<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996.
Or
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ___________.
COMMISSION FILE NUMBER : 0-24484
AccuStaff Incorporated
(Exact name of registrant as specified in its charter)
Florida 59-3116655
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6440 Atlantic Blvd., Jacksonville, FL 32211
(Address of principal executive offices) (Zip Code)
(904) 725-5574
(Registrant's telephone number including area code):
N/A
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
May 8, 1996
Common Stock, $0.01 par value 63,285,395
-----------
(No. of Shares)
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ACCUSTAFF INCORPORATED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I Financial Information
ITEM 1 Financial Statements
Consolidated Balance Sheets March 31, 1996
and December 31, 1995 3
Consolidated Statements of Income Three
months ended March 31, 1996 and April 2, 1995 4
Consolidated Statements of Cash Flow Three
months ended March 31, 1996 and April 2, 1995 5
Notes to Consolidated Financial Statements 6-8
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II Other Information 14
ITEM 4 Submission Of Matters to a Vote of Security
Holders 14
ITEM 6 Exhibits and Reports on Form 8-K 14
Signatures 19
Exhibit Index 20
</TABLE>
2
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ACCUSTAFF INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, 1996 December 31, 1995
--------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,836,868 $ 31,901,125
Investments - -
Accounts receivable, net 81,021,151 37,950,373
Prepaid expenses 1,824,256 1,018,184
Deferred income taxes 1,529,000 1,353,000
------------ ------------
Total current assets 86,211,275 72,222,682
Furniture, equipment, and
leasehold improvements, net 9,027,507 6,044,235
Goodwill, net 156,240,793 65,489,186
Other assets 3,333,396 805,159
------------ ------------
Total assets $254,812,971 $144,561,262
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion $ 3,750,660 $ 10,512,696
Accounts payable and accrued
expenses 10,860,048 3,789,855
Accrued payroll and related
taxes 15,681,083 8,909,379
Accrued workers' compensation
claims 2,850,000 2,700,000
------------ ------------
Total current liabilities 33,141,791 25,911,930
Convertible subordinated debentures 2,300,000 2,300,000
Notes payable, long-term portion 102,783,462 4,493,845
Deferred income taxes 554,000 276,000
------------ ------------
Total liabilities 138,779,253 32,981,775
------------ ------------
Commitments
Stockholders' equity:
Preferred stock, $.01 par
value; 10,000,000 shares
authorized; no shares issued
and outstanding - -
Common stock, $.01 par value;
60,000,000 shares authorized;
49,621,600 and 49,516,872 shares
issued and outstanding on March
31, 1996 and December 31, 1995,
respectively. 496,216 495,168
Additional contributed capital 96,892,568 96,774,764
Retained earnings 18,705,554 14,388,799
------------ ------------
116,094,338 111,658,731
Less: deferred stock
compensation (60,620) (79,244)
------------ ------------
Total stockholders' equity 116,033,718 111,579,487
------------ ------------
Total liabilities and
stockholders' equity $254,812,971 $144,561,262
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
3
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ACCUSTAFF INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1996 April 2, 1995
--------------- --------------
<S> <C> <C>
Revenue $139,044,836 $60,161,411
Cost of revenue 111,072,851 50,423,709
------------ -----------
Gross profit 27,971,985 9,737,702
------------ -----------
Operating expenses:
General and administrative 18,164,348 7,517,192
Depreciation and amortization 1,759,164 322,393
------------ -----------
Total operating expenses 19,923,512 7,839,585
------------ -----------
Income from operations 8,048,473 1,898,117
------------ -----------
Other income (expense):
Interest income 22,045 141,609
Interest expense (1,051,764) (87,625)
------------ -----------
Total other income (expense) (1,029,719) 53,984
------------ -----------
Income before provision for income taxes 7,018,754 1,952,101
------------ -----------
Provision for income taxes 2,702,000 752,000
------------ -----------
Net income $ 4,316,754 $ 1,200,101
============ ===========
Earnings per share $0.08 $0.03
============ ===========
Weighted average number of common
shares and common share equivalents
outstanding 55,077,500 35,301,000
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
ACCUSTAFF INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
March 31, 1996 April 2, 1995
--------------- --------------
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income $ 4,316,754 $ 1,200,101
Adjustments to reconcile net income
to net cash provided by (used in)
operations:
Depreciation and amortization 1,759,164 322,393
Provision for doubtful accounts 74,900 84,215
Deferred income taxes 108,102 (214,000)
Compensation for stock options
granted 18,624 24,057
Changes in assets and liabilities:
Accounts receivable (11,318,971) (3,468,809)
Prepaid expenses (760,937) (83,455)
Other assets (1,626,219) 4,454
Accounts payable and accrued
expenses 207,193 643,757
Accrued payroll and related
taxes 4,276,640 3,211,078
Accrued workers'
compensation claims 150,000 250,000
------------ -----------
Net cash provided by
(used in) operating
activities (2,794,750) 1,973,791
------------- ------------
Cash flows provided by (used in)
investing activities:
Purchases of investments - (2,027,658)
Sales and maturities of investments - 1,229,539
Purchase of furniture, equipment
and leasehold improvements (1,637,761) (293,823)
Purchase of businesses, including
additional earn-outs on acquisitions,
net of cash acquired (93,043,099) (3,228,993)
------------ -----------
Net cash used in investing
activities (94,680,860) (4,320,935)
Cash flows provided by (used in)
financing activities:
Proceeds from issuance of common stock 118,852 326,875
Proceeds from issuance of
convertible subordinated debentures - 2,000,000
Borrowings on notes payable 96,308,750 -
Repayments on notes payable (29,016,249) (1,470,895)
------------ -----------
Net cash provided by
financing activities 67,411,353 855,980
------------ -----------
Net decrease in cash and cash
equivalents (30,064,257) (1,491,164)
Cash and cash equivalents, beginning of
period 31,901,125 8,225,017
------------ -----------
Cash and cash equivalents, end of period $ 1,836,868 $ 6,733,853
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
ACCUSTAFF INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
the Company in accordance with the rules. The accompanying consolidated
financial statements are unaudited and have been prepared by and
regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures usually found in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The financial statements should
be read in conjunction with the financial statements and related footnotes
included in the Company's Form 10-K, as filed with the Securities and
Exchange Commission on March 27, 1996.
The accompanying consolidated financial statements reflect all adjustments
(including only normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial position and
results of operations for the interim periods presented. All share and per
share data has been restated to reflect the Company's stock split in the
form of a 200% stock dividend, effective March 27, 1996. In addition, the
Company completed the acquisition of PTA International ("Perma Temps") on
January 2, 1996, which was accounted for as a pooling of interests.
Therefore, all prior period financial statements presented have been
restated as if the acquisition had taken place at the beginning of such
periods. The results of operations for an interim period are not
necessarily indicative of the results of operations for a full fiscal year.
2. ACQUISITIONS
For the three months ended March 31, 1996
HNS Software, Inc. Effective March 1996, the Company, through its
subsidiary, Computer Professionals, Inc. ("CPI"), acquired HNS Software,
Inc. ("HNS"). Located in Atlanta, HNS provides information technology
staffing services to a wide variety of companies. For the twelve months
ended December 31, 1995, HNS had revenue of approximately $10.7 million.
HNS operates as part of CPI in the Professional Services division.
Excel Temporary Services, Inc. Effective February 1996, the Company
acquired Excel Temporary Services, Inc. and affiliated companies ("Excel").
Excel has 14 branch offices in the Atlanta area and two in Washington, D.C.
providing clerical, accounting, information technology, engineering and
electrical assembly staffing services to a wide variety of companies,
including a number of Fortune 500 companies. For the twelve months ended
December 31, 1995, Excel had revenue of approximately $31.6 million. Excel
operates as part of the Commercial division.
Additional Technical Support, Inc. Effective February 1996, the Company
acquired Additional Technical Support, Inc. and affiliated companies
("ATSI"). ATSI operates 17 offices in eight
6
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states providing staffing services in information technology, management
information systems, engineering, software engineering and CAD design
services. For the twelve months ended December 31, 1995, ATSI had revenue
of approximately $114.9 million. ATSI operates as part of the Professional
Services division.
Advantage Personnel Services, Inc. Effective February 1996, the Company
acquired Advantage Personnel Services, Inc. ("Advantage"). Advantage
provides clerical and information technology staffing services to companies
located in the Oakland area through two offices. For the twelve months
ended December 31, 1995, Advantage had revenue of approximately $10.8
million. Advantage operates as part of the Commercial division.
TEKNA, Inc. Effective January 1996, the Company, through its subsidiary,
CPI, acquired TEKNA, Inc. ("TEKNA") which provides information technology
services through its Richmond, Virginia office. For the twelve months
ended December 31, 1995, TEKNA had revenue of approximately $700,000.
TEKNA operates as part of CPI in the Professional Services division.
Career Enhancement International, Inc. Effective January 1996, the
Company, through its subsidiary, CPI, acquired Career Enhancement
International, Inc. ("Career Enhancement"). Based in Orlando, Florida,
Career Enhancement provides staffing solutions for companies with computer
software and information technology needs. For the twelve months ended
December 31, 1995, Career Enhancement had revenue of approximately $5.4
million. Career Enhancement operates as part of CPI in the Professional
Services division.
Accounting Pros, Inc. Effective January 1996, the Company acquired
Accounting Pros, Inc. and affiliated companies ("Accounting Pros").
Headquartered in King of Prussia, Pennsylvania, Accounting Pros, through
its five offices, provides personnel in the accounting, credit and
collections, treasury and financial departments. For the twelve months
ended December 31, 1995, Accounting Pros had revenue of approximately $3.7
million. Accounting Pros operates as part of the Professional Services
division.
GW Consulting. Effective January 1996, the Company acquired GW
Temporaries, Inc. and Goldfarb-Wasson Associates, Inc. ("GW Consulting").
Headquartered in San Francisco, GW Consulting provides information
technology staffing solutions in northern California through its seven
branch offices in San Francisco, Santa Clara, Walnut Creek and Sacramento.
For the twelve months ended December 31, 1995, GW Consulting had revenue of
approximately $46.0 million. GW Consulting operates as part of the
Professional Services division.
PTA International. Effective January 1996, the Company acquird Perma
Temps. Headquartered in Santa Clara (Silicon Valley), California, Perma
Temps provides commercial, information technology, technical and accounting
staffing, through its two offices. For the twelve months ended December
31, 1995, Perma Temps had revenue of approximately $30.0 million. Perma
Temps operates as part of the Commercial division.
The acquisition of Perma Temps has been accounted for under the pooling of
interests method of accounting while the Company's other acquisitions have
been accounted for under the
7
<PAGE>
purchase method of accounting. Final allocation of the purchase price to
the net assets acquired has not yet been determined for the purchase method
acquisitions. The excess of the purchase price over the fair value of the
tangible assets (goodwill) is being amortized on a straight line basis over
30 years, including any contingent purchase price consideration paid, for
the purchase method acquisitions.
The pro forma results of operations for the three months ended March 31,
1996 and April 2, 1995 listed below reflect purchase accounting adjustments
and pro forma adjustments, including reduction of officers' compensation as
the result of negotiated employment agreements, assuming the acquisitions
which occurred during the three months ended March 31, 1996 had occurred at
the beginning of the three month periods ended March 31, 1996 and April 2,
1995. These pro forma amounts are not necessarily indicative of what
actually would have occurred if the acquisitions had been in effect for the
entire period presented. In addition, they are not intended to be
projections of future results and do not reflect any synergies that might
be achieved from combined operations.
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, 1996 April 2, 1995
---------------- -------------
<S> <C> <C>
Revenue................................. $161,035,765 $138,819,038
Gross profit............................ 31,953,254 27,609,008
Income from operations.................. 8,629,994 6,220,087
Income before provision for income taxes 7,007,237 3,210,953
Net income.............................. 4,309,844 1,955,968
Earnings per share...................... $ 0.08 $ 0.06
</TABLE>
3. Subsequent Events
Acquisitions Subsequent to March 31, 1996. On April 29, 1996, the Company
acquired Alternative Temps, Inc. ("Alternative Temps") for $1.0 million in
cash and $300,000 in notes payable. Alternative Temps provides clerical
and light industrial staffing needs to companies in the Tampa, Florida
market. The former stockholder of Alternative Temps may earn additional
purchase price consideration up to $400,000 upon attainment of certain
earnings targets. The acquisition has been accounted for under the
purchase method of accounting. Alternative Temps operates as part of the
Commercial division.
Public Offering of Common Stock. In April 1996 the Company completed a
follow-on offering of 11,790,000 common stock from which the Company
received $304.9 million in proceeds net of underwriting discount and
commissions associated with the offering. The net proceeds have been used
to repay $92.8 million in outstanding indebtedness under the Company's
revolving credit facility.
8
<PAGE>
Conversion of 6% Convertible Subordinated Debentures. Subsequent to March
31, 1996, the holders of $1.0 million of the Company's 6% Convertible
Subordinated Debentures converted their debt to shares of common stock at a
conversion price of $1.25 per share leaving the Company with $1.3 million
of 6% Convertible Subordinated Debentures outstanding, $300,000 of which
are convertible into Common Stock at a price of $1.25 per share and $1.38
per share. All of the Convertible Subordinated Debentures mature in
January 1997 and are not redeemable.
9
<PAGE>
ACCUSTAFF INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED
APRIL 2, 1995.
Revenues. Revenues increased $78.8 million, or 131.1%, to $139.0 million in
the three months ended March 31, 1996 from $60.2 million in three months ended
April 2, 1995. The increase was attributable by division to: Professional
Services, $53.2 million, or an increase of 951.3%; Commercial, $21.2 million, or
an increase of 62.5%; and Telecommunications, $4.4 million, or an increase of
21.7%. Of the increase in the Professional Services division, $47.5 million was
attributable to acquisitions in the information technology and technical service
lines while the remaining $5.7 million was attributable to acquisitions in the
legal and accounting service lines in addition to internal growth. Of the
increase in the Commercial division, $16.7 million was attributable to three
significant acquisitions, Excel, $6.8 million; Matthews Professional Employment
Specialists, Inc. in July 1995, $5.4 million; and HR Management Services, Inc.
in November 1995, $4.5 million, while the remaining $4.5 million was
attributable to internal growth and less significant acquisitions. The increase
of 21.7% in the Telecommunications division was due to increased revenues from
American Transtech, Inc.
Gross Profit. Gross profit increased $18.3 million, or 187.3%, to $28.0
million in the three months ended March 31, 1996 from $9.7 million in the three
months ended April 2, 1995. Gross profit as a percentage of sales increased by
3.0% in the Commercial division, due to an overall increase in the division's
gross profit including existing and acquired companies, while decreasing by 2.0%
in the Professional Services division, due primarily to the acquisitions of
certain technical service companies which generate lower margins. Gross profit
as a percentage of sales in the Telecommunications division remained stable at
9.6%. The overall gross profit as a percentage of sales increased from 16.2%
to 20.1%, due to the increase in the revenue from the professional services
division which produces a higher gross profit.
Operating Expenses. Operating expenses increased $12.1 million, or 154.1%, to
$19.9 million in the three months ended March 31, 1996 from $7.8 million in the
three months ended April 2, 1995. Operating expenses as a percentage of
revenues increased to 14.3% in the three months ended March 31, 1996 from 13.1%
in the three months ended April 2, 1995. The increase is attributable to the
increase in professional services being provided by the Company. Higher
operating expenses are required to operate the Professional Services division
compared to the Commercial and Telecommunications divisions.
Income from Operations. Income from operations increased $6.1 million, or
324.0%, to $8.0 million in the three months ended March 31, 1996, from $1.9
million in the three months ended April 2, 1995. Income from operations as a
percentage of revenues increased to 5.8% in the three months ended March 31,
1996, from 3.2% in the three months ended April 2, 1995.
Interest Income. Interest income was $22,000 for the three months ended March
31, 1996 compared to $142,000 for the three months ended April 2, 1995.
Interest Expense. Interest expense increased $964,000 to $1.0 million in the
three months ended March 31,1996 from $88,000 in the three months ended April 2,
1995. The increase is attributable
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to the utilization of the Company's credit facility to fund the acquisitions
which occurred in the three months ended March 31, 1996.
Income Taxes. The Company's effective tax rate was 38.5% in the three months
ended March 31, 1996 and in the three months ended April 2, 1995.
Net Income. As a result of the foregoing, net income increased $3.1 million,
or 259.7%, to $4.3 million in the three months ended March 31, 1996, from $1.2
million in the three months ended April 2, 1995. Net income as a percentage of
revenues, increased to 3.1% in the three months ended March 31, 1996, from 2.0%
in the three months ended April 2, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are from operations, proceeds of Common
Stock offerings and borrowings under its $150 million revolving credit facility.
The Company's principal uses of cash are to fund acquisitions, working capital
and capital expenditures. The Company generally pays its temporary employees
weekly for their services while receiving payments from customers 35 to 60 days
from the date of invoice. As new offices are established or acquired, or as
existing offices expand, there will be increasing requirements for cash
resources to fund current operations.
During the three months ended March 31, 1996, the Company experienced a large
increase in accounts receivable which was the primary cause for the Company's
use of approximately $2.8 million of cash to fund operating activities as
reflected in the Company's Consolidated Statements of Cash Flows. The increase
in accounts receivable was primarily due to several acquisitions in which the
Company purchased the business operations and certain assets of the acquired
companies, excluding accounts receivable. Therefore, the Company must finance
the acquired companies' initial accounts receivable balances causing a large
increase in accounts receivable. The Company may continue to experience these
temporary fluctuations if any similarly structured acquisitions are completed in
the future. The currently plans to use either its credit facility or other cash
on hand to fund these temporary operational cash flow needs.
In April 1996, the Company completed a follow-on offering of 11,790,000 shares
of common stock from which the Company received approximately $304.9 million
from the sale of the shares, net of underwriting discount and expenses
associated with the offering. The net proceeds have been used to repay $92.8
million in outstanding indebtedness under the Company's revolving credit
facility, while the remaining $212.1 will be available for other general
corporate purposes, including possible acquisitions.
The Company is also obligated under various acquisition agreements to make earn-
out payments to former stockholders of acquired companies over the next five
years. The Company cannot currently estimate the total amount of these
payments; however, the Company anticipates that the cash generated by the
operations of the acquired companies will provide a substantial part of the
capital required to fund the earn-out payments.
The Company anticipates that improvements to its management information and
operating systems will require capital expenditures during the next twelve
months of approximately $6.0 million. The Company anticipates recurring capital
expenditures in future years to be approxmiately $1.0 million per year.
11
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The Company believes that funds provided by operations, available borrowings
under the credit facility, current amounts of cash and the net proceeds from the
sale of Common Stock will be sufficient to meet its presently anticipated needs
for working capital expenditures and acquisitions for at least the next 12
months.
INDEBTEDNESS OF THE COMPANY
On February 1, 1996, the Company's revolving credit facility was amended and
restated, increasing the available line from $25 million to $100 million. On May
2, 1996, the facility was again amended and restated to increase the available
line from $100 million to $150 million in connection with the syndication of the
facility. The facility was syndicated to a group of 13 banks, with NationsBank,
N.A. (South) as agent. The facility has a term of five years expiring February
1, 2001. Outstanding amounts under the facility bear interest at floating
rates. The facility contains certain affirmative and negative covenants
relating to the Company's operations, including a provision requiring approval
by the lenders holding not less than two-thirds of the credit exposure under the
facility for any business acquisitions if the cost of the acquisition exceeds
the lesser of $20 million or 10% of the Company's consolidated stockholders'
equity. As of March 31, 1996, the Company had outstanding borrowings under the
facility of approximately $92.8 million, bearing interest at a weighted average
interest rate of 6.58%, which were repaid with proceeds from the Company's
offering in April, 1996.
The Company also entered into a $5 million credit facility with NationsBank,
N.A. which provided for such credit to be available through the earlier of (i)
June 18, 1996 or (ii) the date the lending syndicate was completed and became a
party to the above described credit agreement. As of March 31, 1996, the
Company had no borrowings outstanding under the $5 million credit facility. In
addition, subsequent to March 31, 1996, the above credit agreement was
syndicated, therefore, terminating this facility.
The Company has certain notes payable to shareholders of acquired companies.
The notes payable bear interest at rates ranging from 5% to 8% and have
repayment terms from April 1996 to March 1999. As of March 31, 1996, the
Company owed approximately $13.2 million in such acquisition indebtedness.
12
<PAGE>
Subsequent to March 31, 1996, the holders of $1 million of 6% Convertible
Subordinated Debentures converted their debt to shares of the Company's common
stock at a conversion price of $1.25 per share leaving the Company with $1.3
million of 6% Convertible Subordinated Debentures outstanding, $300,000 of which
are convertible into Common Stock at a price of $1.25 per share and $1.0 million
of which are convertible into Common Stock at $1.38 per share. All of the
Convertible Subordinated Debentures mature in January 1997 and are not
redeemable.
INFLATION
The effects of inflation on the Company's operations were not significant during
the periods presented in the financial statements. Generally, throughout the
periods discussed above, the increases in revenue have resulted primarily from
higher volumes, rather than price increases.
OTHER MATTERS
In 1996, the Company will adopt SFAS No. 123, "Accounting for Stock-Based
Compensation." This standard establishes a fair value method of accounting for
stock-based compensation plans, either through recognition or disclosure. The
Company intends to adopt this standard by disclosing the pro forma net income
and earnings per share amounts assuming the fair value method was adopted on
January 1, 1995. The Company does not anticipate that the adoption of this
standard will impact results of operations, financial positions or cash flow.
Statement Regarding Forward-Looking Information
This Form 10-Q contains ceretain forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
the results anticipated in these forward-looking statements as a result of
certain of the factors set forth under the "Risk Factors" and elsewhere in the
company's Prospectus dated April 18, 1996.
13
<PAGE>
PART II OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
A Special Meeting of the Company's shareholders was held on April 15, 1996,
for the purpose of authorizing an increase in the number of shares of the
Company's authorized common stock from 60,000,000 to 150,000,000. Proxies
were solicited from shareholders of record as of the close of business on
March 15, 1996. On March 15, 1996, there were 16,544,016 shares
outstanding and entitled to vote at the Special Meeting. Approximately 73%
of the shares entitled to vote voted in favor of the increase. The
shareholder vote on the increase was as follows:
For Against Abstentions
--- ------- -----------
12,153,832 217,855 10,175
Item 6 Exhibits and Reports on Form 8-K
a)
Exhibit Description
No. -----------
-----
2.1 Agreement and Plan of Reorganization relating to the acquisition of
PTA International, incorporated by reference to the Company's Current
Report on Form 8-K dated January 2, 1996. (File No. 0-24484 )
2.2 Stock Purchase Agreement related to the
purchase of GW Consulting. incorporated
by reference to the Company's Current
Report on Form 8-K dated January 3,
1996. (File No. 0-24484)
2.3 Asset Purchase Agreement related to the
acquisition of Accounting Pros, Inc.
and Accounting Pros Philadelphia, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
2.4 Asset Purchase Agreement related to the
purchase of Career Enhancement
International, Inc., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
14
<PAGE>
2.5 Stock Purchase Agreement related to the
acquisition of TEKNA, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
2.6 Asset Purchase Agreement related to the
acquisition of Advantage Personnel
Services, Inc., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
2.7 Stock Purchase Agreement related to the
acquisition of Additional Technical
Support, Inc., incorporated by
reference to the Company's Current
Report on Form 8-K dated February 20,
1996. (File No. 0-24484)
2.8 Stock Purchase Agreement related to the
acquisition of Excel Temporary
Services, Inc., incorporated by
reference to the Company's Current
Report on Form 8-K dated February 19,
1996. (File No. 0-24484)
2.9 Asset Purchase Agreement related to the
acquisition of HNS Software, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
3.1 Articles of Incorporation, as amended,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
10.1 Fourth Amendment to Executive
Employment Agreement with Derek E.
Dewan. (File No. 0-24484)
10.3 Form of Warrant Agreement between the
Company and NationsBank, N.A. (South)
dated January 9, 1996., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
10.4 Termination Agreement and General
Release among the Company, Leslie M.
Friedman and LMF Transition Corporation
dated March 6, 1996, incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
11 Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K. The Company filed the following Current Reports
on Form 8-K with the Securities and Exchange Commission during the quarter ended
March 31, 1996:
15
<PAGE>
Form 8-K/A dated October 31, 1995, reporting on the acquisition of Computer
Professionals. Inc. and containing the following financial statements of
Computer Professionals, Inc. and the Company:
Financial Statements of Computer Professionals, Inc.
Independent Auditor's Report
Balance Sheets as of December 31, 1994 and 1993
Statements of Income for Years Ended December 31, 1994 and 1993
Statements of Stockholders' Equity for Years Ended December 31, 1994 and
1993
Statements of Cash Flows for Years Ended December 31, 1994 and 1993
Notes to Financial Statements
Balance Sheet as of September 30, 1995 (Unaudited)
Statements of Income (Loss) for the nine months ended September 30, 1994
and 1995 (Unaudited)
Statements of Case Flows for the nine months ended September 30, 1994 and
1995 (Unaudited)
Note to Interim Financial Statements
Pro Forma Financial Information
Introduction to Unaudited Pro Forma Combined Financial Information
Pro Forma Combined Balance Sheet as of October 1, 1995 (Unaudited)
Notes to Unaudited Pro Forma Combined Balance Sheet
Pro Forma Combined Statement of Income for the year ended January 1, 1995
(Unaudited)
Notes to Unaudited Pro Forma Combined Statements of Income
Form 8-K/A dated December 13, 1995, reporting on the acquisition of
Advance/Possis Technical Services, Inc. and containing the following financial
statements of Advance/Possis Technical Services, Inc. and the Company:
Financial Statements of Advance/Possis Technical Services, Inc.
Report of Independent Auditor
Balance Sheets as of September 30, 1995 and 1994
Statements of Income and Retained Earnings for Years Ended September 30,
1995 and 1994
Statements for Cash Flows for Years Ended September 30, 1995 and 1994
Notes to Financial Statements
Pro Forma Financial Information
Introduction to Unaudited Pro Forma Combined Financial Information
Pro Forma Combined Balance Sheet as of October 1, 1995 (Unaudited)
Notes to Unaudited Pro Forma Combined Balance Sheet
Pro Forma Combined Statement of Income for the year ended January 1, 1995
(Unaudited)
Pro Forma Combined Statement of Income for the nine months ended October 1,
1995 (Unaudited)
Notes to Unaudited Pro Forma Combined Statements of Income
16
<PAGE>
Form 8-K and From 8-K/A each dated January 2, 1996, reporting on the acquisition
of PTA International and containing the following financial statements of PTA
International and the Company:
Financial Statements of PTA International
Report of Independent Accountants
Balance Sheets as of December 31, 1995 and 1994
Statements of Income for the years ended December 31, 1995 and 1994
Statements of Stockholders' Equity for the years ended December 31, 1995
and 1994
Notes to Financial Statements
Unaudited Pro Forma Combined Financial Statements
Introduction to Unaudited Pro Forma Combined Financial Information
Pro Forma Combined Balance Sheet as of December 31, 1995 (unaudited)
Notes to Pro Forma Combined Balance Sheet
Pro Forma Combined Statements of Income for the year ended December 31,
1995 (unaudited)
Notes to Unaudited Pro Forma Combined Statement of Income
Form 8-K dated January 3, 1996, reporting the acquisition of GW Consulting. The
following financial statements for GW Consulting were filed as part of the
Company's Form 8-K/A dated January 2, 1996:
Financial Statements of Goldfarb-Wasson Associates, Inc. and GW
Temporaries, Inc. d/b/a GW Consulting
Nine Months Ended December 31, 1995
-----------------------------------
Independent Auditor's Report
Combined Balance Sheet as of December 31, 1995
Combined Statements of Income, Expense and Retained Earnings for the nine
months ended December 31, 1995
Combined Statements of Cash Flows for the nine months ended December 31,
1995
Combined Notes to the Financial Statements
Years Ended March 31, 1995 and 1994
-----------------------------------
Independent Auditor's Report
Combined Balance Sheet as of March 31, 1995 and 1994
Combined Statements of Income, Expense and Retained Earnings for the years
ended March 31, 1995 and 1994
Combined Statements of Cash Flows for the years ended March 31, 1995 and
1994
Combined Notes to the Financial Statements
17
<PAGE>
Form 8-K and From 8-K/A dated February 19, 1996, reporting on the acquisition of
Excel Temporaries, Inc. and containing the following financial statements of
Excel Temporaries, Inc. and the Company:
Financial Statements of Excel Temporaries, Inc.
Report of Independent Accountants
Balance Sheet as of December 31, 1995
Statement of Income for the year ended December 31, 1995
Statement of Stockholders' Equity for the year ended December 31, 1995
Statement of Cash Flows for the year ended December 31, 1995
Notes to the Financial Statements
Unaudited Pro Forma Combined Financial Statements
Introduction to Unaudited Pro Forma Combined Financial Information
Pro Forma Combined Balance Sheet as of December 31, 1995 (unaudited)
Notes to Pro Forma Combined Balance Sheet
Pro Forma Combined Statements of Income for the year ended December 31,
1995 (unaudited)
Notes to Unaudited Pro Forma Combined Statement of Income
Form 8-K dated February 20, 1996, reporting the acquisition of Additional
Technical Support, Inc. The following financial statements for Additional
Technical Support, Inc. were filed as part of the Company's Form 8-K/A dated
February 19, 1996:
Additional Technical Support, Inc. and Affiliates
Years Ended July 31, 1995 and 1994
----------------------------------
Independent Auditor's Report
Combined Balance Sheet as of July 31, 1995 and 1994
Combined Statements of Income for the years ended July 31, 1995 and 1994
Combined Statements of Retained Earnings for the years ended July 31, 1995
and 1994
Combined Statements of Cash Flows for the years ended July 31, 1995 and
1994
Notes to the Financial Statements
Five Months Ended December 31, 1995
-----------------------------------
Combined Balance Sheet as of December 31, 1995 and 1994
Combined Statements of Income for the five months ended December 31, 1995
and 1994
Combined Statements of Retained Earnings for the five months ended December
31, 1995 and 1994
Combined Statements of Cash Flows for the five months ended December 31,
1995 and 1994
Notes to the Financial Statements
18
<PAGE>
Signatures
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AccuStaff Incorporated
May 13, 1996 /S/ Derek E. Dewan
------------ ----------------------
Date Derek E. Dewan
President and Chief Executive Officer
May 13, 1995 /S/ Michael D. Abney
------------ ------------------------
Date Michael D. Abney
Chief Financial Officer
19
<PAGE>
EXHIBIT LIST
------------
NO. DESCRIPTION PAGE
- - ---- ---------------------------------------- ----
2.1 Agreement and Plan of Reorganization
relating to the acquisition of PTA
International, incorporated by
reference to the Company's Current
Report on Form 8-K dated January 2,
1996. (File No. 0-24484)
2.2 Stock Purchase Agreement related to the
purchase of GW Consulting. Incorporated
by reference to the Company's Current
Report on Form 8-K dated January 3,
1996. (File No. 0-24484)
2.3 Asset Purchase Agreement related to the
acquisition of Accounting Pros, Inc.
and Accounting Pros Philadelphia, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
2.4 Asset Purchase Agreement related to the
purchase of Career Enhancement
International, Inc., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
2.5 Stock Purchase Agreement related to the
acquisition of TEKNA, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
2.6 Asset Purchase Agreement related to the
acquisition of Advantage Personnel
Services, Inc., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
2.7 Stock Purchase Agreement related to the
acquisition of Additional Technical
Support, Inc., incorporated by
reference to the Company's Current
Report on Form 8-K dated February 20,
1996. (File No. 0-24484)
2.8 Stock Purchase Agreement related to the
acquisition of Excel Temporary
Services, Inc., incorporated by
reference to the Company's Current
Report on Form 8-K dated February 19,
1996. (File No. 0-24484)
2.9 Asset Purchase Agreement related to the
acquisition of HNS Software, Inc.,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
20
<PAGE>
3.1 Articles of Incorporation, as amended,
incorporated by reference to the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
1995. (File No. 0-24484)
10.1 Fourth Amendment to Executive 22
Employment Agreement with Derek E.
Dewan. (File No. 0-24484)
10.3 Form of Warrant Agreement between the
Company and NationsBank, N.A. (South)
dated January 9, 1996., incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
10.4 Termination Agreement and General
Release among the Company, Leslie M.
Friedman and LMF Transition Corporation
dated March 6, 1996, incorporated by
reference to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1995. (File No.
0-24484)
11 Computation of Per Share Earnings 24
27 Financial Data Schedule 25
21
<PAGE>
EXHIBIT 10.1
------------
FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
THIS FOURTH AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT is made and
entered into as of March __, 1996, and effective as of January 1, 1996 (the
"Fourth Amendment"), by and between ACCUSTAFF INCORPORATED, a Florida
corporation (the "Employer") and DEREK E. DEWAN, a resident of the State of
Florida (the "Executive").
WHEREAS, the Employer and the Executive entered into an Employment
Agreement dated December 31, 1993, as amended by the First Amendment dated as of
December 31, 1993 (the "First Amendment"), the Second Amendment dated as of
August 24, 1995, and effective as of January 26, 1995 (the "Second Amendment")
and the Third Amendment dated as of August 24, 1995 (the "Third Amendment")
(such employment agreement, as amended by the First, Second and Third
Amendments, is herein collectively referred to as the "Agreement");
WHEREAS, in recognition of the Executive's outstanding performance and
record of achievement to date as President and Chief Executive Officer of the
Employer, the Employer wishes to extend the term of the Agreement for an
additional year and to provide the Executive with an incentive to remain in the
employ of the Employer for the full term, as extended hereby;
NOW, THEREFORE, in consideration of the mutual promises, agreements
and covenants, and subject to the terms and conditions contained in this Fourth
Amendment, the Employer and the Executive, intending to be legally bound, hereby
agree as follows (unless otherwise indicated, all capitalized terms herein shall
have the same meaning ascribed to them in the Agreement).
1. RECITALS CORRECT. The above recitals are true and correct and are
----------------
by this reference incorporated in and made a part of this Fourth Amendment.
2. INITIAL TERM; EMPLOYMENT PERIOD. Paragraph 3 of the Agreement is
------------
hereby amended by deleting the year "2000" from the third line thereof (as added
by the Third Amendment) and substituting the year "2001."
3. BASE SALARY. Paragraph 4.A. of the Agreement is hereby amended by
-----------
deleting the amount "$250,000" from the first line thereof and substituting the
amount "350,000."
<PAGE>
4. AGREEMENT VALID. Except as modified hereby, the Agreement shall
---------------
remain valid and binding upon the Employer and the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
March __, 1996, effective as of January 1, 1996.
ACCUSTAFF INCORPORATED
By: /s/ Delores P. Kesler
-------------------------
Name: Delores P. Kesler
Title: Chairman
/s/ Derek E. Dewan
--------------------------
DEREK E. DEWAN
<PAGE>
Exhibit 11 - Computation of Per Share Earnings
ACCUSTAFF INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1996 April 2, 1995
-------------- -------------
<S> <C> <C>
Weighted average number of
common shares outstanding 49,587,847 31,332,306
Additional shares deemed
outstanding for:
Employee options 3,611,316 1,018,812
Director options 111,064 64,446
Convertible debt 1,767,273 2,885,436
----------- -----------
Primary and fully diluted
weighted average number of common and
common share equivalents outstanding 55,077,500 35,301,000
=========== ===========
Net Income $ 4,316,754 $ 1,200,101
Add back of interest expenses attributable to convertible
debentures deemed converted $ 20,927 $ 20,000
----------- -----------
Net Income attributable to common shares $ 4,337,681 $ 1,220,101
Earnings per share of common
and common share equivalents $0.08 $0.03
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,836,868
<SECURITIES> 0
<RECEIVABLES> 81,711,963
<ALLOWANCES> (690,812)
<INVENTORY> 0
<CURRENT-ASSETS> 86,211,275
<PP&E> 16,185,850
<DEPRECIATION> (7,158,343)
<TOTAL-ASSETS> 254,812,971
<CURRENT-LIABILITIES> 33,141,791
<BONDS> 0
0
0
<COMMON> 496,216
<OTHER-SE> 115,537,502
<TOTAL-LIABILITY-AND-EQUITY> 254,812,971
<SALES> 139,044,836
<TOTAL-REVENUES> 139,044,836
<CGS> 111,072,851
<TOTAL-COSTS> 111,072,851
<OTHER-EXPENSES> 19,848,612
<LOSS-PROVISION> 74,900
<INTEREST-EXPENSE> 1,029,719
<INCOME-PRETAX> 7,018,754
<INCOME-TAX> 2,702,000
<INCOME-CONTINUING> 4,316,754
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,316,754
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
