<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
------------------------------
Commission file number 0-26058
ROMAC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-3264661
------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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
------------------------------
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) had been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
As of May 14, 1999, the registrant had 46,519,566 shares of common
stock, $.01 par value per share, issued and outstanding.
================================================================================
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
ROMAC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Assets:
Current Assets:
Cash and cash equivalents $ 40,783 $ 68,821
Short-term investments -- 12,000
Trade receivables, net of allowance for doubtful accounts of $4,725
and $5,762 respectively 128,126 114,144
Notes receivable from franchisees, current 31 31
Receivables from related parties, current 379 384
Deferred tax asset, current 5,702 5,702
Prepaid expenses and other current assets 4,013 3,627
--------- ---------
Total current assets 179,034 204,709
Receivables from related parties, less current portion 1,920 1,721
Furniture and equipment, net 22,278 19,869
Goodwill, net of accumulated amortization of $6,569 and $5,790, respectively 96,719 93,510
Other assets, net 15,643 14,003
--------- ---------
Total assets $ 315,594 $ 333,812
========= =========
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable and other accrued liabilities $ 9,811 $ 9,260
Accrued payroll costs 24,496 41,070
Income taxes payable 6,126 3,213
Current portion of capital lease obligations 743 743
Current portion of payables to related parties 5,588 10,144
Accrued merger and integration expenses 2,381 4,931
--------- ---------
Total current liabilities 49,145 69,361
Capital lease obligations, less current portion 236 461
Deferred tax liability, non current 96 96
Payables to related parties, less current portion 2,000 2,000
Other long-term liabilities, less current portion 7,935 6,872
--------- ---------
Total liabilities 59,412 78,790
--------- ---------
Commitments and contingencies -- --
Shareholders' Equity:
Preferred stock, par value $.01; 15,000 shares authorized,
none issued and outstanding -- --
Common stock, par value $.01; 250,000 shares authorized,
46,597 and 46,408 issued and outstanding, respectively 466 464
Additional paid-in-capital 185,995 185,300
Retained earnings 79,290 70,162
Cumulative translation adjustment 21 21
Less reacquired stock at cost; 1,829 and 677 shares, respectively (9,590) (925)
--------- ---------
Total shareholders' equity 256,182 255,022
--------- ---------
Total liabilities and shareholders' equity $ 315,594 $ 333,812
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE> 3
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
MARCH 31, MARCH 31,
1999 1998
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net service revenues $184,095 $155,402
Direct costs of service 105,263 88,301
-------- --------
Gross profit 78,832 67,101
Selling, general and administrative expenses 61,558 53,832
Depreciation and amortization expense 2,436 2,012
Merger and acquisition related expenses -- 1,745
Other (income) expense (765) (1,333)
--------
Income before income taxes 15,603 10,845
Provision for income taxes 6,475 4,596
-------- --------
Net income and Comprehensive income $ 9,128 $ 6,249
======== ========
Net income per share- Basic $ 0.20 $ 0.14
======== ========
Weighted average shares outstanding- Basic 45,701 44,985
======== ========
Net income per share- Diluted $ 0.20 $ 0.13
======== ========
Weighted average shares outstanding- Diluted 46,492 47,180
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE> 4
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
MARCH 31, MARCH 31,
1999 1998
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,128 $ 6,249
Adjustments to reconcile net income to net cash provided by
Operating activities:
Depreciation and amortization 2,436 2,012
Provision for losses on accounts and notes receivable 356 401
Deferred taxes -- (79)
(Increase) decrease in operating assets:
Trade receivables, net (14,338) (14,347)
Notes receivable from franchisees 29 --
Prepaid expenses and other current assets (386) (907)
Other assets, net (191) (970)
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities (1,961) 806
Accrued merger, restructuring, and integration expense (2,550) --
Accrued payroll costs (16,574) 947
Income taxes payable 2,913 2,982
Other long-term liabilities 1,063 394
-------- --------
Cash (used in) provided by operating activities (20,104) (2,483)
-------- --------
Cash flows from investing activities:
Capital expenditures (4,067) (1,621)
Acquisitions, net of cash acquired (8,543) (4,653)
Proceeds from the sale of short-term investments 12,000 1,868
Premiums paid for cash surrender value of life insurance policies (1,449) (440)
-------- --------
Cash (used in) provided by investing activities (2,059) (4,846)
-------- --------
Cash flows from financing activities:
Proceeds from bank line of credit 663
Payments on capital lease obligations (225) (378)
Payments on notes receivable from related parties 6 15
Repurchase of common stock (6,153) --
Issuance of receivables from related parties (200) --
Proceeds from exercise of stock options 697 1,354
-------- --------
Cash (used in) provided by financing activities (5,875) 1,654
-------- --------
Decrease in cash and cash equivalents (28,038) (5,675)
Cumulative translation adjustment -- (5)
-------- --------
Cash and cash equivalents at beginning of period 68,821 101,669
-------- --------
Cash and cash equivalents at end of period $ 40,783 $ 95,989
======== ========
Supplemental Cash Flows Information
Cash paid during the period for:
Income Taxes $ 3,580 $ 1,538
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE> 5
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Amounts
<S> <C> <C>
COMMON STOCK:
Balance at December 31, 1998 46,408 $ 464
Exercise of stock options 189 2
------ --------
Balance at March 31, 1999 46,597 $ 466
====== ========
ADDITIONAL PAID-IN CAPITAL:
Balance at December 31, 1998 $185,300
Exercise of stock options 695
--------
Balance at March 31, 1999 $185,995
========
CUMULATIVE TRANSLATION ADJUSTMENT:
Balance at December 31, 1998 and March 31, 1999 $ 21
========
RETAINED EARNINGS:
Balance at December 31, 1998 $ 70,162
Net income 9,128
--------
Balance at March 31, 1999 $ 79,290
========
REACQUIRED STOCK:
Balance at December 31, 1998 ($ 925)
Repurchase of common stock (8,665)
---------
Balance at March 31, 1999 ($ 9,590)
=========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE> 6
ROMAC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated Financial Statements
include the accounts of Romac International, Inc. (the "Company") and its
subsidiaries. The Company completed its merger with Source Services Corporation
("Source") on April 20, 1998. The common stock of Source was converted to
shares of the Company using a 1.1351 ratio. This merger was accounted for under
the pooling of interests method; accordingly all historical results have been
restated to reflect the merger. All material intercompany accounts and
transactions have been eliminated in the consolidated financial statements.
Interim Financial Information. The Consolidated Financial Statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and, in management's opinion, include all
adjustments necessary for a fair statement of results for such interim periods.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
Revenue Recognition. Net service revenues consist of sales, net of
credits and discounts. The Company recognizes Flexible Billings based on hours
worked by assigned personnel on a weekly basis. Search Fees are recognized in
contingency search engagements upon the successful completion of the
assignment. For Source, the search fee policy in 1998 was that if an individual
fails to continue employment for a period of time as specified in the placement
agreement, generally a thirty-to-ninety day period, the Company is not entitled
to collect the search fee. During the first quarter of 1999, the Company
changed its guarantee policy at its former Source operations. Revenue from
search fees is shown on the Consolidated Statement of Operations net of amounts
written off for the adjustments due to placed candidates not remaining in
employment for the guarantee period.
Cash and Cash Equivalents. The Company classifies all highly-liquid
investments with an initial maturity of three months or less as cash
equivalents.
Self-insurance. The Company offers an employee benefit program with
Source through September 30, 1998 and for all eligible employees effective
October 1, 1998 for which it is self-insured for a portion of the cost. The
Company is liable for claims up to $125 per employee and aggregate claims up to
a defined yearly payment limit. All full-time employees and salaried
consultants are eligible to participate in the program. Self-insurance costs
are accrued using actuarial estimates to approximate the liability for reported
claims and claims incurred but not reported.
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 bases of other assets and liabilities. The tax effects of
deductions attributable to employees' disqualifying dispositions of shares
obtained from incentive stock options were reflected in additional paid-in
capital.
<PAGE> 7
Foreign Currency Translation. Foreign currency translation
adjustments arise primarily from activities of the Company's Canadian
operations. Results of operations are translated using the average exchange
rates during the period, while assets and liabilities are translated into U.S.
dollars using current rates. Resulting foreign currency translation adjustments
are recorded in Stockholder's Equity.
Earnings Per Share. Options to purchase 4,2800 shares of common stock
were outstanding during the three months ended March 31, 1999, but were not
included in the computation of diluted earnings per share because the options
were anti-dilutive.
Recently Issued Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities. In June
1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", was issued. This statement is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contractors (collectively
referred to as derivatives), and for hedging activities. It also requires that
all derivatives and hedging activities be recognized as either assets or
liabilities in the Statement of Financial Position and be measured at fair
value. The Company does not believe adoption of this standard will have a
material impact on the Company's financial performance or reporting and expects
to adopt this standard during the year ended December 31, 2000.
NOTE B -- MERGER, RESTRUCTURING, AND INTEGRATION EXPENSES
In connection with the Source merger, one-time merger, restructuring,
and integration related expenses were identified and recorded in 1998. As of
March 31, 1999, the remaining accrued expenses reserve balance associated with
the charge in 1998 were $2,381 of which $1,482 related to severance and other
termination related costs to be incurred in connection with anticipated staff
reductions, $805 costs in connection with consolidation of certain office
facilities and related equipment, and approximately $94 related to other merger
and integration related expenses.
NOTE C -- SEGMENT ANALYSIS
In 1998, the Company adopted Statement of Accounting Standards No. 131,
"Disclosures about Segments of Enterprise and Related Information" ("SFAS 131").
SFAS 131 supercedes SFAS 14, "Financial Reporting for Segments of a Business
Enterprise," replacing the "industry segment" approach with the "management"
approach of determining reportable segments of an organization. The management
approach designates the internal organization that is used by management for
making operation decisions and addressing performance as the source of
determining the Company's reportable segments. Beginning in 1997, the Company
revised its organizational structure to provide internal reporting following its
four functional service offerings, including: Information Technology, Finance
and Accounting, Human Resources and Operating Specialities.
The Company only generates information on sales and gross profit on a
functional basis, as such; asset information by segment is not disclosed.
Substantially all operations and long-lived assets are located in the US.
<TABLE>
<CAPTION>
Information Finance & Human Operating
Technology Accounting Resources Specialty TOTAL
----------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
1999
Sales $116,035 $49,847 $4,592 $13,621 $184,095
Gross Profit 44,732 27,606 1,399 5,095 78,832
1998
Sales 99,423 45,540 4,399 6,040 155,402
Gross Profit 39,682 23,854 1,233 2,332 67,101
</TABLE>
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements, particularly with respect to the Liquidity and Capital Resources
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations. Additional written or oral forward-looking statements
may be made by the Company from time to time, in filings with the SEC or
otherwise. Such forward-looking statements are within the meaning of that term
in Section 27A of the Securities Act of 1933 and Section 21 E of the Securities
Exchange Act of 1934. Such statements may include, but not be limited to,
projections of revenue, income, losses, cash flows, capital expenditures, plans
for future operations, financing needs or plans, plans relating to products or
services of the Company, estimates concerning the effects of litigation or
other disputes, potential effects of Year 2000 issues, as well as assumptions
to any of the foregoing. In addition, when used in this discussion the words
"anticipate", "estimates", "expects", "intends", "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 can not be predicted. Future events and actual
results could differ materially from those set forth in or underlying the
forward looking statements. Readers are cautioned not to place undue reliance
on any forward looking statements contained in this report which speak only as
of the date of this report. The Company undertakes no obligation to publicly
publish the results of any adjustments to these forward looking statements that
may be made to reflect events on or after the date of this report or to reflect
the occurrence of unexpected events.
Results of Operations
The following table sets forth certain items in Romac's consolidated
statement of operations, as a percentage of net service revenues, for the
indicated periods:
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
<S> <C> <C>
Flexible billings 80.7% 79.2%
Search Fees 19.3 20.8
Net service revenues 100.0 100.0
Gross profit 42.8 43.2
Selling, general, and administrative expenses 33.4 34.6
Income before taxes 8.5 6.9
Net income 4.9% 4.0%
</TABLE>
Results of Operations for each of the Three Months Ended March 31, 1999 and
1998.
Net service revenues. Net service revenues increased 18.5% to $184.1
million for the three month period ending March 31, 1999 as compared to $155.4
million for the same period in 1998. These increases were comprised of a $25.6
million increase in Flexible Billings (Professional Temporary and Contract
Services revenues combined) and a $3.1 million increase in Search fees for
the three month period ending March 31, 1999, as described below.
Flexible billings increased 20.8% to $148.6 million for the three
month period ending March 31, 1999 as compared to $123.0 million for the same
period in 1998. This increase is a result of an 11.6%
<PAGE> 9
increase in the number of hours billed and a 14.9% increase in average bill
rate as compared to the same period in 1998.
Search fees increased 9.6% to $35.5 million for the three month
period ended March 31, 1999 compared to $32.4 million for the same period in
1998. This increase resulted primarily from an increase in the average fee for
each placement made during the three month period ended March 31, 1999 as
compared to the same period in 1998.
Gross profit. Gross profit increased 17.4% to $78.8 million during the
three month period ended March 31, 1999 as compared to $67.1 million for the
same period in 1998. Gross profit as a percentage of net service revenues
decreased to 42.8% for the three month period ending March 31, 1999 as compared
to 43.2 % for the same period in 1998. This decrease was primarily the result
of the continuing change in the Company's business mix whereby revenues from
Flexible Billings, traditionally lower gross margins than Search, fees
increased to 80.7% of the Company's total revenues for the three month period
ending March 31, 1999 as compared to 79.2% for the same period in 1998.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 14.5% to $61.6 million for the three month
period ended March 31, 1999 as compared to $53.8 million for the same period in
1998. Selling, general and administrative expenses as a percentage of net
service revenues decreased to 33.4 % for the three month period ended March 31,
1999 compared to 34.6% for the same period in 1998. This decrease in selling,
general and administrative expense as a percentage of net service revenues
resulted primarily from elimination of duplicate corporate functions in Dallas,
Texas from the Source merger.
Depreciation and amortization expense. Depreciation and amortization
expense increased 20.0% to approximately $2.4 million for the three month
period ended March 31, 1999 compared to approximately $2.0 million for the same
period in 1998. Depreciation and amortization expense as a percentage of net
service revenues remained constant. The increase in depreciation and
amortization expense in the three months ended March 31, 1999 as compared to
1998 is due to the goodwill amortization related to the settlement of earnout
provisions completed during the second half of 1998.
Merger, restructuring, and integration expenses. Merger and
integration expenses for the three months ended March 31, 1999 decreased 100%
compared to the same period in 1998 due to the completion of the integration of
the Source operations.
Other (income) expense. Other (income) expense decreased 38.5% for the
three months ended March 31, 1999 compared to the same period in 1998. The
decrease in other income during the three months ended March 31, 1999 was due
to less interest income as cash declined as it was used to repurchase common
stock, fund payments of earnout provisions, and operating cash requirements.
Income Before Taxes. Income before taxes increased 44.4% to $15.6
million for the three month period ended March 31, 1999 as compared to $10.8
million for the same period in 1998, primarily as a result of the above
factors.
Provision for income taxes. Provision for income taxes increased 41.3%
to $6.5 million for the three month period ended March 31, 1999 compared to
$4.6 million for the same period in 1998. The effective tax rate was 41.7% for
the three months ended March 31, 1999 compared to 42.6% for the same period in
1998. The change reflects the impact of state taxes and the reduction in 1999
of non-deductible merger-related expenses.
Net Income. Net income increased approximately 46.8% to $9.1 million
in the three months ended March 31, 1999 as compared to the $6.2 million for
the same period in 1998.
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company's sources of liquidity included
approximately $40.8 million in cash and cash equivalents, and approximately
$89.1 million in additional net working capital. In addition, as of March 31,
1999, there were no amounts outstanding on the line of credit and $30.0 million
was available for borrowing under the Company's Line of Credit. The Company has
a Revolving Line of Credit Loan Agreement with NationsBank, N.A. (the "Line of
Credit"). The Line of Credit expires on March 31, 2000 and amounts outstanding
under the line of credit accrue interest at an annual rate equal to 65 basis
points above the 90-day London Interbank Offering interest rate ("LIBOR").
During the three months ended March 31, 1999, cash flow used by
operations was approximately $20.1 million , resulting primarily from net
income, non-cash expenses (depreciation and amortization) and decreases in
operating payroll liabilities and an increase in accounts receivable. The
increase in accounts receivable reflects the increased volume of business
during the first three months of 1999 from existing locations and an increase
in the days sales outstanding. The decrease in the operating payroll is due to
an change in the timing of the commission payroll payments of the former Source
employees from quarterly to monthly.
During the three months ended March 31, 1999, cash flow used in
investing activities was approximately $2.1 million, resulting primarily from
the Company's use of approximately $8.5 million for the acquisition of two
companies and earnout payments made on existing acquisitions and $4.0 million
for capital expenditures. Proceeds from investing activities of $12.0 million
were received in the three months ended March 31, 1999 from the sale of short
term investments.
On March 11, 1999, the Company announced that its board of directors
has authorized the repurchase of up to $50 million of its common stock on the
open market, from time to time, depending on market conditions. This stock
repurchase plan may impact the Company's cash flow requirements in the next
twelve months. As of May 14, 1999, the Company has repurchased 1,152 shares
for approximately $8.7 million. The Company believes that cash flow from
operations and borrowings under the Company's Line of Credit, or other credit
facilities that may become available to the Company in the future will be
adequate to meet the working capital requirements of the Company's current
operations for at least the next 12 months. The Company's estimate of the
period that existing resources will fund its working capital requirements and
the amount of stock that the Company will actually be able to repurchase in the
next 12 months are forward-looking statements that are subject to risks and
uncertainties. Actual results could differ from those indicated as a result of
a number of factors, including the use of such resources for possible
acquisitions and the announced stock repurchase plan.
YEAR 2000
Many computer systems in use today were designed and developed using
two digits, rather than four, to specify years. As a result, such systems will
recognize the year 2000 as "00" or 1900. This could cause many computer
applications to fail completely or to create erroneous results unless
corrective measures are taken.
The Company utilizes software and computer technologies that are
essential to its operations. The Company continuously evaluates the ongoing and
expected future business and industry requirements of its internally developed
and externally purchased applications. These applications and technology
equipment are updated on a regular basis. The Company has not accelerated its
plans to replace or update existing systems because of the Year 2000 issue.
The Company has implemented a four step process to address Year 2000
issues consisting of assessment/overview (identify the issues); discovery
(inventory, categorize, and assess business impacts and risks); conversion
(make program changes, rollout new hardware, perform applications and
<PAGE> 11
acceptance testing, and certification), and deployment (deploy program and
hardware changes, evaluate and apply lessons learned). After the Company
completed the assessment/overview phase, the Company hired an independent third
party to perform the discovery phase and make recommendations on the assessment
of business risks. This study concluded that the greatest risk faced by the
Company's Internal Systems are the hardware system that operates the telephone
voicemail systems at certain locations and the Wizard NT operating system
software that must be upgraded from 3.51 to 4.01 Service Pak 4. As of May 12,
1999, the Company is progressing in the conversion phase and is believes it is
on target for completion of the high risk areas by June 30, 1999.
The Company is working with key third party vendors to understand
their ability to continue to provide services and products through the change
to 2000. The Company intends to continue to partner with its key third party
vendors to avoid any business interruptions in 2000. The Company is dependent
upon its customers for sales and cash flow. The Company currently does not
believe that it is subject to significant business risks related to its
customers' and suppliers' Year 2000 efforts, although if the Company's
customers or vendors experience Year 2000 problems, the Company's results of
operations could be materially adversely affected.
The effect of Year 2000 interruptions on the Company and our
customer's operations is difficult to predict because flexible staffing could
be a vehicle that the Company's customer's may use to correct the effect of
Year 2000 disruptions in their business. The Company will continue to monitor
the status of its customers and key strategic partners as a means of
determining risks and alteratives. The Company is also in the process of
developing contingency plans with regards to the high risk areas described
above as well as areas of medium risk which the Company believes do not have
the potential of material disruption to the business.
The Company estimates that the total cost of the project will be
approximately $1.3 million which includes both personnel costs related to
project management, programming, and hardware and software upgrades. Of this
total, approximately $1.1 million had been incurred as of March 31, 1999. The
cost of the project and the estimated completion dates are based upon
management's best estimates, which were derived utilizing assumptions of future
events, including the continued availability of certain resources, third-party
modification plans and other factors. There can be no assurance that these
estimates will prove accurate, and actual results could differ from those
estimated if these assumptions prove inaccurate.
The Year 2000 discussion includes forward-looking statements,
therefore there can be no assurance that the Company will not experience Year
2000 problems. However, based upon the progress to date, the Company believes
that it is unlikely that the actual results will differ significantly from
those estimated and that the Year 2000 compliance will have a material adverse
effect on the Company's financial condition.
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports:
Romac filed no reports on Form 8-K during the quarter ended
March 31, 1999.
<PAGE> 13
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/ William L. Sanders
----------------------------------
William L. Sanders
Vice President,
Chief Financial and Accounting Officer
Date: May 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ROMAC INTERNATIONAL FOR THE THREE MONTHS ENDED MARCH 31,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 40,783
<SECURITIES> 0
<RECEIVABLES> 132,851
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0
0
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