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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the twelve months ended December 26, 1997
Commission file number: 0-23198
INTERIM SERVICES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-3536544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
2050 SPECTRUM BOULEVARD, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
(954) 938-7600
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
COMMON STOCK--$.01 PAR VALUE New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold
January 23, 1998, was $1,008,395,521.
Number of shares of Registrant's Common Stock, par value $.01 per share
("Common Stock"), outstanding on January 23, 1998 was 39,852,968.
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DOCUMENTS INCORPORATED BY REFERENCE
Certain specified portions of the registrant's definitive proxy statement to
be filed within 120 days after December 26, 1997, are incorporated herein by
reference in response to Part III, Items 11 through 13, inclusive.
PART I
ITEM 1. BUSINESS
GENERAL
GENERAL DEVELOPMENT OF BUSINESS
Interim Services Inc. ("Interim" or, the "Company") has evolved
significantly since its founding in 1946. Originally, the Company was formed to
provide temporary industrial and light industrial services and has since
expanded to provide a wide range of staffing and human resource solutions. In
1997 the Company changed significantly by divesting its HealthCare staffing
business, entering the outplacement market through the acquisition of
AimExecutive Holdings, Inc. ("AIM") and expanding internationally through the
acquisition of Michael Page Group PLC ("Michael Page"). The Company currently
provides skills through two groups: Professional Services and Commercial
Staffing.
The Company was previously owned by H&R Block, Inc. ("Block") under the name
of Personnel Pool of America, Inc. On June 15, 1992, the Company changed its
name to Interim Services Inc. On January 27, 1994, the Company completed an
initial offering of its Common Stock to the public at $10 per share ("IPO"). On
August 7, 1996 Interim Common Stock began trading on the New York Stock
Exchange. On October 17, 1996 the Company completed a public offering of
8,500,000 shares of its $0.01 par value Common Stock (600,000 shares were sold
by certain selling shareholders and 7,900,000 shares were sold by the Company)
at $21.63 per share.
Since its IPO, excluding HealthCare, the Company has nearly doubled its
network of offices from 373 to 706 in 12 countries as of December 26, 1997.
Revenues, excluding the HealthCare business were $537.3 million in the year
ended December 30, 1994 and were $1,418.7 million in the year ended December 26,
1997. This growth has been accomplished by making strategic acquisitions,
recognizing synergies and cross-selling opportunities from these acquisitions,
and continued organic growth. During this timeframe, the Company has acquired
thirteen companies providing staffing, consulting and employment services in
various areas including one company acquired in 1994, five companies acquired in
1995, three companies in 1996 and four companies in 1997. In 1997, the Company
completed two significant acquisitions, Michael Page and AIM. Michael Page is a
premier international recruiting and staffing company which specializes
primarily in accounting, banking and finance. Michael Page's 51 offices are
located in the United Kingdom, France, The Netherlands, Italy, Germany,
Australia, Hong Kong, Singapore, Spain, New Zealand and the United States. The
AIM acquisition broadened the Company's service offerings to include
outplacement and career consulting services.
DESCRIPTION OF BUSINESS
Interim is a world leader in staffing, consulting and career management
services, including flexible staffing, full-time placement, executive search,
human resource consulting, workforce management and outplacement. The Company
offers a wide range of skills available in industries including information
technology ("IT"), legal, accounting and finance, human resources ("HR"),
technical, clerical, administrative and light industrial.
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As of December 26, 1997, the Company operated through a network of 706
offices throughout North America, Europe, Asia and Australia. Management
believes that, based on revenues without the HealthCare business, the Company is
a top ten provider of staffing services and a top five provider of professional
level staffing services in the world.
Professional Services and Commercial Staffing represented approximately 42%
and 46% of total Company revenues for the year ended December 26, 1997,
respectively. The Professional Services Group offers consulting, staffing,
outplacement and placement services and provides skills in the areas of IT,
legal, accounting, banking and finance and human resources. The Commercial
Staffing Group fulfills client requirements for temporary clerical
administrative and light industrial skills, in addition to temporary and
permanent workforce management.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates within one industry segment, providing staffing and
human resource solutions services in 12 countries around the world. Interim
operates in the United States, Australia, Canada, France, Germany, Hong Kong,
Italy, New Zealand, Spain, Singapore, The Netherlands and the United Kingdom.
Accordingly, the Company is subject to risk of changes in rates of foreign
currency. Revenues, operating profits and identifiable assets by geographic
region appear in the notes to the audited financial statements included herein.
GROWTH STRATEGY
The Company's goal is to drive revenue and earnings growth by providing
integrated human resource solutions worldwide that help clients operate more
efficiently and productively. The Company's strategy emphasizes broad geographic
coverage, a comprehensive range of services and customized client solutions.
Management believes that the Company's proven earnings performance, brand
identity, aggressive growth strategy and entrepreneurial operating environment
are key competitive advantages. The following details the major elements of the
Company's strategy.
AGGRESSIVE NETWORK EXPANSION
The Company maintains an aggressive growth strategy, which includes
establishing Company-owned branches, adding licensed offices and making
strategic acquisitions. Growth through acquisition is generally preferred when
building experience in a particular professional service area or when an
acquisition in traditional commercial staffing will enable Interim to fill-in or
expand into an important geographic market. The Company's successful diversified
growth strategy provides it with significant flexibility in evaluating
alternative methods for expansion.
Since the IPO and excluding the divested HealthCare division, the Company
has increased its office base by 89% from 373 to 706 offices. More than half of
this increase is due to organic growth, primarily from openings of Interim
On-Premise locations. Acquisitions added approximately 146 offices along with
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approximately $487.0 million in revenues. The following table provides detail of
the Company's acquisitions since the IPO.
<TABLE>
<CAPTION>
NUMBER REVENUES
OF IN
ACQUISITION OFFICES MILLIONS
ACQUIRED COMPANY DATE (1) (2) PRIMARY SERVICES
- -------------------------------- ------------- ----------- ----------- ----------------------------------------------
<S> <C> <C> <C> <C>
PROFESSIONAL SERVICES
Feldt Personnel Consultants..... 10/97 1 $ 0.5 Accounting Staffing & Placement
Mainstream Access............... 4/97 16 5.7 Outplacement
Michael Page Group.............. 4/97 40 220.0 Accounting & Finance Staffing & Placement
AimExecutive.................... 3/97 17 35.2 Outplacement, Staffing, & Placement
Brandon Systems Corporation..... 5/96 32 89.0 IT Staffing
Of-Counsel...................... 5/96 1 1.0 Attorney, Paralegal & Legal Secretary Staffing
Computer Power Group............ 12/95 17 81.0 IT Consulting and Staffing
Hernand & Partners.............. 11/95 3 2.7 Attorney Staffing
Juntunen........................ 10/95 2 13.6 IT Staffing, HR Consulting and Placement
OCS Services Group.............. 6/95 5 16.1 IT Consulting and Staffing
Career Associates/Career
Temps......................... 6/95 5 5.6 Accounting Staffing and Placement
COMMERCIAL STAFFING
Allround/Interplan (The
Netherlands).................. 11/96 6 15.0 Traditional Staffing
ICS Temporary Services.......... 12/94 1 1.6 Traditional Staffing
--- -----------
Total....................... 146 $ 487.0
--- -----------
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</TABLE>
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(1) Office count at the time of acquisition.
(2) Revenues shown for 1995 and 1994 acquisitions reflect annualized results for
the year. 1997 and 1996 acquisitions reflect revenues for the year ended
prior to acquisition.
In addition to external acquisitions, Interim usually purchases franchise
and license operations which are for sale. The Company is generally the
purchaser of choice when an Interim franchisee or licensee decides to sell its
business. The Company has a first right of refusal on any franchise sale at the
same terms and conditions as may be agreed with another purchaser and has a
standard purchase option on licenses. Overall, Company-owned branches yield
higher profits than franchised or licensed offices and therefore the purchase of
these offices is accretive to overall earnings.
AGGRESSIVELY GROW PROFESSIONAL SERVICES
As part of its acquisition focus, Interim plans to continue to target
aggressive growth in its Professional Services businesses. Demand continues to
expand for professional staffing services, reflecting changing attitudes toward
workforce management and the proliferation of technical skills required in an
office environment. The Company believes that such services provide higher
margins, are less cyclical than traditional flexible staffing and provide
attractive opportunities to cross-sell other Interim services. Once acquired,
the Company is able to successfully integrate and grow acquisitions organically.
Since the IPO, Professional Services revenues have grown from $79.7 million to
over $675 million in 1997, a compound annual growth rate of 70.6%. In addition,
approximately $470 million of the $487 million in acquired revenues have been in
Professional Services.
REPLICATE DOMESTIC SUCCESS GLOBALLY
Expanding internationally enables the Company to provide human resource
solutions to clients anywhere around the world as more and more customers are
asking for one-stop shopping on a global
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basis. Europe, for example, purchases as much in staffing services as the U.S.
and has had a strong staffing industry for years. Yet a unique opportunity
exists in the fact that certain value-added services, such as Interim
On-Premise, the concept of dedicated, on-site workforce management, which is now
maturing in North America is just emerging in Europe. Interim has the
opportunity to leverage the Michael Page infrastructure and pioneer the
On-Premise concept abroad. A significant global presence further strengthens the
Company's strategy of consistent growth as soft economic trends in certain
countries may be offset by strong growth in others.
LEVERAGE COMMON BRAND STRATEGY
Interim is one of a small number of domestic staffing companies which
provides commercial and professional services under the same brand name for
service lines that benefit from household brand recognition, thereby maximizing
cross-selling opportunities (e.g., Interim Technology, Interim Accounting
Professionals, Interim Legal Services, Interim Attorneys, Interim Personnel,
etc.). Through its common brand identity, the Company, its franchisees and
licensees are better able to benefit from national media advertising. The
Company's international subsidiary, Michael Page, is a premiere recruitment
organization focusing on the placement of finance professionals abroad and has
established strong equity within its selling niche--the world's largest
financial markets. Furthermore, The StratfordGroup, the Company's executive
search business specializing in the recruitment of high-level executives relies
on name recognition among CEOs. Michael Page and The StratfordGroup benefit from
a brand identity established among contacts at the executive level, rather than
household brand identity.
DELIVER SERVICES THROUGH SPECIALIZED OFFICES
Each of the Company's offices is focused on providing staff with a
particular skill set to meet customer needs. The managers and sales people in
these offices have training and experience in the relevant field and are able to
establish relationships with those individuals making the buying decisions for
that service at a client organization. This is a key factor in being able to
take a leadership position in specialty markets. For example, the IT offices
often market their services directly to the information resources department
leader and the accounting offices market to the controller. It has been the
Company's experience that clients prefer dealing with an office that "speaks
their language" and understands their staffing requirements.
SUPPORT ENTREPRENEURIAL ENVIRONMENT
The Company seeks highly talented managers who are capable of operating
independently and who will succeed within the Company's decentralized structure.
All Interim managers are compensated based on profits generated within their
scope of responsibility. Branch, area and regional managers are responsible for
their own hiring, pricing, business mix and local promotion. The Company's use
of franchising and licensing contributes to this entrepreneurial environment.
Management believes the Company's decentralized approach provides strong
incentives to manage expenses and increase profits at each office and results in
a creative and committed management team. The Company also encourages employee
ownership of Interim stock through stock option awards, a stock purchase plan
and stock ownership guidelines for management adopted in 1997.
PROVIDE TOTAL HUMAN RESOURCE SOLUTIONS
Interim is committed to bringing together a wide range of solutions to form
a seamless one-stop-shop solution for clients anywhere in the world. This is
consistent with the Company's primary goal of helping clients to access and
deploy talent more efficiently and productively. In 1992 Interim pioneered the
concept of a dedicated, on-site workforce management with Interim On-Premise.
Interim has added numerous professional level staffing services including
executive search, placement, human resource consulting services and outplacement
services in response to client needs.
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INDUSTRY OVERVIEW
THE STAFFING INDUSTRY
Demand for staffing services has grown significantly as businesses continue
to increase reliance on third party providers to manage staffing requirements.
These requirements include clerical and light industrial temporary help,
professional level (i.e., accountants, attorneys, technology specialists)
temporary help, recruiting and search and outplacement, among others. The
staffing industry provides a continuum of services, from help in recruiting or
outplacement of full-time permanent staff where the client is the sole employer
to short-term flexible staffing through long-term outsourced business services
where the staffing provider is the sole employer managing large numbers of
on-site resources or entire outsourced functions. The staffing industry around
the world is highly fragmented and is currently experiencing a trend toward
consolidation. This consolidation is being driven by client demands for one-stop
shopping from staffing providers, the need for sophisticated management
information systems, the growth of national or global relationships and the
expansion of professional level specialties. Smaller staffing companies or those
that do not provide a full spectrum of staffing services are finding it
increasingly difficult to compete.
According to the Staffing Industry Report, the staffing industry in the U.S.
was expected to grow 16% in 1997 to $87 billion. The estimates show that the
staffing industry has grown in the U.S. at a compound annual growth rate of 20%
since 1992. Management believes that the staffing industry outside the U.S. is
at least as big as the U.S. market and also growing rapidly. Outside the U.S.,
staffing companies have historically filled clerical and light industrial
positions and are just beginning to provide higher level professional skills.
PROFESSIONAL STAFFING MARKET
Almost all categories of professional staffing services are experiencing
considerable growth, in excess of the industry as a whole, as companies realize
they can enjoy the same type of flexibility for personnel such as computer
programmers, accountants, paralegals and attorneys as they do with traditional,
lower level flexible staff. Furthermore, the accelerating change within
technology has led to a dramatic rise in demand for technical project support,
software development and other technology related services. Companies are
outsourcing many of these activities and utilizing flexible staffing to attempt
to keep pace with rapidly changing technology and increasing demand for these
types of technical skills. Additionally, an extreme shortage of technology
skills worldwide has also accelerated the demand for temporary skills in this
area. A recent survey by the IT Association of America indicates that there are
more than 190,000 open technology positions in the U.S. alone. The markets for
professional staffing are expanding, as the use of temporary professionals has
become a strategic part of many companies' staffing and operating philosophies.
In the U.S., industry revenues from technical/computer staffing were
estimated to have grown from $5.1 billion in 1992 to $14.9 billion in 1997, a
compound annual growth rate of 24%. In addition, revenues from other
professional level staffing, including accounting, finance and legal, were
estimated to have grown from $1.8 billion in 1992 to $6.1 billion in 1997, a
compound annual growth rate of 28%. Management believes that the demand for
these type of services outside the U.S. are growing at similar rates, depending
on the market.
TRADITIONAL FLEXIBLE STAFFING MARKET
In 1997 the Staffing Industry Report estimated that industry wide revenues
in the U.S. from the traditional portion of the staffing industry, clerical and
light industrial, would approximate $28.5 billion. From 1992 to 1997 the
estimated compound annual growth rate was estimated to be 14%. The U.S. Bureau
of Labor Statistics reported that the flexible staffing industry was the fastest
growing employment category in 1996 and projects that flexible staffing will be
the sixth fastest growing industry from 1996 through 2006, increasing almost
four times faster than the general workforce.
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OTHER MARKET SECTORS
The staffing industry also includes recruiting, search and outplacement. The
recruiting and search segment of the U.S. market was estimated to approximate
$10 billion of revenue in 1997 and has grown at an estimated compound annual
growth rate of 21% since 1992. The outplacement segment of the U.S. market was
estimated to approximate $1 billion of revenue in 1997.
OPERATIONS OVERVIEW
The Company provides skills in two primary groups: Professional Services and
Commercial Staffing. Each offer a comprehensive range of skills to fulfill
client requirements and are described below:
THE PROFESSIONAL SERVICES GROUP
Professional Services offers a comprehensive range of consulting, staffing,
outplacement and placement services in the areas of IT, legal, accounting,
banking and finance and human resources. Approximately 50% of the Company's
total revenues are currently derived from Professional Services which is up from
14% in 1994.
ACCOUNTING AND FINANCE. Through the acquisition of Michael Page and the
organic growth of Interim Accounting Professionals, the Company provides
accounting, banking and finance staffing and placement services worldwide.
Michael Page specializes in recruiting and staffing in areas such as mergers and
acquisitions, corporate finance and funds management. Michael Page operates in
major financial centers across the globe, including London, Paris, Frankfurt,
Amsterdam, Hong Kong, Singapore and Sydney and in 1997, opened its first office
in New York. The Michael Page acquisition made Interim the second largest
provider of accounting, banking and financial skills worldwide. In addition,
Michael Page provides Interim with a global presence to grow its On-Premise and
traditional staffing businesses. Interim Accounting Professionals provides
accounting and finance personnel at all levels including bookkeepers, degreed
accountants, certified public accountants, auditors and controllers. Clients
include corporate accounting departments, small businesses and accounting firms
of every size. Interim Accounting Professionals offers temporary and project
staffing, temp-to-hire and full-time placement capabilities.
INFORMATION TECHNOLOGY. Interim has built a leading information technology
consulting and staffing services group operating through more than 50 offices in
the United States, United Kingdom and Asia. This business provides a
comprehensive scope of IT services including management consulting, staffing and
outsourcing services. Interim Technology services can be subdivided into two
specialty offerings, Technology Consulting and Technology Staffing.
Technology Consulting specializes in the areas of software design,
maintenance, development, quality assurance, implementation and strategic IT
consulting. The group has separate practices to supply unique expertise in the
areas of client/server development, legacy systems support, network integration,
software quality management, systems engineering and technical communications,
and is one of the leading IT service providers to Fortune 100 companies. In
addition, Technology Consulting provides management, staffing, and testing of
Year 2000 projects. Engagements are generally longer term and are provided by
highly trained full-time employees.
Technology Staffing provides operations-based staffing and support for IT
operations including help desk and data center operations, operations analysis,
communications, operations and PC support. This group also offers a unique
outsourcing service whereby its clients maintain complete strategic control of
their IT functions but are relieved of technology staffing and performance
issues. This type of outsourcing service is typically provided to clients under
a contractual arrangement. Management believes that this service engenders a
partnering relationship by providing the traditional savings of outsourcing
while enabling clients to preserve strategic control over their information
systems and data. Technology Staffing generally provides large numbers of
personnel for shorter assignments.
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LEGAL SERVICES. The Company's legal staffing offices provide attorneys,
paralegals, court reporters, litigation support and legal transcription services
predominantly to law firms and corporations. In addition, the Company operates a
"Depolab" at its corporate headquarters providing summarization, proofing,
editing and transcription services utilizing proprietary software that permits
law firms to have depositions summarized into 13 different formats. The
centralized Depolab concept enhances supervision, confidentiality and quality
control while making better use of human resources which would otherwise be
located in various local offices.
In 1997 the Company introduced the Juris Partners product offering designed
to be similar to Interim On-Premise. Juris Partners is a comprehensive
management program designed to increase the effectiveness and cost-efficiency of
a company's legal support. Through Juris Partners, an on-site Interim manager
evaluates and manages a company's entire legal support function, supplying the
necessary staff and services including project staffing, litigation support,
document management and court reporting.
HUMAN RESOURCE SOLUTIONS. Interim HR Solutions offices provide skilled
professionals such as contract recruiters and human resource professionals for
project assignments and human resource consulting and project management at
client locations or on an outsourced basis. In addition, this group's expertise
ranges from organizational development and training to compensation, plan design
and benefits analysis.
PLACEMENT. Interim provides nationwide searches for all levels of
employees, up to president and CEO. Retained searches are conducted for
executives and high-level managers, and contingency recruitment is available for
management and professional positions. Businesses rely on Interim to recruit
industry experts who will provide strategic direction and top management skills.
The search group has developed a blue chip client list, and has particular
expertise in the technology industry, working with virtually all leading
technology companies in the nation. Relationships are established with companies
at the highest levels when recruiting for executives and management. These
relationships serve as an excellent point of entry for a whole host of
additional Interim services including information technology, legal, accounting,
HR, clerical and light industrial.
CAREER CONSULTING. Interim provides career management and outplacement
services to help companies and their employees address career transition and
termination issues. Career Consulting services provide career assessment and
management, executive coaching, leadership development and team alignment. With
nationwide capabilities, Interim manages projects ranging from large-scale
restructurings nationally to individual cases and is ranked among the top five
outplacement firms in the U.S.
THE COMMERCIAL STAFFING GROUP
The Commercial Staffing business line offers services ranging from workforce
management to clerical, administrative and light industrial staffing.
Approximately 50% of the Company's total revenues are currently derived from
Commercial Staffing.
INTERIM PERSONNEL. The traditional flexible staffing business entails
providing a wide variety of clerical, administrative, assembly and light
industrial skills. In addition to supplying personnel to perform general office
tasks such as reception, copying and filing, the Company provides personnel who
are proficient in word processing, graphics, spreadsheets or database
management. In the light industrial area, Interim supplies personnel to perform
light industrial tasks such as electronic and precision assembly, PC board
assembly, packaging, shipping and receiving, warehousing, landscaping,
construction and equipment operation. The Company also offers full-time
placement of these skills.
INTERIM ON-PREMISE. In 1992, the Company introduced a new staffing concept,
Interim On-Premise, whereby a client delegates management of its staffing needs
to the Company, allowing the client to focus on its core business activities.
On-Premise has evolved to include managing a client's entire workforce, a
significant portion of which may be permanent staff. To better serve its
On-Premise clients, the Company
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has developed proprietary software that is designed to facilitate managing the
productivity of personnel at the client's work site. On-Premise offices are
predominantly customer-owned. Since the concept was introduced, revenues from
On-Premise clients have grown to 30% of the Commercial Staffing Group's revenue
for the fiscal year ended December 26, 1997.
The Company has found that Interim On-Premise clients, who currently tend to
utilize Commercial Staffing services, are very receptive to other Interim
services, particularly in the Professional Services area. On-Premise managers
are well positioned to build on established relationships with key people at
client organizations to introduce Professional Services. Conversely,
Professional Services' employees often can identify instances where clients need
additional staffing services and introduce Interim On-Premise. These clients
have also sought to expand the Interim On-Premise service into their
international operations. Management believes the Company's geographic and
service breadth provide a strong competitive advantage in securing such
broad-reaching assignments.
HEALTHCARE DIVISION (SOLD IN 1997)
On September 26, 1997, the Company completed the sale of its HealthCare
division. HealthCare division revenue represented 12% of total revenues for the
year ended December 26, 1997. See the notes to the Consolidated Financial
Statements contained herein for discussion of this transaction.
OFFICE STRUCTURE
Interim offices are Company-owned, franchised and licensed. Most offices
serve multiple clients in their respective geographic area, with the exception
of Interim On-Premise sites which are established at the client's location to
serve only that client. The following table details the number of offices, which
are Company-owned, franchised and licensed as of the end of the periods listed.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER
------------------
<S> <C> <C> <C>
NUMBER OF OFFICES 1997 1996 1995
- ----------------------------------- ---- ---- ----
BRANCH OFFICES
Commercial Staffing................ 218 191 159
Professional Services.............. 181 92 79
HealthCare Services................ -- 113 104
---- ---- ----
Total Branch Offices........... 399 396 342
---- ---- ----
FRANCHISED OFFICES
Commercial Staffing................ 136 131 123
Professional Services.............. 3 3 2
HealthCare Services................ -- 285 289
---- ---- ----
Total Franchised Offices....... 139 419 414
---- ---- ----
LICENSED OFFICES
Commercial Staffing................ 150 160 163
Professional Services.............. 18 16 11
HealthCare Services................ -- 7 10
---- ---- ----
Total Licensed Offices......... 168 183 184
---- ---- ----
TOTAL OFFICES
Commercial Staffing................ 504 482 445
Professional Services.............. 202 111 92
---- ---- ----
Subtotal........................... 706 593 537
---- ---- ----
HealthCare Services................ -- 405 403
---- ---- ----
TOTAL OFFICES.................. 706 998 940
---- ---- ----
---- ---- ----
</TABLE>
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OWNED OFFICES
As of December 26, 1997, the Company operated 399 branch offices. Branch
office expansion is generally pursued in markets where Interim has an
established presence and is used to increase market penetration. Additional
expansion is achieved by establishing On-Premise operations at client sites. The
Company intends to continue to expand Company-owned branches in those locations
where it can "cluster" multiple offices in close geographic proximity to utilize
centralized regional and area management and other administrative functions
which leverages growth and increases profitability.
FRANCHISED OFFICES
The Company has been granting franchises for approximately 40 years. The
average tenure of commercial franchise ownership exceeds 17 years, and a number
of franchisees are second generation owners. Most franchisees operate more than
one franchise. As of December 26, 1997, the Company's 19 franchisees operated
139 offices.
The Company grants franchisees the right to market and furnish commercial
staffing services, or a particular specialty or niche service within a
designated geographic area using the Company's trade names, service marks,
advertising materials, sales programs, operating procedures, manuals and forms.
The Company provides franchises with its national, regional and local
advertising. Franchisees operate their businesses autonomously within the
framework of the Company's policies and standards and recruit, employ and pay
their own full-time and flexible staff. The Company receives royalty fees from
each franchise based upon its sales, and in return supplies a variety of support
and marketing services including loans to facilitate franchise office expansion.
LICENSED OFFICES
The Company also grants licenses, which give the licensee the right to
establish a business utilizing the Company's trade names, service marks,
advertising materials, sales programs, operating procedures, manuals and forms
within a designated territory. As of December 26, 1997, the Company operated 168
licensed offices.
Licensees are required to observe the Company's operating procedures and
standards and act as a representative of the Company in recruiting, screening,
classifying, employing and placing flexible staff in response to client orders.
The licensee is responsible for establishing the office and paying related
administrative and operating expenses, such as rent, utilities and salaries of
full-time employees. The Company is responsible for paying the wages of the
flexible staff and all related payroll taxes and insurance. As a result, the
Company provides a substantial portion of the working capital needed for the
licensed businesses. The Company has made a loan program available to licensees
similar to that available to franchisees.
Sales by the licensed offices are included in the Company's revenues, and
the direct costs of services are included in the Company's cost of services. The
licensee receives a commission from the Company, which generally is equivalent
to 75% of the licensed offices' gross profits. The licensee is required to
participate in the Company's national advertising program and use the Company's
billing, payroll and other data processing services for which a separate fee is
paid to the Company.
SEASONALITY AND CYCLICALITY OF BUSINESS
The Company's businesses are not seasonal in nature, however, the staffing
business has historically been considered to be cyclical, often acting as a
coincidental indicator of both economic downswings and upswings. As a result of
general shifting of employment patterns and the growth in Interim On-Premise,
the Company believes it is becoming less cyclical. Furthermore, the balance
between Professional Services and Commercial Staffing should help mitigate the
impact of cyclicality. The acquisition and growth of AIM
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in 1997 which specializes in outplacement should also mitigate the impact of
cyclicality as outplacement growth rates amplify during a slower economy,
offsetting other services which may be fairly sensitive to economic declines.
Finally, the Company's presence in 12 countries should reduce cyclicality based
on management's belief that the economies of every country will not suffer
economic downturns simultaneously. No single customer accounts for more than 2%
of the Company's sales.
COMPETITION
The commercial and professional services staffing markets throughout the
world are highly competitive and highly fragmented with thousands of firms
competing in these segments. Additionally, there are relatively limited barriers
to entry when competing strictly on a local level. Barriers to entry become more
significant when competing for national or global accounts and when customers
require their staffing partner to provide both clerical, light industrial and
professional skills. Within the commercial staffing market segment the largest
competitors are Manpower, Inc., Adecco S.A. (Switzerland), Kelly Services, Inc.,
The Olsten Corporation, Vedior (The Netherlands), Randstad Holding N.V. (The
Netherlands) and Norrell Corporation. Within the professional services market
segment the largest competitors include these commercial staffing companies as
well as more specialized companies such as CDI Corporation, Robert Half
International, AccuStaff, Inc., Keane Inc., Romac International and COREStaff
Inc. No single competitor has more than a 5% market share in North America.
Management believes that, based on revenues without the HealthCare business, the
Company is a top ten provider of staffing services and a top five provider of
professional level staffing services in the world.
The Company believes that the primary competitive factors in obtaining and
retaining clients are the breadth of services provided as clients seek out
providers that can service all of their staffing needs. Additionally, other
critical competitive factors include the number and location of offices, an
understanding of clients' specific job requirements, the ability to provide
personnel in a timely manner and the ability to monitor the quality of job
performance. The primary competitive factors in obtaining qualified candidates
for employment assignments are quality of available opportunities, wages,
responsiveness to work schedules and number of hours of work available. The
Company believes it has a unique competitive advantage over all of its
competitors because it offers a wide range of services and broad availability of
skills to its customers world wide.
TRADEMARKS
In 1992, the Company changed its name and primary identifying trademark from
"PERSONNEL POOL" to "INTERIM" and related "INTERIM" marks. A few locations
continue to operate under the "PERSONNEL POOL" mark (or related marks used by
such locations prior to acquisition by the Company). With the exception of
Michael Page, the names and trademarks of businesses acquired by the Company
have been transitioned to an appropriate "INTERIM" name, typically within a
period of several months following the date of acquisition. The Company has
undertaken extensive national and local advertising and marketing efforts to
increase its name recognition in the marketplace.
The Company uses and has registered with the United States Patent and
Trademark Office the trademarks: INTERIM, INTERIM ACCOUNTING, INTERIM COURT
REPORTING, INTERIM LEGAL, INTERIM ON-PREMISE, INTERIM PERSONNEL SERVICES,
DEPOLAB, SKILL ANALYZER, STRATFORD GROUP, TEMPLINK, TEMPORARY HEROES, TEST
CYCLE, VALI/TEST PRO and PERSONNEL POOL; it uses and has applications for
registration pending on the trademarks: INTERIM ATTORNEYS and INTERIM
TECHNOLOGY; and it uses and claims ownership of the unregistered trademarks: HOW
THE WORLD IS WORKING, INTERIM CAREER SERVICES, INTERIM PERSONNEL, INTERIM
FACILITIES MANAGEMENT, INTERIM FINANCIAL PERSONNEL, INTERIM MANAGED SERVICES,
INTERIM OFFICE TECHNOLOGY, INTERIM STAFFING, VICTOR PERSONNEL and
1-800-A-CAREER. INTERIM is a registered trademark of the Company in Canada. The
Company's U.S. trademark registration for INTERIM expires April 6, 2003, but
11
<PAGE>
is renewable indefinitely for successive ten-year terms. The Company has
licensed use of its INTERIM HEALTHCARE mark to the newly independent Interim
HealthCare, Inc. for an initial period of five years and renewable every two
years thereafter.
GOVERNMENTAL REGULATION
Flexible staffing firms are generally subject to one or more of the
following types of government regulations: (i) regulation of the
employer/employee relationship between a firm and its flexible staff, (ii)
registration, licensing, record keeping and reporting requirements and (iii)
substantive limitations on its operations. Flexible staffing firms are the legal
employers of their temporary workers, therefore, the firm is governed by laws
regulating the employer/employee relationship such as tax withholding or
reporting, social security or retirement, anti-discrimination and worker's
compensation.
The Company has significant operations in a number of foreign countries. In
some of these countries, particularly in Europe, there is significant national
and local regulation of flexible staffing services. These laws generally require
that part-time, temporary and contract workers receive benefits similar to
full-time workers, such as vacation, welfare plan contributions and severance
pay. In some cases hours of work and the duration of assignments are limited and
workers may not be assigned to certain industries. Industry-wide union
membership is also a requirement in some countries. The Company does not
anticipate that these legal structures and requirements will have a material
effect on its growth or prospects.
The Company's sale of franchises and licenses is regulated by the Federal
Trade Commission and by authorities in approximately 17 states and one Canadian
province. The Company must deliver a franchise offering circular (similar to a
prospectus) to prospective franchisees or licensees. The Company has filed
either the appropriate registration or obtained an exemption from registration
in states, which require franchisers to register in order to sell franchises.
The Company does not anticipate that these requirements will have any material
effect on its ability to sell franchises or licenses.
CORPORATE SUPPORT SERVICES
FIELD SUPPORT
The Company maintains a strong national field support system to provide
services, coordinate marketing and maintain consistent quality standards
throughout the Interim office network. The Company offers a variety of skill
development training for its personnel through Company-generated manuals and
corporate training programs for office management.
CORPORATE SERVICE CENTER
The Company provides its decentralized branch network with centralized
functions for training, payroll, billing, receivables management, credit and
collections, risk management, legal support, cash management and marketing. In
addition, the Company has developed a proprietary software program to
efficiently maintain client and flexible staff information, facilitate staffing
selection and payroll functions, as well as provide testing software for
consistent skills testing and information management.
EMPLOYEES
Interim employed more than 400,000 people in 1997, including Healthcare
operations. The Company estimates that it placed approximately 350,000 flexible
personnel with its commercial clients in 1997, of which approximately 70,000
were placed, on average, at any given time. The Company placed approximately
25,000 people in permanent jobs. In addition, the Company employs approximately
4,000 staff employees full-time in both its national and international
operations.
12
<PAGE>
ITEM 2. PROPERTIES
The executive offices of the Company are located at 2050 Spectrum Boulevard,
Fort Lauderdale, Florida 33309, in a 113,000 square-foot building owned by the
Company which was constructed in 1989, and expanded in 1996. The Company also
leases approximately 27,000 square feet in two buildings within a few miles of
its executive offices for operations associated with its corporate headquarters
and national processing center. These premises are held under variable-term
leases. All other offices of the Company and its subsidiaries are operated in
premises held under short-term leases providing fixed monthly rentals, usually
with renewal options. The Company has sub-let a portion of its executive offices
to its divested HealthCare business under the terms of a transitional service
agreement.
ITEM 3. LEGAL PROCEEDINGS
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. The Company maintains insurance in such amounts and
with such coverages and deductibles as management believes are reasonable and
prudent. The principal risks that the Company insures against are workers'
compensation, personal injury, bodily injury, property damage, professional
malpractice, errors and omissions and fidelity losses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the twelve months ended December 26, 1997.
PART III
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Common Stock is traded on The New York Stock Exchange under the symbol
"IS." High and low prices for the common stock by quarter appear in "Quarterly
Financial Information" on page 39. All price data has been restated for the 100%
stock dividend (treated as a stock split) paid on September 5, 1997 to
stockholders of record as of close of business August 18, 1997. On January 23,
1998, there were approximately 2,204 holders of record of the Company's Common
Stock.
The Company has not and does not intend to pay dividends.
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994(1) 1993
------------ ------------ ------------ ------------ ------------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
System-wide Sales (2)...................... $ 2,187,409 $ 1,834,258 $ 1,494,260 $ 1,279,339 $ 1,085,759
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
INCOME STATEMENT DATA:
Revenues:
Commercial Division
Commercial Staffing...................... $ 739,662 $ 602,396 $ 515,454 $ 431,348 $ 347,189
Professional Services.................... 675,031 308,687 138,140 99,935 79,691
HealthCare Division (3).................... 186,869 228,669 205,719 165,614 143,209
Other Income............................... 6,694 7,399 4,934 7,799 4,171
------------ ------------ ------------ ------------ ------------
Total Revenues......................... 1,608,256 1,147,151 864,247 704,696 574,260
Expenses:
Cost of Services........................... 1,081,113 795,789 600,169 491,404 402,039
------------ ------------ ------------ ------------ ------------
Gross Profit............................. 527,143 351,362 264,078 213,292 172,221
Selling, General & Admin................... 363,152 243,652 177,105 137,859 119,763
Licensee Commissions....................... 45,091 39,500 37,295 33,796 20,586
------------ ------------ ------------ ------------ ------------
Results of Operations.................... 118,900 68,210 49,678 41,637 31,872
Amort. Of Intangibles...................... 18,492 8,802 6,884 6,041 5,671
Interest Expense (4)(5).................... 24,269 5,696 990 112 1,787
Gain on Sale of HealthCare
Business (6)............................. (5,300) -- -- -- --
Merger Expense (7)......................... -- 8,600 -- -- --
------------ ------------ ------------ ------------ ------------
Earnings Before Taxes.................... 81,439 45,112 41,804 35,484 24,414
Income Taxes............................... 38,928 22,097 18,071 16,028 11,564
------------ ------------ ------------ ------------ ------------
Net Earnings............................. $ 42,511 $ 23,015 $ 23,733 $ 19,456 $ 12,850
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net Earnings Per Share (7)(8):
Basic.................................... $ 1.08 $ 0.71 $ 0.77 $ 0.64 $ 0.47
Diluted.................................. 1.05 0.69 0.76 0.63 0.47
Earnings Per Share:
(excl. merger expenses) (8):
Basic.................................... -- $ 0.94 -- -- --
Diluted.................................. -- 0.91 -- -- --
Weighted Average Shares (8):
Basic.................................... 39,305 32,450 30,804 30,386 27,381
Diluted.................................. 40,407 33,418 31,324 30,782 27,476
BALANCE SHEET DATA:
Total Assets (9)........................... $ 1,091,734 $ 512,490 $ 424,489 $ 275,364 $ 242,925
Long-term Obligations (5).................. 379,197 -- 60,000 -- 30,000
Working Capital............................ 73,210 169,283 67,526 81,997 78,898
OPERATING INFORMATION:
Commercial Offices (10).................... 706 593 537 424 393
HealthCare Offices (10).................... -- 405 403 372 335
------------ ------------ ------------ ------------ ------------
706 998 940 796 728
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
14
<PAGE>
- ------------------------
(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) Revenues for the HealthCare division are included through the date of
disposition of September 26, 1997 and do not include certain allocations of
other income.
(4) Interest expense is net of interest income earned by Brandon Systems
Corporation ("Brandon") prior to the pooling. See note 6.
(5) Prior to September 25, 1993, the Company's working capital and acquisition
financing were provided by Block. There was no interest charged on
intercompany debt. In conjunction with the IPO, effective September 25,
1993, Block formalized this arrangement by (i) providing a revolving credit
facility in the amount of $20,000 to fund the operating requirements of the
Company; (ii) converting $30,000 of intercompany indebtedness on such date
to a term loan and (iii) contributing $51,289 to the capital of the
Company. The earnings data for fiscal 1993 give effect to this arrangement
as if it occurred at the beginning of the period. Interest expense has been
computed at 6% and income taxes at the statutory rate.
(6) On September 26, 1997, the Company sold its HealthCare business. Amount
represents pre-tax gain on sale. Taxes on the gain were $5,272.
(7) 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.
(8) On August 7, 1997, the Company announced a two-for-one 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. The effect has
been reflected and applied on a retroactive basis.
(9) Certain reclassifications have been made to prior periods to conform to
current year presentation.
(10) At end of period.
15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
Interim is a world leader in staffing, consulting and career management
services, including flexible staffing, full-time placement, executive search,
human resources consulting, workforce management and outplacement. The Company
offers the widest range of skills available in areas including information
technology ("IT"), legal, accounting and finance, human resources ("HR"),
technical, clerical, administrative and light industrial. The Company has
historically operated through two operating divisions, Commercial and
HealthCare. The HealthCare Division was sold effective September 26, 1997 and
its results of operations are included in the accompanying consolidated income
statement through the date of sale.
The remaining division, Commercial, provides skills in two primary groups:
Professional Services and Commercial Staffing. Excluding HealthCare,
Professional Services and Commercial Staffing represented approximately 48% and
52%, respectively of total Company revenues in the year ended December 26, 1997.
The Professional Services Group offers consulting, staffing, outplacement and
placement services and provides skills in the areas of IT, legal, accounting,
banking and finance and human resources. The Commercial Staffing Group fulfills
client requirements for temporary clerical and light industrial skills, in
addition to temporary and permanent workforce management.
In 1997, the Company made two significant acquisitions, AimExecutive
Holdings, Inc. ("AIM") and Michael Page Group PLC ("Michael Page"). The AIM
acquisition broadened the Company's product offering to include outplacement and
career consulting services. The Michael Page acquisition provided the Company
with its initial launch into numerous international markets and makes the
Company one of the world leaders in accounting and finance staffing and
placement. The 51 offices of Michael Page are located in the United Kingdom,
France, The Netherlands, Germany, Australia, Italy, Hong Kong, Singapore, Spain,
New Zealand and the United States.
SALES OVERVIEW
System-wide sales data includes sales from all Company-owned, franchised and
licensed offices, as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER,
-------------------------------
<S> <C> <C> <C>
1997 1996 1995
--------- --------- ---------
Branch.......................................................... 60.0% 47.9% 40.8%
Franchise....................................................... 27.7 39.2 43.9
License......................................................... 12.3 12.9 15.3
--------- --------- ---------
Total Sales..................................................... 100.0% 100.0% 100.0%
--------- --------- ---------
--------- --------- ---------
</TABLE>
Sales data for franchised offices are derived from reports provided by
franchisees, which are not audited. During 1997, system-wide sales increased by
19.3% to $2.2 billion. From fiscal 1995 to 1997, system-wide sales increased by
a compound annual growth rate of 21.0%. Sales growth from 1995 through 1997
excluding HealthCare is due primarily to rapid expansion of the Company's
Professional Services businesses driven by acquisitions and internal growth as
well as growth within commercial staffing due, in part, to the development of
the Company's On-Premise product offering. Meeting or exceeding market growth
rates within each of the Company's businesses is a primary objective. Excluding
HealthCare, the 40.7% compound annual growth rate from 1995 to 1997 was
approximately half the result of internal growth, and half due to acquisitions.
Higher overall system-wide sales for the Company were partially offset by the
decrease due to the sale of the HealthCare business in 1997. System-wide sales
for the
16
<PAGE>
HealthCare business were $540.3 million, $705.8 million, and $661.8 million for
the years ended December 26, 1997, December 27, 1996 and December 29, 1995,
respectively.
Branch sales have continued to become a greater portion of overall
system-wide sales during the past three years. This trend resulted from the
ongoing purchase of license and franchise operations by the Company, the rapid
rate at which the branch operations are growing (including acquisitions) and the
sale of the HealthCare Division which had a very large franchise operation.
RESULTS OF OPERATIONS
The following table sets forth operational results as a percentage of total
revenues for the periods indicated:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenue:
Professional Services....................................... 42.0% 26.9% 16.0%
Commercial Staffing......................................... 46.2 52.9 60.0
HealthCare.................................................. 11.8 20.2 24.0
--------- --------- ---------
Total Revenues............................................ 100.0% 100.0% 100.0%
Cost of Services.............................................. 67.2 69.4 69.4
--------- --------- ---------
Gross Profit.................................................. 32.8 30.6 30.6
Selling, General & Administrative............................. 22.6 21.2 20.5
Licensee Commissions.......................................... 2.8 3.4 4.3
--------- --------- ---------
Results from Operations....................................... 7.4 6.0 5.8
Merger Expense................................................ -- 0.8 --
Gain on Sale of HealthCare Business........................... (0.3) -- --
Amortization of Intangibles................................... 1.2 0.8 0.8
Interest...................................................... 1.5 0.5 0.1
Taxes......................................................... 2.4 1.9 2.1
--------- --------- ---------
Net Earnings.................................................. 2.6% 2.0% 2.8%
--------- --------- ---------
--------- --------- ---------
Net Earnings (excluding merger expenses)...................... 2.6% 2.7% 2.8%
--------- --------- ---------
--------- --------- ---------
</TABLE>
FISCAL 1997 COMPARED TO 1996
REVENUES. Revenues in 1997 increased 40.2% to $1,608.3 million from
$1,147.2 million in the prior year. Professional Services revenues increased
118.7% reflecting strong internal growth and the Michael Page and AIM
acquisitions. Excluding these acquisitions, Professional Services revenues
increased 31.0%. Commercial Staffing revenues increased 22.8% reflecting the
expansion of the Interim On-Premise program, an increase in the number of
offices and increased business in existing offices. HealthCare Division revenues
decreased due to the sale of the HealthCare business at the end of the third
quarter of 1997.
GROSS PROFIT. Gross profit increased 50.0% to $527.1 million from $351.4
million in the prior year period. Gross profit margin was 32.8% compared with
30.6% in fiscal 1996. This increase was principally due to the Michael Page
acquisition partially offset by the elimination of higher gross profit generated
by the HealthCare business which was sold at the end of the third quarter of
1997. Excluding results from Michael Page and the HealthCare business, gross
profit margin was 28.2% in fiscal 1997 versus 28.3% in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 49.0% to $363.2 million from $243.7 million in
the prior year period. Selling, general and administrative
17
<PAGE>
expenses as a percentage of revenues were 22.6% compared to 21.2% a year ago due
to the higher costs associated with Professional Services. These higher gross
margin businesses have higher operating expenses than the Company's Commercial
Staffing business.
LICENSEE COMMISSIONS. Licensee commissions increased 14.2% to $45.1 million
from $39.5 million in the prior year period and is consistent with the growth in
licensee revenues. Licensee commissions as a percentage of total revenues
decreased from 3.4% to 2.8% due to licensee revenue becoming a smaller portion
of overall revenue.
AMORTIZATION OF INTANGIBLES. Amortization expense increased 110.1% to $18.5
million from $8.8 million in the prior year period reflecting the increase in
intangible assets arising from acquisitions, primarily Michael Page.
INTEREST EXPENSE. Interest expense increased 326.1% to $24.3 million from
$5.7 million in 1996. This results from increased borrowings for acquisitions,
primarily Michael Page. The Company had average borrowings outstanding during
1997 of $361.2 million and accrued an average interest rate of 6.9%. See
Description of Company Financing for further discussion.
TAXES ON EARNINGS. The effective tax rate for the year ended December 26,
1997 was 47.8% compared with 49.0% last year. The 1997 effective rate includes
an approximate 100% effective rate on the $5.3 million HealthCare sale gain due
to a lower tax basis than book basis in this business. Last year's high rate
resulted from a large portion of the 1996 merger expense being nondeductible.
The effective tax rates excluding these two unusual items were 44.2% and 43.0%
for the years ended December 26, 1997 and December 27, 1996, respectively. The
increase in the effective rate, excluding unusual items, resulted from higher
levels of non-deductible goodwill in 1997.
NET EARNINGS. Net earnings excluding merger expenses increased 39.1% to
$42.5 million, or $1.05 per share, from $30.6 million, or $0.91 per share in the
prior year period. This represents a 15.4% increase in per share earnings.
Including merger expenses, net earnings increased 84.7% to $42.5 million, or
$1.05 per share from $23.0 million or $0.69 per share in the prior year period.
The weighted average number of shares used in the per share calculation (as
adjusted for the dilutive impact of common stock equivalents) increased to
40,407,000 from 33,418,000 in the prior year period, primarily due to the
additional shares issued as a result of the secondary public offering on October
17, 1996.
FISCAL 1996 COMPARED TO 1995
REVENUES. Revenues in 1996 increased 32.7% to $1,147.2 million from $864.2
million in the prior year. Professional Services revenues increased 123.5%
reflecting significant IT acquisition activity and internal growth. Commercial
Staffing revenues increased 16.9% reflecting the expansion of the Interim
On-Premise program and an increase in the number of offices and services
provided. HealthCare Division revenues increased 11.3% due to increases in the
number of offices and expansion of occupational health and physicians services.
GROSS PROFIT. Gross profit increased 33.1% to $351.4 million from $264.1
million in the prior year period. Gross profit margin was 30.6%, the same as
1995. Although the Company added revenues of higher gross profit business
through acquisitions and increases in the Professional Services business, this
was offset by a decline in franchise royalties as a percent of total Company
revenue and an increase in the percentage of Commercial Staffing revenues which
generally have lower gross profit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 37.6% to $243.7 million from $177.1 million in
the prior year period. Selling, general and administrative expenses as a
percentage of revenues were 21.2% compared with 20.5% in 1995 due to the higher
relative costs associated with Professional Services.
18
<PAGE>
LICENSEE COMMISSIONS. Licensee commissions increased 5.9% to $39.5 million
from $37.3 million in the prior year period and consistent with the growth in
licensee revenues. Licensee commissions as a percentage of revenues decreased
from 4.3% to 3.4% due to the Company purchasing license operations, one licensee
conversion to a franchise and slower general growth of licensee revenues
compared with branch revenue growth.
AMORTIZATION OF INTANGIBLES. Amortization expense increased 27.9% to $8.8
million from $6.9 million in the prior year period reflecting the increase in
intangible assets arising from acquisitions.
INTEREST EXPENSE. Interest expense increased to $5.7 million from $1.0
million in the prior year; average borrowings during the year were $102.2
million and the Company accrued an average effective rate of 6.2%.
TAXES ON EARNINGS. The effective tax rate of 49.0% in 1996 resulted from a
large portion of merger expenses, recorded in the first half of 1996, being
nondeductible. The effective tax rate, excluding the effects of nonrecurring
merger expenses, was 43.0% compared with 43.2% in the prior year. The decline in
the effective tax rate is due primarily to higher earnings in proportion to the
level of nondeductible intangibles.
NET EARNINGS. Net earnings excluding merger expenses increased 28.8% to
$30.6 million, or $0.91 per share, from $23.7 million, or $0.76 per share in the
prior year period. This represents a 19.7% increase in per share earnings.
Including merger expenses, net earnings decreased 3.0% to $23.0 million, or
$0.69 per share from $23.7 million or $0.76 per share in the prior year period.
The weighted average number of shares used in the per share calculation (as
adjusted for the dilutive impact of common stock equivalents) increased to
33,418,000 from 31,324,000 in the prior year period, primarily due to the
additional shares issued as a result of the secondary public offering on October
17, 1996.
FINANCIAL RESOURCES AND LIQUIDITY
CASH FLOW
Historically, the Company financed its operations through cash generated by
operating activities and bank lines of credit. The Company's principal uses of
cash are funding acquisitions, capital expenditures, working capital needs and
repayment of debt. The nature of the Company's business requires payment of
wages to its flexible staff on a weekly, or bi-weekly basis, while payments from
clients are generally received 30-60 days after billing. The Company believes
that its internally generated funds and lines of credit are sufficient to
support anticipated levels of growth of the Company.
Cash provided by operating activities in 1997 was $57.8 million compared
with cash used by operations in 1996 of $6.1 million and cash provided by
operations in 1995 of $6.6 million. Higher operating cash flow in 1997 resulted
from increased earnings, amortization and depreciation combined with an increase
in accounts payable and accrued liabilities. Reduced cash flow from operating
activities in both 1996 and 1995 resulted from lower levels of earnings,
depreciation and amortization. Operating cash flow in 1996 was also impacted by
higher receivable levels due to increases in days sales outstanding and $7.6
million (after-tax) of merger expenses paid.
Investing activities used $474.7 million in 1997 primarily due to the
acquisition of Michael Page partially offset by the proceeds from the sale of
the HealthCare business. The Company obtained funds from borrowing under a multi
currency credit facility for the acquisition of Michael Page. See further
discussion in Financing below. Proceeds from the sale of the HealthCare
business, net of transaction costs, and operating cash flow were used to reduce
these borrowings leaving $413.0 million of debt outstanding at December 26,
1997. Investing activities in 1996 and 1995 included $12.0 million and $99.0
million, respectively, of other acquisitions, the most significant of which was
the acquisition of the Computer Power Group for $71 million in 1995.
19
<PAGE>
Investing activities in 1997 included $24.9 million of capital expenditures
compared with $33.0 million in 1996 and $11.3 million in 1995. Capital
expenditures in 1997 were for new computer hardware and software, new office
furniture and fixtures and the completion of the Company's corporate
headquarters. Capital expenditures in 1996 were for the expansion of the
Company's headquarters and to upgrade and expand the area of information
technology. The Company anticipates continued expenditures to develop and
upgrade many of its information technology systems. Management expects
expenditures in 1998 to approximate 1997 levels.
On October 17, 1996, the Company completed a public offering of 8.5 million
shares (7.9 million shares sold by the Company) of its $0.01 par value common
stock at $21.63 per share. Net proceeds to the Company were approximately $163.1
million, of which $131.7 million was used to repay borrowings under the
Company's credit facilities.
The Company intends to continue to make strategic acquisitions to grow its
business. Funding for these acquisitions will come from: i) internally generated
funds; ii) borrowings on the Company's credit facility and iii) raising
additional capital. To support this growth, the Company will continue to invest
in its information technologies.
FINANCING
The Company has available a $535.9 million multi-currency credit agreement
entered into as of May 1, 1997 and amended as of June 2, 1997. Outstanding
borrowings at December 26, 1997 under this agreement were a $176.7 million term
loan, $219.5 million revolving loan and $16.8 million in loan notes to prior
shareholders of Michael Page. The term loan is denominated in U.S. dollars while
the revolving loans are denominated in U.S. dollars and British pound sterling.
Borrowings under this facility are unsecured. The credit facility is available
to fund the Company's acquisitions, to supply working capital and to provide for
general corporate needs. Interest rates on amounts outstanding under the Credit
Facility are based on LIBOR plus a variable margin. 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. In addition, the Company has established short-term,
unsecured, uncommitted lines of credit with certain banks. These lines of credit
are based on LIBOR and are available to fund the Company's short-term capital
requirements. No amounts were outstanding under these agreements at December 26,
1997.
There was approximately $120.0 million available for future borrowings under
these agreements at December 26, 1997.
IMPACT OF THE YEAR 2000 ISSUE
The year 2000 issue is the result of computer applications being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities.
Based on a recent assessment, the Company determined that it will be
required to upgrade certain application systems to ensure operability after the
year 1999. However, the Company's most significant internally developed systems
will require modest remediation to be fully compliant with year 2000
requirements. As such, most of the systems activity that must take place entails
upgrading purchased application systems. The Company believes that these
upgrades will take place in the ordinary course of business without significant
incremental cost. Experts from the Interim Technology Consulting group's Year
2000 practice will be utilized to augment internal activities in the assessment
and testing phases of the project.
The Company plans to complete its year 2000 upgrade over the next two years.
The Company does not foresee substantial incremental costs as most of the
applications that are not currently Year 2000
20
<PAGE>
compliant are purchased third party software packages. The vendors of those
products have announced upgrade versions that will be available in the first
half of 1998 and which will be Year 2000 compliant. The costs of these upgrades
are included as part of the ongoing maintenance fees.
INFLATION
The effects of inflation on the Company's operations were not significant
during the periods presented in the financial statements.
FOREIGN OPERATIONS
With the acquisition of Michael Page, the Company has significantly expanded
its business outside of North America. The results of operations of Michael Page
are included within the Professional Services Group. The Company also has
Commercial Staffing operations in The Netherlands. In 1997, revenue and
operating earnings (before interest and taxes, and gain on sale of HealthCare
business) from foreign operations were $251.2 million and $39.5 million,
respectively. There are currently no legal restrictions regarding the
repatriation of cash flows from these foreign operations.
SEASONALITY AND CYCLICALITY OF BUSINESS
The Company's businesses are not seasonal in nature, however, the staffing
business has historically been considered to be cyclical, often acting as a
coincidental indicator of both economic downswings and upswings. As a result of
general shifting of employment patterns and the growth in Interim On-Premise,
the Company believes it is becoming less cyclical. Furthermore, the balance
between Professional Services and Commercial Staffing should help the impact of
cyclicality. The acquisition and growth of AIM in 1997 which specializes in
outplacement should also mitigate the impact of cyclicality as outplacement
growth rates amplify during a slower economy, offsetting other services which
may be fairly sensitive to economic declines. Finally, the Company's presence in
12 countries should reduce cyclicality based on management's belief that the
economies of every country will not suffer economic downturns simultaneously. No
single customer accounts for more than 2% of the Company's sales.
OTHER
In June 1997, Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income," was issued. SFAS No. 130 establishes standards
for reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. SFAS No. 130 is effective for fiscal years beginning
after December 15, 1997. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The Company will adopt
this standard in 1998.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," was issued. SFAS No. 131 establishes standards for the way
that public companies report selected information about operating segments in
annual financial statements and requires that those companies report selected
information about segments in interim financial reports issued to shareholders.
SFAS No. 131 also establishes standards for related disclosures about products
and services, geographic areas, and major customers and supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS No. 131 is
effective for financial statements for periods beginning after December 15,
1997. The Company has historically reported its information under one segment.
This standard will require the Company to report financial information
consistent with how the business is managed. The Company manages its business
primarily by skills and services provided, and thus expects this will determine
its segments to comply with the new standard. The Company will adopt this
standard in 1998.
21
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Interim Services Inc.
Fort Lauderdale, Florida
We have audited the accompanying consolidated balance sheets of Interim
Services Inc. and subsidiaries as of December 26, 1997 and December 27, 1996,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended December 26, 1997.
Our audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Interim Services Inc. and
subsidiaries as of December 26, 1997 and December 27, 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 26, 1997 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ DELOITTE & TOUCHE LLP
Fort Lauderdale, Florida
February 5, 1998
22
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
------------ ------------ ----------
<S> <C> <C> <C>
Revenues.................................................................. $ 1,608,256 $ 1,147,151 $ 864,247
Cost of services.......................................................... 1,081,113 795,789 600,169
------------ ------------ ----------
Gross profit............................................................ 527,143 351,362 264,078
------------ ------------ ----------
Selling, general and administrative expenses.............................. 363,152 243,652 177,105
Licensee commissions...................................................... 45,091 39,500 37,295
Amortization of intangibles............................................... 18,492 8,802 6,884
Interest expense.......................................................... 24,269 5,696 990
Gain on sale of HealthCare business....................................... (5,300) -- --
Merger expense............................................................ -- 8,600 --
------------ ------------ ----------
445,704 306,250 222,274
------------ ------------ ----------
Earnings before taxes................................................... 81,439 45,112 41,804
Income taxes.............................................................. 38,928 22,097 18,071
------------ ------------ ----------
Net earnings............................................................ $ 42,511 $ 23,015 $ 23,733
------------ ------------ ----------
------------ ------------ ----------
Basic earnings per share.................................................. $ 1.08 $ 0.71 $ 0.77
------------ ------------ ----------
------------ ------------ ----------
Diluted earnings per share................................................ $ 1.05 $ 0.69 $ 0.76
------------ ------------ ----------
------------ ------------ ----------
Basic weighted average shares outstanding................................. 39,305 32,450 30,804
------------ ------------ ----------
------------ ------------ ----------
Diluted weighted average shares outstanding............................... 40,407 33,418 31,324
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
See notes to Consolidated Financial Statements.
23
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEC. 26, DEC. 27,
1997 1996
------------ ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................................. $ 15,570 $ 18,938
Marketable securities................................................................. -- 7,499
Receivables, less allowance for doubtful accounts of $5,229 and $3,023................ 230,947 186,732
Insurance deposits.................................................................... 23,974 32,794
Other current assets.................................................................. 37,610 18,301
------------ ----------
Total current assets.................................................................. 308,101 264,264
Goodwill, net........................................................................... 475,656 173,638
Tradenames and other intangibles, net................................................... 219,472 1,109
Property and equipment, net............................................................. 65,475 49,795
Other assets............................................................................ 23,030 23,684
------------ ----------
$ 1,091,734 $ 512,490
------------ ----------
------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt..................................................... $ 33,827 $ --
Accounts payable and other accrued expenses........................................... 86,489 27,092
Accrued salaries, wages and payroll taxes............................................. 65,256 40,948
Accrued self-insurance losses......................................................... 28,466 26,782
Accrued income taxes.................................................................. 20,853 159
------------ ----------
Total current liabilities............................................................. 234,891 94,981
Long-Term Debt.......................................................................... 379,197 --
Deferred Tax Liability.................................................................. 4,054 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; issued and
outstanding 39,745,761 and 38,953,368 shares........................................ 397 390
Additional paid-in capital............................................................ 260,067 251,041
Treasury stock........................................................................ -- (460)
Retained earnings..................................................................... 206,461 163,950
Cumulative translation adjustment..................................................... 6,667 (210)
------------ ----------
Total stockholders' equity.............................................................. 473,592 414,711
------------ ----------
$ 1,091,734 $ 512,490
------------ ----------
------------ ----------
</TABLE>
See notes to Consolidated Financial Statements.
24
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL GAIN (LOSS)ON CUMULATIVE
COMMON PAID IN TREASURY MARKETABLE RETAINED TRANSLATION
STOCK CAPITAL STOCK SECURITIES EARNINGS ADJUSTMENT
----------- ---------- ----------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of December 30, 1994......... $ 308 $ 85,915 $ -- $ (72) $ 118,883 $ (135)
Net earnings............................ -- -- -- -- 23,733 --
Transactions of pooled company.......... -- (1,349) -- 98 (1,308) --
Change in foreign currency translation
adjustment............................ -- -- -- -- -- (185)
Proceeds from exercise of employee stock
options............................... -- 401 -- -- -- --
----- ---------- ----- ----- ---------- ------
Balance as of December 29, 1995......... 308 84,967 -- 26 141,308 (320)
Net earnings............................ -- -- -- -- 23,015 --
Transactions of pooled company.......... -- 271 -- -- (373) --
Change in foreign currency translation
adjustment............................ -- -- -- -- -- 110
Proceeds from exercise of employee stock
options............................... 2 3,116 -- -- -- --
Sale of 7,900,000 shares of common stock
in a public offering, net............. 80 162,595 -- -- -- --
Repurchase of 26,356 shares............. -- -- (460) -- -- --
Other................................... -- 92 -- (26) -- --
----- ---------- ----- ----- ---------- ------
Balance as of December 27, 1996......... 390 251,041 (460) -- 163,950 (210)
Net earnings............................ -- -- -- -- 42,511 --
Change in foreign currency translation
adjustment............................ -- -- -- -- -- 6,877
Proceeds from exercise of employee stock
options, including tax benefit........ 7 8,744 460 -- -- --
Other................................... -- 282 -- -- -- --
----- ---------- ----- ----- ---------- ------
Balance as of December 26, 1997......... $ 397 $ 260,067 $ -- $ -- $ 206,461 $ 6,667
----- ---------- ----- ----- ---------- ------
----- ---------- ----- ----- ---------- ------
<CAPTION>
TOTAL
----------
<S> <C>
Balance as of December 30, 1994......... $ 204,899
Net earnings............................ 23,733
Transactions of pooled company.......... (2,559)
Change in foreign currency translation
adjustment............................ (185)
Proceeds from exercise of employee stock
options............................... 401
----------
Balance as of December 29, 1995......... 226,289
Net earnings............................ 23,015
Transactions of pooled company.......... (102)
Change in foreign currency translation
adjustment............................ 110
Proceeds from exercise of employee stock
options............................... 3,118
Sale of 7,900,000 shares of common stock
in a public offering, net............. 162,675
Repurchase of 26,356 shares............. (460)
Other................................... 66
----------
Balance as of December 27, 1996......... 414,711
Net earnings............................ 42,511
Change in foreign currency translation
adjustment............................ 6,877
Proceeds from exercise of employee stock
options, including tax benefit........ 9,211
Other................................... 282
----------
Balance as of December 26, 1997......... $ 473,592
----------
----------
</TABLE>
See notes to Consolidated Financial Statements.
25
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings............................................................. $ 42,511 $ 23,015 $ 23,733
Adjustments to reconcile net earnings to net cash from operating
activities:
Depreciation and amortization.......................................... 34,874 18,911 14,556
Deferred income tax (benefit) expense.................................. (5,654) 687 (74)
Gain on sale of HealthCare business.................................... (5,300) -- --
Changes in assets and liabilities, net of effects of acquisitions:
Receivables.......................................................... (48,288) (40,724) (27,458)
Other assets......................................................... (12,615) (18,253) (17,999)
Accounts payable and accrued liabilities............................. 50,772 8,828 14,030
Other................................................................ 1,457 1,437 (226)
----------- ----------- -----------
Net Cash (Used in) Provided by Operating Activities.................. 57,757 (6,099) 6,562
----------- ----------- -----------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired....................................... (570,356) (11,964) (98,955)
Proceeds from the sale of HealthCare business, net....................... 113,109 -- --
Capital expenditures..................................................... (24,913) (32,982) (11,303)
Net proceeds from sale (purchases) of marketable securities.............. 7,499 15,631 (5,174)
----------- ----------- -----------
Net Cash Used in Investing Activities................................ (474,661) (29,315) (115,432)
----------- ----------- -----------
Cash Flows from Financing Activities:
Debt proceeds............................................................ 509,019 -- 108,218
Debt repayments.......................................................... (101,911) (114,727) --
Proceeds from stock offering............................................. -- 163,114 --
Other.................................................................... 6,428 1,940 (2,195)
----------- ----------- -----------
Net Cash Provided by Financing Activities............................ 413,536 50,327 106,023
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents......................... (3,368) 14,913 (2,847)
Cash and cash equivalents, beginning of period........................... 18,938 4,025 6,872
----------- ----------- -----------
Cash and cash equivalents, end of period................................. $ 15,570 $ 18,938 $ 4,025
----------- ----------- -----------
----------- ----------- -----------
Supplemental Cash Flow Information:
Income taxes paid........................................................ $ 37,917 $ 21,602 $ 17,570
----------- ----------- -----------
----------- ----------- -----------
Interest paid............................................................ $ 21,316 $ 6,546 $ 1,452
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to Consolidated Financial Statements.
26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS, EXCEPT SHARE
DATA)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS--Interim Services Inc. (the "Company" or "Interim") is a world
leader in staffing, consulting and career management services, including
flexible staffing, full-time placement, executive search, human resources
consulting, workforce management and outplacement. The Company offers a wide
range of skills including information technology, legal, accounting and finance,
human resources, technical, clerical, administrative and light industrial. The
Company operates through a network of offices throughout the United States,
Australia, Canada, France, Germany, Hong Kong, Italy, New Zealand, Spain,
Singapore, The Netherlands and the United Kingdom.
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.
USE 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 December 26, 1997,
December 27, 1996 and December 29, 1995 were all 52 weeks.
CASH AND CASH EQUIVALENTS--The Company considers all highly liquid
investments with original maturities 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 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.
ALLOWANCE FOR DOUBTFUL ACCOUNTS--The Company carries accounts receivable at
the amount it estimates to be collectible. Accordingly, the Company provides
allowances for accounts receivable it estimates to be uncollectible based on
management's best estimates. Recoveries are recognized in the period they are
received. The ultimate amount of accounts receivable that become uncollectible
could differ from those estimated.
INTANGIBLE ASSETS--Intangible assets consist principally of goodwill and
tradenames and are being amortized on a straight-line basis over periods of
approximately 38 years. The Company evaluates the recoverability of intangible
assets, as well as amortization periods, to determine whether an adjustment to
carrying values or a revision to estimated useful lives is appropriate.
Recoverability is determined through evaluation of 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.
PROPERTY AND EQUIPMENT--Property and equipment are stated at cost and
depreciated using the straight-line method over the estimated useful lives of
the related assets. Leasehold improvements are amortized over the shorter of
their estimated useful life or the lease term using the straight-line method.
Maintenance and repairs which do not improve or extend the life of an asset are
expensed as incurred.
27
<PAGE>
ACCRUED SELF-INSURANCE LOSSES--The Company retains a portion of the risk
under its workers' compensation, general liability and professional liability
insurance programs. Reserves have been recorded which reflect the discounted
estimated liabilities including claims incurred but not reported. Losses have
been discounted at approximately 5.8% and 6.2% at December 26, 1997 and December
27, 1996, respectively. Such liabilities are necessarily based on estimates and,
while management believes that the amount is adequate, there can be no assurance
that changes to management's estimates may not occur due to limitations inherent
in the estimation process. Changes in the estimates of these accruals are
charged or credited to income in the period determined. The Company funds
portions of its retained risks through deposits with insurance carriers and
others. These deposits are reflected as insurance deposits on the accompanying
Consolidated Balance Sheets and reflect the estimated fair market value of such
amounts.
FOREIGN CURRENCY TRANSLATION--The Company's foreign operations use the local
currency as their functional currency. Assets and liabilities of these
operations are translated at the exchange rates in effect on the balance sheet
date. Income statement items are translated at the average exchange rates for
the year. The impact of currency fluctuation is included in stockholders' equity
as a translation adjustment.
REVENUE RECOGNITION--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 $23,091, $27,009 and $24,316 for the years ended December 26,
1997, December 27, 1996 and December 29, 1995, respectively. Revenues and the
related labor costs and payroll taxes are recorded in the period in which
temporary staffing services are performed. Revenues on placements are recognized
when services provided are substantially completed. Allowances are established
to estimate losses due to placed candidates not remaining employed for the
Company's guarantee period.
The Company utilizes two forms of franchising agreements. Under the first
form, the Company records franchise royalties, based upon the contractual
percentage of franchise sales, in the period in which the franchise provides the
service. Under the second form (termed "licensee" by the Company), revenues
generated by the licensee 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.
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. The
Company's policy is to not provide deferred taxes on temporary differences
related to investment in foreign subsidiaries as they are considered permanent
in duration. These differences, primarily undistributed foreign earnings, were
not material at December 26, 1997.
EARNINGS PER SHARE--Basic earnings per share is computed by dividing the
Company's net income by the weighted average number of shares outstanding during
the period.
Diluted earnings per share is computed by dividing the Company's net income
by the weighted average number of shares outstanding and the dilutive impact of
common stock equivalents, primarily stock options. The dilutive impact of common
stock equivalents is determined by applying the treasury stock method.
On August 7, 1997, the Company announced a two-for-one 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. All shares
outstanding and per share amounts have been restated to reflect the stock split.
DERIVATIVE FINANCIAL INSTRUMENTS--The Company enters into interest rate swap
agreements and foreign exchange forward contracts as part of the management of
its interest rate and foreign currency exchange rate exposures; it has no
derivative financial instruments held for trading purposes and none of the
28
<PAGE>
instruments are leveraged. All financial instruments are put into place to hedge
specific exposures. Amounts to be paid or received under swap agreements are
recognized over the terms of the agreements as adjustments to interest expense.
Amounts receivable or payable under the agreements are included in receivables
or accrued expenses in the accompanying Consolidated Balance Sheets. Gains and
losses on foreign currency forward contracts offset gains and losses resulting
from the underlying transactions. Gains and losses on contracts that hedge
specific foreign currency commitments are deferred and recorded in net income in
the period in which underlying transaction is recorded.
STOCK BASED COMPENSATION--The Company has chosen to account for stock-based
compensation to employees using the intrinsic value method as prescribed by
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 of grant over the amount
an employee must pay for the stock. Compensation cost related to restricted
stock granted as part of bonus compensation is recognized 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).
NEW ACCOUNTING PRONOUNCEMENTS--In June 1997, Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," was
issued. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general-purpose financial statements. SFAS No. 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The Company will adopt this standard in 1998.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," was issued. SFAS No. 131 establishes standards for the way
that public companies report selected information about operating segments in
annual financial statements and require that those companies report selected
information about segments in interim financial reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers and supercedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS No. 131 is
effective for financial statements for periods beginning after December 15,
1997. The Company has historically reported its information under one segment.
This standard will require the Company to report financial information
consistent with how the business is managed. The Company manages its business
primarily by skills provided, and thus expects this will determine its segments
to comply with the new standard. The Company will adopt this standard in 1998.
ACQUISITIONS AND DISPOSITION
ACQUISITIONS
MICHAEL PAGE GROUP, PLC--On April 18, 1997, the Company completed the
purchase of the outstanding shares of Michael Page Group, PLC ("Michael Page"),
a public company in the United Kingdom, for $577,575. Michael Page provides
staffing and placement services primarily in the fields of finance and
accounting with 51 offices in 11 countries. 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 the date of
acquisition. The excess of the purchase price over the fair value of the net
tangible assets acquired was $512,469. This amount has been allocated to trade
names and goodwill based upon an independent valuation performed for management.
Both intangible assets are being amortized over 40 years based upon this
independent valuation.
29
<PAGE>
BRANDON SYSTEMS CORPORATION--On May 23, 1996, the Company completed its
merger with Brandon Systems Corporation ("Brandon"), an information technology
staffing company. The Company issued 7,745,380 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 415,184 additional
Interim common shares. The merger has been accounted for as a
pooling-of-interests for accounting and financial reporting purposes.
Accordingly, the historical financial statements for the periods prior to the
merger are restated as though the companies had been combined. All fees and
expenses related to the merger and the consolidation and restructuring of the
combined companies have been expensed. Such fees and expenses were $8,600.
Revenues of Brandon from periods prior to the merger are included in the
accompanying income statements and were $22,311 for the quarter ended March 29,
1996 and $83,361 for the year ended December 29, 1995. Net earnings and earnings
per share related to Brandon were $1,244 and $0.04, respectively, for the
quarter ended March 29, 1996 and $6,206 and $0.20, respectively, for the year
ended December 29, 1995.
COMPUTER POWER GROUP--Effective December 1, 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. CPG provides
staffing and consulting services in a variety of information technology
disciplines. This acquisition was accounted for under the purchase method of
accounting. Accordingly, the operations of CPG are included in the Consolidated
Statements of Earnings from the date of acquisition. The excess of the purchase
price over the fair value of the net tangible assets acquired (goodwill) was
$56,618 and is being amortized over 40 years.
OTHER ACQUISITIONS--During 1997, 1996 and 1995 the Company made certain
other acquisitions that were accounted for under the purchase method of
accounting. Their operations are included in the Consolidated Statements of
Earnings from the date of acquisition.
The fair value of assets acquired and liabilities assumed (excluding cash
acquired) in connection with the acquisitions follows.
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Working capital (deficit)................................... $ (8,456) $ 615 $ 9,620
Goodwill and Tradenames..................................... 563,802 12,016 86,715
Other net assets............................................ 15,327 (667) 3,029
Debt assumed................................................ (317) -- (409)
---------- --------- ---------
Net assets acquired......................................... $ 570,356 $ 11,964 $ 98,955
---------- --------- ---------
---------- --------- ---------
</TABLE>
DISPOSITION
HEALTHCARE DIVISION--On September 26, 1997, the Company completed the sale
of its HealthCare business to Cornerstone Equity Investors IV, L.P. ("Buyer").
The Company received $118,590 in cash at closing ($113,109 net of transaction
related cash costs), with the remainder of the $134,000 purchase price to be
paid upon approval of the ownership transfer of Interim HealthCare of New York
Inc. to the Buyer by New York State regulators. Accordingly, recognition of the
remaining portion of the gain on sale has been postponed pending this final
approval. The pre-tax gain on sale recognized in 1997 was $5,300 with taxes on
the gain of $5,272. Revenues, prior to the sale, related to the HealthCare
business were $189,589, $231,268, $207,242 for the years ended December 26,
1997, December 27, 1996, and December 29, 1995, respectively.
Pursuant to the terms of the sales agreement and subject to certain
restrictions, the Company gave the Buyer a royalty-free license to use the
"Interim" trademark and trade names for an initial period of five
30
<PAGE>
years. After that time, a license fee will be charged. Under a transitional
service agreement, the Company will continue to provide various services to the
Buyer including access to and use of information systems. These services will be
provided at rates included in the agreement which approximate the costs the
Company will incur. This service agreement is for two years with an option to
request an additional year. The Company has provided indemnification to the
Buyer on various pending issues with respect to the HealthCare business
including certain medicare reimbursement issues and the collectibility of loans
related to the businesses' physical therapy student loan program. The Company
does not expect that the outcome of these matters will have a material effect on
the Company's financial position or results of operation.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Consolidated Statement of
Earnings of the Company for the year ended December 26, 1997 is based on
historical financial statements of the Company and has been adjusted to reflect
the sale of the Company's HealthCare business, the acquisition of Michael Page
and other acquisitions as if the acquisition and disposition had occurred at the
beginning of the year.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 26, 1997
<TABLE>
<CAPTION>
PRO FORMA
PROFORMA ACQUISITIONS AFTER
EFFECT OF -------------------------------------------- DISPOSITION
HISTORICAL HEALTHCARE MICHAEL OTHER PRO FORMA AND
INTERIM DISPOSITION(a) PAGE(e) ACQUISITIONS(e) ADJUSTMENTS ACQUISITIONS
---------- ------------- --------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................... $1,608,256 $ (189,589) $ 76,253 $ 25,200 $ (138)(f) $1,519,982
Cost of services.............. 1,081,113 (113,050) 38,213 15,717 (138)(f) 1,021,855
---------- ------------- --------- ------------- -------------- ------------
Gross Profit................ 527,143 (76,539) 38,040 9,483 -- 498,127
---------- ------------- --------- ------------- -------------- ------------
Selling, general & admin.
exp......................... 363,152 (61,094) 25,073 6,764 536 (g) 334,431
Licensee commissions.......... 45,091 (597) -- -- (536)(g) 43,958
Amortization of intangibles... 18,492 (1,812) -- -- 3,948 (h) 20,628
Interest expense.............. 24,269 (5,288)(b) (964) -- 13,455 (i) 31,472
Gain on sale of HealthCare
Business.................... (5,300) 5,300 (c) -- -- -- --
Merger expense................ -- -- 5,064 -- (5,064)(j) --
---------- ------------- --------- ------------- -------------- ------------
445,704 (63,491) 29,173 6,764 12,339 430,489
---------- ------------- --------- ------------- -------------- ------------
Earnings before taxes....... 81,439 (13,048) 8,867 2,719 (12,339) 67,638
Income taxes.................. 38,928 (8,793)(d) 4,593 -- (3,473)(k) 31,255
---------- ------------- --------- ------------- -------------- ------------
Net earnings................ $ 42,511 $ (4,255) $ 4,274 $ 2,719 $ (8,866) 36,383
---------- ------------- --------- ------------- -------------- ------------
---------- ------------- --------- ------------- -------------- ------------
Diluted earnings per share.... $ 1.05 $ 0.90
---------- ------------
---------- ------------
Diluted Weighted average
Shares outstanding.......... 40,407 40,407
---------- ------------
---------- ------------
</TABLE>
- ------------------------
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(a) To eliminate the results of operations of the HealthCare business. A portion
of the eliminated selling, general and administrative costs reflect
corporate expenses that have been allocated to the HealthCare business or
that will be eliminated. These corporate expenses reflect management's best
estimate of the costs no longer expected to be incurred by Interim
subsequent to the disposition of the HealthCare business.
(b) To reduce interest expense due to the reduction of debt from cash flows
generated from the sale of the HealthCare business.
(c) To eliminate gain on the sale of the HealthCare business.
31
<PAGE>
(d) To reflect the aggregate tax benefit of eliminating the HealthCare business,
taxes on the gain and reducing borrowings.
(e) Reflects the historical financial statements of the acquired companies.
Michael Page's financial statements have been adjusted for differences
between U.S. and U.K. Generally Accepted Accounting Principles. Michael
Page's statement of income has been translated into U.S. dollars using
average exchange rates for the period.
(f) To eliminate royalties as a result of the repurchase of Interim franchises
(g) To eliminate licensee commissions as a result of the repurchase of several
Interim license operations.
(h) To reflect amortization of goodwill and other intangibles generated by the
acquisitions on a straight-line basis over a weighted average life of 40
years.
(i) To reflect the pro forma effect of interest on the additional borrowings
used to fund the acquisitions. Interest on the credit facilities is computed
at LIBOR plus 85 basis points.
(j) To eliminate one-time costs incurred by Michael Page related to it being
acquired by the Company.
(k) To reflect the aggregate tax benefit of pro forma acquisition adjustments.
For the year ended December 27, 1996 revenues, net earnings and diluted
earnings per share would have been $1,201,548, $11,500 and $0.34, respectively,
had these acquisitions and the disposition of the HealthCare business occurred
at the beginning of the period.
INTANGIBLE ASSETS
A summary of intangible assets is as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE LIFE AVERAGE LIFE
(IN YEARS) DEC. 26, 1997 (IN YEARS) DEC. 27, 1996
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Goodwill................................ 37 $516,058 29 $214,416
Less accumulated amortization........... (40,402) (40,778)
------------- -------------
Goodwill, net........................... $475,656 $173,638
------------- -------------
------------- -------------
Tradenames.............................. 40 $223,216 5 $ 394
Other intangibles....................... 5 3,098 5 4,561
--
------------ ------------- -------------
38 226,314 29 4,955
Less accumulated amortization........... (6,842) (3,846)
------------- -------------
Tradenames and other intangibles, net... $219,472 $ 1,109
------------- -------------
------------- -------------
</TABLE>
Amortization of intangible assets is as follows:
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
--------- ----------- -----------
<S> <C> <C> <C>
Goodwill....................................................... $ 14,193 $ 8,241 $ 6,021
Tradenames..................................................... 3,877 1 --
Other intangibles.............................................. 422 560 863
--------- ----------- -----------
$ 18,492 $ 8,802 $ 6,884
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
32
<PAGE>
PROPERTY AND EQUIPMENT
A summary of property and equipment follows:
<TABLE>
<CAPTION>
LIFE DEC. 26, DEC. 27,
(IN YEARS) 1997 1996
----------- --------- ----------
<S> <C> <C> <C>
Land........................................................ -- $ 4,167 $ 4,167
Buildings................................................... 10 - 40 14,331 11,394
Equipment................................................... 3 - 8 82,871 60,453
Software.................................................... 3 - 5 15,060 14,270
Leasehold improvements and other............................ 3 - 5 7,653 2,419
--------- ----------
124,082 92,703
Less accumulated depreciation and amortization.............. (58,607) (42,908)
--------- ----------
$ 65,475 $ 49,795
--------- ----------
--------- ----------
</TABLE>
Depreciation and amortization of property and equipment for the years ended
December 26, 1997, December 27, 1996 and December 29, 1995 amounted to $16,382,
$10,109, and $7,672, respectively.
LONG-TERM DEBT
The Company's debt as of December 26, 1997 was comprised of the following:
<TABLE>
<S> <C>
U.S. dollar denominated term loan, due 1998
through 2003.................................... $ 176,700
Revolving loan facility, due 2003--
British pound sterling denominated borrowings... 209,488
U.S. dollar denominated borrowings.............. 10,000
Loan notes denominated in British Pound
Sterling........................................ 16,836
---------
413,024
Less current maturities of long term debt......... (33,827)
---------
$ 379,197
---------
---------
</TABLE>
The Company has available $535,908 under a multi-currency syndicated credit
agreement entered into as of May 1, 1997 and amended as of June 2, 1997 ("Credit
Facility"). This agreement provides both a U.S. dollar denominated term loan and
a multi-currency revolving loan facility. Borrowings under this facility are
unsecured. Interest rates on amounts outstanding under the term loan and
revolving loan are based on LIBOR plus a variable margin. The facility contains
customary covenants, which include the maintenance of certain financial ratios
including minimum net worth, restrictions on the incurrence of lines and
additional indebtedness. The average interest rate for the year ending December
26, 1997 was 6.9%.
The Company also has sterling denominated loan notes outstanding payable to
certain former shareholders of Michael Page. Interest on these notes is based on
six month sterling LIBOR less 1%. The Company expects the majority of these
notes to be paid in 1998.
In addition, the Company has established short-term, unsecured, uncommitted
lines of credit with certain banks. These lines of credit are based on LIBOR and
are available to fund the Company's short-term capital requirements.
Under these agreements, the Company had approximately $120.0 million
available for future borrowings as of December 26, 1997.
The maturities of long term debt outstanding at December 26, 1997, are
summarized as follows: $33,827 in 1998, $23,787 in 1999, $33,981 in 2000,
$50,971 in 2001, $50,971 in 2002.
The Company had various credit facilities in place prior to 1997 with
variable interest rates. No debt was outstanding as of December 27, 1996
pursuant to these agreements.
33
<PAGE>
INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Current tax expense:
Federal.......................................... $ 23,220 $ 17,062 $ 14,509
State and Local.................................. 6,055 4,110 3,636
Foreign.......................................... 15,307 238 --
------------ ------------ ------------
44,582 21,410 18,145
------------ ------------ ------------
Deferred tax (benefit) expense:
Federal.......................................... (3,029) 538 (63)
State and Local.................................. (721) 149 (11)
Foreign.......................................... (1,904) -- --
------------ ------------ ------------
(5,654) 687 (74)
------------ ------------ ------------
Total Provision for Income Taxes................... $ 38,928 $ 22,097 $ 18,071
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The following table reconciles the U.S. Federal income tax rate to the
Company's effective tax rate:
<TABLE>
<CAPTION>
DEC. 26, 1997 DEC. 27, 1996 DEC. 29, 1995
--------------- --------------- ---------------
<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........................................ 4.3 6.2 5.6
Nondeductible amortization of intangibles........ 5.9 3.6 3.9
Sale of HealthCare business...................... 3.2 -- --
Merger expense................................... -- 4.7 --
Other, net....................................... (0.6) (0.5) (1.3)
----- --- ---
Effective Tax Rate................................. 47.8% 49.0% 43.2%
----- --- ---
----- --- ---
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
DEC. 26, DEC. 27,
1997 1996
------------ ------------
<S> <C> <C>
Current deferred tax assets:
Employee benefits and self-insurance........................... $ 9,529 $ 2,935
Receivables allowances......................................... 1,354 1,114
Other.......................................................... 26 128
------------ ------------
10,909 4,177
------------ ------------
Noncurrent deferred tax assets (liabilities):
Fixed assets................................................... (1,123) (1,688)
Intangible assets.............................................. (2,947) (1,075)
Other.......................................................... 16 (35)
------------ ------------
(4,054) (2,798)
------------ ------------
Net deferred tax assets.......................................... $ 6,855 $ 1,379
------------ ------------
------------ ------------
</TABLE>
34
<PAGE>
EMPLOYEE BENEFIT PLANS
The Company has various savings plans covering substantially all eligible
employees. Company contributions to the plans are based on employee
contributions, the level of the Company match and the attainment of certain
financial objectives. During 1997, plans maintained by three of the Company's
business units were merged into one. Contributions by the Company under these
plans amounted to $2,402, $393 and $666 for the years ended December 26, 1997,
December 27, 1996 and December 29, 1995, respectively.
During 1995, the Company started a deferred compensation plan for certain
employees who are not eligible to participate in the Company's 401(k) savings
plan. This plan was extended to a larger group in 1997. The plan allows eligible
employees to defer receipt of a portion of their compensation. The Company
matches and accrues certain amounts deferred pursuant to this plan based upon
the same criteria as the 401(k) plan. The deferred compensation, along with the
Company matching amounts and accumulated investment earnings, is accrued. Such
accrual amounted to $5,507, $1,821 and $710 at December 26, 1997, December 27,
1996 and December 29, 1995, respectively.
Effective July 1997, the Company adopted a new Employee Stock Purchase Plan
(ESPP) to provide substantially all employees who have been employed for at
least 12 months an opportunity to purchase shares of its common stock at a
discount of 15%. The aggregate amount an employee may purchase is limited to a
maximum of 15% of an employee's compensation up to $25,000 of stock. There were
9,294 shares issued in 1997 under this plan. A total of 290,706 shares are
available as of December 26, 1997 for purchase under the plan which expires on
July 1, 2002.
STOCK-BASED COMPENSATION PLANS
The Company has three primary option stock plans, the 1997 Long-Term
Executive Compensation and Outside Directors Stock Option Plan, the 1997 Stock
Option Plan for employees of Michael Page Group PLC and the 1994 Stock Option
Plan for Franchisees, Licensees and Agents. The 1997 stock option plan for
employees of Michael Page was adopted solely to grant options to employees of
Michael Page to induce them to continue employment after the Michael Page
acquisition. Under the other two plans, options may be granted to outside
directors, selected employees of the Company and its subsidiaries, 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 granted under all plans are exercisable
cumulatively 20% to 100% each year beginning one-year after the initial date of
grant. At December 26, 1997 and December 27, 1996, the Company had 1,964,723 and
1,085,606 shares, respectively, reserved for future grants under these plans. 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. At
December 26, 1997 and December 27, 1996, 10,054 and 15,730 shares, respectively,
were reserved for future grant under this Plan.
As part of the Company's bonus plan, the Board of Directors has authorized
50,000 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. At December
26, 1997 and December 27, 1996, the Company had 21,858 and 3,306 shares,
respectively, reserved for future grant under this plan.
35
<PAGE>
Changes under these plans for 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
DEC 26, 1997 DEC. 27, 1996 DEC. 29, 1995
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ---------- ----------- ---------- -----------
Outstanding at beginning of
year.......................... 2,642,554 $ 13.24 2,203,422 $ 10.60 1,614,210 $ 9.28
Granted......................... 1,678,910 18.53 840,326 19.01 826,170 12.86
Exercised....................... (866,241) 11.09 (281,692) 9.49 (94,806) 7.49
Forfeited....................... (353,619) 16.85 (119,502) 14.25 (142,152) 10.89
---------- ---------- ----------
Outstanding at end of year...... 3,101,604 $ 16.28 2,642,554 $ 13.24 2,203,422 $ 10.60
---------- ---------- ----------
---------- ---------- ----------
Options exercisable at year-
end........................... 908,495 $ 13.01 927,968 $ 9.83 650,046 $ 7.78
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The following table summarizes information about fixed stock options
outstanding at December 26, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF EXERCISE OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
PRICES AT 12/26/97 LIFE PRICE AT 12/26/97 PRICE
- ---------------------- ----------- ----------- ----------- ----------- -----------
$0-$ 9.99........... 32,000 4.02 $ 6.74 32,000 $ 6.74
$10.00-$14.99....... 952,534 6.64 11.45 639,862 11.21
$15.00-$19.99....... 2,021,762 8.48 18.44 201,753 18.21
$20.00-$24.00....... 95,308 8.75 22.00 34,880 21.89
----------- ----------- ----------- ----------- -----------
3,101,604 7.88 $ 16.28 908,495 $ 13.01
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
The weighted average per share fair values of options granted under the
Company's stock option plans during 1997, 1996 and 1995 were $3.90, $4.03 and
$2.76, respectively. Had the fair value of the grants under these plans been
recognized as compensation expense over the vesting period of the awards,
compensation cost would have been increased by $2,896 ($2,039 after tax, $0.05
per share), $2,136 ($1,524 after tax, $0.05 per share) and $890 ($632 after tax,
$0.02 per share) in 1997, 1996 and 1995, respectively.
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:
<TABLE>
<CAPTION>
DEC. 26, 1997 DEC. 27, 1996 DEC. 29, 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Expected life...................................... 2 2 2
Interest rate...................................... 5.99% 5.94% 5.98%
Volatility......................................... 29.79% 30.30% 31.23%
Dividend Yield..................................... -- -- --
</TABLE>
SHAREHOLDER RIGHTS PLAN
On February 17, 1994, the Company's Board of Directors adopted a shareholder
rights plan to protect shareholders in the event of an unsolicited attempt to
acquire the Company which is not believed by the
36
<PAGE>
Board of Directors to be in the best interest of shareholders. Under the plan, a
dividend of one right (a "Right") per share was declared and paid on each share
of the Company's Common Stock outstanding on April 1, 1994. As to shares issued
after such date, rights will automatically attach to them after their issuance.
Under the plan, registered holders of each Right may purchase from the
Company one one-hundredth of a share of a new class of the Company's Preferred
Stock, $0.01 par value per share, at a price of $150.00, subject to adjustment,
when the Rights become exercisable. The Rights become exercisable when a person
or group of persons acquires 15% or more of the outstanding shares of the
Company's Common Stock without the prior written approval of the Company's Board
of Directors (an "Unapproved Stock Acquisition"), and after ten business days
following the commencement of a tender offer that would result in an Unapproved
Stock Acquisition. If a person or group of persons makes an Unapproved Stock
Acquisition, the registered holder of each Right has the right to purchase, for
the exercise price of the Right, a number of shares of the Company's Common
Stock having a market value equal to twice the exercise price of the Right.
Following an Unapproved Stock Acquisition, if the Company is involved in a
merger, or 50% or more of the Company's assets or earning power are sold, the
registered holder of each Right has the right to purchase, for the exercise
price of the Right, a number of shares of the common stock of the acquiring
company having a market value equal to twice the exercise price of the Right.
After an Unapproved Stock Acquisition, but before any person or group of
persons acquires 50% or more of the outstanding shares of the Company's Common
Stock, the Board of Directors may exchange all or part of the then outstanding
and exercisable Rights for Common Stock at an exchange ratio of one share of
Common Stock per Right. Upon any such exchange, the right of any holder to
exercise a Right terminates.
The Company may redeem the Rights at a price of $0.01 per Right at any time
prior to an Unapproved Stock Acquisition (and after such time in certain
circumstances). The Rights expire on April 1, 2004, unless extended by the Board
of Directors. Until a Right is exercised, the holder thereof, as such, has no
rights as a stockholder of the Company, including the right to vote or to
receive dividends. The issuance of the Rights alone has no dilutive effect and
does not affect reported earnings per share.
FINANCIAL INSTRUMENTS AND FAIR VALUES
The Company had entered into variable to fixed interest rate swap agreements
in the notional amount of $100,000 as of December 26, 1997. These agreements
have expiration dates between 2000 and 2002. Under these agreements, the Company
received an average variable rate of 5.8% and paid an average fixed rate of 6.2%
during the twelve months ended December 26, 1997. The Company also has variable
to variable interest rate swap agreements outstanding at December 26, 1997 with
notional amounts of $225,693, which effectively convert interest from a LIBOR
basis to a broader index and cap the Company's exposure to upward movement in
rates at 8.5%. These agreements expire in 2002. Under these agreements, the
Company received an average variable rate of 6.3% and paid an average variable
rate of 5.4% during the twelve months ended December 26, 1997.
Exposure to market risk on interest rate and foreign currency financial
instruments results from fluctuations in interest and currency rates,
respectively, during the periods in which the contracts are outstanding. The
counterparties to the Company's interest rate swap agreements and currency
exchange contracts consist of a diversified group of major financial
institutions, each of which is rated investment grade A or better. The Company
is exposed to credit risk to the extent of potential nonperformance by
counterparties on financial instruments. Any potential credit exposure does not
exceed the fair value as stated below; the Company believes the risk of
incurring losses due to credit risk is remote.
The cost to terminate the outstanding interest rate swaps as of December 26,
1997 was $5,054. Book value at December 26, 1997 was a $287 receivable. The fair
values of all other financial instruments, including debt, approximate their
book values.
37
<PAGE>
COMMITMENTS AND CONTINGENCIES
Substantially all of the Company's operations are conducted in leased
premises. Total lease expense for the years ended December 26, 1997, December
27, 1996 and December 29, 1995 was $19,085, $11,543 and $7,187, respectively.
Future minimum lease payments under non-cancelable leases as of December 26,
1997 are $15,527, $14,593, $12,140, $9,594, $5,747 in 1998, 1999, 2000, 2001 and
2002, respectively.
Additionally, the Company had outstanding irrevocable letters of credit of
approximately $37.8 million (same as fair value). These letters of credit, which
expire in 1998, collateralize the Company's obligation under certain workers'
compensation insurance programs.
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.
GEOGRAPHIC INFORMATION
The Company operates within one industry segment, providing employment
services in the United States, Puerto Rico, Canada, The Netherlands, United
Kingdom, France, Germany, Italy, Spain, Hong Kong, Singapore, Australia and New
Zealand. Prior to April 18, 1997, when the Company acquired Michael Page, the
Company's global interest was almost entirely in North America. For purposes of
this disclosure the Company has grouped its operations into these regions: North
America, Europe, and Asia Pacific.
The table below provides information pertaining to the Company's operation
by geographic area:
<TABLE>
<CAPTION>
DEC. 26, DEC. 27, DEC. 29,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
North America.................................... $1,357,093 $1,144,558 $ 864,247
Europe........................................... 214,930 2,593 --
Asia Pacific..................................... 36,233 -- --
------------ ------------ ------------
$1,608,256 $1,147,151 $ 864,247
------------ ------------ ------------
------------ ------------ ------------
Operating Profit:
North America.................................... $ 60,912 $ 58,973 $ 42,794
Europe........................................... 34,963 435 --
Asia Pacific..................................... 4,533 -- --
------------ ------------ ------------
100,408 59,408 42,794
Interest Expense................................... 24,269 5,696 990
Gain on sale of HealthCare business/merger
expenses......................................... (5,300) 8,600 --
------------ ------------ ------------
Earnings before income taxes....................... $ 81,439 $ 45,112 $ 41,804
------------ ------------ ------------
------------ ------------ ------------
Identifiable Assets:
North America.................................... $ 465,367 $ 512,490 $ 424,489
Europe........................................... 548,268 -- --
Asia Pacific..................................... 78,099 -- --
------------ ------------ ------------
$1,091,734 $ 512,490 424,489
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
38
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED--AMOUNT IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
The following is a tabulation of the quarterly results of operations for the
years ended December 26, 1997 and December 27, 1996.
<TABLE>
<CAPTION>
1997 QUARTER ENDED
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEPT. 26, 1997 JUNE 27,
DEC. 26, 1997 (a) 1997 MARCH 28, 1997
---------------- -------------- ------------ ---------------
Revenues...................... $ 412,868 $ 455,770 $422,833 $ 316,785
Gross profit.................. 134,331 153,414 141,958 97,440
Earnings before taxes......... 21,546 26,844 18,375 14,674
Income taxes.................. 9,529 14,797 8,453 6,149
Net earnings (loss)........... 12,017 12,047 9,922 8,525
Basic earnings (loss) per
share....................... 0.30 0.31 0.25 0.22
Diluted earnings (loss) per
share....................... 0.29 0.30 0.25 0.21
Share price:
High.......................... 31 25 5/8 21 7/16 21 9/16
Low........................... 23 5/8 21 3/4 17 9/16 17 1/8
</TABLE>
<TABLE>
<CAPTION>
1996 QUARTER ENDED
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
JUNE 28, 1996
DEC. 27, 1996 SEPT. 27, 1996 (b) MAR. 29, 1996
---------------- -------------- -------------- ---------------
Revenues...................... $ 306,527 $ 294,711 $ 281,188 $ 264,725
Gross profit.................. 94,521 91,160 86,684 78,997
Earnings before taxes......... 17,237 13,970 4,069 9,836
Income taxes.................. 7,192 6,143 4,415 4,347
Net earnings (loss)........... 10,045 7,827 (346 ) 5,489
Basic earnings (loss) per
share....................... 0.27 0.25 (0.01 ) 0.18
Diluted earnings (loss) per
share....................... 0.26 0.25 (0.01 ) 0.17
Share price:
High.......................... 22 13/16 22 25 1/8 20 3/8
Low........................... 17 18 1/4 17 3/8 17 1/8
</TABLE>
- ------------------------
(a) Includes pretax gain on sale of HealthCare business of $5,300 and taxes of
$5,272.
(b) Includes $8,600 pretax of Brandon merger expenses.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in the registrant's principal accountants during
the two most recent fiscal years or any subsequent interim time period.
39
<PAGE>
PART III
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, each of whom has been elected to
serve at the discretion of the Board of Directors of the Company are:
<TABLE>
<CAPTION>
NAME AND AGE POSITION
- ------------------------------ ----------------------------------------------------------------------------------
<S> <C>
Raymond Marcy, 47............. Chairman of the Board of Directors since August 1997; Chief Executive Officer
since September 1991; President and a Director since November 1989; Chief
Operating Officer from November 1989 until September 1991. Prior to joining the
Company, Mr. Marcy served as Senior Vice President of Operations for Adia
Services, Inc. ("Adia"), from 1980 through 1988. While retaining his position as
Senior Vice President of Operations for Adia, from May 1988 until November 1989,
Mr. Marcy was President and Chief Executive Officer of Nursefinders, Inc., the
temporary nursing subsidiary of Adia.
Robert E. Livonius, 49........ Chief Operations Officer since February 1997, Executive Vice President since
August 1993. Vice President, HealthCare Division from August 1991 to August
1993. Prior to joining the Company, he served as Vice President-Field Operations
for a division of NYNEX Corporation, from June 1986 through June 1991.
Roy G. Krause, 51............. Executive Vice President and Chief Financial Officer since October 1995. Prior to
joining the Company, he served as Executive Vice President of HomeBank Federal
Savings Bank and HomeBank Mortgage Corporation from November 1980 to September
1995.
Ronald de Heer, 55............ Executive Vice President, European Operations since September 1996. Prior to
joining the Company he served as Managing Director for Adia Personnel for nearly
10 years in Holland, Belgium and Luxembourg.
John B. Smith, 58............. Senior Vice President since January 1980; Legal Counsel and Secretary since
January 1965; Director from January 1969 until May 1995.
Mark Dermott, 41.............. Vice President (Commercial Franchise and License Operations) since July 1997.
Regional Vice President (HealthCare Branch Operations) from July 1993 to July
1997. Vice President (Training) Talent Tree Personnel from June 1992 to July
1993. Held other positions with Talent Tree Personnel from January 1989 to July
1993.
Robert Evans, 54.............. Vice President/Chief Information Officer since May 1996. Prior to joining the
Company he served in several executive positions with AT&T including Vice
President Customer Care Strategy and Reengineering, Chief Technology Officer,
Chief Information Officer and General Manager of the Consumer interactive
Services business unit.
Richard Gorman, 55............ Vice President (Marketing) since May 1991. Prior to joining the Company, he served
as Vice President of Marketing for Interim Systems Corporation, from February
1988 to May 1991.
Gary Peck, 45................. President (Commercial Staffing Group) since August 1997. Vice President
(Commercial Branch Operations) from January 1995 to August 1997; Vice President
(Special Services) from August 1991 to December 1994. Prior to joining the
Company, he served as Senior Vice President for Talent Tree Services, Inc., from
August 1988 to August 1991.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE POSITION
- ------------------------------ ----------------------------------------------------------------------------------
<S> <C>
Mark W. Smith, 35............. Vice President (Finance) since June 1997. Prior to joining the Company, he served
as Group Director--Financial Planning, Ryder Integrated Logistics, Inc. from
October 1996 to June 1997. Assistant Corporate Controller, Ryder System Inc.
from October 1993 to September 1996. He held other positions with Ryder System
Inc. from February 1990 to September 1993.
Shannon C. Allen, 31.......... Treasurer since May 1997. Assistant Treasurer from October 1994 to May 1997. Prior
to joining the Company, she served as Senior Financial Analyst in the Treasury
and Corporate Finance Department at W. R. Grace & Co., Inc. from April 1992 to
October 1994. From August 1988 to September 1991 she worked in Corporate Finance
at Kidder, Peabody & Co., Incorporated.
</TABLE>
The information required by items 11, 12 and 13 of this Part III is omitted
because, no later than 120 days from December 26, 1997, the Company will file
and distribute its definitive proxy statement containing the information
required by Part III. Such omitted information is incorporated herein by this
reference.
41
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The following consolidated financial statements of Interim Services Inc. and
subsidiaries are filed as part of this Report:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report........................................................... 22
Consolidated Statements of Earnings.................................................... 23
Consolidated Balance Sheets............................................................ 24
Consolidated Statements of Stockholders' Equity........................................ 25
Consolidated Statements of Cash Flows.................................................. 26
Notes to Consolidated Financial Statements............................................. 27
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule is filed as part of this Report:
<TABLE>
<CAPTION>
<S> <C>
Schedule II--Valuation and Qualifying Accounts........................ 47
</TABLE>
Schedules not filed herewith are either not applicable, the information is
not material or the information is set forth in the financial statements or
notes thereto.
(3) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
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 February 25, 1997 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.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
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.
4.8 Certificate of Increase of Shares Designated as Participating Preferred Stock, filed as Exhibit 2.2 to
the Corporation's Form 8-A/A2, dated November 3, 1997, is 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 dated 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 dated November 5, 1993, is incorporated
herein by reference.
10.6 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.
10.7 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 dated
December 15, 1995, is incorporated herein by reference.
10.8 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.
10.9 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.
10.10 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 filed as Exhibit 10.12 to
the registrant's Form 10-Q for the quarter ending June 27, 1997, is incorporated herein by reference.
10.11 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.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.12 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.
10.13 Restated Stock Purchase Agreement, dated September 26, 1997 among Interim Services Inc., Catamaran
Acquisition Corp. and Cornerstone Equity Investors IV, L.P., filed as Exhibit 2.1 to the registrant's
Form 8-K dated September 26, 1997 and filed October 13, 1997, is incorporated herein by reference.
10.14 The Deferred Compensation Plan of Interim Services Inc., filed as Exhibit 4.1 to the registrant's Form
S-8 filed on July 23, 1997, is incorporated herein by reference.
10.15 The Interim Services Inc. Outside Directors Compensation Plan filed as Exhibit 10.15 to the registrants
Form 10-Q for the quarter ending September 26, 1997 is incorporated herein by reference.
10.16 The registrant's 1997 Stock Purchase Assistance Plan for executives of the Registrant is filed herewith
as Exhibit 10.16.
10.17 Amendment Agreement No. 1, dated as of June 1, 1997, to the Credit Agreement dated as of May 1, 1997, by
and among Interim Services Inc. and NationsBank is filed herewith as Exhibit 10.17.
11. See "Earnings Per Share" in the Notes to Consolidated Financial Statements included at page 26 herein.
21. Subsidiaries of Registrant
23.1 Consent of Deloitte & Touche LLP
27. Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K
During the last quarter of the period covered by this report, a report on
Form 8-K dated September 26, 1997 was received by the SEC on October 13, 1997.
The Report was filed under Item 2 of Form 8-K.
(c) EXHIBITS FILED WITH THIS FORM
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME PAGE
- ----------- ------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
10.16 The 1997 Stock Purchase Assistance Plan for executives of the Registrant. *
10.17 Amendment Agreement No. 1, dated as of June 1, 1997, to the Credit Agreement dated as of May 1, *
1997 by and among Interim Services Inc. and NationsBank.
21. Subsidiaries of Registrant 48
23.1 Consent of Deloitte & Touche LLP *
27. Financial Data Schedule *
</TABLE>
* Filed herewith.
(d) OTHER FINANCIAL STATEMENTS
There were no other financial statements of the type described in
subparagraph (d) of item 14 of IV required to be filed herein.
44
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
INTERIM SERVICES INC.
February 27, 1998 By: /s/ RAYMOND MARCY
-----------------------------------------
Raymond Marcy, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- ----------------------
<C> <S> <C>
/s/ STEVEN S. ELBAUM
- ------------------------------ Director
Steven S. Elbaum 2/27/98
/s/ WILLIAM EVANS
- ------------------------------ Director
William Evans 2/27/98
/s/ JEROME GROSSMAN
- ------------------------------ Director
Jerome Grossman 2/26/98
/s/ CINDA A. HALLMAN
- ------------------------------ Director
Cinda A. Hallman 2/6/98
/s/ J. IAN MORRISON
- ------------------------------ Director
J. Ian Morrison 2/25/98
/s/ A. MICHAEL VICTORY
- ------------------------------ Director
A. Michael Victory 2/25/98
</TABLE>
45
<PAGE>
SIGNATURE TITLE
- ------------------------------ --------------------------
Chairman, President, Chief
/s/ RAYMOND MARCY Executive Officer and
- ------------------------------ Director (principal
Raymond Marcy executive officer)
Executive Vice President
/s/ ROY G. KRAUSE and Chief financial
- ------------------------------ Officer (principal
Roy G. Krause financial officer)
/s/ MARK W. SMITH Vice President Finance
- ------------------------------ (principal accounting
Mark W. Smith officer)
(Signed as to each on February 27, 1998)
46
<PAGE>
INTERIM SERVICES INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C
COLUMN B ADDITIONS COLUMN E
----------- ------------------------ -----------
COLUMN A BALANCE AT CHARGED TO CHARGED TO COLUMN D BALANCE AT
- ---------------------------------------------------- BEGINNING COSTS AND OTHER ----------- END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIODS
- ---------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR (52/53 WEEKS) ENDED DECEMBER 29, 1995
Allowance for doubtful accounts..................... $ (1,602) $ (1,638) $ -- $ 1,064 $ (2,176)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (26,471) (6,021) (26) $ (32,518)
Tradenames........................................ (190) (61) -- (251)
Other............................................. (2,128) (802) -- -- (2,930)
----------- ----------- ----------- ----------- -----------
$ (28,789) $ (6,884) $ -- $ (26) $ (35,699)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
YEAR (52/53 WEEKS) ENDED DECEMBER 27, 1996
Allowance for doubtful accounts..................... $ (2,176) $ (2,445) $ -- $ 1,598 $ (3,023)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (32,518) (8,241) (34) 15 $ (40,778)
Tradenames........................................ (251) (58) -- (309)
Other............................................. (2,930) (503) (104) -- (3,537)
----------- ----------- ----------- ----------- -----------
$ (35,699) $ (8,802) $ (138) $ 15 $ (44,624)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
YEAR (52/53 WEEKS) ENDED DECEMBER 26, 1997
Allowance for doubtful accounts..................... $ (3,023) (4,863) $ (2,274) $ 4,931 $ (5,229)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (40,778) $ (14,193) $ (117) $ 14,686 $ (40,402)
Tradenames........................................ (309) (3,877) (67) 111 (4,142)
Other............................................. (3,537) (422) -- 1,259 (2,700)
----------- ----------- ----------- ----------- -----------
$ (44,624) $ (18,492) $ (184) $ 16,056 $ (47,244)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
47
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF INTERIM SERVICES INC.
Following is a list of the direct and indirect subsidiaries of Interim
Services Inc. a Delaware corporation. All active subsidiaries do business under
their corporate name listed below, or close derivatives thereof, except where
indicated otherwise:
<TABLE>
<CAPTION>
<S> <C>
Interim Accounting Personnel Inc.................................... Texas (1)
Interim Career Services Inc......................................... Delaware (1)
Interim Financial Corporation....................................... Delaware (1)
Interim HealthCare of New York Inc.................................. New York (1)
Interim Legal Services Inc.......................................... Florida (1)
Interim Personnel Inc............................................... Florida (1)
Interim Real Estate Solutions Inc................................... Florida (1)
Interim Services (Canada) Ltd....................................... Canada (1)(14)
Interim Services (Europe) Inc....................................... Delaware (1)
Interim Technology Inc.............................................. Florida (1)
Interim Technology (UK) Limited..................................... United Kingdom (1)
Interim Temporary Personnel Inc..................................... Florida (1)
Michael Page International Inc...................................... Delaware (1)
Rich Field Agency, Inc.............................................. Florida (1)
Spectrum Financial Corporation...................................... Delaware (1)
Spectrum Insurance Company Ltd...................................... Cayman Islands (1)
Systemp, Inc........................................................ Delaware (1)(14)
Cornell Computer Corp. d/b/a Interim Technology..................... Arizona (2)
Interim Technology (Asia) Pte Ltd................................... Singapore (2)
Interim Services Worldwide Holding B.V.............................. Netherlands (3)
Interplan Uitzenbureau Voor Kantoorpersoneel B.V. d/b/a Interim
Uitzenbureau...................................................... Netherlands (4)
Interplan Uitzenbureau Voor Technisch & Industriel Personeel B.V.
d/b/a Interim Uitzenbureau........................................ Netherlands (4)
Allround Data B.V. d/b/a Interim Uitzenbureau....................... Netherlands (4)
Allround Industrie B.V. d/b/a Interim Uitzenbureau.................. Netherlands (4)
Allround Registratie B.V. d/b/a Interim Uitzenbureau................ Netherlands (4)
Allround Uitzenburo B.V. d/b/a Interim Uitzenbureau................. Netherlands (4)
Michael Page Group Plc.............................................. United Kingdom (3)
</TABLE>
48
<PAGE>
<TABLE>
<S> <C>
Interim On-Premise Ltd.............................................. United Kingdom (5)
Michael Page Recruitment Group Ltd.................................. United Kingdom (5)
Michael Page Holdings Ltd........................................... United Kingdom (6)
Michael Page Partnership Ltd........................................ United Kingdom (7)(14)
Accountancy Additions Ltd........................................... United Kingdom (8)
Michael Page International Holdings Ltd............................. United Kingdom (8)(14)
Michael Page UK Ltd................................................. United Kingdom (8)
Michael Page Ltd.................................................... Singapore (9)
LPM Professional Recruitment Ltd.................................... United Kingdom (9)(14)
The Page Partnership................................................ United Kingdom (9)
Sales Recruitment Specialist Ltd.................................... United Kingdom (9)
Questor International Ltd........................................... United Kingdom (9)
Michael Page International (Italia) SRL............................. Italy (10)
Michael Page International (Espana) SA.............................. Spain (10)
Michael Page International (France) SA.............................. France (10)
Page Interim SA..................................................... Spain (10)
Michael Page International (Australia) Pty Ltd...................... Australia (10)
Michael Page International (Deutschland) GmbH....................... Germany (10)
Michael Page International (Hong Kong) Ltd.......................... Hong Kong (10)
Michael Page International (Nederland) B.V.......................... Netherlands (10)
Page Interim SA..................................................... France (11)
Page Interim (East) EURL............................................ France (12)
Page Interim (West) EURL............................................ France (12)
Business Interim EURL............................................... France (12)
Compagnie Du Recrutor EURL.......................................... France (13)
Societe Des Nouveaux Recruteurs EURL................................ France (13)
Michael Page Advertising SA......................................... France (13)
Michael Page Services EURL.......................................... France (13)
</TABLE>
- ------------------------
NOTES TO SUBSIDIARIES OF INTERIM SERVICES INC.:
1. Subsidiary of Interim Services Inc.
2. Subsidiary of Interim Technology Inc.
3. Subsidiary of Interim Services (Europe) Inc.
4. Subsidiary of Interim Services Worldwide Holding B.V.
5. Subsidiary of Michael Page Group Plc
49
<PAGE>
6. Subsidiary of Michael Page Recruitment Group Ltd.
7. Subsidiary of Michael Page Holdings Ltd.
8. Subsidiary of Michael Page Partnership Ltd.
9. Subsidiary of Michael Page (UK) Ltd.
10. Subsidiary of Michael Page International Holdings Ltd.
11. Subsidiary of LP Professional Recruitment Ltd.
12. Subsidiary of Page Interim SA (France)
13. Subsidiary of Michael Page International (France) SA
14. Inactive
15. The above list of subsidiaries excludes 2 subsidiaries of Michael Page
Partnership Ltd., 2 subsidiaries of Michael Page Ltd. and 4 subsidiaries of
Michael Page International Holdings Ltd., all of which are inactive and not
"significant subsidiaries".
50
<PAGE>
EXHIBIT 10.16
SPECIFIC PLAN DOCUMENT
INTERIM SERVICES INC.
1997 STOCK PURCHASE ASSISTANCE PLAN
1. PURPOSE
The Board of Directors of Interim Services Inc. (the "Company") has
established Company stock ownership guidelines for Company executives (the
"Guidelines") as a means of aligning the interests of Company executives and
stockholders. The purpose of the Interim Services Inc. 1997 Stock Purchase
Assistance Plan (the "Plan") is to facilitate investment by Company
executives in shares of Company stock at levels at least sufficient to
satisfy the Guidelines.
2. DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means the occurrence of any one of the
following events: (i) any person, entity or group of persons or entities
acting in concert (other than a subsidiary of the Company), including any
person as defined in Section 13(d)(3) of the Exchange Act, becoming the
beneficial owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of more than twenty-five percent (25%) of the total combined
voting power of all classes of capital stock of the Company ordinarily
entitled to vote for the election of directors of the Company, (ii) the sale
of all or substantially all of the property or assets of the Company and its
subsidiaries, (iii) the consolidation or merger of the Company with another
corporation, other than with any subsidiary of the Company, the consummation
of which would result in the occurrence of an event described in clause (i)
above, or (iv) a change in the Board occurring with the result that the
members of the Board on the effective date hereof (the "Incumbent Directors")
no longer constitute a majority of such Board, provided that any person
becoming a director whose election or nomination for election was supported
by a majority of the Incumbent Directors shall be considered an Incumbent
Director for purposes hereof.
(c) "Compensation Committee" means the Compensation Committee of the
Board.
(d) "Company" means Interim Services Inc., a Delaware corporation.
(e) "Guidelines" means the stock ownership guidelines established by
the Board, as the same may be amended from time to time.
<PAGE>
(f) "Participant" means an employee of the Company or any subsidiary
of the Company who is selected by the Committee to participate in the Plan
pursuant to Section 3 hereof.
(g) "Plan" means the Interim Services Inc. 1997 Stock Purchase
Assistance Plan.
(h) "Plan Administrative Committee" means the Plan Administrative
Committee appointed by the Board to administer the Company's employee benefit
plans.
(i) "Repayment Obligation" shall mean the obligation of a Participant
to repay Interest Payments under Section 5(c) or 6(a).
(j) "Stock" means the common stock of the Company, par value $.01 per
share.
(k) "Stock Acquisition Loan" means an individually secured loan
negotiated with the Company's assistance with an approved lending institution
on behalf of a Participant. A Stock Acquisition Loan shall be obtained by the
Participant on the basis of his or her individual credit worthiness and shall
be guaranteed by the Company. The maximum term for a Stock Acquisition Loan
shall be seven (7) years.
3. PARTICIPATION
The Compensation Committee shall designate those employees of the
Company who shall be eligible to participate in the Plan.
4. STOCK ACQUISITION
(a) The Plan Administrative Committee shall designate the
participation level for each Participant through the table set forth in
Appendix A, as the same may be amended from time to time. Under the Plan,
each Participant is eligible to acquire Stock up to the participation level
designated in Appendix A.
(b) To facilitate the Participant's acquisition of Stock under the
Plan, the Company shall use reasonable efforts to provide each Participant
with access to Stock Acquisition Loans, the proceeds of which shall be used
for such Stock acquisition. Subject to any lending requirements imposed by an
outside lender through which Stock Acquisition Loans are obtained, a
Participant may take out additional Stock Acquisition Loans from time to time
and have multiple Stock Acquisition Loans outstanding at any time.
5. STOCK OWNERSHIP INCENTIVE PAYMENTS
(a) During the term of any Stock Acquisition Loan, the Company shall
reimburse each Participant the amount of interest paid by the Participant on
such Stock Acquisition Loan. Such reimbursements ("Interest Payments") shall
be made on a quarterly basis. During the first
-2-
<PAGE>
three years that any Stock Acquisition Loan is outstanding, the Interest
Payments shall also include a tax equalization "gross up" intended to
approximate the participant's additional federal income tax liability
(assuming a 31 percent marginal tax rate) resulting from the Interest
Payment. The total Interest Payment, including the gross-up amount (which
shall be calculated without reference to the Participant's actual federal
income tax rate or liability) shall be equal to the amount obtained by
dividing the total amount of interest paid by the Participant during the
quarter by .69. For example, if the total interest paid by the Participant
during a quarter is $600, the Interest Payment, including the gross up
amount, would be $600 divided by .69, or $869.57.
(b) The Plan Administrative Committee may authorize additional cash
advances to a Participant if, upon a recommendation by the Plan
Administrative Committee, the Compensation Committee determines such advances
are necessary to avoid a sale or other disposition of Stock by such
Participant due to a margin call, or to prevent a sale or disposition of the
Stock by such Participant if, in the Plan Administrative Committee's
judgment, such disposition would be detrimental to the Company or would
adversely affect shareholder value.
(c) In the case of a Participant who exercises a nonqualified option
to acquire Stock ("NSO") in order to satisfy the stock ownership levels
specified in the Guidelines, the Compensation Committee may authorize
additional cash payments to such Participant to compensate the Participant
for the approximate difference between (i) the estimated federal income tax
liability incurred by the participant by reason of such NSO exercise
(assuming a 31 percent marginal tax rate) and (ii) the tax liability the
Participant would have incurred if the difference between the exercise price
of the NSO and the fair market value of the Stock subject to the NSO on the
option exercise date (the "Spread") were taxed at a federal income tax rate
applicable to long-term capital gain of 20 percent (such payment being
referred to as the "Spread Reimbursement"). The Spread Reimbursement upon the
exercise of a nonqualified option shall be calculated by multiplying the
amount of the Spread by 11 percent. Such payments may include a "gross-up"
sufficient to offset the Participant's federal income tax liability incurred
on the receipt of the Spread Reimbursement, as determined by the Compensation
Committee in its sole and absolute discretion. Unless otherwise specified by
the Compensation Committee, any Spread Reimbursement paid to the Participant
under this Section 5(c) shall be subject to a Repayment Obligation in
accordance with the provisions of Section 6 in the same manner applicable to
Interest Payments described in Section 6(a).
(d) Notwithstanding any contrary provision of this Plan, unless
otherwise approved by the Compensation Committee, no Participant shall be
eligible to receive Interest Payments or tax gross-up payments with respect
to any Stock Acquisition Loan if (i) the proceeds of such loan are used to
purchase Shares of Stock on the open market or in a private sale and (ii) the
Participant had, on the date of such Stock acquisition, presently exercisable
employee stock options which remain unexercised.
-3-
<PAGE>
6. PARTICIPANT REPAYMENT OBLIGATIONS
(a) Following the third anniversary of any Stock Acquisition Loan and
prior to the seventh anniversary of such Stock Acquisition Loan, the Company
will continue to make Interest Payments (without the "gross up" for federal
income tax) to the Participant in accordance with Section 5 hereof; provided,
however that the Participant shall be obligated to repay such Interest
Payments to the Company for periods after the third anniversary of the Stock
Acquisition Loan term.
(b) The repayment obligation of a Participant ("Repayment Obligation")
shall be evidenced by a writing signed by the Participant and by the
execution of a negotiable promissory note. Any Repayment Obligation shall
bear interest at a rate, adjusted each calendar quarter, equal to the prime
rate as published in the WALL STREET JOURNAL on the last business day of the
preceding calendar quarter and shall be secured by a second priority security
interest in the Participant's Stock acquired with the proceeds of the Stock
Acquisition Loan.
(c) Payment of a Repayment Obligation shall be required in full on the
earlier of (i) the Participant's termination of employment with the Company,
(ii) the seventh anniversary of the corresponding Stock Acquisition Loan or
(iii) subject to the limitation of Section 6(d), the sale or other
disposition of the Stock if such sale or disposition causes the Participant's
Stock ownership level to fall below the participation level designated in the
Guidelines.
(d) Notwithstanding the provisions of Subsection (c) above, any
acceleration of a Repayment Obligation on account of a sale or other
disposition pursuant to Subsection 6(c)(ii) shall be limited to the lesser of
(i) any gain from such sale or disposition (net of any commissions) and (ii)
the Participant's Repayment Obligation at the time of the sale or disposition
multiplied by the ratio of the number of shares of Stock sold or disposed of
by the Participant to the total number of shares of Stock held by the
Participant prior to such sale or disposition. Any portion of a Repayment
Obligation not accelerated as a result of the limitation described in the
preceding sentence shall continue to be repayable in accordance with the
provisions of Section 6(c).
As an example of the manner in which this provision is intended to
operate, assume a Participant ("A") has a participation level under the
Guidelines of 1,000 shares of Stock. A acquires the 1,000 shares of Stock
with the proceeds of a 7-year Stock Acquisition Loan. In Year 4, A sells 700
shares (thus, falling below his designated participation level of 1,000
shares) at a gain of $200 (net of commissions). At the time of the sale, A
had a Repayment Obligation of $400 related to interest on his Stock
Acquisition Loan. Because A's sale of 700 shares is prior to the end of the
Stock Acquisition Loan term, A is required to pay the Company $200. Since A's
gain on the sale of the 700 shares (i.e., $200) is less than A's
proportionate share of his Repayment Obligation related to those 700 shares
(i.e., $280 -- $400 x 700 shares/1,000 shares = $280), A must pay $200 to the
Company pursuant to Section 6(d).
(e) Notwithstanding anything to the contrary contained herein,
Participant's Repayment Obligations shall terminate upon Participant's
termination of employment with the Company if such termination occurs within
twelve (12) months after a Change in Control of the
-4-
<PAGE>
Company and such termination is (a) by the Company, or (b) by the Participant
for "good reason." For the purposes of this paragraph, "good reason" shall
mean either a material reduction by the Company in the Participant's duties
and responsibilities, or a material reduction in the Participant's base
compensation. Upon any termination of employment with the Company by the
Participant, the Company's obligations to make further Interest Payments to
such Participant shall terminate immediately. For purposes of this Section
6(e), employment with a subsidiary of the Company shall be deemed to be
employment with the Company.
7. TERMINATION AND AMENDMENT
The Plan is completely voluntary on the part of the Company and neither
its existence nor its continuation shall be construed as creating any
contractual right to or obligation for its continued existence, nor shall the
existence of the Plan or participation therein be deemed to modify or
otherwise affect a Participant's continued employment with the Company. The
Company reserves the right at any time to modify or terminate the Plan by
action approved in writing by the Board or its delegatee, provided that such
modification or termination shall not affect the rights and obligations of
Participants and the Company under any then outstanding Stock Acquisition
Loans.
8. ADMINISTRATION OF THE PLAN
The Compensation Committee shall delegate to the Plan Administrative
Committee the power and authority to administer the Plan. The Plan
Administrative Committee shall have full authority in its discretion to
determine the participation level of each Participant. Except as otherwise
provided herein and subject to the provisions of the Plan, the Plan
Administrative Committee shall have full and conclusive authority to
interpret the Plan; to determine the terms and provisions of any Repayment
Obligation; and to make all other determinations necessary or advisable for
the proper day to day administration of the Plan. The Plan Administrative
Committee shall not have the power or authority to determine the persons
eligible to participate in the Plan, materially increase any benefits offered
under the Plan; to materially increase the Company's financial commitments;
or to prescribe, amend and rescind rules and regulations relating to the
Plan. The Plan Administrative Committee's determinations under the Plan need
not be uniform and may be made by it selectively among persons who are
eligible to participate in the Plan. The Plan Administrative Committee's
decisions shall be final and binding on all Participants.
9. MISCELLANEOUS
(a) The Plan shall become effective on September 1, 1997 or such other
date as designated by the Board.
(b) No benefit under the Plan shall in any manner be liable for or
subject to the debts, contracts, liabilities, engagements, or torts of the
Participant entitled to benefits under the Plan, and any attempt to
anticipate, sell, transfer, assign, pledge, encumber, or charge the same
shall be void.
-5-
<PAGE>
(c) The titles and headings of the Sections of the Plan are placed
herein for the convenience of reference only, and in the case of any
conflicts, the text of the Plan, rather than the titles or headings, shall
control.
(d) The masculine pronoun, wherever used herein, shall include the
feminine pronoun, and the singular shall include the plural, except where the
context requires otherwise.
(e) The provisions of the Plan shall be construed according to the
laws of the State of Florida, and the venue and jurisdiction of any suit with
respect to the Plan shall lie solely in the state or federal courts located
in Broward County, Florida.
-6-
<PAGE>
INTERIM SERVICES INC.
1997 STOCK PURCHASE ASSISTANCE PLAN
APPENDIX A
PARTICIPATION LEVELS
The number of shares of Stock which may be initially acquired by a
Participant under the Plan shall be determined as of September 1, 1997, based
on Participant's base salary and the fair market value of the stock as of
such date, or at such later dates as the Compensation shall determine for
future Participants who are selected to participate in the Plan after
September 1, 1997. The number of shares of Stock which may be acquired by a
Participant hereunder shall be adjusted as of each subsequent September 1
based on the Participant's base salary, position, and the fair market of the
Stock on each such date. The number of shares of Stock which may be acquired
by a Participant under the Plan shall not exceed the Participant's base
salary multiplied by the applicable multiplier, based upon Participant's
position with the Company, set forth below, divided by the fair market value
of the Stock:
Multiple of
Position Base Salary
-------- -----------
President/CEO 5
EVP-COO, EVP-CFO, SVP-General Counsel 3
Other Executive Who Directly Reports to CEO 2
EVP-COO, EVP-CFO, or SVP-General
Counsel
-7-
<PAGE>
EXHIBIT 10.17
AMENDMENT AGREEMENT NO. 1
TO THE CREDIT AGREEMENT
THIS AMENDMENT AGREEMENT NO. 1 (the "Amendment Agreement"), dated as of
June 1, 1997 to the CREDIT AGREEMENT dated as of May 1, 1997 (the "Credit
Agreement"), made by and among INTERIM SERVICES INC., a Delaware corporation
(the "Borrower"), the Borrowing Subsidiaries parties hereto both as of the date
hereof or pursuant to SECTION 2.20 to the Credit Agreement (herein each a
"Company" and collectively, the "Companies"), the several financial institutions
from time to time party to the Credit Agreement (collectively, the "Banks";
individually, a "Bank"), THE FIRST NATIONAL BANK OF CHICAGO, as documentation
agent for the Banks (in such capacity, the "Documentation Agent"), and
NATIONSBANK, N.A., as agent for the Banks (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Companies, the Banks, the Documentation Agent
and the Agent have entered into the Credit Agreement;
WHEREAS, the Borrower has requested that the Documentation Agent, the Agent
and the Banks amend the Credit Agreement; and
WHEREAS, upon the terms and conditions contained herein the Documentation
Agent, the Agent and the Banks are willing to amend the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and conditions herein set
forth, it is hereby agreed as follows:
1. CREDIT AGREEMENT AMENDMENT. Subject to the conditions hereof, the
Credit Agreement is hereby amended, effective as of the date hereof, as follows:
a. SECTION 1.1 of the Credit Agreement is hereby amended by amending and
restating the definition of "Guarantor" in its entirety as follows:
"'Guarantor' means each of Interim Accounting Personnel, Inc.,Interim
Financial Corporation, Interim Legal Services Inc., Interim Personnel
Inc., Interim Temporary Personnel Inc., Rich Field Agency, Inc.,
Interim Technology Inc., Interim Real Estate Solutions Inc., Cornell
Computer Corp., Spectrum Financial Corporation, Interim Acquisition
Corporation (and such other Subsidiaries which may become a
Guarantor)."
b. The definition of "Total Offshore Currency Sublimit" in SECTION 1.1
of the Credit Agreement is hereby amended by deleting the figure
"$305,000,000" appearing therein and inserting in lieu thereof the
figure "$315,000,000."
<PAGE>
c. SECTION 2.9(e)(i) of the Credit Agreement is hereby amended by
amending and restating such section in its entirety as follows:
"(i) the Companies shall apply 100% of Net Proceeds to the prepayment
or permanent reduction of Term Loan Outstandings or Revolving Loan
Outstandings in the following manner:
(A) the Companies shall prepay or otherwise permanently reduce
Term Loan Outstandings by application to the Ratable Reduction of
Term Loans of an amount equal to 50% of Net Proceeds and if such
Net Proceeds to be applied to Term Loan Outstandings shall be
greater than the Dollar Equivalent Amount of Term Loan
Outstandings, then the Revolving Loan Outstandings shall be
reduced by the amount of such excess;
(B) a Company shall give not less than five (5) Business Days
written notice to the Agent of a prepayment under this SECTION
2.9(e)(i), which notice shall include a certificate of a
Responsible Officer of the Borrower setting forth in reasonable
detail the allocations and calculations utilized in computing the
amount of such prepayment or other reduction; and
(C) each prepayment or other reduction under this SECTION
2.9(e)(i) is to be made within 30 days of receipt of such
proceeds;"
d. SECTION 9.7(b) of the Credit Agreement is hereby amended by deleting
"$125,000,000" and inserting in lieu thereof the phrase "$75,000,000
excluding the value of the assets sold in connection with the sale of
the Borrower's healthcare division to Cornerstone Equity Investors."
e. Exhibit A of Schedule II is hereby amended by deleting references to
the following Subsidiaries: (i) Interim Assisted Care, Inc., (ii)
Interim Healthcare, Inc., (iii) Interim Healthcare of New York, Inc.,
(iv) Interim Occupational Health, Inc. and (v) Interim Physicians,
Inc.
2. APPLICATION OF NET PROCEEDS. Notwithstanding SECTION 2.9(e)(i) of the
Credit Agreement as amended, the Net Proceeds from the sale of the Borrower's
healthcare division to Cornerstone Equity Investors shall be applied as agreed
to between the Banks.
3. REPRESENTATIONS AND WARRANTIES. In order to induce the
Documentation Agent, the Agent and the Banks to enter into this Amendment
Agreement, each Company hereby represents and warrants that the Credit
Agreement has been re-examined by such Company and that except as disclosed
by any Company in writing to the Banks as of the date hereof:
a. The representations and warranties made by the Borrower in Article VII
thereof are true on and as of the date hereof except that the
financial statements referred to in
2
<PAGE>
SECTION 7.10 shall be those most recently furnished to the Agent
pursuant to SECTION 8.1;
b. There has been no material adverse change in the condition, financial
or otherwise, of such Company and its Subsidiaries since the date of
the most recent financial reports of such Company delivered to the
Agent under SECTION 8.1 thereof, other than changes in the ordinary
course of business, none of which has been a material adverse change;
c. The business and properties of such Company and its Subsidiaries are
not, and since the date of the most recent financial reports of such
Company delivered to the Agent under SECTION 8.1 thereof, have not
been, adversely affected in any substantial way as the result of any
fire, explosion, earthquake, accident, strike, lockout, combination of
workers, flood, embargo, riot, activities of armed forces, war or acts
of God or the public enemy, or cancellation or loss of any major
contracts; and
d. After giving effect to this Amendment Agreement, no condition exists
which, upon the effectiveness of the amendment contemplated hereby,
would constitute a Default or an Event of Default on the part of such
Company under the Credit Agreement or the Notes, either immediately or
with the lapse of time or the giving of notice, or both.
4. CONDITIONS PRECEDENT. The effectiveness of this Amendment Agreement is
subject to the receipt by the Agent of the following:
a. twenty-two counterparts of this Amendment Agreement duly executed by
all signatories hereto; and
b. copies of all additional agreements, instruments and documents which
the Agent may reasonably request, such documents, when appropriate, to
be certified by appropriate governmental authorities.
All proceedings of the Borrower relating to the matters provided for herein
shall be satisfactory to the Lenders, the Agent and their counsel.
5. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Amendment
Agreement
3
<PAGE>
may be changed, modified, waived or canceled orally or otherwise, except by
writing, signed by all the parties hereto, specifying such change,
modification, waiver or cancellation of such terms or conditions, or of any
proceeding or succeeding breach thereof.
6. CONSENT OF GUARANTORS. The Guarantors have joined in the execution
of this Amendment Agreement for the purposes of consenting hereto and for the
further purpose of confirming their guaranty of Obligations of the Companies
as provided in the Guaranty.
7. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall remain
in full force and effect according to their respective terms.
8. COUNTERPARTS. This Amendment Agreement may be executed in any number
of counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
9. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAW OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER HEREBY (i) SUBMITS TO
THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF FLORIDA FOR THE
PURPOSES OF RESOLVING DISPUTES HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY OR FOR PURPOSES OF COLLECTION AND (ii) WAIVES
TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
10. ENFORCEABILITY. Should any one or more of the provisions of this
Amendment Agreement be determined to be illegal or unenforceable as to one or
more of the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
11. CREDIT AGREEMENT. All references in any of the Loan Documents to the
Credit Agreement shall mean and include the Credit Agreement as amended hereby.
12. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lenders, the Agent
and their respective successors, assigns and legal representatives; PROVIDED,
HOWEVER, that the Borrower, without the prior consent of the Lenders, may not
assign any rights, powers, duties or obligations hereunder.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered in Charlotte by their proper and duly authorized
officers as of the day and year first above written.
WITNESS: INTERIM SERVICES INC.
/s/ [Illegible] Bruce T. Peterson By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Name: Shannon C. Allen
/s/ [Illegible] Rose Martin Title: Treasurer
- --------------------------
INTERIM SERVICES (EUROPE) INC.
/s/ [Illegible] Bruce T. Peterson By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Name: Shannon C. Allen
/s/ [Illegible] Rose Martin Title: Treasurer
- --------------------------
INTERIM SERVICES (UK) PLC
/s/ [Illegible] Fay Rugh By: /s/ John B. Smith
- -------------------------- ------------------------------------
Name: John B. Smith
Bruce T. Peterson Title: Director
- --------------------------
5
<PAGE>
INTERIM ACCOUNTING PERSONNEL INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
INTERIM FINANCIAL CORPORATION
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
INTERIM LEGAL SERVICES INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
INTERIM PERSONNEL INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
INTERIM TEMPORARY PERSONNEL INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
RICH FIELD AGENCY, INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
6
<PAGE>
INTERIM TECHNOLOGY INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
INTERIM REAL ESTATE SOLUTIONS INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
CORNELL COMPUTER CORP.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
SPECTRUM FINANCIAL CORPORATION
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
INTERIM CAREER SERVICES INC.
Bruce T. Peterson
/s/ [Illegible] By: /s/ Shannon C. Allen
- -------------------------- ------------------------------------
Rose Martin Name: Shannon C. Allen
/s/ [Illegible] Title: Treasurer
- --------------------------
7
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent and Issuing Bank
By: /s/ Richard G. Parkhurst, Jr.
------------------------------------
Name: Richard G. Parkhurst, Jr.
Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION,
as a Bank
By: /s/ Richard G. Parkhurst, Jr.
------------------------------------
Name: Richard G. Parkhurst, Jr.
Title: Vice President
8
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation Agent and as a Lender
By: /s/ Courtenay R. Wood
------------------------------------
Name: Courtenay R. Wood
Title: Vice President
Lending Office:
One First National Plaza
Suite 0167, 1-10
Chicago, Illinois 60670
Wire Transfer Instructions:
The First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Account #7521-7653
Attention: DES Incoming Clearing Account
Reference: Interim Services, Inc.
9
<PAGE>
BARNETT BANK, N.A., as a Co-Agent and
as a Lender
By: /s/ Michael Cooney
------------------------------------
Name: Michael Cooney
Title: Vice President
Lending Office:
1 E. Broward Boulevard, 4th Floor
Fort Lauderdale, Florida 33301
Wire Transfer Instructions:
Barnett Bank, N.A.
Jacksonville, Florida
ABA #063000047
Account # Interim Services 00900015967
Attention: Commercial Loan Accounting
10
<PAGE>
THE FUJI BANK AND TRUST COMPANY,
as a Co-Agent and as a Lender
By:/s/ Toshiaki Yakura
------------------------------------
Name: Toshiaki Yakura
Title: EVP
Lending Office:
The Fuji Bank and Trust Company
Two World Trade Center
New York, New York 10048
Wire Transfer Instructions:
The Fuji Bank and Trust Company
New York, New York
ABA # 026008905
Account # 515011U2
Attention: Betty Ali
Reference: Interim Services, Inc.
11
<PAGE>
THE CHASE MANHATTAN BANK,
as a Co-Agent and as a Lender
By: /s/ Stephanie Parker
------------------------------------
Name: Stephanie Parker
Title: Assistant Vice President
Lending Office:
270 Park Avenue
New York, New York 10017
Wire Transfer Instructions:
The Chase Manhattan Bank
New York, New York
ABA #021000021
Account # I059420
Reference: Interim Services, Inc.
Attention: John Knapp
12
<PAGE>
FLEET NATIONAL BANK, as a Co-Agent
and as a Lender
By: /s/ Deborah Lawrence
------------------------------------
Name: Deborah Lawrence
Title: Senior Vice President
Lending Office:
1 Federal Street
MAOFDO4J
Boston, Massachusetts 02176
Wire Transfer Instructions:
Fleet National Bank
Boston, Massachusetts
ABA # 011-000-138
Account # __________
Attention: _______________________
Reference: Interim Services Inc.
13
<PAGE>
ABN AMRO BANK NV
By: /s/ Richard Lavina
--------------------------------
Name: Richard Lavina
Title: Group Vice President
By: /s/ Deborah Day Orzco
--------------------------------
Name: Deborah Day Orzco
Title: Vice President
Lending Office:
200 S. Biscayne Boulevard
22nd Floor
Miami, Florida 33131
Wire Transfer Instructions:
LOANS:
ABN AMRO Bank NV
New York, New York
ABA # 026009580
F/O ABN AMRO Bank NV-Chicago CPU
Account # 650-001-1789-41
Reference: Interim
LETTERS OF CREDIT:
ABN AMRO Bank NV
New York Trade Services CPU
ABA # 026009580
F/O ABN AMRO Bank NV-New York Trade Services CPU
Account # 655-001-1711-41
Reference: Interim
14
<PAGE>
BANK OF MONTREAL
By: /s/ R. J. McClorey
-------------------------------------
Name: R. J. McClorey
Title: Director
Lending Office:
115 South LaSalle Street
Chicago, Illinois 60603
Wire Transfer Instructions:
Harris Trust & Savings Bank
Chicago, Illinois 60603
ABA #071-000-288
Account # 1248566
Bank of Montreal, Chicago Branch
Reference: Interim Services Inc.
15
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
By: /s/ Kazuo Iida
-------------------------------------
Name: Kazuo Iida
Title: General Manager
Lending Office:
191 Peachtree Street, N.E.
Suite 3600
Atlanta, Georgia 30303-1757
Wire Transfer Instructions:
The Industrial Bank of Japan, Limited,
New York Branch
New York, New York
ABA #026008345
For further credit to: IBJ Atlanta Agency
Account # 2601-21014
Reference: Interim Services Inc.
16
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Jeffrey Hwang
-------------------------------------
Name: Jeffrey Hwang
Title: Vice President
Lending Office:
60 Wall Street
New York, New York 10260-0060
Wire Transfer Instructions:
Morgan Guaranty Trust Company of New York
New York, New York
ABA # 021000238
For credit to: Loan Department
Account # 999-99-090
Attention: Module 0002
Reference: Interim Services Inc.
17
<PAGE>
THE SANWA BANK, LIMITED, ATLANTA
AGENCY
By: /s/ P. J. Pawlak
-------------------------------------
Name: P. J. Pawlak
Title: V.P. & Senior Manager
Lending Office:
133 Peachtree Street, N.E.
Suite 4950
Atlanta, Georgia 30303
Wire Transfer Instructions:
The Sanwa Bank, New York Branch
New York, New York
ABA # 026009823
For the account of: Sanwa Atlanta
Account # 999669
18
<PAGE>
THE SUMITOMO BANK, LIMITED
By: /s/ Masayuki Fukushima
-------------------------------------
Name: Masayuki Fukushima
Title: Joint General Manager
Lending Office:
277 Park Avenue
New York, New York 10172
Wire Transfer Instructions:
Morgan Guaranty Trust Company of New York
New York, New York
Account # 631-28-256
(The Sumitomo Bank, Ltd.)
ABA # 021000238
Attention: Loan Operations
Reference: Interim Services Inc.
19
<PAGE>
THE BANK OF NEW YORK
By: /s/ David C. Siegel
-------------------------------------
Name: David C. Siegel
Title: Assistant Vice President
Lending Office:
One Wall Street, 22nd Floor
New York, New York 10286
Wire Transfer Instructions:
The Bank of New York
New York, New York
ABA # 021000018
Commercial Loan Servicing Department
Reference: Interim Services Inc.
20
<PAGE>
COMERICA BANK
By: /s/ Martin G. Ellis
-------------------------------------
Name: Martin G. Ellis
Title: Vice President
Lending Office:
500 Woodward Avenue
Detroit, Michigan 48375-3280
Wire Transfer Instructions:
Comerica Bank
Detroit, Michigan
ABA # 072000096
Reference: Interim Services
Attention: CLAS
21
<PAGE>
HIBERNIA NATIONAL BANK
By: /s/ Christopher B. Pitre
-------------------------------------
Name: Christopher B. Pitre
Title: Assistant Vice President
Lending Office:
313 Carondelet Street
New Orleans, Louisiana 70130
Wire Transfer Instructions:
Hibernia National Bank
New Orleans, Louisiana
ABA #065000090
Account # 0520-36615
Attention: National Accounts
22
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Dave McLaughlin
-------------------------------------
Name: Dave McLaughlin
Title: Vice President
Lending Office:
1251 Avenue of the Americas, 12th Floor
New York, New York 10020-1104
Wire Transfer Instructions:
Bank of Tokyo-Mitsubishi Trust Company
ABA # 0260-0968-7
Further Credit to: Loan Operations Dept.
23
<PAGE>
WACHOVIA BANK, N.A.
By: /s/ David R. Shutley
------------------------------------
Name: David R. Shutley
Title: Vice President
Risk Management
Lending Office:
191 Peachtree Street NE - Mail Code GA3940
Atlanta, Georgia 30303
Wire Transfer Instructions:
Wachovia Bank, N.A.
ABA # 061000010
Account #18-800-621
Account Name: Clearing Account
Attention: Adrienne Durham / Karen Mathews
Reference: Interim Services, Inc.
24
<PAGE>
LONG TERM CREDIT BANK TRUST COMPANY
By: Philip A. Marsden
--------------------------------
Name: Philip A. Marsden
Title: Senior Vice President
Lending Office:
165 Broadway
New York, New York 10006
Wire Transfer Instructions:
Bankers Trust Company
ABA # 021001033
Account # 04-203-606
Account Name: LTCB Trust Company
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-05873, 33-76120, 333-05959, 33-76122, 333-05957, 333-18935, 333-18883,
333-18885, 333-30841, 333-30211, 333-31901, 333-31895 and 333-43757 on Form
S-8 and Registration Statement No. 33-94532 on Form S-3 of Interim Services
Inc. of our report dated February 5, 1998, appearing in this Annual Report on
Form 10-K of Interim Services Inc. for the year ended December 26,1997.
/s/ Deloitte & Touche LLP
Fort Lauderdale, Florida
March 9, 1998
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