<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 5, 1997
ROMAC INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
FLORIDA 0-26058 59-3264661
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
120 West Hyde Park Place, Suite 150, Tampa, Florida 33606
- --------------------------------------------------------------------------------
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813)-251-1700
----------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
This Report on Form 8-K may contain forward-looking statements within
the meaning of that term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Additional written or oral
forward-looking statements may be made by the Company from time to time, in
filings with the Securities Exchange Commission or otherwise. Statements
contained herein that are not historical facts are forward-looking statements
made pursuant to the safe harbor provisions described above. Forward-looking
statements may include, but are not limited to, projections of revenues, income
or losses, capital expenditures, plans for future operations, the elimination
of losses under certain programs, financings needs or plans, compliance with
financial covenants in loan agreements, plans for sale of assets or businesses,
plans relating to products or services of the Company, assessments of
materiality, predictions of future events, and the effects of pending and
possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words, "anticipates," "expects,"
"plans," and variations thereof and similar expressions are intended to
identify forward-looking statements.
Forward-looking statements are inherently subject to risks and
uncertainities, some of which cannot be predicted or quantified based on current
expectations. Consequently, future events and actual results could differ
materially from those set forth in, contemplated by, or underlying the
forward-looking statements contained herein, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unexpected events.
On September 22, 1997, the Company filed a report on Form 8-K with
respect to the acquisition of the stock of Uni*Quality System Solutions, Inc. At
that time it was impracticable to provide the financial statements and pro forma
financial information required to be filed therewith relative to the acquired
stock, and the Company stated in such Form 8-K that it intended to file the
required financial statements and proforma financial information as soon as
practicable, but no later than 60 days from the date of that filing. By this
amendment to such Form 8-K, the Company is amending and restating Item 7 thereof
to include the required financial statements and pro forma financial
information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Report of Independent Certified Public Accountants
Balance Sheet as of December 31, 1996
Statement of Operations and Retained Earnings for the Year Ended
December 31, 1996
Statement of Cash Flows for the Year Ended December 31, 1996
Notes to Financial Statements
Unaudited Interim Balance Sheet as of June 30, 1997
Unaudited Interim Statements of Operations and Retained Earnings for
the Six Months Ended June 30, 1996 and 1997
Unaudited Interim Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997
(b) PRO FORMA FINANCIAL INFORMATION.
Introduction to Unaudited ProForma Combined Financial Information
Pro Forma Combined Balance Sheet as of June 30, 1997 (Unaudited)
Notes to Pro Forma Combined Balance Sheet as of June 30, 1997
(Unaudited)
Pro Forma Combined Statement of Operations for the year ended
December 31, 1996 (Unaudited)
Pro Forma Combined Statement of Operations for the six months ended
June 30, 1997 (Unaudited)
Notes to Pro Forma Combined Statements of Operations (Unaudited)
<PAGE> 3
(c) EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROMAC INTERNATIONAL, INC.
(Registrant)
By: /s/ Thomas M. Calcaterra
-----------------------------------------------
Thomas M. Calcaterra, Chief Financial Officer
and Secretary
Date: October 15, 1997
<PAGE> 4
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Uni*Quality Systems Solutions, Inc.
In our opinion, the accompanying balance sheet and the related statement of
operations and retained earnings and of cash flows present fairly, in all
material respects, the financial position of Uni*Quality Systems Solutions, Inc.
d/b/a UQ Solutions, Inc. (the "Company") at December 31, 1996, and the results
of its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Tampa, Florida
October 14, 1997
<PAGE> 5
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
BALANCE SHEET
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,000
Trade receivables, net 1,512,761
Receivables from related parties 10,085
Other receivables 40,210
Prepaid expenses and other current assets 14,827
------------------
Total current assets 1,587,883
Furniture and equipment, net 132,697
Intangible assets, net 433,417
Other assets, net 28,140
------------------
Total assets $ 2,182,137
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other accrued liabilities $ 72,326
Accrued payroll costs 314,159
Deferred income taxes 494,000
Line of credit 225,000
Note payable 116,124
------------------
Total current liabilities 1,221,609
------------------
Commitments and contingencies
Shareholders' equity:
Common stock, $10 par value; 1,000 shares authorized,
600 shares issued and outstanding 6,000
Retained earnings 954,528
------------------
Total shareholders' equity 960,528
------------------
Total liabilities and shareholders' equity $ 2,182,137
==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1996
<S> <C>
Net service revenues $ 12,413,876
Direct costs of service 8,846,957
----------------
Gross profit 3,566,919
Selling, general and administrative expenses 3,107,624
Depreciation and amortization expense 56,048
Interest expense 24,595
Other income (11,160)
----------------
Income before income taxes 389,812
Provision for income taxes 156,600
----------------
Net income 233,212
Retained earnings:
Beginning of year 721,316
----------------
End of year $ 954,528
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1996
<S> <C>
Cash flows from operating activities:
Net income $ 233,212
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 56,048
Deferred taxes 153,400
(Increase) decrease in operating assets:
Trade receivables, net (337,618)
Receivables from related parties (2,288)
Prepaid and other assets 16,695
Other receivables (30,469)
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities (111,093)
Accrued payroll costs 91,627
---------------
Cash provided by operating activities 69,514
---------------
Cash flows from investing activities:
Capital expenditures (71,873)
---------------
Cash used in investing activities (71,873)
---------------
Cash flows from financing activities:
Payments on note payable (191,604)
Proceeds from line of credit 150,000
---------------
Cash used in financing activities (41,604)
---------------
Decrease in cash and cash equivalents (43,963)
Cash and cash equivalents, beginning of year 53,963
---------------
Cash and cash equivalents, end of year $ 10,000
===============
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid during the period for:
Interest $ 24,595
Income taxes $ 19,800
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
Uni*Quality Systems Solutions, Inc. d/b/a UQ Solutions, Inc. (the
"Company") was incorporated in February 1994 for the purpose of providing
data processing and programming services. The Company serves primarily the
Chicago, Illinois market area. Sales to one customer are approximately 32%
of net service revenue. No other customers account for more than 10% of net
service revenue.
Effective February 1, 1994, the Company purchased substantially all the
assets of Uni*Quality, Inc. (the "Seller"). The purchase price of $635,000
consisted of a cash payment of $155,000 and a note payable to the Seller of
$480,000. In conjunction with the acquisition, the Seller's shareholders
executed a five year agreement not to compete with the Company.
The purchase price was allocated to the acquired assets using the fair
market values of the assets on the acquisition date, as follows:
<TABLE>
<S> <C>
Equipment, furniture and fixtures $ 68,000
Covenant not to compete 60,000
Goodwill 507,000
-----------
$ 635,000
===========
</TABLE>
Amortization of the covenant not to compete and goodwill is computed using
the straight line method over the estimated useful lives of five and
fifteen years, respectively. Accumulated amortization at December 31, 1996
was $133,583.
Furniture and Equipment
Furniture and equipment are carried at cost, less accumulated depreciation.
Major additions are capitalized, while repairs and maintenance are charged
to expenses as incurred. Depreciation is computed using the straight line
method over the estimated useful lives of the assets ranging from five to
seven years.
Revenue Recognition
Net service revenues consist of sales less credits and discounts. The
Company recognizes revenue for contract personnel based on hours worked by
assigned personnel on a weekly basis.
Income Taxes
The Company accounts for income taxes under the principles of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 requires an asset and liability approach to the recognition
of deferred tax assets and liabilities for the expected future tax
consequences of differences between the carrying amounts and the tax base
of other assets and liabilities.
<PAGE> 9
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Cash and Cash Equivalents
The Company classifies all highly-liquid investments with an initial
maturity of three months or less as cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. The fair values of the Company's financial instruments are
estimated based on current market rates and instruments with the same risk
and maturities. The fair values of trade and other receivables, accounts
payable and other accruals, note payable and line of credit approximate the
carrying values of these financial instruments.
3. FURNITURE AND EQUIPMENT
Major classifications of furniture and equipment and related asset liens as
of December 31, 1996 are summarized as follows:
<TABLE>
<S> <C>
Furniture, fixtures and equipment $ 87,640
Computer equipment 100,211
-----------
187,851
Less accumulated depreciation (55,154)
-----------
$ 132,697
===========
</TABLE>
4. LINE OF CREDIT AND NOTE PAYABLE
Line of Credit
On June 1, 1996, the Company executed a $600,000 Revolving Credit Agreement
with a bank. The note agreement matures on June 1, 1998 and bears interest
at 1/2% in excess of the bank's prime rate. At December 31, 1996, the
Company reported a liability of $225,000 under this note agreement.
Substantially all of the assets of the Company serve as collateral for
amounts borrowed under this agreement.
<PAGE> 10
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note Payable
In conjunction with the asset purchase described in Note 1, the Company
executed a $480,000 note payable to the Seller. This note was equivalent to
an amount owed by the Seller to its bank. Monthly payments of $18,000,
including interest, are to be paid directly to the Seller's bank. These
payments will continue until the principal amount is retired. Interest is
being calculated at one percent above the bank's prime rate. The bank holds
a collateral interest in the purchased assets, but this interest is
subordinate to the line of credit. The remaining payments due under this
note mature in 1997.
5. INCOME TAXES
The provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
1996
<S> <C>
Current provision
Federal $ 2,700
State 500
Deferred provision
Federal 125,900
State 27,500
-------------
Total $ 156,600
=============
</TABLE>
Deferred income taxes arise from the use of the accrual method of
accounting for financial reporting purposes and the cash method of
accounting for income tax reporting purposes. Deferred federal and state
income taxes have been reported in the accompanying balance sheet using an
effective rate of approximately 40%, which approximates the federal and
state statutory rates. The significant components of the liability for
deferred income taxes at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
DEFERRED
INCOME
TAXES
<S> <C>
Amounts to be reported as taxable income in future periods:
Trade receivables $ 600,000
Prepaid expenses 6,100
Depreciation and amortization 33,000
Amounts to be reported as deductible expenses in future periods:
Accounts payable (11,100)
Accrued expenses (134,000)
--------------
$ 494,000
==============
</TABLE>
<PAGE> 11
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain equipment and office space under operating
leases. Future minimum lease payments under operating leases are summarized
as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1997 $ 89,923
1998 85,233
1999 720
</TABLE>
Rental expense under all operating leases was $86,400 for 1996.
7. PROFIT SHARING PLAN
The Company maintains a 401(k) savings plan, whereby all employees may
elect to make contributions pursuant to a salary reduction agreement upon
meeting age and length-of-services requirements. The Company may make
matching contributions equal to a discretionary percentage, to be
determined by the Company, of the employees' salary reductions. The Company
did not make matching contributions to the plan for the year ended December
31, 1996.
8. SUBSEQUENT EVENT
On September 5, 1997, the Company completed the sale of 100% of its stock
to Romac International, Inc. The sale price, including a non-compete
agreement, is in excess of net book value of the assets acquired and is
subject to adjustment upon attainment of certain operating results.
<PAGE> 12
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
UNAUDITED INTERIM BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30,
(IN THOUSANDS) 1997
(UNAUDITED)
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 38
Trade receivables 2,906
Receivables from related parties, current 11
Prepaid expenses and other current assets 31
------
Total current assets 2,986
Furniture and equipment, net 120
Goodwill, net of accumulated amortization of $1,930 418
Other assets, net 22
------
Total assets $3,546
======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities 428
Accrued payroll costs 750
Deferred income taxes-current portion 830
------
Total current liabilities 2,008
------
Total liabilities 2,008
------
Commitments and contingencies
Shareholders' Equity:
Common stock, $10 par value; 1,000 authorized, 600 issued and outstanding 6
Additional paid-in capital
Retained earnings 1,532
------
Total shareholders' equity 1,538
------
Total liabilities and shareholders' equity 3,546
======
</TABLE>
See notes to unaudited interim financial statements.
<PAGE> 13
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
UNAUDITED INTERIM STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------
1996 1997
<S> <C> <C>
Net service revenues 6,003 9,670
Direct cost of services 4,202 7,094
----- -----
Gross profit 1,801 2,576
Selling, general and administrative expenses 1,598 1,611
Other (income) expense 10 4
Income before income taxes 193 961
Provision for income taxes 72 384
----- -----
Net income 121 577
Retained Earnings, Beginning of Year 721 955
----- -----
Retained Earnings, End of Year 842 1,532
===== =====
</TABLE>
See notes to unaudited interim financial statements.
<PAGE> 14
UNI*QUALITY SYSTEMS SOLUTIONS, INC.
UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-------------------
1996 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 121 $ 577
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 28 28
Deferred taxes 82 336
(Increase) decrease in operating assets:
Trade receivables, net (216) (1,393)
Receivables from related parties (32) (1)
Prepaid and other assets 8 (11)
Other receivables 10 40
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities 73 357
Accrued payroll costs 403 436
------ -------
Cash provided by operating activities 477 369
Cash flows from investing activities:
Capital expenditures (49) --
------ -------
Cash used in investing activities (49) --
Cash flows from financing activities:
Payments on note payable (93) (116)
Payments on line of credit (75) (225)
------ -------
Cash used in financing activities (168) (341)
Increase in cash and cash equivalents 260 28
Cash and cash equivalents, beginning of year 54 10
------ -------
Cash and cash equivalents, end of year $ 314 $ 38
====== =======
</TABLE>
See notes to unaudited interim financial statements
<PAGE> 15
UNI*QUALITY SYSTEM SOLUTIONS, INC.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
Interim Financial Information
The interim financial data is unaudited; however, in the opinion of the Company,
the interim data includes all adjustments, consisting only of normal recurring
accruals, necessary for a fair statement of the results of the interim periods.
The results of operations for the six months ended June 30, 1996 and 1997 are
not necessarily indicative of the results that can be expected for the entire
fiscal years ending December 31, 1996 and 1997.
<PAGE> 16
ROMAC INTERNATIONAL, INC.
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information for
the year ended December 31, 1996 and the six months ended June 30, 1997 have
been prepared to reflect the financial position of Romac International, Inc.
(the "Company") as if the acquisitions of Uni*Quality Systems Solutions, Inc.
d/b/a UQ Solutions, Inc.("UQ") in September 1997 had occurred effective January
1, 1996.
UQ ACQUISITION
The acquisition was treated as a purchase for financial reporting
purposes. The Company acquired UQ for approximately $19.6 million in cash and
was determined through arms-length negotiations by the parties. The purchase
price is subject to an earn-out agreement wherein seven and one-half times all
earnings before income taxes, interest, and amortization of UQ in excess of
$2,772,750 and three times all earnings before income taxes, interest, and
amortization greater than $2,772,750 for the years ending June 30,1998 and 1999,
respectively, shall be paid to UQ's prior owners in the form of additional
purchase price and would be amortized over the remaining life of goodwill. The
earn-outs, if achieved, would be paid in the form of cash on or before August
31, 1998 and August 31, 1999, respectively. The transaction was financed with
the proceeds of the Company's secondary public offering which have been invested
in short-term securities since May 1996.
The unaudited pro forma combined financial statements are derived, in
part, from historical financial statements and should be read in conjunction
with those financial statements and the notes thereto. The unaudited pro forma
combined financial statements are not necessarily indicative of the results
that would have occurred if the assumed transaction had occurred on the dates
indicated or the expected financial position or results of operations in the
future. The unaudited pro forma combined statement of income should be read
in conjunction with the separate historical financial statements of Romac
International, Inc. and in conjunction with the related assumptions and notes to
these unaudited pro forma combined financial statements. The unaudited pro
forma combined financial statements do not include certain acquisitions that
are individually and in the aggregate, insignificant to the financial
statements. The historical earnings per share amounts have been adjusted to
reflect the two for one stock split effected as a 100% stock dividend effective
October 3, 1997.
<PAGE> 17
<TABLE>
<CAPTION>
ROMAC INTERNATIONAL
PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1997 HISTORICAL
-----------------------------
(IN THOUSANDS) ROMAC UQ PRO FORMA
(UNAUDITED) INTERNATIONAL SOLUTIONS ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $30,352 38 -19,632 (a) 10,758
3,903 3,903
Trade receivables, net of allowance for doubtful
accounts of $581, respectively 23,327 2,906 26,233
Notes receivable from franchisees, current 233 233
Receivables from related parties, current 525 11 536
Deferred tax asset 243 -243 (a) 0
Prepaid expenses and other current assets 1,273 31 1,304
------- ------ ------- ------
Total current assets 59,856 2,986 -19,875 42,967
Notes receivable from franchisees, less current portion 71 71
Receivables from related parties, less current portion 849 849
Deferred tax asset 209 209
Furniture and equipment, net 8,242 120 8,362
Goodwill, net of accumulated amortization of $1,930 21,927 418 18,370 (a) 40,715
Other assets, net 2,257 22 2,279
------- ----- ------- ------
Total assets 93,411 3,546 -1,505 95,452
======= ===== ======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities 2,268 428 2,696
Accrued payroll costs 4,871 750 5,621
Current portion of notes payable and capital lease obligations 891 891
Current portion of payables to related parties 1,360 1,360
Deferred income taxes-current portion 830 -243 (a) 587
Income taxes payable 940 940
------ ----- ------ ------
Total current liabilities 10,330 2,008 -243 12,095
Notes payable and capital lease obligations 1,636 1,636
Payables to related parties, less current portion 1,575 1,575
Other long-term liabilities 1,829 1,829
------ ----- ----- -------
Total liabilities 15,370 2,008 -243 17,135
Commitments and contingencies
Shareholders' Equity:
Preferred stock
Common stock, par value $.01; 100,000 authorized, 24,890 issued 249 (b) 6 -6 (a) 249
Additional paid-in capital 63,637 (b) 63,637
Stock subscriptions receivable -1 -1
Retained earnings 15,081 1,532 -1,256 (a) 15,357
Less: reacquired stock at cost -925 -925
------ ----- ------ ------
Total shareholders' equity 78,041 1,538 -1,262 78,317
------ ----- ------ ------
Total liabilities and shareholders' equity 93,411 3,546 -1,505 95,452
====== ===== ====== ======
</TABLE>
See Notes to Unaudited Pro Forma Combined Balance Sheet.
<PAGE> 18
ROMAC INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
(a) To reflect purchase accounting adjustments for the allocation of purchase
price and to reflect the use of cash by Romac International, Inc. to
finance transaction.
(b) As adjusted for a two for one stock split in the form of a 100% stock
dividend effective October 3, 1997.
<PAGE> 19
<TABLE>
<CAPTION>
ROMAC INTERNATIONAL
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1996
(IN THOUSANDS) HISTORICAL
---------------------
(UNAUDITED)
ROMAC PRO FORMA
INTERNATIONAL UQ ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Net service revenues 94,210 12,414 106,624
Direct cost of services 53,839 8,847 62,686
------ ------ -------
Gross profit 40,371 3,567 43,938
Selling, general and administrative expenses 30,348 3,108 -1,077 (a) 32,379
Depreciation and amortization expense 1,762 56 602 (b) 2,420
Other (income) expense (1,685) 13 1,168 (c) -504
------ ----- ------ -------
Income before income taxes 9,946 390 (693) 9,643
Provision for income taxes 3,965 157 -265 (d) 3,857
----- ----- ----- -------
Net income 5,981 233 -428 5,786
====== ===== ===== =======
Net income per share (f) 0.25
Weighted average shares outstanding (f) 23,560
See Notes to Unaudited Pro Forma Combined Statements of Operations.
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
ROMAC INTERNATIONAL
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30,1997
(IN THOUSANDS) HISTORICAL
-------------------------------------------
(UNAUDITED)
ROMAC PRO FORMA
INTERNATIONAL UQ ADJUSTMENTS PRO FORMA
(e)
<S> <C> <C> <C> <C>
Net service revenues 74,592 9,670 84,262
Direct cost of services 44,581 7,094 51,675
------ ----- ------
Gross profit 30,011 2,576 32,587
Selling, general and administrative expenses 22,387 1,583 -205 (a) 23,765
Depreciation and amortization expense 1,286 28 301 (b) 1,615
Other (income) expense -1,063 4 584 (c) -475
------ ----- ---- ------
Income before income taxes 7,401 961 -680 7,682
Provision for income taxes 2,895 384 -206 (d) 3,073
------ ----- ---- ------
Net income 4,506 577 -474 4,609
====== ===== ==== ======
Net income per share-Primary (f) $0.18
Weighted average shares outstanding-primary (f) 25,342
Net income per share-Fully Diluted (f) $0.18
Weighted average shares outstanding-Fully Diluted (f) 25,582
See Notes to Unaudited Pro Forma Combined Statements of Operations.
</TABLE>
<PAGE> 21
ROMAC INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
Basis of Recording the Transaction. The accompanying pro forma combined
statements of operations for the year ended December 31,1996, and the six months
ended June 30,1997, have been prepared to reflect the operations of the Company
as if the acquisition of UQ had occurred January 1, 1996.
Statements of Operations Adjustments. The following pro forma adjustments
were made to the historical statements of the Company.
(a) The adjustments for the year ended December 31, 1996 and the six
months ended June 30, 1997 relates to non-recurring selling,
general and administrative expenses primarily due to eliminated
salaries and related benefits of $1,077 and $205, respectively.
(b) This adjustment relates to the increase in amortization expense
related to the goodwill Recorded under the purchase method of
accounting of $602 and $301 for the year ended December 31, 1996
and the six months ended June 30, 1997, respectively.
(c) This adjustment reflects the decrease in dividend and interest
income of $1,168 and $584 for the year ended December 31, 1996 and
the six months ended June 30, 1997, respectively as investments
were used to finance the acquisition. The weighted average interest
income rate used was 5.95%.
(d) This adjustment reflects the decrease in income tax expense based
upon the pro forma adjustments to income before income taxes using
the Company's effective tax rate of approximately 40%.
(e) Represents operations prior to the effective date of acquisition.
(f) As adjusted for a two for one stock split in the form of a 100%
stock dividend effective October 3, 1997.
