTER. The Company provides its decentralized branch
network with centralized functions for training, payroll, billing, receivables
management, credit and collections, risk management, legal support, cash
management, marketing and health care clinical operations. In addition, the
Company has developed its own proprietary software program called "TempLink" to
efficiently maintain client and flexible staff information, facilitate staffing
selection and payroll functions as well as provide testing software for
consistent skills testing and information management.
HEALTHCARE CLINICAL OPERATIONS. The Company maintains quality control
standards through its national Clinical Operations Department. This department
sets Company-wide medical policies and procedures and establishes guidelines for
compliance with federal, state and local regulations in order to maintain
consistent quality in patient care. All Interim HealthCare offices have
registered nurses who provide supervision of patient care at the local level and
coordinate business strategy with the national organization. Further, as a part
of its overall strategy to become a full-service home care provider, Interim has
entered into a number of relationships with pharmaceutical and home medical
equipment vendors.
CORPORATE MANAGED CARE AND MEDICARE EXPERTISE. During 1995, approximately
10% of the Company's revenues were derived from employer insurance plans, HMO
plans, indemnity insurance plans and private funds. The Company has worked in
tandem with many of the largest HMOs, insurance carriers and health care
facilities and has developed experience with per episode and capitated rates, as
well as traditional fee-for-service payment systems.
Approximately 5% of the Company's 1995 revenues were from the Medicare
program and approximately 4% were from Medicaid programs. Proposals have been
advanced to change the current Medicare cost reimbursement scheme by
substituting a prospective payment plan. Most prospective payment proposals
would phase in a payment system under which providers would ultimately receive
payment on a "per episode" basis, with overall payment limits as well as the
opportunity for providers to share in savings to the extent program payments to
providers are less than annual aggregate limits. While there can be no assurance
that any such proposals will be implemented, nor any assurance as to the final
form of such legislation, Interim does not anticipate any adverse impact from
such changes because of its ability to manage its Medicare caseload and its
ability to keep its current Medicare service costs well below existing cost
caps.
SEASONALITY AND CYCLICALITY OF BUSINESS
The Company's businesses are not seasonal in nature. The Company's
commercial business has historically been considered to be cyclical, often
acting as a coincidental indicator of both economic downswings and upswings.
However, as a result of general shifting of employment patterns and the
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<PAGE>
growth in On-Premise, this business is becoming less cyclical. In addition, the
Company's health care business is not cyclical and tends to dampen any cyclical
effects from the commercial sector. No single customer accounts for more than 1%
of the Company's revenues.
COMPETITION
The flexible staffing industry is competitive with limited barriers to
entry. In addition to the Company, Manpower, Inc., Kelly Services, Inc., and the
Olsten Corporation are the principal national companies in the flexible staffing
industry. The Company also competes with CDI Corporation, Career Horizons, Inc.,
Accustaff, Inc., Robert Half International, Inc., Keane, Inc., COREStaff, Inc.,
Alternative Resources Corporation and Norrell Corporation, as providers of
flexible staffing in regional or specialty staffing markets and with a variety
of smaller, local providers of flexible staffing. No single competitor has more
than a 7% national market share, based on system-wide sales. The Company and the
Olsten Corporation are the principal national staffing companies providing
health care personnel. Management believes that, based on system-wide sales, the
Company is currently the fourth largest provider of staffing services in the
United States and is the seventh largest provider in the world.
Management believes that the Company's size gives it an advantage over
smaller local competitors. As large companies and government agencies in the
commercial area and large insurance companies, hospitals and physician groups in
the health care area are increasingly contracting staffing services on a
national and regional basis, flexible staffing companies that lack a significant
presence may be at a disadvantage in bidding for this business.
TRADEMARKS
In 1992, the Company changed its name and primary identifying trademarks
from "PERSONNEL POOL" and "MEDICAL PERSONNEL POOL" to "INTERIM" and the related
"INTERIM" marks described below. A few locations continue to operate under the
"MEDICAL PERSONNEL POOL" and "PERSONNEL POOL" marks (or related marks used by
such location prior to its acquisition by the Company). The Company has
undertaken extensive national and local advertising and marketing efforts to
increase its name recognition in the marketplace.
The Company uses and has registered with the United States Patent and
Trademark Office the trademarks: INTERIM, INTERIM ACCOUNTING, INTERIM
HEALTHCARE, INTERIM PERSONNEL SERVICES, INTERIM IN-TOUCH, INTERIM LEGAL, INTERIM
ON-PREMISE, INTERIM PHYSICIANS, INTERIM THERAPY, DEPOSUMS, INTERPATH, TEMPLINK,
SKILL ANALYZER, TEMPORARY HEROS, INTERIM ASSISTED CARE, MEDICAL PERSONNEL POOL
and PERSONNEL POOL; it uses and has applications for registration pending for
the trademarks: INTERIM COURT REPORTING, INTERIM TECHNOLOGY, DEPOLAB, and
INTERIM ATTORNEYS; and it uses and claims ownership of the unregistered
trademarks: INTERIM CARE MANAGEMENT, INTERIM PERSONNEL, INTERIM FACILITIES
MANAGEMENT, INTERIM FINANCIAL PERSONNEL, INTERIM HOME CARE, INTERIM OCCUPATIONAL
HEALTH SERVICES, INTERIM MANAGED SERVICES, INTERIM OFFICE TECHNOLOGY, INTERIM
STAFFING and VICTOR PERSONNEL.
GOVERNMENTAL REGULATION
Flexible staffing firms are generally subject to one or more of the
following types of government regulations: (i) regulation of the
employer/employee relationship between a firm and its flexible staff; (ii)
registration, licensing, record keeping and reporting requirements; and (iii)
substantive limitations on its operations. Flexible staffing firms are the legal
employers of their temporary workers. Therefore, the firm is governed by laws
regulating the employer/employee relationship, such as tax withholding or
reporting, social security or retirement, anti-discrimination and workers'
compensation.
The Company's HealthCare Division is subject to periodic examinations by
government agencies and to extensive government regulation under federal, state
and local law, including licensing requirements, certificate of need
requirements, Medicare and Medicaid certification requirements, reimbursement
requirements, anti-fraud, anti-abuse and anti-kickback statutes and regulations,
and laws prohibiting physician ownership or compensation arrangements with home
care agencies. Health care providers are also subject to extensive documentation
requirements of government agencies and industry participants, such as insurance
companies and managed care companies. These regulations
29
<PAGE>
can affect the ability of the Company to collect its fees for services provided.
There can be no assurance that the Company will be able to continue to obtain or
maintain the required governmental approvals or licenses, obtain reimbursement
for its services or avoid compliance or other problems under applicable laws and
regulations.
The federal and state governments have enacted in the past, and will enact
in the future, laws and regulations that affect the provision of and
reimbursement for Medicare services by the Company. However, management believes
that because home care services and flexible staffing enable health care
providers to lower the cost of providing medical services, health care reform
may increase the use of flexible staffing and home care services, which are less
costly than institutional care.
Currently, 193 Interim HealthCare locations (approximately 50%) are
accredited by the Joint Commission on Accreditation of Health Care Organizations
("JCAHO"). Applications for accreditation by the JCAHO are pending for
additional branch and franchised offices. Being accredited by the JCAHO can
simplify the process of becoming an approved home care provider under the
Medicare program and becoming licensed to provide home care services in some
states. The Company intends to seek JCAHO accreditation of all branch and
licensed offices and to encourage all franchised offices to do so as well.
New York State requires the approval by the Public Health Council of the New
York State Department of Health ("NYPHC") of any changes in "the controlling
person" of an operator of a licensed health care services agency (a "LHCSA").
Control of an entity is presumed to exist if any person owns, controls or holds
the power to vote 10% or more of the voting securities of such entity. A person
seeking approval as a controlling person of an operator of a LHCSA must file an
application for NYPHC approval within 30 days of becoming a controlling person,
and pending a decision by the NYPHC, such person may not exercise control over
LHCSA. The Company has six offices in New York State which are LHCSAs. These
offices accounted for 2.3% of the Company's revenues during 1995. If any person
should become the owner or holder, or acquire control, or the right to vote 10%
or more of the common stock of the Company, such person could not exercise
control of the Company's LHCSAs until such ownership, control or holding has
been approved by the NYPHC.
The Company's sale of franchises and licenses is regulated by the Federal
Trade Commission and by authorities in approximately 17 states and one Canadian
province. The Company must deliver a franchise offering circular (similar to a
prospectus) to prospective franchisees or licensees. The Company has either
filed the appropriate registration or obtained an exemption from registration in
states which require franchisors to register in order to sell franchises. The
Company does not anticipate that these requirements will have any material
effect on its ability to sell franchises or licenses.
LEGAL AND ADMINISTRATIVE PROCEEDINGS
The Company, in the ordinary course of its business, is threatened with or
named as a defendant in various lawsuits, and the Company maintains insurance in
such amounts and with such coverage and deductibles as management believes are
reasonable and prudent. The principal risks that the Company insures against are
workers' compensation, personal injury, bodily injury, property damage,
professional malpractice, errors and omissions and fidelity losses.
EMPLOYEES
The Company estimates that it placed approximately 380,000 flexible
personnel with clients in 1995, of which approximately 78,000 were placed, on
average, at any given time. In addition, the Company employs approximately 3,300
staff employees at its corporate headquarters, field offices and national
processing center.
30
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the directors
and certain executive officers of the Company. The Board of Directors is divided
into three classes: Class I, Class II and Class III, with each class consisting,
as nearly as possible, of one-third of the members of the Board. Each director
is elected for a term of three years and the term of one class of directors
expires at each annual meeting of stockholders. Officers are elected or
appointed by the Board of Directors and serve at its discretion.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- ----------- -----------------------------------------------------
<S> <C> <C>
Raymond Marcy........................................ 45 Chief Executive Officer, President and Director
Robert E. Livonius................................... 47 Executive Vice President, Operations
Roy G. Krause........................................ 49 Executive Vice President and Chief Financial Officer
Ronald de Heer....................................... 54 Executive Vice President, European Operations
John B. Smith........................................ 56 Senior Vice President, Legal Counsel and Secretary
Allan C. Sorensen.................................... 57 Chairman and Director
Dr. J. Ian Morrison.................................. 43 Director
A. Michael Victory................................... 61 Director
William F. Evans..................................... 48 Director
Cinda A. Hallman..................................... 51 Director
Harold Toppel........................................ 71 Director
Jerome B. Grossman................................... 76 Director
Steven S. Elbaum..................................... 47 Director
</TABLE>
RAYMOND MARCY has served as the Company's Chief Executive Officer since
September 1991 and as the President and a director since November 1989, as well
as the Chief Operating Officer from November 1989 until September 1991. Prior to
joining the Company, Mr. Marcy served as Senior Vice President of Operations for
Adia Services, Inc. ("Adia"), from 1980 through 1988. While retaining his
position as Senior Vice President of Operations for Adia, from May 1988 until
November 1989, Mr. Marcy was President and Chief Executive Officer of
Nursefinders, Inc., the temporary nursing subsidiary of Adia.
ROBERT E. LIVONIUS has served as an Executive Vice President, Operations of
the Company since August 1993 and as Vice President, HealthCare Division, from
August 1991 to August 1993. Prior to joining the Company, Mr. Livonius served as
Vice President-Field Operations for a division of NYNEX Corporation from June
1986 through June 1991.
ROY G. KRAUSE has served as the Company's Executive Vice President and Chief
Financial Officer since October 1995. Prior to joining the Company, Mr. Krause
served as Executive Vice President of HomeBank Federal Savings Bank and HomeBank
Mortgage Corporation from November 1980 to September 1995.
RONALD DE HEER has served as Executive Vice President, European Operations
since September 1996. Prior to joining the Company Mr. de Heer served as a
Managing Director for Adia S.A. for nearly 10 years in Holland, Belgium and
Luxembourg as well as serving in an executive capacity with a number of service
companies in Europe.
JOHN B. SMITH has served as the Company's Senior Vice President since
January 1980 and as Legal Counsel and Secretary since January 1965. Mr. Smith
also served as a director from January 1969 until May 1995.
31
<PAGE>
ALLEN C. SORENSEN has served as the Chairman of the Board of the Company
since November 1989 and as a Director since 1967. Mr. Sorenson also served as
President of the Company from 1967 to November 1989, and as the Company's Chief
Executive Officer from August 1978 to November 1989. In addition, he was a
Director of Block from 1979 until September 1993.
A. MICHAEL VICTORY has served as a director of the Company since August
1980. Mr. Victory has also served as President of AMEC Capital, Inc., a private
investment firm since January 1993. Prior thereto he was a general partner in
the Cumberland Investment Group.
WILLIAM F. EVANS has served as a director of the Company since August 1993.
Mr. Evans has also served as the Executive Vice President and Chief Financial
Officer of ProSource, Inc., a food service distribution company, since July
1995. Prior thereto, he was the Senior Vice President of Corporate Operations,
of Block, from August 1992 through October 1994, the Executive Vice President
and Chief Financial Officer of Dun & Bradstreet Software Services, Inc., from
1990 through July 1992.
CINDA A. HALLMAN has served as a director of the Company since February
1995. Ms. Hallman has also served as the Vice President, Information Systems and
Chief Information Officer of E. I. duPont de Nemours & Co. ("DuPont") since
November 1991. Prior thereto, she served as the Vice President, Information
Services for DuPont from November 1990 to November 1991 and the Director,
Information Services from April 1988 to November 1991. Ms. Hallman is also a
Trustee of the Medical Center of Delaware and a Board Chair-elect of the United
Way of Delaware.
HAROLD TOPPEL has served as a director of the Company since May 1990. Mr.
Toppel is also the Managing Partner of Toppel Partners, a family investment
partnership. In addition, he serves as a member of the Board of Directors of 1st
United Bank in Boca Raton, Florida and of Sports Authority, Inc.
JEROME B. GROSSMAN has served as a director of the Company since August
1978. Mr. Grossman served as the Executive Vice President and Chief Operating
Officer of Block. from May 1971 to August 1989 and then as Vice Chairman of the
Board of Block until he retired in July 1992. He also was a Director of Block
from September 1973 until September 1992, at which time Mr. Grossman was elected
Vice Chairman Emeritus.
DR. J. IAN MORRISON has served as a director of the Company since August
1993. Mr. Morrison has also been a Senior Fellow of the Institute for the Future
(IFTF), a non-profit research and consulting firm, since August 1996. Prior
thereto he served as President of IFTF from May 1990 to August 1996.
STEVEN S. ELBAUM has served as a director of the Company since the Brandon
Merger. Mr. Elbaum served as a director of Brandon from January 1987 until the
Brandon Merger. Mr. Elbaum has been Chairman of the Board and Chief Executive
Officer of The Alpine Group, Inc., a diversified public holding company, since
June 1984.
32
<PAGE>
SELLING STOCKHOLDERS
The table below sets forth the beneficial ownership of the Company's Common
Stock by the Selling Stockholders at July 29, 1996, and following the sale of
the shares of Common Stock offered hereby.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY TO BE BENEFICIALLY
OWNED BEFORE OWNED AFTER
SALE UNDER THIS SALE UNDER THIS
NAME OF PROSPECTUS (1)(2) PROSPECTUS
SELLING -------------------------- SHARES TO ------------------------
STOCKHOLDERS NUMBER PERCENTAGE BE SOLD NUMBER PERCENTAGE
- --------------------------------------------- ----------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Ira Brown (1)(2) 1,101,640 6.6% 220,000 801,640 4.1%
Myra Brown (1)(2) 1,101,640 6.6 80,000 801,640 4.1
</TABLE>
- --------------
(1) Includes 799,772 shares owned directly by Ira Brown, 168,011 shares owned
directly by Myra Brown, 50,257 shares owned by Ira and Myra Brown's daughter
Rene Brown, over which Mr. and Mrs. Brown severally have voting and
dispositive power pursuant to a power of attorney, and 83,600 shares owned
by and in the name of the Ira B. Brown Foundation, for which Ira B. Brown
serves as a co-trustee.
(2) Until May 23, 1996, Mr. Brown served as a director and as the Chairman and
Chief Executive Officer of Brandon and Mrs. Brown served as a director and
officer of Brandon.
33
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 52,500,000 shares of
which 50,000,000 shares are Common Stock (the "Common Stock") and 2,500,000
shares are Preferred Stock (the "Preferred Stock"). As of June 28, 1996, there
were 15,464,351 issued and outstanding shares of Common Stock as adjusted, and
approximately 1,915,931 additional shares of Common Stock are reserved for
issuance upon the exercise of stock options that have been or may be granted
under the Company's stock option plans. As of June 28, 1996, there were no
issued and outstanding shares of Preferred Stock. On September 9, 1996, the
Company's Stockholders approved an amendment to the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 25,000,000 to 50,000,000.
COMMON STOCK
Generally, the vote of the holders of a majority of all shares of stock of
the Company voting (whether in person or by proxy) on a matter will decide such
matter, unless express provisions of law or the Company's Restated Certificate
of Incorporation require a different vote. All shares of Common Stock are deemed
to be voting stock of the Company, and all holders thereof are entitled to one
vote for each share of stock standing in their names. Holders of Common Stock
have no preemptive rights to purchase or subscribe for any stock or other
securities of the Company. The outstanding Common Stock is fully paid and
non-assessable. Each holder of Common Stock on the applicable record date is
entitled to receive such dividends as may be declared by the Board of Directors
at any meeting out of funds legally available therefor. No dividend or other
distribution with respect to the Common Stock has ever been paid by the Company,
other than in connection with the stockholder rights plan discussed below and by
Brandon prior to the Brandon Merger. The Company currently intends to retain any
earnings for use in its business and does not anticipate paying any cash
dividends in the foreseeable future.
The Company has in place a stockholder rights plan designed to deter
coercive or unfair takeover tactics and to prevent a potential acquirer from
gaining control of the Company without offering a fair price. Under the plan, a
dividend of one right (a "Right") per share was declared and paid on each share
of Common Stock outstanding on April 1, 1994 and with respect to shares of
Common Stock issued after such date, Rights will automatically attach to them
upon their issuance. Under the plan, holders of each Right may purchase from the
Company one one-hundredth of a share of a new class of Preferred Stock, par
value $.01 per share, at a price of $98.00, subject to adjustment, when the
Rights become exercisable. The Rights become exercisable after a public
announcement that, without the prior written consent of the Company's Board of
Directors, a person, together with all affiliates and associates of such person,
shall become the beneficial owner of 15% or more of the then outstanding shares
of Common Stock (an "Unapproved Stock Acquisition"), and after ten business days
following the commencement of, or the public announcement of an intention to
commence, a tender or exchange offer that would result in an Unapproved Stock
Acquisition. If a person or group of persons makes an Unapproved Stock
Acquisition, the registered holder of each Right has the right to receive upon
exercise, in lieu of Preferred Stock, that number of shares of Common Stock
having a market value equal to twice the exercise price of the Right (a
"Subscription Right"). Following an Unapproved Stock Acquisition, if the Company
is involved in a merger, or 50% or more of the Company's assets or earning power
are sold, the registered holder of each Right has the right to receive upon
exercise, in lieu of Preferred Stock, that number of shares of the common stock
of the acquiring company having a market value equal to twice the exercise price
of the Right (a "Merger Right"). After an Unapproved Stock Acquisition, but
before any person or group of persons, together with all affiliates and
associates of such person, shall become the beneficial owner of 50% or more of
the outstanding shares of Common Stock, the Board of Directors may exchange all
or part of the then outstanding and exercisable Rights for Common Stock at an
exchange ratio of one share of Common Stock per Right. Upon any such exchange,
the right of any holder to exercise a Right terminates. The Company may redeem
the Rights at a price of $.01 per Right at any time prior to an Unapproved Stock
Acquisition (and after such time in certain circumstances). The Rights expire on
April 1, 2004, unless extended by the Board of Directors, redeemed or exchanged
by the Company or
34
<PAGE>
after the consummation of a permitted merger transaction. Until a Right is
exercised, the holder thereof, as such, has no rights as a stockholder of the
Company, including the right to vote or to receive dividends. The issuance of
the Rights alone has no dilutive effect and does not affect reported earnings
per share.
PREFERRED STOCK
The Company's Board of Directors has the authority to issue up to 2,500,000
shares of Preferred Stock, par value $.01 per share, in one or more series and
to fix, by resolution, the number of shares constituting any such series, the
designations, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including the
dividend rights, dividend rates, terms of redemption (including sinking fund
provisions), redemption prices, conversion rights, amounts payable on
liquidation and liquidation preferences of the shares constituting any series,
without any further vote or action by the stockholders. No shares of Preferred
Stock are outstanding. Any shares of Preferred Stock so authorized and issued
would have priority over the Common Stock with respect to dividend and
liquidation rights.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The Company's authorized but unissued shares are available for future
issuance without stockholder approval. These additional shares may be utilized
for a variety of proper corporate purposes, including future public offerings to
raise additional capital, to facilitate corporate acquisitions and for employee
benefit plans.
One of the effects of the existence of unissued and unreserved Preferred
Stock and Common Stock may be to enable the Company's Board of Directors to
issue shares to persons friendly to current management which could render more
difficult or discourage an attempt to obtain control of the Company by means of
a merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of the Company's management. Issuance of Preferred Stock might, under
certain circumstances, deter the acquisition of the Company or its securities by
a person concerned about the terms or effect of such Preferred Stock.
VALIDITY OF COMMON STOCK
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Bryan Cave LLP, Kansas City, Missouri and for the
Underwriters by Sullivan & Cromwell, Washington, DC.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 30, 1994 and December 29, 1995, and for each of the
three years in the period ended December 29, 1995, included in the Prospectus
and Registration Statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports thereon appearing herein and
elsewhere in this Registration Statement and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
35
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, 7th Floor, New York, New York 10048. Copies of such materials may be
obtained from the web site that the Commission maintains at http://www.sec.gov.
In addition, such material may also be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005,
and the Pacific Stock Exchange, Incorporated, 301 Pine Street, San Francisco,
California 94104.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-23198)
pursuant to the Exchange Act are incorporated herein by reference:
1. the Company's Annual Report on Form 10-K for the fiscal year ended
December 29, 1995;
2. the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 29, 1996;
3. the Company's Current Reports on Form 8-K dated December 15, 1995, and
as amended by Forms 8-K/A dated December 22, 1995 and February 2, 1996;
4. the Company's Registration Statement on Form S-4, dated April 24, 1996
(File No. 333-2773);
5. the Company's Current Report on Form 8-K, dated June 6, 1996;
6. the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 28, 1996; and
7. all documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of the offering made
hereby.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company, 2050
Spectrum Boulevard, Fort Lauderdale, FL 33309, Attention: Roy Krause, telephone:
(954) 938-7600.
--------------
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
36
<PAGE>
INTERIM SERVICES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-2
Consolidated Statements of Earnings for the Years Ended December 24, 1993, December 30, 1994 and December
29, 1995 and the Six Months Ended June 30, 1995 and June 28, 1996 (Unaudited)............................. F-3
Consolidated Balance Sheets as of December 30, 1994, December 29, 1995 and June 28, 1996 (Unaudited)....... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 24, 1993, December 30, 1994
and December 29, 1995 and the Six Months Ended June 28, 1996 (Unaudited).................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 24, 1993, December 30, 1994 and December
29, 1995 and the Six Months Ended June 30, 1995 and June 28, 1996 (Unaudited)............................. F-6
Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Interim Services Inc.
Fort Lauderdale, Florida
We have audited the accompanying consolidated balance sheets of Interim
Services Inc. and subsidiaries as of December 30, 1994 and December 29, 1995,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended December 29, 1995.
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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Interim
Services Inc. and subsidiaries as of December 30, 1994 and December 29, 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 29, 1995, in conformity with generally
accepted accounting principles.
We previously audited and reported on the consolidated financial statements
of Interim Services Inc. as of December 30, 1994 and December 29, 1995 and for
each of the three years in the period ended December 29, 1995, prior to their
restatement for the merger with Brandon Systems Corporation as described in Note
3 to the consolidated financial statements. The accompanying consolidated
financial statements give retroactive effect to the merger of Brandon Systems
Corporation with Interim Services Inc. on May 23, 1996, which has been accounted
for as a pooling-of-interests.
Deloitte & Touche LLP
Fort Lauderdale, Florida
July 29, 1996
F-2
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------------- ------------------------
DEC. 24, DEC. 30, DEC. 29, JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................................ $ 574,260 $ 704,696 $ 864,247 $ 397,096 $ 545,913
Cost of services.................................... 402,039 491,404 600,169 275,135 380,232
----------- ----------- ----------- ----------- -----------
Gross profit.................................... 172,221 213,292 264,078 121,961 165,681
----------- ----------- ----------- ----------- -----------
Selling, general and administrative expenses........ 119,763 137,859 177,105 82,462 116,741
Licensee commissions................................ 20,586 33,796 37,295 18,157 18,657
Amortization of intangibles......................... 5,671 6,041 6,884 3,291 4,337
Merger expense...................................... -- -- -- -- 8,600
Interest expense.................................... 137 112 990 (42) 3,441
----------- ----------- ----------- ----------- -----------
146,157 177,808 222,274 103,868 151,776
----------- ----------- ----------- ----------- -----------
Earnings before taxes............................... 26,064 35,484 41,804 18,093 13,905
Income taxes........................................ 12,241 16,028 18,071 7,932 8,762
----------- ----------- ----------- ----------- -----------
Net earnings.................................... $ 13,823 $ 19,456 $ 23,733 $ 10,161 $ 5,143
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net earnings per common and common equivalent
shares............................................. $ 1.26 $ 1.52 $ 0.65 $ 0.32
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental earnings data (unaudited):
Pro forma net earnings............................ $ 12,850
-----------
-----------
Pro forma net earnings per share.................. $ 0.93
-----------
-----------
Weighted average shares outstanding................. 13,873 15,391 15,662 15,659 15,916
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 29, JUNE 28,
1994 1995 1996
-------------- -------------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Current Assets:
Cash and cash equivalents......................................... $ 6,872 $ 4,025 $ 2,007
Marketable securities............................................. 10,335 15,675 55
Receivables, less allowance for doubtful accounts of $1,602,
$2,176 and $2,813 at December 30, 1994, December 29, 1995 and
June 28, 1996, respectively...................................... 101,720 143,209 167,274
Insurance deposits................................................ 43,695 50,686 51,393
Other current assets.............................................. 6,126 9,270 11,430
-------------- -------------- -----------
Total current assets............................................ 168,748 222,865 232,159
Intangible assets, net.............................................. 91,699 171,529 174,154
Property and equipment, net......................................... 20,456 27,128 35,469
Other assets........................................................ 10,747 20,106 22,123
-------------- -------------- -----------
$ 291,650 $ 441,628 $ 463,905
-------------- -------------- -----------
-------------- -------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks............................................ $ 6,100 $ 54,727 $ 60,000
Accounts payable and other accrued expenses....................... 17,810 25,829 27,239
Accrued salaries, wages, and payroll taxes........................ 19,524 30,005 39,193
Accrued insurance................................................. 42,520 43,319 44,860
Dividend payable.................................................. 311 372 --
Accrued income taxes.............................................. 486 1,087 --
-------------- -------------- -----------
Total current liabilities....................................... 86,751 155,339 171,292
Long-Term Obligations............................................... -- 60,000 60,000
Commitments and Contingencies (see notes 14 and 15)
Stockholders' Equity:
Preferred stock, par value $.01 per share; 2,500,000 shares
authorized; none issued or outstanding........................... -- -- --
Common stock, par value $.01 per share; 25,000,000 shares
authorized; 15,424,870, 15,376,248 and 15,464,351 shares issued
and outstanding at
December 30, 1994, December 29, 1995 and June 28, 1996,
respectively..................................................... 154 154 155
Additional paid-in capital........................................ 86,069 85,121 86,697
Unrealized gain (loss) on marketable securities................... (72) 26 --
Retained earnings................................................. 118,748 140,988 145,761
-------------- -------------- -----------
Total stockholders' equity...................................... 204,899 226,289 232,613
-------------- -------------- -----------
$ 291,650 $ 441,628 $ 463,905
-------------- -------------- -----------
-------------- -------------- -----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL GAIN (LOSS) ON
PAID-IN MARKETABLE RETAINED
COMMON STOCK CAPITAL SECURITIES EARNINGS TOTAL
------------- ----------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance as of December 26, 1992................... $ 100 $ -- $ -- $ 74,667 $ 74,767
Adjustment for pooling-of-interests............... 38 5,778 -- 13,096 18,912
----- ----------- --------------- ----------- ---------
Balance as of December 26, 1992, restated......... 138 5,778 -- 87,763 93,679
Net earnings...................................... -- -- -- 13,823 13,823
Transactions of pooled company.................... -- 130 -- (944) (814)
Change in foreign currency translation
adjustment....................................... -- -- -- 17 17
Contribution to capital........................... -- 51,289 -- -- 51,289
----- ----------- --------------- ----------- ---------
Balance as of December 24, 1993................... 138 57,197 -- 100,659 157,994
Net earnings...................................... -- -- -- 19,456 19,456
Transactions of pooled company.................... 1 612 (72) (1,105) (564)
Change in foreign currency translation
adjustment....................................... -- -- -- (262) (262)
Proceeds from exercise of over-allotment option
net of expenses of $1,725........................ 15 28,260 -- -- 28,275
----- ----------- --------------- ----------- ---------
Balance as of December 24, 1994................... 154 86,069 (72) 118,748 204,899
Net earnings...................................... -- -- -- 23,733 23,733
Transactions of pooled company.................... -- (1,349) 98 (1,308) (2,559)
Change in foreign currency translation
adjustment....................................... -- -- -- (185) (185)
Proceeds from exercise of employee stock
options.......................................... -- 401 -- -- 401
----- ----------- --------------- ----------- ---------
Balance as of December 29, 1995................... 154 85,121 26 140,988 226,289
Net earnings...................................... -- -- -- 5,143 5,143
Transactions of pooled company.................... -- 271 (26) (374) (129)
Change in foreign currency translation
adjustment....................................... -- -- -- 4 4
Proceeds from exercise of employee stock
options.......................................... 1 1,305 -- -- 1,306
----- ----------- --------------- ----------- ---------
Balance as of June 28, 1996 (unaudited)........... $ 155 $ 86,697 $ -- $ 145,761 $ 232,613
----- ----------- --------------- ----------- ---------
----- ----------- --------------- ----------- ---------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
DEC. 24 DEC. 30 DEC. 29 JUNE 30 JUNE 28
1993 1994 1995 1995 1996
--------- --------- --------- ----------- -----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings............................................... $ 13,823 $ 19,456 $ 23,733 $ 10,161 $ 5,143
Adjustments to reconcile net earnings to net cash from
operating activities:
Depreciation and amortization............................ 11,419 12,173 14,556 6,931 9,098
(Benefit from) Provision for deferred taxes on income.... (1,487) 775 (74) (111) 327
Changes in assets and liabilities, net of effects of
acquisitions:
Receivables............................................ (10,079) (19,118) (27,458) (8,022) (24,308)
Insurance deposits..................................... (3,388) (12,448) (6,991) 13 (707)
Other current assets................................... (2,591) 285 (2,334) (3,244) (2,475)
Other assets........................................... (574) (5,324) (9,527) 863 (3,031)
Accounts payable and accrued expenses.................. (77) 2,438 3,143 (2,881) 524
Accrued salaries, wages and payroll taxes.............. (351) 6,797 10,481 3,688 9,152
Accrued insurance...................................... 4,427 8,171 799 597 1,541
Accrued income taxes................................... 3,042 (2,810) 460 (448) (1,087)
Other.................................................. 138 (335) (226) (128) (1)
--------- --------- --------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES.......................................... 14,302 10,060 6,562 7,419 (5,824)
--------- --------- --------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................... (5,980) (9,576) (11,303) (6,896) (12,919)
Purchases of marketable securities......................... (7,927) (10,276) (16,910) (11,443) (1,123)
Proceeds from sales of marketable securities............... 6,849 9,106 11,736 9,562 16,754
Decrease in deposits....................................... (4) (4) 35 5 --
Acquisitions, net of cash acquired......................... (4,058) (10,758) (98,990) (18,055) (5,382)
--------- --------- --------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES................ (11,120) (21,508) (115,432) (26,827) (2,670)
--------- --------- --------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances (Repayments) of Notes Payable.................... -- 6,100 108,218 18,727 5,273
Dividends paid............................................. (893) (1,032) (1,247) (622) (374)
Purchase of treasury stock................................. (3) -- (1,805) -- --
Issuance of Common Stock under employee stock purchase
plan...................................................... -- 144 189 88 99
Issuance of Common Stock under dividend reinvestment and
stock purchase plan....................................... -- -- 4 -- 8
Repayments to H&R Block.................................... (7,728) (30,000) -- -- --
Proceeds from exercise of employee stock options........... 84 467 664 209 1,470
Proceeds from exercise of over-allotment option............ -- 28,275 -- -- --
--------- --------- --------- ----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES.......................................... (8,540) 3,954 106,023 18,402 6,476
--------- --------- --------- ----------- -----------
Net decrease in cash and cash equivalents.................... (5,358) (7,494) (2,847) (1,066) (2,018)
Cash and cash equivalents, beginning of period............... 19,724 14,366 6,872 6,872 4,025
--------- --------- --------- ----------- -----------
Cash and cash equivalents, end of period..................... $ 14,366 $ 6,872 $ 4,025 $ 5,866 $ 2,007
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid.......................................... $ 9,337 $ 16,911 $ 17,570 $ 8,652 $ 11,422
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
Interest paid.............................................. $ 456 $ 528 $ 1,452 $ 348 $ 3,841
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Conversion of due to parent indebtedness to a $30 million
term loan and contribution of balance to additional paid-in
capital..................................................... $ 30,000
Term loan.................................................... 51,289
---------
Additional paid-in capital................................... $ 81,289
---------
---------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. ORGANIZATION
HISTORY -- Prior to January 27, 1994, the effective date of its initial
public offering, Interim Services Inc. ("Interim" or the "Company") was a
wholly-owned subsidiary of H&R Block, Inc. ("Block"). On January 27, 1994, Block
completed the sale at $20 per share of 10 million shares of Interim, its entire
holdings. On January 28, 1994, Interim's shares commenced trading on the Nasdaq
National Market. In addition, the underwriters for the offering exercised their
over-allotment option and purchased from Interim an additional 1.5 million
shares at $20 per share. The net proceeds to Interim were $28,275.
Prior to September 25, 1993, the Company's working capital and acquisition
financing were provided by Block. There was no interest charged on intercompany
debt. Effective September 25, 1993, Block formalized this arrangement by (i)
providing a revolving credit facility in the amount of $20,000 to fund the
operating requirements of Interim; (ii) converting $30,000 of intercompany
indebtedness on such date to a term loan, and (iii) contributing $51,289 to the
capital of Interim. The supplemental earnings data for the year ended December
24, 1993 (unaudited) gives effect to this arrangement as if it occurred at the
beginning of the period. Interest expense has been computed at 6% and income
taxes at the statutory rate.
BUSINESS -- The Company is a leader in providing a comprehensive range of
customized staffing solutions, including flexible staffing, home care, full-time
placement, consulting and other value-added services on a national basis to
businesses, professional and service organizations, governmental agencies,
health care facilities and individuals. As of June 28, 1996, the Company
operated through a network of offices in the U.S., Canada and the United
Kingdom.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The consolidated financial statements include the
accounts of Interim and Brandon Systems Corporation ("Brandon") (a wholly-owned
subsidiary of Interim), collectively referred to as the Company. As discussed in
Note 3, on May 23, 1996, Brandon became a wholly-owned subsidiary of Interim.
These consolidated financial statements have been prepared under the pooling-of-
interests method of accounting and reflect the combined financial position and
operating results of Interim and Brandon for all periods presented. There were
no significant intercompany transactions during the periods covered by these
consolidated financial statements.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated.
PERVASIVENESS OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
FISCAL YEAR -- The Company's fiscal year is comprised of 52 or 53 weeks,
ending on the last Friday in December. The year ended December 30, 1994
contained 53 weeks and the years ended December 29, 1995 and December 24, 1993
contained 52 weeks.
INTANGIBLE ASSETS -- The excess of cost of franchise and independent offices
acquired over the fair value of net assets acquired is being amortized on a
straight-line basis over various periods averaging
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
approximately 29 years. The Company evaluates the recoverability of its
investments in such intangible assets in relation to anticipated cash flows on
an undiscounted basis. If the estimated future cash flows are projected to be
less than the carrying value, an impairment write-down would be recorded.
REVENUES -- The Company generates revenues from sales by its own branch and
licensed operations and from royalties earned on sales by its franchise
operations. Franchise royalties, which are included in revenues, were $20,458,
$22,790 and $24,316 for the years ended December 24, 1993, December 30, 1994 and
December 29, 1995, respectively, and $11,813 and $13,093 for the six months
ended June 30, 1995 and June 28, 1996, respectively. Revenues and the related
labor costs and payroll taxes are recorded in the period in which the service is
performed.
The Company utilizes two forms of franchising agreements. Under the first
form, the Company records franchise royalties, based upon the contractual
percentage of franchise sales, in the period in which the franchise provides the
service. Under the second form (termed "license" by the Company), revenues
generated by the franchisee operations and related direct costs are included as
part of the Company's revenues from services and cost of services, respectively.
The net distribution paid to the licensee is based upon a percentage of the
gross profit generated, and is captioned "licensee commissions" in the
Consolidated Statements of Earnings.
Revenues generated from the sales of licenses and franchises are recognized
when the Company has performed substantially all of its obligations under its
franchise agreements and when collectibility of such amounts is reasonably
assured.
MARKETABLE SECURITIES -- Marketable securities, which consist of tax-exempt
securities issued by various state agencies and their political subdivisions,
and U.S. Treasury Notes, have been categorized as available for sale and, as a
result, are stated at fair value. Unrealized gains and losses are included as a
component of stockholders' equity until realized.
DEPRECIATION AND AMORTIZATION -- Buildings and equipment are depreciated
over the estimated useful lives of the assets using the straight-line method.
Leasehold improvements are amortized over the shorter of their estimated useful
life or the lease term using the straight-line method. Maintenance and repairs
are expensed as incurred. Expenditures which significantly increase the value of
the assets or extend useful lives are capitalized.
WORKERS' COMPENSATION BENEFITS -- The Company's workers' compensation
coverage is retrospectively rated based upon ultimate incurred losses and loss
adjustment expenses. Workers' compensation costs are accrued based upon the
aggregate of the liability for reported claims and loss adjustment expenses and
an actuarially determined estimated liability for claims incurred but not
reported.
INCOME TAXES -- The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109 ("SFAS No.
109"), "Accounting for Income Taxes". SFAS No. 109 provides that income taxes
are accounted for using an asset and liability method which requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of temporary differences, which are not material, between tax bases
and financial reporting bases of assets and liabilities.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company has entered into an income tax sharing agreement with Block to
provide for the payment of taxes for periods prior to January 27, 1994, during
which Block and the Company filed a consolidated federal income tax return, and
whereby Block shall be liable for, and shall hold the Company harmless against,
any liability for income taxes for any period prior to January 27, 1994.
EARNINGS PER SHARE -- Earnings per share and supplemental earnings per share
(see Note 1) are computed based upon the weighted average number of common and
common equivalent shares outstanding, adjusted for the exchange ratio of the
merger described in Note 3. Earnings per share and supplemental earnings per
share, assuming full dilution, have not been shown as there would be no material
dilution.
ALLOWANCE FOR DOUBTFUL ACCOUNTS -- The Company carries accounts and notes
receivable at the amount it deems to be collectible. Accordingly, the Company
provides allowances for accounts and/or notes receivable it deems to be
uncollectible based on management's best estimates. Recoveries are recognized in
the period they are received. The ultimate amount of accounts and/or notes
receivable that become uncollectible could differ from those estimated.
CONSOLIDATED STATEMENTS OF CASH FLOWS -- For purposes of the Consolidated
Statements of Cash Flows, the Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.
DISCLOSURE REGARDING FINANCIAL INSTRUMENTS -- The carrying amounts of cash
and cash equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value due to the relatively short maturity of the respective
instruments.
The carrying amounts of notes payable to banks and long-term debt
obligations issued pursuant to the Company's bank credit agreements and
revolving credit facility approximate fair value because the interest rates on
these instruments change with market interest rates.
NEW ACCOUNTING STANDARDS -- In March 1995, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be held
and used and for long-lived assets and certain identifiable intangibles to be
disposed of. SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicated that the
carrying amount of an asset may not be recoverable. The Company adopted SFAS No.
121 during the quarter ended March 29, 1996. The adoption of this statement did
not have a material impact on the Company's financial position or results of
operations.
The FASB has also issued SFAS No. 123, "Accounting for Stock-Based
Compensation". This statement defines a fair value based method of accounting
for an employee stock option. This statement also permits a company to continue
to measure compensation costs for their stock option plan using the intrinsic
value based method of accounting prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS No. 123
requires disclosure of the pro forma net income and earnings per share that
would be reported if the fair value method was utilized. The Company plans to
continue to utilize the provisions of APB No. 25 to account for such
compensation costs, and will provide the pro forma disclosures required by SFAS
No. 123 in their 1996 financial statements.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
3. THE BRANDON SYSTEMS MERGER
On May 23, 1996, the Company completed its merger with Brandon Systems
Corporation, an information technology staffing company. The Company issued
3,872,690 shares of its common stock in exchange for 100% of the outstanding
shares of Brandon common stock. In addition, Brandon stock options outstanding
at the effective time of the merger were converted into options to purchase an
aggregate of 207,592 additional Interim common shares.
The merger has been accounted for as a pooling-of-interests for accounting
and financial reporting purposes. The pooling-of-interests method of accounting
is intended to present as a single interest two or more common shareholders'
interests which were previously independent; accordingly, the historical
financial statements for the periods prior to the merger are restated as though
the companies had been combined. The restated financial statements are adjusted
to conform the accounting policies of the combined companies and fiscal
reporting periods of the Company.
All fees and expenses related to the merger and the consolidation and
restructuring of the combined companies have been expensed as required under the
pooling-of-interests accounting method and are reflected in the consolidated
statements of earnings for the period ending June 28, 1996. Such fees and
expenses approximate $8,600 ($7,555 after tax) and include investment banking,
legal and accounting fees, severance and benefit-related costs, and other costs
of consolidating operations.
The following summarizes amounts previously reported by Interim and Brandon
prior to the transaction:
<TABLE>
<CAPTION>
YEARS ENDED QUARTERS ENDED
------------------------------------- ------------------------
DEC. 24, DEC. 30, DEC. 29, MAR. 31, MAR. 29,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Interim.................................. $ 515,033 $ 634,417 $ 780,886 $ 173,517 $ 242,414
Brandon.................................. 59,227 70,279 83,361 20,135 22,311
----------- ----------- ----------- ----------- -----------
Combined............................... $ 574,260 $ 704,696 $ 864,247 $ 193,652 $ 264,725
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net earnings:
Interim.................................. $ 10,383 $ 14,157 $ 17,527 $ 3,241 $ 4,245
Brandon.................................. 3,440 5,299 6,206 1,451 1,244
----------- ----------- ----------- ----------- -----------
Combined............................... $ 13,823 $ 19,456 $ 23,733 $ 4,692 $ 5,489
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Pro forma net earnings:
Interim.................................. $ 9,410
Brandon.................................. 3,440
-----------
Combined............................... $ 12,850
-----------
-----------
Net earnings per share:
Interim.................................. $ 0.92 $ 1.12 $ 0.21 $ 0.27
Brandon.................................. 0.34 0.40 0.09 0.08
----------- ----------- ----------- -----------
Combined............................... $ 1.26 $ 1.52 $ 0.30 $ 0.35
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Pro forma net earnings per share:
Interim.................................. $ 0.68
Brandon.................................. 0.25
-----------
Combined............................... $ 0.93
-----------
-----------
</TABLE>
4. MARKETABLE SECURITIES
At December 29, 1995 net unrealized gains on marketable securities was $44
and is included in stockholders' equity net of applicable taxes of $18. Gross
unrealized gains and losses were $87 and $43
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
4. MARKETABLE SECURITIES (CONTINUED)
At December 29, 1995, respectively. There were $57 of gross realized gains and
$37 of gross realized losses during the fiscal year ended December 29, 1995. At
June 28, 1996 the Company had no significant marketable securities and as such,
no unrealized gains or losses were recorded. There were $43 of gross realized
gains and a $68 of gross realized losses during the six months ended June 28,
1996. For the purpose of determining gross realized gains and losses, the
amortized cost of securities sold is based upon specific identification.
The contractual maturities of available for sale marketable debt securities,
including accrued interest are as follows:
<TABLE>
<CAPTION>
DEC. 30, 1994 DEC. 29, 1995 JUNE 28, 1996
---------------------- ---------------------- ----------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Due within one year................. $ 7,257 $ 7,244 $ 10,816 $ 10,862 $ 55 $ 55
Due after one through five years.... 1,644 1,613 4,054 4,093 -- --
Due five through ten years.......... 495 489 117 116 -- --
Due after ten years................. 1,061 989 644 604 -- --
----------- --------- ----------- --------- ----------- ---------
$ 10,457 $ 10,335 $ 15,631 $ 15,675 $ 55 $ 55
----------- --------- ----------- --------- ----------- ---------
----------- --------- ----------- --------- ----------- ---------
</TABLE>
5. INTANGIBLE ASSETS
A summary of intangible assets is as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE LIFE DEC. 30, AVERAGE LIFE DEC. 29, AVERAGE LIFE JUNE 28,
(IN YEARS) 1994 (IN YEARS) 1995 (IN YEARS) 1996
--------------- ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Excess of cost over fair value of net
assets acquired...................... 23 $ 116,670 29 $ 202,351 29 $ 209,329
Customer lists........................ 5 1,706 5 1,985 5 1,986
Non-compete agreements................ 5 1,581 5 2,376 5 2,376
Other intangible assets............... 5 531 5 516 5 612
----------- ----------- -----------
22 120,488 29 207,228 29 214,303
Less accumulated amortization......... (28,789) (35,699) (40,149)
----------- ----------- -----------
$ 91,699 $ 171,529 $ 174,154
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Amortization of intangible assets is as follows:
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------------- ------------------------
DEC. 24, DEC. 30, DEC. 29, JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Excess of cost over fair value of net assets
acquired......................................... $ 5,149 $ 5,536 $ 6,021 $ 2,863 $ 4,057
Customer lists.................................... 302 317 269 143 155
Non-compete agreements............................ 169 132 533 255 96
Other intangible assets........................... 51 56 61 30 29
----------- ----------- ----------- ----------- -----------
$ 5,671 $ 6,041 $ 6,884 $ 3,291 $ 4,337
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
6. PROPERTY AND EQUIPMENT
A summary of property and equipment follows:
<TABLE>
<CAPTION>
DEC. 30, DEC. 29, JUNE 28,
1994 1995 1996
---------- ---------- ---------
<S> <C> <C> <C>
Land............................................................... $ 3,817 $ 3,817 $ 3,817
Buildings.......................................................... 3,718 3,824 3,822
Equipment.......................................................... 33,026 42,135 50,468
Software........................................................... 3,990 7,306 9,922
Leasehold Improvements............................................. 1,904 2,228 2,166
Construction in progress........................................... 70 1,009 3,203
---------- ---------- ---------
46,525 60,319 73,398
Less accumulated depreciation and amortization..................... (26,069) (33,191) (37,929)
---------- ---------- ---------
$ 20,456 $ 27,128 $ 35,469
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Depreciation and amortization of leasehold improvements for the years ended
December 24, 1993, December 30, 1994 and December 29, 1995 amounted to $5,748,
$6,132 and $7,672, respectively, and $3,640 and $4,761 for the six months ended
June 30, 1995 and June 28, 1996, respectively.
7. CREDIT FACILITIES
SHORT-TERM:
The Company has unsecured, uncommitted lines of credit with several banks
based on LIBOR and available to fund the Company's short-term capital
requirements. As of December 29, 1995 and June 28, 1996, the Company had
borrowings outstanding of $54,727 and $60,000, respectively, under these
agreements.
LONG-TERM:
On April 6, 1994, the Company replaced a $30,000 term loan and a $20,000
revolving credit facility with a new five-year $50,000 committed senior
revolving credit agreement. In November, 1995, this facility was increased to
$150,000. This credit facility is available to fund the Company's general
corporate needs, to fund working capital and to fund acquisitions. Interest
charged on the facility is based, at the Company's option, on either the banks'
base rate or LIBOR plus an applicable margin. The margin changes based on the
Company's leverage and fixed charge ratios. The facility contains customary
covenants, which include the maintenance of certain financial ratios including
minimum net worth, restrictions on the incurrence of liens and additional
indebtedness. This facility terminates on April 6, 1999. As of December 29, 1995
and June 28, 1996, the Company had borrowings outstanding of $60,000 under this
facility, and was in compliance with all of its terms.
8. INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------- --------------------
DEC. 24, DEC. 30, DEC. 29, JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Currently payable:
Federal.......................................... $ 11,051 $ 12,230 $ 14,509 $ 6,395 $ 6,723
State and local.................................. 2,677 3,023 3,636 1,648 1,712
--------- --------- --------- --------- ---------
13,728 15,253 18,145 8,043 8,435
Deferred........................................... (1,487) 775 (74) (111) 327
--------- --------- --------- --------- ---------
$ 12,241 $ 16,028 $ 18,071 $ 7,932 $ 8,762
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
8. INCOME TAXES (CONTINUED)
The following table reconciles the U.S. Federal income tax rate to the
Company's effective tax rate:
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------------- ------------------------
DEC. 24, DEC. 30, DEC. 29, JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Statutory rate........................................ 35.0% 35.0% 35.0% 35.0% 35.0%
Increase in income taxes resulting from:
State income taxes, net of federal benefit.......... 6.0 5.8 5.6 5.8 8.4
Non-deductible amortization of intangibles.......... 6.5 4.7 3.9 4.5 5.8
Non-deductible merger costs......................... -- 14.8
Other............................................... (0.5) (0.3) (1.3) (1.5) (1.0)
--- --- --- --- ---
47.0% 45.2% 43.2% 43.8% 63.0%
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
9. EMPLOYEE BENEFIT PLANS
The Company and Brandon each maintain voluntary defined contribution 401(k)
profit sharing plans covering all eligible employees as defined in the
respective plan documents. For Interim employees, the plan provides a
discretionary matching contribution of up to 25% of employee contributions up to
6% of compensation contributed by eligible employees. In years when budget
objectives are attained, the plan provides for up to an additional 25% matching
contribution payable in Interim Common Stock. For Brandon employees, the
discretionary matching contribution permitted by the plan is equal to 25% of the
first 6% of compensation contributed by eligible full-time salaried employees.
In addition, each year the Company may elect to make a profit sharing
contribution to eligible full-time salaried employees. Additionally, the Company
had sponsored a profit sharing plan for Interim employees who had completed
1,000 hours of service within a twelve month period. The profit sharing plan was
non-contributory, with amounts funded for the benefit of qualifying employees
determined annually by the Company's Board of Directors on a discretionary
basis. The Company's Board of Directors voted to terminate the profit sharing
plan effective December 31, 1993. Contributions, net of forfeitures, by the
Company under these plans amounted to $611, $756 and $666 for the years ended
December 24, 1993, December 30, 1994 and December 29, 1995, respectively, and
$552 and $881 for the six months ended June 30, 1995 and June 28, 1996,
respectively.
During 1995, the Company started a deferred compensation plan for selected
highly compensated employees who are not eligible to participate in the
Company's 401(k) savings plan. The plan allows eligible employees to defer
receipt of a portion (not less than 2 percent nor more than 10 percent) of their
compensation. The Company provides a discretionary matching contribution of up
to 25% of employee contributions up to 6 percent. In years when budget
objectives are attained, the Company provides an additional 25% matching
contribution. The matching contributions vest on a graduated scale from two to
five years of service. The deferred compensation, along with the Company
matching amounts and accumulated investment earnings, is accrued but unfunded.
Such accrual amounted to $710 and $1,343 at December 29, 1995 and June 28, 1996,
respectively. Contributions by the Company under this plan amounted to $149, $19
and $161 for the year ended December 29, 1995, and the six months ended June 30,
1995 and June 28, 1996, respectively.
10. STOCKHOLDERS' EQUITY AND STOCK OPTION PLANS
STOCK OPTIONS -- The Company has three stock option plans: the 1993
Long-Term Executive Compensation Plan, the 1993 Stock Option Plan for Outside
Directors and the 1994 Stock Option Plan for Franchisees, Licensees and Agents.
Under the plans, options may be granted to outside directors, selected employees
and franchisees, licensees and agents to purchase the Company's common stock for
periods not to exceed ten years at a price that is not less than 100 percent of
fair market value on the
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
10. STOCKHOLDERS' EQUITY AND STOCK OPTION PLANS (CONTINUED)
date of grant. Options under the Long-Term Executive Compensation Plan are
exercisable (if certain qualifying criteria are met) starting one year from the
date of grant on a cumulative basis at the annual rate of 33 1/3 percent of the
total number of optioned shares. Options under the Outside Directors Plan are
exercisable in full one year after the date of grant. Options under the
Franchisees, Licensees and Agents Plan are exercisable starting one year from
the date of grant on a cumulative basis at an annual rate that varies during the
first five years of the options' term at which time they become fully
exercisable. In October, 1993, the Company reserved a total of 1,000,000 shares,
and on May 11, 1995, and May 9, 1996, an additional total of 350,000 and 450,000
shares, respectively, of common stock for issuance under the foregoing plans. On
January 27, 1994, the first options under these plans were granted.
As described in Note 3, prior to the merger Brandon had also adopted a stock
option plan, under which 235,900 options to purchase its common shares were
outstanding and unexercised at the date of the Merger. Such options were
converted into options to purchase an aggregate of 207,592 shares of the
Company's common stock at a price equivalent (after conversion) to the original
grant price (which was not less than the estimated fair value of Brandon common
stock at grant date). Changes under these plans for 1994 and 1995 giving
retroactive effect to the conversion of the Brandon stock options upon their
original grant dates were as follows:
<TABLE>
<CAPTION>
NUMBER OPTION
OF SHARES PRICE
----------- -----------------
<S> <C> <C>
Options outstanding, December 24, 1993.............................. 234,546 $ 1.14 - 12.65
Options granted..................................................... 666,913 14.92 - 24.38
Options exercised................................................... (60,648) 6.09 - 14.92
Options forfeited................................................... (33,706) 6.09 - 20.00
-----------
Options outstanding, December 30, 1994.............................. 807,105 6.82 - 24.38
Options granted..................................................... 413,085 22.16 - 33.00
Options exercised................................................... (47,403) 9.09 - 23.13
Options forfeited................................................... (71,076) 18.05 - 25.00
-----------
Options outstanding, December 29, 1995.............................. 1,101,711 6.82 - 33.00
Options granted..................................................... 373,939 36.23 - 37.25
Options exercised................................................... (84,827) 6.82 - 25.85
Options forfeited................................................... (21,362) 18.05 - 37.25
-----------
Options outstanding, June 28, 1996.................................. 1,369,461 6.82 - 37.25
-----------
-----------
Shares exercisable, June 28, 1996................................... 405,617 6.82 - 36.23
-----------
-----------
Shares reserved for future grants, June 28, 1996.................... 560,315
-----------
-----------
</TABLE>
TREASURY STOCK -- On October 26, 1995, Brandon repurchased 100,000 shares of
its common stock for $1,805. In 1990, Brandon's Board of Directors had
authorized the repurchase of up to $2 million of common stock as market
conditions may warrant. The aggregate number of shares repurchased through
October 26, 1995 were 116,700 for a total consideration of $1,923. Such treasury
stock was cancelled upon consummation of the merger.
EMPLOYEE STOCK PURCHASE AND DIVIDEND REINVESTMENT AND STOCK PURCHASE PLANS
- -- Under the terms of Brandon's 1993 Employee Stock Purchase Plan, eligible
employees could purchase Brandon's Common Stock through authorized payroll
deductions. The Employee Stock Purchase and Dividend Reimbursement and Stock
Purchase Plans were terminated upon consummation of the Merger.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
11. STOCKHOLDER RIGHTS PLAN
On February 17, 1994, the Company's Board of Directors adopted a stockholder
rights plan to deter coercive or unfair takeover tactics and to prevent a
potential acquirer from gaining control of the Company without offering a fair
price to all of the Company's stockholders. Under the plan, a dividend of one
right (a "Right") per share was declared and paid on each share of the Company's
Common Stock outstanding on April 1, 1994. As to shares issued after such date,
rights will automatically attach to them after their issuance.
Under the plan, registered holders of each Right may purchase from the
Company one one-hundredth of a share of a new class of the Company's Preferred
Stock, $0.01 par value per share, at a price of $98.00, subject to adjustment,
when the Rights become exercisable. The Rights become exercisable when a person
or group of persons acquires 15% or more of the outstanding shares of the
Company's Common Stock without the prior written approval of the Company's Board
of Directors (an "Unapproved Stock Acquisition"), and after ten business days
following the commencement of a tender offer that would result in an Unapproved
Stock Acquisition. If a person or group of persons makes an Unapproved Stock
Acquisition, the registered holder of each Right has the right to purchase, for
the exercise price of the Right, a number of shares of the Company's Common
Stock having a market value equal to twice the exercise price of the Right.
Following an Unapproved Stock Acquisition, if the Company is involved in a
merger, or 50% or more of the Company's assets or earning power are sold, the
registered holder of each Right has the right to purchase, for the exercise
price of the Right, a number of shares of the common stock of the acquiring
company having a market value equal to twice the exercise price of the Right.
After an Unapproved Stock Acquisition, but before any person or group of
persons acquires 50% or more of the outstanding shares of the Company's Common
Stock, the Board of Directors may exchange all or part of the then outstanding
and exercisable Rights for Common Stock at an exchange ratio of one share of
Common Stock per Right. Upon any such exchange, the right of any holder to
exercise a Right terminates.
The Company may redeem the Rights at a price of $0.01 per Right at any time
prior to an Unapproved Stock Acquisition (and after such time in certain
circumstances). The Rights expire on April 1, 2004, unless extended by the Board
of Directors. Until a Right is exercised, the holder thereof, as such, has no
rights as a stockholder of the Company, including the right to vote or to
receive dividends. The issuance of the Rights alone has no dilutive effect and
does not affect reported earnings per share.
12. ACQUISITIONS
Effective December 1, 1995, Interim acquired the assets of Computer Power
Group, a subsidiary of Australia-based Computer Power Group, Ltd., for $71
million in cash. Computer Power Group provides staffing and consulting services
in a variety of information technology disciplines. This acquisition was
accounted for under the purchase method of accounting. Accordingly, the
operations of CPG are included in the consolidated statements of earnings from
the date of acquisition. The excess of the purchase price over the fair value of
the net tangible assets acquired (goodwill) was $56,618 and is being amortized
over 40 years.
During 1993, 1994 and 1995, the Company made certain other acquisitions
which were accounted for under the purchase method of accounting. Their
operations are included in the consolidated statements of earnings from the date
of acquisition. Had the acquisitions during 1993 and 1994 taken place at the
beginning of the year in which they occurred, pro forma operating results would
not have been significantly different from those reported.
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
12. ACQUISITIONS (CONTINUED)
The following unaudited pro forma consolidated results of operations give
effect to the acquisitions made during 1995 as though they occurred at the
beginning of 1994 and 1995 with pro forma adjustments to give effect to
amortization of goodwill, interest expense on additional borrowings used to fund
the acquisitions, and other adjustments, together with income tax effects.
<TABLE>
<CAPTION>
DEC. 30, DEC. 29,
1994 1995
----------- -----------
<S> <C> <C>
Revenue.................................................................... $ 806,178 $ 969,652
Net earnings............................................................... $ 17,706 $ 23,974
Net earnings per common and common equivalent shares....................... $ 1.15 $ 1.53
</TABLE>
The unaudited pro forma information is not necessarily indicative either of
results of operations that would have occurred had the purchases been made at
the beginning of 1994 and 1995, or future results of the continued companies.
13. TRANSACTIONS WITH BLOCK
The Company and Block, or an affiliate of Block, had engaged in the
following transactions or are parties to the contracts or business relationships
described below.
DUE TO BLOCK -- Amounts due to Block consisted of cash advances for
purchases of property and equipment, acquisitions, current income tax
liabilities and fluctuating working capital needs, offset by payments made by
the Company from its operating bank accounts. Block did not charge the Company
interest expense on any balance due. During the year ended December 24, 1993 the
average balance of amounts due Block was $84,018.
CAPTIVE INSURANCE PROGRAM -- The Company has historically purchased workers'
compensation, general liability, errors and omissions, and property and casualty
insurance from various insurance companies. The Company has purchased its
workers' compensation insurance coverage and its general liability and errors
and omissions insurance coverage from an insurance company that has a
reinsurance agreement with an affiliate of Block commencing January 1, 1994 and
June 1, 1993, respectively. Certain of the Company's franchisees also
participate in the same insurance program. The premiums for coverages provided
by the insurance company to the Company and its licensees for the years ended
December 24, 1993, December 30, 1994 and December 29, 1995, aggregated $1,600,
$3,300 and $1,400, respectively for general liability and errors and omissions
coverage and $0, $14,600 and $5,600, respectively for workers' compensation
coverage, subject to certain adjustments based on actual loss experience.
BLOCK GUARANTEE OF FRANCHISE OBLIGATIONS -- For purposes of enabling the
Company to register to sell franchises in certain states, Block guaranteed the
performance of the Company's obligations as franchisor under its franchise
agreements. Subsequent to the closing of the public offering, Block no longer
guarantees the Company's obligations to new franchisees. Each previously
existing guarantee will terminate at the end of the term of the applicable
franchise agreement, with such termination of the guarantee being effective upon
the granting of a renewal by the Company (or election by the franchisee to
exercise its option to renew the franchise).
INDEMNIFICATION AGREEMENT -- The Company and Block have entered into an
Indemnification Agreement, whereby the Company has agreed to indemnify Block
against losses incurred by Block arising from the conduct of the Company's
business subsequent to January 27, 1994. This indemnification obligation
includes any liability incurred by Block pursuant to Block's guarantee of the
Company's obligation as franchisor under the Company's franchise agreements.
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
14. COMMITMENTS
Substantially all of the Company's operations are conducted in leased
premises. The Company leases off-site corporate related office space and branch
and regional processing center locations. Total lease expense for the years
ended December 24, 1993, December 30, 1994 and December 29, 1995 was $7,399,
$7,418 and $8,585, respectively, and $4,138 and $5,587 for the six months ended
June 30, 1995 and June 28, 1996, respectively.
Future minimum lease payments under noncancellable leases as of December 29,
1995 were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
- --------------------------------------------------------------
<S> <C>
1996.......................................................... $ 8,846
1997.......................................................... 6,954
1998.......................................................... 5,150
1999.......................................................... 3,689
2000.......................................................... 2,356
</TABLE>
15. CONTINGENCIES
The Company in the ordinary course of its business is threatened with or
named as a defendant in various lawsuits. It is not possible to determine the
ultimate disposition of these matters; however, management is of the opinion
that the final resolution of any threatened or pending litigation is not likely
to have a material adverse effect on the financial position or results of
operations of the Company.
QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a tabulation of the quarterly results of operations for the
years ended December 30, 1994 and December 29, 1995.
<TABLE>
<CAPTION>
MAR. 25, JUNE 24, SEP. 23, DEC. 30, MAR. 31, JUNE 30, SEP. 29, DEC. 29,
1994 1994 1994 1994 1995 1995 1995 1995
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $ 156,973 $ 164,410 $ 179,486 $ 203,827 $ 193,652 $ 203,444 $ 221,948 $ 245,203
Gross profit............................... 47,400 49,577 53,996 62,319 59,116 62,845 66,509 75,608
Earnings before taxes...................... 6,722 8,373 9,550 10,839 8,465 9,628 11,304 12,407
Income taxes............................... 3,099 3,781 4,280 4,868 3,773 4,159 4,927 5,212
Net earnings............................... 3,623 4,592 5,270 5,971 4,692 5,469 6,377 7,195
Net earnings per
common and common equivalent shares....... $ 0.24 $ 0.30 $ 0.34 $ 0.38 $ 0.30 $ 0.35 $ 0.41 $ 0.46
</TABLE>
F-17
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the U.S.
Underwriters named below, and each of such U.S. Underwriters, for whom Goldman,
Sachs & Co., Robert W. Baird & Co. Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives, have severally agreed to
purchase from the Company and the Selling Stockholders, the respective number of
shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- --------------------------------------------------------------------------------------- ---------------
<S> <C>
Goldman, Sachs & Co....................................................................
Robert W. Baird & Co. Incorporated.....................................................
Donaldson, Lufkin & Jenrette Securities Corporation....................................
---------------
Total.............................................................................. 4,250,000
---------------
---------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.
The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $ per share. The U.S. Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per share
to certain brokers and dealers. After the shares of Common Stock are released
for sale to the public, the offering price and other selling terms may from time
to time be varied by the representatives.
The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of shares of Common Stock in an international offering
outside of the United States. The offering price and aggregate underwriting
discounts and commissions per share for the two offerings are identical. The
closing of the offering made hereby is a condition to the closing of the
international offering, and vice versa. The representatives of the International
Underwriters are Goldman Sachs International, Robert W. Baird & Co. Incorporated
and Donaldson, Lufkin & Jenrette Securities Corporation.
Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters has agreed that, as part of the distribution of the shares
offered hereby and subject to certain exceptions, it will offer, sell or deliver
the shares of Common Stock, directly or indirectly, only in the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction (the "United
States") and to U.S. persons, which term shall mean, for purposes of this
paragraph: (a) any individual who is a resident of the United States or (b) any
corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters named herein has agreed pursuant to the Agreement
Between that, as a part of the distribution of the shares offered as a part of
the international offering, and subject to certain exceptions, it will (i) not,
directly or indirectly, offer, sell or deliver shares of Common Stock (a) in the
U-1
<PAGE>
United States or to any U.S. persons or (b) to any person who it believes
intends to reoffer, resell or deliver the shares in the United States or to any
U.S. persons, and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction.
It is anticipated that more than 10% of the proceeds of the Offering, not
including underwriting compensation, will be received by lenders to the Company
under the Credit Facilities that are affiliated with members of the National
Association of Securities Dealers, Inc. ("NASD") who are participating in the
Offering. As a result, the Offering is being conducted pursuant to Rule
2710(c)(8) of the NASD Conduct Rules.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price less an amount not greater than the selling
concession.
The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of 510,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the U.S. Underwriters exercise their over-allotment option, the Underwriters
have severally agreed, subject to certain conditions, to purchase approximately
the same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 4,250,000 shares of Common
Stock offered. The Company has granted the International Underwriters a similar
option exercisable up to an aggregate of 127,500 additional shares of Common
Stock.
The Company and the Selling Stockholders have agreed that during the period
beginning from the date of this Prospectus and continuing to and including the
date 90 days after the date of this Prospectus, not to offer, sell, contract to
sell or otherwise dispose of any securities of the Company (other than pursuant
to employee stock option plans, employee stock purchase plans, 401(k) plans or
any other employee plans of a similar nature, including, without limitations,
any such plans for the benefit of directors or officers of the Company, which
are described in the Prospectus, existing on the date of this Prospectus and
10,000 of the shares held by the Ira B. Brown Foundation, Inc., a charitable
institution) which are substantially similar to the shares of Common Stock,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Stock or any
substantially similar security, without the prior written consent of the
Representatives, except for the shares of Common Stock offered in connection
with the concurrent U.S. and international offerings.
The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Common Stock offered by them.
The Company and the Selling Stockholders have severally agreed to indemnify
the several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
U-2
<PAGE>
[INSIDE BACK COVER: MAP OF UNITED STATES, UNITED KINGDOM, AND PUERTO RICO
INDICATING OFFICE LOCATIONS FOR COMMERCIAL, PROFESSIONAL AND HEALTH CARE]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 7
The Company............................. 10
Use of Proceeds......................... 10
Price Range of Common Stock............. 11
Dividend Policy......................... 11
Capitalization.......................... 12
Selected Consolidated Financial and
Operating Data........................ 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 15
Business................................ 21
Description of Operations............... 24
Management.............................. 31
Selling Stockholders.................... 33
Description of Capital Stock............ 34
Validity of Common Stock................ 35
Experts................................. 35
Available Information................... 36
Incorporation of Certain Documents by
Reference............................. 36
Consolidated Financial Statements....... F-1
Underwriting............................ U-1
</TABLE>
4,250,000 SHARES
[LOGO]
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
--------------
PROSPECTUS
-----------
GOLDMAN, SACHS & CO.
ROBERT W. BAIRD & CO.
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred by the
Company in connection with the issuance and distribution of the Common Stock
being registered less the portion thereof to be paid by the Selling
Stockholders.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 64,011
NASD filing fee.................................................. 19,063
New York Stock Exchange Filing Fee............................... 15,575
Accounting fees and expenses..................................... 75,000
Legal Fees and expenses.......................................... 150,000
Printing and Engraving expenses.................................. 12,000
Blue Sky fees and expenses....................................... 12,500
Transfer Agent and Registrar fees and expenses................... 3,000
Miscellaneous.................................................... 95,000
Expenses payable by Selling Stockholders......................... 35,000
---------
Total........................................................ $ 481,849
---------
---------
</TABLE>
- --------------
*To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
SIXTH: (A) The Corporation shall indemnify to the fullest extent authorized
or permitted by law (as now or hereafter in effect) any person made, or
threatened to be made a party or witness to any action, suit or proceeding
(whether civil or criminal or by or in the right of the Corporation) by reason
of the fact that he, his testator or intestate, is or was a director or officer
of the Corporation or by reason of the fact that such director or officer, at
the request of the Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, in
any capacity. Nothing contained herein shall affect any rights to
indemnification to which employees other than directors and officers may be
entitled by law. No amendment to or repeal of this paragraph (A) of Article
Sixth shall apply to or have any effect on any right to indemnification provided
hereunder with respect to any acts or omissions occurring prior to such
amendment or repeal.
(B) No director or shareholder of the Corporation shall be personally liable
to the Corporation or its shareholders for monetary damages for any breach of
fiduciary duty as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for any breach of
the director's duty of loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from which
such director derived an improper personal benefit. No amendment to or repeal of
this paragraph (B) of Article Sixth shall adversely affect any right or
protection of any director of the Corporation existing at the time of such
amendment to repeal for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
THE COMPANY'S BYLAWS
24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY
OR IN THE RIGHT OF THE CORPORATION. The corporation shall indemnify to the
fullest extent authorized or permitted by law (as now or hereafter in effect)
any person made, or threatened to be made, a party or witness to any
II-1
<PAGE>
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she (or his or her
testator or intestate) is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT
OF THE CORPORATION. The corporation shall indemnify to the fullest extent
authorized or permitted by law (as now or hereafter in effect) any person made,
or threatened to be made a party or witness to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she (or his or her
testator or intestate) is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees), and, if and to the extent
permitted by applicable law, judgments, penalties, and amounts to paid in
settlement, incurred by him or her in connection with defending, investigating,
preparing to defend, or being prepared to be a witness in, such action, suit,
proceeding or claim if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless (and only to the extent that) the Court of
Chancery or the court in which such action, suit, proceeding or claim was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses and amounts which
the Court of Chancery or such other court shall deem proper.
(c) AUTHORIZATION OF INDEMNIFICATION.
(1) Any indemnification under Section 24 (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 24(a) or (b), as the case may be. Such determination shall be made (i)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders; provided, however, that if a Change in Control (as
defined in Section 24(c)(3)) has occurred and the person seeking indemnification
so requests, such determination shall be made in a written opinion rendered by
independent legal counsel chosen by the person seeking indemnification and not
reasonably objected to by the Board of Directors (whose fees and expenses shall
be paid by the corporation). To the extent, however, that a director or officer
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding described above, or in defense of any claim,
issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) incurred by him or her in connection therewith,
without the necessity of authorization in the specific case.
(2) For purposes of the proviso to the second sentence of Section 24(c)(1),
"independent legal counsel" shall mean legal counsel other than an attorney, or
a firm having associated with it an attorney, who has been retained by or who
has performed services for the corporation or the person seeking indemnification
within the previous three years.
II-2
<PAGE>
(3) A "Change in Control" shall mean a change in control of the corporation
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the corporation is then subject to such reporting requirement; provided
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Section 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the corporation or a corporation owned
directly or indirectly by the stockholders of the corporation in substantially
the same proportions as their ownership of stock of the corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the corporation representing
thirty percent (30%) or more of the total voting power represented by the
corporation's then outstanding shares of capital stock entitled to vote (the
"Voting Securities"), or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the corporation and any new director whose election by the Board of
Directors or nomination for election by the corporation's stockholders who
approved by a vote of at least two-thirds ( 2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
corporation approve a merger or consolidation of the corporation with any other
corporation, other than a merger or consolidation which would result in any
Voting Securities of the corporation outstanding or by being converted into any
voting securities of the surviving entity) at least eighty percent (80%) of the
total voting power represented by all Voting Securities of the corporation or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the corporation approve a plan of complete
liquidation of the corporation or an agreement for the sale or disposition by
the corporation of (in one transaction or a series of transactions) all or
substantially all of the corporation's assets.
(d) GOOD FAITH DEFINED. For purposes of any determination under Section
24(c), a person shall be deemed to have acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interest of the
corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his or her conduct was unlawful, if his or her
action is based on the records or on information supplied to him or her by the
officers of the corporation or another enterprise in the course of their duties,
or on the advice of legal counsel for the corporation or another enterprise or
on information or records given or reports made to the corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the corporation or another
enterprise. The term "another enterprise" as used in this Section 24(d) shall
mean any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
corporation as a director or officer. The provisions of this Section 24(d) shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Section 24(a) or (b), as the case may be.
(e) RIGHT TO INDEMNIFICATION UPON APPLICATION; PROCEDURE UPON APPLICATION,
ETC. Except as otherwise provided in the proviso to Section 24(b):
(1) Any indemnification under Section 24(a) or (b) shall be made no
later than 30 days after receipt by the corporation of the written request
of the director or officer or former director or officer unless a
determination is made within said 30-day period in accordance with Section
24(c) that such person has not met the applicable standard of conduct set
forth in Sections 24(a) and (b).
(2) The right to indemnification under Section 24(a) or (b) or advances
under Section 24(f) shall be enforceable by the director or officer or
former director or officer in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
corporation. Neither the absence of any prior determination that
indemnification is proper in the circumstances, nor a prior determination
that indemnification is not proper in the circumstances shall be a defense
to the action or create a presumption that the director or officer or former
director or officer has not met the applicable standard of conduct. The
expenses (including attorneys' fees
II-3
<PAGE>
and expenses) incurred by the director or officer or former director or
officer in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action (or in any action
or claim brought by him to recover under any insurance policy or policies
referred to in Section 24(i)) shall also be indemnified by the corporation.
(3) If any person is entitled under any provision of this Section 24 to
indemnification by the corporation for some or a portion of expenses,
judgments, fines, penalties or amounts paid in settlement incurred by him or
her, but not, however, for the total amount thereof, the corporation shall
nevertheless indemnify such person for the portion of such expenses,
judgments, fines, penalties and amounts to which he is entitled.
(f) EXPENSES PAYABLE IN ADVANCE. Expenses incurred in defending or
investigating a threatened or pending action, suit or proceeding may be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is or
she is not entitled to be indemnified by the corporation as authorized in this
Section 24; provided, however, that if he or she seeks to enforce his or her
rights in a court of competent jurisdiction pursuant to Section 24(e)(2), said
undertaking to repay shall not be applicable or enforceable unless and until
there is a final court determination that he or she is entitled to
indemnification as to which all rights of approval have been exhausted or have
expired.
(g) NON-EXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this Section 24 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, contract, vote of stockholders or disinterested directors or
pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, it being the policy
of the corporation that indemnification of the persons specified in Sections
24(a) and (b) shall or may, as the case may be, be made to the fullest extent
permitted by law. The provisions of this Section 24 shall not be deemed to
preclude the indemnification of any person who is not specified in Sections
24(a) and (b) but whom the corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise. The corporation may enter into written agreements, approved by a
majority of the Directors, which include all or any of the indemnity provisions
required or permitted by this Section 24.
(h) INSURANCE. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power or the obligation to indemnify him or her
against such liability under the provisions of this Section 24.
(i) MEANING OF "CORPORATION" FOR PURPOSES OF SECTION 24. For purposes of
this Section 24, references to "the corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors or officers so that any person who is or was a director
or officer of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section 24 with respect to the resulting
or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
(j) SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
II-4
<PAGE>
STATUTORY
Generally, Section 145 of the General Corporation Law of the State of
Delaware authorizes Delaware corporations, under certain circumstances, to
indemnify their officers and directors against all expenses and liabilities
(including attorneys' fees) incurred by them as a result of any suit brought
against them in their capacity as a director or an officer, if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A director or officer may also be indemnified against expenses
incurred in connection with a suit by or in the right of the corporation if such
director or officer acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
UNDERWRITING AGREEMENT
The Underwriting Agreement provides that the Underwriter shall indemnify
each director of the Company, each officer of the Company who signed this
Registration Statement, each person who controls the Company, and the Selling
Stockholders, for certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended.
II-5
<PAGE>
ITEM 16. EXHIBITS
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME NOTE
- ----------- -------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
1.1 Form of Underwriting Agreement (U.S. Version)..................................................... *
1.2 Form of Underwriting Agreement (International Version)............................................ *
2.1 Agreement and Plan of Merger...................................................................... (1)
4.1 Articles Fourth, Fifth, Seventh, Eighth and Tenth of the Restated Certificate of Incorporation of
the Company...................................................................................... *
4.2 Sections Four through Twelve and Thirty-Five through Forty-One of the Bylaws of the Company....... *
4.3 Form of Stock Certificate......................................................................... (2)
4.4 Rights Agreement dated as of April 1, 1994, by and between the Company and Boatmen's Trust
Company.......................................................................................... (3)
5.1 Opinion of Bryan Cave LLP......................................................................... *
23.1 Consent of Bryan Cave LLP (to be included in Exhibit 5.1)......................................... *
23.2 Consent of Deloitte & Touche LLP.................................................................. *
24.1 Power of Attorney (included on signature page).................................................... +
27.1 Financial Data Schedule........................................................................... +
99.1 Schedule II -- Valuation and Qualifying Accounts.................................................. *
</TABLE>
- --------------
(1) This Exhibit is filed as an Exhibit to the Company's Proxy Statement/
Prospectus, dated April 24, 1996 and is incorporated herein by reference.
(2) This Exhibit is filed as an Exhibit to the Company's Form 10-K for the
fiscal year ended March 25, 1994, and is incorporated herein by reference.
(3) This Exhibit is filed as an Exhibit to the Company's Form 8-A, dated April
11, 1994, SEC Registration No. 0-23198, and is incorporated herein by
reference.
+ Previously filed.
* Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Company's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offering therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(2) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-6
<PAGE>
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(4) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(5) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Lauderdale, State of Florida, on the 26th day of
July, 1996.
INTERIM SERVICES INC.
By: /s/ RAYMOND MARCY
-----------------------------------
Raymond Marcy
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------- ------------------------
*
------------------------------------------- Director September 13, 1996
Steven S. Elbaum
*
------------------------------------------- Director September 13, 1996
William F. Evans
*
------------------------------------------- Director September 13, 1996
Jerome B. Grossman
*
------------------------------------------- Director September 13, 1996
Cinda A. Hallman
*
------------------------------------------- Director September 13, 1996
J. Ian Morrison
*
------------------------------------------- Director September 13, 1996
Allen C. Sorensen
*
------------------------------------------- Director September 13, 1996
Harold Toppel
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------- ------------------------
*
------------------------------------------- Director September 13, 1996
A. Michael Victory
* President, Chief Executive
------------------------------------------- Officer and Director September 13, 1996
Raymond Marcy (principal executive officer)
* Executive Vice President and
------------------------------------------- Chief Financial Officer September 13, 1996
Roy G. Krause (principal financial officer)
* Financial Vice President and
------------------------------------------- Treasurer (principal September 13, 1996
Paul Haggard accounting officer)
* By: /s/ JOHN B. SMITH
--------------------------------------
John B. Smith
Attorney-in-Fact
</TABLE>
II-9
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME NOTE
- ----------- -------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
1.1 Form of Underwriting Agreement (U.S. Version)..................................................... *
1.2 Form of Underwriting Agreement (International Version)............................................ *
2.1 Agreement and Plan of Merger...................................................................... (1)
4.1 Articles Fourth, Fifth, Seventh, Eighth and Tenth of the Restated Certificate of Incorporation of
the Company...................................................................................... *
4.2 Sections Four through Twelve and Thirty-Five through Forty-One of the Bylaws of the Company....... *
4.3 Form of Stock Certificate......................................................................... (2)
4.4 Rights Agreement, as amended, dated as of April 1, 1994, by and between the Company and Boatmen's
Trust Company.................................................................................... (3)
5.1 Opinion of Bryan Cave LLP ........................................................................ *
23.1 Consent of Bryan Cave LLP (to be included in Exhibit 5.1)......................................... *
23.2 Consent of Deloitte & Touche LLP ................................................................. *
24.1 Power of Attorney (included on signature page).................................................... +
27.1 Financial Data Schedule........................................................................... +
99.1 Schedule II -- Valuation and Qualifying Accounts.................................................. *
</TABLE>
- --------------
(1) This Exhibit is filed as an Exhibit to the Company's Proxy Statement/
Prospectus, dated April 24, 1996 and is incorporated herein by reference.
(2) This Exhibit is filed as an Exhibit to the Company's Form 10-K for the
fiscal year ended March 25, 1994, and is incorporated herein by this
reference.
(3) This Exhibit is filed as an Exhibit to the Company's Form 8-A, dated April
11, 1994, SEC Registration No. 0-23198, and is incorporated herein by
reference.
* Filed herewith.
+ Previously filed.
<PAGE>
INTERIM SERVICES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
----------------------------------------
UNDERWRITING AGREEMENT
(U.S. VERSION)
-------------------------
October __, 1996
Goldman, Sachs & Co.,
Robert W. Baird & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Interim Services Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
3,160,000 shares and, at the election of the Underwriters, up to 510,000
additional shares of Common Stock (par value $.01 per share) ("Stock") of the
Company, and the stockholders of the Company named in Schedule II hereto (the
"Selling Stockholders") propose, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of 240,000 shares of Stock.
The aggregate of 3,400,000 shares to be sold by the Company and the Selling
Stockholders is herein called the "Firm Shares" and the aggregate of 510,000
additional shares to be sold by the Company is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
It is understood and agreed to by all parties that the Company and the
Selling Stockholders are concurrently entering into an agreement (the
"International Underwriting Agreement") providing for the sale by the Company
and the Selling Stockholders of up to a total of 977,500 shares of Stock (the
"International Shares"), including the overallotment option thereunder, through
arrangements with certain underwriters outside the United States (the
"International Underwriters"), for whom Goldman Sachs International, Robert W.
Baird & Co. Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation
are acting as lead managers. Anything herein or therein to the contrary
notwithstanding, the respective closings under this Agreement and the
International Underwriting Agreement are hereby expressly made conditional on
one another. The Underwriters hereunder and the International Underwriters are
simultaneously
<PAGE>
entering into an Agreement between U.S. and International Underwriting
Syndicates (the "Agreement between Syndicates") which provides, among other
things, for the transfer of shares of Stock between the two syndicates. Two
forms of prospectus are to be used in connection with the offering and sale of
shares of Stock contemplated by the foregoing, one relating to the Shares
hereunder and the other relating to the International Shares. The latter form
of prospectus will be identical to the former except for certain substitute
pages as included in the registration statement and amendments thereto as
mentioned below. Except as used in Sections 2, 3, 4, 9 and 11 herein, and except
as the context may otherwise require, references hereinafter to the Shares shall
include all the shares of Stock which may be sold pursuant to either this
Agreement or the International Underwriting Agreement, and references herein to
any prospectus whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.
1. (a) The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-09109)
(the "Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto but including all documents incorporated by reference in the
prospectus contained therein, to you for each of the other Underwriters,
have been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration
Statement or document incorporated by reference therein has heretofore been
filed with the Commission; and no stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment thereto
or the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Act, is hereinafter called a
"Preliminary Prospectus"); the various parts of and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration Statement,
if any, became or hereafter becomes effective and (ii) the documents
incorporated by reference in the prospectus contained in the registration
statement at the time such part of the registration statement became
effective, each as amended at the time such part of the registration
statement became effective, are hereinafter collectively called the
"Registration Statement"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; and any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the
2
<PAGE>
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Item 7 of
Form S-3;
(iii) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the Commission thereunder, and
none of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and any further documents so
filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Goldman, Sachs & Co.
expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use
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therein or by a Selling Stockholder expressly for use in the preparation of
the answers therein to Item 7 of Form S-3;
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or change in
excess of $__ long-term debt of the Company or any of its subsidiaries or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus;
(vi) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries;
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation;
(viii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the Stock contained in
the Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims;
(ix) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder and under the International Underwriting
Agreement have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
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(x) The issue and sale of the Shares to be sold by the Company
hereunder and under the International Underwriting Agreement and the
compliance by the Company with all of the provisions of this Agreement and
the International Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement and the International
Underwriting Agreement, except the registration under the Act of the Shares
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or Blue
Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters and the International Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(xii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate and complete in all material
respects;
(xiii) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(xiv) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(xv) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes; and
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(xvi) Deloitte Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
(xvii) The Company owns or possesses adequate licenses or other
rights to use all trademarks, service marks, trade names, copyrights, and
know-how necessary to conduct the business now or proposed to be conducted
by the Company as described in the Prospectus, and, except as disclosed in
the Prospectus, the Company has not received any notice of infringement of
or conflict with (and knows of no such infringement of or conflict with)
asserted rights of others with respect to trademarks, service marks, trade
names, copyrights, and know-how which, individually or in the aggregate, is
reasonably likely to result in any material adverse effect upon the
financial position, stockholders' equity or results in any material adverse
effect upon the financial position, stockholders' equity or results of
operations of the Company, the Company does not in the conduct of its
business as now or proposed to be conducted as described in the Prospectus,
infringe or conflict with any right of any third party, known to the
Company, where such infringement or conflict is reasonably likely to result
in any material adverse effect upon the financial position, stockholders'
equity or results of operations of the Company; and
(xviii) The Company has obtained any permits, consents and
authorizations required to be obtained by it under laws or regulations
relating to its business, including, without limitation, laws or
regulations relating to (a) the provision of medical care and (b) the
operation and sales of franchises (collectively, "Laws"), and any such
permits, consents and authorizations remain in full force and effect,
except as to any of the foregoing the absence of which (individually or in
the aggregate) will not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the Company.
The Company is in compliance with the Laws in all material respects, and
there is no pending or, to the Company's knowledge, threatened, action or
proceeding against the Company under such Laws, other than any such actions
or proceedings which, individually or in the aggregate, if adversely
determined, is not reasonably likely to have a material adverse effect on
the financial position, stockholders' equity or results of operations of
the Company.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement, the International Underwriting Agreement, the Power of Attorney
and the Custody Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Stockholder hereunder and
under the International Underwriting Agreement, have been obtained; and
such Selling Stockholder has full right, power and authority to enter into
this Agreement, the International Underwriting Agreement, the Power of
Attorney and the Custody Agreement and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder hereunder and
under the International Underwriting Agreement;
(ii) The sale of the Shares to be sold by such Selling Stockholder
hereunder and under the International Underwriting Agreement and the
compliance by such Selling Stockholder with all of the provisions of this
Agreement, the International Underwriting Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any
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statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound, or to which any of the property or
assets of such Selling Stockholder is subject, nor will such action result
in any violation of the provisions of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over such Selling Stockholder or the property of such Selling Stockholder;
(iii) Such Selling Stockholder has, and immediately prior to the
First Time of Delivery (as defined in Section 4 hereof) such Selling
Stockholder will have, good and valid title to the Shares to be sold by
such Selling Stockholder hereunder and under the International Underwriting
Agreement, free and clear of all liens, encumbrances, equities or claims;
and, upon delivery of such Shares and payment therefor pursuant hereto and
thereto, good and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several Underwriters or
the International Underwriters, as the case may be;
(iv) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder or under the International Underwriting
Agreement, any securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans existing on, or upon the conversion
or exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement), without your prior written consent;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Stockholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(viii) Certificates in negotiable form representing all of the
Shares to be sold by such Selling Stockholder hereunder and under the
International Underwriting Agreement
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<PAGE>
have been placed in custody under a Custody Agreement, in the form
heretofore furnished to you (the "Custody Agreement"), duly executed and
delivered by such Selling Stockholder to [NAME OF CUSTODIAN], as custodian
(the "Custodian"), and such Selling Stockholder has duly executed and
delivered a Power of Attorney, in the form heretofore furnished to you (the
"Power of Attorney"), appointing the persons indicated in Schedule II
hereto, and each of them, as such Selling Stockholder's attorneys-in-fact
(the "Attorneys-in-Fact") with authority to execute and deliver this
Agreement and the International Underwriting Agreement on behalf of such
Selling Stockholder, to determine the purchase price to be paid by the
Underwriters and the International Underwriters to the Selling Stockholders
as provided in Section 2 hereof, to authorize the delivery of the Shares to
be sold by such Selling Stockholder hereunder and otherwise to act on
behalf of such Selling Stockholder in connection with the transactions
contemplated by this Agreement, the International Underwriting Agreement
and the Custody Agreement; and
(ix) The Shares represented by the certificates held in custody
for such Selling Stockholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder and the International Underwriters
under the International Underwriting Agreement; the arrangements made by
such Selling Stockholder for such custody, and the appointment by such
Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are
to that extent irrevocable; the obligations of the Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death
or incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by
the occurrence of any other event; if any individual Selling Stockholder or
any such executor or trustee should die or become incapacitated, or if any
such estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement, of the
International Underwriting Agreement and of the Custody Agreements; and
actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney
shall be as valid as if such death, incapacity, termination, dissolution or
other event had not occurred, regardless of whether or not the Custodian,
the Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company and
each of the Selling Stockholders agree, severally and not jointly, to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and each of the Selling Stockholders, at a
purchase price per share of $......................, the number of Firm Shares
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Stockholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to sell to each
of the Underwriters, and each
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of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this Section
2, that portion of the number of Optional Shares as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to .......... Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Goldman, Sachs & Co.,
through the facilities of The Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by certified or official bank check or checks, payable
to the order of the Company and the Selling Stockholders in New York Clearing
House (same day) funds. The Company will cause the certificates representing
the Shares to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of DTC or its designated custodian (the "Designated Office"). The
time and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York City time, on ............., 1996 or such other time
and date as Goldman, Sachs & Co. the Company and the Selling Stockholders may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New
York City time, on the date specified by Goldman, Sachs & Co. in the written
notice given by Goldman, Sachs & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as Goldman, Sachs & Co. and
the Company may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Firm Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(k) hereof, and the check or checks specified in subsection
(a) above, will be delivered at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, NY 10004-2498 (the "Closing Location"), and the Shares will be
delivered at the Designated Office, all at each Time of Delivery. A meeting
will be held at the
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Closing Location at ..............p.m., New York City time, on the New York
Business Day next preceding each Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you copies thereof; to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Shares; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
such quantities as you may reasonably request, and, if the delivery of
a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any events shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary
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during such period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act or the Exchange Act, to
notify you and upon your request to file such document and to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder and under the International
Underwriting Agreement, any securities of the Company that are
substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than pursuant to employee stock option plans,
employee stock purchase plans, 401(k) plans or other employee plans of
a similar nature existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of
this Agreement), without your prior written consent;
(f) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
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(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement and the International Underwriting
Agreement in the manner specified in the Prospectus under the caption
"Use of Proceeds"; and
(i) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "Exchange").
6. The Company and each of the Selling Stockholders, jointly and
severally, covenant and agree with one another and with the several
Underwriters that (a) the Company will pay or cause to be paid the following:
(i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of printing or producing any Agreement among Underwriters, this Agreement,
the International Underwriting Agreement, the Agreement between Syndicates,
the Selling Agreements, the Blue Sky Memorandum, closing documents (including
any compilations thereof) and any other documents in connection with the
offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky surveys; (iv) all fees and
expenses in connection with listing the Shares on the New York Stock
Exchange; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the
sale of the Shares; (vi) the fees and expenses of the Attorneys-in-fact and
the Custodian; (vii) the cost of preparing stock certificates; (viii) the cost
and charges of any transfer agent or registrar; (ix) the first $100,000 of
the incremental expenses in the nature of those described above, if
any, incurred by the Company in complying with the provisions of
Paragraph 14.2 of that certain Employment Agreement dated as of
July 8, 1994 between Ira B. Brown and Brandon Systems
Corporation; and (x) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 6; and (b) such Selling
Stockholder will pay or cause to be paid all costs and expenses incident to
the performance of such Selling Stockholder's obligations hereunder which are
not otherwise specifically provided for in this Section 6, including (i) any
fees and expenses of counsel for such Selling Stockholder; and
(ii) all other expenses and taxes incident to the sale and delivery
of the Shares to be sold by such Selling Stockholder to the Underwriters
hereunder. In connection with Clause (b) (ii) of the preceding sentence,
Goldman, Sachs & Co. agrees to pay New York State stock transfer tax, and the
Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for associated
carrying costs if such tax payment is not rebated on the day of payment and
for any portion of such tax payment not rebated. It is understood, however,
that the Company shall bear, and the Selling Stockholders shall not be
required to pay or to reimburse the Company for, the cost of any other
matters not directly relating to the sale and purchase of the Shares pursuant
to this Agreement, and that, except as provided in this Section 6, and Sections
8 and 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale
of any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all
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representations and warranties and other statements of the Company and of the
Selling Stockholders herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and the Selling Stockholders shall have
performed all of its and their obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission shall
have been complied with to your reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions (a draft of each such opinion is
attached as Annex II(a) hereto), dated the date of such Time of Delivery,
with respect to the matters covered in paragraphs (i), (ii), (v), (ix),
(xi), (xii) and (xiv) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(c) Bryan Cave LLP, counsel for the Company, shall have furnished to
you their written opinion, (a draft of each such opinion is attached as
Annex II(b) hereto), dated the date of such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly and validly authorized and issued and are fully paid and
non-assessable; and the Shares conform to the description of the
Common Stock contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of failure to
be so qualified in any such jurisdiction (such counsel being entitled
to rely in respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of officers
of the Company, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(iv) Each of the Company's active subsidiaries incorporated in
the state of Delaware or the state of Florida (the "Active
Delaware/Florida Subsidiaries") has been duly incorporated and is a
corporation validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation; and all of the issued
shares of capital stock of each of the Active Delaware/Florida
Subsidiaries have been duly authorized and validly issued and are fully
paid and non-assessable, and (except for directors' qualifying shares)
all of the issued shares of capital stock of
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each of the Company's active domestic subsidiaries are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state
that they believe that both you and they are justified in relying upon
such opinions and certificates);
(v) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company;
(vi) The issuance and sale of the Shares by the Company to the
Underwriters and the fulfillment of and compliance by the Company with
all of the provisions of this Agreement and the International
Underwriting Agreement will not conflict with or result in a breach or
violation of the terms or provisions of, or constitute a default under,
any existing obligation of the Company or any of its subsidiaries under
any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument for money borrowed known to such
counsel to which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action violate any of the
provisions of the Certificate of Incorporation or By-laws of the
Company, each as amended, any applicable statute, rule or regulation
or any order known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties;
(vii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Shares or the consummation
by the Company of the transactions contemplated by this Agreement and
the International Underwriting Agreement, except the registration under
the Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state or
foreign securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters and the
International Underwriters;
(viii) To the best of such counsel's knowledge, neither the Company
nor any of its Active Domestic Subsidiaries is in violation of their
respective Certificate of Incorporation or By-Laws;
(ix) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting"
and, in the international version of the Prospectus, "Certain Federal
Tax Considerations for Non-United States Holders of Common Stock",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate and complete in all
material respects;
(x) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
(xi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the rules and regulations thereunder;
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(xii) Such counsel have no reason to believe that any of the
documents incorporated by reference in the Prospectus, when such
documents became effective or were filed with the Commission, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or, in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading or that as of the effective date of the Registration
Statement or such Time of Delivery, the Registration Statement or the
Prospectus or any further amendment thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Such counsel do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus,
except for those referred to in the opinion in subsection (xi) of this
Section 7(c);
(xiii) Such counsel do not know of any amendment to the
Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be incorporated by reference
into the Prospectus or required to be described in the Registration
Statement or the Prospectus which are not filed or incorporated by
reference or described as required; and
(xiv) Such counsel shall also confirm that the documents
incorporated by reference in the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein, as
to which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder;
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States;
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(d) John B. Smith, Senior Vice President, Secretary and Legal
Counsel of Interim Services Inc, shall have furnished you with a written
opinion, a draft of which is attached as Annex II(c) hereto, dated the date
of such Time of Delivery, in form and substance satisfactory to you, the
effect that;
(i) Each of the Company's active subsidiaries incorporated in
the State of Florida has been duly incorporated and is a corporation
validly existing in good standing under the laws of the State of
Florida.
(ii) All of the issued shares of capital stock of each of the
Active Florida Subsidiaries have been duly authorized and validly
issued, and are fully paid and nonassessable.
(iii) All of the issued shares of capital stock of each of the
Company's active foreign subsidiaries are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the opinion
in this clause upon opinions of local counsel and in respect of matters
of fact upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they believe
that both of you and they are justified in relying upon such opinions
and certificates.)
(iv) The Company has been registered to offer franchises or has
obtained an exemption from registration or has filed notice of
franchise offering or has filed its offer of franchises (and, to such
counsel's knowledge, such registrations, notices and filings are still
effective and have not been revoked) in each jurisdiction in which the
conduct of its business requires such registrations and filings. The
Company's current franchise registrations, filings, notice of franchise
offering, and offering circular substantially comply as to form with
applicable federal laws and regulations regarding the offer and sale of
franchises. To such counsel's knowledge, the Company has never been
denied franchise registration by any jurisdiction and the Company has
never been and is not now the subject of any cease or desist order
issued by the Federal Trade Commission or other federal agency or state
agency having jurisdiction over franchising activities. To such
counsel's knowledge, the offer and sale of each franchise offered or
sold by the Company to date does not constitute the offer and sale of
a security under applicable federal securities laws. The Company's
current form of franchise agreement is enforceable in accordance with
its terms. As used in this paragraph (iv) and in the applicable
assumptions, exceptions, qualifications and limitations set forth
below, the terms "franchise" "franchises", "franchisee" or
"franchisees" also include any license or licenses offered or sold
by the Company in connection with the Company's licensed office
program and licensees thereunder, as described in the Prospectus.
(v) Except as disclosed in the Prospectus, to the best of such
counsel's knowledge, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party
or to which any property of the Company or any of its subsidiaries is
subject which is likely to be determined adversely to the Company or
any of its subsidiaries in a manner or amount which would,
individually or in the aggregate, have a material adverse effect
on the consolidated financial position, stockholders equity, or
results of operations of the Company and its subsidiaries,
and no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(e) The respective counsel for each of the Selling Stockholders, as
indicated in Schedule II hereto, shall each have furnished to you their written
opinion (a draft of each such opinion is attached as Annex II(c) hereto) with
respect to each of the Selling Stockholders for whom they are acting as counsel,
dated the First Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Stockholder and the Custody
Agreement is enfroceable against such Selling Stockholder;
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(ii) This Agreement and the International Underwriting Agreement
have been duly executed and delivered by or on behalf of such Selling
Stockholder; and to the knowledge of such counsel, the performance of
such Selling Stockholder's agreements in this Agreement and the
International Underwriting Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions contemplated
thereby do not result in a breach of, or constitute a default under, or
violation of any terms or provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound, or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation of
the provisions of any statutory law or regulation;
(iii) Assuming that the Underwriters are purchasers in good faith
for value without knowledge or notice of any adverse claim or any lien
upon or restriction on transfer of the Shares, upon the closing the
Underwriters will have acquired all rights of such Selling Stockholders
in the Shares being sold by such Selling Stockholders pursuant to the
Underwriting Agreement and the International Underwriting Agreement,
free and clear of all such claims, liens or restrictions on transfer.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement and the International
Underwriting Agreement in connection with the Shares to be sold by such
Selling Stockholder hereunder or thereunder, except any such consent,
approval, authorization or order which has have been duly obtained and
is in full force and effect, such as have been obtained under the Act
and such as may be required under state or foreign securities or Blue
Sky laws in connection with the purchase and distribution of such
Shares by the Underwriters or the International Underwriters;
(iv) Assuming that the Shares were duly and validly issued to the
Selling Stockholders in connection with the merger of Brandon Systems
Corporation with and into the Company (as to which such Counsel need
express no opinion) effective on May 26, 1996, upon payment and delivery
in accordance with the terms of the Underwriting Agreement and the
International Underwriting Agreement, good and valid title to the
Shares, free and clear of all liens, encumbrances, equities and claims,
will pass to each of the Underwriters who has purchased such Shares in
good faith and without notice (in the case of each such term, within
the meaning of the Uniform Commercial Code) of any such lien,
encumbrance, equity or claim.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States and in
rendering the opinion in subparagraph (iv) such counsel may rely upon a
certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on the Shares sold by
such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(f) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Deloitte & Touche
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in
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Annex I hereto (the executed copy of the letter delivered prior to the execution
of this Agreement is attached as Annex I(aa) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective amendment to
the Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(g)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or change
in excess of $10 million long-term debt (excluding up to $15 million of
additional debt incurred in connection with acquisitions) of the Company
or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Representatives so material
and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on New York Stock Exchange;
(iii) a general moratorium on commercial banking activities declared by either
Federal or New York State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Representatives makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(i) The Shares to be sold by the Company and the Selling Stockholders
at such Time of Delivery shall have been duly listed, subject to notice of
issuance, on the Exchange;
(j) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of officers
of the Company and of the Selling Stockholders, respectively, satisfactory to
you as to the accuracy of the representations and warranties of the Company and
the Selling Stockholders, respectively, herein at and as of such Time of
Delivery, as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (g) of this
Section, and as to such other matters as you may reasonably request; and
(k) The Company shall have complied with the provisions of
section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement).
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
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actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Goldman, Sachs & Co.
expressly for use therein.
(b) Each of Ira Brown and Myra Brown jointly and severally will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use therein;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that such
Selling Stockholder shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. expressly for use therein; PROVIDED FURTHER that the liability of the
Selling Stockholders pursuant to this subsection (b) shall not exceed the
product of the number of Shares sold by the Selling Stockholders and the initial
public offering price of the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and each
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or such Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not
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misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or such Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) (b)
or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as
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well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters with respect to the Shares purchased under this Agreement,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Stockholders on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, each
of the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
by PRO RATA allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section 8 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Stockholders shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Stockholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Stockholders
21
<PAGE>
notify you that they have so arranged for the purchase of such Shares, you or
the Company and the Selling Stockholders shall have the right to postpone such
Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all of the Shares to be purchased at such Time of
Delivery, then the Company and the Selling Stockholders shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares which
such Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except for the expenses
to be borne by the Company and the Selling Stockholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any of the Selling Stockholders, or any
officer or director or controlling person of the Company, or any controlling
person of any Selling Stockholder, and shall survive delivery of and payment for
the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company and each of
the Selling Stockholders pro rata (based on the number of Shares to be sold by
the
22
<PAGE>
Company and such Selling Stockholder hereunder) will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Selling Stockholders shall then be under no
further liability to any Underwriter in respect of the Shares not so delivered
except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; if to any Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and for each of the Representatives plus one
for each counsel and the Custodian, if any counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement
<PAGE>
among each of the Underwriters, the Company and each of the Selling
Stockholders. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters (U.S. Version), the form of which shall be
submitted to the Company and the Selling Stockholders for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
24
<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Interim Services Inc.
By:. . . . . . . . . . . . . . . .
Name:
Title:
Ira B. Brown
Myra Brown
By:. . . . . . . . . . . . . . . .
Name:
Title:
As Attorney-in-Fact acting on behalf of each of
the Selling Stockholders named in Schedule II to
this Agreement.
Accepted as of the date hereof at ........,.......:
Goldman, Sachs & Co.
Robert W. Baird & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
By:. . . . . . . . . . . . . . .
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- ---------------- -------------------
<S> <C> <C>
Goldman, Sachs & Co.. . . . . . . . . . . . . . . . . . . . .
Robert W. Baird & Co. Incorporated. . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . .
[NAMES OF OTHER UNDERWRITERS] . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
TO BE EXERCISED
PURCHASED
---------------- --------------------
<S> <C> <C>
The Company. . . . . . . . . . . . . . . . . . . . . . . . . .
The Selling Stockholder(s):
Ira Brown(a). . . . . . . . . . . . . . . . . . . . . . . 220,000 --
Myra Brown(a) . . . . . . . . . . . . . . . . . . . . . . 80,000 --
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
------- ------
------- ------
</TABLE>
(a) This Selling Stockholder is represented by McCarter & English,
Newark, New Jersey and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN
TWO)], and each of them, as the Attorneys-in-Fact for such Selling Stockholder.
27
<PAGE>
ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data, pro
forma financial information, financial forecasts and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon,
copies of which have been separately furnished to the representatives of
the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's Quarterly Report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their reports
thereon copies of which have been separately furnished to the
Representatives; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for financial
and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
<PAGE>
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Exchange
Act and the related published rules and regulations, or (ii) any
material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus or
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated financial
statements included or incorporated by reference in the Company's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial statements included
or incorporated by reference in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have
2
<PAGE>
not been properly applied to the historical amounts in the compilation
of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders' equity or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference) or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
3
<PAGE>
INTERIM SERVICES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
(INTERNATIONAL VERSION)
October __, 1996
Goldman Sachs International,
Robert W. Baird & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB, England.
Ladies and Gentlemen:
Interim Services Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
790,000 shares and, at the election of the Underwriters, up to
127,500 additional shares of Common Stock (par value $.01 per share)
("Stock") of the Company, and the stockholders of the Company named in Schedule
II hereto (the "Selling Stockholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of
60,000 shares of Stock. The aggregate of 850,000 shares to be sold
by the Company and the Selling Stockholders is herein called the "Firm Shares"
and the aggregate of 127,500 additional shares to be sold by the
Company is herein called the "Optional Shares". The Firm Shares and the
Optional Shares which the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "Shares".
It is understood and agreed to by all parties that the Company and the
Selling Stockholders are concurrently entering into an agreement, a copy of
which is attached hereto (the "U.S. Underwriting Agreement"), providing for the
sale by the Company and the Selling Stockholders of up to a total of
3,910,000 shares of Stock (the "U.S. Shares"),
<PAGE>
including overallotment option thereunder, through arrangements with certain
underwriters in the United States (the "U.S. Underwriters"), for whom Goldman,
Sachs & Co., Robert W. Baird & Co. Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives. Anything herein or
therein to the contrary notwithstanding, the respective closings under this
Agreement and the U.S. Underwriting Agreement are hereby expressly made
conditional on one another. The Underwriters hereunder and the
U.S. Underwriters are simultaneously entering into an Agreement between U.S. and
International Underwriting Syndicates (the "Agreement between Syndicates") which
provides, among other things, for the transfer of shares of Stock between the
two syndicates. Two forms of prospectus are to be used in connection with the
offering and sale of shares of Stock contemplated by the foregoing, one relating
to the Shares hereunder and the other relating to the U.S. Shares. The latter
form of prospectus will be identical to the former except for certain substitute
pages as included in the registration statement and amendments thereto as
mentioned below. Except as used in Sections 2, 3, 4, 9 and 11 herein, and
except as context may otherwise require, references hereinafter to the Shares
shall include all of the shares of Stock which may be sold pursuant to either
this Agreement or the U.S. Underwriting Agreement, and references herein to any
prospectus whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.
In addition, this Agreement incorporates by reference certain provisions
from the U.S. Underwriting Agreement (including the related definitions of
terms, which are also used elsewhere herein) and, for purposes of applying the
same, references (whether in these precise words or their equivalent) in the
incorporated provisions to the "Underwriters" shall be to the Underwriters
hereunder, to the "Shares" shall be to the Shares hereunder as just defined, to
"this Agreement" (meaning therein the U.S. Underwriting Agreement) shall be to
this Agreement (except where this Agreement is already referred to or as the
context may otherwise require) and to the representatives of the Underwriters or
to Goldman, Sachs & Co. shall be to the addressees of this Agreement and to
Goldman Sachs International ("GSI"), and, in general, all such provisions and
defined terms shall be applied MUTATIS MUTANDIS as if the incorporated
provisions were set forth in full herein having regard to their context in this
Agreement as opposed to the U.S. Underwriting Agreement.
1. The Company and each of the several Selling Stockholders hereby
make to the Underwriters the same respective representations, warranties and
agreements as are set forth in Section 1 of the U.S. Underwriting Agreement,
which Section is incorporated herein by this reference.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Stockholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Stockholders, at a purchase price per share of $............, the number of Firm
Shares (to be adjusted by you so as to eliminate fractional shares) determined
by multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all the Underwriters
<PAGE>
from the Company and all the Selling Stockholders hereunder and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 127,500 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering overallotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of such
notice.
3. Upon the authorization by GSI of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus and in the forms of Agreement
among Underwriters (International Version) and Selling Agreements, which have
been previously submitted to the Company by you. Each Underwriter hereby makes
to and with the Company and the Selling Stockholders the representations and
agreements of such Underwriter as a member of the selling group contained in
Section 3(d) and 3(e) of the form of Selling Agreements.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least forty-eight
hours' prior notice to the Company and the Selling Stockholders shall be
delivered by or on behalf of the Company and the Selling Stockholders to
Goldman, Sachs & Co., through the facilities of The Depository Trust
Company ("DTC"), for the account of such Underwriter, against payment by
or on behalf of such Underwriter of the purchase price therefor by
certified or official bank check or checks, payable to the order of the
Company and each of the Selling Stockholders in New York Clearing House
(same day) funds. The Company will cause the certificates representing
the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment
shall be, with respect to the Firm Shares, 9:30 a.m., New York City time,
on ............., 1996 or such other time and date as Goldman, Sachs &
Co., the Company, and the Selling Stockholders may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the
date specified by Goldman, Sachs & Co. in the written notice given by
Goldman, Sachs & Co. of the Underwriters'
<PAGE>
election to purchase such Optional Shares, or such other time and date as
Goldman, Sachs & Co. and the Company may agree upon in writing. Such time
and date for delivery of the Firm Shares is herein called the "First Time
of Delivery", such time and date for delivery of the Firm Optional Shares,
if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a
"Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 of the U.S.
Underwriting Agreement, including the cross-receipt for the Shares and any
additional documents requested by the Underwriters pursuant to Section
7(j) of the U.S. Underwriting Agreement, and the check or checks specified
in subsection (a) above, will be delivered at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, NY 10004-2498 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all
at each Time of Delivery. A meeting will be held at the Closing Location
at ..............p.m., New York City time, on the New York Business Day
next preceding each Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company hereby makes with the Underwriters the same
agreements as are set forth in Section 5 of the U.S. Underwriting Agreement,
which Section is incorporated herein by this reference.
6. The Company, each of the Selling Stockholders, and the
Underwriters hereby agree with respect to certain expenses on the same terms as
are set forth in Section 6 of the U.S. Underwriting Agreement, which Section is
incorporated herein by this reference.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their discretion,
at each Time of Delivery to the condition that all representations and
warranties and other statements of the Company, and of the Selling Stockholders
herein are, at and as of such Time of Delivery, true and correct, the condition
that the Company and the Selling Stockholders shall have performed all of its
and their respective obligations hereunder theretofore to be performed, and
additional conditions identical to those set forth in Section 7 of the
U.S. Underwriting Agreement, which Section is incorporated herein by this
reference.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER,
<PAGE>
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through GSI expressly
for use therein.
(b) Each of Ira Brown and Myra Brown jointly and severally will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use therein;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that such
Selling Stockholder shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through GSI expressly
for use therein; PROVIDED FURTHER that the liability of the Selling Stockholders
pursuant to this subsection (b) shall not exceed the product of the number of
Shares sold by the Selling Stockholders and the initial public offering price of
the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through GSI expressly for use
therein; and will reimburse the Company and each Selling Stockholder for any
legal or other expenses reasonably incurred by the Company or such Selling
Stockholder in connection with investigating or defending any such action or
claim as such expenses are incurred.
<PAGE>
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares purchased
under this Agreement (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
<PAGE>
the omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (e)
were determined by PRO RATA allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 8 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Stockholders shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Stockholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Stockholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Stockholders shall have the right to postpone such Time
of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this
<PAGE>
Section with like effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except for the expenses
to be borne by the Company and the Selling Stockholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or any of the Selling Stockholders, or any
officer or director or controlling person of the Company or any controlling
person of any Selling Stockholders, and shall survive delivery of and payment
for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason, any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company and each of
the Selling Stockholders pro rata (based on the number of Shares to be sold by
the Company and such Selling Stockholder hereunder) will reimburse the
Underwriters through GSI for all out-of-pocket expenses approved in writing by
GSI, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Stockholders shall then
be under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 6 and 8 hereof.
<PAGE>
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by GSI on behalf of you as the representatives of the
Underwriters; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Underwriters in care of GSI, Peterborough Court,
133 Fleet Street, London EC4A 2BB, England, Attention: Equity Capital Markets,
Telex No. 94012165, facsimile transmission No. (071) 774-1550; if to any Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for such Selling Stockholder at its address set forth in Schedule II
hereto; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholders by GSI upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and for each of the Representatives plus one
for each counsel and the Custodian, if any, counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement among each of the
Underwriters, the Company and each of the Selling Stockholders. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters (International Version), the form of which shall be furnished to
the Company and the Selling Stockholders for examination upon request, but
without warranty on your part as to the authority of the signers thereof.
<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Interim Services Inc.
By: ...................................
Name:
Title:
Ira B. Brown
Myra Brown
By: ...................................
Name:
Title:
As Attorney-in-Fact acting on behalf of each of
the Selling Stockholders named in Schedule II to
this Agreement.
Accepted as of the date hereof at......,
......................... New York, New York:
Goldman Sachs International
Robert W. Baird & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
By: .....................................................
(Goldman Sachs International)
On behalf of each of the Underwriters
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- ---------------- -------------------
<S> <C> <C>
Goldman Sachs International
Robert W. Baird & Co. Incorporated . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation. . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . .
---------------- -------------------
---------------- -------------------
<PAGE>
SCHEDULE II
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
TO BE PURCHASED EXERCISED
---------------- -------------------
The Company. . . . . . . . . . . . . . . . . .
The Selling Stockholder(s):
Ira Brown (a) . . . . . . . . . . . . . . 220,000 --
Myra Brown (a). . . . . . . . . . . . . . 80,000 --
Total . . . . . . . . . . . . . . . . . . 300,000
---------------- -------------------
---------------- -------------------
</TABLE>
(a) This Selling Stockholder is represented by McCarter & English, 100
Mulberry Street, Newark, New Jersey 07101-0652 and has appointed [NAMES OF
ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and each of them, as the
Attorneys-in-Fact for such Selling Stockholder.
<PAGE>
EXHIBIT 4.1
EXCERPTS OF
RESTATED CERTIFICATE
OF
INCORPORATION
OF
INTERIM SERVICES INC.
--------------------------------------
PURSUANT TO SECTIONS 228, 242, AND 245
OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
FOURTH: The Aggregate Number of Shares of All Classes of Stock
That the Corporation Shall Have Authority to Issue Is 52,500,000,
Divided Into Two Classes As Follows:
(I) 50,000,000 Shares of a Class Designated Common Stock
with a Par Value of $0.01 Per Share; and
(II) 2,500,000 Shares of a Class Designated Preferred Stock
with a Par Value of $.01 Per Share.
The voting powers, designations, preferences, qualifications,
limitations, restrictions and special or relative rights in respect
of each class of stock are or shall be fixed as follows:
(1) PREFERRED STOCK. The Board of Directors is expressly
authorized to issue the Preferred Stock from time to time, in one
or more series, provided that the aggregate number of shares issued
and outstanding at any time of all such series shall not exceed
2,500,000. The Board of Directors is further authorized to fix or
alter by resolution or resolutions, in respect of each such series,
the following terms and provisions of any authorized and unissued
shares of such stock:
(a) The distinctive serial designation;
<PAGE>
(b) The number of shares of the series, which number may at
any time or from time to time be increased or decreased (but not
below the number of shares of such series then outstanding) by the
Board of Directors;
(c) The voting powers and, if voting powers are granted, the
extent of such voting powers including the right, if any, to elect
a director or directors;
(d) The election, term of office, filling of vacancies and
other terms of the directorships of directors elected by the
holders of any one or more classes or series of such stock;
(e) The dividend rights, including the dividend rate and the
dates on which any dividends shall be payable;
(f) The date from which dividends on shares issued prior to
the date for payment of the first dividend thereon shall be
cumulative, if any;
(g) The redemption price, terms of redemption, and the
amount of and provisions regarding any sinking fund for the
purchase or redemption thereof;
(h) The liquidation preference and the amounts payable on
dissolution or liquidation;
(i) The terms and conditions, if any, under which shares of
the series may be converted; and
2
<PAGE>
(j) Any other terms or provisions that the Board of
Directors is by law authorized to fix or alter.
(2) COMMON STOCK. The holders of shares of Common Stock
shall be entitled (i) to vote on all matters at all meetings of
the shareholders of the Corporation on the basis of one vote for
each share of Common Stock held of record; (ii) subject to any
preferential dividend rights applicable to the Preferred Stock, to
receive such dividends as may be declared by the Board of
Directors; and (iii) in the event of the voluntary, or involuntary,
liquidation or winding up of the Corporation, after distribution in
full of any preferential amounts to be distributed to holders of
shares of Preferred Stock, to receive all of the remaining assets
of the Corporation available for distribution to its shareholders,
ratably in proportion to the aggregate number of their shares of
Common Stock and Preferred Stock (if the holders of such Preferred
Stock are entitled to share in such distribution).
(3) PROVISIONS APPLICABLE TO COMMON AND PREFERRED STOCK. No
holder of shares of any class of stock of the Corporation shall be
entitled, as a matter of right, to purchase or subscribe for any
shares of any class of stock of the Corporation, whether now or
hereafter authorized. The Board of Directors shall have authority
to fix the issue price of any and all shares of any class of stock
of the Corporation.
FIFTH: (A) NUMBER OF DIRECTORS. The number of directors to
constitute the Board of Directors shall be such number as fixed by
a resolution adopted by the affirmative vote of a majority vote of
the whole Board of Directors, but to be nine until otherwise
determined.
(B) CLASSIFICATION OF DIRECTORS. Pursuant to an action taken
by the shareholders of the Corporation either at a special meeting
of the shareholders of the Corporation in 1993 or pursuant to a
consent in lieu thereof of the shareholders of the Corporation in
accordance with Section 228 of the GCL, the directors of the
Corporation shall be divided into three classes: Class I, Class II
and Class III. Membership in such classes shall be as nearly equal
as possible and any increase or decrease in the number of directors
shall be apportioned by the Board of Directors among the classes to
maintain the number of directors as nearly equal as possible. The
initial Class I directors shall hold office until the annual meeting
of shareholders of the Corporation in 1994, the initial Class II
directors shall hold office until the annual meeting of shareholders
of the Corporation in 1995, and the initial Class III directors shall
hold office until the annual meeting of shareholders of the
Corporation in 1996 or, in each case, until their successors are
elected and qualified and subject to prior death, resignation,
retirement or removal from office. Beginning in 1994, at each annual
meeting of shareholders, the directors elected to succeed those
whose terms then expire shall belong to the same class as the
directors they succeed and shall hold office until the third
succeeding annual meeting of shareholders or until their successors
are elected and qualified and subject to the prior death, resignation,
retirement or removal from office of a director. No decrease in the
number of directors constituting the Board of Directors shall reduce
the term of any incumbent director.
3
<PAGE>
Whenever the holders of any one or more classes or series of Preferred
Stock of the Corporation shall have the right to elect directors, the
election, term of office, filling of vacancies and other terms of such
directorships shall be governed by the provisions of this Certificate of
Incorporation applicable to such Preferred Stock and such directors shall
not be divided into classes pursuant to this Article Fifth unless expressly
provided or determined as provided elsewhere in this Certificate of
Incorporation.
(C) VACANCIES. Newly created directorships resulting from an increase
in the number of directors and any vacancies on the Board of Directors
resulting from any cause shall be filled by a majority of the Board of
Directors then in office, although less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same remaining term as his
or her predecessor.
(D) REMOVAL OF DIRECTORS. The entire Board of Directors of the
corporation may be removed at any time but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of each class of
stock of the corporation entitled to elect one or more directors at a meeting
of the shareholders called for such purpose.
(E) BYLAWS. The Board of Directors shall have the power to make,
alter, amend, change, add to or repeal the Bylaws of the corporation.
4
<PAGE>
SEVENTH: In the event any class of stock of the Corporation is
registered pursuant to the Securities Exchange Act of 1934, as amended, for
so long as such class of stock of the Corporation is so registered, any
action that may be taken at any annual or special meeting of the shareholders
of the Corporation shall be taken only at an annual or special meeting of the
shareholders of the Corporation and no such action shall be taken without
such a meeting, regardless of any provision of the GCL that permits
shareholders to take such an action by written consent in lieu of an annual
or special meeting of shareholders.
EIGHTH: Special meetings of the shareholders for any lawful purpose or
purposes may be called at any time only by a majority of the Board of
Directors, by the Chairman of the Board or by the President. Each call for a
special meeting of the shareholders shall state the time, the day, the place
and the purpose or purposes of such meeting and shall be in writing, signed
by the persons making the same and delivered to the secretary. No business
shall be conducted at any special meeting of the shareholders other than the
business stated in the call for such meeting. The shareholders of the
Corporation shall not be entitled, as a matter of right, to require the Board
of Directors to call a special meeting of the shareholders or to bring any
business before a special meeting of the shareholders.
TENTH: The affirmative vote of the holders of not less than 2/3 of the
outstanding shares of stock of the Corporation entitled to vote generally in
the election of directors shall be required to amend, modify, alter or repeal
Articles Fifth, Eighth and Tenth of this Restated Certificate of
Incorporation or any provision of the Corporation's Bylaws.
5
<PAGE>
EXHIBIT 4.2
EXCERPTS OF
BY-LAWS
OF
INTERIM SERVICES INC.
(Adopted January 23, 1991)
(Amended March 9, 1992)
(Amended November 19, 1992)
(Amended October 18, 1993)
MEETING OF STOCKHOLDERS
4. PLACE OF MEETINGS. All meetings of the stockholders shall be held at
the office of the corporation or at such other place either within or without
the State of Delaware as shall be designated from time-to-time by the Board
of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
5. ANNUAL MEETING. (Amended October 18, 1993) the annual meeting of the
stockholders of the corporation shall be held on the second wednesday of
september of each year, commencing in 1994, if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 10:00 a.m., or at
such other date and time as shall be determined by the board of directors and
stated in the notice of the meeting, at which directors shall be elected and
such other business shall be transacted as may be properly brought before the
meeting.
At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the board of directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business
(including, without limitation, the nomination of candidates for the board of
directors) to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
secretary. To be timely, such notice must be delivered to or mailed and
received at the principal executive offices of the corporation not less than
fifty days nor more than seventy-five days prior to the meeting; provided,
however, that if fewer than sixty-five days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the fifteenth day following the day on which such notice
of the date of the annual meeting was mailed or such public disclosure was
made. A stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the stockholder proposing such business,
(iii) the class and number of shares of the corporation that are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder
in such business.
<PAGE>
Notwithstanding anything in these by-laws to the contrary, no
business shall be conducted at the annual meeting except in accordance with
the procedures set forth in this section 5; provided, however, that nothing in
this section 5 shall be deemed to preclude discussion by any stockholder of
any business properly brought before the annual meeting in accordance with
such procedure.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 5, and
if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
6. SPECIAL MEETINGS. (Amended October 18, 1993) special meetings of the
stockholders for any lawful purpose or purposes may be called at any time
only by a majority of the board of directors, by the chairman of the board or
by the president. Each call for a special meeting of the stockholders shall
state the time, the day, the place and the purpose or purposes of such
meeting and shall be in writing, signed by the persons making the same and
delivered to the secretary. No business shall be conducted at any special
meeting of the stockholders other than the business stated in the call for
such meeting. The stockholders of the corporation shall not be entitled, as a
matter of right, to require the board of directors to call a special meeting of
the stockholders or to bring any business before a special meeting of the
stockholders.
7. VOTING. At all meetings of stockholders, every stockholder having
the right to vote shall be entitled to vote in person, or by proxy appointed
by an instrument in writing subscribed by such stockholder and bearing a date
not more than three years prior to said meeting, unless said instrument shall
provide for a longer period. Unless otherwise provided by the Certificate of
Incorporation, each stockholder shall have one vote for each share of stock
entitled to vote at such meeting registered in his name on the books of the
corporation. At all meetings of stockholders, the voting may be by voice
vote, except that, unless otherwise provided by the Certificate of
Incorporation, any qualified voter may demand a vote by ballot on any matter,
in which event such vote shall be taken by ballot.
2
<PAGE>
8. QUORUM. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders for the
transaction of any business, except as otherwise provided by law, by the
certificate of incorporation or by these By-Laws. Every decision of a
majority in the amount of stock of such quorum shall be valid as a corporate
act, except in those specific instances in which a larger vote is required by
law or by the Certificate of Incorporation or by these By-Laws.
At any meeting at which a quorum shall not be present, the holders of
a majority of the stock present in person or by proxy at such meeting shall
have power successively to adjourn the meeting from time-to-time to a
specified time and place, without notice to anyone other than announcement
at the meeting, until a quorum shall be present in person or by proxy. At
such adjourned meeting at which a quorum shall be present in person or by
proxy, any business may be transacted which might have been transacted at the
original meeting which was adjourned. If the adjournment is for more than 30
days, or if after adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
9. STOCK LEDGER. The original or duplicate stock ledger shall be the
only evidence as to who are the stockholders entitled to examine the list
required under Section 10 of these By-Laws or the books of the corporation,
or to vote in person or by proxy at any meeting of the stockholders.
10. STOCKHOLDERS LIST. The secretary or assistant secretary, who shall
have charge of the stock ledger, shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of any
stockholder for any purpose germane to the meeting during ordinary business
hours for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, or, if not so
specified, at the place where the meeting is to held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
3
<PAGE>
11. NOTICE. Written or printed notice of each meeting of the
stockholders, whether annual or special, stating the place, date, and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes
thereof, shall be given, either personally or by mail, to each stockholder of
record of the corporation entitled to vote at such meeting not less than 10
days nor more than 60 days prior to the meeting. The Board of Directors may
fix in advance a date, which shall not be more than 60 nor less than 10 days
preceding the date of any meeting of the stockholders, as a record date for
the determination of the stockholders entitled to notice of, and to vote at,
any such meeting and any adjournment thereof; provided, however, that the
Board of Directors may fix a new record date for any adjourned meeting.
12. ACTION BY STOCKHOLDERS WITHOUT MEETING. (Amended October 18, 1993)
unless otherwise prescribed by the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice, and
without a vote, if a consent in writing setting forth the action so taken
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of any taking of corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders
who have not consented in writing.
STOCK
35. CERTIFICATES. Certificates of stock shall be issued in numerical
order, and each stockholder shall be entitled to a certificate signed by the
president or a vice president, and by the treasurer or an assistant treasurer
or the secretary or an assistant secretary, certifying to the number of
shares owned by the stockholder. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate may
nevertheless be issued by the corporation with the same effect as if such
officer, transfer agent, or registrar who signed such certificate, or whose
facsimile signature shall have been placed thereon, had not ceased to be such
officer, transfer agent, or registrar of the corporation.
36. TRANSFER. Transfers of stock shall be made only upon the transfer
books of the corporation, kept at the office of the corporation or respective
transfer agents designated to transfer the several classes of stock, and
before a new certificate is issued the old certificate shall be surrendered
for cancellation. Until and unless the Board of Directors appoints some other
person, firm, or corporation as its transfer agent or transfer clerk (and
upon the revocation of any such appointment, thereafter until a new
appointment is similarly made) the secretary of the corporation without the
necessity of any formal action of the Board, and the secretary, or any person
designated by him, shall perform all of the duties thereof.
-4-
<PAGE>
37. REGISTERED STOCKHOLDERS. Registered stockholders only shall be
entitled to be treated by the corporation as the holders and owners in fact
of the shares standing in their respective names and the corporation shall
not be bound to recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as expressly provided by the laws of the
State of Delaware.
38. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation, alleged to have been
lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates to be lost, stolen, or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his legal representative, to give the
corporation and its transfer agents and registrars, if any, a bond in such
sum as it may direct to indemnify it against any claim that may be made
against it with respect to the certificate or certificates alleged to have
been lost, stolen, or destroyed.
39. REGULATIONS. The Board of Directors shall have power and authority to
make all such rules and regulations as it may deem expedient concerning the
issue, transfer, conversion, and registration of certificates for shares of
the capital stock of the corporation, not inconsistent with the laws of the
State of Delaware, the Certificate of Incorporation of the corporation and
these By-Laws.
40. FIXING RECORD DATE. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion, or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting except that the Board of Directors may fix a new record date for the
adjourned meeting.
-5-
<PAGE>
DIVIDENDS AND FINANCE
41. DIVIDENDS. Dividends upon the outstanding shares of the corporation,
subject to the provisions of the Certificate of Incorporation and of any
applicable law and of these By-Laws, may be declared by the Board of
Directors at any meeting. Subject to such provisions, dividends may be paid
in cash, in property, or in shares of the capital stock of the corporation.
-6-
<PAGE>
EXHIBIT 5.1
BRYAN CAVE LLP
SEPTEMBER 13, 1996
Interim Services Inc.
2050 Spectrum Boulevard
Ft. Lauderdale, Florida 33309
Ladies and Gentlemen:
We refer to the Amendment No. 1 to the Registration Statement (the
"Registration Statement") of Interim Services Inc., a Delaware corporation (the
"Company"), filed on Form S-3 with the Securities and Exchange Commission (the
"SEC"), to register under the Securities Act of 1933, as amended (the "Act"),
the offer to sell 4,887,500 shares of the Company's common stock, par value
$0.01 per share (the "Common Stock").
In this connection, we have examined originals or copies certified or
otherwise identified to our satisfaction of such corporate records and
agreements of the Company, and such instruments and documents, including
officers certificates and certificates of public officials, as we have deemed
necessary as a basis for the opinions hereinafter expressed.
Based on the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth below, we are of the opinion that:
1. The Company has been duly incorporated and is a corporation validly
existing in good standing under the laws of the State of Delaware;
2. The shares of Common Stock registered pursuant to the Registration
Statement will be, when sold, duly authorized, validly issued, fully paid,
and non-assessable.
The opinions expressed herein are limited by, subject to and based on the
following assumptions, exceptions, qualifications and limitations:
a. The opinions stated herein are as of the date hereof, and we assume
no obligation to update or supplement this legal opinion to reflect any
facts or circumstances that may hereafter come to our attention or any
changes in the laws that may hereinafter occur; and
b. This legal opinion is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated.
We consent to the filing of this legal opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the prospectus filed as a part thereof. We also consent to your
filing copies of this legal opinion as an exhibit to the Registration Statement
with agencies of such states as you deem necessary in the course of complying
with the laws of such states regarding the offering. In giving this consent, we
do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rulesand regulations of the SEC.
Very truly yours,
/s/ BRYAN CAVE LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-09109 of Interim Services Inc. of our report dated July 29, 1996, appearing
in the Prospectus, which is a part of this Registration Statement, and to the
references to us under the headings "Selected Consolidated Financial Data" and
"Experts" in such Prospectus.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedule of Interim
Services Inc., listed in Item 99.1. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Fort Lauderdale, Florida
September 13, 1996
<PAGE>
EXHIBIT 99.1
INTERIM SERVICE INC. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C
----------------------------
COLUMN B
------------- ADDITIONS COLUMN E
COLUMN A BALANCE AT CHARGED TO COLUMN D ---------------
- -------------------------------------------- BEGINNING OF COSTS AND CHARGED TO ----------- BALANCE AT END
DESCRIPTION PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS OF PERIOD
- -------------------------------------------- ------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 24, 1993
Allowance for doubtful accounts........... $ (1,923) $ (1,302) $ 1,242 $ (1,983)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
Accumulated Amortization:
Excess of cost over fair value of net
assets acquired.......................... $ (16,370) $ (5,148) $ 41 $ (21,477)
Customer lists............................ (386) (302) (1) (689)
Noncompete agreements..................... (821) (169) 1 (989)
Other intangible assets................... (83) (51) -- (134)
------------- ----------- ------- ----------- ---------------
$ (17,660) $ (5,670) $ 41 $ (23,289)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
YEAR ENDED DECEMBER 30, 1994
Allowance for doubtful accounts........... $ (1,983) $ (784) $ 1,165 $ (1,602)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
Accumulated Amortization:
Excess of cost over fair value of net
assets acquired.......................... $ (21,477) $ (5,536) $ 542 $ (26,471)
Customer lists............................ (689) (317) -- (1,006)
Noncompete agreements..................... (989) (133) -- (1,122)
Other intangible assets................... (134) (56) -- (190)
------------- ----------- ------- ----------- ---------------
$ (23,289) $ (6,042) $ 542 $ (28,789)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
YEAR ENDED DECEMBER 29, 1995
Allowance for doubtful accounts........... $ (1,602) $ (1,638) $ 1,064 $ (2,176)
Accumulated Amortization:
Excess of cost over fair value of net
assets acquired.......................... $ (26,471) $ (6,021) $ (26) $ (32,518)
Customer lists............................ (1,006) (269) -- (1,275)
Noncompete agreements..................... (1,122) (533) -- (1,655)
Other intangible assets................... (190) (61) -- (251)
------------- ----------- ------- ----------- ---------------
$ (28,789) $ (6,884) $ (26) $ (35,699)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
SIX MONTHS ENDED JUNE 28, 1996
Allowance for doubtful accounts........... $ (2,176) $ (1,230) $ 393 $ (3,013)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
Accumulated Amortization:
Excess of cost over fair value of net
assets acquired.......................... (32,518) (4,057) (19) -- (36,594)
Customer lists............................ (1,275) (155) -- (1,430)
Noncompete agreements..................... (1,655) (96) -- (1,751)
Other intangible assets................... (251) (29) (94) -- (374)
------------- ----------- ------- ----------- ---------------
$ (35,699) $ (4,337) (113) $ -- $ (40,149)
------------- ----------- ------- ----------- ---------------
------------- ----------- ------- ----------- ---------------
</TABLE>
