<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXHANGE ACT OF 1934
Date of Report (Date of earliest event reported):September 26, 1997
ROMAC INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida
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(State of Other Jurisdiction of Incorporation)
0-26058 59-3264661
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(Commission File Number) (IRS Employer Idenification No.)
120 West Hyde Park Place, Suite 150 Tampa, Florida 33606
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(Address of principal executive offices) (Zip Code)
(813)-251-1700
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former name or former address, if changed since last report)
<PAGE> 2
This Report on Form 8-K contains 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
uncertainties, 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 October 9, 1997, the Company filed a report on Form 8-K with respect
to the acquisition of the assets of Sequent Associates, 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 assets, 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.
Independent Auditor's Report
Balance Sheet as of December 31, 1996
Statement of Income 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 Income 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
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<PAGE> 3
(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)
(c) EXHIBITS.
Exhibit Number Description
None
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<PAGE> 4
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 17, 1997
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<PAGE> 5
Board of Directors
Sequent Associates, Inc.
San Jose, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Sequent Associates, Inc. as of
December 31, 1996, and the related statements of income and retained earnings
and cash flows for the year then ended. 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 in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sequent Associates, Inc. as of
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.
FRANK, RIMERMAN & CO. LLP
San Jose, California
March 12, 1997
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<PAGE> 6
SEQUENT ASSOCIATES, INC.
BALANCE SHEET
December 31, 1996
ASSETS (Note 3)
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 277,219
Accounts receivable, net of allowance for doubtful accounts
of $13,000 1,936,774
Prepaid expenses and other 47,045
-----------
Total current assets 2,261,038
PROPERTY AND EQUIPMENT, net (Note 2) 282,593
OTHER ASSETS (Note 5) 53,489
-----------
$ 2,597,120
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank borrowings (Note 3) $ 867,184
Accounts payable 95,773
Accrued expenses (Note 7) 435,777
Current maturities of notes payable (Note 3) 46,178
Current portion of capital lease obligations (Note 4) 9,888
Note payable to stockholder (Note 3) 82,000
-----------
Total current liabilities 1,536,800
NOTES PAYABLE, less current maturities (Note 3) 93,516
CAPITAL LEASE OBLIGATIONS, less current portion (Note 4) 9,280
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY (Notes 5 and 6)
Common stock, no par value; 2,500,000 shares authorized;
1,187,500 shares issued and outstanding 257,224
Stockholder note receivable (9,000)
Retained earnings 709,300
-----------
957,524
-----------
$ 2,597,120
===========
</TABLE>
See Notes to Financial Statements
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<PAGE> 7
SEQUENT ASSOCIATES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Year Ended December 31, 1996
<TABLE>
<S> <C>
CONTRACTOR SERVICE FEES $15,892,452
COST OF CONTRACTOR SERVICE FEES 11,765,440
-----------
Gross Profit 4,127,012
-----------
OPERATING EXPENSES
Salaries and related benefits 2,331,485
Selling and marketing 791,900
Facilities and related 158,295
General and administrative 559,139
-----------
3,840,819
-----------
Operating income 286,193
INTEREST EXPENSE, net 64,744
-----------
Income before provision for income taxes 221,449
PROVISION FOR INCOME TAXES 800
-----------
Net income 220,649
RETAINED EARNINGS, beginning of year 488,651
-----------
RETAINED EARNINGS, end of year $ 709,300
===========
</TABLE>
See Notes to Financial Statements
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<PAGE> 8
SEQUENT ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 220,649
Adjustments to reconcile net income to net cash provided by
operating activities:
Allowance for doubtful accounts 22,040
Depreciation and amortization 79,386
Changes in operating assets and liabilities:
Accounts receivable (381,649)
Prepaid expenses and other (39,690)
Accounts payable 36,684
Accrued expenses 87,097
---------
Net cash provided by operating activities 24,517
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (126,276)
---------
Net cash used in investing activities (126,276)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from lines of credit, net 173,905
Proceeds from note payable to stockholder 82,000
Payments of notes payable (40,055)
Payments of capital lease obligations (12,976)
Proceeds from stockholder receivable 1,000
---------
Net cash provided by financing activities 203,874
---------
Net increase in cash 102,115
CASH, beginning of year 175,104
---------
CASH, end of year $ 277,219
=========
</TABLE>
(Continued)
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<PAGE> 9
SEQUENT ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1996
(Continued)
<TABLE>
<S> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $65,000
=======
Income taxes paid $ 800
=======
</TABLE>
See Notes to Financial Statements
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<PAGE> 10
SEQUENT ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
NATURE OF BUSINESS
Sequent Associates, Inc. (Company) was incorporated in California in
February, 1984. The Company provides engineering professionals on a
temporary (contract) basis to companies in the high-technology
industries located primarily in California.
SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition:
Fees from contractor services are recognized as services are performed.
Property and Equipment:
Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets,
generally five years. Leasehold improvements are recorded at cost and
amortized using the straight-line method over the lesser of their
useful lives or the remaining lease term.
Income Taxes:
The Company has elected S-Corporation status for income tax purposes.
Accordingly, the stockholders are required to report, at the
stockholder level, their pro rata share of the Company's taxable
income. The Company is subject to minimal current state taxes on its
taxable income.
Statement of Cash Flows:
For purposes of this statement, cash includes cash in bank demand and
liquid asset accounts.
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, disclosure of contingent assets and liabilities, and
reported amounts of revenues and expenses in the financial statements
and the accompanying notes. Actual results could differ from those
estimates.
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<PAGE> 11
SEQUENT ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk:
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of cash and accounts
receivable. At December 31, 1996, all of the Company's cash was on
deposit with one bank. Cash accounts are insured up to $100,000 by the
Federal Deposit Insurance Corporation.
The Company does not require collateral from its customers and
generally requires payment in 30 days. The Company periodically
evaluates the collectibility of its accounts receivable and provides an
allowance for potential credit losses as necessary. Historically,
credit losses have been within management's expectations.
2. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<S> <C>
Equipment $357,053
Furniture and fixtures 142,001
Leasehold improvements 29,068
--------
528,122
Less accumulated depreciation and amortization 245,529
--------
$282,593
========
</TABLE>
3. Borrowings
Short-Term Borrowings:
The Company has a revolving line of credit agreement which allows for
borrowings of up to $1,500,000 based on 80% of eligible accounts
receivable at the bank's prime rate plus 1.75% (10% in total at
December 31, 1996). Borrowings are secured by substantially all of the
assets of the Company and are guaranteed by the stockholders. The
agreement requires the Company to meet certain financial covenants and
maintain profitable operations. The agreement is subject to renewal in
May, 1997.
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<PAGE> 12
SEQUENT ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
3. Borrowings (continued)
Short-Term Borrowings: (continued)
The Company also has an equipment line which allows for borrowings of
up to $100,000 at the bank's prime rate plus 2%.
In March, 1997, the outstanding borrowings on the equipment line
($76,287 at December 31, 1996) will convert to a term note payable in
equal monthly installments through March, 2001. The equipment line is
secured by property and equipment and guaranteed by the stockholders.
Long-Term Borrowings:
<TABLE>
<S> <C>
Note payable to bank secured by equipment, payable in monthly
installments of $1,667, plus interest at the bank's prime rate plus
2.5%, through June, 1999 $ 45,891
Note payable to bank secured by equipment, payable in monthly
installments of $2,180, plus interest at the bank's prime rate plus
2.0%, through July, 2000 93,803
Other --
--------
139,694
Less current maturities 46,178
--------
$ 93,516
========
Future principal maturities are as follows:
1997 $ 46,178
1998 46,178
1999 32,068
2000 15,270
--------
$139,694
========
</TABLE>
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<PAGE> 13
SEQUENT ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
3. Borrowings (continued)
Note Payable to Stockholder:
The Company has a demand note payable to a stockholder, with interest
at 8.5%.
4. Commitments
The Company leases its Northern California and Southern California
facilities under non-cancelable operating leases which expire January,
2000 and February, 1997, respectively. Under the terms of the leases,
the Company is required to maintain property and general liability
insurance. The Company has an option to extend the Northern Californian
lease for an additional five years. The Southern California lease
automatically renews for an additional six months unless canceled by
either party.
The Company also leases equipment under capital lease agreements with
an original cost of $62,450 and a net book value of $13,988 at December
31, 1996. The lease agreements require the Company to pay insurance and
certain maintenance costs.
Future minimum lease payments under capital and operating leases, are
as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases Total
-------- --------- ----------
<S> <C> <C> <C> <C>
1997 $ 13,700 $ 131,000 $ 144,700
1998 7,700 131,000 138,700
1999 3,700 132,000 135,700
2000 2,100 11,000 13,100
-------- --------- ----------
27,200 $ 405,000 $ 432,200
========= ==========
Less amount representing interest 8,032
--------
19,168
Less current portion 9,888
--------
$ 9,280
========
</TABLE>
Rent expense under operating leases was $136,000 in 1996.
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<PAGE> 14
SEQUENT ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
5. Stockholder Notes Receivable
Included in other assets are notes receivable from stockholders of
$25,000 with accrued interest at 8% which are due in 1999.
The Company also has a $9,000 stockholder note receivable, with
interest at 7%, collateralized by shares of common stock.
6. Stockholders' Equity
The Company has issued common stock to employees subject to agreements.
Under the terms of the agreements, the Company has the right to
repurchase the stock if the employee leaves the Company. The repurchase
price is equal to the Company's net book value on a per share basis.
7. Accrued Expenses
Accrued expenses consists of the following:
<TABLE>
<S> <C>
Contractor compensation costs $234,807
Payroll and related expenses 151,103
Other 49,867
--------
$435,777
========
</TABLE>
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<PAGE> 15
SEQUENT ASSOCIATES, INC.
UNAUDITED INTERIM BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30,
(IN THOUSANDS) 1997
(UNAUDITED)
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 539
Trade receivables 2,081
Prepaid expenses and other current assets 16
-------
Total current assets 2,636
Furniture and equipment, net 284
Receivables from related parties, net of current portion 40
Other assets, net 14
-------
Total assets $ 2,974
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities $ 638
Current portion of bank line of credit facility 641
Current Portion of notes payable and capital lease obligations 55
-------
Total current liabilities 1,334
Notes payable and capital lease obligations, net of current portion 196
Deferred income taxes, net of current portion 3
-------
Total liabilities 1,533
-------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value; 2,500 authorized, 1,187 issued and outstanding 257
Stock subscriptions receivable (9)
Retained earnings 1,193
-------
Total shareholders' equity 1,441
-------
Total liabilities and shareholders' equity $ 2,974
=======
</TABLE>
See notes to unaudited interim financial statements.
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<PAGE> 16
SEQUENT ASSOCIATES, INC.
UNAUDITED INTERIM STATEMENTS OF INCOME AND
RETAINED EARNINGS
<TABLE>
<CAPTION>
(IN THOUSANDS)
(UNAUDITED) FOR THE SIX MONTHS ENDED
JUNE 30,
1996 1997
<S> <C> <C>
Net service revenues $7,322 $10,103
Direct cost of services 5,431 7,458
------ -------
Gross profit 1,891 2,645
Selling, general and administrative expenses 1,508 2,074
Depreciation and amortization expense 37 44
Other (income) expense 31 43
------ -------
Income before income taxes 315 484
Provision for income taxes 1 1
------ -------
Net income 314 483
Retained Earnings, Beginning of Year 489 709
------ -------
Retained Earnings, End of Year $ 803 $ 1,192
====== =======
</TABLE>
See notes to unaudited interim financial statements.
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<PAGE> 17
SEQUENT ASSOCIATES, INC.
UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
For the six
months ended
June 30,
1996 1997
Cash flows from operating activities:
Net income $ 314 $ 483
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 37 44
(Increase) decrease in operating assets:
Trade receivables, net 144 (145)
Receivables from related parties (42) --
Prepaid and other assets 46 31
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities 83 110
----- -----
Cash provided by operating activities 582 523
----- -----
Cash flows from investing activities:
Capital expenditures (16) (45)
----- -----
Cash used in investing activities (16) (45)
----- -----
Cash flows from financing activities:
Payments on bank line of credit facility, net (400) (150)
Payments on notes and capital lease obligations (24) (66)
----- -----
Cash used in financing activities (424) (216)
----- -----
Decrease in cash and cash equivalents 142 262
Cash and cash equivalents, beginning of year 175 277
----- -----
Cash and cash equivalents, end of year $ 317 $ 539
===== =====
See notes to unaudited interim financial statements.
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<PAGE> 18
SEQUENT ASSOCIATES, 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, 1997 are not
necessarily indicative of the results that can be expected for the entire
fiscal year ending December 31, 1997.
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<PAGE> 19
ROMAC INTERNATIONAL, INC.
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma combined 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, and Sequent Associates, Inc.
("Sequent") 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 by the
proceeds of the Company's secondary public offering which have been invested in
short-term securities since May 1996.
SEQUENT ACQUISITION
The acquisition was treated as a purchase for financial reporting
purposes. The Company acquired Sequent for approximately $20.3 million in cash
and was determined through arms-length negotiations by the parties. The purchase
price is subject to an earn-out agreement wherein eight times earnings before
income taxes, interest, and amortization in excess of $2,375,000 for the year
ended September 30, 1998, shall be paid 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 within 60 days of when the earnout
is determined but no later than December 31, 1998. The purchase price is also
subject to certain indemnity obligations contained in the Agreement. The
transaction was financed by the proceeds of the Company's secondary public
offering in May 1996 and the Company's Revolving Line of Credit Loan Agreement
with Nationsbank, N.A.
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<PAGE> 20
The unaudited pro forma consolidated 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
consolidated 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 consolidated 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 consolidated 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 to shareholders of record on October 3,
1997, which will be reflected on the Nasdaq National Market on October 17, 1997.
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<PAGE> 21
ROMAC INTERNATIONAL
PRO FORMA COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
HISTORICAL
AS OF JUNE 30, 1997 -------------------------------------
(IN THOUSANDS) ROMAC PRO FORMA
(UNAUDITED) INTERNATIONAL UQ SEQUENT ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 30,352 $ 38 $ 539 $(30,352)(b) $ 577
Short-term investments 3,903 0 0 (3,903)(b) 0
Trade receivables, net of allowance for doubtful
accounts of $581 23,327 2,906 2,081 28,314
Notes receivable from franchisees, current 233 233
Receivables from related parties, current 525 11 536
Deferred tax asset 243 (243)(b) 0
Prepaid expenses and other current assets 1,273 31 16 1,320
-------- -------- ------ -------- --------
Total current assets 59,856 2,986 2,636 (34,498) 30,980
Notes receivable from franchisees, less current portion 71 71
Receivables from related parties, less current portion 849 40 (40)(a) 849
Deferred tax asset 209 (3)(b) 206
Furniture and equipment, net 8,242 120 284 8,646
Goodwill, net of accumulated amortization of $2,231 21,927 418 35,760 (b) 58,105
Other assets, net 2,257 22 14 2,293
-------- -------- ------ -------- --------
Total assets $ 93,411 $ 3,546 $ 2,974 $ 1,219 $101,150
======== ======== ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities $ 2,268 $ 428 $ 638 $ 3,334
Accrued payroll costs 4,871 750 5,621
Current portion of bank line of credit facility 641 5,041 (b) 5,682
Current portion of notes payable and capital lease obligations 891 55 (55)(b) 891
Current portion of payables to related parties 1,360 1,360
Deferred income taxes-current portion 830 (243)(b) 587
Income taxes payable 940 940
-------- -------- ------ -------- --------
Total current liabilities 10,330 2,008 1,334 4,743 18,360
Notes payable and capital lease obligations 1,636 196 (196)(b) 1,636
Payables to related parties, less current portion 1,575 1,575
Deferred income taxes, net of current portion 3 (3)(b) 0
Other long-term liabilities 1,829 1,829
-------- -------- ------ -------- --------
Total liabilities 15,370 2,008 1,533 4,544 23,400
Commitments and contingencies
Shareholders' Equity:
Preferred stock
Common stock, par value $.01; 100,000 authorized, 24,890 issued 249(c) 6 257 (263)(a) 249
Additional paid-in capital 63,637(c) 63,637
Stock subscriptions receivable (1) (9) 9 (a) (1)
Retained earnings 15,081 1,532 1,193 (3,071)(b) 14,790
Less: reacquired stock at cost (925) (925)
-------- -------- ------ -------- --------
Total shareholders' equity 78,041 1,538 1,441 (3,325) 77,750
-------- -------- ------ -------- --------
Total liabilities and shareholders' equity $ 93,411 $ 3,546 $ 2,974 $ 1,219 $101,150
======== ======== ======= ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Combined Balance Sheets.
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<PAGE> 22
ROMAC INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
(a) To adjust for assets and liabilities not purchased.
(b) To reflect purchase accounting adjustments for the allocation of
purchase price and to reflect the use of cash and borrowing by Romac
International, Inc. to finance transaction.
(c) As adjusted for a two for one stock split in the form of a 100% stock
dividend to shareholders of record on October 3, 1997, which will be
reflected on the Nasdaq National Market on October 17, 1997.
- 22 -
<PAGE> 23
ROMAC INTERNATIONAL
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,1996
(IN THOUSANDS) Historical
(UNAUDITED) -------------------------------------
Romac Pro Forma
International UQ Sequent Adjustments Pro Forma
<S> <C> <C> <C> <C> <C>
Net service revenues $94,210 $12,414 $15,892 $122,516
Direct cost of services 53,839 8,847 11,765 74,451
------- ------- ------- --------
Gross profit 40,371 3,567 4,127 48,065
Selling, general and administrative expenses 30,348 3,108 3,762 -2,081 (a) 35,137
Depreciation and amortization expense 1,762 56 79 1,192 (b) 3,089
Other (income) expense -1,685 13 65 2,054 (c) 447
------- ------- ------- ------- --- --------
Income before income taxes 9,946 390 221 (1,165) 9,392
Provision for income taxes 3,965 157 1 -366 (d) 3,757
------- ------- ------- ------- --- --------
Net income $ 5,981 $ 233 $ 220 $ -799 $ 5,635
======= ======= ======= ======= ========
Net income per share(f) $ 0.24
Weighted average shares outstanding(f) 23,560
</TABLE>
See Notes to ProForma Combined Statements of Operations.
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<PAGE> 24
ROMAC INTERNATIONAL
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30,1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ROMAC PRO FORMA
INTERNATIONAL UQ SEQUENT ADJUSTMENTS PRO FORMA
(e) (e)
<S> <C> <C> <C> <C> <C>
Net service revenues $74,592 $9,670 $10,103 $94,365
Direct cost of services 44,581 7,094 7,458 59,133
------- ------ ------- -------
Gross profit 30,011 2,576 2,645 0 35,232
Selling, general and administrative expenses 22,387 1,583 2,074 -730 (a) 25,314
Depreciation and amortization expense 1,286 28 44 596 (b) 1,954
Other (income) expense -1,063 4 43 1,248 (c) 232
Income before income taxes 7,401 961 484 -1,114 7,732
Provision for income taxes 2,895 384 1 -187 (d) 3,093
------- ------ ------- ------ -------
Net income $ 4,506 $ 577 $ 483 $-1,301 $ 4,639
======= ====== ======= ====== =======
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
</TABLE>
See Notes to Unaudited Pro Forma Combined Statements of Operations.
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<PAGE> 25
ROMAC INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
Basis of Recording the Transactions. 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 following had occurred January 1, 1996: (i) the
acquisition of UQ and (ii) the acquisition of Sequent.
Statements of Income Adjustments. The following pro forma adjustments
were made to the historical statements of the Company.
(a) This adjustment 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:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1996 June 30, 1997
<S> <C> <C>
UQ $(1,077) $(205)
Sequent (1,004) (525)
------- -----
Total $(2,081) $(730)
</TABLE>
(b) This adjustment reflects the increase in amortization expense
related to the goodwill and other intangible assets recorded
under the purchase method of accounting for the following
acquisitions:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1996 June 30, 1997
<S> <C> <C>
UQ $ 602 $301
Sequent 590 295
------ ----
Total $1,192 $596
</TABLE>
(c) This adjustment reflects the decrease in dividend and interest
income of $1,485 and $1,063, for the year ended December 31,
1996 and the six months ended June 30, 1997, respectively as
investments were used to finance the acquisitions. In
addition, it reflects the increase of interest expense as a
result of the debt required to finance the acquisitions of
$569 and $185, for the year ended December 31, 1996 and the
six months ended June 30, 1997, respectively. The weighted
average interest expense rate used is 6.5%.
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<PAGE> 26
(d) This adjustment reflects the increase in income tax expense
based upon the proforma adjustments to income before provision
for income taxes and as if Sequent were taxable as a C
corporation based on the Company's effective tax rate of
approximately 40%.
(e) Represents operations prior to 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.
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