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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 27, 1997
COMMISSION FILE NUMBER 0-23198
INTERIM SERVICES INC.
(Exact name of registrant in its charter)
DELAWARE 36-3536544
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices, including zip code)
(954) 938-7600
(Registrant's telephone number, including area code)
_______________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes ( X ) No ( )
The number of shares outstanding of the registrant's Common Stock, $0.0l par
value, at July 25, 1997 was 19,627,416 shares.
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TABLE OF CONTENTS
PART I Financial Information
Item 1. Financial Statements Page
Consolidated Statements of Earnings
Quarter Ended June 27, 1997 and June 28, 1996
Six Months Ended June 27, 1997 and June 28, 1996.............. 1
Consolidated Balance Sheets
June 27, 1997 and December 27, 1996........................... 2
Consolidated Statements of Cash Flows
Six Months Ended June 27, 1997 and June 28, 1996.............. 3
Notes to Consolidated Financial Statements...................... 4
Item 2.
Management's Discussion and Analysis of Results of
Operations and Financial Condition.............................. 6
PART II Other Information
Item 4.
Matters Submitted to a Vote of Security Holders................ 10
Item 6.
Exhibits and Reports on Form 8-K................................ 11
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------- ---------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
--------- --------- -------- --------
Revenues from services $ 422,833 $ 281,188 $ 739,618 $ 545,913
Cost of services 280,875 194,504 500,220 380,232
--------- --------- -------- --------
Gross profit 141,958 86,684 239,398 165,681
--------- --------- -------- --------
Selling, general and
administrative expenses 101,283 60,964 172,062 116,741
Licensee commissions 11,034 9,475 20,462 18,657
Amortization of intangibles 5,081 2,188 7,365 4,337
Interest expense 6,185 1,805 6,460 3,441
Merger expense - 8,183 - 8,600
--------- --------- -------- --------
123,583 82,615 206,349 151,776
--------- --------- -------- --------
EARNINGS BEFORE INCOME
TAXES 18,375 4,069 33,049 13,905
Income taxes 8,453 4,415 14,602 8,762
--------- --------- --------- --------
NET EARNINGS (LOSS) $ 9,922 $ (346) $ 18,447 $ 5,143
========= ========= ========= ========
NET EARNINGS (LOSS) PER
COMMON AND COMMON
EQUIVALENT SHARES $ 0.25 $ (0.01) $ 0.46 $ 0.16
========= ========= ========= ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 39,946 30,840 39,880 31,832
========= ========= ========= ========
EPS effect before August 7, 1997 two-for-one stock split
Net earnings/(loss) per
common and common
equivalent shares $ 0.50 $ (0.02) $ 0.93 $ 0.32
========= ========= ========= ========
Weighted average shares
outstanding 19,973 15,420 19,940 15,916
========= ========= ========= ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
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INTERIM SERVICES INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, amounts in thousands, except per share data)
June 27, December 27,
1997 1996
-------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 25,548 $ 18,938
Marketable securities - 7,499
Receivables, less allowance for
doubtful accounts of $4,874
and $3,023 268,753 186,732
Insurance deposits 21,449 32,794
Other current assets 40,789 18,301
------------ -----------
TOTAL CURRENT ASSETS 356,539 264,264
INTANGIBLE ASSETS, NET 731,668 174,747
PROPERTY AND EQUIPMENT, NET 71,413 49,795
OTHER ASSETS 36,436 23,684
------------ -----------
$ 1,196,056 $ 512,490
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 31,900 $ -
Accounts payable and other accrued
expenses 78,057 27,092
Accrued salaries, wages
and payroll taxes 73,403 40,948
Accrued insurance 23,980 26,782
Accrued income taxes 19,534 159
----------- ----------
TOTAL CURRENT LIABILITIES 226,874 94,981
LONG-TERM DEBT 524,458 -
DEFERRED TAX LIABILITY 4,155 2,798
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share;
authorized, 2,500,000 shares;
none issued or outstanding - -
Common stock, par value $.01 per share;
authorized, 50,000,000 shares;
outstanding, 1997 - 39,227,580,
and 1996 - 38,953,368 392 390
Treasury stock (460) (460)
Additional paid-in capital 253,174 251,041
Retained earnings 182,397 163,950
Cumulative translation adjustment 5,066 (210)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 440,569 414,711
------------ -----------
$ 1,196,056 $ 512,490
============ ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED
---------------------------
JUNE 27, JUNE 28,
1997 1996
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 18,447 $ 5,143
Adjustments to reconcile net earnings to
net cash from operating activities:
Depreciation and amortization 14,560 9,098
(Benefit from) provision for deferred taxes
on income (3,139) 327
Changes in assets and liabilities, net of
effect of acquisitions
Receivables (39,829) (24,308)
Insurance deposits 11,345 (707)
Other current assets (7,883) (2,475)
Other assets (12,751) (3,031)
Accounts payable and accrued expenses 22,752 524
Accrued salaries, wages and
payroll taxes 21,965 9,152
Accrued insurance (2,857) 1,541
Accrued income taxes (2,827) (1,087)
Other (67) (1)
----------- --------
NET CASH PROVIDED BY/(USED IN)
OPERATING ACTIVITIES 19,716 (5,824)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (560,883) (5,382)
Capital expenditures (11,558) (12,919)
Net proceeds from sale of marketable securities 7,499 15,631
----------- ---------
NET CASH USED IN INVESTING ACTIVITIES (564,942) (2,670)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 579,784 5,273
Repayment of borrowings (30,275) -
Proceeds from exercise of employee stock
options and other 2,135 1,203
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 551,644 6,476
----------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 192 -
----------- ---------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 6,610 (2,018)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,938 4,025
----------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 25,548 $ 2,007
=========== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Income taxes paid $ 12,376 $ 11,422
=========== ========
Interest paid $ 2,026 $ 3,841
=========== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements of Interim Services Inc. and
subsidiaries (the "Company"), included herein, do not include all
footnote disclosures normally included in annual financial statements
and, therefore, should be read in conjunction with the Company's
financial statements and notes thereto for each of the three years in the
period ended December 27, 1996 included in the Company's Annual Report on
Form 10-K.
The interim consolidated financial statements for the six months ended
June 27, 1997 are unaudited and, in the opinion of management, reflect
all adjustments (consisting only of normal recurring adjustments)
necessary for fair presentation of financial position, results of
operations and cash flows for such periods. Results for the six months
ended June 27, 1997 are not necessarily indicative of results to be
expected for the full fiscal year ending December 26, 1997.
2. Earnings Per Share
Net earnings per share is based on the weighted average number of shares
of common stock and common stock equivalents outstanding during each
period. As of June 27, 1997, the Company had 19,613,790 shares of common
stock outstanding. On August 7, 1997 the Company announced a two-for-one
stock split in the form of a 100% stock dividend, subject to New York
Stock Exchange approval, to stockholders of record as of the close of
business on August 18, 1997, payable on September 5, 1997. Including the
effect of the two-for-one stock split, as of June 27, 1997 the Company
had 39,227,580 shares of common stock outstanding. The effect has been
reflected in the accompanying consolidated balance sheets and
consolidated statements of earnings and has been applied on a retroactive
basis.
3. Acquisitions
On April 18, 1997, Interim Services (UK) PLC ("Interim UK"), a
wholly-owned subsidiary of Interim Services Inc., acquired 74.8% of the
outstanding ordinary share capital of Michael Page Group, PLC ("Michael
Page") pursuant to a tender offer. When aggregated with the 17.3% ownership
held by Interim UK as a result of open market purchases made from the
announcement of the tender offer, Interim UK's holdings totaled
approximately 92% of the outstanding ordinary share capital of Michael
Page. Subsequently, the remaining shares were purchased to complete the
transaction.
This acquisition was accounted for under the purchase method of
accounting. Accordingly, the operations of Michael Page are included in
the Consolidated Statement of Earnings from April 18, 1997. The excess
of the purchase price over the fair value of the net tangible assets
acquired is $512 million and is being amortized over 40 years.
During 1997, 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 earning from the date of
acquisition.
As of June 27, 1997 the cost of the acquisitions in 1997 have been
allocated on a preliminary basis while the Company obtains final
information regarding the fair value of assets acquired and liabilities
assumed. Although the allocations and amortization periods are subject to
4
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adjustment, the Company does not expect that such adjustments will have a
material effect on the consolidated financial statements.
The following unaudited pro forma consolidated results of operations
give effect to acquisitions consummated during 1997 as though they
occurred at the beginning of 1997 and 1996 with pro forma adjustments
to give effect to amortization of goodwill, interest expense on
additional borrowings used to fund acquisitions and other adjustments,
together with income tax effects:
June 27, 1997 June 28, 1996
Revenue $ 836.4 million $ 689.2 million
Net earnings $ 17.0 million $ 1.0 million
Net earnings per
common and common
equivalent shares $ 0.43 per share $ 0.03 per share
The pro forma consolidated results are not necessarily indicative of
results that would have occurred had the acquisitions been in effect
for the periods presented, nor are they indicative of the results that
will be obtained in the future.
4. Financing
The acquisitions were funded by borrowings of approximately $580,000,000
under a $675,000,000 syndicated credit agreement entered into as of
May 1, 1997 (the "Credit Facility"). The Credit Facility consists of a
revolving loan facility of $400,000,000 (terminating in 2003) and a term
loan of $275,000,000 (due through 2002). Interest rates on amounts
outstanding under the Credit Facility are based on LIBOR plus a variable
margin, determined by financial tests. The average interest rate during the
second quarter was 6.86%.
The Company has entered into variable to fixed interest rate swap agreements
in the notional amount of $100 million as of June 27, 1997 which have been
assigned to portions of these credit facilities. These agreements have
various expiration dates with the option to extend between 2000 and 2002.
Under these agreements, the Company received an average variable rate of
5.86% and paid an average fixed rate of 6.28% during the six months ended
June 27, 1997. The Company also has variable to variable interest rate
swap agreements outstanding at June 27, 1997 with notional amounts of
$100 million which effectively convert interest from a LIBOR basis to a
broader index. These agreements expire in 2002. Under these agreements,
the Company received an average variable rate of 5.84% and paid an
average variable rate of 5.35% during the six months ended June 27, 1997.
The difference between the book value and market value of these instruments
at June 27, 1997 was immaterial.
5. Subsequent Event
On June 29, 1997, the Company reached a definitive agreement to sell its
Healthcare business to Cornerstone Equity Investors for cash of $134
million. The closing is expected to take place during the third quarter
of 1997 and the Company will use the net proceeds to reduce debt.
5
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following analysis of operations for the quarter and six months ended
June 27, 1997 compared to the quarter and six months ended June 28, 1996
should be read in conjunction with the Consolidated Statements of Earnings
found on page 1.
QUARTER ENDED JUNE 27, 1997 COMPARED TO QUARTER ENDED JUNE 28, 1996
Revenues increased 50.4% to $422.8 million from $281.2 million last year.
Revenues are generated primarily through two operating divisions, Commercial
and HealthCare. Commercial revenues increased 60.4% reflecting strong
internal growth as well as 1997 acquisitions including Michael Page Group PLC
("Michael Page"), an international recruiting and staffing company, acquired
in the second quarter and outplacement and search businesses acquired in the
first quarter of 1997 ("1997 acquisitions"). Excluding 1997 acquisitions,
revenues increased 25.5% reflecting high growth rates within the Commercial
division's professional services businesses, particularly within Information
Technology (IT). The Commercial division's traditional staffing business also
continued to grow significantly due, in part, to expansion of its On-Premise
program. HealthCare Division revenues increased 14.1% due to internal growth
and an internal buyback of a major franchise at the end of the first quarter
in 1997.
Gross profit increased 63.8% to $142.0 million compared with $86.7 million a
year ago. Gross profit margin increased to 33.6% from 30.8% last year due to
growth in the percentage of revenues being derived from the Company's higher
margin professional services businesses. Professional services comprised
42.2% of total revenues in the second quarter of 1997 compared with 27.0% in
the same period last year.
Selling, general and administrative expenses increased 66.1% to $101.3
million from $61.0 million last year. Selling, general and administrative
expenses as a percentage of revenues were 24.0% compared with 21.7% a year
ago. Operating expenses increased due to the higher costs associated with
the professional services businesses. These higher gross margin businesses
have higher operating expenses than the Company's traditional personnel
staffing business.
Licensee commissions increased 16.5% to $11.0 million from $9.5 million last
year. Licensee commissions as a percent of revenues decreased to 2.6% from
3.4% due to branch revenues growing at a faster rate than licensee revenue.
Amortization expense increased from $2.2 million to $5.1 million reflecting
an increase in intangible assets arising from the 1997 acquisitions.
The effective tax rate for the second quarter of 1997 was 46.0% compared with
108.5% last year. Last year's high rate resulted from a large portion of last
year's merger expense being nondeductible. The second quarter effective tax
rate, excluding the effects of the non recurring merger expenses, was 43.1%.
This increase in the effective tax rate from 43.1% last year to 46% this year
results from the additional goodwill related to the Michael Page acquisition
being nondeductible.
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On August 7, 1997 the Company announced a 2 for 1 stock split ("stock
split") in the form of a 100% stock dividend to stockholders of record as of
the close of business on August 18, 1997, payable on September 5, 1997.
Net earnings for the quarter ended June 27, 1997 were $9.9 million, or $0.25
per share ($0.50 before stock split), compared to a loss of $0.3 million, or
$(0.01) per share ($(0.02) before stock split) last year. Exclusive of 1996
merger expenses, net earnings for the quarter were up 47.3% compared with
$6.7 million, or $0.22 per share ($0.44 before stock split) last year,
representing a 13.7% increase in per share earnings. The weighted average
number of shares outstanding was 39,946,000 (19,973,000 before stock split)
compared to 30,840,000 (15,420,000 before stock split) last year.
SIX MONTHS ENDED JUNE 27, 1997 COMPARED TO SIX MONTHS ENDED JUNE 28, 1996
Revenues increased 35.5% to $739.6 million from $545.9 million last year.
Revenues are generated primarily through two operating divisions, Commercial
and HealthCare. Commercial revenues increased 42.5% reflecting strong
internal growth as well as the 1997 acquisitions. Excluding the 1997
acquisitions, revenues increased 23.8% reflecting high growth rates within
the Commercial division's professional services businesses, particularly
within Information Technology (IT). The Commercial division's traditional
staffing business also continued to grow significantly due, in part, to
expansion of its On-Premise program. HealthCare Division revenues increased
9.6% due primarily to internal growth and an internal buyback of a major
franchise at the end of the first quarter in 1997.
Gross profit increased 44.5% to $239.4 million compared with $165.7 million a
year ago. Gross profit margin increased to 32.4% from 30.3% last year due to
growth in the percentage of revenues being derived from the Company's higher
margin professional services businesses. Professional services comprised
37.1% of total revenues in the six months ended June 27, 1997 compared with
27.0% in the same period last year.
Selling, general and administrative expenses increased 47.4% to $172.1
million from $116.7 million last year. Selling, general and administrative
expenses as a percentage of revenues were 23.3% compared with 21.4% a year
ago. Operating expenses increased due to the higher costs associated with
the professional services businesses. These higher gross margin businesses
have higher operating expenses than the Company's traditional personnel
staffing business.
Licensee commissions increased 9.7% to $20.5 million from $18.7 million last
year. Licensee commissions as a percent of revenues decreased to 2.8% from
3.4% due to branch revenues growing at a faster rate than licensee revenue,
caused in part by a large licensee converting to a franchise in the first
quarter of 1996.
Amortization expense increased from $4.3 million to $7.4 million reflecting
an increase in intangible assets arising from the 1997 acquisitions.
The effective tax rate for the six months ended June 27, 1997 was 44.2%
compared with 63.0% last year. Last year's high rate resulted from a large
portion of last year's merger expense being nondeductible. The effective tax
rate for the six months ended June 28, 1996, excluding the effects of the non
recurring merger expenses, was 43.6%. This increase in the effective tax
rate from 43.6% last year to 44.2% this year results from the additional
goodwill related to the Michael Page acquisition being nondeductible.
Net earnings for the six months ended June 27, 1997 were $18.4 million, or
$0.46 per share ($0.93 before stock split), compared to $5.1 million, or
$0.16 per share ($0.32 before stock split)
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last year. Exclusive of 1996 merger expenses, net earnings for the six months
ended were up 44.8% compared to $12.7 million, or $0.40 per share ($0.80
before stock split) last year, representing a 16.3% increase in per share
earnings. The weighted average number of shares outstanding was 39,880,000
(19,940,000 before stock split) compared to 31,832,000 (15,916,000 before
stock split) last year.
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FINANCIAL CONDITION
These comments should be read in conjunction with the Consolidated Balance
Sheets and Consolidated Statements of Cash Flows found on pages 2 and 3,
respectively.
Net cash provided by operating activities was $19.7 million in the first six
months ended of 1997 compared with operating activities using $5.8 million
in 1996. The increase in cash flow provided by operating activities was
primarily attributable to increased net earnings, higher depreciation and
amortization and increased accounts payable and accrued salaries, wages and
payroll taxes partially offset by increased receivables and an increase in
other assets.
Investing activities used cash of $564.9 million primarily due to the
acquisition of Michael Page. The Company and Interim UK obtained these funds
from borrowings of approximately $580,000,000 under a $675,000,000 Credit
Facility. The Credit Facility consists of a revolving loan facility of
$400,000,000 and a term loan of $275,000,000. Interest rates on amounts
outstanding under the Credit Facility are based on LIBOR plus a variable
margin, determined by financial tests.
The Company believes that its internally generated funds and lines of credit
are sufficient to support anticipated levels of growth.
SUBSEQUENT EVENTS
On June 29, 1997, the Company reached a definitive agreement to sell its
Healthcare business to Cornerstone Equity Investors for cash of $134 million.
The closing is expected to take place during the third quarter of 1997 and
the Company will use the net proceeds to reduce debt.
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PART II - OTHER INFORMATION
ITEM 4. -- MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of the stockholders of the company was on May 22,
1997.
(b) Not applicable.
(c) At the Annual Meeting, stockholders voted:
(1) To elect directors William Evans and Cinda Hallman to continue in
office as Class I Directors for a three-year term expiring on the
date of the Annual Shareholder's Meeting in the year 2000.
Votes For: Votes Withheld:
---------- ---------------
William Evans 16,638,029 13,586
Cinda Hallman 16,637,829 13,786
(2) To ratify the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal period ending December 26, 1997.
Votes for: Votes Against: Abstentions:
---------- -------------- ------------
16,643,974 3,398 4,943
(3) To approve the Company's 1997 Long Term Executive Compensation and
Outside Director Stock Option Plan.
Votes for: Votes Against: Abstentions:
---------- -------------- ------------
12,982,746 2,447,459 23,243
(4) To approve the Company's 1997 Employee Stock Purchase Plan.
Votes for: Votes Against: Abstentions:
---------- ------------- ------------
15,149,063 156,580 16,282
(5) To approve the Company's Incentive Plan for 162(m) Executives
Votes for: Votes Against: Abstentions:
---------- ------------- ------------
16,491,871 136,710 22,634
(d) Not applicable
10
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER EXHIBIT NAME
------- -------------
3.1 Restated Certificate of Incorporation of the registrant,
as amended September 12, 1996, filed as Exhibit 3.1 to the
registrant's Form 10-Q for the quarter ending September 27,
1996, is incorporated herein by reference.
3.2 By-Laws of registrant, as amended, filed as Exhibit 3.2 to
the registrant's Form 10-Q for the quarter ending
September 27, 1996, are incorporated herein by reference.
4.1 Form of Stock Certificate, filed as Exhibit 4.3 to the
registrant's Form 10-K for the fiscal year ended December
27, 1996, is incorporated herein by reference.
4.2 Rights Agreement dated as of March 17, 1994, between the
registrant and Boatmen's Trust Company, filed as Exhibit
1.1 to the registrant's Form 8-A filed April 11, 1994, is
incorporated herein by reference
4.3 Certificate of Designation, Preferences and Rights filed
with the Secretary of State of the State of Delaware,
filed as Exhibit 2.1 to the registrant's Form 8-A filed
April 11, 1994, is incorporated herein by reference.
4.4 Amendment No. 1 to Rights Agreement dated June 26, 1996
between the registrant, Boatmen's Trust Company, and
ChaseMellon Shareholder Services L.L.C., filed as Exhibit
4.1(A) to the registrant's Form 10-Q for the quarter ended
September 27, 1996 is incorporated herein by reference
4.5 Amendment No. 2 to Rights Agreement dated June 26, 1996
between the registrant and ChaseMellon Shareholder
Services L.L.C., filed as Exhibit 4.1(B) to the
registrant's Form 10-Q for the quarter ended March 28,
1997, is incorporated herein by reference
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4.6 Articles Fourth, Fifth, Seventh, Eighth and Tenth of the
Restated Certificate of Incorporation of the registrant,
as amended September 12, 1996, filed as part of Exhibit
4.4 to the registrant's Form 10-K for the fiscal year
ended December 27, 1996, are incorporated herein by
reference.
4.7 Sections Four through Twelve and Thirty-Five through
Forty-One of the Bylaws of the registrant, as amended,
filed as part of Exhibit 4.2 to registrant's Form S-3
filed September 16, 1996, are incorporated herein by
reference.
10.1 1993 Long Term Executive Compensation Plan, as amended,
filed as Exhibit A to the registrant's Proxy Statement
dated March 28, 1996, is incorporated herein by reference.
10.2 1993 Stock Option Plan for Outside Directors, as amended,
filed as Exhibit B to the registrant's Proxy Statement
dated March 28, 1996, is incorporated herein by reference.
10.3 1994 Stock Option Plan for Franchisees, Licensees and
Agents, as amended, filed as Exhibit 10.4A to the
registrant's Form S-3, filed on July 12, 1995, is
incorporated herein by reference.
10.4 Tax Sharing Agreement dated October 1993, by and between
H&R Block, Inc. and Interim Services Inc. filed as Exhibit
10.5 to the registrant's Form S-1 filed on November 5,
1993, is incorporated herein by reference.
10.5 Indemnification Agreement dated January 1, 1994, by and
between Interim Services Inc. and H&R Block, Inc., filed
as Exhibit 10.8 to the registrant's Form S-1 filed on
November 5, 1993, is incorporated herein by reference.
10.6 Franchise/License Agreement dated July 12, 1993, by and
between Interim Services Inc. and Keco Health Care, Inc.,
filed as Exhibit 10.9 to the registrant's Form S-1 filed
on January 12, 1994, is incorporated herein by reference.
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10.7 Employment Agreement dated as of May 1, 1994, by and
between Interim Services Inc. and Raymond Marcy, filed as
Exhibit 10(l) to the registrant's Form 10-K for the fiscal
year ended December 30, 1994, is incorporated herein by
reference.
10.8 Employment, Confidentiality, and Noncompetition Agreement
by and between Interim Services Inc. and Allan C.
Sorensen, filed as Exhibit 10(m) to the registrant's Form
10-K for the fiscal year ended December 30, 1994, is
incorporated herein by reference.
10.9 Amendment No. 2 dated November 28, 1995 to Amended and
Restated Revolving Credit Agreement of Interim Services
Inc. dated as of June 2, 1995, filed as Exhibit 10.2 to
the registrant's Form 8-K filed on December 15, 1995, is
incorporated herein by reference.
10.10 Second Amended and Restated Credit Agreement of Interim
Services Inc. dated as of January 15, 1997, filed as
Exhibit 10.3 to the registrant's Form 10-Q for the quarter
ending March 28, 1997, is incorporated herein by reference
10.11 Credit Agreement between Interim Services Inc. and
NationsBank dated as of May 1, 1997, filed as Exhibit
10.11 to the registrant's Form 10-Q for the quarter ending
March 28, 1997, is incorporated herein by reference
*10.12 Recommended Cash Offer dated March 14, 1997, by J.P.
Morgan on behalf of Interim Services (UK) PLC a
wholly-owned subsidiary of Interim Services Inc. for
Michael Page Group PLC is filed herewith as Exhibit 10.12
10.13 Interim Services Inc. 1997 Long Term Executive
Compensation and Outside Directors Stock Option Plan,
filed as Exhibit I to the registrant's Proxy Statement
dated April 10, 1997, is incorporated herein by reference.
10.14 Interim Services Inc. Incentive Plan for 162(m)
Executives, filed as Exhibit III to the registrant's Proxy
Statement dated April 10, 1997, is incorporated herein by
reference
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*11 Statement re: Computation of Per Share Earnings is filed
herewith as Exhibit 11 at page 14 .
23.1 Consent of Arthur Andersen, filed as Exhibit 23.1 to the
registrant's Form 8-K/A filed on May 9, 1997, is
incorporated herein by reference.
*27 Financial Data Schedule is filed herewith as Exhibit 27.
- ---------------------------------
*Filed as an Exhibit to this Form
(b) Reports on Form 8-K
During the period covered by this report, the company filed a Report on Form
8-K dated May 5, 1997 and received by the SEC on May 5, 1997. The Report was
filed under Item 2 of Form 8-K.
The Company subsequently filed an amended report on Form 8-K/A dated May 9,
1997 and received by the SEC on May 9, 1997. The amendment was filed under
Items 2 and 7 of Form 8-K.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERIM SERVICES INC.
---------------------------
(Registrant)
DATE 08/11/ 97 BY /s/ Roy G. Krause
--------------------------
Roy G. Krause
Executive Vice President
and Chief Financial Officer
DATE 08/11/ 97
BY /s/ Paul Haggard
----------------------
Paul Haggard
Financial Officer
15
<PAGE>
Exhibit 10.12
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE
IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK
YOUR OWN PERSONAL FINANCIAL ADVICE FROM YOUR STOCKBROKER, BANK MANAGER,
SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED
UNDER THE FINANCIAL SERVICES ACT 1986 IMMEDIATELY.
IF YOU HAVE SOLD OR TRANSFERRED all your Michael Page Ordinary Shares, please
send this document and the accompanying Form of Acceptance and reply-paid
envelope as soon as possible to the purchaser or transfseree, or to the
stockbroker, bank or other agent through whom the sale or transfer was
effected, for transmission to the purchaser or transferee. However, this
document and the accompanying Form of Acceptance should not be forwarded or
transmitted in or into the United States, Canada, Australia or Japan.
The Offer is not being made, directly or indirectly, and this document should
not be sent, in or into the United States, Canada, Australia or Japan or by
use of the mails of, or by any means or instrumentality of interstate or
foreign commerce of, or any facilities of a national securities exchange of,
any of these jurisdictions, including, without limitation, the post,
facsimile transmission, telex and telephone.
RECOMMENDED CASH OFFER
by
JP MORGAN
on behalf of
Interim Services (UK) PLC
a wholly-owned subsidiary of
INTERIM
SERVICES INC.
for
MICHAEL PAGE GROUP PLC
A letter from the Chairman of Michael Page containing the recommendation of
the directors of Michael Page is set out on pages 3 and 4 of this document.
ACCEPTANCES SHOULD BE DESPATCHED AS SOON AS POSSIBLE, AND IN ANY EVENT SO AS
TO BE RECEIVED NOT LATER THAN 3:00 PM ON 4 APRIL, 1997. THE PROCEDURE FOR
ACCEPTANCE IS SET OUT ON PAGES 9 TO 12 AND IN THE ACCOMPANYING FORM OF
ACCEPTANCE.
J.P. Morgan is acting for Interim Services (UK) and Interim Services and no
one else in connection with the Offer and will not be responsible to any
person other than Interim Services (UK) and Interim Services for providing
the protections afforded to customers of J.P. Morgan or for giving advice in
relation to the Offer.
BZW is acting for Michael Page and no one else in connection with the Offer
and will not be responsible to any person other than Michael Page for
providing the protections afforded to customers of BZW or for giving advice
in relation to the Offer.
<PAGE>
CONTENTS
Page
Letter from the Chairman of Michael Page 3
Letter from J.P. Morgan 5
1. Introduction 5
2. The Offer 5
3. The Loan Note Alternative 6
4. Information relating to Interim Services 6
5. Information relating to Michael Page 7
6. Reasons for the Offer 7
7. Management and employees 8
8. Michael Page Share Option Schemes 8
9. United Kingdom taxation 8
10. Procedure for acceptance of the Offer 9
11. Settlement 11
12. Further information 12
Appendices
I. Conditions and further terms of the Offer 13
II. Particulars of the Loan Notes 27
III. Financial effects of acceptance of the Offer 29
IV. Further information on Interim Services and Interim Services (UK) 30
V. Further information on Michael Page 46
VI. Additional information 59
Definitions 65
Form of Acceptance and reply-paid envelope enclosed
2
<PAGE>
MICHAEL PAGE
GROUP PLC
Directors Registered Office
The Rt. Hon. Lord Wakeham (Chairman) 39-41 Parker Street
Terence W. Benson (Chief Executive) London WC2B 5LH
Ian V. Nash (Finance Director)
Michael Andrews (Non-executive)
TO MICHAEL PAGE SHAREHOLDERS AND, FOR INFORMATION ONLY, TO HOLDERS OF OPTIONS
UNDER THE MICHAEL PAGE SHARE OPTION SCHEMES.
14 March, 1997
Dear Shareholder,
RECOMMENDED CASH OFFER FROM INTERIM SERVICES
INTRODUCTION
On 3 March, 1997, the boards of Michael Page and Interim Services announced
that agreement had been reached on the terms of a recommended cash offer to
be made by J.P. Morgan on behalf of Interim Services (UK), a wholly owned
subsidiary of Interim Services, for the whole of the issued and to be issued
ordinary share capital of Michael Page. Full details of the Offer are set out
in the letter from J.P. Morgan on pages 5 to 12 of this document.
I am writing to explain the reasons why your board is recommending acceptance
of the Offer.
THE OFFER
The Offer is 550p in cash for each Michael Page Ordinary Share. In addition,
Michael Page Shareholders will be entitled to retain the proposed final
dividend of 7p (net) per share in respect of the year ended 31 December,
1996, whether or not the Offer becomes unconditional. The dividend is
proposed to be paid on 23 May, 1997 to shareholders on the register at close
of business on 1 April, 1997.
The Offer, taken together with the proposed final dividend, values each
Michael Page Ordinary Share at 557p and the whole of the issued share capital
of Michael Page at approximately L346 million.
The Offer, taken together with the proposed final dividend, represents a
premium of 12.5 per cent. over the closing middle market price of 495p for
Michael Page Ordinary Shares on 28 February, 1997, the last business day
prior to the announcement of the Offer, a 25 per cent. premium over the
average closing middle market price for the three months prior to the
announcement of the offer of 445p, and a 35 per cent. premium over the
closing middle market price for Michael Page Ordinary Shares of 412.5p on 1
January, 1997. The Offer, taken together with the proposed final dividend,
represents a multiple of 17.7 times Michael Page's earnings per share of
31.47p for the year ended 31 December, 1996.
BACKGROUND TO AND REASONS FOR RECOMMENDING THE OFFER
The Michael Page business has achieved exceptional growth over the last two
years with significantly expanded margins which, in the last financial year,
were at an all time high. This has been reflected in the Michael Page share
price, which has more than quadrupled over the last two years. The Offer
enables all Michael Page Shareholders to realise the full cash value of their
investment at a favourable point in the recruitment cycle.
The combination of Interim Services and Michael Page creates a complementary
group, with virtually no geographic duplication, and consequently will
greatly assist Michael Page in achieving expansion into North America.
Interim Services, which operates predominantly in North America, not only
provides traditional temporary help, but also provides high level skills
within its Professional Services group, including accounting, technology,
legal, executive recruitment and outplacement services. Michael Page, on the
other hand, provides high level accounting, banking, finance, marketing and
sales, technology and legal recruitment services in the UK, Europe and the
Pacific Rim.
REGISTERED IN ENGLAND NO. 2245324
3
<PAGE>
RESULTS FOR THE YEAR ENDED 31 DECEMBER, 1996
On 3 March, 1997, Michael Page announced its unaudited preliminary results
for the year ended 31 December, 1996. The Michael Page annual report
including the audited results for the year ended 31 December, 1996 is being
sent to Michael Page Shareholders with this document. Over that period the
group had total turnover of L142.1 million, profit before tax of L30.4
million, and earnings per share of 31.47p. As at 31 December, 1996,
shareholders' funds were L37.3 million and net cash was L40.9 million.
BOARD, MANAGEMENT AND EMPLOYEES
Interim Services has confirmed that the existing employment rights, including
pension rights, of all the employees of Michael Page, will be fully
safeguarded. Interim Services has assured Michael Page that its employees
should have enhanced career opportunities within the combined group as it
grows both in the UK and internationally.
Terry Benson and Ian Nash will retain their current positions as Chief
Executive and Finance Director respectively of Michael Page and will continue
to lead the expansion of Michael Page on a worldwide basis.
Michael Andrews and I will resign as directors following the Offer becoming
unconditional in all respects and I shall be appointed President of Michael
Page and will continue as a consultant.
MICHAEL PAGE SHARE OPTION SCHEMES
The Offer will extend to any Michael Page Ordinary Shares issued as a result
of the exercise of options granted under the Michael Page Share Option
Schemes prior to the date on which the Offer closes. Interim Services (UK)
will make appropriate proposals to optionholders under the Michael Page Share
Option Schemes in due course once the Offer becomes or is declared
unconditional in all respects.
LOAN NOTE ALTERNATIVE
Instead of some or all of the cash consideration of 550p per Michael Page
Ordinary Share which would otherwise be receivable under the Offer, accepting
Michael Page Shareholders (other than certain overseas shareholders) will be
entitled to elect to receive Loan Notes (subject to a minimum election in
total for L10 million in nominal value of Loan Notes) to be issued by Interim
Services (UK). The Loan Notes will be fully guaranteed by NationsBank N.A.
(London branch).
IRREVOCABLE UNDERTAKINGS
The executive and non-executive directors of Michael Page have given
irrevocable undertakings to accept the Offer in respect of their
shareholdings which together comprise 123,500 Michael Page Ordinary Shares
(representing 0.2 per cent. of Michael Page's issued ordinary share capital)
and 1,100,000 Michael Page Ordinary Shares (representing 1.8 per cent. of
Michael Page's issued ordinary share capital) issued and held under option by
the executive directors under the Michael Page Share Option Schemes.
RECOMMENDATION
THE DIRECTORS OF MICHAEL PAGE, WHO HAVE BEEN SO ADVISED BY BZW, CONSIDER THE
TERMS OF THE OFFER TO BE FAIR AND REASONABLE AND THE DIRECTORS UNANIMOUSLY
RECOMMEND SHAREHOLDERS TO ACCEPT THE OFFER. IN PROVIDING ADVICE TO THE
DIRECTORS OF MICHAEL PAGE, BZW HAS TAKEN INTO ACCOUNT THE DIRECTORS'
COMMERCIAL ASSESSMENTS.
Yours sincerely
Lord Wakeham
Chairman
4
<PAGE>
JP MORGAN
MORGAN GUARANTY
TRUST COMPANY
OF NEW YORK
PO BOX 161
60 VICTORIA EMBANKMENT
LONDON EC4Y 0JP
TO MICHAEL PAGE SHAREHOLDERS AND, FOR INFORMATION ONLY, TO HOLDERS OF OPTIONS
UNDER THE MICHAEL PAGE SHARE OPTION SCHEMES.
14 MARCH, 1997
Dear Sir or Madam,
RECOMMENDED CASH OFFER FOR MICHAEL PAGE
1. INTRODUCTION
On 3 March, 1997, the boards of Interim Services and Michael Page announced
that agreement had been reached on the terms of a recommended cash offer to
be made by J.P. Morgan on behalf of Interim Services (UK), a wholly-owned
subsidiary of Interim Services, to acquire the whole of the issued and to be
issued ordinary share capital of Michael Page at 550p in cash for each
Michael Page Ordinary Share. Michael Page Shareholders will also be entitled
to retain the proposed final dividend of 7p (net) in respect of the year
ended 31 December, 1996 whether or not the Offer becomes unconditional. The
Offer, taken together with the proposed final dividend, values each Michael
Page Ordinary Share at 557p and the whole of the issued share capital of
Michael Page at approximately L346 million.
The Offer, taken together with the proposed final dividend, represents:
- - a premium of 12.5 per cent. over the closing middle market price of 495p
for Michael Page Ordinary Shares on 28 February, 1997, the last business
day prior to the announcement of the Offer
- - a premium of 25 per cent. over the average closing middle market price of
445p for Michael Page Ordinary Shares for the three months prior to the
announcement of the Offer
- - a premium of 35 per cent. over the closing middle market price of 412.5p
for Michael Page Ordinary Shares on 1 January, 1997
- - a multiple of 17.7 times Michael Page's earnings per share of 31.47p for
the year ended 31 December, 1996
Your attention is drawn to the letter from your Chairman on pages 3 and 4 of
this document, from which you will see that the directors of Michael Page,
who have been so advised by BZW, consider the terms of the Offer to be fair
and reasonable and the directors unanimously recommend shareholders to accept
the Offer. In providing advice to the directors of Michael Page, BZW has
taken into account the directors' commercial assessments.
Interim Services has received irrevocable undertakings from the executive and
non-executive directors of Michael Page to accept the Offer in respect of
123,500 Michael Page Ordinary Shares (representing 0.2 per cent. of Michael
Page's issued ordinary share capital) together with 1,100,000 Michael Page
Ordinary Shares issued and held under option by the executive directors under
the Michael Page Share Option Schemes (representing 1.8 per cent. of Michael
Page's issued ordinary share capital). The undertakings will lapse if the
Offer is withdrawn or lapses. In addition, since 3 March, 1997 Interim
Services (UK) has purchased 8,321,550 Michael Page Ordinary Shares
representing 13.4 per cent. of Michael Page's issued ordinary share capital
as set out in paragraph 3 of Appendix VI. As at 14 March, 1997 Interim
Services (UK) has therefore either received irrevocable undertakings to
accept the Offer in respect of, or purchased, 9,545,050 Michael Page Ordinary
Shares, representing 15.4 per cent. of Michael Page's issued ordinary share
capital.
2. THE OFFER
On behalf of Interim Services (UK), we hereby offer to acquire, on the terms
and subject to the conditions set out or referred to in this document and in
the Form of Acceptance, all of the Michael Page Ordinary Shares on the
following basis:
FOR EACH MICHAEL PAGE ORDINARY SHARE 550p IN CASH
5
<PAGE>
Michael Page Shareholders will also be entitled to retain the proposed final
dividend of 7p (net) in respect of the year ended 31 December, 1996, which is
proposed to be paid on 23 May, 1997 to Michael Page Shareholders on the
register at close of business on 1 April, 1997.
Acceptances of the Offer should be despatched as soon as possible, and in any
event so as to be received no later than 3.00 pm on 4 April, 1997.
Your attention is drawn to paragraph 10 of this letter, which sets out the
procedure for acceptance of the Offer and to the conditions and further terms
of the Offer set out in Appendix I and in the Form of Acceptance.
The Michael Page Ordinary Shares are to be acquired by Interim Services (UK)
fully paid and free from all liens, equities, charges, encumbrances and other
interests and together with all rights now or hereafter attaching to them,
including the right to receive and retain all dividends and other
distributions declared, made or paid on or after 3 March, 1997, but excluding
the right to receive the proposed final dividend of 7p (net) per Michael Page
Ordinary Share in respect of the year ended 31 December, 1996.
3. THE LOAN NOTE ALTERNATIVE
Instead of some or all of the cash consideration of 550p per Michael Page
Ordinary Share which would otherwise be receivable under the Offer, accepting
Michael Page Shareholders (other than certain overseas shareholders) will be
entitled to elect to receive Loan Notes to be issued by Interim Services (UK)
on the following basis:
FOR EVERY L1 OF CASH CONSIDERATION UNDER THE OFFER L1 NOMINAL OF LOAN NOTES
Fractional entitlements to Loan Notes will be disregarded. The Loan Notes
will bear interest at a rate of 1 per cent. below LIBOR for six month sterling
deposits, as certified by Lloyds Bank Plc. The Loan Notes will be
transferable, but no application will be made for them to be listed or dealt
in on any stock exchange. The Loan Notes will be guaranteed as to principal
and interest by NationsBank N.A. (London branch).
The Loan Notes will only be issued if, by the time the Offer becomes or is
declared unconditional in all respects, Michael Page Shareholders have
elected for at least L10 million in aggregate nominal value of Loan Notes.
If, as a result of insufficient elections, the Loan Notes are not issued,
Michael Page Shareholders who have elected for Loan Notes will receive the
consideration which would otherwise be receivable under the basic terms of
the Offer.
J.P. Morgan has advised that, based on current market conditions, their
estimate of the value of the Loan Notes, if they had been in issue on 12
March, 1997, would have been approximately 99p per L1 in nominal value.
A summary of the terms of the Loan Notes is set out in Appendix II.
4. INFORMATION RELATING TO INTERIM SERVICES
Interim Services is a leader in providing a comprehensive range of customised
staffing solutions, including flexible staffing, full-time placement,
consulting, home care and other value-added services to businesses,
professional and service organisations, governmental agencies, health care
facilities and individuals. As of 27 December, 1996, Interim Services
operated through a network of 998 offices in the United States, Canada, The
Netherlands and the United Kingdom.
Interim Services provides commercial and health care services through two
divisions, each offering numerous specialised skills. The Commercial Services
Division is divided into two units, Commercial Staffing and Professional
Services, which at 27 December, 1996 represented approximately 53% and 27% of
total Interim Services revenues, respectively. Commercial Staffing fulfils
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, executive search and human resources.
The HealthCare Division provides physicians, nurses, therapists, home health
aides and home companions and at 27 December, 1996 represented approximately
20% of total Interim Services revenues.
Interim Services management believes that, based on system-wide sales,
Interim Services is currently the fourth largest provider of staffing
services in the United States and is the seventh largest provider in the
world.
6
<PAGE>
For the year ended 27 December, 1996, Interim Services had total revenues of
US$1,147 million, income before taxes of US$54 million and earnings per share
of US$1.83 both excluding one-time merger related expenses. Total assets as
at 27 December, 1996 were US$512 million with shareowners' equity of US$415
million.
Further information on Interim Services and Interim Services (UK) is set out
in Appendix IV.
5. INFORMATION RELATING TO MICHAEL PAGE
The Michael Page Group operates internationally in specialised areas of
permanent and temporary professional recruitment. In addition to its leading
position in the UK's executive recruitment industry, the group has developed
its international business with profitable and strengthening positions in
France, The Netherlands, Germany, Australia, Singapore and Hong Kong. The
group has grown its revenue base substantially over the last five years, from
L36.0 million in 1991 to L142.1 million in 1996, an increase of 295 per cent.
In the UK, the Michael Page Group is a market leader in the recruitment of
accounting, finance, sales and marketing, information technology and legal
professionals for both permanent and temporary positions under the Michael
Page brand name. In addition, the Michael Page Group operates businesses
under the Accountancy Additions and Sales Recruitment Specialists brand names
for junior positions within these disciplines. During 1996, Questor, an
executive search and selection business, was also founded in the UK. At 31
December, 1996 the Michael Page Group had 531 staff in the UK, operating from
29 offices.
Outside the UK, the Michael Page Group's operations are in Europe, Australia
and South East Asia. Operating from 11 offices, the non-UK operations at 31
December 1996 employed 278 staff. In France, the Michael Page Group
undertakes permanent recruitment for the accounting, financial services,
sales and marketing, information technology and legal professions trading
under the Michael Page name. In addition, Page Interim was established two
years ago to service the temporary accountants market in France.
In The Netherlands and Germany, the Michael Page Group undertakes accountancy
recruitment operating under the Michael Page name. The Australian business
comprises accounting, financial services, information technology and
marketing recruitment of temporary and permanent staff under the Michael Page
name. The Hong Kong business undertakes broadly the same activities as
Australia and there is also an accounting and finance recruitment business
which has recently been opened in Singapore.
On 3 March, 1997, Michael Page announced its unaudited preliminary results
for the year ended 31 December, 1996. The Michael Page annual report
including the audited results for the year ended 31 December, 1996 is being
sent to Michael Page Shareholders with this document. Over that period the
group had total turnover of L142.1 million, profit before tax of L30.4
million, and earnings per share of 31.47p. As at 31 December, 1996
shareholders' funds were L37.3 million and net cash was L40.9 million.
Further information on Michael Page is set out in Appendix V.
6. REASONS FOR THE OFFER
The temporary help and recruitment industry is consolidating rapidly and
becoming increasingly international. As clients seek to reduce their number
of service providers, those service providers which can supply a wide range
of skills on a global basis will be positively rewarded. The combination of
Interim Services and Michael Page creates a complementary group, with
virtually no geographic duplication, which can globally fulfil those
requirements. Interim Services, which operates predominantly in North
America, not only provides traditional temporary help, but also provides high
level skills within its Professional Services group including accounting,
technology, legal, executive recruitment and outplacement services. Michael
Page, on the other hand, provides high level accounting, banking, finance,
marketing and sales, technology and legal recruitment services in the UK,
Europe and the Pacific Rim.
Beyond the clear geographic fit between the two organisations and the wide
range of skills which the combined group will provide to its clients, Interim
Services believes that the management team of Michael Page is unrivalled in
the industry and will be highly compatible with the Interim Services team.
Both organisations stress a value added service versus a lowest cost
mentality with the clients they serve. Further, both organisations operate
within a decentralised and autonomous environment with common standards and
methodologies. Interim Services management believes that, following the
completion of the transaction, the combined group will be a leading worldwide
provider of diversified professional services.
7
<PAGE>
The Michael Page business has achieved exceptional growth over the last two
years with significantly expanded margins, which in the last financial year
were at an all time high. The Offer enables Michael Page Shareholders to
realise the full cash value of their investment at a favourable point in the
recruitment cycle.
7. MANAGEMENT AND EMPLOYEES
Interim Services confirms that the existing employment rights, including
pension rights, of all the employees of Michael Page will be fully
safeguarded. Interim Services has assured Michael Page that its employees
should have enhanced career opportunities within the combined group as it
grows both in the UK and internationally.
Terry Benson and Ian Nash will retain their current positions as Chief
Executive and Finance Director respectively of Michael Page and will continue
to lead the expansion of Michael Page on a worldwide basis.
The Rt. Hon. Lord Wakeham, Chairman of Michael Page, and Michael Andrews, who
are both non-executive directors of Michael Page, will resign from the board
of Michael Page, although it is intended that Lord Wakeham will be appointed
President of Michael Page and will continue as a consultant.
8. MICHAEL PAGE SHARE OPTION SCHEMES
The Offer extends to any Michael Page Ordinary Shares issued as a result of
the exercise of options granted under the Michael Page Share Option Schemes
prior to the date on which the Offer closes. Interim Services (UK) will make
appropriate proposals to optionholders under the Michael Page Share Option
Schemes once the Offer becomes or is declared unconditional in all respects.
Details of the proposals in relation to the allocation of Michael Page
Ordinary Shares held by the trustees of the Michael Page Employee Shares
Trust are set out in paragraph 3(j) of Appendix VI.
9. UNITED KINGDOM TAXATION
The following paragraphs, which are intended as a general guide only, are
based on current legislation and Inland Revenue practice and summarise
certain limited aspects of the United Kingdom taxation treatment of
acceptance of the Offer and the Loan Note Alternative. They relate only to
the position of Michael Page Shareholders who are resident or ordinarily
resident in the United Kingdom for tax purposes and who hold their Michael
Page Ordinary Shares as an investment. Any Michael Page Shareholders who are
in doubt as to their tax position or who are subject to taxation in any
jurisdiction other than the United Kingdom should consult their own
professional advisers.
(a) TAXATION OF CAPITAL GAINS
Liability to United Kingdom taxation of chargeable gains will depend on the
individual circumstances of Michael Page Shareholders and on the form of
consideration received.
To the extent that the consideration is received in cash, this will
constitute a disposal or part disposal of Michael Page Ordinary Shares for
the purposes of United Kingdom taxation of chargeable gains. Such a disposal
or part disposal may, depending on Michael Page Shareholders' individual
circumstances, give rise to a liability to United Kingdom taxation of
chargeable gains.
A Michael Page Shareholder who, either alone or together with persons
connected with him, holds not more than 5 per cent. of the Michael Page
Ordinary Shares should not be treated as having made a disposal of his
Michael Page Ordinary Shares to the extent that he receives Loan Notes in
exchange for his Michael Page Ordinary Shares. Instead, any gain or loss
which would otherwise have arisen on a disposal of the Michael Page Ordinary
Shares will be calculated according to the market value of the shares at the
date of exchange for the Loan Notes but such gain or loss will be deferred
and deemed to accrue on a subsequent disposal or deemed disposal (including
redemption of the Loan Notes).
A holder of Michael Page Ordinary Shares who, either alone or together with
persons connected with him, holds more than 5 per cent. of the Michael Page
Ordinary Shares will be treated in the manner described in the preceding
paragraph provided that the Inland Revenue is satisfied that transactions are
for a BONA FIDE commercial purpose and not part of a scheme where the main
purpose is avoidance of liability to capital gains tax or corporation tax.
Interim Services (UK) is making an application for clearance under section
138 of the Taxation of Chargeable Gains Act 1992 so that this condition is
satisfied.
The Loan Notes are qualifying corporate bonds. Accordingly, individuals will
not be liable to taxation on chargeable gains or entitled to allowable losses
in respect of any profit or loss from a disposal which is
8
<PAGE>
attributable to the Loan Notes themselves. A subsequent disposal of all or
any of the Loan Notes (including on redemption or repayment) may however
result in a liability to United Kingdom taxation on any deferred gain
depending on individual circumstances. Any chargeable gain will not be
reduced by any indexation allowance for the period of ownership of the Loan
Notes.
The Finance Act 1996 introduced changes with effect from 1 April, 1996 to the
tax treatment for companies of corporate debt, which includes loan notes. In
the case of corporate shareholders subject to United Kingdom corporation tax
all profits and losses on their Loan Notes, whether of a capital or income
nature, will be taxed or relieved as income items. Whether there will be such
profits or losses and the time at which they will be treated as arising will,
in general, be determined by reference to the corporate shareholder's
statutory accounting treatment authorised for this purpose.
(b) TAXATION OF INCOME
Payment of interest on the Loan Notes will be made subject to the deduction
of United Kingdom income tax at the lower rate (currently 20 per cent.).
Interim Services (UK) will not gross up any payments of interest on the Loan
Notes to compensate for any tax which it is required to deduct at source. The
gross amount of such interest will form part of an individual's income for
the purposes of United Kingdom income tax and will be taxed as the upper
slice of income, credit being allowed for the tax withheld. Higher rate tax
payers may have further tax to pay. In certain cases, holders of Loan Notes
may be able to recover an amount in respect of the credit from the Inland
Revenue. Under the "accrued income scheme" a charge to tax on income may
arise on a transfer by an individual of Loan Notes in respect of interest on
the Loan Notes which has accrued since the preceding interest payment date.
Corporate holders within the charge to United Kingdom corporation tax will
generally be charged to tax in respect of interest on the Loan Notes which
relates to that holder's relevant accounting period in accordance with its
authorised accounting method.
(c) SHARE OPTIONS
Michael Page Shareholders who acquired or acquire their Michael Page Ordinary
Shares by exercising options under the Michael Page Share Option Schemes are
reminded that special tax provisions may apply to them on exercise of their
options or on any disposal of the Michael Page Ordinary Shares acquired on
exercise, including provisions imposing a charge to United Kingdom income tax.
10. PROCEDURE FOR ACCEPTANCE OF THE OFFER
THIS PARAGRAPH SHOULD BE READ TOGETHER WITH THE NOTES ON THE FORM OF
ACCEPTANCE.
You should note that, if you hold Michael Page Ordinary Shares in both
certificated and uncertificated form, you should complete a separate Form of
Acceptance for each holding. If you hold Michael Page Ordinary Shares in
uncertificated form, but under different member account IDs, you should
complete a separate Form of Acceptance in respect of each member account ID.
Similarly, if you hold Michael Page Ordinary Shares in certificated form but
under different designations, you should complete a separate Form of
Acceptance in respect of each designation.
(a) TO ACCEPT THE OFFER
To accept the Offer, you should complete Boxes /1/ and /4/ (and, if your
Michael Page Ordinary Shares are in CREST, Box /5/) and sign Box /3/ of the
Form of Acceptance in the presence of a witness, who should also sign in
accordance with the instructions printed on it.
(b) RETURN OF FORM OF ACCEPTANCE
TO ACCEPT THE OFFER, THE FORM OF ACCEPTANCE MUST BE COMPLETED AND RETURNED,
WHETHER OR NOT YOUR MICHAEL PAGE ORDINARY SHARES ARE IN CREST. The completed
and signed Form of Acceptance, together, if your Michael Page Ordinary Shares
are in certificated form, with your share certificate(s) for your Michael
Page Ordinary Shares and/or other document(s) of title, should be returned by
post or by hand to THE ROYAL BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT,
NEW ISSUES SECTION, PO BOX 859, CONSORT HOUSE, EAST STREET, BEDMINSTER,
BRISTOL BS99 1XZ OR BY HAND ONLY (DURING NORMAL BUSINESS HOURS) TO THE ROYAL
BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES SECTION, PO BOX 633,
5-10 GREAT TOWER STREET, LONDON EC3R 5ER IN EACH CASE AS SOON AS POSSIBLE BUT
IN ANY EVENT SO AS TO BE RECEIVED NOT LATER THAN 3.00 PM ON 4 APRIL, 1997. A
reply-paid envelope is enclosed for your convenience and may be used by
Michael Page Shareholders for returning Forms of Acceptance within the UK. No
9
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acknowledgement of receipt of documents will be given. The instructions
printed on the Form of Acceptance shall be deemed to form part of the terms
of the Offer.
(c) MICHAEL PAGE ORDINARY SHARES IN UNCERTIFICATED FORM (I.E. IN CREST)
If your Michael Page Ordinary Shares are in uncertificated form, you should
insert in Box 5 of the enclosed Form of Acceptance the participant ID and
member account ID under which such shares are held by you in CREST and
otherwise complete and return the Form of Acceptance as described above. In
addition, you should take (or procure to be taken) the action set out below
to transfer the Michael Page Ordinary Shares in respect of which you wish to
accept the Offer to an escrow balance, specifying The Royal Bank of Scotland
(in its capacity as a CREST participant under The Royal Bank of Scotland's
participant ID referred to below) as the escrow agent, as soon as possible
and IN ANY EVENT SO THAT THE TRANSFER TO ESCROW SETTLES NOT LATER THAN 3.00
PM ON 4 APRIL, 1997.
IF YOU ARE A CREST SPONSORED MEMBER, YOU SHOULD REFER TO YOUR CREST SPONSOR
BEFORE TAKING ANY ACTION. Your CREST sponsor will be able to confirm details
of your participant ID and the member account ID under which your Michael
Page Ordinary Shares are held. In addition, only your CREST sponsor will be
able to send the TTE instruction to CRESTCo in relation to your Michael Page
Ordinary Shares.
You should send (or, if you are a CREST sponsored member, procure that your
CREST sponsor sends) a TTE instruction to CRESTCo which must be properly
authenticated in accordance with CREST Co's specifications and which must
contain, in addition to the other information that is required for a TTE
instruction to settle in CREST, the following details:
- - the number of Michael Page Ordinary Shares to be transferred to an escrow
balance;
- - your member account ID. This must be the same member account ID as the
member account ID that is inserted in Box /5/ of the Form of Acceptance;
- - your participant ID. This must be the same participant ID as the
participant ID that is inserted in Box /5/ of the Form of Acceptance;
- - the participant ID of the escrow agent, The Royal Bank of Scotland, in its
capacity as a CREST receiving agent. This is RA70;
- - the member account ID of the escrow agent. This is MICHAEL;
- - the Form of Acceptance Reference Number. This is the Reference Number that
appears at the top of page 3 of the Form of Acceptance. This Reference
Number should be inserted in the first eight characters of the shared note
field on the TTE instruction. Such insertion will enable The Royal Bank of
Scotland to match the transfer to escrow to your Form of Acceptance. You
should keep a separate record of this Reference Number for future
reference;
- - the intended settlement date. This should be as soon as possible and in any
event not later than 3.00 pm on 4 April, 1997;
- - the Corporate Action Number for the Offer. This is 2.
After settlement of the TTE instruction, you will not be able to access in
CREST the Michael Page Ordinary Shares concerned for any transaction or
charging purposes. If the Offer becomes or is declared unconditional in all
respects, the escrow agent will transfer the Michael Page Ordinary Shares
concerned to itself in accordance with paragraph 5(e) of Part B of Appendix I
to this document.
You are recommended to refer to the CREST Manual published by CRESTCo for
further information on the CREST procedures outlined above. For ease of
processing, you are requested, wherever possible, to ensure that a Form of
Acceptance relates to only one transfer to escrow.
If no Form of Acceptance Reference Number, or an incorrect Form of Acceptance
Reference Number, is included on the TTE instruction, Interim Services (UK)
may treat any Michael Page Ordinary Shares transferred to an escrow balance
in favour of the escrow agent specified above from the participant ID and
member account ID identified in the TTE instruction as relating to any
Form(s) of Acceptance which relate(s) to the same member account ID and
participant ID (up to the amount of Michael Page Ordinary Shares inserted or
deemed to be inserted on the Form(s) of Acceptance concerned).
YOU SHOULD NOTE THAT CRESTCO DOES NOT MAKE AVAILABLE SPECIAL PROCEDURES IN
CREST FOR ANY PARTICULAR CORPORATE ACTION. NORMAL SYSTEM TIMINGS AND
LIMITATIONS WILL THEREFORE APPLY IN
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CONNECTION WITH A TTE INSTRUCTION AND ITS SETTLEMENT. YOU SHOULD THEREFORE
ENSURE THAT ALL NECESSARY ACTION IS TAKEN BY YOU (OR BY YOUR CREST SPONSOR)
TO ENABLE A TTE INSTRUCTION RELATING TO MICHAEL PAGE ORDINARY SHARES TO
SETTLE PRIOR TO 3.00 PM ON 4 APRIL, 1997. IN THIS CONNECTION YOU ARE REFERRED
IN PARTICULAR TO THOSE SECTIONS OF THE CREST MANUAL CONCERNING PRACTICAL
LIMITATIONS OF THE CREST SYSTEM AND TIMINGS.
Interim Services (UK) will make an appropriate announcement if any of the
details contained in this sub-paragraph (c) alter for any reason.
(d) SHARE CERTIFICATES NOT READILY AVAILABLE OR LOST
If your Michael Page Ordinary Shares are in certificated form but your share
certificate(s) and/or other document(s) of title is/are not readily available
or is/are lost, the Form of Acceptance should nevertheless be completed,
signed and RETURNED AS STATED ABOVE SO AS TO ARRIVE NOT LATER THAN 3.00 PM ON
4 APRIL, 1997, together with any share certificate(s) and/or other
document(s) of title that you have available, accompanied by a letter stating
that the balance will follow or that you have lost one or more of your share
certificate(s) and/or documents(s) of title. You should then arrange for the
relevant share certificate(s) and/or other document(s) of title to be
forwarded as soon as possible. No acknowledgement of receipt of documents
will be given. In the case of loss, you should write as soon as possible to
Independent Registrars Group Limited, Balfour House, 390-398 High Road,
Ilford, Essex IG1 1NQ for a letter of indemnity for lost share certificate(s)
and/or other document(s) of title which, when completed in accordance with
the instructions given, should be returned to The Royal Bank of Scotland as
set out in sub-paragraph (b) above.
(e) DEPOSITS OF MICHAEL PAGE ORDINARY SHARES INTO, AND WITHDRAWALS OF MICHAEL
PAGE ORDINARY SHARES FROM, CREST
Normal CREST procedures (including timings) apply in relation to any Michael
Page Ordinary Shares that are, or are to be, converted from uncertificated to
certificated form, or from certificated to uncertificated form, during the
course of the Offer (whether any such conversion arises as a result of a
transfer of Michael Page Ordinary Shares or otherwise). Holders of Michael
Page Ordinary Shares who are proposing to convert any such shares are
recommended to ensure that the conversion procedures are implemented in
sufficient time to enable the person holding or acquiring the shares as a
result of the conversion to take all necessary steps in connection with an
acceptance of the Offer (in particular, as regards delivery of share
certificate(s) and/or other document(s) of title or transfers to an escrow
balance as described above) prior to 3.00 pm on 4 April, 1997.
(f) VALIDITY OF ACCEPTANCES
Without prejudice to paragraph 7(d) of Part B of Appendix I to this document,
Interim Services (UK) reserves the right to treat as valid any acceptance of
the Offer which is not entirely in order or which is not accompanied by the
relevant transfer to escrow instruction or (as applicable) the relevant share
certificate(s) and/or other document(s) of title. In that event, no payment
of cash under the Offer will be made until after the relevant transfer to
escrow has settled or (as applicable) the relevant share certificate(s)
and/or other document(s) of title or indemnities satisfactory to Interim
Services (UK) have been received.
(g) OVERSEAS SHAREHOLDERS
The attention of shareholders who are citizens or residents of jurisdictions
outside the United Kingdom is drawn to paragraphs 5 and 6 of Part B of
Appendix I and to the relevant provisions of the Form of Acceptance,
including Boxes /6/ and /7/.
IF YOU ARE IN ANY DOUBT AS TO THE PROCEDURE FOR ACCEPTANCE, PLEASE CONTACT
THE ROYAL BANK OF SCOTLAND PLC, REGISTRAR'S DEPARTMENT, NEW ISSUES SECTION BY
TELEPHONE ON 0117 937 0666 OR AT EITHER OF THE ADDRESSES IN SUB-PARAGRAPH (B)
ABOVE. YOU ARE REMINDED THAT, IF YOU ARE A CREST SPONSORED MEMBER, YOU SHOULD
CONTACT YOUR CREST SPONSOR BEFORE TAKING ANY ACTION.
11. SETTLEMENT
Subject to the Offer becoming or being declared unconditional in all
respects, settlement of the consideration to which any Michael Page
Shareholder is entitled under the Offer will be effected (i) in the case of
acceptances received, complete in all respects, by the date on which the
Offer becomes or is declared unconditional in all respects, within 14 days of
such date, or (ii) in the case of acceptances received, complete in all
respects, after the date on which the Offer becomes or is declared
unconditional in all respects but while it remains open for acceptance,
within 14 days of such receipt, in the following manner:
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(a) MICHAEL PAGE ORDINARY SHARES IN UNCERTIFICATED FORM (I.E., IN CREST)
Where an acceptance relates to Michael Page Ordinary Shares in uncertificated
form, the cash consideration to which the accepting Michael Page Shareholder
is entitled will be paid by means of CREST by Interim Services (UK) procuring
the creation of an assured payment obligation in favour of the accepting
Michael Page Shareholder's payment bank in respect of the cash consideration
due, in accordance with the CREST assured payment arrangements.
Interim Services (UK) reserves the right to settle all or any part of the
cash consideration referred to above, for all or any accepting Michael Page
Shareholder(s), in the manner referred to in sub-paragraph (b) below, if, for
any reason, it wishes to do so.
(b) MICHAEL PAGE ORDINARY SHARES IN CERTIFICATED FORM
Where an acceptance relates to Michael Page Ordinary Shares in certificated
form, cheques for cash due will be despatched (but not in or into the United
States, Canada, Australia or Japan) by post (or by such other method as may
be approved by the Panel). All such cash payments will be made in pounds
sterling by cheque drawn on a branch of a UK clearing bank.
If the Offer does not become unconditional in all respects, share
certificates and/or other documents of title will be returned by post (or by
such other method as may be approved by the Panel), within 14 days of the
Offer lapsing, to the person or agent whose name and address (outside the
United States, Canada, Australia and Japan) is set out in Box /7/ on the
relevant Form of Acceptance or, if none is set out, to the first-named holder
at his registered address outside the United States, Canada, Australia and
Japan. No such documents will be sent to an address in the United States,
Canada, Australia or Japan. The Royal Bank of Scotland will, immediately
after the lapsing of the Offer (or within such longer period as the Panel may
permit, not exceeding 14 days of the lapsing of the Offer), give TFE
instructions to CRESTCo to transfer all relevant Michael Page Ordinary Shares
held in escrow balances, and in relation to which it is the escrow agent for
the purposes of the Offer, to the original available balances of the Michael
Page Shareholders concerned.
All communications, notices, certificates, documents of title, and
remittances to be delivered by or sent to or from Michael Page Shareholders
(or their designated agent(s)) will be delivered by or sent to or from them
(or their designated agent(s)) at their risk.
12. FURTHER INFORMATION
Your attention is drawn to the further information in the Appendices, which
form part of this document.
Yours faithfully,
Nicholas Draper Daniel Chamier
MANAGING DIRECTOR VICE PRESIDENT
Morgan Guaranty Trust Company of New York
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APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
PART A: CONDITIONS OF THE OFFER
The Offer is subject to the following conditions:
(a) valid acceptances being received (and not, where permitted, withdrawn) by
3.00 pm on 4 April, 1997 (or such later time(s) and/or date(s) as Interim
Services (UK) may, subject to the rules of the Code, decide) in respect
of not less than 90 per cent. (or such lower percentage as Interim
Services (UK) may decide) of the Michael Page Ordinary Shares to which
the Offer relates, provided that this condition will not be satisfied
unless Interim Services (UK) shall have acquired or agreed to acquire,
whether pursuant to the Offer or otherwise, Michael Page Ordinary Shares
carrying, in aggregate, more than 50 per cent. of the voting rights then
normally exercisable at general meetings of Michael Page including for
this purpose, to the extent (if any) required by the Panel, any voting
rights attaching (or which on issue will attach) to any Michael Page
Ordinary Shares unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to acceptances; and, for this
purpose, (A) the expression "Michael Page Ordinary Shares to which the
Offer relates" shall be construed in accordance with Sections 428 to
430F of the Companies Act 1985 (as amended) and (B) shares which have
been unconditionally allotted shall be deemed to carry the voting rights
which they will carry upon issue;
(b) the Office of Fair Trading indicating, in terms satisfactory to Interim
Services (UK), that it is not the intention of the Secretary of State for
Trade and Industry to refer the proposed acquisition of Michael Page by
Interim Services (UK) or any matters arising therefrom to the Monopolies
and Mergers Commission;
(c) no government or governmental, quasi-governmental, supranational, statutory
or regulatory body, authority (including any national anti-trust or merger
control authorities), court, trade agency, association, institution or
professional body or any other person or body in any relevant jurisdiction
having instituted, implemented or threatened any action, proceedings, suit,
investigation, enquiry or reference, or made, proposed or enacted, any
statute, regulation, order or decision, or taken any other steps which would
or might be likely to:
(i) make the Offer, its implementation, or the proposed acquisition by
Interim Services (UK) or any member of the Interim Services Group of
any shares in, or control of, Michael Page void, illegal or
unenforceable under the laws of any relevant jurisdiction or
otherwise directly or indirectly restrain, prohibit, restrict or
delay the Offer, its implementation or the proposed acquisition as
before mentioned or impose additional material conditions or
obligations with respect thereto, or otherwise challenge or interfere
in any material respect therewith;
(ii) require as a result of the Offer the divestiture by Interim Services or
any of its subsidiaries, or any partnership, joint venture, firm or
any company in which any member of the Interim Services Group may be
interested ("the Wider Interim Services Group") or the divestiture by
Michael Page or any of its subsidiaries, or any partnership, joint
venture, firm or any company in which any member of the Michael Page
Group may be interested ("the Wider Michael Page Group") of all or
any material portion of their respective businesses, assets or
property or impose as a result of the Offer any material limitation
on the ability of any of them to conduct all or any portion of their
respective businesses or own all or any portion of their respective
assets or property;
(iii) impose any limitation on the ability of any member of the Interim
Services Group or any member of the Michael Page Group to hold
or exercise effectively any rights of ownership of shares in any
member of the Wider Michael Page Group or to exercise management
control over any member of the Michael Page Group;
(iv) require any member of the Wider Interim Services Group or any member
of the Wider Michael Page Group to offer (other than in the Offer) to
acquire any shares in any member of the Wider Michael Page Group
owned by any third party; or
(v) otherwise materially and adversely affect the business,
profits or prospects of the Wider Michael Page Group taken as a
whole;
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and all applicable waiting and other time periods during which any such
government, body, authority, court, agency, association, institution or
person could decide to take, institute, implement or threaten any such
action, proceeding, suit, investigation, enquiry or reference having
expired, lapsed or been terminated;
(d) all necessary filings in connection with the Offer or its implementation
having been made, all appropriate waiting periods in respect of the Offer
under any applicable legislation or regulations of any jurisdiction
having expired, lapsed or been terminated and all authorisations, orders,
recognitions, grants, consents, licences, confirmations, clearances,
permissions and approvals necessary or appropriate for or in respect of
the Offer or the proposed acquisition of any shares in, or control of,
Michael Page by Interim Services (UK), or which are necessary or
appropriate for any member of the Wider Michael Page Group to carry on
its business, having been obtained in terms and in a form reasonably
satisfactory to Interim Services (UK) from all appropriate governments,
governmental, quasi-governmental, supranational, statutory or regulatory
bodies, authorities, courts, trade agencies, associations, institutions,
professional associations, persons or other bodies with whom any member
of the Wider Michael Page Group has entered into contractual arrangements
and all such authorisations, orders, recognitions, grants, consents,
licences, confirmations, clearances, permissions and approvals remaining
in full force and effect and there being no notice of an intention to
revoke or not to renew the same and all necessary or appropriate
statutory or regulatory obligations in connection with the Offer or its
implementation in any relevant jurisdiction having been complied with;
(e) except as disclosed in writing to Interim Services (UK) prior to 3
March, 1997, there being no provision of any arrangement, agreement,
licence or other instrument to which any member of the Wider Michael Page
Group, which is material in the context of the Michael Page Group taken
as a whole, is a party or by or to which any such member of the Wider
Michael Page Group or any of its assets may be bound, entitled or subject
and which, in consequence of the making of the Offer or proposed
acquisition of any shares in, or control of, Michael Page by Interim
Services (UK), would or might result to an extent which is material in
the context of the Michael Page Group in:
(i) any monies borrowed by or other indebtedness (actual or
contingent) of any such member of the Wider Michael Page Group being
or becoming repayable or being capable of being declared repayable
prior to the stated maturity date;
(ii) the creation of any mortgage, charge or other security interest
over the whole or any part of the business, property or assets of any
such member of the Wider Michael Page Group or any such security
(whether arising or having arisen) becoming enforceable;
(iii) any such arrangement, agreement, licence or other instrument
being terminated or materially and adversely modified or any adverse
action being taken or any onerous obligation arising thereunder;
(iv) any asset or interest of any such member of the Wider Michael
Page Group being or failing to be disposed of or any right arising
under which any such asset or interest could be required to be
disposed of, in any case other than in the ordinary course of
business;
(v) the interests or business of any member of the Wider Michael Page
Group in or with any other person, firm, company or body (or any
arrangements relating to such interest or business) being terminated
or materially and adversely modified or affected;
(vi) any such member of the Wider Michael Page Group ceasing to be
able to carry on business under any name under which it presently
does so; or
(vii) the value of any such member of the Wider Michael Page Group or
its financial or trading position being materially and adversely
affected;
(f) no member of the Michael Page Group having, since 31 December, 1995
(save as disclosed in the Michael Page Report and Accounts for the year
to 31 December, 1995 or in Michael Page's interim results for the six
months ended 30 June, 1996 or otherwise announced on or before 2 March,
1997 on the London Stock Exchange or disclosed in writing to Interim
Services (UK) prior to 3 March, 1997):
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(i) issued additional shares of any class, or securities convertible
into, or rights, warrants or options to subscribe for or acquire, any
such shares or convertible securities (save as between Michael Page
and wholly-owned subsidiaries of Michael Page or between any of those
subsidiaries or upon the exercise of rights to subscribe for Michael
Page Ordinary Shares pursuant to the exercise of options granted
under the Michael Page Share Option Schemes) or redeemed, purchased
or reduced any part of its share capital;
(ii) save for the proposed final dividend of 7p (net) in respect of
the year ended 31 December, 1996 and for dividends paid by
wholly-owned subsidiaries of Michael Page, declared, paid or made any
bonus issue, dividend or other distribution;
(iii) merged with or demerged from any body corporate or acquired or
disposed of or transferred (other than in the ordinary course of
business) or mortgaged or encumbered any material assets or any
right, title or interest in any material assets or made any change to
its share or loan capital which is material in the context of the
Wider Michael Page Group taken as a whole;
(iv) issued any debentures or incurred or increased any indebtedness
or contingent liability which is material in the context of the Wider
Michael Page Group taken as a whole;
(v) entered into any contract, transaction, arrangement or commitment
(whether in respect of capital expenditure or otherwise) which is of
an onerous and unusual nature or magnitude, or which involves or
could involve an obligation of such a nature or magnitude or which is
or will be or could be materially restrictive to the business of any
member of the Michael Page Group which is material in the context of
the Wider Michael Page Group taken as a whole;
(vi) entered into any contract, reconstruction, amalgamation,
arrangement or similar transaction otherwise than in the ordinary
course of business which is material in the context of the Wider
Michael Page Group taken as a whole;
(vii) entered into or materially varied the terms of any service
agreement or any other agreement or arrangement, other than increases
in remuneration in the ordinary course of business, with any of the
directors or senior executives of any member of the Michael Page
Group or any connected person of any of such persons (within the
meaning of Section 346 of the Companies Act 1985);
(viii) waived or compromised any claim which is material in the
context of that member;
(ix) proposed any voluntary winding up; or
(x) entered into or made an offer (which remains open for acceptance)
to enter into an agreement or commitment or passed any resolution or
announced or authorised any of the transactions or events referred to
in this paragraph (f);
(g) since 31 December, 1995 (save as disclosed in the Michael Page Report
and Accounts for the year to 31 December, 1995 or in Michael Page's
interim results for the six months ended 30 June, 1996 or otherwise
announced on or before 2 March, 1997 on the London Stock Exchange or
disclosed in writing to Interim Services (UK) prior to 3 March, 1997):
(i) there having been no material adverse change, and no contingent
liability or other circumstance having arisen which would or might be
likely to result in any material adverse change, in the business,
financial or trading position or profits of the Michael Page Group;
(ii) there not having been instituted or remaining outstanding any
litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider Michael Page Group,
which is material in the context of the Wider Michael Page Group
taken as a whole, is a party (whether as plaintiff or defendant or
otherwise) and no such proceedings having been threatened against any
such member of the Wider Michael Page Group which, in any case, might
materially and adversely affect the Wider Michael Page Group taken as
a whole, and no investigation by any government or
quasi-governmental, supranational, regulatory or investigative body
or court against or in respect of any such member of the Wider
Michael Page Group or the business carried on by any such member of
the Wider Michael Page Group having been threatened, announced or
instituted or
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remaining outstanding by, against or in respect of any such member of
the Wider Michael Page Group the effect of which will or may be
material to the Wider Michael Page Group taken as a whole; and
(iii) there having been no receiver, administrative receiver or other
encumbrancer appointed over any of the material assets of any member
of the Wider Michael Page Group, which is material in the context of
the Michael Page Group taken as a whole, or any analogous proceedings
or steps taking place in any jurisdiction and there having been no
petition presented for the administration of any such member of the
Wider Michael Page Group or any analogous proceedings or steps taking
place in any jurisdiction; and
(h) Interim Services (UK) not having discovered:
(i) that any financial or business information concerning any member
of the Wider Michael Page Group, which is material in the context of
the Michael Page Group taken as a whole, as contained in the
information publicly disclosed at any time or otherwise available to
Interim Services or Interim Services (UK) either contains a material
misrepresentation of fact or omits to state a fact necessary to make
the information contained therein not materially misleading; or
(ii) that any member of the Michael Page Group is subject to any
material liability, contingent or otherwise, existing at 31 December,
1995, which is not disclosed in the Report and Accounts of Michael
Page for the financial year ended on that date, or in Michael Page's
interim results for the six months ended 30 June 1996 or disclosed in
writing to Interim Services (UK) prior to 3 March, 1997 and which is
material in the context of the Michael Page Group taken as a whole.
Interim Services (UK) reserves the right to waive, in whole or in part, all
or any of conditions (b) to (h) inclusive. The Offer will lapse unless the
conditions set out above (other than condition (a)) are fulfilled or (if
capable of waiver) waived or, where appropriate, have been determined by
Interim Services (UK) to be or to remain satisfied not later than 21 days
after the later of 4 April, 1997 and the date on which the Offer becomes or
is declared unconditional as to acceptances, or such later date as the Panel
may agree. Interim Services (UK) shall be under no obligation to waive or
treat as satisfied any of conditions (b) to (h) inclusive by a date earlier
than the latest date specified above for the satisfaction thereof
notwithstanding that the other conditions of the Offer may at such earlier
date have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any such conditions may not be capable of
fulfilment.
If Interim Services (UK) is required by the Panel to make an offer for
Michael Page Ordinary Shares under the provisions of Rule 9 of the Code,
Interim Services (UK) may make such alterations to the above conditions,
including condition (a), as are necessary to comply with the provisions of
that Rule.
PART B: FURTHER TERMS OF THE OFFER
The following further terms apply, unless the context requires otherwise, to
the Offer.
Except where the context requires otherwise, any reference in Part B of this
Appendix I and in the Form of Acceptance to: (i) the "Offer" shall include
the Offer and any revision or amendment of it or extension to it; (ii) the
"Offer becoming unconditional" will include the Offer being or becoming or
being declared unconditional; (iii) the Offer being or becoming or being
declared "unconditional" will be construed as the Offer being or becoming or
being declared unconditional as to acceptances, whether or not any other
condition of the Offer remains to be fulfilled; (iv) the "acceptance
condition" means the condition as to acceptances set out in paragraph (a) of
Part A of this Appendix I and references to the Offer becoming unconditional
as to acceptances will be construed accordingly; and (v) the "Offer Document"
will mean this document and any other document containing, or containing
details of, the Offer.
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1. ACCEPTANCE PERIOD
(a) The Offer will be open for acceptance until 3.00 pm on 4 April, 1997.
Although no revision is envisaged, if the Offer is revised it will remain
open for acceptance for a period of at least 14 days (or such other
period as may be permitted by the Panel) following the date on which
written notice of the revision is despatched by post to Michael Page
Shareholders. Except with the consent of the Panel, no revision of the
Offer may be made after 29 April, 1997, or, if later, the date 14 days
before the last date on which the Offer can become unconditional.
(b) The Offer, whether revised or not, will not (except with the consent
of the Panel) be capable of becoming unconditional after midnight on 13
May, 1997 (or any other time and/or date beyond which Interim Services
(UK) has stated that the Offer will not be extended and has not withdrawn
that statement), nor of being kept open after that time and/or date
unless the Offer has previously become unconditional, provided that
Interim Services (UK) reserves the right, with the permission of the
Panel, to extend the Offer to later time(s) and/or date(s). Except with
the consent of the Panel, Interim Services (UK) may not, for the purposes
of determining whether the acceptance condition has been satisfied, take
into account acceptances received or purchases of Michael Page Ordinary
Shares made after 1.00 pm on 13 May, 1997 (or any other time(s) and/or
date(s) beyond which Interim Services (UK) has stated that the Offer will
not be extended and has not withdrawn that statement) or such later
time(s) and/or date(s) as Interim Services (UK), with the permission of
the Panel, may determine.
(c) If the Offer becomes unconditional, it will remain open for
acceptance for not less than 14 days from the date on which it would
otherwise have expired. If the Offer has become unconditional and it is
stated that the Offer will remain open until further notice, then not
less than 14 days' notice in writing will be given prior to the closing
of the Offer to those Michael Page Shareholders who have not accepted the
Offer.
(d) If a competitive situation arises after a no extension statement
and/or no increase statement has been made in connection with the Offer,
Interim Services (UK) may, if it specifically reserves the right to do so
at the time such statement is made (or otherwise with the consent of the
Panel), withdraw such statement and be free to extend or revise the
Offer, provided it complies with the requirements of the Code and, in
particular, that it announces the withdrawal as soon as possible and in
any event within four business days of the announcement of the competing
offer or other competitive situation and notifies Michael Page
Shareholders to that effect in writing at the earliest opportunity or, in
the case of Michael Page Shareholders with registered addresses outside
the UK or whom Interim Services (UK) knows to be nominees, custodians or
trustees holding Michael Page Ordinary Shares for such persons, by
announcement in the UK. Interim Services (UK) may choose not to be bound
by a no increase or no extension statement if, having reserved the right
to do so, it posts an increased or improved offer which is recommended by
the board of directors of Michael Page, or in other circumstances
permitted by the Panel. Any Michael Page Shareholders who have accepted
the Offer after the date of the no extension or no increase statement
will have a right of withdrawal in accordance with paragraph 3(c) below.
(e) For the purposes of determining whether the acceptance condition has
been satisfied, Interim Services (UK) will not be bound (unless otherwise
required by the Panel) to take into account any Michael Page Ordinary
Shares which have been issued or unconditionally allotted or which arise
as the result of the exercise of conversion rights before that
determination takes place unless written notice containing relevant
details of the allotment, issue or conversion has been received from
Michael Page or its agents before that time by Interim Services (UK) or
The Royal Bank of Scotland on behalf of Interim Services (UK) at one of
the addresses specified in paragraph 3(a) below. Notification by telex or
facsimile or other electronic transmission or copies will not be
sufficient.
2. ANNOUNCEMENTS
(a) Without prejudice to paragraph 3(a) below, by 8.30 am on the business
day (the "relevant day") following the day on which the Offer is due to
expire or becomes unconditional or is revised or extended, or such later
time or date as the Panel may agree, Interim Services (UK) will make an
appropriate announcement and simultaneously inform the London Stock
Exchange of the position. Such announcement will also state (unless
otherwise permitted by the Panel) the total
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number of Michael Page Ordinary Shares and rights over Michael Page
Ordinary Shares (as nearly as practicable):
(i) for which acceptances of the Offer have been received (showing
the extent, if any, to which such acceptances have been received from
persons acting or deemed to be acting in concert with Interim
Services (UK));
(ii) acquired or agreed to be acquired by or on behalf of Interim
Services (UK) or any person acting or deemed to be acting in concert
with Interim Services (UK) during the Offer Period; and
(iii) held by or on behalf of Interim Services (UK) or any person
acting or deemed to be acting in concert with Interim Services (UK)
prior to the Offer Period,
and will specify the percentage of the Michael Page Ordinary Shares
represented by each of these figures. Any decision to extend the time
and/or date by which the acceptance condition has to be satisfied may be
made at any time up to, and will be announced not later than, 8.30 am on
the relevant day or such later time and/or date as the Panel may agree
and the announcement will also state the next expiry date (unless the
Offer is unconditional). In computing the number of Michael Page Ordinary
Shares represented by acceptances and purchases, there may be included or
excluded for announcement purposes, subject to paragraph 7(d) below,
acceptances and purchases not in all respects in order or subject to
verification.
(b) In this Appendix I, references to the making of an announcement or the
giving of notice by Interim Services (UK) include the release of an
announcement by public relations consultants or by J.P. Morgan to the
press and the delivery by hand or telephone, telex or facsimile
transmission or other electronic transmission of an announcement to
the London Stock Exchange. An announcement made otherwise than to the
London Stock Exchange will be notified simultaneously to the London
Stock Exchange.
3. RIGHTS OF WITHDRAWAL
(a) If Interim Services (UK), having announced the Offer to be
unconditional, fails by 3.30 pm on the relevant day (or such later time
or date as the Panel may agree) to comply with any of the other relevant
requirements relating to the Offer specified in paragraph 2(a) above, an
accepting Michael Page Shareholder may immediately after that time
withdraw his acceptance of the Offer by written notice signed by such
shareholder (or his agent duly appointed in writing and evidence of whose
appointment in a form satisfactory to Interim Services (UK) is produced
to Interim Services (UK)) given by post or by hand to The Royal Bank of
Scotland plc, Registrar's Department, New Issues Section, PO Box 859,
Consort House, East Street, Bedminster, Bristol BS99 1XZ or during normal
business hours by hand only to The Royal Bank of Scotland plc,
Registrar's Department, New Issues Section, PO Box 633, 5-10 Great Tower
Street, London EC3R 5ER on behalf of Interim Services (UK). Subject to
paragraph 1(b) above, this right of withdrawal may be terminated not less
than eight days after the relevant day by Interim Services (UK)
confirming, if that be the case, that the Offer is still unconditional
and complying with the other relevant requirements relating to the Offer
specified in paragraph 2(a) above. If any such confirmation is given, the
first period of 14 days referred to in paragraph 1(c) above will run from
the date of that confirmation and compliance.
(b) If by 3.00 pm on 25 April, 1997 (or such later time and/or date as
the Panel may agree) the Offer has not become unconditional, an accepting
Michael Page Shareholder may withdraw his acceptance of the Offer at any
time after that time in the manner referred to in paragraph 3(a) above
before the earlier of (i) the time that the Offer becomes unconditional
and (ii) the final time for lodgement of acceptances which can be taken
into account in accordance with paragraph 1(b) above.
(c) If a no extension and/or no increase statement is withdrawn in
accordance with paragraph 1(d) above, any acceptance of the Offer made
after the date of that statement may be withdrawn in the manner referred
to in paragraph 3(a) above, no later than the eighth day after the date
on which the notice of the withdrawal is posted to Michael Page
Shareholders.
(d) Except as provided by this paragraph 3, acceptances and elections
will be irrevocable.
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(e) In this paragraph 3 "written notice" (including any letter of
appointment, direction or authority) means notice in writing bearing the
original signature(s) of the relevant accepting Michael Page
Shareholder(s) or his/their agent(s) duly appointed in writing (evidence
of whose appointment in a form satisfactory to Interim Services (UK) is
produced with the notice). Telex or facsimile or other electronic
transmissions or copies will not be sufficient. No notice which is
post-marked or otherwise appears to Interim Services (UK) or its agents
to have been sent from the United States, Canada, Australia or Japan will
be treated as valid.
4. REVISED OFFER
(a) Although no such revision is envisaged, if the Offer (in its original
or any previously revised form(s)) is revised (either in its terms or
conditions or in the value or form of the consideration offered or
otherwise), and any such revised Offer represents on the date on which
the revision is announced (on such basis as J.P. Morgan may consider
appropriate) an improvement (or no diminution) in the value of the
consideration previously offered, the benefit of the revised Offer will,
subject to paragraphs 4(c) and (d) and 6 below, be made available to each
Michael Page Shareholder who has accepted the Offer in its original or
previously revised form(s) (a "Previous Acceptor"). The acceptance by or
on behalf of a Previous Acceptor of the Offer in its original or any
previously revised form(s) will, subject to paragraphs 4(c) and (d) and 6
below, be deemed to be an acceptance of the Offer as so revised and will
also constitute an authority to any director of Interim Services (UK) or
any duly authorised representative of J.P. Morgan or any of their
respective agents as his attorney and/or agent to accept any such revised
Offer on behalf of such Previous Acceptor and, if such revised Offer
includes alternative forms of consideration, to make on his behalf
elections for and/or accept such alternative forms of consideration on
his behalf as such attorney and/or agent in his absolute discretion
thinks fit and to execute on behalf of and in the name of such Previous
Acceptor all such further documents and take such further actions (if
any) as may be required to give effect to such acceptances and/or
elections. In making any such acceptance or making any such election, the
attorney and/or agent will take into account the nature of any previous
acceptances and/or elections made by the Previous Acceptor and such other
facts or matters as he may reasonably consider relevant.
(b) Interim Services (UK) reserves the right (subject to paragraph 4(a)
above) to treat an executed Form of Acceptance relating to the Offer in
its original or any previously revised form(s) which is received (or
dated) on or after the announcement or issue of the Offer in any revised
form as a valid acceptance of and/or election in respect of the revised
Offer and such acceptance will constitute an authority in the terms of
paragraph 4(a) above MUTATIS MUTANDIS on behalf of the relevant Michael
Page Shareholder.
c) The deemed acceptances and/or elections referred to in this paragraph
4 shall not apply and the authorities conferred by this paragraph 4 shall
not be exercised by any director of Interim Services (UK) or any duly
authorised representative of J.P. Morgan or any of their respective
agents if, as a result, the Previous Acceptor would (on such basis as
J.P. Morgan may consider appropriate) receive less in aggregate
consideration as a result of acceptance of the revised Offer than he
would have received in aggregate consideration as a result of acceptance
of the Offer in the form in which it was originally accepted by him.
(d) The deemed acceptances and/or elections referred to in this paragraph
4 will not apply and the authorities conferred by this paragraph will be
ineffective to the extent that a Previous Acceptor shall lodge with The
Royal Bank of Scotland, within 14 days of the posting of the document
containing the revised Offer, a Form of Acceptance or some other form
issued by (or on behalf of) Interim Services (UK) in which the Michael
Page Shareholder validly elects to receive the consideration receivable
by him under such revised Offer in some other manner.
5. FORM OF ACCEPTANCE
Each Michael Page Shareholder by whom, or on whose behalf, any Form of
Acceptance is executed irrevocably undertakes, represents, warrants and
agrees to and with Interim Services (UK), J.P. Morgan and The Royal Bank
of Scotland (in its capacity as receiving agent for the purpose of the
Offer) (so as to bind him and his personal representatives, heirs,
successors and assigns) to the following effect:
(a) that the execution of the Form of Acceptance shall constitute:
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(i) an irrevocable acceptance of the Offer in respect of the number
of Michael Page Ordinary Shares inserted or deemed to be inserted in
Box /1/ of the Form of Acceptance; and
(ii) an undertaking to execute any further documents, take any
further action and give any further assurances which may be required
in connection with the Offer;
in each case on the terms and subject to the conditions set out in this
document and the Form of Acceptance and subject only to the rights of
withdrawal set out in paragraph 3 above;
(b) that the Michael Page Ordinary Shares in respect of which the Offer
is accepted, or is deemed to be accepted, are sold fully paid and free
from all liens, equities, charges, encumbrances and other interests and
together with all rights attaching to them on or after 3 March, 1997,
including, without limitation, the right to receive and retain in full
all dividends and other distributions declared, made or paid on or after
that date, but excluding the right to receive and retain the proposed
final dividend of 7p (net) per Michael Page Ordinary Share in respect of
the year ended 31 December, 1996, which is proposed to be paid on 23 May,
1997;
(c) that unless "YES" is inserted in Box /6/ of the Form of Acceptance,
such Michael Page Shareholder has not received or sent copies or
originals of this document, the Form(s) of Acceptance or any related
documents in, into or from the United States, Canada, Australia or Japan
and has not otherwise utilised in connection with the Offer, directly or
indirectly, the United States, Canadian, Australian or Japanese mails or
any means or instrumentality (including, without limitation, facsimile
transmission, telex and telephone) of interstate or foreign commerce, or
any facilities of a national securities exchange, of the United States,
Canada, Australia or Japan; was outside the United States, Canada,
Australia and Japan when the Form of Acceptance was delivered and at the
time of accepting the Offer; in respect of the Michael Page Ordinary
Shares to which the Form of Acceptance relates, is not an agent or
fiduciary acting on a non-discretionary basis for a principal who has
given any instructions with respect to the Offer from within the United
States, Canada, Australia or Japan; and that the Form of Acceptance has
not been mailed or otherwise sent in, into or from the United States,
Canada, Australia or Japan;
(d) that the execution of the Form of Acceptance and its delivery to The
Royal Bank of Scotland constitutes, subject to the Offer becoming
unconditional in all respects in accordance with its terms and to the
accepting Michael Page Shareholder not having validly withdrawn his
acceptance, the irrevocable separate appointment of Interim Services (UK)
and/or J.P. Morgan as such Michael Page Shareholder's attorney and/or
agent, with an irrevocable instruction to the attorney and/or agent to
complete and execute all or any form(s) of transfer and/or renunciation
and/or other document(s) at the attorney's or agent's discretion in
relation to the Michael Page Ordinary Shares referred to in sub-paragraph
(a)(i) of this paragraph 5 in favour of Interim Services (UK) or as
Interim Services (UK) may direct and to deliver such form(s) of transfer
and/or renunciation and/or other document(s) at the attorney's and/or
agent's discretion together with any share certificate(s) and/or other
document(s) of title relating to such Michael Page Ordinary Shares for
registration within six months of the Offer becoming unconditional in all
respects and to do all such other acts and things as may in the opinion
of such attorney and/or agent be necessary or expedient for the purposes
of, or in connection with, the acceptance of the Offer and to vest in
Interim Services (UK) or its nominee(s) the Michael Page Ordinary Shares
as aforesaid;
(e) that the execution of the Form of Acceptance and its delivery to The
Royal Bank of Scotland constitutes the irrevocable appointment of The
Royal Bank of Scotland as such Michael Page Shareholder's attorney and/or
agent and with an irrevocable instruction to the attorney and/or agent
(i) subject to the Offer becoming unconditional in all respects in
accordance with its terms and to the accepting Michael Page Shareholder
not having validly withdrawn his acceptance, to transfer to itself (or to
such other person or persons as Interim Services (UK) or its agents may
direct) by means of CREST all or any of the Relevant Michael Page
Ordinary Shares (but not exceeding the number of Michael Page Ordinary
Shares in respect of which the Offer is accepted or deemed to be
accepted) and (ii) if the Offer does not become unconditional in all
respects, to give instructions to CRESTCo, immediately after the lapsing
of the Offer (or within such longer period as the Panel may permit, not
exceeding 14 days of the lapsing of the Offer), to transfer all Relevant
Michael Page Ordinary Shares to the original available balance of the
accepting Michael Page Shareholder. "Relevant Michael Page Ordinary
Shares" means Michael Page Ordinary Shares in uncertificated form and in
respect of which a transfer or transfers to escrow has or have
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been effected pursuant to the procedures described in paragraph 10(c) of
the letter from J.P.Morgan contained in this document (subject to any
alteration to such procedures announced by Interim Services (UK)) and
where the transfer(s) to escrow was or were made in respect of Michael
Page Ordinary Shares held under the same member account ID and
participant ID as the member account ID and participant ID relating to
the Form of Acceptance concerned (but irrespective of whether or not any
Form of Acceptance Reference Number, or a Form of Acceptance Reference
Number corresponding to that appearing on the Form of Acceptance
concerned, was included in the TTE instruction concerned);
(f) that, subject to the Offer becoming unconditional in all respects in
accordance with its terms and to the accepting Michael Page Shareholder
not having validly withdrawn his acceptance, the execution of the Form of
Acceptance and its delivery to The Royal Bank of Scotland constitutes a
separate and irrevocable authority and request:
(i) to Michael Page or its agents to procure the registration of the
transfer of the Michael Page Ordinary Shares in certificated form
pursuant to his acceptance of the Offer and the delivery of the share
certificate(s) and/or other document(s) of title in respect of them
to Interim Services (UK) or as it may direct;
(ii) if the Michael Page Ordinary Shares concerned are in certificated
form, to Interim Services (UK), J.P. Morgan or their respective
agents, to procure the despatch by post (or such other method as
may be approved by the Panel) of a cheque in respect of any cash
consideration to which such shareholder is entitled under the
Offer, at the risk of such shareholder, to the person or agent whose
name and address outside the United States, Canada, Australia and
Japan is set out in Box /7/ of the Form of Acceptance or, if none is
set out, to the first-named holder at his registered address outside
the United States, Canada, Australia and Japan; and
(iii) if the Michael Page Ordinary Shares concerned are in
uncertificated form, to Interim Services (UK), J.P. Morgan or their
respective agents, to procure the creation of an assured payment
obligation in favour of the Michael Page Shareholder's payment bank
in accordance with the CREST assured payment arrangements in respect
of any cash consideration to which such shareholder is entitled,
provided that Interim Services (UK) may (if, for any reason, it
wishes to do so) determine that all or any part of any such cash
consideration shall be paid by cheque despatched by post and
sub-paragraph (f)(ii) above shall apply to such method of payment;
(g) that the execution of the Form of Acceptance and its delivery to The
Royal Bank of Scotland constitutes a separate authority to Interim
Services (UK) or any duly authorised representative of J.P. Morgan or any
of their respective agents within the terms of paragraph 4 above;
(h) subject to the Offer becoming unconditional in all respects (or if
the Offer will become unconditional in all respects or lapse immediately
upon the outcome of the resolution in question) or if the Panel otherwise
gives its consent, that:
(i) Interim Services (UK) or its agents shall be entitled to direct
the exercise of any votes and any other rights and privileges
(including the right to requisition a general meeting or separate
class meeting of Michael Page) attaching to any Michael Page Ordinary
Shares in respect of which the Offer has been accepted, or is deemed
to have been accepted, and such acceptance is not validly withdrawn,
such votes, where relevant, to be cast so far as possible to satisfy
any outstanding condition of the Offer;
(ii) the execution of a Form of Acceptance by a Michael Page
Shareholder in respect of the Michael Page Ordinary Shares comprised
in such acceptance and in respect of which such acceptance has not
been validly withdrawn:
(A) constitutes an authority to Michael Page from such Michael
Page Shareholder to send any notice, warrant, document or other
communication which may be required to be sent to him as a member
of Michael Page (including any share certificate(s) or other
document(s) of title issued as a result of a conversion of such
Michael Page Ordinary Shares into certificated form) to Interim
Services (UK) at its registered office;
(B) constitutes an authority to Interim Services (UK) or its
agent to sign any consent to short notice on his behalf and/or
attend and/or execute a form of proxy in respect of such
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Michael Page Ordinary Shares appointing any person nominated by
Interim Services (UK) to attend general meetings and separate
class meetings of Michael Page or its members (or any of them)
(and any adjournments of any such meeting) and to exercise the
votes attaching to such shares on his behalf, such votes, where
relevant, to be cast so far as possible to satisfy any
outstanding condition of the Offer; and
(C) will also constitute the agreement of such Michael Page
Shareholder not to exercise any of such rights without the
consent of Interim Services (UK) and the irrevocable undertaking
of such Michael Page Shareholder not to appoint a proxy for, or
to attend, any such general meeting or separate class meeting;
(i) that he will deliver to The Royal Bank of Scotland at either of the
addresses referred to in paragraph 3(a) above his share certificate(s)
and/or other document(s) of title in respect of all Michael Page Ordinary
Shares in respect of which the Offer has been accepted or is deemed to
have been accepted and not validly withdrawn held by him in certificated
form, or an indemnity acceptable to Interim Services (UK) in lieu of such
documents, as soon as possible and in any event within six months of the
Offer becoming unconditional in all respects;
(j) that he will take (or procure to be taken) the action set out in
paragraph 10 of the letter from J.P. Morgan contained in this document to
transfer all Michael Page Ordinary Shares held by him in uncertificated
form in respect of which the Offer has been accepted or is deemed to have
been accepted and not validly withdrawn to an escrow balance as soon as
possible and in any event so that the transfer to escrow settles within
six months of the Offer becoming unconditional in all respects;
(k) that if, for any reason, any Michael Page Ordinary Shares in respect
of which a transfer to an escrow balance has been effected in accordance
with paragraph 10 of the letter from J.P.Morgan contained in this
document are converted to certificated form, he will (without prejudice
to sub-paragraph (h)(ii)(A) above) immediately deliver or procure the
immediate delivery of the share certificate(s) and/or other document(s)
of title in respect of all such Michael Page Ordinary Shares as so
converted to The Royal Bank of Scotland at either of the addresses
referred to in paragraph 3(a) above or to Interim Services (UK) at its
registered office or as Interim Services (UK) or its agent may direct;
(l) that the creation of an assured payment obligation in favour of his
payment bank in accordance with the CREST assured payments arrangements
referred to in sub-paragraph (f)(iii) above shall, to the extent of the
obligation so created, discharge in full any obligation of Interim
Services (UK) to pay to him the cash consideration to which he is
entitled pursuant to the Offer;
(m) that, if he accepts the Offer, he will do all such acts and things as
shall, in the opinion of Interim Services (UK) or The Royal Bank of
Scotland, be necessary or expedient to vest in Interim Services (UK), or
its nominee(s) or such other person as Interim Services (UK) may decide,
the number of Michael Page Ordinary Shares inserted or deemed to be
inserted in Box /1/ of the Form of Acceptance and all such acts and things
as may be necessary or expedient to enable The Royal Bank of Scotland to
perform its functions as escrow agent for the purposes of the Offer in
relation to those Michael Page Ordinary Shares which are in
uncertificated form;
(n) that the terms and conditions of the Offer contained in this document
will be incorporated and deemed to be incorporated in the Form of
Acceptance, which will be read and construed accordingly;
(o) that he will ratify each and every act or thing which may be done or
effected by Interim Services (UK) or J.P. Morgan or The Royal Bank of
Scotland or any authorised representative of Interim Services (UK) or
J.P. Morgan or The Royal Bank of Scotland or their respective agents or
Michael Page or its agents, as the case may be, in the exercise of any of
his or its powers and/or authorities hereunder;
(p) that, if any provisions of this Part B will be unenforceable or
invalid or will not operate so as to afford Interim Services (UK) or J.P.
Morgan or The Royal Bank of Scotland or any authorised representative of
any of them or their respective agents the benefit of the authority
expressed to be given therein, he agrees with all practicable speed to do
all such acts and things and execute all
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such documents that may be required to enable those persons to secure the
full benefits of this Part B;
(q) that he submits, in relation to all matters arising out of the Offer
and the Form of Acceptance, to the jurisdiction of the Courts of England;
and
(r) on execution, the Form of Acceptance will take effect as a deed.
6. OVERSEAS SHAREHOLDERS
(a) The making of the Offer in, or to certain persons who are resident
in, or citizens or nationals of, jurisdictions outside the UK may be
affected by the laws of the relevant jurisdictions. Michael Page
Shareholders who are residents, citizens or nationals of jurisdictions
outside the UK should inform themselves about and observe any applicable
legal requirements. It is the responsibility of any such person wishing
to accept the Offer to satisfy himself as to the full observance of the
laws of the relevant jurisdiction in connection with the Offer, including
the obtaining of any governmental, exchange control or other consents
which may be required, the compliance with other necessary formalities,
and the payment of any issue, transfer or other taxes due in that
jurisdiction.
(b) In particular, the Offer is not being made, directly or indirectly,
in or into the United States, Canada, Australia or Japan, or by use of
the mails of, or by any means or instrumentality of interstate or foreign
commerce of, or any facilities of a national securities exchange of, any
of these jurisdictions. Such means or instrumentalities include, but are
not limited to, facsimile transmission, telex and telephone.
Accordingly, copies of this document, the Form of Acceptance and any
related offer documents are not being, and must not be, mailed or
otherwise distributed or sent in or into the United States, Canada,
Australia or Japan including to Michael Page Shareholders or participants
in the Michael Page Share Option Schemes with registered addresses in
those jurisdictions or to persons whom Interim Services (UK) knows to be
nominees, custodians or trustees holding Michael Page Ordinary Shares for
such persons. Persons receiving such documents (including, without
limitation, custodians, nominees and trustees) must not distribute, send
or mail them in, into or from the United States, Canada, Australia or
Japan or use any such means, instrumentality or facilities in connection
with the Offer, and doing so may render invalid any related purported
acceptance of the Offer. Persons wishing to accept the Offer must not use
the United States, Canadian, Australian or Japanese mails or any such
means, instrumentality or facilities for any purpose directly or
indirectly related to acceptance of the Offer. Envelopes containing the
Form of Acceptance must not be postmarked in the United States, Canada,
Australia or Japan or otherwise despatched from these jurisdictions and
all acceptors must provide addresses outside the United States, Canada,
Australia and Japan for the receipt of the consideration to which they
are entitled under the Offer and which is despatched by post pursuant to
sub-paragraphs 5(f)(ii) or (iii) above or for the return of the Form of
Acceptance and (in relation to Michael Page Ordinary Shares in
certificated form) any Michael Page Ordinary Share certificate(s) and/or
other document(s) of title.
(c) Subject as provided below, a Michael Page Shareholder will be deemed
not to have accepted the Offer if:
(i) he puts "Yes" in Box /6/ of the Form of Acceptance and by so doing
does not make the representations and warranties set out in paragraph
5(c) above;
(ii) he completes Box /4/ of the Form of Acceptance with an address in
the United States, Canada, Australia or Japan or has a registered
address in the United States, Canada, Australia or Japan and in
either case he does not insert in Box /7/ of the Form of Acceptance the
name and address of a person or agent outside the United States,
Canada, Australia and Japan to whom he wishes the consideration to
which he is entitled under the Offer, or returned documents, to be
sent, subject to the provisions of this paragraph 6 and applicable
laws; or
(iii) a Form of Acceptance received from him is received in an
envelope postmarked in, or otherwise appears to Interim Services (UK)
or its agents to have been sent from, the United States, Canada,
Australia or Japan,
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and Interim Services (UK) reserves the right, in its sole discretion,
to investigate, in relation to any acceptance, whether the
representations and warranties set out in paragraph 5(c) above could
have been truthfully given by the relevant Michael Page Shareholder
and, if such investigation is made and as a result Interim Services
(UK) determines that such representations and warranties could not
have been so given, such acceptance shall not be valid.
(d) If, notwithstanding the restrictions described above, any person
(including, without limitation, custodians, nominees and trustees)
whether pursuant to a contractual or legal obligation or otherwise
forwards this document, any Form of Acceptance or any related offer
document in, into or from the United States, Canada, Australia or
Japan or uses the mails or any means or instrumentality (including,
without limitation, facsimile transmission, telex and telephones) of
interstate or foreign commerce of, or any facilities of a national
securities exchange of, the United States, Canada, Australia or Japan
in connection with such forwarding, such person should (i)inform the
recipient of such fact, (ii) explain to the recipient that such
action may invalidate any purported acceptance by the recipient and
(iii) draw the attention of the recipient to this paragraph 6.
(e) The Offer extends to persons to whom this document, the Form of
Acceptance and any related documents may not be despatched and such
persons may collect copies of those documents from The Royal Bank of
Scotland at either of the addresses referred to in paragraph 3(a)
above. Interim Services (UK) and J.P. Morgan reserve the right to
notify any matter, including the making of the Offer, to all or any
Michael Page Shareholders:
(i) with a registered address outside the UK; or
(ii) whom Interim Services (UK) knows to be a custodian, trustee or
nominee holding Michael Page Ordinary Shares for persons who are
citizens, residents or nationals of jurisdictions outside the UK,
by announcement or by paid advertisement in a daily national newspaper
published and circulated in the UK (in which event such notice shall
be deemed to have been sufficiently given, notwithstanding any
failure by such shareholder to receive or see such notice) and all
references in this document to notice or the provision of information
in writing by or on behalf of Interim Services (UK) shall be
construed accordingly.
(f) Notwithstanding anything to the contrary contained in this document
or the Form of Acceptance, Interim Services (UK) and J.P. Morgan may make
the Offer (with or without giving effect to the foregoing sub-paragraphs
of this paragraph 6) in the United States, Canada, Australia or Japan or
available to persons with a registered address in the United States,
Canada, Australia or Japan pursuant to an exemption under the United
States Securities Act of 1933, as amended, or in accordance with
applicable law in Canada, Australia or Japan and in this connection the
provisions of paragraph 5(c) above will be varied accordingly.
(g) The provisions of this paragraph 6 and/or any other terms of the
Offer relating to overseas shareholders may be waived, varied or modified
as regards specific Michael Page Shareholder(s) or on a general basis by
Interim Services (UK) at its absolute discretion. Subject thereto, the
provisions of this paragraph 6 supersede any terms of the Offer which are
inconsistent with them.
(h) The Loan Notes to be issued pursuant to the Offer have not been, and
will not be registered under the United States Securities Act of 1933, as
amended, or in accordance with applicable laws in Canada, Australia or
Japan. Accordingly, unless an exemption under such Act or laws is
available, the Loan Notes may not be offered, sold or delivered, directly
or indirectly, in or into the United States, Canada, Australia or Japan.
7. GENERAL
(a) The Offer will lapse unless all the conditions relating to the Offer
have been fulfilled or (if capable of waiver) waived or, where
appropriate, have been determined by Interim Services (UK) in its
reasonable opinion to be or remain satisfied by the later of (i) 3.00 pm
on 25 April, 1997; (ii) 21 days after the date on which the Offer becomes
unconditional; and (iii) such date as Interim Services (UK) may, with the
consent of the Panel, decide, provided that Interim Services (UK) shall
be under no obligation to waive or treat as satisfied any condition by a
date earlier than the
24
<PAGE>
latest date specified above for the satisfaction thereof notwithstanding
that the other conditions of the Offer may at such earlier date have been
waived or fulfilled and that there are at such earlier date no
circumstances indicating that any such conditions may not be capable of
fulfilment. If the Offer lapses for any reason, the Offer shall cease to
be capable of fulfilment. If the Offer lapses for any reason, the Offer
shall cease to be capable of further acceptance and Interim Services (UK)
and J.P. Morgan and Michael Page Shareholders shall thereupon cease to be
bound by prior acceptances.
(b) Except with the consent of the Panel, settlement of the consideration
to which any Michael Page Shareholder is entitled under the Offer will be
implemented in full in accordance with the terms of the Offer without
regard to any lien, right of set-off, counterclaim or other analogous
right to which Interim Services (UK) may otherwise be, or claim to be,
entitled as against such shareholder and will be effected in the manner
described in paragraph 11 of the letter from J.P. Morgan contained in
this document.
(c) Subject to paragraph (d) below, notwithstanding that no certificate(s)
or other document of title is/are delivered in respect of any
Michael Page Ordinary Shares held in certificated form, a duly
completed Form of Acceptance: (i) executed under seal by SEPON Limited
and endorsed on behalf of the London Stock Exchange to the effect that
the Michael Page Ordinary Shares to which it refers are the whole or part
of a holding registered in the name of SEPON Limited and/or are Michael
Page Ordinary Shares of which SEPON Limited is unconditionally entitled
immediately to become the registered holder, or (ii) executed by any
other person(s) and endorsed on behalf of the London Stock Exchange to
the effect that such person(s) is/are unconditionally entitled
immediately to become the registered holder(s) of the shares to which it
refers and that one or more transfer(s) in favour of such person(s) in
respect thereof is/are in the course of registration, may be treated by
Interim Services (UK) and J.P. Morgan as an acceptance valid in all
respects on the date of its actual receipt provided that, on its
presentation to Michael Page registrars, it is unconditionally accepted
for registration.
(d) Notwithstanding the right reserved by Interim Services (UK) to treat
a Form of Acceptance as valid even though not entirely in order or not
accompanied by the relevant share certificate(s) and/or other documents
of title, or not accompanied by the relevant transfer to escrow, except
as otherwise agreed with the Panel:
(i) an acceptance of the Offer will only be counted towards
fulfilling the relevant acceptance condition if the requirements of
Note 4 and, if applicable, Note 6 on Rule 10 of the Code are
satisfied in respect of it;
(ii) a purchase of Michael Page Ordinary Shares by Interim Services
(UK) or its nominee(s) (or, if relevant, any person acting in concert
with Interim Services (UK), or its nominee(s)) will only be counted
towards fulfilling the relevant acceptance condition if the
requirements of Note 5 and, if applicable, Note 6 on Rule 10 of the
Code are satisfied in respect of it; and
(iii) the Offer will not become unconditional unless The Royal Bank
of Scotland issues a certificate to Interim Services (UK) and/or J.P.
Morgan or their respective agents stating the number of Michael Page
Ordinary Shares in respect of which acceptances of the Offer have
been received which comply with sub-paragraph (i) above and the
number of Michael Page Ordinary Shares otherwise acquired, whether
before or during the Offer Period, which comply with sub-paragraph
(ii) above.
(e) If sufficient acceptances are received, Interim Services (UK)
intends to apply the provisions of sections 428 to 430F of the
Companies Act 1985 to acquire compulsorily any outstanding Michael
Page Ordinary Shares to which the Offer relates.
(f) The terms, provisions, instructions and authorities contained or
deemed to be contained in the Form of Acceptance constitute part of
the terms of the Offer. Words and expressions defined in this
document have the same meanings when used in the Form of Acceptance,
unless the context otherwise requires. The provisions of this
Appendix I shall be deemed to be incorporated in and form part of the
Form of Acceptance.
(g) All references in this document and in the Form of Acceptance to
4 April, 1997 will (except in the definition of Offer Period and in
paragraph 1(a) above and where the context otherwise requires)
25
<PAGE>
be deemed, if the expiry date of the Offer be extended, to refer to the
expiry date of the Offer as so extended.
(h) References in paragraphs 5 and 6 to a Michael Page Shareholder will
include references to the person or persons executing a Form of
Acceptance and in the event of more than one person executing a Form of
Acceptance, such paragraphs will apply to them jointly and severally.
(i) Any omission to despatch this document, the Form of Acceptance or any
notice required to be despatched under the terms of the Offer to, or any
failure to receive the same by, any person to whom the Offer is made, or
should be made, will not invalidate the Offer in any way.
(j) Interim Services (UK) and J.P. Morgan reserve the right to treat
acceptances as valid if received by or on behalf of either of them at any
place or places determined by them otherwise than as set out in this
document or the Form of Acceptance.
(k) No acknowledgement of receipt of any Form of Acceptance, transfer by
means of CREST, share certificates, or other documents of title will be
given by, or on behalf of, Interim Services (UK). All communications,
notices, certificates, documents of title and remittances to be delivered
by or sent to or from Michael Page Shareholders (or their designated
agent(s)) will be delivered by or sent to or from them (or their
designated agent(s)) at their risk.
(l) If the Offer does not become unconditional in all respects, the Form
of Acceptance, share certificates and/or other documents of title will be
returned by post (or such other methods as may be approved by the Panel)
within 14 days of the Offer lapsing, to the person or agent whose name
and address outside the United States, Canada, Australia and Japan is set
out in Box /7/ on the relevant Form of Acceptance or, if none is set out,
to the first-named holder at his registered address outside the United
States, Canada, Australia and Japan. No such documents will be sent to an
address in the United States, Canada, Australia or Japan. The Royal Bank
of Scotland will, immediately after the lapsing of the Offer (or within
such longer period as the Panel may permit, not exceeding 14 days of the
lapsing of the Offer), give TFE instructions to CRESTCo to transfer all
relevant Michael Page Ordinary Shares held in escrow balances and in
relation to which it is the escrow agent for the purposes of the Offer to
the original available balances of the Michael Page Shareholders
concerned.
(m) All powers of attorney, appointments of agents and authorities
conferred by this Appendix I or in the Form of Acceptance are given by
way of security for the performance of the obligations of the Michael
Page Shareholder concerned and are irrevocable in accordance with section
4 of the Power of Attorney Act 1971 except in the circumstances where the
donor of such power of attorney or authority or appointor validly
withdraws his acceptance.
(n) The Offer is made at 3.00 pm on 14 March, 1997 and is capable of
acceptance from and after that time. The Offer is being made by means of
this document and an advertisement proposed to be published in the
Evening Standard on 14 March, 1997 and in the Financial Times on 15
March, 1997. Forms of Acceptance and copies of this document are
available from The Royal Bank of Scotland at either of the addresses
referred to in paragraph 3(a) above and/or J.P. Morgan at 60 Victoria
Embankment, London EC4Y 0JP.
(o) The Offer and the Form of Acceptance and all acceptances and
elections in respect of them will be governed by and construed in
accordance with English law.
(p) The Offer will lapse if the acquisition of Michael Page is referred
to the Monopolies and Mergers Commission before 3.00 pm on 4 April, 1997
or the date on which the Offer becomes or is declared unconditional as to
acceptances, whichever is the later, and if the Offer so lapses, the
Offer will cease to be capable of further acceptance and accepting
Michael Page Shareholders and Interim Services (UK) will cease to be
bound by Forms of Acceptance submitted before the time when the Offer
lapses.
(q) The Loan Note Alternative will lapse if the Offer lapses or expires
and is conditional upon the Offer becoming wholly unconditional.
26
<PAGE>
APPENDIX II
PARTICULARS OF THE LOAN NOTES
The Loan Notes to be issued by Interim Services (UK) pursuant to the Loan
Note Alternative will be constituted by the Loan Note Instrument to be
executed by Interim Services (UK) and NationsBank N.A. (London branch)
("NationsBank") which will contain (INTER ALIA) provisions to the following
effect:
1. The Loan Notes will be issued by Interim Services (UK) in amounts and
integral multiples of L1 and will be guaranteed by NationsBank. The Loan
Note Instrument will not contain any restrictions on borrowing, disposals
or charging of assets by Interim Services (UK).
2. Interest on the Loan Notes will acrue from day to day and will be
calculated on the basis of a 365 day year and will be payable (after
deduction of tax) twice yearly in arrears on 30 June and 31 December in
each year (each an "Interest Payment Date") or, if any such day is not a
business day, on the immediately preceding business day in respect of the
period (an "Interest Period") starting on the previous Interest Payment
Date and ending on the day before the next Interest Payment Date. The first
payment of interest on the Loan Notes will be made on 31 December, 1997 and
will be in respect of the period starting on the date of the issue of the
Loan Notes and ending on (but excluding) 31 December, 1997 and this period
is also called an "Interest Period".
3. The rate of interest on the Loan Notes for each Interest Period will be
the rate per annum calculated by Interim Services (UK) to be one per cent
below the rate per annum (as notified to Interim Services (UK)) which
Lloyds Bank Plc is prepared to offer six-month sterling deposits of
L10,000,000 to leading banks in the London inter-bank market at or about
11.00 am London time on the first day of the relevant Interest Period as
certified by a duly authorised official of the bank (which certificate
shall be conclusive and binding in the absence of manifest error). If a
rate of interest cannot be established for the first Interest Period the
rate for that period shall be calculated by reference to such rate as the
Company may reasonably decide on the basis of quotation, made for six month
deposits of a similar size and currency in any such other interbank market
or markets as Interim Services (UK) may reasonably select and, if a rate of
interest cannot be established in accordance with the foregoing provisions
for any succeeding Interest Period then the rate of interest on the Loan
Notes for such period shall be the same as that applicable to the Loan
Notes during the previous Interest Period.
4. A holder of Loan Notes ("Noteholder") shall be entitled to require
Interim Services (UK) to redeem all or any part (being L1,000 nominal or an
integral multiple thereof) of his holding of Loan Notes at par, together
with accrued interest (after deduction of tax), on any Interest Payment
Date falling on or after 31 December, 1997 in any of the years 1997 to 2002
inclusive by giving not less than 30 days' notice in writing to Interim
Services (UK) before that Interest Payment Date. On the due date of
redemption, Interim Services (UK) shall redeem the Loan Notes at par
together with accrued interest (after deduction of tax) up to but excluding
that date.
5. If at any time, the principal amount of Loan Notes outstanding is less than
or equal to the greater of L3,000,000 and 25 per cent. of the total
nominal amount of Loan Notes issued prior to that time Interim Services
(UK) may, by giving to the remaining Noteholders not less than 30 days'
notice expiring on any Interest Payment Date falling on or after
31 December, 1997 and before 31 December, 2002, redeem on that Interest
Payment Date all (but not some only) of the outstanding Loan Notes at par
together with accrued interest (after deduction of tax) up to but excluding
that Interest Payment Date. Interim Services (UK) will have the right on
any Interest Payment Date to redeem the Loan Notes at par together with
accrued interest (after deduction of tax) on no less than one month's
notice at any time if interest payable under the Loan Notes is reasonably
expected by it to fall to be treated as a distribution for corporation tax
purposes.
6. Each Noteholder shall be entitled to require all or any part (being L1,000
nominal or an integral multiple thereof) of the Loan Notes to be repaid at
par together with accrued interest (after deduction of tax) up to but
excluding the date of redemption upon written notice by such Noteholder to
Interim Services UK upon the occurrence of any of the following events:
(a) the passing of a resolution by Interim Services (UK) for its
winding-up or the making by a Court of competent jurisdiction of an
order for the winding-up of Interim Services (UK) or the dissolution
of Interim Services (UK) otherwise than, in each case, for the
purposes of a solvent amalgamation or reconstruction;
27
<PAGE>
(b) the making of an administration order in relation to Interim Services
(UK) or the appointment of a receiver over, or the taking into
possession or sale by an encumbrancer of, any of the assets of Interim
Services (UK) where any relevant order is not stayed within a period
of seven days;
(c) the making by Interim Services (UK) of an arrangement or composition
with its creditors generally or the making by Interim Services (UK) of
an application to a court of competent jurisdiction for protection of
its creditors generally; or
(d) the failure by Interim Services (UK) to meet its payment obligations
to holders of Loan Notes under the Loan Note Instrument within 21 days
of the due date for payment.
7. Any Loan Notes not previously purchased or redeemed will be redeemed at par
on 31 December, 2002 together with accrued interest (after deduction of
tax) up to but excluding that date.
8. Interim Services (UK) will be entitled at any time on or after 31 December,
1997 to purchase Loan Notes at any price by tender, private treaty or
otherwise by agreement with the relevant Noteholder(s).
9. No application has been made or will be made to any stock exchange for
the Loan Notes to be listed or dealt in.
10. Interim Services (UK) may, without the consent of the Noteholders but
subject to the prior written consent OF NationsBank (not to be unreasonably
withheld), substitute any other company which is a member of the Interim
Services Group in place of Interim Services (UK) as the principal debtor
under the Loan Note Instrument but in such event the Loan Notes will
continue to be unconditionally guaranteed as to both principal and interest
by NationsBank.
11. Noteholders will cease to be entitled to amounts due in respect of interest
which remains unclaimed for a period of five years and to amounts due in
respect of principal which remains unclaimed for periods of ten years,
in each case from the date on which the relevant payment first became due.
12. The provisions of the Loan Note Instrument and the rights of the
Noteholders against Interim Services (UK) may from time to time be
modified, abrogated or compromised in any respect with the sanction of an
Extraordinary Resolution of the Noteholders, as defined in the Loan Note
Instrument, and with the consent of Interim Services (UK) and NationsBank.
13. Transfers of Loan Notes to or for the benefit of persons in or resident in
the USA, Canada, Australia, Japan or the Republic of Ireland are forbidden,
and other restrictions with respect to those countries apply, as set out in
the Loan Note Instrument.
14. The Loan Notes and the Loan Note Instrument will be governed by and
construed in accordance with English Law.
The above represents a summary of the terms of the Loan Notes and is subject
to the detailed provisions of the Loan Note Instrument which will govern the
rights and obligations of Interim Services (UK), NationsBank and the
Noteholders with respect to the Loan Notes.
THE LOAN NOTES WILL ONLY BE ISSUED IF, BY THE TIME THE OFFER BECOMES OR IS
DECLARED WHOLLY UNCONDITIONAL, MICHAEL PAGE SHAREHOLDERS HAVE ELECTED FOR AT
LEAST L10 MILLION IN AGGREGATE NOMINAL VALUE OF LOAN NOTES. IF, AS A RESULT
OF THIS CONDITION, THE LOAN NOTES ARE NOT ISSUED, THOSE MICHAEL PAGE
SHAREHOLDERS WHO HAVE ELECTED FOR LOAN NOTES WILL RECEIVE THE CONSIDERATION
IN CASH.
28
<PAGE>
APPENDIX III
FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER
FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER
The following tables set out, for illustrative purposes only, and on the
bases and assumptions stated in the notes below, the financial effects on
total consideration and income for a holder of one Michael Page Ordinary
Share accepting the Offer if the Offer becomes or is declared unconditional
in all respects:
(A) INCREASE IN TOTAL CONSIDERATION
Cash consideration 550p
Proposed final dividend 7p
Total consideration plus dividend 557p
Market value of one Michael Page Ordinary Share (Note 1) 495p
Increase (taking into account proposed final dividend) 62p
This represents an effective increase of 12.5%
(B) INCREASE IN GROSS INCOME
Gross income from total cash consideration plus dividend (Note 2) 39.05p
Gross dividend income on one Michael Page 11.25p
Ordinary Share (Note 3)
Increase 27.80p
This represents an effective increase of 247.1%
NOTES:
1. THE MARKET VALUE OF ONE MICHAEL PAGE ORDINARY SHARE IS BASED ON THE SEAQ
MIDDLE MARKET QUOTATION PREVAILING AT THE CLOSE OF BUSINESS ON 28 FEBRUARY,
1997 (BEING THE LAST BUSINESS DAY PRIOR TO THE COMMENCEMENT OF THE OFFER
PERIOD).
2. THE GROSS INCOME ASSUMES THAT THE CASH CONSIDERATION (INCLUDING THE PROPOSED
FINAL DIVIDEND) IS RE-INVESTED IN GOVERNMENT SECURITIES SO AS TO ACHIEVE A
GROSS INCOME OF 7.01 PER CENT. PER ANNUM, BEING THE AVERAGE GROSS REDEMPTION
YIELD ON MEDIUM COUPON BRITISH GOVERNMENT FIXED INTEREST SECURITIES OF UP TO
5 YEARS' MATURITY, AS DERIVED FROM THE FT-ACTUARIES INDEX ON 12 MARCH, 1997
(BEING THE LATEST PRACTICABLE DATE PRIOR TO THE POSTING OF THIS DOCUMENT).
3. THE GROSS DIVIDEND INCOME ON A MICHAEL PAGE ORDINARY SHARE IS BASED ON THE
INTERIM DIVIDEND FOR THE SIX MONTHS ENDED 30 JUNE, 1996 OF 2P (NET) PER
MICHAEL PAGE ORDINARY SHARE AND THE PROPOSED FINAL DIVIDEND FOR THE YEAR
ENDED 31 DECEMBER, 1996 OF 7P (NET) PER MICHAEL PAGE ORDINARY SHARE TOGETHER
WITH AN ASSUMED TAX CREDIT OF 20/80THS.
4. NO ACCOUNT HAS BEEN TAKEN OF ANY LIABILITY TO TAXATION, SAVE THAT, IN
RELATION TO CALCULATING THE INCREASE IN TOTAL CONSIDERATION, ANY TAX CREDIT
ATTACHING TO THE PROPOSED FINAL DIVIDEND HAS BEEN DISREGARDED. IF A 1.75P
TAX CREDIT IS INCLUDED IN THIS CALCULATION, GIVING A GROSS DIVIDEND OF
8.75P, THE TOTAL CONSIDERATION PLUS DIVIDEND IS 558.75P, WHICH REPRESENTS A
12.9% INCREASE IN TOTAL CONSIDERATION (TAKING INTO ACCOUNT THE PROPOSED
FINAL DIVIDEND).
29
<PAGE>
APPENDIX IV
FURTHER INFORMATION ON INTERIM SERVICES AND INTERIM SERVICES (UK)
1. INTERIM SERVICES (UK)
Interim Services (UK) was incorporated as a private limited company on 30
January, 1997 and was re-registered as a public limited company on 10 March,
1997 and has its registered office at 21 Holborn Viaduct, London EC1A 2DY.
Interim Services (UK), a wholly-owned subsidiary of Interim Services (Europe)
Inc which, in turn, is a wholly-owned subsidiary of Interim Services Inc, has
been established for the purpose of making the Offer and has an authorised
and fully issued share capital of L50,000.
2. DIRECTORS OF INTERIM SERVICES (UK)
The directors of Interim Services (UK) are:
Raymond Marcy (President and Chief Executive Officer of Interim Services) Roy
Krause (Executive Vice President and Chief Financial Officer of Interim
Services) John B. Smith (Senior Vice President and Legal Counsel of Interim
Services)
3. FINANCIAL INFORMATION
Section 4 presents selected financial data on Interim Services. Sections 5 to
8 summarise the consolidated financial statements of Interim Services for the
three fiscal years ended 30 December, 1994, 29 December, 1995 and 27
December, 1996. All financial data in these sections is derived from the
published audited accounts for those years.
30
<PAGE>
4. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED
---------------------------------------------------
IN $ THOUSANDS, EXCEPT PER SHARE AMOUNTS 27 DEC., 1996 29 DEC., 1995 30 DEC., 1994(1)
--------------- --------------- -----------------
System-wide Sales(2)................................. $1,834,258 $1,494,260 $1,279,339
--------------- --------------- -----------------
--------------- --------------- -----------------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Commercial Division
Commercial Staffing................................. $ 602,504 $ 515,454 $ 431,348
Professional Services............................... 308,793 138,140 99,935
HealthCare Division.................................. 229,002 205,719 165,614
Other Income......................................... 6,852 4,934 7,799
--------------- --------------- -----------------
Total Revenues...................................... 1,147,151 864,247 704,696
Expenses:
Cost of Services..................................... 795,789 600,169 491,404
--------------- --------------- -----------------
Gross Profit........................................ 351,362 264,078 213,292
Selling, General Admin............................... 243,652 177,105 137,859
Licensee Commissions................................. 39,500 37,295 33,796
--------------- --------------- -----------------
Results of Operations............................... 68,210 49,678 41,637
Merger Expense(3).................................... 8,600 -- --
Amort. Of Intangibles................................ 8,802 6,884 6,041
Interest Expense(4)(5)............................... 5,696 990 112
--------------- --------------- -----------------
Earnings Before Taxes............................... 45,112 41,804 35,484
Taxes on Earnings.................................... 22,097 18,071 16,028
--------------- --------------- -----------------
Net Earnings........................................ $ 23,015 $ 23,733 $ 19,456
--------------- --------------- -----------------
--------------- --------------- -----------------
Net Earnings Per Share(6)............................ $ 1.38 $ 1.52 $ 1.26
--------------- --------------- -----------------
--------------- --------------- -----------------
Net Earnings Per Share (excluding merger expenses)... $ 1.83
---------------
---------------
Weighted Average Shares.............................. 16,709 15,662 15,391
BALANCE SHEET DATA:
Total Assets(7)...................................... $ 512,490 $ 424,489 $ 275,364
Long-term Obligations................................ -- 60,000 --
Working Capital...................................... 169,283 67,526 81,997
OPERATING INFORMATION:
Total Offices(8)..................................... 998 940 796
</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) ON MAY 23, 1996, THE COMPANY COMPLETED A MERGER WITH BRANDON SYSTEMS
CORPORATION ("BRANDON"), AN IT STAFFING COMPANY. MERGER EXPENSE
REPRESENTS ALL FEES AND EXPENSES RELATED TO THE MERGER, CONSOLIDATION AND
RESTRUCTURING OF THE COMBINED COMPANIES.
(4) INTEREST EXPENSE IS NET OF INTEREST INCOME EARNED BY BRANDON.
(5) 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 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.
(6) NO CASH DIVIDEND HAS EVER BEEN PAID BY INTERIM SERVICES. HOWEVER, PRIOR TO
THE BRANDON MERGER, BRANDON PAID CASH DIVIDENDS.
(7) CERTAIN RECLASSIFICATIONS HAVE BEEN MADE TO PRIOR PERIODS TO CONFORM TO
CURRENT YEAR PRESENTATION.
(8) AT END OF PERIOD.
31
<PAGE>
5. CONSOLIDATED STATEMENT OF EARNINGS OF INTERIM SERVICES
The following table sets forth the consolidated income statements of Interim
Services for the three fiscal years ended 30 December, 1994, 29 December,
1995 and 27 December, 1996, as derived from the published audited
consolidated accounts for those years:
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED
---------------------------------------------------
IN $ THOUSANDS, EXCEPT PER SHARE AMOUNTS 27 DEC., 1996 29 DEC., 1995 30 DEC., 1994(1)
--------------- --------------- -----------------
<S> <C> <C> <C>
Revenues............................................. $1,147,151 $ 864,247 $ 704,696
Cost of services..................................... 795,789 600,169 491,404
--------------- --------------- -----------------
Gross profit........................................ 351,362 264,078 213,292
--------------- --------------- -----------------
Selling, general and administrative expenses......... 243,652 177,105 137,859
Licensee commissions................................. 39,500 37,295 33,796
Amortization of intangibles.......................... 8,802 6,884 6,041
Interest expense..................................... 5,696 990 112
Merger expense....................................... 8,600 -- --
--------------- --------------- -----------------
306,250 222,274 177,808
--------------- --------------- -----------------
EARNINGS BEFORE TAXES................................ 45,112 41,804 35,484
Income taxes......................................... 22,097 18,071 16,028
--------------- --------------- -----------------
Net earnings........................................ $ 23,015 $ 23,733 $ 19,456
--------------- --------------- -----------------
--------------- --------------- -----------------
Net earnings per common and common equivalent
shares.............................................. $ 1.38 $ 1.52 $ 1.26
--------------- --------------- -----------------
--------------- --------------- -----------------
WEIGHTED AVERAGE SHARES OUTSTANDING.................. 16,709 15,662 15,391
--------------- --------------- -----------------
--------------- --------------- -----------------
</TABLE>
See notes to consolidated financial statements in paragraph 8 of this
Appendix IV.
32
<PAGE>
6. ASSETS AND LIABILITIES OF INTERIM SERVICES
The following sets forth the consolidated assets and liabilities of Interim
Services as at 29 December, 1995 and 27 December, 1996 extracted from the
published audited consolidated balance sheets at those dates:
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS AT
----------------------------------
IN $ THOUSANDS, EXCEPT PER SHARE AMOUNTS 27 DEC., 1996 29 DEC., 1995
--------------- ---------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................... $ 18,938 $ 4,025
Marketable securities:
Available for sale................................................. -- 15,675
Trading securities................................................. 7,499 --
Receivables, less allowance for doubtful accounts of $3,023 and
$2,176.............................................................. 186,732 143,209
Insurance deposits.................................................. 32,794 33,547
Other current assets................................................ 18,301 9,270
--------------- ---------------
Total current assets................................................ 264,264 205,726
Intangible assets, net............................................... 174,747 171,529
Property and equipment, net.......................................... 49,795 27,128
Other assets......................................................... 23,684 20,106
--------------- ---------------
$ 512,490 $ 424,489
--------------- ---------------
--------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks.............................................. $ -- $ 54,727
Accounts payable and other accrued expenses......................... 27,092 25,829
Accrued salaries, wages and payroll taxes........................... 40,948 30,005
Accrued insurance................................................... 26,782 26,180
Dividend payable.................................................... -- 372
Accrued income taxes................................................ 159 1,087
--------------- ---------------
Total current liabilities........................................... 94,981 138,200
Long-Term Obligations................................................ --- 60,000
Deferred Tax Liability............................................... 2,798 --
Commitments and contingencies
Stockholders Equity:
Preferred stock, par value $.01 per share; authorised --
2,500,000 shares; none issued or outstanding
Common stock, par value $.01 per share; authorised --
50,000,000 and 25,000,000 shares; issued and
outstanding -- 19,476,684 and 15,376,248 shares.................... 195 154
Additional paid-in capital.......................................... 251,236 85,121
Treasury stock...................................................... (460) --
Unrealized gain on marketable securities............................. -- 26
Retained earnings.................................................... 163,740 140,988
--------------- ---------------
Total stockholders' equity........................................... 414,711 226,289
--------------- ---------------
$ 512,490 $ 424,489
--------------- ---------------
--------------- ---------------
</TABLE>
See notes to consolidated financial statements in paragraph 8 of this
Appendix IV.
33
<PAGE>
7. CASH FLOW STATEMENT OF INTERIM SERVICES
The following table sets forth the consolidated cash flow statements of
Interim Services for the three fiscal years ended 30 December, 1994, 29
December, 1995 and 27 December, 1996, as derived from the published audited
consolidated accounts for those years:
CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
YEARS ENDED
---------------------------------------------------
IN $ THOUSANDS 27 DEC., 1996 29 DEC., 1995 30 DEC., 1994
--------------- --------------- -----------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings.......................................... $ 23,015 $ 23,733 $ 19,456
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation and amortisation........................ 18,911 14,556 12,173
Provision for (Benefit from) deferred taxes on
income............................................... 687 (74) 775
Changes in assets and liabilities, net of effects of
acquisitions:
Receivables......................................... (40,724) (27,458) (19,118)
Trading securities.................................. (7,499) -- --
Insurance deposits.................................. 753 (6,138) (7,215)
Other current assets................................ (6,308) (2,334) 285
Other assets........................................ (5,199) (9,527) (5,324)
Accounts payable and accrued expenses............... (280) 3,143 3,825
Accrued salaries, wages and payroll taxes........... 9,434 10,481 6,420
Accrued insurance................................... 602 (54) 1,928
Accrued income taxes................................ (928) 460 (2,810)
Other............................................... 1,437 (226) (335)
--------------- --------------- -----------------
Net Cash (Used in) Provided by Operating
Activities.......................................... (6,099) 6,562 10,060
--------------- --------------- -----------------
Cash Flows from Investing Activities:
Capital expenditures.................................. (32,982) (11,303) (9,576)
Purchases of marketable securities.................... (1,123) (16,910) (10,276)
Proceeds from sales of marketable securities.......... 16,754 11,736 9,106
Decrease in deposits.................................. -- 35 (4)
Acquisitions, net of cash acquired.................... (11,964) (98,990) (10,758)
--------------- --------------- -----------------
Net Cash Used in Investing Activities............... (29,315) (115,432) (21,508)
--------------- --------------- -----------------
Cash Flows from Financing Activities:
(Repayments) Issuances of notes payable............... (114,727) 108,218 6,100
Transactions of pooled company........................ (103) (2,596) (421)
Purchase of treasury stock............................ (460) -- --
Proceeds from secondary stock offering................ 163,114 -- --
Repayments to H & R Block............................. -- -- (30,000)
Proceeds from exercise of employee stock options...... 2,503 401 --
Proceeds from exercise of over-allotment option....... -- -- 28,275
--------------- --------------- -----------------
Net Cash Provided by Financing Activities............ 50,327 106,023 3,954
--------------- --------------- -----------------
Net Increase/(decrease) in cash and cash equivalents.. 14,913 (2,847) (7,494)
Cash and cash equivalents, beginning of period........ 4,025 6,872 14,366
--------------- --------------- -----------------
Cash and cash equivalents, end of period.............. $ 18,938 $ 4,025 $ 6,872
--------------- --------------- -----------------
--------------- --------------- -----------------
Supplemental Disclosures of Cash Flow Information:
Income taxes paid..................................... $ 21,602 $ 17,570 $ 16,911
--------------- --------------- -----------------
--------------- --------------- -----------------
Interest paid......................................... $ 6,546 $ 1,452 $ 528
--------------- --------------- -----------------
--------------- --------------- -----------------
</TABLE>
See notes to consolidated financial statements in paragraph 8 of this
Appendix IV.
34
<PAGE>
8. NOTES TO THE ACCOUNTS OF INTERIM SERVICES
The notes to the accounts of the Interim Services Group, which include a
summary of significant accounting policies, set out below, are extracted from
its audited consolidated accounts for the year ended 27December, 1996.
References to "the Company" are to Interim Services. The presentation of
dates has been conformed to the rest of this document. Amounts are in $
thousands, except per share amounts.
NOTE 1 -- ORGANISATION
HISTORY -- Prior to 27 January, 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 27 January, 1994,
Block completed the sale at $20 per share of 10 million shares of the
Company, its entire holdings. On 28 January, 1994, the Company's shares
commenced trading on the Nasdaq Stock Market. In addition, the underwriters
for the offering exercised their over-allotment option and purchased from the
Company an additional 1.5 million shares at $20 per share. The net proceeds
to the Company were $28,275.
On 7 August, 1996 Interim Common Stock began trading on the New York Stock
Exchange. On 17 October, 1996 the Company completed a public offering of
4,250,000 shares of its $.01 par value common stock (300,000 shares were sold
by certain selling shareholders and 3,950,000 shares were sold by the
Company) at $43.25 per share. Net proceeds to the Company were $163,114.
BUSINESS -- The Company is a leader in providing a comprehensive range of
customised 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 organisations, governmental
agencies, health care facilities and individuals. The Company operates
through a network of offices throughout the United States, Canada, The
Netherlands and the United Kingdom.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
RECLASSIFICATIONS -- Certain amounts in the prior years' consolidated
financial statements have been reclassified to conform to the current year's
presentation.
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. Due to the inherent uncertainty
involved in making estimates, actual results reported in future periods may
be based upon amounts which 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 fiscal years ended 27 December,
1996, 29 December, 1995 and 30 December, 1994 included 52, 52 and 53 weeks
respectively.
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments with a remaining maturity of 90 days or less at the time of
purchase to be cash equivalents. Cash equivalents are carried at cost which
approximates fair value.
MARKETABLE SECURITIES -- Marketable securities are comprised of readily
marketable debt securities with remaining maturities of more than 90 days at
the time of purchase. The Company has classified its current investment
portfolio as trading securities and the carrying value of such securities has
been adjusted to fair market value, which was not materially different from
cost. Prior to the merger with Brandon, Brandon had classified its
investments as available for sale.
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 recognised
in the period they are received. The ultimate amount of accounts and/or notes
receivable that become uncollectible could differ from those estimated.
35
<PAGE>
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 periods of approximately 29 years. The Company
evaluates the recoverability of its investment 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 of services by its own
branch and licensed operations and from royalties earned on sales of services
by its franchise operations. Franchise royalties, which are included in
revenues, were $27,009, $24,316 and $22,790 for the years ended 27 December,
1996, 29 December, 1995 and 30 December, 1994, respectively. Revenues and the
related labour costs and payroll taxes are recorded in the period in which
the service is performed.
The Company utilises 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 "licensee" by the Company),
revenues generated by the franchisee operations and related direct costs are
included as part of the Company's revenues 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 and licensing of franchises, and initial
franchise fees, are recognised when the Company has performed substantially
all of its obligations under its franchise agreements and when collectibility
of such amounts is reasonably assured.
DEPRECIATION AND AMORTISATION -- Buildings and equipment are depreciated over
the estimated useful lives of the assets using the straight-line method.
Leasehold improvements are amortised 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.
The Company funds its workers' compensation program through deposits with
insurance carriers who administer and pay reported claims. These deposits are
reflected as insurance deposits on the accompanying Consolidated Balance
Sheets and are reduced as claims and administrative costs are paid.
The Company also has a captive insurance company that provides general
liability insurance to franchise, license and company-owned locations.
INCOME TAXES -- The Company accounts for income taxes under an asset and
liability approach which requires the recognition of deferred tax assets and
liabilities for expected future tax consequences of temporary differences
between tax bases and financial reporting bases of assets and liabilities.
EARNINGS PER SHARE -- Earnings per share are computed based upon the weighted
average number of common and common equivalent shares outstanding during the
respective years. Earnings per share, assuming full dilution, has not been
shown as there would be no material dilution.
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. For marketable securities fair values are based on
quoted market prices.
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.
STOCK BASED COMPENSATION -- Statement of Financial Accounting Standards (SFAS)
No. 123, "Accounting for Stock-Based Compensation," encourages, but does not
require companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to account
for stock-based compensation to employees using the intrinsic value method as
prescribed by
36
<PAGE>
Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations. Accordingly, compensation
cost for stock options issued to employees is measured as the excess, if any,
of the quoted market price of the Company's stock at the date for grant over
the amount an employee must pay for the stock. Compensation cost related to
restricted stock granted as part of bonus compensation is recognised in the
period the bonus is earned and measured using the quoted market price on the
effective grant date. Compensation cost related to stock options of
non-employees is recorded at fair value (in accordance with SFAS No. 123).
NOTE 3 -- MERGERS AND ACQUISITIONS
BRANDON SYSTEMS CORPORATION
On 23 May, 1996, the Company completed its merger with Brandon Systems
Corporation ("Brandon"), 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 27 December, 1996.
Such fees and expenses approximate $8,600 ($7,593 after tax) and include
investment banking, legal and accounting fees, severance and benefit-related
costs, and other costs of consolidating operations.
The following summarises amounts previously reported by Interim and Brandon
prior to the transaction:
QUARTERS ENDED YEARS ENDED
---------------------------- ----------------------------
29 MAR., 1996 31 MAR., 1995 29 DEC., 1995 30 DEC., 1994
------------- ------------- ------------- -------------
Revenues:
Interim............ $242,414 $173,517 $780,886 $634,417
Brandon............ 22,311 20,135 83,361 70,279
------------- ------------- ------------- -------------
Combined............. $264,725 $193,652 $864,247 $704,696
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net earnings:
Interim............ $ 4,245 $ 3,241 $ 17,527 $ 14,157
Brandon............ 1,244 1,451 6,206 5,299
------------- ------------- ------------- -------------
Combined............. $ 5,489 $ 4,692 $ 23,733 $ 19,456
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net earnings per share:
Interim............ $ 0.27 $ 0.21 $ 1.12 $ 0.92
Brandon............ 0.08 0.09 0.40 0.34
------------- ------------- ------------- -------------
Combined............. $ 0.35 $ 0.30 $ 1.52 $ 1.26
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
COMPUTER POWER GROUP
Effective 1 December, 1995, the Company acquired the U.S. and U.K. based
assets of Computer Power Group ("CPG"), a subsidiary of Australia-based
Computer Power Group, Ltd., for $71,000 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.
37
<PAGE>
The excess of the purchase price over the fair value of the net tangible
assets acquired (goodwill) was $56,618 and is being amortised over 40 years.
OTHER
During 1996, 1995, and 1994, 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 1996 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.
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 1995 and 1994 with pro forma adjustments to give effect to
amortisation of goodwill, interest expense on additional borrowings used to
fund the acquisitions, and other adjustments, together with income tax
effects.
YEARS ENDED
-----------------------------
29 DEC., 1995 30 DEC., 1994
------------- -------------
Revenues from services............................ $969,652 $806,178
Net earnings...................................... $23,974 $17,706
Net earnings per common and common equivalents.... $1.53 $1.15
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 1995 and 1994, or future results of the continued companies.
NOTE 4 -- INTANGIBLE ASSETS
A summary of intangible assets is as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE LIFE AVERAGE LIFE
(IN YEARS) 27 DEC., 1996 (IN YEARS) 29 DEC., 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Excess of cost over fair value of net assets
acquired......................................... 29 $214,416 29 $202,351
Customer lists.................................... 5 1,986 5 1,985
Non-compete agreements............................ 5 2,475 5 2,376
Other intangible assets........................... 5 494 5 516
------------- ------------- ------------- -------------
29 219,371 29 207,228
Less accumulated amortisation..................... (44,624) (35,699)
------------- -------------
- $174,747 - $171,529
Amortisation of intangible assets is as follows:
<CAPTION>
YEARS ENDED
-----------------------------
27 DEC., 1996 29 DEC., 1995
------------- -------------
<S> <C> <C>
Excess of cost over fair value of net assets acquired............................ $8,241 $6,021
Customer lists................................................................... 309 269
Non-compete agreements........................................................... 194 533
Other intangible assets.......................................................... 58 61
------------- -------------
$8,802 $6,884
------------- -------------
------------- -------------
</TABLE>
38
<PAGE>
NOTE 5 -- PROPERTY AND EQUIPMENT
A summary of property and equipment follows:
YEARS ENDED
-----------------------------
27 Dec., 1996 29 Dec., 1995
------------- -------------
Land............................................. $ 4,167 $ 3,817
Buildings........................................ 11,394 3,824
Equipment........................................ 60,453 42,135
Software......................................... 14,270 7,306
Leasehold improvements........................... 2,387 2,228
Construction in progress......................... 32 1,009
------------- -------------
92,703 60,319
Less accumulated depreciation and amortisation... (42,908) (33,191)
------------- -------------
$ 49,795 $ 27,128
------------- -------------
------------- -------------
Depreciation and amortisation of property and equipment for the years ended
27 December, 1996, 29 December, 1995, and 30 December, 1994 amounted to
$10,109, $7,672 and $6,132, respectively.
NOTE 6 --- CREDIT FACILITIES
SHORT-TERM:
The Company has uncommitted lines of credit with several banks based on LIBOR
which are available to fund the Company's short-term capital requirements. As
of 27 December, 1996, the Company had no borrowings outstanding under these
agreements. As of 29 December, 1995, the Company had borrowings outstanding
of $54,727 under these agreements at an effective interest rate of 6.2%.
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 and increased to $200,000 in January 1997. 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. 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
15 January, 2002. As of 27 December, 1996, the Company had no borrowings
outstanding under this facility, and was in compliance with all of its terms.
As of 29 December, 1995 the Company had borrowings outstanding of $60,000
under this facility at an effective interest rate of 6.2%.
NOTE 7 --- INCOME TAXES
The provision for income taxes is comprised of the following:
YEARS ENDED
---------------------------------------------
27 DEC., 1996 29 DEC., 1995 30 DEC., 1994
------------- ------------- -------------
Current
Federal......................... $ 17,300 $ 14,509 $ 12,230
State and local................. 4,110 3,636 3,023
------------- ------------- -------------
21,410 18,145 15,253
Deferred......................... 687 (74) 775
------------- ------------- -------------
$ 22,097 $ 18,071 $ 16,028
------------- ------------- -------------
------------- ------------- -------------
39
<PAGE>
Deferred tax expense results from temporary differences in the recognition of
revenue and expense for tax and financial statement purposes. The sources of
these differences and the tax effect of each for 1995 and 1994 are immaterial
and for the year ended 27 December, 1996 were:
Employee benefits................................................ $ (2,275)
Receivables allowances........................................... (412)
Depreciation..................................................... 2,185
Amortisation of intangibles...................................... 1,302
Other............................................................ (113)
-----------
$ 687
-----------
-----------
The following table reconciles the U.S. Federal income tax rate to the Company's
effective tax rate:
<TABLE>
<CAPTION>
YEARS ENDED
---------------------------------------------
27 DEC., 1996 29 DEC., 1995 30 DEC., 1994
------------- ------------- -------------
<S> <C> <C> <C>
Statutory Rate........................................ 35.0% 35.0% 35.0%
Increase (decrease) in rate resulting from:
State and local income taxes, net of federal benefit.. 6.2 5.6 5.8
Nondeductible amortisation of intangibles............. 3.6 3.9 4.7
Merger expense........................................ 4.7 -- --
Other................................................. (0.5) (1.3) (0.3)
------------- ------------- -------------
49.0% 43.2% 45.2%
------------- ------------- -------------
------------- ------------- -------------
Significant components of the Company's deferred tax assets and liabilities are
as follows:
<CAPTION>
YEARS ENDED
-----------------------------
27 DEC., 1996 29 DEC., 1995
------------- -------------
<S> <C> <C>
Current deferred tax assets (liabilities):
Employee benefits................................................... $2,935 $ 660
Receivables reserves................................................ 1,114 820
Intangible assets................................................... 41 59
Other............................................................... 87 14
------------- -------------
4,177 1,553
------------- -------------
Noncurrent deferred tax assets (liabilities):
Fixed assets........................................................ (1,688) 498
Intangible assets................................................... (1,075) 209
Receivables reserves................................................ 118 --
Other............................................................... (153) (194)
------------- -------------
(2,798) 513
------------- -------------
Net deferred tax assets............................................... $1,379 $2,066
------------- -------------
------------- -------------
</TABLE>
NOTE 8 -- 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.
40
<PAGE>
Contributions, net of forfeitures, by the Company under these plans amounted
to $393, $666 and $756 for the years ended 27 December, 1996, 29 December,
1995 and 30 December, 1994, 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 $1,821 and $710 at 27 December, 1996 and
29 December, 1995, respectively. Contributions by the Company under this plan
amounted to $144 and $149 for the years ended 27 December, 1996 and 29
December, 1995.
NOTE 9 -- STOCK-BASED COMPENSATION PLANS
The Company has three stock option plans and a bonus plan under which a
portion of the bonus payable to certain employees is paid in restricted
Common Stock. These plans provide for the granting of stock options and
restricted shares of the Company's Common Stock. In addition, the Company's
Outside Directors' Compensation Plan provides for the annual retainer to be
paid in the form of the Company's Common Stock.
The three stock options plans are: 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 date of grant. Options under the Long-Term Executive
Compensation Plan are generally 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 11 May, 1995 and 9
May, 1996 an additional total of 350,000 and 450,000 shares, respectively, of
common stock for issuance under the foregoing plans. On 27 January, 1994, the
first options under these plans were granted.
As part of the Company's Bonus Plan, the Board of Directors has authorised
10,000 shares of Common Stock to be used for payment of a portion of the
bonus payable to certain employees in the form of restricted shares of the
Company's Common Stock. These shares vest ratably over a three year period
and are contingent upon future employment status with the Company.
41
<PAGE>
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 1996, 1995 and 1994 giving
retroactive effect to the conversion of the Brandon stock options upon their
original grant dates were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- --------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year............................. 1,101,711 $21.19 807,105 $18.56 234,546 $ 9.43
Granted........................... 420,163 38.01 413,085 25.72 666,913 20.70
Exercised......................... (140,846) 18.98 (47,403) 14.98 (60,648) 7.37
Forfeited (59,751) 28.50 (71,076) 21.78 (33,706) 17.62
--------- ----------- --------- ----------- --------- -----------
Outstanding at end of year........ 1,321,277 26.47 1,101,711 21.19 807,105 18.56
Options exercisable at year-
end.............................. 463,984 $19.65 325,023 $15.55 174,021 $10.41
Weighted average fair value
of options granted during
the year......................... $8.07 $5.52
The following table summarises information about fixed stock options outstanding
at 27 December, 1996:
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- -------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
RANGE OF PRICES AT 12/27/96 LIFE PRICE AT 12/27/96 PRICE
- ------------------ ----------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
$9.09 - $19.99 125,487 2.67 $11.23 119,987 $11.23
$20.00 - $25.99 755,165 7.59 22.61 318,360 21.89
$26.00 - $31.99 12,000 8.34 28.88 12,000 28.88
$32.00 - $37.99 373,966 9.06 36.86 13,637 33.63
$38.00 - $42.99 29,008 9.63 41.02 -- --
$43.00 - $48.00 25,651 9.39 45.21 -- --
-------------- --------------- ------------ --------------- ------------
$9.09 - $48.00 1,321,277 7.62 $26.47 463,984 $19.65
-------------- --------------- ------------ --------------- ------------
-------------- --------------- ------------ --------------- ------------
</TABLE>
The Company applies APB No. 25 and related interpretations in accounting for
its stock option plans for employees as described in Note 2 -- Summary of
Significant Accounting Policies. Accordingly, no compensation expense has
been recognised in 1996 or 1995 related to these plans. The compensation cost
that has reduced pretax income for its restricted stock and nonemployee stock
option plans was immaterial in the years 1996, 1995, and 1994, respectively.
In addition, these compensation cost would have been increased by $2,136
($1,524 after tax, $.09 per share) and $890 ($632 after tax, $.04 per share)
in 1996, and 1995, respectively, had the fair values of stock options granted
been recognised as compensation cost as prescribed by SFAS No. 123.
42
<PAGE>
The fair value of options at grant date was estimated using the Black-Scholes
multiple option model where each vesting increment is treated as a separate
option with its own expected life and own fair value. The following weighted
average assumptions were used:
1996 1995
------------- -------------
Expected life..................................... 2 2
Interest rate..................................... 5.94% 5.98%
Volatility........................................ 30.30% 31.23%
Dividend Yield.................................... -- --
TREASURY STOCK -- On 26 October, 1995, Brandon repurchased 100,000 shares of
its common stock for $1,805. In 1990, Brandon's Board of Directors had
authorised the repurchase of up to $2 million of common stock as market
conditions may warrant. The aggregate number of shares repurchased through 26
October, 1995 were 116,700 for a total consideration of $1,923. Such treasury
stock was canceled upon consummation of the merger.
BRANDON 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 authorised
payroll deductions. The Employee Stock Purchase and Dividend Reimbursement
and Stock Purchase Plans were terminated upon consummation of the merger.
NOTE 10 -- SHAREHOLDER RIGHTS PLAN
On 17 February, 1994, the Company's Board of Directors adopted a shareholder
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 1April, 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, $.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 $.01 per Right at any time
prior to an Unapproved Stock Acquisition (and after such time in certain
circumstances). The Rights expire on 1 April, 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.
NOTE 11 -- TRANSACTIONS WITH BLOCK
Prior to 25 September, 1993, the Company's working capital and acquisition
financing were provided by Block. There was no interest charged on
intercompany debt. Effective 25 September, 1993, Block formalised 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.
43
<PAGE>
NOTE 12 -- 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 centre locations. Total lease expense for the
years ended 27 December, 1996, 29 December, 1995 and 30 December, 1994 was
$11,543, $7,187 and $6,151, respectively.
Future minimum lease payments under noncancellable leases as of 27 December,
1996 were as follows:
FISCAL YEAR ENDING
- ----------------------------------------------------------------
1997............................................................ $ 9,485
1998............................................................ 7,598
1999............................................................ 6,120
2000............................................................ 4,551
2001............................................................ 2,172
Thereafter...................................................... 1,178
Additionally, the Company had outstanding irrevocable letters of credit of
approximately $20.2 million (same as fair value). These letters of credit,
which expire in 1997, collateralise the Company's obligation under certain
workers' compensation insurance programmes and an earnout provision relating
to an acquisition.
NOTE 13 -- 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.
9. MATERIAL CHANGES
Neither the directors of Interim Services nor the directors of Interim
Services (UK) are aware of any material changes in the financial or trading
position of Interim Services Group since 27December, 1996 the date at which
the last audited consolidated accounts were drawn up.
10. MATERIAL CONTRACTS
The following contracts, not being contracts in the ordinary course of
business, have been entered into by members of the Interim Services Group on
or after 3 March, 1995 (being the date two years before the commencement of
the Offer Period) and are, or may be, material:
(a) a business and asset purchase agreement dated 4 February, 1997 and made
between Interim Acquisition Corporation, a wholly owned subsidiary of
Interim Services Inc, ("Interim Acquisition") (1), Aim Executive Holdings
Inc ("the Seller") (2) and Jeffrey L. DePerro and Scott R. DePerro, the
shareholders of the Seller ("the Shareholders") (3). In accordance with
the terms of this agreement, the Seller agreed to sell to Interim
Acquisition substantially all of its human resources management business
("the Business") together with substantially all of the assets used in
connection with the Business (including all personal and real property, all
interests in licences, permits, approvals and other governmental
authorisations, all goodwill associated with the Business and all cash,
deposits and pre-paid expenses of the Business) subject to the assumption
by Interim Acquisition of certain of the liabilities and obligations
relating directly to the conduct of the Business and the assets
transferred.
Completion of the agreement took place on 5 March, 1997. The consideration
for the acquisition of the Business and assets was US$32,900,000, together
with deferred payments for the next three calendar years, calculated in
each of those years as four times the amount by which the annual Pre-Tax
Income (as defined in the agreement) exceeds the greater of:
(i) the highest annual Pre-Tax Income of any of the three preceeding
calendar years with respect to which any deferred payments were
payable; or
(ii) US$4,274,186.
44
<PAGE>
(b) an underwriting agreement dated 17 October, 1996 between Goldman Sachs
Co., Robert W Baird Co. Inc. and Donaldson Lufkin & Jenrette Securities
Corporation and certain other underwriters (the "Underwriters") (1)
Interim Services (2) and Ira and Myra Brown (the "Selling Shareholders")
whereby Interim Services and the Selling Shareholders agreed to issue and
sell, respectively, a total of 4.25 million shares of common stock in
Interim Services to the Underwriters. The initial public offering price was
$43.25 per share and the underwriting discount was $1.84 per share. Interim
Services raised net proceeds of $162.9 million and the Selling Shareholders
received net proceeds of $12.4 million. Interim Services and the Selling
Shareholders agreed to indemnify the Underwriters against certain
liabilities, including under the Securities Act of 1933. Interim Services
also granted the Underwriters an option for 30 days to purchase up to an
additional 638,500 shares at the initial public offering price per share,
less the underwriting discount, solely to cover over-allotments. This
option was not exercised.
(c) an agreement and plan of merger dated 27 February, 1996 and made between
Interim Services (1), Brandon Systems Corporation ("Brandon") (2) and
Delco Merger Corporation (a wholly owned subsidiary of Interim Services)
("Delco") (3). The terms of this agreement were effected by merging
Brandon with Delco to create a single surviving corporation ("Brandon
Systems Corporation").
All the properties, rights, privileges, powers and franchises of Brandon
and Delco vested in Brandon Systems Corporation and all debts, obligations,
liabilities and duties of the respective parties were deemed vested in
Brandon Systems Corporation.
The merger was effected on a share for share basis, with Interim Services
issuing 3,872,690 shares of its common stock in exchange for 100% of
Brandon's issued common stock. In addition, holders of Brandon stock
options outstanding at the effective date of the merger received Interim
Services' stock options entitling them to purchase an additional 207,592
common shares in Interim Services. Fractional entitlements to Interim
Services' shares were satisfied in cash. After the merger, the common stock
of Brandon held by Interim Services was cancelled. The merger was treated
as a pooling of interests for accounting purposes.
Further details of the merger are set out in Note 3 of the Notes to the
accounts of Interim Services in paragraph 8, above.
(d) an agreement dated 9 November, 1995 between Computer Power Group Limited
(1), CP Systems Inc. (2), Computer Power (UK) Limited (3) and Interim
Services (4) whereby Interim Services acquired the U.S. and U.K. based
assets of Computer Power Group, a subsidiary of Computer Power Group
Limited, for $71,000,000 in cash. Further details of the acquisition are
set out in Note 3 of the Notes to the accounts of Interim Services in
paragraph 8 above.
45
<PAGE>
APPENDIX V
FURTHER INFORMATION ON MICHAEL PAGE
1. DIRECTORS
The directors of Michael Page are:
The Rt. Hon. Lord Wakeham
T W Benson
I V Nash
J M G Andrews
2. REGISTERED OFFICE
The registered office of Michael Page is 39-41 Parker Street, London WC2B 5LH.
3. ACCOUNTING POLICIES
The following are the accounting policies of Michael Page, as included in its
published audited accounts for the year ended 31 December, 1996.
The principal accounting policies adopted in preparing these accounts, all of
which have been applied consistently throughout the year and the preceding
two years are as follows:
A. BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention, and in
compliance with applicable accounting standards.
B. BASIS OF CONSOLIDATION
The Michael Page Group accounts consolidate the results of Michael Page Group
PLC and all its subsidiary undertakings. Goodwill arising on consolidation
(representing the excess of the fair value of the consideration given over
the fair value of the separable net assets acquired) is written off against
reserves on acquisition.
C. FOREIGN EXCHANGE
Assets and liabilities in foreign currencies are translated into sterling at
the rates of exchange ruling at the balance sheet date. Transactions in
foreign currencies are converted at rates of exchange prevailing at the date
the transactions were made. Differences arising from changes in exchange
rates on trading transactions are dealt with through the profit and loss
account. Accounts of overseas operations are translated using the closing
rate method. Profits, losses and cash flows of overseas operations are
translated at the average exchange rate applicable to the period. Net
differences arising on the translation of the accounts of overseas operations
are dealt with through reserves.
D. TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at original cost less accumulated
depreciation. Depreciation is calculated to write off the cost less estimated
residual value of each asset evenly over its expected useful life at the
following rates:
Leasehold improvements -- 10% p.a. or period of lease if shorter
Furniture, fittings and equipment -- 10-20% p.a.
Motor vehicles -- 25% p.a.
E. LEASED ASSETS
Assets held under finance leases and hire purchase contracts are capitalised
and depreciated over the shorter of the lease terms and their useful lives at
the rates applicable to fixed assets of a similar category owned by the
group. Rentals under operating leases are charged on a straight line basis
over the term of the lease.
F. INVESTMENTS
Fixed asset investments are shown at cost less amounts written off.
Provisions are made for permanent diminution in value.
46
<PAGE>
G. TURNOVER
Recruitment consultancy turnover represents fee income and expenses
chargeable to clients, excluding VAT.
H. INCOME RECOGNITION
Fee income on retained assignments is recognised on completion of defined
stages of work. Income on non-retained assignments (which is dependent upon
the successful completion of the assignment) is recognised when the position
of employment is accepted by the candidate. This normally precedes the
invoice date which approximates the date when the position of employment is
started. These amounts are included within accrued income in the balance
sheet. Provision is made for withdrawals prior to, or shortly after, the
commencement of employment.
I. TAXATION
Corporation tax is provided on taxable profits at the current rate. Provision
is made for deferred taxation on all material timing differences to the
extent that it is probable that a liability or asset will crystallise. The
provision is calculated on the liability method at the rates of tax likely to
be in force at the time of reversal of the timing differences. No provision
is made for taxation liabilities that may arise if the retained profits of
overseas operations were remitted to the United Kingdom.
J. PENSION COSTS
The group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the group in an independently
administered fund. The pension costs charged in the year represent
contributions payable by the group to the fund.
4. CONSOLIDATED PROFIT AND LOSS ACCOUNTS
The following table summarises the consolidated profit and loss accounts of
the Michael Page Group for the three financial years ended 31 December, 1994,
31 December, 1995 and 31 December, 1996, as derived from the published
audited consolidated accounts:
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS, EXCEPT PER SHARE AMOUNTS NOTES 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
TURNOVER................................. (i) 142,144 103,783 74,291
Cost of sales............................ (98,181) (74,592) (55,283)
----------- ---------- ----------
GROSS PROFIT............................. 43,963 29,191 19,008
Administrative expenses.................. (15,106) (12,459) (10,549)
Other operating income................... --- --- 34
----------- ---------- ----------
OPERATING PROFIT......................... 28,857 16,732 8,493
Interest receivable...................... 1,603 1,058 528
Interest payable......................... (ii) (20) (49) (78)
----------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION................................. (v) 30,440 17,741 8,943
Tax on profit on ordinary activities (vi) (10,660) (6,389) (3,190)
----------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION................................. 19,780 11,352 5,753
Equity minority interests................ (313) (178) (73)
----------- ---------- ----------
PROFIT ATTRIBUTABLE TO SHAREHOLDERS...... 19,467 11,174 5,680
Dividends................................ (vii) (5,588) (3,074) (1,801)
----------- ---------- ----------
RETAINED PROFIT FOR THE YEAR............. (xvii) 13,879 8,100 3,879
----------- ---------- ----------
----------- ---------- ----------
EARNINGS PER SHARE....................... (viii) 31.47p 18.39p 9.51p
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
47
<PAGE>
STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Profit attributable to shareholders...... 19,467 11,174 5,680
Foreign currency translation differences (1,831) 531 288
----------- ---------- ----------
TOTAL RECOGNISED GAINS................... 17,636 11,705 5,968
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The group's results for 1996, 1995 and 1994 derive entirely from its
continuing activities.
5. ASSETS AND LIABILITIES
The following is a summary of the consolidated balance sheets of the Michael
Page Group as at 31 December, 1995 and 31 December, 1996 extracted from the
published audited consolidated balance sheets:
AS AT 31 DECEMBER,
-------------------------
IN L THOUSANDS NOTES 1996 1995
----------- ----------
FIXED ASSETS
Tangible assets.......................... (ix) 7,441 5,822
Investments.............................. (x) 364 295
----------- ----------
7,805 6,117
----------- ----------
CURRENT ASSETS
Debtors................................. (xi) 23,678 18,206
Investments -- short term deposits...... 27,650 19,955
Cash.................................... 13,312 6,382
----------- ----------
64,640 44,543
----------- ----------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Borrowings............................... (xii) (4) (238)
Other creditors.......................... (xiii) (32,751) (23,595)
----------- ----------
(32,755) (23,833)
----------- ----------
NET CURRENT ASSETS....................... 31,885 20,710
----------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES.... 39,690 26,827
CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
Borrowings............................... (xii) (27) (32)
PROVISIONS FOR LIABILITIES AND CHARGES... (xiv) (357) (15)
----------- ----------
NET ASSETS............................... 39,306 26,780
----------- ----------
----------- ----------
CAPITAL RESERVES
Called-up share capital.................. (xv) 1,242 1,231
Share premium account.................... (xvii) 1,158 938
Other reserves........................... (xvii) (662) (737)
Profit & loss account..................... (xvii) 35,587 23,419
----------- ----------
EQUITY SHAREHOLDERS' FUNDS............... (xviii) 37,325 24,851
Equity minority interests................ 1,981 1,929
----------- ----------
TOTAL CAPITAL EMPLOYED................... 39,306 26,780
----------- ----------
----------- ----------
48
<PAGE>
6. GROUP CASH FLOW
The following table summarises the consolidated cash flow statements of the
Michael Page Group for the three financial years ended 31 December, 1994, 31
December, 1995 and 31 December, 1996, as derived from the published audited
consolidated accounts. The 1994 Cash Flow Statement has been restated to
comply with Financial Reporting Standard number 1 (revised):
<TABLE>
<CAPTION>
AS AT 31 DECEMBER,
---------------------------------------
IN L THOUSANDS NOTES 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES (xix) 30,021 17,506 10,986
Returns on investments and servicing of
finance............................... (xx) 1,583 984 436
Taxation................................ (7,166) (3,313) (1,161)
Capital expenditure and financial investment (xx) (4,462) (3,107) (2,556)
Equity dividends paid................... (3,639) (1,993) (1,424)
----------- ---------- ----------
NET CASH INFLOW BEFORE USE OF LIQUID
RESOURCES AND FINANCING................ 16,337 10,077 6,281
Management of liquid resources........... (xx) (8,203) (8,257) (3,874)
Financing................................ (xx) (8) 589 (124)
----------- ---------- ----------
INCREASE IN CASH......................... (xxi) 8,126 2,409 2,283
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH BALANCES
<TABLE>
<CAPTION>
AS AT 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Increase in cash......................... 8,126 2,409 2,283
Purchase of short term deposits.......... 8,203 8,257 3,874
Repayments under finance leases.......... 239 243 269
----------- ---------- ----------
CHANGE IN NET CASH RESULTING FROM CASH
FLOWS.................................. 16,568 10,909 6,426
Translation differences.................. (1,704) 431 204
New finance leases....................... -- -- (49)
----------- ---------- ----------
MOVEMENT IN NET CASH IN YEAR............. 14,864 11,340 6,581
Net cash at 1 January.................... 26,067 14,727 8,146
----------- ---------- ----------
NET CASH AT 31 DECEMBER.................. 40,931 26,067 14,727
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
7. EXTRACTS FROM NOTES TO THE ACCOUNTS
(i) SEGMENT INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------------------------------------------
1996 1995
------------------------------------ ------------------------------------
PROFIT PROFIT
TURNOVER BEFORE NET TURNOVER BEFORE NET
IN L THOUSANDS BY ORIGIN TAX ASSETS BY ORIGIN TAX ASSETS
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Geographical Area:
UK...................... 87,369 19,517 26,288 65,063 11,011 16,000
Australia............... 20,993 3,125 3,900 14,531 1,612 2,143
France.................. 16,781 3,994 6,787 12,168 2,820 5,311
Benelux................. 11,315 2,988 1,684 8,211 1,975 3,210
Germany................. 2,354 297 384 2,333 223 261
Hong Kong............... 3,231 695 426 1,477 100 (145)
Singapore............... 101 (176) (163) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
142,144 30,440 39,306 103,783 17,741 26,780
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
YEAR ENDED 31 DECEMBER,
------------------------------------
1994
------------------------------------
PROFIT
TURNOVER BEFORE NET
IN L THOUSANDS BY ORIGIN TAX ASSETS
---------- ---------- ----------
Geographical Area:
UK...................... 51,510 6,587 11,314
Australia............... 10,873 1,202 1,177
France.................. 6,409 721 3,140
Benelux................. 3,998 727 1,680
Germany................. 1,336 (43) 48
Hong Kong............... 165 (251) (245)
Singapore............... -- -- --
---------- ---------- ----------
74,291 8,943 17,114
---------- ---------- ----------
---------- ---------- ----------
Turnover analysed by destination in 1996, 1995 and 1994 is not materially
different to turnover analysed by origin.
The amounts stated above derive from the group's activity of recruitment
consultancy.
49
<PAGE>
(ii) INTEREST PAYABLE
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Interest payable on:
Bank overdrafts.......................... 5 9 20
Finance leases........................... 15 40 58
----------- ---------- ----------
20 49 78
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(iii) EMPLOYEE INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
1996 1995 1994
Number Number Number
----------- ---------- ----------
<S> <C> <C> <C>
The average number of employees (including
executive directors) during the year were: 734 553 426
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Employment costs in the year comprised:
Wages and salaries....................... 26,957 19,796 14,701
Social security costs.................... 3,150 2,471 1,833
Other pension costs...................... 696 557 422
----------- ---------- ----------
30,803 22,824 16,956
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
There were no outstanding contributions payable to the pension fund at the
year end (1995: L Nil, 1994: L Nil).
(iv) DIRECTORS
DIRECTORS' EMOLUMENTS:
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Directors' emoluments.................... 349 435 456
Performance related bonuses.............. 356 355 467
Pension contributions.................... 29 28 26
----------- ---------- ----------
734 818 949
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
BANDING OF DIRECTORS' REMUNERATION:
<TABLE>
<CAPTION>
1996 1995 1994
NUMBER NUMBER NUMBER
----------- ---------- ----------
<S> <C> <C> <C>
L 10,001 to L 15,000. .................. 1 2 1
L 20,001 to L 25,000.................... -- 1 --
L 30,001 to L 35,000.................... 1 -- 1
L180,001 to L185,000.................... -- 1 --
L215,001 to L220,000.................... -- 1 --
L230,001 to L235,000.................... -- -- 1
L255,001 to L260,000.................... 1 -- --
L275,001 to L280,000.................... -- -- 1
L340,001 to L345,000.................... -- 1 --
L365,001 to L370,000.................... -- -- 1
L400,001 to L405,000.................... 1 -- --
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The above figures for remuneration do not include any amounts for the value
of share options granted to or held by Directors.
50
<PAGE>
(v) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Profit on ordinary activities before taxation
is stated after charging (crediting):
Depreciation of tangible fixed assets -- owned 1,856 1,570 1,406
Depreciation of tangible fixed assets -- leased 153 123 383
Auditors' remuneration -- audit work..... 148 144 117
Auditors' remuneration -- non audit services 137 242 206
Operating lease rentals for property..... 2,751 2,519 2,367
Operating lease rentals for equipment.... 126 87 85
(Profit)/Loss on disposal of fixed assets (146) 45 7
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(vi) TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Current year taxation:
UK corporation tax....................... 6,351 3,921 2,275
Overseas corporation tax................. 3,841 2,381 929
Deferred taxation........................ 494 94 (27)
----------- ---------- ----------
10,686 6,396 3,177
----------- ---------- ----------
Prior year adjustments:
UK corporation tax....................... 132 60 157
Overseas corporation tax................. (14) 7 (37)
Deferred taxation........................ (144) (74) (107)
----------- ---------- ----------
(26) (7) 13
----------- ---------- ----------
10,660 6,389 3,190
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(vii) DIVIDENDS
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER,
---------------------------------------
IN L THOUSANDS 1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Interim paid: 2p per ordinary
share (1995: 1.1p, 1994: 0.8p)........... 1,240 674 482
Final proposed: 7p per ordinary
share (1995: 3.9p, 1994: 2.2p)........... 4,348 2,400 1,319
----------- ---------- ----------
5,588 3,074 1,801
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(viii) EARNINGS PER SHARE
Earnings per share are calculated on the basis of profit on ordinary
activities after taxation and minority interests, and the weighted average
number of ordinary shares in issue throughout the year of 61,853,697 (1995:
60,761,400, 1994: 59,757,813).
The potential dilution of earnings per share from the exercise of share
options is not material.
51
<PAGE>
(ix) TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
FIXTURES
LEASEHOLD FITTINGS & MOTOR
IN L THOUSANDS IMPROVEMENTS EQUIPMENT VEHICLE TOTAL
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
COST
AT 1 JANUARY, 1995....................... 1,652 5,939 2,550 10,141
Additions................................ 263 1,380 1,543 3,186
Disposals................................ (158) (1,044) (1,051) (2,253)
Exchange adjustment...................... 21 123 61 205
------------ ---------- ---------- ----------
AT 31 DECEMBER, 1995..................... 1,778 6,398 3,103 11,279
Additions................................ 498 1,833 2,132 4,463
Disposals................................ (43) (57) (1,197) (1,297)
Exchange adjustment...................... (70) (327) (134) (531)
------------ ---------- ---------- ----------
AT 31 DECEMBER, 1996..................... 2,163 7,847 3,904 13,914
------------ ---------- ---------- ----------
------------ ---------- ---------- ----------
DEPRECIATION
AT 1 JANUARY, 1995....................... 846 3,525 822 5,193
Charge for the year...................... 186 820 687 1,693
Disposals................................ (116) (882) (571) (1,569)
Exchange adjustment...................... 11 104 25 140
------------ ---------- ---------- ----------
AT 31 DECEMBER, 1995..................... 927 3,567 963 5,457
Charge for the year...................... 229 960 820 2,009
Disposals................................ (43) (44) (545) (632)
Exchange adjustment...................... (40) (253) (68) (361)
------------ ---------- ---------- ----------
AT 31 DECEMBER, 1996..................... 1,073 4,230 1,170 6,473
------------ ---------- ---------- ----------
NET BOOK VALUE
AT 31 DECEMBER, 1996..................... 1,090 3,617 2,734 7,441
------------ ---------- ---------- ----------
------------ ---------- ---------- ----------
AT 31 DECEMBER, 1995..................... 851 2,831 2,140 5,822
------------ ---------- ---------- ----------
------------ ---------- ---------- ----------
</TABLE>
Included above in the group's motor vehicles are assets held under finance
leases with a net book value of L36,000 (1995: L189,000).
(x) FIXED ASSET INVESTMENTS
OWN
IN L THOUSANDS SHARES
----------
COST
AT 1 JANUARY, 1995.................................................. 96
Additions........................................................... 582
Expensed in year.................................................... (383)
----------
AT 31 DECEMBER, 1995................................................ 295
Additions........................................................... 810
Expensed in year.................................................... (741)
----------
AT 31 DECEMBER, 1996................................................ 364
----------
----------
The own shares above are held under an Employee Share Trust as detailed in
note (xvi).
The company's principal subsidiary undertakings are detailed below. All
holdings are of ordinary share capital.
52
<PAGE>
All subsidiary undertakings operate as recruitment consultancies in their
country of incorporation. The investments are held through intermediate
subsidiary undertakings.
<TABLE>
<CAPTION>
COUNTRY OF PERCENTAGE
NAME OF UNDERTAKING INCORPORATION HOLDING NOTE
------------- ---------- ----------
<S> <C> <C> <C>
Accountancy Additions Ltd....................... Great Britain 90% (i)
Michael Page Ltd................................ Great Britain 100%
Michael Page UK Ltd............................. Great Britain 100%
Questor International Ltd....................... Great Britain 100%
Sales Recruitment Specialists Ltd............... Great Britain 100%
The Page Partnership Ltd........................ Great Britain 100%
Michael Page International (Australia) Pty Ltd.. Australia 90% (ii)
Michael Page International (France) SA.......... France 95% (ii)
Page Interim SA................................. France 100%
Michael Page International (Nederland) BV....... Netherlands 100%
Michael Page International (Deutschland) GmbH... Germany 100%
Michael Page International (Hong Kong) Ltd...... Hong Kong 100%
</TABLE>
NOTES
(i) THE MINORITY SHAREHOLDING IS OWNED BY TWO OF THE DIRECTORS OF THE
BUSINESS. AN AGREEMENT EXISTS BETWEEN THESE DIRECTORS AND THE MICHAEL
PAGE GROUP PLC WHEREBY THE COMPANY WILL PURCHASE THEIR EQUITY HOLDINGS
IN THE YEAR 2000, FOR A CONSIDERATION BASED ON A MULTIPLE OF THE AVERAGE
PROFITS OF THE YEARS ENDING 31 DECEMBER 1998 AND 1999.
(ii) THE MINORITY SHAREHOLDINGS ARE OWNED BY THE MANAGING DIRECTORS OF
THE BUSINESSES. AGREEMENTS EXIST BETWEEN THE MANAGING DIRECTORS AND THE
MICHAEL PAGE GROUP PLC WHEREBY THE COMPANY WILL PURCHASE THEIR EQUITY
HOLDINGS IN 1997, FOR CONSIDERATIONS BASED ON A MULTIPLE OF THE AVERAGE
PROFITS OF THE YEARS ENDING 31 DECEMBER 1995 AND 1996. THESE AMOUNTS
HAVE BEEN PROVIDED FOR WITHIN MINORITY INTERESTS IN THE CONSOLIDATED
BALANCE SHEET.
(xi) DEBTORS
YEAR ENDED 31 DECEMBER,
------------------------
IN L THOUSANDS 1996 1995
---------- ----------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade debtors.................................. 18,479 14,733
Other debtors.................................. 267 152
Prepayments and accrued income................. 4,805 3,233
---------- ----------
23,551 18,118
---------- ----------
AMOUNTS FALLING DUE AFTER ONE YEAR:
Other debtors.................................. 127 88
---------- ----------
23,678 18,206
---------- ----------
---------- ----------
(xii) Borrowings
YEAR ENDED 31 DECEMBER,
------------------------
IN L THOUSANDS 1996 1995
---------- ----------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Bank overdrafts................................ -- --
Finance lease and hire purchase liabilities.... 4 238
---------- ----------
4 238
---------- ----------
---------- ----------
AMOUNTS FALLING DUE AFTER ONE YEAR:
Finance lease and hire purchase liabilities:
-- due between two and five years............. 27 32
---------- ----------
31 270
---------- ----------
---------- ----------
53
<PAGE>
(xiii) CREDITORS
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
--------- --------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade creditors............................. 2,994 1,766
Corporation tax payable..................... 7,571 5,184
ACT payable................................. 1,332 841
Other tax and social security............... 6,196 5,047
Proposed dividends.......................... 4,348 2,400
Other creditors............................. 929 1,160
Accruals and deferred income................ 9,381 7,197
--------- -------
32,751 23,595
--------- -------
--------- -------
(xiv) PROVISIONS FOR LIABILITIES AND CHARGES
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
--------- ---------
DEFERRED TAXATION:
At 1 January................................ 15 --
Charge for the year......................... 350 20
Exchange adjustment......................... (8) (5)
-------- --------
AT 31 DECEMBER.............................. 357 15
-------- --------
-------- --------
Deferred taxation is attributable to:
Capital allowances in excess of
depreciation............................... 211 82
Other timing differences................... 146 (67)
-------- --------
357 15
-------- --------
-------- --------
All material deferred taxation balances have been fully provided within these
accounts.
(xv) CALLED-UP SHARE CAPITAL
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
--------- ---------
Authorised:
80,000,000 Ordinary Shares of 2p each ....... 1,600 1,600
1 Cumulative Redeemable Preference Share..... 50 50
--------- ---------
1,650 1,650
--------- ---------
--------- ---------
Allotted, called-up and fully paid:
62,108,492 Ordinary Shares (1995: 61,533,492)
of 2p each................................... 1,242 1,231
--------- ---------
--------- ---------
During the year the company issued 575,000 ordinary shares on the exercise of
share options as detailed in note (xvi).
(xvi) SHARE OPTIONS
Executive Share Option Scheme
Under the Michael Page Group Executive Share Option Scheme options were granted
during the year on 900,000 ordinary shares at a price of 204.5p exercisable
between 23 April, 1999 and 22 April, 2006. During the year 325,000 share options
were exercised, 225,000 at 41.5p per share and 100,000 at 37.5p per share. At 31
December, 1996 options amounting to 1,446,034 ordinary shares remained
outstanding, exercisable between 27 June, 1991 and 22 April, 2006 at a price
between 52p and 204.5p per share.
54
<PAGE>
Overseas Share Option Scheme
Under the Michael Page Group Overseas Share Option Scheme options were granted
during the year on 200,000 ordinary shares at a price of 204.5p exercisable
between 23 April, 1999 and 22 April, 2006. During the year 250,000 share options
were exercised, 200,000 at 35.5p per share and 50,000 at 60.5p per share. At
31 December, 1996 options amounting to 580,000 ordinary shares remained
outstanding, exercisable between 6 October, 1996 and 22 April, 2006 at a price
between 60.5p and 204.5p per share.
Employee Share Trust Option Scheme
The group has established two Employee Share Trusts (ESOPs) for the purpose of
purchasing shares in the company on the open market, which are subsequently
awarded to senior employees and directors under a share option scheme on a
discretionary basis by the trustees. The ESOPs are fully funded by the group,
and consequently have no external borrowings.
During the year the ESOPs purchased 200,000 ordinary shares in the company at
405p per share and granted options over 300,000 ordinary shares to senior
employees. As at 31 December, 1996 the ESOPs held a total of 2,091,828 ordinary
shares, of which 1,700,000 ordinary shares have been placed under option to
senior employees and directors at a price of 2p per share, exercisable between
31 December, 1994 and 16 December, 2003. The market price of the company's
shares at 31 December, 1996 was 412.5p per share.
A total of L637,907 (1995: L295,214) has been charged to the consolidated profit
and loss account in respect of the cost of share options granted by the trust in
the year, together with the income and administration expenses of the group's
ESOPs. The ESOPs have not waived dividend income from the company.
The total value of net assets of the ESOPs included within the consolidated
balance sheet at 31 December, 1996 are L468,359 (1995: L295,266).
(xvii) RESERVES
SHARE PROFIT
PREMIUM OTHER & LOSS
IN L THOUSANDS ACCOUNT RESERVES ACCOUNT
------- -------- -------
At 1 January, 1995 .......................... 140 682 14,826
Retained profit for year .................... -- -- 8,100
Share premium arising in year ............... 798 -- --
Goodwill written off in year ................ -- (1,457) --
Exchange adjustment ......................... -- 38 493
------- -------- -------
At 31 December, 1995 ........................ 938 (737) 23,419
Retained profit for year .................... -- -- 13,879
Share premium arising in year ............... 220 -- --
Goodwill adjustment ......................... -- 195 --
Exchange adjustment ......................... -- (120) (1,711)
------- -------- -------
At 31 December, 1996 ........................ 1,158 (662) 35,587
------- -------- -------
------- -------- -------
Estimates of amounts of contingent consideration payable for the purchase of
shares held by minority shareholders are included in the calculation of goodwill
when the directors believe that they can assess the amounts payable with
reasonable certainty. The goodwill adjustment arising in the year represents the
difference between the current estimate and previous estimates of that cost.
The cumulative amount of goodwill written off against the group's reserves is
L1,628,000 (1995: L1,823,000).
55
<PAGE>
(xviii) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
---------- ----------
Profit attributable to shareholders ....... 19,467 11,174
Dividends ................................. (5,588) (3,074)
---------- ----------
13,879 8,100
Exchange adjustment ....................... (1,831) 531
Goodwill written off in year .............. 195 (1,457)
Shares issued in year ..................... 231 832
---------- ----------
Net addition to shareholders' funds ....... 12,474 8,006
Opening shareholders' funds ............... 24,851 16,845
---------- ----------
Closing shareholders' funds ............... 37,325 24,851
---------- ----------
---------- ----------
(xix) RECONCILIATION OF OPERATING PROFIT TO OPERATING NET CASH FLOWS
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
---------- ----------
Operating profit .......................... 28,857 16,732
Depreciation .............................. 2,009 1,693
Own shares expensed ....................... 741 383
(Profit)/Loss on disposal of fixed assets.. (146) 45
Increase in debtors ....................... (6,581) (4,676)
Increase in creditors ..................... 5,141 3,329
---------- ----------
30,021 17,506
---------- ----------
---------- ----------
(xx) GROSS CASH FLOWS
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
---------- ----------
Interest received ......................... 1,603 1,034
Interest paid ............................. (5) (10)
Interest element of finance lease
payments ................................. (15) (40)
---------- ----------
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE ................................ 1,583 984
---------- ----------
---------- ----------
Purchase of tangible fixed assets ......... (4,463) (3,158)
Sale of tangible fixed assets ............. 811 633
Purchase of shares by ESOP trust .......... (810) (582)
---------- ----------
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT ................................ (4,462) (3,107)
---------- ----------
---------- ----------
Purchase of short term deposits ........... (8,203) (8,257)
---------- ----------
MANAGEMENT OF LIQUID RESOURCES ............ (8,203) (8,257)
---------- ----------
---------- ----------
Issue of ordinary shares .................. 231 832
Repayments under finance leases ........... (239) (243)
---------- ----------
FINANCING ................................. (8) 589
---------- ----------
---------- ----------
56
<PAGE>
(xxi) ANALYSIS OF NET CASH BALANCES
TRANSLATION
IN L THOUSANDS AT 1.1.95 CASH FLOWS DIFFERENCES AT 31.12.95
--------- ---------- ----------- -----------
Cash in hand and at bank ...... 3,986 2,070 326 6,382
Overdrafts .................... (350) 339 11 --
--------- ---------- ----------- -----------
3,636 2,409 337 6,382
Finance leases ................ (513) 243 -- (270)
Short term deposits ........... 11,604 8,257 94 19,955
--------- ---------- ----------- -----------
Net Cash ...................... 14,727 10,909 431 26,067
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
TRANSLATION
IN L THOUSANDS AT 1.1.96 CASH FLOWS DIFFERENCES AT 31.12.96
--------- ---------- ----------- -----------
Cash in hand and at bank ...... 6,382 8,126 (1,196) 13,312
Finance leases ................ (270) 239 -- (31)
Short term deposits ........... 19,955 8,203 (508) 27,650
--------- ---------- ----------- -----------
Net Cash ...................... 26,067 16,568 (1,704) 40,931
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
(xxii) CAPITAL COMMITMENTS
Capital commitments for which no provision has been made in these accounts
were:
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
---------- ----------
Contracted for but not provided ............ 138 163
---------- ----------
---------- ----------
(xxiii) OPERATING LEASE COMMITMENTS
Annual commitments under non-cancellable operating leases were:
YEAR ENDED 31 DECEMBER,
-----------------------
IN L THOUSANDS 1996 1995
---------- ----------
Leases in respect of property expiring:
- -- within one year ......................... 73 147
- -- in two to five years .................... 1,396 735
- -- after five years ........................ 1,904 1,688
---------- ----------
3,373 2,570
---------- ----------
---------- ----------
Leases in respect of equipment expiring:
- -- within one year ......................... 7 23
- -- in two to five years .................... 95 46
- -- after five years ........................ 8 --
---------- ----------
110 69
---------- ----------
---------- ----------
8. PROPOSED FINAL DIVIDEND
The proposed final dividend of 7p (net) in respect of the year ended 31
December, 1996 is proposed to be paid on 23 May, 1997 to Michael Page
Shareholders on the register at close of business on 1 April, 1997.
9. MATERIAL CHANGES
The directors of Michael Page are not aware of any material changes in the
financial or trading position of the Michael Page Group since 31 December,
1996, the date to which the last audited consolidated accounts were drawn up.
57
<PAGE>
10. MATERIAL CONTRACTS
No member of the Michael Page Group has entered into a contract, not being a
contract in the ordinary course of business, on or after 3 March, 1995 (being
the date two years before the commencement of the Offer Period) which is, or may
be, material.
11. NATURE OF FINANCIAL INFORMATION
The financial information contained in this Appendix does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. An
unqualified auditors report within the meaning of section 235 of the
Companies Act 1985 has been given in respect of the accounts and does not
contain any statement under section 237(2) or (3) of the Companies Act 1985.
Statutory accounts for the year ended 31 December, 1996 have not yet been
approved by Michael Page Shareholders, however the Michael Page annual report
including the audited results for the year ended 31 December, 1996 is being
sent to Michael Page Shareholders with this document. Accordingly the
accounts have not yet been delivered to the Registrar of Companies.
58
<PAGE>
APPENDIX VI
ADDITIONAL INFORMATION
1. RESPONSIBILITY
The directors of Interim Services (UK), whose names are set out in paragraph
2 of Appendix IV, accept responsibility for the information contained in this
document other than that relating to the Michael Page Group, the directors of
Michael Page and their immediate families. Subject as aforesaid, to the best
of the knowledge and belief of the directors of Interim Services (UK) (who
have taken all reasonable care to ensure that such is the case) the
information contained in this document is in accordance with the facts and
does not omit anything likely to affect the import of such information.
The directors of Michael Page, whose names are set out in paragraph 1 of
Appendix V, accept responsibility for the information contained in this
document relating to the Michael Page Group, themselves and their immediate
families. To the best of the knowledge and belief of the directors of Michael
Page (who have taken all reasonable care to ensure that such is the case),
such information is in accordance with the facts and does not omit anything
likely to affect the import of such information.
2. MARKET QUOTATIONS
The following table shows the closing middle market quotations for Michael
Page Ordinary Shares, as derived from the London Stock Exchange Daily
Official List, on the first business day of each of the six months prior to
the date of this document, on 28 February, 1997 (being the last business day
before the announcement of the Offer) and on 13 March, 1997 (being the latest
practicable date prior to the posting of this document):
MICHAEL
PAGE
ORDINARY
SHARES
(p)
-----------
1996
2 September....................................................... 355.0p
1 October......................................................... 382.5p
1 November........................................................ 419.0p
2 December........................................................ 405.0p
1997
2 January......................................................... 433.5p
3 February........................................................ 467.5p
28 February....................................................... 495.0p
13 March.......................................................... 550.5p
------
3. SHAREHOLDINGS AND DEALINGS
In this document "disclosure period" means the period commencing 3 March,
1996 (being the date 12 months prior to the commencement of the Offer Period)
and ending on 13 March, 1997 (the latest practicable date prior to the
posting of this document).
(a) At the close of business on 13 March, 1997 (the latest practicable
date prior to the posting of this document), the Interim Services
Group was beneficially interested in 8,321,550 Michael Page Ordinary
Shares. Dealings for value in Michael Page Ordinary Shares by the
Interim Services Group during the disclosure period were as follows:
NUMBER OF
MICHAEL PAGE PRICE PER
ORDINARY MICHAEL PAGE
PURCHASER DATE TRANSACTION SHARES ORDINARY SHARE
- ------------------------- ------ ----------- ------------ --------------
Interim Services (UK).... 3.3.97 Purchase 2,741,500 557p
Interim Services (UK).... 4.3.97 Purchase 1,928,850 557p
Interim Services (UK).... 5.3.97 Purchase 1,480,000 557p
Interim Services (UK).... 6.3.97 Purchase 1,000,000 557p
Interim Services (UK).... 7.3.97 Purchase 1,171,200 557p
59
<PAGE>
(b) At the close of business on 13 March, 1997 (the latest practicable date
prior to the posting of this document), J.P. Morgan and its affiliates do
not own or control any Michael Page Ordinary Shares.
(c) The following irrevocable undertakings to accept, or procure acceptance of,
the Offer have been given by directors of Michael Page in respect of the
following number of Michael Page Ordinary Shares (which include their
entire beneficial holdings):
NUMBER OF
NUMBER OF MICHAEL PAGE
MICHAEL PAGE ORDINARY SHARES
NAME ORDINARY SHARES HELD UNDER OPTION
- ---------------------------------- ------------------ --------------------
Lord Wakeham --- ---
T W Benson 100,000 900,000
I V Nash 10,000 200,000
J M G Andrews 13,500 ---
(d) Save as disclosed in this paragraph 3, neither Interim Services, Interim
Services (UK) nor any director of Interim Services or Interim Services
(UK), nor any member of their immediate families or any related trust, nor
any person acting in concert with Interim Services or Interim Services (UK)
for the purpose of the Offer owns or controls or (in the case of such
directors and their immediate families and related trusts) is interested in
(in the manner described in Parts VI and X of the Companies Act 1985 and
regulations made thereunder) any Michael Page Ordinary Shares or securities
convertible into, or rights to subscribe for, or options (including traded
options) in respect of, or derivatives referenced to, Michael Page Ordinary
Shares ("Michael Page securities"), nor has any such person dealt for value
in Michael Page securities during the disclosure period.
(e) At the close of business on 13 March, 1997 (the latest practicable date
prior to the posting of this document) Michael Page was not beneficially
interested in any shares in the capital of Interim Services or shares in
the capital of Interim Services (UK) or any securities convertible into,
rights to subscribe for or options (including traded options) in respect
of, or derivatives referenced to, shares in the capital of Interim Services
or shares in the capital of Interim Services (UK) (together, "Interim
Services securities"), nor has Michael Page dealt for value in Interim
Services securities during the disclosure period.
(f) Save as disclosed in paragraph 6 below no director of Michael Page is
interested in any Interim Services securities nor has any such director nor
any member of his immediate family or related trusts dealt for value in
Interim Services securities during the disclosure period.
(g) The interests of directors of Michael Page (including those of their
immediate families and related trusts) in Michael Page Ordinary Shares,
other than options, as shown in the register of directors' interests
required to be kept pursuant to section 325 of the Companies Act 1985 as at
13 March, 1997 (being the latest practicable date prior to the posting of
this document) are as follows:
NUMBER OF MICHAEL
NAME PAGE ORDINARY SHARES
---------------------
Lord Wakeham ---
T W Benson 100,000
I V Nash 10,000
J M G Andrews 13,500
60
<PAGE>
(h) The directors of Michael Page hold the following options over Michael Page
Ordinary Shares:
<TABLE>
<CAPTION>
NUMBER OF
NORMAL EXERCISE MICHAEL PAGE EXERCISE PRICE
NAME SCHEME PERIOD ORDINARY SHARES PER SHARE
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
Lord Wakeham -- -- -- --
T W Benson Michael Page 31.12.94/ 500,000 2p
Group PLC
Employee Trust 30.12.98
Share Option
Scheme
Michael Page 15.11.96/ 400,000 2p
Group PLC
Employee Trust 14.11.00
Share Option
Scheme
I V Nash Michael Page 15.11.96/ 200,000 2p
Group PLC
Employee Trust 14.11.00
Share Option
Scheme
J M G Andrews -- -- -- --
</TABLE>
(i) In addition to the grant of options referred to in paragraph (h)
above, dealings for value in Michael Page Ordinary Shares by the
directors of Michael Page and their immediate families and related
trusts during the disclosure period were as follows:
<TABLE>
<CAPTION>
NUMBER OF
MICHAEL PAGE MARKET PRICE
ORDINARY AT DATE OF
NAME DATE TRANSACTION SHARES PRICE PER SHARE EXERCISE
------ ----------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
T W Benson Exercise of
9.4.96 option 300,000 2p 215p
I V Nash Exercise of
9.4.96 option 200,000 2p 215p
</TABLE>
(j) The trustees of the Michael Page Employee Shares Trust, Mourant Co.
Trustees Limited, hold 2,091,828 Michael Page Ordinary Shares. Options
to employees have been granted over 1,700,000 Michael Page Ordinary
Shares. It is intended that the trustees will gift all the remaining
391,828 unallocated Michael Page Ordinary Shares to certain employees
of the Michael Page Group before the Offer becomes unconditional in
all respects (of these, it is intended that 175,000 Michael Page
Ordinary Shares will be gifted to Ian Nash) or such lesser number as
may enable the trustees to retain funds to meet any relevant tax or
other liabilities. This will enable the Trust to be wound up once the
Offer has been declared unconditional in all respects.
(k) Save as disclosed above, no director of Michael Page is interested in
Michael Page securities nor has any such director or any member of his
immediate family or any related trust or any company under its control
dealt for value in Michael Page securities during the disclosure
period.
(l) No subsidiary of Michael Page nor any pension fund of Michael Page or
any subsidiary nor any bank, financial or other professional adviser
(including stockbrokers) to Michael Page nor any person controlling,
controlled by, or under the same control as, any such bank, financial
or other professional adviser (other than exempt market-makers) owns
or controls any Michael Page securities nor has any such person dealt
for value therein during the disclosure period.
4. FINANCING ARRANGEMENTS
The cash consideration payable under the Offer will be financed from the
existing resources of the Interim Services Group including a new bank facility
(the "Facility") entered into by Interim Services with NationsBank N.A. on
2 March, 1997.
61
<PAGE>
Under the Facility, NationsBank N.A. has agreed to lend US$675 million to
Interim Services to be used (i) to fund an acquisition of up to 100 per cent. of
the share capital of Michael Page, including buying Michael Page Ordinary Shares
in the open market, (ii) to pay transaction costs in connection with the
acquisition of Michael Page, (iii) to refinance existing indebtedness and (iv)
to provide ongoing working capital to Interim Services.
Interest is payable at a margin over the Eurodollar base rate as determined by
NationsBank N.A. in accordance with a pricing grid set out in the Facility
agreement. $275 million of the Facility is repayable in predetermined stages
over a six year period in accordance with an amortisation schedule set out in
the Facility agreement and the balance of $400 million of the Facility is
repayable on 27 February, 2003.
The Facility is unsecured but contains a negative covenant that Interim Services
may not incur any indebtedness in the nature of borrowing except indebtedness to
NationsBank N.A. under the terms of the Facility agreement.
Interim Services anticipates that repayment of the amounts drawn down under the
Facility agreement will be made from a variety of sources, including, without
limitation, funds generated internally by the Interim Services Group including,
after the Offer has become unconditional in all respects, funds generated by the
Michael Page Group which are paid to Interim Services by way of dividends or
other lawful distributions or payments. Save to the extent of any such
dividends, distributions or payments, Interim Services does not intend that the
payment of interest or, repayment of or security for any liability (contingent
or otherwise) in respect of such Facility will depend to any significant extent
on the business of the Michael Page Group. It is the intent of Interim Services
and NationsBank N.A. to enter into a Credit Agreement which will replace the
Facility agreement in its entirety, such Credit Agreement to contain terms and
conditions acceptable to Interim Services and NationsBank N.A.. It is not a
condition of the making of the loans under the Facility that Interim Services
and NationsBank N.A. shall enter into such Credit Agreement.
J.P. Morgan is satisfied that the necessary financial resources are available to
Interim Services (UK) to enable it to implement the Offer in full.
5. BASES OF CALCULATION AND SOURCES OF INFORMATION
The sources and/or bases of calculation of certain data in this document are as
follows:
(a) The market prices of Michael Page Ordinary Shares are based on the
closing middle market quotations as derived from SEAQ.
(b) The value of the whole of the issued ordinary share capital of Michael
Page is based upon 62,108,492 Michael Page Ordinary Shares being in
issue.
(c) Unless otherwise stated, financial information concerning Interim
Services and Michael Page has been derived from the published annual
report and accounts for the relevant company for the relevant periods.
6. MICHAEL PAGE DIRECTORS' SERVICE CONTRACTS
The following are details of the service agreements between Michael Page or any
of its subsidiaries and the executive directors of Michael Page which have more
than 12 months to run from the date of this document:
(a) Each of Mr T W Benson and Mr I V Nash (each an "Executive") has
entered into an amended service contract with Michael Page dated 2
March, 1997. The amended service contracts are conditional upon the
Offer being declared unconditional in all respects.
Mr Benson will be entitled to a basic salary of L225,000 (currently
L225,000) and other benefits. In addition, Mr Benson will be entitled
to an annual bonus equal to 0.662 per cent. of the annual pre-tax
operating income (as defined) of Michael Page. Mr Benson received
L218,500 as a bonus payment in the year ended 31 December, 1996. The
amended service contract is terminable on 12 months' notice from
either party and replaces a service contract dated 20 April, 1988
which was also terminable on 12 months' notice.
Mr Nash will be entitled to a basic salary of L150,000 (currently
150,000) and other benefits. In addition, Mr Nash will be entitled to
an annual bonus equal to 0.441 per cent. of the annual pre-tax
operating income (as defined) of Michael Page. Mr Nash received
L136,500 as a bonus
62
<PAGE>
payment in the year ended 31 December, 1996. The amended service
contract is terminable on 12 months' notice from either party and
replaces a service contract dated 20 April, 1988 which was also
terminable on 12 months' notice.
The respective amended service contracts provide that, subject to
Michael Page achieving specified pre-tax operating income targets in
each of the fiscal years 1997 to 2001 inclusive, two bonus pools of
restricted shares of Interim Services fully paid common stock may be
created for the benefit of the Michael Page executive directors and
senior management team. The aggregate amount of the bonus pools and
the number of shares of Interim Services fully paid common stock will
be determined according to a formula as set out in the amended service
contracts. The maximum aggregate combined value of these two bonus
pools will be 10 per cent. of the targeted pre-tax operating income
for the applicable fiscal year. Mr Benson will be eligible to receive
a grant of Interim Services fully paid restricted common stock equal
to 15 per cent. of each of the two bonus pools and Mr Nash will be
entitled to receive a grant of Interim Services fully paid restricted
common stock equal to 7 per cent. of each of the two bonus pools. The
restricted shares are released as to one third each year after grant
provided that the relevant employee remains as an employee of Michael
Page at that time.
(b) For the benefit of the Michael Page executive directors and senior
management team, upon the Offer being declared unconditional in all
respects, stock options on 225,000 Interim Services fully paid shares
of common stock will be granted. The exercise price for the stock
options will be the closing price for Interim Services shares of
common stock on the New York Stock Exchange at close of business in
New York on the date upon which the Offer is declared unconditional in
all respects. Of the 225,000 stock options, Mr Benson will be eligible
to receive a grant of stock options on 50,000 Interim Services shares
of common stock and Mr Nash will be eligible to receive a grant of
stock options on 25,000 Interim Services shares of common stock and
the remainder will be allocated to members of the Michael Page senior
management team according to Mr Benson's recommendation to the Chief
Executive Officer of Interim Services. The stock options will be
released as to one third each year after grant provided that the
relevant employee remains as an employee of Michael Page at that time.
(c) Lord Wakeham and Mr Andrews, who are both non-executive directors of
Michael Page, have terms of appointment with Michael Page which may be
terminated on reasonable notice. They will both resign from the board
of directors of Michael Page when the Offer has been declared
unconditional in all respects. Interim Services intends that Lord
Wakeham will continue on a consultancy basis as President of Michael
Page at a fee of L40,000 (currently L31,500). Upon his resignation,
Mr Andrews will be paid L13,230 representing one year's annual fee in
lieu of notice. They do not participate in Michael Page's performance
related bonus arrangements, pension plan or share option schemes.
Save as disclosed in this paragraph, there are no service contracts between
any director of Michael Page and Michael Page or any of its subsidiaries
having more than 12 months to run and no such contract has been entered into
or amended within 6 months prior to the date of this document.
7. OTHER INFORMATION
(a) No agreement, arrangement or understanding (including any compensation
arrangement) exists between Interim Services (UK), any person acting
in concert with Interim Services (UK) for the purposes of the Offer
and any of the directors, recent directors, shareholders or recent
shareholders of Michael Page having any connection with or dependence
on, or which is conditional on the outcome of, the Offer.
(b) No proposal exists in connection with the Offer that any payment or
other benefit be made or given to any director of Michael Page as
compensation for loss of office or as consideration for, or in
connection with, his retirement from office, save for the payment to
Mr Andrews, described in paragraph 6(c) above.
(c) There is no agreement, arrangement or understanding whereby the
beneficial ownership of any of the Michael Page Ordinary Shares to be
acquired by Interim Services (UK) pursuant to the Offer will be
transferred to any other person, save that Interim Services (UK)
reserves the right to transfer any such shares to any other member(s)
of the Interim Services Group.
63
<PAGE>
(d) Save as disclosed above, none of Interim Services (UK), any person
acting in concert with Interim Services (UK), Michael Page or any
associate of Michael Page, has any arrangement in relation to Michael
Page securities or Interim Services securities.
(e) This document is issued by J.P. Morgan on behalf of Interim Services.
J.P. Morgan has given and not withdrawn its written consent to the
issue of this document with the inclusion of, and references to, its
name and letter in the forms and contexts in which they appear. J.P.
Morgan is regulated by The Securities and Futures Authority Limited.
(f) BZW has given and not withdrawn its written consent to the issue of
this document with the references herein to its name in the form and
context in which it appears. BZW is regulated by the Securities and
Futures Authority Limited.
(g) For the purposes of this Appendix:
(i) "arrangement" includes indemnity and option arrangements and any
agreement or understanding, formal or informal, of whatever
nature relating to Michael Page securities or Interim Services
securities which may be an inducement to deal or refrain from
dealing;
(ii) "derivative" includes any financial product whose value in whole
or in part is determined directly or indirectly by reference to
the price of an underlying security but which does not include
the possibility of delivery of such underlying securities;
(iii) ownership or control of 20 per cent. or more of the equity share
capital is regarded as the test of "associated company" status
and "control" means a holding, or aggregate holdings, of shares
carrying 30 per cent. or more of the voting rights attributable
to the share capital of a company which are currently exercisable
at a general meeting, irrespective of whether the holding or
holdings give de facto control;
(iv) "associate" includes, in relation to Michael Page, any subsidiary
or associated company of Michael Page or any company of which any
such company is an associated company (a "relevant company"), any
bank, financial or other professional adviser (including
stockbrokers) of Michael Page or any relevant company including
persons controlling, controlled by or under the same control as
such bank, financial or other professional adviser, any director
of any relevant company (including Interim Services or Michael
Page) or any of such director's close relatives and related
trusts or any pension fund of Interim Services or Michael Page
or any relevant company; and
(v) references to a "bank" do not include a bank whose sole
relationship with Interim Services (UK) or Michael Page or a
relevant company is the provision of normal commercial banking
services.
8. DOCUMENTS FOR INSPECTION
Copies of the following documents will be available for inspection at the
offices of Lovell White Durrant, 65Holborn Viaduct, London EC1A 2DY during usual
business hours on any weekday (Saturdays and public holidays excepted) while the
Offer remains open for acceptance:
(a) the Memorandum and Articles of Association of each of Interim Services
(UK) and Michael Page and the Restated Certificate of Incorporation
and By-Laws, each as amended, of Interim Services;
(b) the published audited consolidated accounts of Interim Services for
the two fiscal years ended 29December, 1995 and 27 December, 1996 and
the published audited consolidated accounts of Michael Page for the
two financial years ended 31 December, 1995 and 31 December, 1996;
(c) the irrevocable undertakings referred to in paragraph 3(c) above;
(d) the facility agreement referred to in paragraph 4 above.
(e) the service contracts of the directors of Michael Page referred to in
paragraph 6 above and the service contracts of the directors of
Interim Services with more than 12 months to run;
(f) the written consents referred to in paragraphs 7(e) and 7(f) above;
(g) the material contracts referred to in paragraph 8 of Appendix IV
above;
(h) the draft Loan Note Instrument referred to in Appendix II; and
(i) the Michael Page Share Option Schemes.
64
<PAGE>
DEFINITIONS
The following definitions apply throughout this document, unless the context
requires otherwise:
"BZW" Barclays de Zoete Wedd Limited
"certificated" or a Michael Page Ordinary Share which is not in
"in certificated form" uncertificated form
"Code" the City Code on Takeovers and Mergers
"CREST" the relevant system (as defined in the Regulations)
in respect of which CRESTCo is the Operator
(as defined in the Regulations)
"CRESTCo" CRESTCo Limited
"CREST member" a person who has been admitted by CRESTCo as a
system-member (as defined in the Regulations)
"CREST participant" a person who is, in relation to CREST, a system-
participant (as defined in the Regulations)
"CREST sponsor" a CREST participant admitted to CREST as a CREST
sponsor
"CREST sponsored member" a CREST member admitted to CREST as a sponsored
member
"Form of Acceptance" the form of acceptance and authority relating to
the Offer despatched with this document
"Interim Services" Interim Services Inc.
"Interim Services Group" Interim Services and its subsidiary undertakings
"Interim Services (UK)" Interim Services (UK) PLC, a wholly-owned
subsidiary of Interim Services (Europe) Inc, which,
in turn, is a wholly owned subsidiary of Interim
Services
"J.P. Morgan" Morgan Guaranty Trust Company of New York
"Loan Note Alternative" the Loan Note Alternative which is more fully
described in the letter from J.P. Morgan set out in
this document
"Loan Notes" the floating rate guaranteed, unsecured loan notes
of Interim Services (UK) to be issued pursuant to
the Loan Note Alernative
"Loan Note Instrument" the instrument constituting the Loan Notes
"London Stock Exchange" London Stock Exchange Limited
"member account ID" the identification code or number attached to any
member account in CREST
"Michael Page" Michael Page Group PLC
"Michael Page Group" Michael Page and its subsidiary undertakings
"Michael Page Ordinary the existing issued and fully paid ordinary shares
Shares" of 2p each in Michael Page and any further such
shares which are unconditionally allotted or issued
before the date on which the Offer closes (or such
earlier date, not being earlier than the date on
which the Offer becomes or is declared
unconditional as to acceptances or, if later, the
first closing date of the Offer, as Interim
Services (UK) may decide)
"Michael Page Share the Michael Page Group PLC Employee Trust Share
Option Schemes" Option Scheme, the
65
<PAGE>
Michael Page Group Executive Share Option Scheme
and the Michael Page Group Overseas Share Option
Scheme
"Michael Page Shareholders" holders of Michael Page Ordinary Shares
"Offer" the cash offer described in this document made by
J.P. Morgan on behalf of Interim Services (UK) to
acquire the Michael Page Ordinary Shares and,
where the context admits, any subsequent
revision, variation, extension or renewal thereof
"Offer Period" the period commencing on 3 March, 1997 and ending
at 3.00 pm on 4 April, 1997 or, if later, the date
on which the Offer becomes or is declared
unconditional or lapses
"participant ID" the identification code or membership number used
in CREST to identify a particular CREST member or
other CREST participant
"participating security" in relation to a share or other security, a share
or other security which, by virtue of the
Regulations, is permitted by CRESTCo to be
transferred by means of CREST
"Panel" the Panel on Takeover and Mergers
"Regulations" the Uncertificated Securities Regulations 1995
"The Royal Bank of Scotland" The Royal Bank of Scotland plc, which has been
engaged by Interim Services (UK) to receive Forms
of Acceptance from Michael Page Shareholders
"TFE instruction" a Transfer from Escrow instruction (as defined by
the CREST Manual issued by CRESTCo)
"TTE instruction" a Transfer to Escrow instruction (as defined by
the CREST Manual issued by CRESTCo)
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern
Ireland
"uncertificated" or a Michael Page Ordinary Share which is for the time
"in uncertificated form" being recorded on the register of members of
Michael Page as being held in uncertificated form
"US" or "United States" the United States of America, its territories and
possessions, any state of the United States of
America and the District of Columbia
"US$" or "$" United States dollars
66
<PAGE>
EXHIBIT 11
CALCULATION OF PRIMARY NET EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
AFTER EFFECT OF AUGUST 7, 1997 TWO-FOR-ONE STOCK SPLIT
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
---------------------------- ----------------------------
June 27 June 28 June 27 June 28
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net earnings per common and common
equivalent share $ 9,922,000 $ (346,000) $ 18,447,000 $ 5,143,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Average number of shares used in
calculating primary earnings
per share:
Average number of common shares
outstanding 39,190,000 30,840,000 39,110,000 30,816,000
Dilutive effect of stock options after
application of treasury stock method 756,000 0 770,000 1,016,000
------------ ------------ ------------ ------------
Average number of shares outstanding 39,946,000 30,840,000 39,880,000 31,832,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per share:
Primary $ 0.25 $ (0.01) $ 0.46 $ 0.16
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
CALCULATION OF FULLY DILUTED NET EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
AFTER EFFECT OF AUGUST 7, 1997 TWO-FOR-ONE STOCK SPLIT
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
---------------------------- ----------------------------
June 27 June 28 June 27 June 28
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net earnings per common and
common equivalent share $ 9,922,000 $ (346,000) $ 18,447,000 $ 5,143,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Average number of shares used in
calculating fully diluted earnings
per share:
Average number of common shares
outstanding 39,190,000 30,840,000 39,110,000 30,816,000
Additional effect of stock options
after application of treasury
stock method 944,000 0 872,000 1,048,000
------------ ------------ ------------ ------------
Average number of shares outstanding 40,134,000 30,840,000 39,982,000 31,864,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per share:
Fully diluted $ 0.25 $ (0.01) $ 0.46 $ 0.16
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> DEC-28-1996
<PERIOD-END> JUN-27-1997
<CASH> 25,548
<SECURITIES> 0
<RECEIVABLES> 273,627
<ALLOWANCES> 4,874
<INVENTORY> 0
<CURRENT-ASSETS> 356,539
<PP&E> 120,941
<DEPRECIATION> 49,528
<TOTAL-ASSETS> 1,196,056
<CURRENT-LIABILITIES> 226,874
<BONDS> 0
0
0
<COMMON> 392
<OTHER-SE> 440,177
<TOTAL-LIABILITY-AND-EQUITY> 1,196,056
<SALES> 0
<TOTAL-REVENUES> 739,618
<CGS> 0
<TOTAL-COSTS> 500,220
<OTHER-EXPENSES> 20,462
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,460
<INCOME-PRETAX> 33,049
<INCOME-TAX> 14,602
<INCOME-CONTINUING> 18,447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,447
<EPS-PRIMARY> .46<F1>
<EPS-DILUTED> 0
<FN>
<F1> REFLECTS AUGUST 7, 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
