SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2000
Commission file number: 0-23198
SPHERION CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3536544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2050 SPECTRUM BOULEVARD, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
(954) 938-7600
(Registrant's telephone number, including area code)
INTERIM SERVICES INC.
(Former name)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
COMMON STOCK-$.01 PAR VALUE New York Stock Exchange
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__
Number of shares of Registrant's Common Stock, par value $.01 per
share ("Common Stock"), outstanding on October 27, 2000 was 62,247,124.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Financial Information
Item 1. Financial Statements Page
----
<S> <C>
Condensed Consolidated Statements of Earnings
Three and Nine Months Ended September 29, 2000 and September 24, 1999....... 1
Condensed Consolidated Balance Sheets
September 29, 2000 and December 31, 1999.................................... 2
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 29, 2000 and September 24, 1999................. 3
Notes to Condensed Consolidated Financial Statements........................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 14
PART II Other Information
Item 4. Matters Submitted to a Vote of Security Holders............................... 15
Item 6. Exhibits and Reports on Form 8-K.............................................. 15
Signatures.............................................................................. 17
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
29, 2000 24, 1999 29, 2000 24, 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues................................. $ 936,744 $ 956,419 $ 2,842,028 $ 2,129,525
Cost of services......................... 627,207 656,220 1,894,840 1,406,811
-------------- -------------- ------------- --------------
Gross profit............................. 309,537 300,199 947,188 722,714
-------------- -------------- ------------- --------------
Selling, general and administrative
expenses............................... 229,011 208,002 693,818 517,435
Licensee commissions..................... 17,882 22,614 54,858 47,843
Amortization of intangibles.............. 10,891 10,240 32,095 23,990
Interest expense......................... 13,701 12,010 39,231 25,496
Interest income.......................... (636) (572) (1,865) (1,974)
Year 2000 costs.......................... - 3,038 - 3,038
Restructuring and integration costs...... - 20,864 - 20,864
-------------- -------------- ------------- --------------
270,849 276,196 818,137 636,692
-------------- -------------- ------------- --------------
Earnings before income taxes........ 38,688 24,003 129,051 86,022
Income taxes............................. 14,315 10,650 52,266 37,946
-------------- -------------- ------------- --------------
Net earnings............................ $ 24,373 $ 13,353 $ 76,785 $ 48,076
============== ============== ============= ==============
Earnings per share:
Basic............................... $ 0.38 $ 0.21 $ 1.20 $ 0.93
Diluted............................. $ 0.37 $ 0.21 $ 1.16 $ 0.91
Weighted average shares outstanding:
Basic............................... 63,627 63,343 64,051 51,901
Diluted............................. 69,393 69,409 70,110 57,788
</TABLE>
See notes to Condensed Consolidated Financial Statements.
1
<PAGE>
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 29, DECEMBER 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................. $ 43,693 $ 37,539
Receivables, less allowance for doubtful accounts of $21,290 and $16,956.. 626,129 560,713
Deferred tax asset........................................................ 51,748 45,686
Other current assets...................................................... 52,426 64,452
--------------- ----------------
Total current assets................................................... 773,996 708,390
Goodwill, net............................................................... 1,322,808 1,270,562
Tradenames and other intangibles, net....................................... 179,518 200,909
Property and equipment, net................................................. 139,410 135,976
Other assets................................................................ 118,528 123,064
--------------- ----------------
$ 2,534,260 $ 2,438,901
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................................... $ 308,848 $ 216,108
Accounts payable and other accrued expenses............................... 173,542 223,409
Accrued salaries, wages and payroll taxes................................. 237,096 184,611
Other current liabilities................................................. 62,355 33,774
--------------- ----------------
Total current liabilities............................................... 781,841 657,902
Long-term debt ............................................................. 470,012 513,611
Other long-term liabilities................................................. 108,489 108,128
--------------- ----------------
Total liabilities....................................................... 1,360,342 1,279,641
--------------- ----------------
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 200,000,000 shares;
issued 65,341,425 shares............................................... 653 653
Treasury stock, at cost, 3,184,406 and 1,751,143 shares, respectively .... (46,889) (31,628)
Additional paid-in capital................................................ 868,472 868,572
Retained earnings......................................................... 409,883 333,098
Accumulated other comprehensive loss...................................... (58,201) (11,435)
--------------- ----------------
Total stockholders' equity.............................................. 1,173,918 1,159,260
--------------- ----------------
$ 2,534,260 $ 2,438,901
=============== ================
</TABLE>
See notes to Condensed Consolidated Financial Statements.
2
<PAGE>
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER SEPTEMBER
29, 2000 24, 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings ............................................................... $ 76,785 $ 48,076
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization ............................................ 60,046 45,761
Restructuring charge ..................................................... -- 12,650
Other non-cash charges ................................................... 5,931 4,061
Changes in assets and liabilities, net of effects of acquisitions:
Receivables ............................................................ (77,643) (87,146)
Other assets ........................................................... 21,834 (4,908)
Accounts payable and accrued liabilities ............................... 25,707 11,538
--------- ---------
Net Cash Provided by Operating Activities ............................. 112,660 30,032
--------- ---------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired ......................................... (98,162) (260,294)
Capital expenditures ....................................................... (39,540) (35,988)
Investments in equity securities ........................................... (26,765) --
Other ...................................................................... 13,035 2,928
--------- ---------
Net Cash Used in Investing Activities ................................. (151,432) (293,354)
--------- ---------
Cash Flows from Financing Activities:
Debt proceeds .............................................................. 92,942 378,319
Debt repayments ............................................................ (18,672) (127,891)
Purchase of treasury stock ................................................. (28,319) (89,368)
Proceeds from exercise of employee stock options and stock purchase plan ... 8,890 6,411
Other, net ................................................................. (9,915) (8,861)
--------- ---------
Net Cash Provided by Financing Activities ............................. 44,926 158,610
--------- ---------
Increase/(decrease) in cash and cash equivalents ........................... 6,154 (104,712)
Cash and cash equivalents, beginning of period ............................. 37,539 153,314
--------- ---------
Cash and cash equivalents, end of period ................................... $ 43,693 $ 48,602
========= =========
Non-cash activities:
Stock issuance in connection with the Norrell acquisition ............. $ 431,283
=========
Reissuance of treasury stock in connection with the Norrell
acquisition............................................................ $ 54,182
=========
</TABLE>
See notes to Condensed Consolidated Financial Statements.
3
<PAGE>
SPHERION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The condensed consolidated financial statements of Spherion Corporation
and subsidiaries ("Spherion"), formerly Interim Services Inc.
("Interim"), included herein, do not include all footnote disclosures
normally included in annual financial statements and, therefore, should
be read in conjunction with Interim's financial statements and notes
thereto for each of the fiscal years in the three-year period ended
December 31, 1999 included in Interim's Annual Report on Form 10-K.
The condensed consolidated financial statements for the three and nine
months ended September 29, 2000 and September 24, 1999 are unaudited
and, in the opinion of management, reflect all adjustments (consisting
only of normal recurring adjustments) necessary for fair presentation of
the financial position, results of operations and cash flows for such
periods. Results for the three and nine months ended September 29, 2000
are not necessarily indicative of results to be expected for the full
fiscal year ending December 29, 2000. Certain 1999 amounts have been
reclassified to conform to current year presentation.
2. Name Change
As disclosed in the Form 8-K filed with the Securities and Exchange
Commission on July 7, 2000, Interim Services Inc. changed its name to
Spherion Corporation. This change was made to better reflect the nature
of the total company, which has shifted from a traditional staffing
company to one that provides global consulting and human capital
management services. Spherion's new ticker symbol on the New York Stock
Exchange is "SFN."
3. Comprehensive Income
Comprehensive income, which totaled $5.2 million and $20.6 million for
the three months ended September 29, 2000 and September 24, 1999,
respectively, is comprised of net earnings of $24.4 million and $13.4
million, respectively, foreign currency translation adjustments of
($11.3) million and $7.2 million, respectively, and an unrealized loss,
net of tax, on equity securities of ($7.9) million in 2000.
Comprehensive income, which totaled $30.0 million and $35.4 million for
the nine months ended September 29, 2000 and September 24, 1999,
respectively, is comprised of net earnings of $76.8 million and $48.1
million, respectively, foreign currency translation adjustments of
($34.9) million and ($12.7) million, respectively, and an unrealized
loss, net of tax, on equity securities of ($11.9) million in 2000.
4. Earnings Per Share
Basic earnings per share is computed by dividing Spherion's net earnings
by the weighted average number of shares outstanding during the period.
Diluted earnings per share is computed by dividing Spherion's net
earnings plus after-tax interest on the convertible subordinated notes,
by the weighted average number of shares outstanding and the impact of
all dilutive potential common shares, primarily stock options,
convertible subordinated notes, restricted stock and deferred stock
units. The dilutive impact of stock options is determined by applying
the treasury stock method and the dilutive impact of the convertible
subordinated notes is determined by applying the "if converted" method.
4
<PAGE>
The following table reconciles the numerator (earnings) and denominator
(shares) of the basic and diluted earnings per share computations for
net earnings.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 29, 2000 SEPTEMBER 24, 1999
---------------------------------- ------------------------------------
NET PER-SHARE NET PER-SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
----------- --------- ---------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS...................... $ 24,373 63,627 $ 0.38 $ 13,353 63,343 $ 0.21
========== ===========
Effect of dilutive securities:
Stock options and other
dilutive securities .... - 217 - 517
Convertible subordinated
notes.................. 1,511 5,549 1,512 5,549
----------- --------- ------------- ---------
Diluted EPS.................... $ 25,884 69,393 $ 0.37 $ 14,865 69,409 $ 0.21
=========== ========= ========== ============= ========= ===========
<CAPTION>
NINE MONTHS ENDED
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 29, 2000 SEPTEMBER 24, 1999
--------------------------------- ----------------------------------
NET PER-SHARE NET PER-SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
---------- --------- ---------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS...................... $ 76,785 64,051 $ 1.20 $ 48,076 51,901 $ 0.93
========== ===========
Effect of dilutive securities:
Stock options and other
dilutive securities..... - 510 - 338
Convertible subordinated
notes.................. 4,535 5,549 4,549 5,549
---------- --------- -------------- ---------
Diluted EPS.................... $ 81,320 70,110 $ 1.16 $ 52,625 57,788 $ 0.91
========== ========= ========== ============== ========= ===========
</TABLE>
5. Segment Information
Effective in the first quarter of 2000, Spherion changed its basis of
segmentation from a geographic approach to the following: Information
Technology, Professional Services and Commercial Staffing. Management
believes that the new reportable segments better reflect the management
and fiscal responsibilities within Spherion subsequent to the Norrell
acquisition and integration of its operations. Spherion evaluates the
performance of its operating segments and allocates resources based on
revenues, gross profit and segment operating margin. Segment operating
margin is defined as income before unallocated central costs, net
interest expense, income taxes and special charges (Year 2000,
restructuring and integration costs). All material intercompany revenues
and expenses have been eliminated. All previous year amounts have been
restated for comparative purposes.
5
<PAGE>
Information on operating segments and a reconciliation to earnings
before income taxes for the three and nine months ended September 29,
2000 and September 24, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
29, 2000 24, 1999 29, 2000 24, 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Information Technology....... $ 186,542 $ 222,531 $ 580,017 $ 560,011
Professional Services........ 329,678 281,792 981,097 643,275
Commercial Staffing.......... 420,524 452,096 1,280,914 926,239
-------------- -------------- -------------- -------------
$ 936,744 $ 956,419 $ 2,842,028 $ 2,129,525
============== ============== ============== =============
GROSS PROFIT:
Information Technology....... $ 59,605 $ 76,131 $ 187,689 $ 194,519
Professional Services........ 159,143 128,274 484,705 331,841
Commercial Staffing.......... 90,789 95,794 274,794 196,354
-------------- -------------- -------------- -------------
$ 309,537 $ 300,199 $ 947,188 $ 722,714
============== ============== ============== =============
SEGMENT OPERATING MARGIN:
Information Technology....... $ 9,375 $ 20,822 $ 30,267 $ 52,291
Professional Services........ 36,976 30,094 115,831 73,938
Commercial Staffing.......... 19,855 17,280 57,788 31,923
-------------- -------------- -------------- -------------
66,206 68,196 203,886 158,152
Unallocated central costs.... (14,453) (8,853) (37,469) (24,706)
Interest expense, net........ (13,065) (11,438) (37,366) (23,522)
Year 2000 costs.............. - (3,038) - (3,038)
Restructuring and integration
costs................... - (20,864) - (20,864)
-------------- -------------- -------------- -------------
Earnings before income taxes. $ 38,688 $ 24,003 $ 129,051 $ 86,022
============== ============== ============== =============
</TABLE>
6. Acquisitions
During the nine months ended September 29, 2000, Spherion repurchased
several licensed offices, which do not impact Spherion's reported
revenues, as sales by the licensed offices are included in Spherion's
revenues, and completed several other acquisitions for total cash
consideration of approximately $41.5 million. Additionally, Spherion
made earnout payments of $56.7 million in cash on previous acquisitions.
7. Restructuring
During 1999, Spherion incurred approximately $12.8 million of
restructuring costs related to a plan (the "Plan") adopted by management
in which certain redundant functions and assets of Spherion, as a result
of the Norrell acquisition, would be eliminated. During the second
quarter of 2000, remaining accruals of approximately $3.0 million were
identified that were not needed, primarily the result of the buyout of
existing lease obligations at better than expected rates and this $3.0
million was reversed to income. Spherion then undertook additional
restructuring actions in the amount of $3.2 million related to the
Norrell acquisition. These additional actions included 71 positions,
which were eliminated due to the integration of former Norrell
operations into Spherion's existing operations, with most of these
positions being administrative personnel within the Information
Technology segment. An additional 14 offices were selected for closure
due to continued rationalization of office space where overlapping
territories were identified.
6
<PAGE>
An analysis of the restructuring accrual is as follows (dollar amounts
in thousands):
<TABLE>
<CAPTION>
Second Quarter 2000
-------------------
Utilized
Original Through Reversal New Accrual Utilized Accrual at
Plan June 30, of Over Restructuring at June During the September
Charge 2000 Accrual Actions 30, 2000 Quarter 29, 2000
-------------- --------- ------------ --------- -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Facility
closures $ 6,992 ($2,545) ($2,007) $ 845 $3,285 ($1,226) $2,059
Severance 3,650 (2,366) (978) 2,399 2,705 (895) 1,810
Asset
write-offs 2,108 (2,108) - - - - -
-------------- --------- ------------ --------- -------------- ---------- ------------ -----------
Total Charge $12,750 ($7,019) ($2,985) $3,244 $5,990 ($2,121) $3,869
============== ========= ============ ========= ============== ========== ============ ===========
Number of
offices 43 (45) - 14 12 - 12
Number of
personnel 160 (90) (74) 71 67 (40) 27
</TABLE>
The remaining accruals, which are included in accounts payable and
accrued expenses, relate to lease buyout assumptions that will be paid
out through 2004 unless early terminations can be negotiated and
severance costs which will be paid out during 2000.
8. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (the "Statement" or "SFAS No. 133").
The Statement establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that
receive hedge accounting. SFAS No. 133, as amended, is effective for
fiscal years beginning after June 15, 2000. Spherion will adopt the
provisions of SFAS No. 133, as amended, in the first quarter of 2001 as
a cumulative effect of a change in accounting principles in the
statement of earnings. Had Spherion adopted these pronouncements in
the fourth quarter of 2000, the after tax cost would have been
approximately $1.2 million, but this amount will change as market
conditions change.
9. Other
During the second quarter of 2000, Spherion invested $24.8 million in
Xceed Inc., an interactive architect and eBusiness solutions builder. At
September 29, 2000, the fair market value of this investment had
declined $19.8 million. Under the accounting rules prescribed by SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," this investment has been classified as "available for sale"
and the decline in fair value as an unrealized holding loss, net of tax,
which is included in accumulated other comprehensive loss on the
Consolidated Balance Sheet. Management periodically assesses the
valuation of its SFAS No. 115 "available for sale" investments and if a
decline in value is deemed to be other than temporary, a loss would be
recorded in the statement of earnings.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Spherion is a leader in the area of human capital management operating
in 13 countries around the world. As previously mentioned, Spherion
changed its basis of segmentation during the first quarter of 2000 from
a geographic approach to the following: Information Technology,
Professional Services and Commercial Staffing. Management believes that
the new reportable segments better reflect the management and fiscal
responsibilities within Spherion subsequent to the Norrell acquisition
and integration of its operations. In its operating segments, Spherion
provides five services: (1) consulting-including outplacement, executive
coaching and information
7
<PAGE>
technology consulting; (2) managed staffing-such as temporary and permanent
workforce management, which includes On-Premise and vendor management; (3)
outsourcing-includes functional management and staffing of various
administrative functions, including full service call center management; (4)
search/recruitment-such as contingency recruiting and executive retained search;
and (5) flexible staffing-temporary personnel from administrative to executive.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------
SEPTEMBER 29, 2000 SEPTEMBER 24, 1999
--------------------------- ---------------------------
% OF % OF
TOTAL TOTAL
----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Information Technology......... $ 186,542 19.9% $ 222,531 23.3%
Professional Services.......... 329,678 35.2% 281,792 29.4%
Commercial Staffing............ 420,524 44.9% 452,096 47.3%
-------------- ----------- ------------- ------------
$ 936,744 100.0% $ 956,419 100.0%
============== =========== ============= ============
<CAPTION>
% OF % OF
REVENUES REVENUES
----------- ------------
<S> <C> <C> <C> <C>
GROSS PROFIT:
Information Technology......... $ 59,605 32.0% $ 76,131 34.2%
Professional Services.......... 159,143 48.3% 128,274 45.5%
Commercial Staffing............ 90,789 21.6% 95,794 21.2%
-------------- ----------- ------------- ------------
$ 309,537 33.0% $ 300,199 31.4%
============== =========== ============= ============
SEGMENT OPERATING MARGIN:
Information Technology.......... $ 9,375 5.0% $ 20,822 9.4%
Professional Services........... 36,976 11.2% 30,094 10.7%
Commercial Staffing............. 19,855 4.7% 17,280 3.8%
-------------- ----------- ------------- ------------
66,206 7.1% 68,196 7.1%
=========== ============
Unallocated central costs....... (14,453) (8,853)
Interest expense, net........... (13,065) (11,438)
Year 2000 costs................. - (3,038)
Restructuring and integration
costs...................... - (20,864)
-------------- -------------
Earnings before income taxes.... $ 38,688 $ 24,003
============== =============
</TABLE>
THREE MONTHS ENDED SEPTEMBER 29, 2000 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 24, 1999
INFORMATION TECHNOLOGY. Revenues decreased 16.2% to $186.5 million from
$222.5 million in the prior year due primarily to industry-related
decreases in customer demand and absence of longer duration ERP and
Y2K-related projects in the 2000 period. Information Technology revenues
continued to be impacted by the trend toward smaller and shorter
duration e-solutions projects and away from traditional IT services.
Revenues by service line for the quarter within the group were comprised
of 63.2% consulting, 7.6% managed staffing, 1.3% outsourcing, 1.1%
search/recruitment and 26.8% flexible staffing. As a percentage of total
Information Technology revenues, managed staffing increased from a 1999
level of 4.8% reflecting increases in help desk services, while
consulting revenue decreased from 67.1% due to the industry-related
decreases previously described. All other service line revenue
percentages were about the same in both three-month periods.
8
<PAGE>
Gross profit decreased 21.7% to $59.6 million from $76.1 million in the
prior year and the overall gross profit percentage decreased to 32.0%
from 34.2% due to the slowdown in technology spending, discussed above,
and lower utilization of consultants.
Segment operating margin (earnings before unallocated central costs, net
interest expense, income taxes and special charges) decreased 55.0% to
$9.4 million from $20.8 million in the prior year. The lower operating
margin in the quarter was due primarily to the decrease in gross profit
of $16.5 million discussed above and higher amortization expense of $0.2
million, partially offset by lower operating expenses of $5.3 million.
Operating costs as a percentage of revenues increased from 23.9% in 1999
to 25.9% for 2000. Cost-reduction initiatives within this segment
included office closures and headcount reductions. Management continues
to address the level of infrastructure costs for this business segment
in order to align operating costs as a percentage of revenue with
historical levels.
PROFESSIONAL SERVICES. Revenues increased 17.0% to $329.7 million from
$281.8 million in the prior year, with most of the increase due to
strong organic growth in financial search/recruitment led by Michael
Page and due to increases in outsourcing in the U.S. Revenues by service
line within the group were comprised of 3.4% consulting, 0.7% managed
staffing, 24.0% outsourcing, 31.2% search/recruitment and 40.7% flexible
staffing. As a percentage of total Professional Services revenues,
search/recruitment revenues increased from a 1999 pro forma level of
28.3%, while flexible staffing decreased from 42.8%. The shift in mix
was due primarily to a strong permanent placement market as unemployment
levels remained low in most of Spherion's markets.
Gross profit increased 24.1% to $159.1 million from $128.3 million in
the prior year and the gross profit percentage increased from 45.5% in
the prior year to 48.3% due primarily to the increase in
search/recruitment business, which yields higher gross profit
percentages.
Segment operating margin increased 22.9% to $37.0 million from $30.1
million in the prior year. The higher operating margin from the prior
year was due primarily to the increase in gross profit of $30.8 million
discussed above, which was partially offset by higher operating expenses
of $23.8 million and higher amortization expenses of $0.1 million. As a
percentage of revenues, operating expenses increased from 33.0% for 1999
to 35.5% due primarily to growth of permanent placement commissions at
Michael Page.
COMMERCIAL STAFFING. Revenues decreased 7.0% to $420.5 million from
$452.1 million in the prior year due to the development of higher margin
customers, earlier elimination of certain unprofitable or lower margin
business and the impact of Norrell acquisition-related integration
issues. Revenues by service line within the group were comprised of
34.5% managed staffing, 1.8% search/recruitment and 63.7% flexible
staffing. As a percentage of total Commercial Staffing revenues,
flexible staffing increased from a 1999 pro forma level of 59.3%, while
managed staffing decreased from 39.6%.
Gross profit decreased 5.2% to $90.8 million from $95.8 million in the
prior year and the overall gross profit percentage increased to 21.6%
from 21.2% in the prior year due to the concentration on improving
margins by shedding targeted high volume/low margin business and a
reduction in State unemployment taxes.
Segment operating margin increased to $19.9 million from $17.3 million
in the prior year. The higher operating margin for the quarter was due
primarily to lower operating expenses of $8.0 million, which more than
offset lower gross profit of $5.0 million and higher amortization of
$0.4 million. Operating expenses as a percentage of revenue decreased
from 16.7% for 1999 to 16.1% for the quarter as Spherion was able to
leverage fixed costs by eliminating redundant personnel and offices. The
segment operating margin increased from 3.8% of revenues in the prior
year to 4.7%.
UNALLOCATED CENTRAL COSTS. Unallocated central costs increased 63.3% to
$14.5 million from $8.9 million in the prior year. These costs as a
percentage of consolidated revenues of 1.5% were greater than the prior
rate of 0.9% due to incremental costs to complete its back office
migration in the third quarter of 2000 and to transition additional back
office functions from Atlanta to Fort Lauderdale.
9
<PAGE>
INTEREST EXPENSE, NET. Gross interest expense increased 14.1% to $13.7
million from $12.0 million last year. This increase resulted from higher
debt levels, due primarily to acquisition activity (primarily licensed
office buybacks and earnout payments) and additional borrowings to fund
stock repurchases, and slightly higher overall average interest rates.
Spherion had average borrowings outstanding during the third quarter of
2000 of $789.6 million at an average rate of interest, including the
effects of interest rate swaps, of 6.9% compared with $771.1 million
outstanding during the third quarter of 1999 at an average rate of
interest of 6.7%. Interest income was relatively unchanged at $0.6
million.
INCOME TAXES. The effective income tax rate for the third quarter of
2000 was 37.0% compared with 44.4% in 1999. The lower effective tax rate
resulted from the retroactive impact of reducing the annual effective
rate to 40.5% from 42.0% earlier in the year combined with an increase
in earnings, higher levels of Work Opportunity tax credits and lower
state income taxes.
NET EARNINGS. Net earnings increased 82.5% to $24.4 million ($0.37 per
diluted share) from $13.4 million ($0.21 per diluted share) in the prior
year period. This represents a 76.2% increase in per share net earnings
which is due primarily to special charges, Year 2000 and restructuring
and integration costs in the 1999 period as weighted average shares
outstanding (on a diluted basis) were relatively unchanged at 69.4
million.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------------------------------------
SEPTEMBER 29, 2000 SEPTEMBER 24, 1999
----------------------------- ----------------------------
% OF % OF
TOTAL TOTAL
------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Information Technology....... $ 580,017 20.4% $ 560,011 26.3%
Professional Services........ 981,097 34.5% 643,275 30.2%
Commercial Staffing.......... 1,280,914 45.1% 926,239 43.5%
--------------- ------------ --------------- ------------
$ 2,842,028 100.0% $ 2,129,525 100.0%
=============== ============ =============== ============
<CAPTION>
% OF % OF
REVENUES REVENUES
------------ ------------
<S> <C> <C> <C> <C>
GROSS PROFIT:
Information Technology....... $ 187,689 32.4% $ 194,519 34.7%
Professional Services........ 484,705 49.4% 331,841 51.6%
Commercial Staffing.......... 274,794 21.5% 196,354 21.2%
--------------- ------------ --------------- ------------
$ 947,188 33.3% $ 722,714 33.9%
=============== ============ =============== ============
SEGMENT OPERATING MARGIN:
Information Technology....... $ 30,267 5.2% $ 52,291 9.3%
Professional Services........ 115,831 11.8% 73,938 11.5%
Commercial Staffing.......... 57,788 4.5% 31,923 3.4%
--------------- ------------ --------------- ------------
203,886 7.2% 158,152 7.4%
============ ============
Unallocated central costs.... (37,469) (24,706)
Interest expense, net........ (37,366) (23,522)
Year 2000 costs.............. - (3,038)
Restructuring and integration
costs................... - (20,864)
--------------- ---------------
Earnings before income taxes. $ 129,051 $ 86,022
=============== ===============
</TABLE>
10
<PAGE>
NINE MONTHS ENDED SEPTEMBER 29, 2000 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 24, 1999
INFORMATION TECHNOLOGY. Revenues increased 3.6% to $580.0 million from
$560.0 million in the prior year due primarily to the Norrell
acquisition partially offset by industry related decreases in customer
demand due to the absence of ERP and Y2K-related projects in the 2000
period. On a pro forma basis (including Norrell as if it were acquired
at the beginning of 1999), revenues were down 13.2% from $668.5 million
in the prior year. Information Technology revenues declined from 1999
pro forma levels, due primarily to the impact of the trend toward
smaller and shorter duration e-solutions projects and away from
traditional IT services and a slowdown in the Asia Pacific corporate
education business. Revenues by service line for 2000 within the group
were comprised of 65.1% consulting, 6.7% managed staffing, 1.5%
outsourcing, 1.1% search/recruitment and 25.6% flexible staffing. As a
percentage of total Information Technology revenues, managed staffing
increased from a 1999 pro forma level of 4.5% reflecting increases in
help desk services, while consulting revenue decreased from 67.1% due to
the industry-related decreases previously described. All other service
line revenue percentages were about the same in both nine-month periods.
Gross profit decreased 3.5% to $187.7 million from $194.5 million in the
prior year and the overall gross profit percentage decreased to 32.4%
from 34.7% as the lower margin Norrell business was added. On a pro
forma basis, gross profit percentage for 2000 was lower than the 1999
level of 33.8% due to lower utilization of consultants.
Segment operating margin decreased 42.1% to $30.3 million from $52.3
million in the prior year. The lower margin in 2000 was due primarily to
the decrease in gross profit of $6.8 million discussed above, higher
operating expenses of $13.6 million and higher amortization expense of
$1.6 million, both due primarily to the Norrell acquisition. Operating
costs as a percentage of revenues increased from 24.6% in 1999 to 26.1%
for 2000. Cost-reduction intiatives within this segment included office
closures and headcount reductions. Management continues to address the
level of infrastructure costs for this business segment in order to
align operating costs as a percentage of revenue with historical levels.
PROFESSIONAL SERVICES. Revenues increased 52.5% to $981.1 million from
$643.3 million in the prior year, with most of the increase due to the
acquisition of Norrell's outsourcing business and strong organic growth
in the European search/recruitment business, led by Michael Page. On a
pro forma basis, revenues increased 18.7% from $826.3 million due
primarily to growth in European search/recruitment, led by Michael Page
and growth in domestic outsourcing. Revenues by service line within the
group were comprised of 3.8% consulting, 23.8% outsourcing, 32.3%
search/recruitment and 40.1% flexible staffing. As a percentage of total
Professional Services revenues, search/recruitment revenues increased
from a 1999 pro forma level of 27.8%, while flexible staffing decreased
from a 1999 pro forma level of 42.0%. The shift in mix was due primarily
to a strong permanent placement market as unemployment levels were low
in most of Spherion's markets.
Gross profit increased 46.1% to $484.7 million from $331.8 million in
the prior year and the gross profit percentage decreased from 51.6% in
the prior year to 49.4%. The increase in gross profit dollars was due
primarily to the addition of Norrell's outsourcing business and strong
results from Michael Page. The decrease in gross profit percentage was
due primarily to the addition of the lower margin outsourcing business.
On a pro forma basis, gross profit percentage for 2000 was higher than
the 1999 level of 45.6% due to the increase in the proportion of
search/recruitment revenues to total revenue.
Segment operating margin increased 56.7% to $115.8 million from $73.9
million in the prior year due to the increase in gross profit of $152.9
million, partially offset by higher operating expenses of $109.0 million
and higher amortization expenses of $2.0 million (Norrell acquisition
related). As a percentage of revenues, operating expenses decreased from
38.0% for 1999 to 36.0% due primarily to the inclusion of the
outsourcing business in the current year (which classifies most of its
expenses in gross profit) and greater leveraging of operating expenses.
11
<PAGE>
COMMERCIAL STAFFING. Revenues increased 38.3% to $1.28 billion from
$926.2 million in the prior year due primarily to the Norrell
acquisition. On a pro forma basis, revenues decreased 4.9% from $1.35
billion, as Spherion concentrated on higher margin customers and
eliminated certain unprofitable and lower margin business in 2000 and
was impacted by Norrell acquisition-related integration issues. Revenues
by service line within the group were comprised of 34.9% managed
staffing, 1.6% search/recruitment and 63.5% flexible staffing. As a
percentage of total Commercial Staffing revenues, flexible staffing
increased from a 1999 pro forma level of 61.3%, while managed staffing
decreased from 37.4%.
Gross profit increased 39.9% to $274.8 million from $196.4 million in
the prior year due primarily to the Norrell acquisition. The gross
profit percentage increased to 21.5% from 21.2% in the prior year and on
a pro forma basis 20.9%, due to the concentration on improving margins
with certain customers and a reduction in state unemployment taxes.
Segment operating margin increased 81.0% to $57.8 million from $31.9
million in the prior year. The increase in segment operating margin was
due to the increase in gross profit of $78.4 million, partially offset
by higher operating expenses of $48.0 million and higher amortization of
$4.5 million (primarily Norrell acquisition related). Operating expenses
as a percentage of revenue decreased from 17.1% for 1999 to 16.2% for
2000 as Spherion was able to leverage fixed costs by eliminating
redundant personnel and offices. The segment operating margin increased
from 3.4% of revenues in the prior year to 4.5%.
UNALLOCATED CENTRAL COSTS. Unallocated central costs increased 51.7% to
$37.5 million from $24.7 million in the prior year, due primarily to the
Norrell acquisition and related integration costs. These costs increased
to 1.3% of consolidated revenues from 1.2% in the prior year due to
increased costs due to the delay in conversion of Norrell's back office
systems to a common platform. This back-office conversion was completed
late in the third quarter, however, some expenses will carry over into
the fourth quarter.
INTEREST EXPENSE, NET. Gross interest expense increased 53.9% to $39.2
million from $25.5 million last year. This increase resulted from higher
debt levels, due primarily to the Norrell acquisition, and higher
overall average interest rates. Spherion had average borrowings
outstanding during the first nine months of 2000 of $770.4 million at an
average rate of interest, including the effects of interest rate swaps,
of 6.7% compared with $577.9 million outstanding during the first nine
months of 1999 at an average rate of interest of 5.8%. Interest income
was slightly lower at $1.9 million.
INCOME TAXES. The effective income tax rate for the first nine months of
2000 was 40.5% compared with 44.1% in 1999. The decrease in the
effective tax rate resulted from an increase in earnings, higher levels
of Work Opportunity tax credits and lower state income taxes.
NET EARNINGS. Net earnings increased 59.7% to $76.8 million ($1.16 per
diluted share) from $48.1 million ($0.91 per diluted share) in the prior
year period. This represents a 27.5% increase in per share net earnings.
The weighted average number of shares (as adjusted for the dilutive
impact of common stock equivalents) increased to 70.1 million from 57.8
million in the prior year, due primarily to the issuance of 20.8 million
shares in July 1999 related to the Norrell acquisition, offset by stock
repurchases.
RESTRUCTURING
During 1999, Spherion incurred approximately $12.8 million of
restructuring costs related to a plan (the "Plan") adopted by management
in which certain redundant functions and assets of Spherion, as a result
of the Norrell acquisition, would be eliminated. During the second
quarter of 2000, remaining accruals of approximately $3.0 million were
identified that were not needed, primarily the result of the buyout of
existing lease obligations at better than expected rates and this $3.0
million was reversed to income. Spherion then undertook additional
restructuring actions in the amount of $3.2 million related to the
Norrell acquisition. These additional actions included 71 positions,
which were eliminated due to the integration of former Norrell
operations into Spherion's existing operations, with most of these
positions being administrative personnel within the Information
Technology segment. An additional 14 offices were selected for closure
due to continued rationalization of office space where overlapping
territories were identified.
12
<PAGE>
An analysis of the restructuring accrual is as follows (dollar amounts
in thousands):
<TABLE>
<CAPTION>
Second Quarter 2000
-------------------
Utilized
Original Through Reversal New Accrual Utilized Accrual at
Plan June 30, of Over Restructuring at June During the September
Charge 2000 Accrual Actions 30,2000 Quarter 29, 2000
-------------- --------- ------------ --------- -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Facility
closures $ 6,992 ($2,545) ($2,007) $ 845 $3,285 ($1,226) $2,059
Severance 3,650 (2,366) (978) 2,399 2,705 (895) 1,810
Asset
write-offs 2,108 (2,108) - - - - -
-------------- --------- ------------ --------- -------------- ---------- ------------ -----------
Total Charge
$12,750 ($7,019) ($2,985) $3,244 $5,990 ($2,121) $3,869
============== ========= ============ ========= ============== ========== ============ ===========
Number of
offices 43 (45) - 14 12 - 12
Number of
personnel 160 (90) (74) 71 67 (40) 27
</TABLE>
The remaining accruals, which are included in accounts payable and
accrued expenses, relate to lease buyout assumptions that will be paid
out through 2004 unless early terminations can be negotiated and
severance costs which will be paid out during 2000.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Cash provided by operating activities for the nine months ended
September 29, 2000 was $112.7 million compared with $30.0 million in the
prior year. Higher operating cash flows this period were due primarily
to increased earnings, lower working capital needs and the impact of
higher amortization, depreciation and other non-cash charges. Cash used
by changes in working capital was $30.1 million this year compared by
$80.5 million last year. Less cash used for working capital items
resulted primarily from: a decrease in other assets resulting from the
liquidation of certain insurance-related deposits of $12.0 million and
the receipt of an $8.0 million federal income tax refund related to the
final Norrell tax return; an increase in accounts payable and accrued
liabilities, reflecting lower income tax payments in the 2000 period and
timing of payroll-related liabilities and a lower absolute increase in
accounts receivables in 2000. The lower increase in receivables was due
primarily to sequential quarterly revenue declines in 2000 versus
revenue increases in 1999, partially offset by an increase in days sales
outstanding in 2000.
Investing activities used $151.4 million for the nine months ended
September 29, 2000 due primarily to the repurchase of licensee
operations to reduce market overlap created by the Norrell acquisition,
earnout payments associated with prior acquisitions and strategic
investments in eBusiness alliance partners. During the second quarter of
2000, Spherion invested $24.8 million in Xceed Inc., an interactive
architect and eBusiness solutions builder. At September 29, 2000, the
fair market value of this investment had declined $19.8 million. Under
the accounting rules prescribed by SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," this investment has been
classified as "available for sale" and the decline in fair value as an
unrealized holding loss, net of tax, which is included in accumulated
other comprehensive loss on the Consolidated Balance Sheet. Management
periodically assesses the valuation of its SFAS No. 115 "available for
sale" investments and if a decline in value is deemed to be other than
temporary, a loss would be recorded in the statement of earnings.
13
<PAGE>
Investing activities also included $39.5 million of capital
expenditures, primarily for new computer hardware and software to
continue to upgrade and expand Spherion's information technology
capabilities. Investing activities used $293.4 million for the nine
months ended September 24, 1999 and included payments on the Norrell
acquisition and December 1998 acquisition of Computer Power, and
acquisitions in the areas of European and North American flexible
staffing.
Cash provided by financing activities was $44.9 million for the nine
months ended September 29, 2000 and primarily reflects increased net
borrowings to fund acquisitions, strategic investments and stock
repurchases; and proceeds from employee stock option and purchase plan
activity. Cash provided by financing activities was $158.6 million in
the comparable 1999 period and reflected net borrowings for the Norrell
acquisition offset by $89.4 million of common stock repurchases of 5.2
million shares. During 2000, Spherion repurchased approximately 2.1
million shares of common stock for $28.3 million. There are no shares
remaining to be purchased under Spherion's authorized share repurchase
program.
On October 16, 2000, Spherion announced that it is reviewing strategic
alternatives related to its Michael Page business unit, including a sale
of up to 100% of Michael Page's common stock through an initial public
offering on the London Stock Exchange.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 29, 2000, Spherion maintains a portion of its cash and
cash equivalents in financial instruments with original maturities of
three months or less. These financial instruments are subject to
interest rate risk and will decline in value if interest rates increase.
Due to the short duration of these financial instruments, an immediate
increase of 1% in interest rates would not have a material effect on
Spherion's financial condition.
Spherion's outstanding variable-rate debt at September 29, 2000 and
September 24, 1999 was $571.9 million and $629.7 million, respectively.
Interest rates on the Credit Facility and other short-term borrowings
are based on LIBOR plus a variable margin. Interest rates on the
Accounts Receivable Securitization borrowings and the Australian dollar
term financing are based on commercial paper market rates and Australian
bank bills plus a variable margin, respectively. Based on the
outstanding balance, a change of 1% in the interest rate would cause a
change in interest expense of approximately $5.7 million and $6.3
million in 2000 and 1999, respectively, on an annual basis not
considering the offset of the interest rate swap discussed below.
Spherion utilizes interest rate swap agreements to reduce the impact on
interest expense of fluctuating interest rates on its variable rate
debt. Spherion had a variable to variable interest rate swap agreement
outstanding as of September 29, 2000 and September 24, 1999 with the
notional amount of $110.7 million and $123.1 million, respectively,
which effectively converts interest from a British Pound LIBOR basis to
a broader index and caps Spherion's exposure to upward movement in rates
at 8.5%. This agreement expires in 2002. The cost to terminate (i.e.
fair value) the outstanding interest rate swap as of September 29, 2000
and September 24, 1999 was $1.9 million and $1.0 million, respectively.
In May 1998, Spherion issued $207.0 million of 4 1/2% Convertible
Subordinated Notes due June 2005. The fair value of Spherion's fixed
rate convertible subordinated debt as of September 29, 2000 and
September 24, 1999 was $141.3 million and $162.7 million, respectively,
compared with the related carrying value of $207.0 million.
Spherion enters into foreign exchange hedging activities to mitigate the
impact of changes in foreign currency exchange rates. Spherion attempts
to hedge transaction exposures through natural offsets. To the extent
this is not practicable, exposure areas which are considered for hedging
include foreign currency denominated receivables and payables,
intercompany loans and firm committed transactions and dividends related
to foreign subsidiaries. Spherion uses financial instruments,
principally forward exchange contracts, in its management of foreign
currency exposures. Spherion does not enter into forward contracts for
trading purposes. At September 29, 2000 and September 24, 1999, Spherion
had outstanding foreign currency forward contracts to sell Australian
dollars in the notional amount of $79.9 million and $74.0 million
respectively. The fair value of the foreign currency forward contracts
included in net income for the nine months ended September 29, 2000 was
a $13.4 million gain, which was offset by a $13.4 million loss on an
intercompany transaction. The amount for the nine months ended September
24, 1999 was not material.
14
<PAGE>
FORWARD-LOOKING STATEMENTS
Part I, Items 2 (Management's Discussion and Analysis of Financial
Condition and Results of Operations) and 3 (Quantitative and Qualitative
Disclosures about Market Risk) of this Quarterly Report on Form 10-Q may
contain forward-looking statements, including statements regarding
future prospects, industry trends, competitive conditions, litigation,
and quantitative and qualitative estimates as to market risk. This
notice is intended to take advantage of the "safe harbor" provided by
the Private Securities Litigation Reform Act of 1995 with respect to
such forward-looking statements. These forward-looking statements
involve a number of risks and uncertainties. Among others, factors that
could cause actual results to differ materially from Spherion's beliefs
or expectations are the following: industry trends and trends in the
general economy; competitive factors in the markets in which Spherion
operates; changes in regulatory requirements which are applicable to
Spherion's business; completion of the integration of Norrell's
operations; and other factors referenced herein or from time to time in
Spherion's reports to the Securities and Exchange Commission.
PART II - OTHER INFORMATION
ITEM 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the security holders for a vote
during the period covered by this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Name
------ ------------
<S> <C>
10.20 Spherion Corporation Stock Purchase Assistance Plan effective July 7, 2000 filed as
Exhibit 10.20 hereto.
10.42 Amendment No. 4 dated July 31, 2000, to the Credit and Security Agreement dated as of
July 1, 1999, and Amendment to Related Fee Letters by and among Interim Services
Receivables Corp., the registrant, Blue Ridge Asset Funding Corporation, Falcon Asset
Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First
National Bank of Chicago), filed as Exhibit 10.42 hereto.
10.43 Amendment No. 5 dated September 15, 2000, to the Credit and Security Agreement dated
as of July 1, 1999, by and among Interim Services Receivables Corp., the registrant,
Blue Ridge Asset Funding Corporation, Falcon Asset Securitization Corporation,
Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago),
filed as Exhibit 10.43 hereto.
27 Financial Data Schedule.
</TABLE>
(b) On July 7, 2000, the Company filed a Report on Form 8-K pertaining
to the name change of Interim Services Inc. to Spherion Corporation,
which name change was accomplished by parent-subsidiary merger effective
July 7, 2000. Also on July 7, 2000, Spherion Corporation began trading
under the new ticker symbol "SFN" on the New York Stock Exchange.
15
<PAGE>
(c) Exhibits filed with this form:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Name
------ ------------
<S> <C>
10.20 Spherion Corporation Stock Purchase Assistance Plan effective July 7, 2000.
10.42 Amendment No. 4 dated July 31, 2000, to the Credit and Security Agreement dated as of
July 1, 1999, and Amendment to Related Fee Letters by and among Interim Services
Receivables Corp., the registrant, Blue Ridge Asset Funding Corporation, Falcon Asset
Securitization Corporation, Wachovia Bank N.A., and Bank One, NA (f/k/a The First
National Bank of Chicago).
10.43 Amendment No. 5 dated September 15, 2000, to the Credit and Security Agreement dated
as of July 1, 1999, by and among Interim Services Receivables Corp., the registrant,
Blue Ridge Asset Funding Corporation, Falcon Asset Securitization Corporation,
Wachovia Bank N.A., and Bank One, NA (f/k/a The First National Bank of Chicago).
27 Financial Data Schedule.
</TABLE>
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPHERION CORPORATION
(Registrant)
DATE - November 13, 2000 BY /s/ ROY G. KRAUSE
-----------------------------
Roy G. Krause
Executive Vice President
and Chief Financial Officer
(principal financial officer)
DATE - November 13, 2000 BY /s/ MARK W. SMITH
------------------------------
Mark W. Smith
Vice President, Finance
(principal accounting officer)
17
<PAGE>
