SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported):
June 29, 1997
INTERIM SERVICES INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-23198
(Commission File Number)
36-3536544
(IRS Employer Identification no.)
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309-3008
(954) 938-7780
(Address, including zip code, and telephone number
of principal executive offices)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
On June 29, 1997, the Registrant entered into a definitive agreement to
sell its Interim Healthcare business (the "Healthcare Division") to Cornerstone
Equity Investors IV, L.P. for $134 million in cash. The Registrant will use the
net proceeds of the transaction to reduce its outstanding debt. The sale of the
Healthcare Division is expected to close on or before September 30, 1997.
The divestment of the Healthcare Division will enable the Registrant to
focus its energies and resources on its core Commercial Division. The
Registrant's Commercial Division is divided between Commercial Staffing (made up
of clerical and light industrial staffing, plus the Registrant's "On Premise"
operations) and Professional Services (consisting of technology,
accounting/finance, legal, human resources and search). Revenues for the
Registrant's Commercial Division have grown at a compound annual growth rate of
31% from 1994 to 1996. The Registrant anticipates that its 1997 revenues,
exclusive of the Healthcare Division, will reach approximately $1.4 billion in
1997 and will be derived 53% from Commercial Staffing and 47% from Professional
Services.
This report and the exhibits hereto contain certain forward-looking statements
regarding the prospects of Interim Services Inc. which involve risks and
uncertainties. The Registrant's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth in the Registrant's reports on Forms 10-K, 10-Q and 8-K made
under the Securities Exchange Act of 1934. In addition, changes in market,
business or economic conditions, fluctuations in currency exchange rates or
significant acquisitions or other transactions could create material differences
in the results anticipated in these forward-looking statements.
ITEM 7. EXHIBITS
(c) EXHIBITS.
The following exhibit is filed with this report:
Number Description
------ -------------------------------------------------------------------
99.1 Press release dated June 30, 1997, and related Investor Fact
Sheet.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERIM SERVICES INC.
DATE: July 10, 1997 By: /s/ John B. Smith
------------------------------------
John B. Smith, Esq.
Senior Vice President and
General Counsel
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<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- ----------------------------------------------------------------
99.1 Press release dated June 30, 1997, and related Investor Fact
Sheet
4
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Investor Contact: Roy Krause Press Contact: Liza Fiore
(954) 489-6225 (954) 938-7736
INTERIM ANNOUNCES PLANS TO DIVEST ITS HEALTHCARE DIVISION
FT. LAUDERDALE, Fla., June 30, 1997 - Interim Services Inc. (NYSE: IS)
today announced it has reached a definitive agreement to sell its Interim
HealthCare business to Cornerstone Equity Investors for $134 million. Interim
Services Inc. will use the net proceeds of the transaction, which is expected to
close within 90 days, to reduce debt.
Interim HealthCare is one of North America's largest providers of home
nursing and other specialized health care services. It has approximately 400
offices throughout the United States and Canada, with 1996 revenues of $230
million.
Interim Services Inc. President and CEO Ray Marcy commented, "The
divestment of our HealthCare Division was pursued in order to maximize
shareholder value. The HealthCare Division has been increasingly viewed as
non-core and less synergistic with our more rapidly growing Commercial Division.
"The divestment will enable senior management to more narrowly focus on
opportunities within the Commercial sector, which we believe will further
accelerate the growth of Interim Services Inc. going forward. With Cornerstone's
successful history in the health care field, we also anticipate Interim
HealthCare will have increased opportunity for growth and development in the
near future."
Revenues for the Commercial Division of Interim have grown at a compound
annual growth rate of 31% from 1994 to 1996. Commercial Division 1997 revenues
are expected to reach approximately $1.4 billion, as compared to $916 million in
1996.
"Perhaps even more significant than the Commercial Division growth rates
over the past three years, is the transformation Interim has made from being
viewed as a temporary help supplier to a human resource solution for our
clients," said Marcy.
Since its initial public offering in January 1994, Interim has dramatically
expanded into the areas of information technology, legal and accounting, as well
as workforce management,
<PAGE>
through Interim On-Premise. More recently the company has also focused on
developing a significant presence in executive search, recruiting, outplacement
and career consulting, as well as in international markets. In June 1997 Interim
acquired Michael Page, a premier staffing and recruitment company operating
exclusively in the professional services arena throughout eight countries in
Europe and Asia.
Looking forward, Interim Services Inc. 1997 revenues, exclusive of the
HealthCare Division, are expected to be 53% Commercial Staffing and 47%
Professional Services. This puts Interim on track to exceed $600 million in
Professional Services revenues in 1997, making it one of the largest
international providers of professional skills. Commercial Staffing includes
clerical, administrative, light industrial and On-Premise business; and
Professional Services focuses on technology, accounting and finance, legal,
human resources, marketing and sales, search and outplacement.
Alex. Brown & Sons Incorporated was retained by Interim to act as
investment adviser for this transaction.
Interim Services Inc., based in Ft. Lauderdale, Fla., is a leading provider
of human resource solutions. It had 1996 revenues of $1.1 billion, and currently
operates 1000 offices throughout North America, Europe and Asia. Information on
Interim Services Inc. is available at website: http://www.interim.com.
Cornerstone Equity Investors, based in New York, is a leading equity
investment firm which sponsors management buyouts of growth companies. With more
than $1 billion in capital under management, Cornerstone has a long history of
successful health care investments.
This press release contains certain forward-looking statements regarding
the prospects of Interim Services Inc. which involve risks and uncertainties.
The company's actual results could differ materially from the results
anticipated in these forward-looking statements as a result of certain factors
set forth in the company's reports on Forms 10-K, 10-Q and 8-K made under the
Securities Exchange Act of 1934. In addition, changes in market, business or
economic conditions, fluctuations in currency exchange rates or significant
acquisitions or other transactions could create material differences in the
results anticipated in these forward-looking statements.
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<PAGE>
INVESTOR FACT SHEET
CONTACT: Roy Krause, (954) 489-6225
Interim Services Inc. today announced the signing of a definitive agreement to
sell the assets of its HealthCare Division, Interim HealthCare, to Cornerstone
Equity Investors IV, L.P. for $134 million in cash.
INTERIM COMMERCIAL DIVISION - FIRST QUARTER 1997 REVENUES AND OFFICE COUNT
As of the first quarter 1997, the Commercial Division had revenues of $257.1
million, sales of $308.9 million. It had 634 offices in North America, Europe
and Asia.
INTERIM COMMERCIAL DIVISION - ESTIMATED FULL-YEAR 1997 REVENUES AND OFFICE COUNT
Commercial Division full-year 1997 revenues are estimated to be approximately
$1.4 billion, sales are estimated to be approximately $1.7 billion.
HISTORICAL FINANCIAL ANALYSIS OF INTERIM COMMERCIAL DIVISION:(1)
* COMMERCIAL DIVISION, WHICH INCLUDES COMMERCIAL STAFFING BUSINESS UNIT
(CLERICAL, LIGHT INDUSTRIAL AND ON-PREMISE) AND PROFESSIONAL SERVICES BUSINESS
UNIT (TECHNOLOGY, ACCOUNTING/FINANCE, LEGAL, HUMAN RESOURCES AND SEARCH) HAD:
--> REVENUE CAGR OF 30.56% FROM 1994 TO 1996
* COMMERCIAL STAFFING REVENUE GROWTH OF 17.82% FROM 1994 TO 1996
* PROFESSIONAL SERVICES REVENUE GROWTH OF 75.23% FROM 1994 TO 1996
--> EBITDA CAGR OF 44.21% FROM 1994 TO 1996
--> STRONG INCREASES IN HISTORICAL PROFIT MARGINS
* GROSS PROFIT MARGIN - IMPROVEMENT OF 169 BASIS POINTS SINCE 1994 (26.07%
IN 1994 TO 27.76% IN 1996)
* EBITDA MARGIN - IMPROVEMENT OF 113 BASIS POINTS SINCE 1994 (5.12% IN
1994 TO 6.25% IN 1996)
PROJECTED FINANCIAL ANALYSIS OF INTERIM COMMERCIAL DIVISION:
--> Revenue growth of 52.31% from 1996 to 1997E
* Commercial Services revenue growth of 21.38% from 1996 to 1997E
* Professional Services revenue growth of 112.67% from 1996 to 1997E
- ---------------
(1) Supporting data shown in following pages. Financial information taken from
the Company's consolidated audited financial statements for the years 1994
through 1996, audited divisional financial statements for the years 1994 through
1996 for the Healthcare Division, and derived from unaudited March 29, 1996 and
March 28, 1997 quarterly financial statements for both the Company and the
Healthcare Division. Healthcare divisional financial statements have been
prepared from the separate records maintained by Healthcare Division and may not
necessarily be indicative of the conditions which would have existed or the
results of operations if the division had been operated as an unaffiliated
company. Portions of certain income and expenses represent allocations made from
corporate headquarter items applicable to the Company as a whole.
<PAGE>
PROFESSIONAL SERVICES PROFILE:
Interim Professional Services, with revenues estimated to exceed $600 million in
1997, is one of the largest providers of professional staffing and consulting
services in the world, operating with a broad range of skills in ten countries
around the world.
RANKING OF PUBLICLY-TRADED SPECIALTY STAFFING COMPETITORS 1996 REVENUES(2)
Fiscal
Year Revenue
Specialty Staffing Ranking Ended ($000s)
- ---------------------------------------------------- ------------ ------------
1 Robert Half Dec-96 898,635
2 Interim - Professional Services Dec-96 532,000
3 Keane Dec-96 467,090
4 Computer Task Group Dec-96 365,076
5 Analysts International Jun-96 329,544
6 Computer Horizons Dec-96 233,858
7 Source Services Dec-96 204,748
8 Alternative Resources Dec-96 196,728
9 Ciber Jun-96 156,873
10 The Registry Jun-96 145,588
11 Romac Dec-96 94,210
12 On Assignment Dec-96 88,188
13 Data Processing Resources Jul-96 58,145
14 Data Dimensions Dec-96 14,835
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(2) Source: annual financial information from company 10-K filings.
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<PAGE>
<TABLE>
INTERIM COMMERCIAL DIVISION
PRO FORMA SUMMARY HISTORICAL FINANCIAL INFORMATION
In Millions of Dollars
<CAPTION>
1994 1995 1996 1Q96 1Q97 1997E
----------- ---------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales $ 708.6 $ 832.4 $ 1,128.4 $ 251.5 $ 308.9 $ 1,650.0
Revenue
Commercial Staffing 436.2 518.1 605.5 136.6 161.4 735.0
Professional Services 101.1 138.9 310.3 70.9 95.6 660.0
----------- ---------- ------------ --------- ---------- ------------
Total Revenue 537.3 657.0 915.9 207.5 257.1 1,395.0
Direct Cost 339.4 418.5 576.2 130.0 159.4
----------- ---------- ------------ --------- ----------
Gross Margin 197.9 238.5 339.7 77.5 97.7
Other Direct Cost 57.8 62.1 85.5 20.4 25.4
----------- ---------- ------------ --------- ----------
Gross Profit 140.1 176.4 254.2 57.1 72.3
Total Operating Expense 122.3 151.3 211.9 48.6 61.6
----------- ---------- ------------ --------- ----------
EBIT 17.8 25.1 42.3 8.5 10.7
EBITDA $ 27.5 $ 36.4 $ 57.2 $ 12.1 $ 15.2
Margin Analysis
Gross Profit Margin 26.07% 26.85% 27.76% 27.51% 28.11%
Service Gross Profit Margin 25.10% 26.06% 27.05% 26.87% 27.52%
Total Operating Expense 22.76% 23.02% 23.14% 23.44% 23.96%
EBIT Margin 3.31% 3.82% 4.62% 4.08% 4.15%
EBITDA Margin 5.12% 5.54% 6.25% 5.83% 5.90%
Growth Analysis
Sales 17.47% 35.56% 22.84% 46.22%
Commercial Staffing 18.78% 16.87% 18.14% 21.38%
Professional Services 37.40% 123.49% 34.93% 112.67%
Total Revenue 22.28% 39.40% 23.88% 52.31%
Gross Profit 25.90% 44.14% 26.57%
Operating Expense 23.68% 40.09% 26.63%
EBIT 41.17% 68.58% 26.24%
EBITDA 32.35% 57.13% 25.31%
CAGR
Sales 26.19% 32.54%
Commercial Staffing 17.82% 18.99%
Professional Services 75.23% 86.92%
Total Revenue 30.56% 37.44%
Gross Profit 34.71%
Operating Expense 31.63%
EBIT 54.27%
EBITDA 44.21%
</TABLE>
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<PAGE>
INTERIM COMMERCIAL DIVISION
OFFICE GROWTH ANALYSIS(3)
The following tables present summaries of office location growth.
At the Year End December
------------------------------------------------
1994 1995 1996 1997E CAGR
-------- -------- -------- -------- --------
Commercial Staffing Offices 375 445 482 510 10.79%
Professional Services Offices 24 60 111 200 102.74%
Combined Offices 399 505 593 710 21.18%
At the Year Ended December
------------------------------------------------
1994 1995 1996 1997E CAGR
-------- -------- -------- -------- --------
Branch Offices 156 206 283 389 35.60%
Licensed Offices 139 174 176 182 9.40%
Franchised Offices 104 125 134 139 10.15%
Total Offices 399 505 593 710 21.18%
- ---------------
(3) Branch office total will differ from 10-K because the 10-K restates
historical office count for the acquisition of Brandon Systems in May of 1996.
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<PAGE>
COMMERCIAL DIVISION - 1997 ESTIMATED BUSINESS MIX
[PIE CHART]
By Business Unit
Professional Services ..... 47%
Commercial Staffing ....... 53%
[PIE CHART]
Profesional Services Detail
Out-placement ............. 1%
Legal ..................... 4%
Accounting/Finance ........ 9%
Search .................... 9%
Technology ................ 24%
Commercial Staffing ....... 53%
[PIE CHART]
By Geography
Australia/Asia ............ 2%
Europe .................... 10%
North America ............. 88%
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