Back to GetFilings.com
1
===============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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 of incorporation or organization) (IRS Employer 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of Registrant's voting and non-voting stock
held by nonaffiliates of Registrant, as of March 20, 2000, was $552,448,063.
The number of shares outstanding of Registrant's Common Stock as of
March 20, 2000, was 44,195,845.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts of the Company's definitive proxy statement for the Annual
Meeting of the Company's Shareholders to be held on May 5, 2000, are
incorporated by reference into Part III of this Form.
===============================================================================
- 1 -
2
TABLE OF CONTENTS
ITEM PAGE
---- ----
Item 1. Business ........................................................ 3
Item 2. Properties ...................................................... 11
Item 3. Legal Proceedings ............................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ............. 11
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ............................................. 11
Item 6. Selected Financial Data ......................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................... 12
Item 8. Financial Statements and Supplementary Data ..................... 17
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ........................................ 17
Item 10. Directors and Executive Officers of the Registrant .............. 18
Item 11. Executive Compensation .......................................... 18
Item 12. Security Ownership of Certain Beneficial Owners and
Management ...................................................... 18
Item 13. Certain Relationships and Related Transactions .................. 18
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
10-K ............................................................ 19
Index to Consolidated Financial Statements (Pages 21-40)................... 20
- 2 -
3
PART I
ITEM 1. BUSINESS
This document contains certain forward-looking statements regarding future
financial condition and results of operations and the Company's business
operations. The words "expect," "estimate," "anticipate," "predict," "believe,"
"plans" and similar expressions are intended to identify forward-looking
statements. Such statements involve risks, uncertainties and assumptions,
including industry and economic conditions, customer actions and other factors
discussed in this and Romac International, Inc.'s ("Romac" or the "Company")
other filings with the Securities and Exchange Commission (the "Commission").
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary materially
from those indicated.
GENERAL
Headquartered in Tampa, Florida, the Company was formed in August 1994 as a
result of the combination of Romac & Associates, Inc. and three of its largest
franchises. Following an Initial Public Offering in l995, the Company grew to
31 offices in 18 major markets. On April 20, 1998, the Company consummated a
merger whereby Source Services Corporation ("Source"), a Delaware corporation,
was merged into the Company pursuant to an Agreement and Plan of Merger ("the
Merger Agreement") dated February 1, 1998, as amended on February 11, 1998 and
April 17, 1998. The acquisition has been accounted for using the pooling of
interests method of accounting; accordingly, all historical results have been
restated to reflect the merger. This merger combined the strength of two
organizations that shared common visions, strategies and business practices.
The Company now operates through more than 95 locations in 45 markets and
serves primarily clients from Fortune 1000 companies with the top ten clients
representing less than 8% of revenue in 1999.
Subject to shareholder approval, the Company intends to change its name from
Romac International, Inc. to kforce.com, Inc. to be consistent with its
long-term goals to focus its efforts as a web-based company. During 1999, the
Company launched its kforce.com website and a major advertising campaign to
promote kforce.com. Effective January 31, 2000, the Company began doing
business under the name kforce.com in all the markets in which it operates. The
Company believes these changes have been well received by both employers and
candidates.
INDUSTRY OVERVIEW
The flexible employment service industry has experienced significant growth in
response to the changing work environment in the United States. Fundamental
changes in the employer-employee relationship continue to occur, with employers
developing increasingly stringent criteria for permanent employees, while
moving toward project-oriented flexible hiring. This trend has been advanced by
increasing automation that has resulted in shorter technological cycles and by
global competitive pressures. Many employers have responded to these challenges
by turning to flexible personnel to keep labor costs variable, to achieve
maximum flexibility, to outsource highly specialized skills, and to avoid the
negative effects of layoffs.
Rapidly changing regulations concerning employee benefits, health insurance,
retirement plans, and the highly competitive business climate have also
prompted many employers to take advantage of the flexibility offered through
flexible staffing. Additionally, Internal Revenue Service and Department of
Labor regulations concerning the classification of employees and independent
contractors have significantly increased demand by prompting many independent
contractors to affiliate with employers like the Company.
The temporary staffing industry has grown rapidly in recent years as companies
have utilized temporary employees to manage personnel costs, while meeting
specialized or fluctuating staffing requirements. The National Association of
Temporary and Staffing Services has estimated that more than 80% of all U.S.
businesses utilize temporary staffing services. According to the Staffing
Industry Report, the United States temporary staffing industry grew from
approximately $102 billion in revenue
- 3 -
4
in 1998 to an estimated $117 billion in revenue in 1999. One of the fastest
growing sectors for the Company, as well as the industry, is information
technology services. Revenue for this sector has grown from an estimated $18
billion in 1998 to an estimated $22 billion in 1999 or a 22% growth over the
one year period. The Company believes that professional and technical staffing
within the temporary staffing industry requires longer-term, more
highly-skilled personnel services and offers the opportunity for higher
profitability than the clerical and light industrial staffing segments, because
of the value-added nature of professional and technical personnel.
Further, the speed of communications and an increasingly competitive
environment demand that companies look for methods to streamline and accelerate
their hiring process for temporary positions. While Internet job posting sites
have provided an immediate database pool of applicants, increasingly both
individual job seekers and corporations are looking for a web-based menu of
complete staffing transaction solutions that utilize the Internet to its full
power and capability.
BUSINESS STRATEGY
The Company's objective is to be a nationally recognized leader in providing
web-based professional specialty staffing services. The key elements of the
Company's business strategy in seeking to achieve this objective include the
following:
- BUILD THE BRAND. Build and develop its kforce.com brand while
educating and migrating both existing and new customers, as
well as operating personnel, to an integrated web-based
"hi-tech hi-touch" staffing model, utilizing kforce.com
Interactive as a unique and increasingly necessary tool to be
employed by its core client base. As the staffing industry
evolution continues, the move toward further integration and
utilization of the Internet has accelerated. Both companies
and individuals are looking for on-line availability and
staffing transactions. By building brand awareness through
advertising and marketing initiatives for kforce.com and
identifying it as the destination for web-based staffing
solutions, the Company intends to foster that recognition
across all the markets it serves.
- DEVELOP A WEB-BASED STAFFING SOLUTION. The Company believes
that the speed and rapid deployment and acceptance of the
Internet as a competitive business tool help make it a
perfect complement to professional staffing. The vast
majority of professional/managerial/ technical employees as
well as human resource department professionals are regular
Internet users. Accordingly, the Company believes that many
of its corporate customers are predisposed to employ a
web-based staffing model, thereby gaining greater control
over the recruitment and hiring process. With these market
dynamics in place, the Company expects to allocate increasing
resources toward the education and implementation of its
Internet based staffing model across all of the primary
markets the Company serves through its four functional
business units.
- FOCUS ON VALUE-ADDED SERVICES. The Company focuses
exclusively on providing specialty staffing services to its
clients, specifically in the areas of information technology,
human resources, finance and accounting and operating
specialties. The Company believes that providing these
specialty services to its clients offers greater
profitability than the clerical and light industrial sectors
of the temporary staffing industry. In addition, the Company
believes, based upon data published by the U.S. Bureau of
Labor Statistics and other sources, that employment growth
will be greater in the Company's sectors than in the
traditional clerical and light industrial sectors. The
placement of highly skilled personnel requires a distinct
operational knowledge to effectively recruit and screen
personnel, match them to client needs, and develop and manage
the resulting relationships. The Company believes its
historical focus in this market, combined with management's
operating expertise, provide it with a competitive advantage.
- BUILD LONG-TERM, CONSULTATIVE RELATIONSHIPS. The Company has
developed long-term relationships with its clients by
providing integrated solutions to their specialty staffing
requirements. The Company strives to differentiate itself by
working closely with its clients to maximize their return on
human
- 4 -
5
assets. In addition, the Company's ability to offer a broad
range of flexible personnel services coupled with its
permanent placement capability, offers the client a
single-source provider of specialty staffing services. This
ability enables the Company to emphasize consultative rather
than transactional client relationships.
- ACHIEVE EXTENSIVE CLIENT PENETRATION. The Company's client
development process focuses on repeated contacts with client
employees responsible for staffing decisions. Contacts are
made within numerous functional departments and at many
different organizational levels within the client. The
Company's operating employees are trained to develop a
thorough understanding of each client's total staffing
requirements. In addition, although the Company is organized
functionally, its operating employees are trained and
incentivized to recognize cross-selling opportunities for all
of the Company's other services.
- RECRUIT HIGH-QUALITY PROFESSIONALS. The Company places great
emphasis on recruiting qualified personnel. The Company
believes it has a recruiting advantage over those of its
competitors that lack the ability to offer personnel flexible
and permanent opportunities. Personnel seeking permanent
employment frequently accept flexible assignments through the
Company until a permanent position becomes available.
- ENCOURAGE OPERATING EMPLOYEE ACHIEVEMENT. The Company's
management promotes a quality-focused, results-oriented
culture. Operating employees are selected based on their
willingness to assume responsibility and promote the
Company's philosophy. All operating employees are given
numerous incentives to encourage the achievement of corporate
goals. The Company fosters a team-oriented and high energy
environment, celebrates the successes of its operating
employees, and attempts to create a "spirited" work
environment.
GROWTH STRATEGY
The Company has a two-tier growth strategy to expand its services in existing
markets, increasing the reach of its full range of functional services, while
providing its four functional business units with integrated web-based staffing
services through kforce.com Interactive. Externally, the Company will primarily
utilize its web-based staffing solutions to both enter markets where it does
not have a physical presence as well as enhance existing operations. The key
elements of the Company's growth strategy are as follows:
- WEBIFY OUR STAFFING PROCESS. Integrate the kforce.com
web-based staffing levels of service within each of the
Company's four functional business units increasing overall
transactions, while positioning the Company's capabilities to
offer a full range of web-based staffing solutions to expand
into new markets of opportunity. Corporations are seeking
greater speed, efficiency and flexibility to meet their
staffing requirements. The Company, through its web-based
staffing solutions, can provide a fully integrated staffing
approach, offering a full menu of unbundled services. The
Company believes this approach will initially complement its
more traditional staffing services providing reduced cost per
hire for its corporate clients, while streamlining the
overall process. At the same time, the Company believes that
increasing the utilization of a web-based approach will
broaden its markets, offering a value-added service to the
Company's vertical business groups. This, the Company
believes, will help grow overall transactions in its core
markets and lead to greater overall efficiencies while
providing a vehicle for brand expansion.
- INTRODUCE FUNCTIONAL SERVICE OFFERINGS TO EXISTING MARKETS.
The Company believes that a substantial opportunity exists to
increase the number of service offerings within its existing
markets. Further, the Company believes that through the use
of kforce.com Interactive, it can now accelerate the
availability of these services in many geographic markets
where the Company does not have a physical presence.
- 5 -
6
- LEVERAGE EXISTING CLIENT RELATIONSHIPS AND DEVELOP NEW
CLIENTS. The Company continually identifies additional growth
opportunities within existing and new clients as a result of
the interrelationships among its service offerings. The
Company has established goals for cross-selling and has
trained and incentivized its operating employees to actively
sell its full range of services, in an effort to maximize its
reach into the marketplace.
- ACQUIRE STRATEGIC BUSINESSES. The Company intends to continue
to pursue the acquisition of complementary specialty staffing
businesses. The Company's preference is to acquire businesses
in markets in which it currently has a location or formerly
maintained a franchised or licensed location, although other
markets will also be explored, including markets outside the
United States. The Company's primary acquisition candidates
are local or regional Internet companies that offer plug-in
or complementary services.
- EXPAND MAJOR AND NATIONAL ACCOUNTS PROGRAM. The Company will
continue to market its full range of services to existing and
new clients in order to position itself as the preferred
vendor for web-based staffing services. We particularly feel
that our national account strategy is well suited for our
interactive initiative. The Company believes the major
accounts program enables it to further penetrate its clients
by giving it greater access to key staffing decision makers,
including the support of the client's purchasing and
procurement team. This increased access allows the Company to
achieve greater operating leverage through improved
efficiencies in the marketing process. The Company has
successfully secured several national agreements for
professional and technical specialty staffing services. The
Company intends to aggressively pursue such agreements to
facilitate geographic expansion and existing market
penetration.
FUNCTIONAL ORGANIZATION
Organized by function, the Company provides services in the specialty areas of
information technology, finance and accounting, human resources and operating
specialties. The Company has also set up a separate business unit, kforce.com
Interactive, which supports the four functional groups, and works independently
to manage and enhance the Company's web-based staffing technology, as well as
the development of content and strategic alliances. The organization also
focuses on the expansion of the Company's database of candidates, and on
introducing and marketing the Company's range of services into geographic
markets not fully served by the functional groups.
The combination of a growing number of available software applications, the
increased complexity of such software applications, and the short supply of
qualified software expertise contributed to the Company's decision to create
kforce Consulting (formerly Emerging Technologies) in mid-1995. kforce
Consulting retrains skilled information technology professionals in cutting
edge technology solutions, particularly e-services and business-to-business,
and then offers the services of those highly trained individuals to its
clients. The Company believes the sophistication of these technologies, coupled
with the significant unmet demand, provide an attractive opportunity for it to
generate new, higher margin business, and to add value to its clients.
The functional areas are defined as:
- INFORMATION TECHNOLOGY. Computer and Data Processing Services
heads the Bureau of Labor Statistics' list of the fastest
growing industries. The shortage of technical expertise to
operate the advanced systems that businesses have acquired
over the last decade is a major catalyst contributing to the
growth of this segment. The Company's Information Technology
services focuses on more sophisticated areas of the
information technologies (i.e., systems/applications
programmers, systems analysts, e-business and networking
technicians), where the shortage of personnel is the most
acute.
- 6 -
7
- FINANCE & ACCOUNTING. In its markets, the Company believes it
has built a strong reputation for providing qualified finance
and accounting professionals to businesses. The Company
believes this reputation facilitates its recruiting and
placement efforts. The Company's Finance & Accounting
personnel are experienced in areas such as corporate
taxation, budget preparation and analysis, financial
reporting, cost analysis, and audit services. Finance &
Accounting also offers its Executive Solutions service line
which provides chief financial officers, controllers and
other higher-level financial professionals on a contract
basis for assignment lengths generally ranging from three to
six months.
- HUMAN RESOURCES. The non-core functions of a business, such
as human resources, are the most likely to be outsourced.
With increasing employment regulations, the administrative
burden on employers is becoming more complex and more
time-consuming than ever before. The Company offers flexible
and permanent staffing of human resource professionals in the
areas of recruiting, benefits administration, training and
generalists. In addition, the Company provides outplacement,
outsourcing and consulting services in this field.
- OPERATING SPECIALTIES. This segment consists of professionals
skilled in the pharmaceutical, engineering, health care,
legal, life insurance and investment industries. Examples of
the types of positions that would be classified in these
categories are: research and regulatory personnel for
pharmaceutical clients, quality engineers and assurance
personnel for manufacturing companies, hospital
administration and management personnel for health care
companies, and management personnel for life insurance
companies.
Supporting these four functional groups is a new business unit, kforce.com
Interactive, which provides the technical management and operational expertise
for the Company's web-based staffing solutions. The unit works closely with the
functional units to integrate unbundled web-based services into existing
accounts, to grow and manage the database of the Company's job candidates and
to serve, through the national business center, as the primary point of sales
into secondary or tertiary markets and geographic regions where it does not
have a physical presence.
Once the functional challenges of the client have been identified, the Company
can then consult with the client to determine its staffing and time duration
requirements. The Company offers its staffing services in one of two
categories: Flexible Staffing Services or Search Services.
FLEXIBLE STAFFING SERVICES
Flexible Staffing services are offered by the Company to provide personnel in
the fields of information technology, finance and accounting, human resources
and operating specialties. The Company currently offers flexible staffing
services in all metropolitan market areas of information technology, finance
and accounting, operating specialties and human resources.
FINANCE AND ACCOUNTING. Flexible staffing offers its clients a
reliable and cost-effective means of handling uneven or peak workloads
caused by events such as periodic financial reporting deadlines, tax
deadlines, special projects, systems conversions, and unplanned
staffing fluctuations. Flexible staffing for finance and accounting
meets such clients' needs with personnel who have an extensive range
of accounting and financial experience, including corporate taxation,
budget preparation and analysis, financial reporting, regulatory
filings, payroll preparation, cost analysis, and audit services.
Through the use of the Company's services, clients are able to avoid
the cost and inconvenience of hiring and terminating permanent
employees. Typically, the duration of assignments in the Professional
Temporary Services is six to twelve weeks.
INFORMATION TECHNOLOGY. Flexible service in information technology
provides personnel on a contractual basis, which typically averages
six to nine months in duration. Flexible Information Technology
Services has traditionally focused on providing information systems
personnel to assist clients whose
- 7 -
8
needs range from mainframe environments to single work stations.
Flexible information technology personnel perform a wide range of
services, including software development, database design and
management, system administration, end-user training and acceptance,
network design and integration, information strategy development,
business and systems plans, and standardization of technology and
business procedures. The size and growth of the information services
industry in recent years have been driven largely by rapid
technological advances. These advances have included the availability
of increased computing power at lower costs and the emergence of new
information systems capabilities. As a result, the ability of
businesses to benefit from the application of computer technology has
been greatly enhanced and has been accompanied by a dramatic increase
in the number of end-users. At the same time, the sophistication and
complexity of the systems needed to serve these businesses and to
deliver the desired benefits have greatly increased. Additionally, the
need to contain costs has caused many businesses to reduce the number
of personnel resulting in increased dependence upon information
systems to support important functions and to improve productivity.
The Company's base of skilled technical personnel is integral to its
success. Because technical needs are diverse and technology advances
occur frequently, technical talent is in high demand. As a result,
flexible information technology focuses heavily on its recruiting
efforts. In addition, the Company focuses on training its Information
Systems personnel in sophisticated technology applications. The
Company believes that building a base of skilled technical personnel
who are available for assignment is as integral to its success as are
its client relationships.
OPERATING SPECIALITIES AND HUMAN RESOURCES. The Company has expanded
its Flexible Staffing Services functions to include pharmaceutical,
engineering, health care, legal, life insurance and investment
industries and human resources personnel. Within engineering services,
the Company provides a wide range of quality engineers and quality
assurance personnel. Health care flexible services provides hospital
administration and management personnel. Pharmaceutical flexible
services provides pharmaceutical industry clients with research and
regulatory personnel. Human resources provides primary contract
recruiters and human resources management professionals.
The Company's operating employees develop and maintain an active
personnel inventory designed to meet the needs of its clients. To
recruit qualified personnel, the Company uses targeted telephone and
Internet recruiting, obtains referrals from its existing personnel and
clients, and places newspaper advertisements. The Search Services'
recruiting efforts complement those of Flexible Staffing Services, and
the Company believes that this combination distinguishes it from its
competitors. To foster loyalty and commitment from its existing
personnel, the Company maintains frequent contact and offers
competitive wages, benefits, flexible schedules, and exposure to a
variety of working environments. The Company currently maintains a
database of 1.5 million candidates.
Flexible Staffing Services targets Fortune 1000 companies and other
large organizations, with a primary focus on organizations determined
to have the potential need for the Company's full range of services.
In order to maximize its marketing effectiveness, the Company provides
extensive training to its operating employees, which emphasizes the
consulting nature of its business. The Company's operating employees
develop marketing plans composed of multiple visits, frequent
telemarketing activity, monthly mailings, and other actions supported
through the use of the front end systems and daily staff meetings. The
Company believes that these techniques and processes provide the
opportunity to expand its business within its clients' organizations,
solidify client relationships, and develop new clients. The Company
recognizes that in some cases Flexible Staffing Services personnel
will be offered permanent positions. If a client requests that
personnel become permanent employees, the Company typically charges a
"conversion" fee that is calculated as a percentage of the initial
annual compensation.
- 8 -
9
SEARCH SERVICES
The Company provides extensive search services for professional and technical
personnel. The professional skills offered by the Search Services are in the
areas of information technology, finance and accounting, financial services,
pharmaceutical research, health care, human resources, insurance and
manufacturing.
The Company performs both contingency and retained searches. A contingency
search results in payment to the Company only when personnel are actually hired
by a client. The Company's strategy is to perform contingency searches only for
skills it targets as its "core-businesses." Client searches that are outside a
core-business area typically are at a management or executive level and require
a targeted research and recruiting effort. The Company typically performs these
searches as retained searches where the client pays a part of the search fee in
advance and the remainder upon completion of the search. The Company's fee is
typically structured as a percentage of the placed individual's first-year
annual compensation.
An active database of personnel is maintained as the result of the Company's
continuous recruiting efforts and reputation in the industry. In addition,
operating employees locate many potential personnel as the result of referrals
from the Flexible Staffing Services activities.
The Company believes that it has developed a reputation for quality search work
and that it is recognized as a leader in its search specialties. To minimize
the risk of changes in skill demand, the Company's marketing plan incorporates
a continual review of client recruitment plans for future periods to allow for
rapid changes to "in-demand" skills. The quality of the relationship with
client personnel is a key component of the strategy, and the Company seeks to
use consultative relationships to obtain insight into emerging growth areas.
The clients targeted by the Search Services are typically the same as those
targeted by the Flexible Staffing Services. This common focus is intended to
contribute to the Company's objective of providing integrated solutions to its
clients' personnel needs.
The Company's search business is highly specialized. Certain skills, such as
finance and accounting, information technology and human resources, may be
served by local offices, while other, more highly specialized operating
specialties require a regional or national focus. The Company believes that a
trend toward greater selectivity in its clients' hiring processes has
contributed to an increased demand for its Search Services. This emphasis on
quality fits well with the Company's inventory of personnel. The Company
expects that the Search Services will continue to add operating specialties in
the majority of markets served.
MARKETS
The Company serves 45 metropolitan markets with more than 95 locations and
management of the operations is coordinated from its headquarters in Tampa. The
Company's headquarters provides its offices with administrative, marketing,
accounting, training, legal, and information systems support, particularly as
it relates to the standardization of the operating processes of the offices.
TECHNOLOGY
The Company and Source had each developed a proprietary integrated system
designed to maximize productivity and to aid in the management of its business.
These systems are called "PROS" and "Wizard", respectively. PROS and Wizard are
designed to be a comprehensive approach to the operation and management of a
specialty staffing firm. Each system has links that update each office
location's information through the use of a private network to corporate
headquarters servers in Tampa and Dallas. Through the use of PROS and Wizard,
market information concerning target customers is tracked and prioritized to
focus marketing and development efforts. Readily available management reports
indicate the frequency and nature of contact with the targeted customers to
support marketing plans. By using these reports, managers provide direction and
support to operating employees to ensure that customers are properly served.
- 9 -
10
Finally, PROS and Wizard help the Company manage information by passing data
from the operating divisions software to the accounting software. This approach
increases productivity, as data have a single point of entry and can be readily
accessed by all functional areas within the Company. During 1998, the Company
developed a front end browser connection to PROS and Wizard to standardize the
desktop for its operating employees. The Company intends to continue to enhance
its systems capabilities to streamline processes in order to improve customer
servicing.
COMPETITION
The specialty staffing services industry is very competitive and fragmented.
There are relatively limited barriers to entry and new competitors frequently
enter the market. A number of the Company's competitors possess substantially
greater resources than the Company. The Company faces substantial competition
from large national firms and local specialty staffing firms. The local firms
are typically operator-owned, and each market generally has one or more
significant competitors. The Company also faces competition from national
clerical and light industrial staffing firms and national and regional
accounting firms that also offer certain specialty staffing services.
Additionally, there are a number of "born on the web" job boards as well as
traditional staffing companies developing a web component.
The Company believes that the availability and quality of its personnel, the
level of service, the effective monitoring of job performance, scope of
geographic service and the price of service are the principal elements of
competition. The Company believes that availability of quality personnel is an
especially important facet of competition. In order to attract personnel, the
Company places emphasis upon its ability to provide permanent placement
opportunities, competitive compensation and benefits, quality and varied
assignments, and scheduling flexibility. Because personnel pursue other
employment opportunities on a regular basis, it is important that the Company
respond to market conditions affecting these individuals. Additionally, in
certain markets the Company has experienced significant pricing pressure from
some of its competitors. Although the Company believes it competes favorably
with respect to these factors, it expects competition to increase, and there
can be no assurance that it will remain competitive.
INSURANCE
The Company maintains a fidelity bond and a number of insurance policies
including general liability and automobile liability, (each with excess
liability coverage), professional liability, errors and omissions, employment
practices liability, worker's compensation and employers' liability. Each of
these policies with aggregate coverage of up to $5.0 million cover certain
liabilities that may arise from the actions or omissions of its operating
employees and personnel. There can be no assurance that any of the above
coverages will be adequate for the Company's needs.
OPERATING EMPLOYEES AND PERSONNEL
As of December 31, 1999, the Company and its subsidiaries employed
approximately 2,500 operating employees. Additionally, as of that date, the
Company had approximately 6,800 personnel on assignment providing flexible
staffing services to its clients. As the employer, the Company is responsible
for the operating employees and personnel payrolls and employer's share of
social security taxes (FICA), federal and state unemployment taxes, workers'
compensation insurance, and other direct labor costs relating to its operating
employees and personnel. The Company offers access to various insurance
programs and other benefits for its operating employees and personnel. The
Company has no collective bargaining agreements covering any of its operating
employees or personnel, has never experienced any material labor disruption,
and is unaware of any current efforts or plans to organize its operating
employees or personnel.
- 10 -
11
ITEM 2. PROPERTIES
The Company owns no real estate. It leases its corporate headquarters in Tampa,
Florida, as well as space for its other locations. The aggregate area of office
space under leases for locations is approximately 560,000 square feet. The
leases generally run from month-to-month to five years and the aggregate annual
rent paid by the Company in 1999 was approximately $12.2 million. The Company
believes that when its planned expansion of its corporate headquarters is
completed that its facilities would be adequate for its needs and does not
expect difficulty replacing such facilities or locating additional facilities,
if needed, in the interim.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of its business, the Company is from time to time
threatened with or named as a defendant in various lawsuits, including
discrimination and harassment and other similar claims. The Company maintains
insurance in such amounts and with such coverages and deductibles as management
believes are reasonable. The principal risks that the Company insures against
are workers' compensation, personal injury, bodily injury, property damage,
professional malpractice, errors and omissions, employment practices liability
and fidelity losses. The Company is not currently involved in any litigation
which it believes is material to the Company's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1999 covered by this
Annual Report on Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market(SM), formerly under the symbol "ROMC" and now under the
symbol "KFRC". The following table sets forth, for the periods indicated, the
range of high and low closing sale prices for the Common Stock, as reported on
the Nasdaq National Market.
FISCAL YEAR HIGH LOW
- ----------- ------- -------
1998:
First Quarter...................................... $29.750 $19.375
Second Quarter..................................... $32.250 $23.125
Third Quarter...................................... $31.125 $16.125
Fourth Quarter..................................... $22.750 $11.750
1999:
First Quarter...................................... $24.250 $ 6.875
Second Quarter..................................... $15.438 $ 6.906
Third Quarter...................................... $ 9.750 $ 7.000
Fourth Quarter..................................... $15.625 $ 5.875
2000:
First Quarter (through March 20)................... $18.250 $10.375
On March 20, 2000, the last reported sale for the Company's Common
Stock was at $12.50. On March 20, 2000 there were approximately 171 holders of
record.
Since the Company's initial public offering, the Company has not paid
any cash dividends on its common stock.
- 11 -
12
ITEM 6. SELECTED FINANCIAL DATA
The information set forth below is not necessarily indicative of the results of
future operations and should be read in conjunction with Consolidated Financial
Statements and the related Notes thereto incorporated into Item 8 of this
report.
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net service revenues ............ $188,374 $301,588 $479,743 $680,086 $746,632
Direct costs of services ........ 88,512 145,881 254,132 388,505 424,001
-------- -------- -------- -------- --------
Gross profit .................... 99,862 155,707 225,611 291,581 322,631
Selling, general and
administrative expenses ...... 87,038 133,084 184,876 224,790 346,452
Depreciation and
amortization ................. 1,111 3,238 5,794 9,507 14,514
Merger, restructuring, and
integration expense .......... -- -- -- 26,122 --
Other (income) expense,
net .......................... (30) (1,773) (2,675) (4,985) (942)
-------- -------- -------- -------- --------
Income (loss) before taxes ...... 11,743 21,158 37,616 36,147 (37,393)
(Provision) benefit for taxes ... (4,555) (8,706) (15,545) (20,708) 13,877
-------- -------- -------- -------- --------
Net income (loss) ............... $ 7,188 $ 12,452 $ 22,071 $ 15,439 $(23,516)
======== ======== ======== ======== ========
Net income (loss)
per share-basic ............... $ .25 $ .35 $ .55 $ .34 $ (.53)
======== ======== ======== ======== ========
Weighted average shares
outstanding-basic ............... 28,309 35,312 40,471 45,410 44,781
Net income (loss) per
share-diluted ................ $ .25 $ .34 $ .52 $ .33 $ (.53)
======== ======== ======== ======== ========
Weighted average shares
outstanding-diluted .......... 29,265 36,996 42,264 47,318 44,781
DECEMBER 31,
----------------------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
BALANCE SHEET DATA:
Working capital ................. $ 28,537 $ 95,557 $149,459 $135,348 $ 86,310
Total assets .................... $ 51,576 $142,112 $283,098 $333,812 $296,187
Total long-term debt ............ $ 500 $ -- $ 1,260 $ 461 $ --
Shareholders' equity ............ $ 34,218 $119,221 $232,704 $255,022 $218,205
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in connection with the Company's
Consolidated Financial Statements and the related Notes thereto incorporated
into Item 8 of this report.
- 12 -
13
OVERVIEW
The Company is a provider of professional and technical specialty staffing
services in 44 markets in the United States and one international market
(Toronto, Canada). The Company provides its customers staffing services in the
following specialties: information technology, finance and accounting, human
resources and operating specialties. These services are provided through both
traditional staffing channels and the Company's web-based kforce.com
Interactive staffing solution. The Company believes its broad range of highly
specialized services provides clients with integrated solutions to their
staffing needs, allowing it to develop long-term, consultative relationships.
This range of services includes search services and flexible staffing services,
both professional temporary and contract. Contract services for information
technology services are provided through the Company's kforce Consulting group.
The Company believes its functional focus and range of service offerings
generate increased placement opportunities and enhance its ability to identify,
attract, retain, develop and motivate personnel and operating employees. The
Company principally serves Fortune 1000 clients, with its top ten clients
representing less than 8% of its revenue for 1999.
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. The Company's
policy is to replace individuals who fail to continue employment for the period
of time specified in the agreements for search assignments, generally thirty to
ninety days. Revenue from Search Fees is shown on the Consolidated Statement of
Operations net of a reserve for candidates not remaining in employment for the
guarantee period, including estimates of future deferrals related to placements
made in 1999.
GROSS PROFIT
Gross profit on Flexible Billings is determined by deducting the direct cost of
services (primarily flexible personnel payroll wages, payroll taxes,
payroll-related insurance, and subcontract costs) from net service revenues.
Consistent with industry practices, all costs related to Search Fees are
classified as selling, general, and administrative expense.
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net service revenues,
certain items in the Company's consolidated statement of operations for the
indicated periods:
YEAR ENDED DECEMBER 31,
-----------------------
1997 1998 1999
----- ----- -----
Flexible Billings............................ 74.9% 80.1% 80.6%
Search Fees.................................. 25.1 19.9 19.4
----- ----- -----
Net service revenues......................... 100.0 100.0 100.0
Gross profit................................. 47.0 42.9 43.2
Selling, general, and administrative
expenses................................... 38.5 33.1 46.4
Income (loss) before taxes................... 7.8 5.3 (5.0)
Net income (loss) ........................... 4.6% 2.3% (3.1)%
- 13 -
14
1999 COMPARED TO 1998
Net service revenues. Net service revenues increased 9.8% to $746.6 million in
1999 as compared to $680.1 million for the same period in 1998. This increase
was composed of a $56.9 million increase in Flexible Billings and a $9.6
million increase in Search Fees for the year ended December 31, 1999 as
described below.
Flexible Billings increased 10.4% to $601.5 million in 1999 as compared to
$544.6 million for the same period in 1998. Approximately $41 million of this
increase is a result of an increase in the number of hours billed by operations
as compared to the same periods in 1998 due to the Company's continued emphasis
on expanding the number of service offerings in all markets. The remaining
increase, approximately $16 million, is attributable to an increase in the
average billing rate for 1999.
Search fees increased 7.1% to $145.1 million in 1999 as compared to $135.5
million for the same period in 1998. This increase resulted primarily from an
increase in the average fee for each search placement made during 1999 as
compared to the same period in 1998. The number of search placements made in
1999 remained relatively constant compared to 1998.
Gross profit. Gross profit increased 10.6% to $322.6 million in 1999 as
compared to $291.6 million in 1998. Gross profit as a percentage of net service
revenues increased to 43.2% in 1999 as compared to 42.9% for the same period in
1998. The increase in gross profit percentage was a result of the improvement
in margins on Flexible Billings attributable to higher average billing rates.
This increase was partially offset by the continuing change in the Company's
business mix between Flexible Billings and Search Fees. Revenues from Flexible
Billings, which have traditionally lower gross margins than Search Fees,
increased to 80.6% of the Company's net service revenues in 1999 as compared to
80.1% for the same period in 1998.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 54.1% to $346.5 million in 1999 as compared
to $224.8 million for the same period in 1998. Selling, general and
administrative expenses as a percentage of net service revenues increased to
46.4% in 1999 compared to 33.1% for the same period in 1998. The increase as a
percentage of net service revenues resulted from several strategic initiatives
adopted by management during the first half of 1999. These included: i) the
development, deployment, advertising and other related expenses for the
Company's online interactive career management and recruitment resource,
kforce.com Interactive, ii) activities to re-engineer and streamline back
office operations, and iii) investments in future growth, including leadership
development, increasing the number of sales consultants, buildout of a national
service center, and further development of educational services, kforce
Consulting and operating specialties.
Merger, restructuring and integration expense. There was no merger,
restructuring and integration expense in 1999, compared to $26.1 million in
1998. The 1998 expenses were related to the merger with Source in April 1998
and the restructuring charges incurred in connection with the merger. Merger,
restructuring and integration expenses consisted of $8.2 million of direct
costs related to the merger and $17.9 million related to restructuring and
integration.
Depreciation and amortization expense. Depreciation and amortization expense
increased 52.7%, to $14.5 million for 1999 as compared to $9.5 million for the
same period in 1998. Depreciation and amortization expense as a percentage of
net service revenue increased to 1.9% for 1999 as compared 1.4% for the same
period in 1998. The increase as a percentage of net service revenues for 1999
as compared to the same period in 1998 is primarily due to additional
depreciation on the new technology platform implemented at certain Source
locations in the second half of 1998 and to additional goodwill amortization
due to earnout buyouts negotiated in 1999.
- 14 -
15
Other (income) expense. Other (income) expense decreased 81.1% in 1999 to $0.9
million as compared to $5.0 million for the same period in 1998. The decrease
during 1999 compared to the same period in 1998 is due to a decrease in
investment income resulting from increased cash requirements for funding
operations and for the Company's repurchase of common stock.
Income (loss) before taxes. The loss before taxes was $37.4 million for 1999 as
compared to income before taxes of $36.1 million for the same period in 1998,
primarily as a result of the increase in selling, general and administrative
expenses discussed above.
Provision for (benefit from) income taxes. The income tax benefit for 1999 was
$13.9 million compared to a provision of $20.7 million for the same period in
1998. The effective tax benefit rate was 37.1% in 1999 as compared to an
effective provision rate of 57.3% in 1998. The decrease in the effective tax
rate in 1999 as compared to 1998 was primarily due to the Company's net loss
position in 1999 and to certain non-deductible merger related expenses in 1998
which were not present in 1999.
Net income (loss). The net loss was $23.5 million for 1999 compared to net
income of $15.4 million for the same period in 1998. This decrease was
primarily due to the increase in selling, general and administrative expenses
discussed above, which were partially offset by the 1998 merger, restructuring,
and integration expenses and the decrease in the effective tax rate as a result
of the non-deductible merger related expenses in 1998.
1998 COMPARED TO 1997
Net service revenues. Net service revenues increased 41.8% to $680.1 million in
1998 as compared to $479.7 million for the same period in 1997. This increase
was composed of a $185.1 million increase in Flexible Billings and a $15.3
million increase in Search Fees for the year ended December 31, 1998 as
described below.
Flexible billings increased 51.5% to $544.6 million in 1998 as compared to
$359.5 million for the same period in 1997. This increase is a result of an
increase in the number of hours billed by operations as compared to the same
periods in 1997 due to the Company's continued emphasis on expanding the number
of service offerings in all markets and, to a lesser extent, an increase in the
average billing rates.
Search fees increased 12.7% to $135.5 million in 1998 as compared to $120.2
million for the same period in 1997. This increase resulted primarily from an
increase in the number of search sales consultants, which increased the number
of search placements made in 1998 as compared to the same period in 1997. The
average fee for each search placement made during the periods remained
relatively constant.
Gross profit. Gross profit increased 29.3% to $291.6 million in 1998 as
compared to $225.6 million in 1997. Gross profit as a percentage of net service
revenues decreased to 42.9% in 1998 as compared to 47.0% for the same period in
1997. This decrease was a result of the continuing change in the Company's
business mix whereby revenues from Flexible Billings, which have traditionally
lower gross margins than Search Fees, increased to 80.1% of the Company's net
service revenues in 1998 as compared to 74.9% for the same period in 1997.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 21.6% to $224.8 million in 1998 as compared
to $184.9 million for the same period in 1997. Selling, general and
administrative expenses as a percentage of net service revenues decreased to
33.1% in 1998 compared to 38.5% for the same period in 1997. This decrease in
selling, general and administrative expense as a percentage of net service
revenues resulted from synergies and operating efficiencies obtained from the
merger such as elimination of duplicate back office costs.
- 15 -
16
Merger, restructuring and integration expense. Merger, restructuring and
integration expense were $26.1 million in 1998. There was no merger,
restructuring and integration expense for 1997. The 1998 expense was related to
the merger with Source in April 1998, and associated restructuring charges
incurred as a result of the merger. Merger, restructuring and integration
expenses consisted of $8.2 million of direct costs related to the merger and
$17.9 million related to restructuring and integration.
Depreciation and amortization expense. Depreciation and amortization expense
increased 63.8%, to $9.5 million for 1998 as compared to $5.8 million for the
same period in 1997. Depreciation and amortization expense as a percentage of
net service revenue increased to 1.4% for 1998 as compared 1.2% for the same
period in 1997. The increase as a percentage of net service revenues for 1998
as compared to the same period in 1997 is primarily due to additional goodwill
amortization due to the earnout buyouts negotiated in 1998, full year of
amortization of the acquisitions of Uni-Quality Systems Solutions, Inc. and
Sequent Associates, Inc. in 1998 compared to four months in 1997, and
additional depreciation on the new technology platform implemented at certain
Source locations in the second half of 1998.
Other (income) expense. Other (income) expense increased 85.2% in 1998 to $5.0
million as compared to approximately $2.7 million for the same period in 1997.
The increase during 1998 is due to interest earned on the investment of the
proceeds from the November 1997 stock offering.
Income before taxes. Income before taxes decreased 4.0% to $36.1 million for
1998 as compared to $37.6 million for the same period in 1997, primarily as a
result of the merger, restructuring and integration expenses discussed above.
Provision for income taxes. The provision for income taxes increased 33.5% to
$20.7 million for 1998 compared to $15.5 million for the same period in 1997.
The effective tax rate was 57.3% in 1998 as compared to approximately 41.2% in
1997. The increase in the effective tax rates in 1998 as compared to 1997 was
due to certain non-deductible merger related expenses.
Net income. Net income decreased 30.3% to $15.4 million for 1998 compared to
$22.1 million for the same period in 1997. This decrease was primarily due to
the merger, restructuring and integration expenses explained above and the
increase in the effective tax rate as a result of non-deductible merger related
expense.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company's sources of liquidity included
approximately $7.9 million in cash and cash equivalents and approximately $78.4
million in additional net working capital. In addition, as of December 31,
1999, there were no amounts outstanding under the Company's $30 million
Revolving Line of Credit Loan Agreement (the "Line of Credit"), although the
Company did borrow against the Line of Credit at various times during 1999. The
Line of Credit expires on March 31, 2000 and amounts outstanding under it
accrue interest at an annual rate equal to 65 basis points above the 90-day
London Interbank Offering Rate ("LIBOR"). The Company is currently negotiating
for a new line of credit facility in order to fund expenditures associated with
operations, additional repurchase of Company stock and potential future
acquisitions. In addition, the Company is pursuing various lease financing
alternatives for the construction of its new Tampa headquarters building.
During the year ended December 31, 1999, cash flow used in operations was
approximately $26.7 million, resulting primarily from the net loss, the
non-cash tax benefit resulting from the loss, an increase in accounts
receivable and a decrease in operating payroll liabilities. These were
partially offset by non-cash expenses (depreciation, amortization and bad debt
provision) and an increase in accounts payable and accrued liabilities.
During 1999, cash flow used in investing activities was approximately $11.0
million, resulting primarily from the Company's use of $16.8 million for
capital expenditures and approximately $6.0 million in cash for settlement of
earnout provisions on previous acquisitions, offset by $12.0 million received
from the sale of short-term investments.
- 16 -
17
For the year of 1999, cash flow used in financing activities was approximately
$23.0 million, resulting primarily from the use of $15.1 million for the
purchase of treasury stock and $10.1 million in payments on notes related to
prior years' acquisitions.
On March 11, 1999, the Company announced that its board of directors had
authorized the repurchase of up to $50 million of its common stock on the open
market, from time to time, depending on market conditions. If additional shares
of stock are repurchased, there may be a material impact on the Company's cash
flow requirements in the next twelve months. During 1999, a total of
approximately 1.9 million shares were repurchased at an average purchase price
of $7.78 per share. Subsequent to December 31, 1999, less than 200,000
additional shares have been repurchased.
The Company believes that cash flow from operations and borrowings under its
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 current operations for at least the next twelve months. However, there is no
assurance that the Company will be able to obtain financing in amounts
sufficient to meet its operating requirements or at terms which are satisfactory
and which allow the Company to remain competitive. The Company's estimate of the
period that existing resources will fund its working capital requirements is a
forward-looking statement that is 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
The Year 2000 issue is the result of computer programs being written using two
digits rather that four to define the applicable year. Computer programs or
hardware that fail to recognize dates beyond 1999 could result in system
failures, miscalculations and other problems. The Company has experienced no
problems with its computer systems since the beginning of 2000 but will
continue to monitor the systems to assess whether any problems develop. In
addition, the Company has not experienced any significant problems in the
exchange of data or the processing of transactions with business partners (both
vendors and clients) with whom it has material business relationships. The
Company incurred approximately $1.3 million in expenses related to assessing
and remedying any Year 2000 problems and upgrading computer systems, but does
not expect to incur any additional material expenses related to Year 2000
issues going forward.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates on its borrowings. The Company does
not engage in trading market risk sensitive instruments for speculative or
hedging purposes. The Company does not believe that changes in interest rates
or foreign currency are material to its operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and notes thereto and the
report of PricewaterhouseCoopers LLP, the Company's independent accountants,
are set forth on the pages indicated in Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
- 17 -
18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 relating to executive officers and
directors of the registrant is incorporated herein by reference to the
registrant's definitive proxy statement for the Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 relating to executive compensation is
incorporated herein by reference to the registrant's definitive proxy statement
for the Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 relating to security ownership of certain
beneficial owners and management is incorporated herein by reference to the
registrant's definitive proxy statement for the Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 relating to certain relationships and
related transactions is incorporated herein by reference to the registrant's
definitive proxy statement for the Annual Meeting of Shareholders.
- 18 -
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. FINANCIAL STATEMENTS. The consolidated financial statements, and
related notes thereto, of the Company with the independent
auditors' report thereon are included in Part IV of this report
on the pages indicated by the Index to Consolidated Financial
Statements and Schedule as presented on page 20 of this report.
2. FINANCIAL STATEMENT SCHEDULE. The financial statement schedule
of the Company is included in Part IV of this report on the page
indicated by the Index to Consolidated Financial Statements and
Schedule as presented on page 20 of this report. The independent
auditors' report as presented on page 41 of this report applies
to the financial statement schedule. This financial statement
schedule should be read in conjunction with the consolidated
financial statements, and related notes thereto, of the Company.
Schedules not listed in the Index to Consolidated Financial
Statements and Schedules have been omitted because they are not
applicable, not required, or the information required to be set forth
therein is included in the consolidated financial statements or notes
thereto.
3. EXHIBITS. See Item 14(c) below.
(b) REPORTS ON FORM 8-K.
(i) Report on Form 8-K, filed November 19,1999, relating to the
proposed name change of the Company to kforce.com, Inc.
(c) EXHIBITS. The exhibits listed on the Exhibits Index are filed as part
of, or incorporated by reference into, this report.
(d) FINANCIAL STATEMENT SCHEDULES. See Item 14(a) above.
- 19 -
20
ROMAC INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
----
Independent Auditors' Report ........................................................ 21
Consolidated Financial Statements:
Consolidated Balance Sheets - December 31, 1999 and 1998 .......................... 22
Consolidated Statements of Operations and Comprehensive Income - Years ended
December 31, 1999, 1998 and 1997 ................................................ 23
Consolidated Statements of Cash Flows - Years ended
December 31, 1999, 1998 and 1997 ................................................ 24
Consolidated Statements of Changes in Shareholders' Equity - Years ended
December 31, 1999, 1998 and 1997 ................................................ 25
Notes to Consolidated Financial Statements ........................................ 27
Financial Statement Schedule:
Schedule II - Calculation and Qualifying Accounts ................................. 42
- 20 -
21
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Romac International, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and comprehensive income, of
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Romac International, Inc., and its subsidiaries ("the
Company") at December 31, 1999 and 1998, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. 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 audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
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 audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Tampa, Florida
February 8, 2000
-21-
22
ROMAC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-------------------------
1999 1998
--------- ---------
(IN 000'S)
ASSETS
Current Assets:
Cash and cash equivalents ................................ $ 7,919 $ 68,821
Short-term investments ................................... -- 12,000
Trade receivables, net of allowance for doubtful accounts
of $4,417 and $5,762, respectively .................... 112,545 114,144
Receivables from related parties, current ................ -- 384
Income tax receivables ................................... 23,038 --
Deferred tax asset ....................................... 3,546 5,702
Prepaid expenses and other current assets ................ 3,669 3,658
--------- ---------
Total current assets ............................. 150,717 204,709
Receivables from related parties, less current portion ..... 960 1,721
Furniture and equipment, net ............................... 27,758 19,869
Other assets, net .......................................... 21,060 14,003
Goodwill, net of accumulated amortization of $9,452 and
$5,790, respectively .................................. 95,692 93,510
--------- ---------
Total assets ..................................... $ 296,187 $ 333,812
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities ........... $ 24,180 $ 9,260
Accrued payroll costs .................................... 31,922 41,070
Bank overdrafts .......................................... 5,824 --
Current portion of capital lease obligations ............. 481 743
Current portion of payables to related parties ........... 2,000 10,144
Accrued merger, restructuring, and integration ........... -- 4,931
Income taxes payable ..................................... -- 3,213
--------- ---------
Total current liabilities ........................ 64,407 69,361
Capital lease obligations, less current portion ............ -- 461
Deferred tax liability, non current ........................ -- 96
Payables to related parties, less current portion .......... -- 2,000
Other long-term liabilities ................................ 13,575 6,872
--------- ---------
Total liabilities ................................ 77,982 78,790
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $0.01 par; 15,000 shares authorized, none
issued and outstanding ................................ -- --
Common stock, $0.01 par; 250,000 shares authorized, 46,687
and 46,408 issued, respectively ....................... 467 464
Additional paid-in capital ............................... 187,262 185,300
Cumulative translation adjustment ........................ (170) 21
Retained earnings ........................................ 46,646 70,162
Less reacquired shares at cost; 2,613 and 677 shares,
respectively ...................................... (16,000) (925)
--------- ---------
Total shareholders' equity ....................... 218,205 255,022
--------- ---------
Total liabilities and shareholders' equity ....... $ 296,187 $ 333,812
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
-22-
23
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
(IN 000'S, EXCEPT PER SHARE DATA)
Net service revenues............................. $746,632 $680,086 $479,743
Direct costs of services......................... 424,001 388,505 254,132
-------- -------- --------
Gross profit..................................... 322,631 291,581 225,611
Selling, general and administrative expenses..... 346,452 224,790 184,876
Merger, restructuring and integration expense.... -- 26,122 --
Depreciation and amortization.................... 14,514 9,507 5,794
Other (income) expense:
Dividend and interest income................... (1,639) (5,224) (3,077)
Interest expense............................... 423 216 308
Other (income) expense, net.................... 274 23 94
-------- -------- --------
(Loss) income before income taxes................ (37,393) 36,147 37,616
Benefit (provision) for income taxes............. 13,877 (20,708) (15,545)
-------- -------- --------
Net (loss) income................................ $(23,516) $15,439 $ 22,071
======== ======== ========
Comprehensive (loss) income:
Foreign currency translation................... (191) 63 (21)
-------- -------- --------
Comprehensive (loss) income...................... $(23,707) $ 15,502 $ 22,050
======== ======== ========
Net (loss) income per share:
Basic....................................... $ (.53) $ .34 $ .55
======== ======== ========
Diluted..................................... $ (.53) $ .33 $ .52
======== ======== ========
Weighted average shares:
Basic....................................... 44,781 45,410 40,471
======== ======== ========
Diluted..................................... 44,781 47,318 42,264
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
-23-
24
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------------
1999 1998 1997
-------- --------- ---------
(IN 000'S)
Cash flows from operating activities:
Net (loss) income ............................... $(23,516) $ 15,439 $ 22,071
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization ................ 14,514 9,507 5,794
Provision for fallouts and losses on accounts
and notes receivable ....................... 9,768 4,049 4,271
Deferred taxes ............................... 347 (2,742) (891)
Loss on asset sales/disposals ................ 419 1,604 --
(Increase) decrease in operating assets:
Trade receivables, net ....................... (8,169) (33,464) (34,921)
Notes receivable from franchisees ............ -- 82 155
Prepaid expenses and other current assets .... (43) (1,108) (1,037)
Other assets, net ............................ (7,281) (5,833) (2,487)
Increase (decrease) in operating liabilities:
Accounts payable and other accrued
liabilities ................................ 14,920 1,229 2,512
Accrued payroll costs ........................ (9,148) 12,932 13,048
Bank overdrafts .............................. 5,824 -- --
Accrued merger, restructuring, and integration
expense .................................... (4,931) 4,931 --
Income taxes ................................. (26,129) 29 4,621
Other long-term liabilities .................. 6,703 4,284 1,201
-------- --------- ---------
Cash (used in) provided by operating
activities ............................ (26,722) 10,939 14,337
-------- --------- ---------
Cash flows from investing activities:
Capital expenditures, net .................... (16,779) (11,820) (6,690)
Acquisitions, net of cash acquired and payment
on earnout provisions ...................... (6,039) (23,593) (52,127)
Proceeds from sale of furniture and equipment 176 -- 1,706
Proceeds from the sale of short-term
investments ................................ 12,000 -- 833
Premiums paid for cash surrender value of life
insurance policies ......................... (391) (3,292) (1,485)
Purchase of short-term investments ........... -- (10,047) (1,906)
-------- --------- ---------
Cash used in investing activities ....... (11,033) (48,752) (59,669)
-------- --------- ---------
Cash flows from financing activities:
Payments on capital lease obligations ........ (723) (787) (535)
Payments on notes payable to related parties . (10,144) -- (23)
Payments on notes receivable from related
parties .................................... 1,143 164 52
Issuance of notes receivable from related
parties .................................... -- (746) (600)
Proceeds from issuance of common stock ....... -- -- 86,515
Proceeds from exercise of stock options ...... 1,843 6,271 3,210
Repurchase of treasury stock Plan ............ (15,075) -- (1)
-------- --------- ---------
Cash (used in) provided by
financing activities ................ (22,956) 4,902 88,618
-------- --------- ---------
Increase(decrease) in cash and cash equivalents ... (60,711) (32,911) 43,286
Cumulative translation adjustment ................. (191) 63 (21)
-------- --------- ---------
Cash and cash equivalents at beginning of year .... 68,821 101,669 58,404
-------- --------- ---------
Cash and cash equivalents at end of year .......... $ 7,919 $ 68,821 $ 101,669
======== ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
-24-
25
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN 000'S)
COMMON ADDITIONAL CUMULATIVE STOCK
STOCK PAID-IN TRANSLATION SUBSCRIPTION
CAPITAL ADJUSTMENT RECEIVABLE
Shares Amounts
SHAREHOLDERS' EQUITY:
Balance at December 31, 1996 ............ 34,635 $ 346 $ 87,182 $ (21) $ (13)
Issuance of common stock ................ 4,577 46 86,468 -- --
3-for-2 stock split ..................... 5,184 52 (52) -- --
Exercise of stock options ............... 1,079 11 3,199 -- --
Tax benefit of employee stock options ... -- -- 1,696 -- --
Payments on stock subscription receivable -- -- -- -- 13
Foreign currency translation adjustment . -- -- -- (21) --
Net income .............................. -- -- -- -- --
------ ----- --------- ------ -----
Balance at December 31, 1997 ............ 45,475 455 178,493 (42) --
Exercise of stock options ............... 933 9 6,262 -- --
Tax benefit of employee stock options ... -- -- 545 -- --
Foreign currency translation adjustment . -- -- -- 63 --
Net income .............................. -- -- -- -- --
------ ----- --------- ------ -----
Balance at December 31, 1998 ............ 46,408 464 185,300 21 --
Exercise of stock options ............... 279 3 1,840 -- --
Tax benefit of employee stock options ... -- -- 122 -- --
Foreign currency translation adjustment . -- -- -- (191) --
Net income (loss) ....................... -- -- -- -- --
Repurchase of common stock .............. -- -- -- -- --
------ ----- --------- ------ -----
Balance at December 31, 1999 ............ 46,687 $ 467 $ 187,262 $ (170) $ --
====== ===== ========= ====== =====
The accompanying notes are an integral part of these consolidated financial
statements.
-25-
26
ROMAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
CONTINUED (IN 000'S)
RETAINED REACQUIRED
EARNINGS STOCK TOTAL
Shares Amounts
SHAREHOLDERS' EQUITY:
Balance at December 31, 1996 ............ $ 32,652 677 $ (925) $ 119,221
Issuance of common stock ................ -- -- -- 86,514
3-for-2 stock split ..................... -- -- -- --
Exercise of stock options ............... -- -- -- 3,210
Tax benefit of employee stock options ... -- -- -- 1,696
Payments on stock subscription receivable -- -- -- 13
Foreign currency translation adjustment . -- -- -- (21)
Net income .............................. 22,071 -- -- 22,071
-------- ----- -------- ---------
Balance at December 31, 1997 ............ 54,723 677 (925) 232,704
Exercise of stock options ............... -- -- -- 6,271
Tax benefit of employee stock options ... -- -- -- 545
Foreign currency translation adjustment . -- -- -- 63
Net income .............................. 15,439 -- -- 15,439
-------- ----- -------- ---------
Balance at December 31, 1998 ............ 70,162 677 (925) 255,022
Exercise of stock options ............... -- -- -- 1,843
Tax benefit of employee stock options ... -- -- -- 122
Foreign currency translation adjustment . -- -- -- (191)
Net income (loss) ....................... (23,516) -- -- (23,516)
Repurchase of common stock .............. -- 1,936 (15,075) (15,075)
-------- ----- -------- ---------
Balance at December 31, 1999 ............ $ 46,646 2,613 $(16,000) $ 218,205
======== ===== ======== =========
The accompanying notes are an integral part of these consolidated financial
statements.
-26-
27
ROMAC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN 000'S EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ROMAC International, Inc. (the "Company") is a provider of professional and
technical specialty staffing services in more than 95 locations in 45 markets
in the United States. The Company provides its customers value-added staffing
services in the following specialties: Information Technology, Finance and
Accounting, Human Resources and Operating Specialties. These services are
provided through both traditional staffing channels and the Company's web-based
kforce Interactive staffing solution. The Company provides flexible staffing
services on both a professional temporary and contract basis and provides
search services on both a contingency and retained basis. The Company
principally serves Fortune 1000 clients.
On November 17, 1999, the Board of Directors approved a resolution to change
the Company's name to kforce.com, Inc., subject to approval by the Company's
shareholders at the next annual meeting. Effective January 31, 2000, the
Company is operating as Romac International, Inc. d/b/a kforce.com.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Romac
International, Inc. and its subsidiaries. All material intercompany accounts
and transactions have been eliminated in the consolidated financial statements.
STOCK SPLIT/DIVIDEND
The Company declared a two-for-one stock split effected as a 100% stock
dividend on its common stock on October 3, 1997. All share-related data in
these consolidated financial statements have been adjusted retroactively to
give effect to these events as if they had occurred at the beginning of the
earliest period presented.
PUBLIC OFFERINGS
The Company completed a secondary offering of 4,577 shares of common stock on
October 17, 1997. The proceeds of $86,515, net of underwriters' discounts and
other offering costs, were being used to finance business acquisitions and for
general working capital purposes.
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.
CASH AND CASH EQUIVALENTS
The Company classifies all highly liquid investments with an original maturity
of three months or less as cash equivalents.
INVESTMENTS
Investments in mutual funds and common stock have been classified as available
for sale and, as a result, are stated at fair market value. Mutual funds
available for current operations are classified in the balance sheet as
short-term investments while investments in common stock are included in other
assets. Unrealized holding gains and losses are included as a component of
shareholders' equity until realized. At December 31, 1999 and 1998, there were
no unrealized gains or losses.
-27-
28
FURNITURE AND EQUIPMENT
Furniture and equipment are carried at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. The cost of leasehold improvements is amortized
using the straight-line method over the terms of the related leases which range
from three to seven years.
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. The Company's
policy is to replace individuals who fail to continue employment for the period
of time specified in the agreements for search assignments, generally thirty to
ninety days. Revenue from Search Fees is shown on the Consolidated Statement of
Operations net of a reserve for candidates not remaining in employment for the
guarantee period, including estimates of future deferrals related to placements
made in 1999.
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 are
reflected in additional paid-in capital.
STOCK BASED COMPENSATION
The Company has elected to continue accounting for stock based compensation
under the intrinsic value method of accounting for stock based compensation as
provided under APB No. 25 and has disclosed pro forma net income and earnings
per share amounts using the fair value based method prescribed by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123").
SELF-INSURANCE
The Company offered an employee benefit program for certain employees through
September 30, 1998 and offers a program 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 estimates to approximate the liability for reported claims
and claims incurred but not reported.
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 stockholders' equity.
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
-28-
29
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 its financial performance or
reporting and expects to adopt this standard during the year ending December 31,
2000.
EARNINGS PER SHARE
Under Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"), basic earnings per share is computed as earnings divided by weighted
average shares outstanding. Diluted earnings per share includes the dilutive
effects of stock options and other potentially dilutive securities.
Options that were outstanding, but were antidilutive and therefore were
excluded from the computation of diluted shares totaled 5,289, 1,207 and 158
shares of common stock, for 1999, 1998 and 1997, respectively, at option prices
ranging from $ 0.980 to $30.063 share in 1999, $24.125 to $30.063 per share in
1998 and $16.13 to $20.63 per share in 1997. The options, which expire on
various dates ranging from July 2004 to October 2009, were still outstanding at
December 31, 1999.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year financial statements
to conform with the 1999 presentation.
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. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. 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 cash and cash
equivalents, accounts receivable, short-term investments, accounts payable,
notes payable and payables to related parties approximate the carrying values
of these financial instruments.
2. FURNITURE AND EQUIPMENT
Major classifications of furniture and equipment and related asset lives are
summarized as follows:
DECEMBER 31,
-----------------
USEFUL LIFE 1999 1998
----------- ------- -------
Furniture and equipment.................... 5-7 years $20,436 $14,058
Computer equipment......................... 3-5 years 24,342 16,450
Airplane................................... 5 years 1,889 1,746
Leasehold improvements..................... lease term 2,746 1,559
------- -------
49,413 33,813
Less accumulated depreciation and
amortization............................. 21,655 13,944
------- -------
$27,758 $19,869
======= =======
Included in computer equipment is approximately $2,600 subject to a
noncancelable capital lease commitment with a three-year term commencing on
July 1, 1997.
-29-
30
3. ACQUISITIONS
Goodwill and intangible assets totaled $95,692 and $93,510 at December 31, 1999
and 1998, respectively. Goodwill is amortized on a straight-line basis over a
fifteen to thirty year period and intangible assets are amortized over the life
of the employment agreement (five to eight years). Management periodically
reviews the potential impairment of goodwill in order to determine the proper
carrying value of goodwill as of each balance sheet date presented. Goodwill
amortization expense was $3,857, $3,212 and $1,469 for the years ended December
31, 1999, 1998 and 1997, respectively.
FOR THE YEAR ENDED DECEMBER 31, 1999
In January 1999, the Company acquired substantially all of the assets of
Network Training Solutions, Science Solutions, Inc. and Technology Consulting
Group for an aggregate purchase price of approximately $5,100. During 1999, the
Company also settled earnout provisions on certain prior acquisitions for
approximately $1,300. These amounts have been recorded as purchase price
consideration and are included in goodwill.
FOR THE YEAR ENDED DECEMBER 31, 1998
The Company completed its merger with Source Services Corporation ("Source") on
April 20, 1998, in a transaction accounted for as a pooling of interests.
Accordingly, all historical results have been restated to reflect the combined
results for the Company and Source for all periods presented. The common stock
of Source was converted to shares of the Company using a 1.1351 ratio.
There were no purchased acquisitions by the Company during the year ended
December 31, 1998. However, the Company settled the earnout provisions on
certain prior acquisitions for $18,500 (see also Note 9). During 1998,
approximately $23,593 of earnout provisions related to prior acquisitions were
paid. These amounts have been recorded as additional purchase price
consideration and are included in goodwill.
FOR THE YEAR ENDED DECEMBER 31, 1997
In January 1997, the Company acquired substantially all of the assets of Career
Enhancement International of Massachusetts (CEIM), a provider of permanent
placement and contract services for information technology personnel. The
purchase price was approximately $4,400, subject to adjustment upon attainment
of certain operating results.
In March 1997, the Company acquired all of the outstanding capital stock of
Professional Application Resources Incorporated (PAR), a provider of
information technology contract personnel. The purchase price was approximately
$4,700.
In September 1997, the Company acquired all of the outstanding capital stock of
Uni*Quality Systems Solutions, Inc. (UQ), a provider of contract services for
information technology personnel. The purchase price was approximately $19,600,
subject to adjustment upon attainment of certain operating results. Also in
September 1997, the Company acquired substantially all of the assets of Sequent
Associates, Inc. (Sequent), a provider of supplemental contract personnel
staffing specializing in information technology and engineering professionals.
The purchase price was approximately $20,300, subject to adjustment upon
attainment of certain operating results.
In November 1997, the Company acquired the fixed assets of DP Specialists of
Colorado, Inc. (DPSE), a provider of permanent placement and staff augmentation
contract services for information technology personnel. The purchase price,
including a non-compete agreement, was approximately $3,300.
In December 1997, the Company acquired substantially all of the assets of The
Center For Recruiting Effectiveness, Inc. (CRE), a provider of human resources
personnel on a permanent and contract basis. The purchase price was
approximately $2,100, subject to adjustment upon attainment of certain
operating results.
-30-
31
The Company has accounted for all acquisitions, except for the Source
transaction, using the purchase method of accounting. The results of these
purchased companies' operations have been included with those of the Company
from the dates of the respective acquisitions. The pro forma results of
operations listed below reflect purchase accounting and pro forma adjustments
as if the transactions occurred as of the beginning of 1997. 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.
1997
-----------
(UNAUDITED)
Net service revenue........................................ $514,850
Gross profit............................................... 235,067
Income before income taxes................................. 37,793
Net income................................................. 22,060
Earnings per share -- Basic................................ $ .55
-- Diluted.............................. $ .52
4. OTHER ASSETS
DECEMBER 31,
----------------
1999 1998
------- ------
Cash surrender value of life insurance policies............. $10,435 $ 5,572
Capitalized software, net of amortization................... 8,294 7,128
Deferred tax asset - Noncurrent portion..................... 1,711 --
Other....................................................... 620 1,303
------- ------
$21,060 $14,003
======= ======
The cash surrender value of life insurance policies relates to policies
maintained on key employees used to fund deferred compensation agreements with
a cash surrender value of $10,435 and $5,114 at December 31, 1999 and 1998,
respectively, and key man life insurance on officers with a cash surrender
value of $458 at December 31, 1998.
During 1997, the Company began the development and implementation of new
computer software to enhance performance of the accounting and operating
systems. Direct internal and external costs subsequent to the preliminary stage
of this project are being capitalized and classified as other assets.
Capitalized software development costs are amortized over the estimated useful
life of the software (typically three years) using the straight-line method.
5. LINE OF CREDIT AND CAPITAL LEASE OBLIGATION
DECEMBER 31,
---------------
1999 1998
------ ------
Obligation under capital lease with quarterly payments of
principal and interest at 8.3% through June 2000.......... $ 481 $1,204
Less current maturities..................................... 481 743
------ ------
$ -- $ 461
====== ======
-31-
32
The Company has an unsecured line of credit agreement that provides for up to
$30,000 of working capital to the Company for general corporate purposes. This
agreement matures on March 31, 2000 and bears interest at up to 150 basis
points above the average rate at which deposits in U.S. dollars were offered in
the London Interbank Market. This agreement contains restrictive covenants
which require the maintenance of certain financial ratios. No amounts were
outstanding under the line at either December 31, 1999 or 1998.
The Company is currently negotiating for a new line of credit.
6. MERGER, RESTRUCTURING AND INTEGRATION EXPENSES
In connection with the Source merger, $26,122 of one-time merger,
restructuring, and integration related expenses were identified and recorded in
1998. These charges included direct merger costs of approximately $8,265, which
consisted of professional fees and other transaction costs associated with the
merger, approximately $4,606 of severance and other termination-related costs
to be incurred in connection with anticipated staff reductions, $5,885 costs in
connection with consolidation of certain office facilities and related
equipment, and approximately $7,366 in other merger and integration related
expenses.
At December 31, 1999 and 1998, the remaining accrued expenses balance
associated with the above charge were $-0- and $4,931, respectively, of which
approximately $2,744 related to severance and other termination-related costs,
approximately $1,631 related to the consolidation of certain office facilities
and related equipment and approximately $556 related to other merger and
integration related expenses at December 31, 1998.
7. INCOME TAXES
The benefit (provision) for income taxes consists of the following:
YEARS ENDED DECEMBER 31,
----------------------------
1999 1998 1997
------- --------- ---------
Current:
Federal................................... $13,252 $(19,156) $(13,156)
State..................................... 972 (4,294) (3,281)
Deferred.................................. (347) 2,742 892
------- ------- -------
$13,877 $(20,708) $(15,545)
======= ======== ========
The benefit (provision) for income taxes shown above varied from the statutory
federal income tax rates for those periods as follows:
YEARS ENDED
DECEMBER 31,
------------------
1999 1998 1997
---- ---- ----
% % %
Federal income tax rate............................. (35.0) 35.0 35.0
State income taxes, net of federal tax benefit...... (5.0) 5.0 5.5
Non-deductible items................................ 1.8 16.1 1.0
Goodwill amortization............................... 1.0 1.2 .3
Other............................................... .1 - (.5)
---- ---- ----
Effective tax rate.................................. (37.1) 57.3 41.3
Nondeductible items consist primarily of the direct costs of the Source merger
and the portion of meals and entertainment expenses which are not deductible
for tax purposes.
-32-
33
Deferred income tax assets and liabilities shown on the balance sheet are
comprised of the following:
DECEMBER 31,
-----------------------
1999 1998
------- -------
Deferred taxes, current:
Assets
Allowance for bad debts ................ $ 1,426 $ 2,270
Accrued liabilities .................... 2,154 3,432
------- -------
3,580 5,702
Liabilities
Accrued liabilities .................... (34) --
------- -------
Net deferred tax asset, current ........ $ 3,546 $ 5,702
======= =======
Deferred taxes, non-current:
Assets
Deferred compensation .................. $ 5,600 $ 2,710
Deferred rent .......................... 968 --
------- -------
6,568 2,710
Liabilities
Depreciation and amortization .......... (4,857) (2,806)
------- -------
Net deferred tax asset (liability),
non-current ............................ $ 1,711 $ (96)
======= =======
A valuation allowance on the net deferred tax assets has not been recorded due
to the presence of taxable income in years available for carryback and
management's expectation that it is more likely than not that deferred tax
assets will be realized in future periods.
At December 31, 1999, the Company had a net operating loss of approximately
$32,900. It is expected that the entire net operating loss will be carried back
to prior years for refund of income taxes paid in those years. Further, the
Company had state net operating losses of approximately $34,700. Of this
amount, approximately $14,800 is expected to be carried back to prior years for
refund of income taxes paid in those years, and approximately $19,900 will be
carried forward to be offset against future state taxable income. The state tax
net operating loss carryforward expires in varying amounts through 2014.
8. RELATED PARTIES
RECEIVABLES FROM RELATED PARTIES
Receivables from related parties are summarized as follows:
DECEMBER 31,
----------------------
1999 1998
------- -------
Receivables from officers and shareholders ..... $ 960 $ 1,644
Other related party receivables ................ -- 461
------- -------
960 2,105
Less current maturities ........................ -- 384
------- -------
$ 960 $ 1,721
======= =======
- 33 -
34
Receivables from officers and shareholders include non interest bearing
receivables for premiums paid on split dollar life insurance policies.
Repayment terms on the remaining unsecured receivables range from one to two
years at rates of 8% to 9%.
PAYABLES TO RELATED PARTIES
Notes payable to related parties include the following:
DECEMBER 31,
----------------------
1999 1998
------- ------
Notes payable due in annual installments through March
2000 relating to contingent purchase price
adjustments on previous acquisitions (see Note 3) ........ $ 2,000 $12,144
Less current maturities .................................... 2,000 10,144
------- -------
$ -- $ 2,000
======= =======
RELATED PARTY TRANSACTIONS
In March 1999, the Company guaranteed a note payable by one of its officers. At
December 31, 1999, the balance of this note was approximately $1,779. During
1999, consulting services totaling $595 were provided to the Company by a
company owned by the spouse of the Chairman of the Board. Also during 1999, an
aircraft charter company owned 100% by the Chairman of the Board provided
charter services to the Company in the amount of $125. The Company billed the
aircraft charter company $35 for the use of the Company's airplane in 1999.
Similar agreements for consulting services and aircraft usage have been entered
into for 2000. During 1998, the Company purchased an airplane at cost for
$1,746 from the Chairman's charter company. The Company also had a consulting
agreement with a company affiliated with one of its outside board members.
Services under this agreement were completed by December 1998 at an aggregate
cost of approximately $187. The Company has operating leases with related
parties as discussed in Note 12.
9. EMPLOYEE BENEFIT PLANS
401(k) SAVINGS PLAN
The Company has a qualified defined contribution 401(k) plan covering
substantially all full-time employees. The plan offers a savings feature and
Company matching contributions. Employer matching contributions are
discretionary and are funded annually as approved by the Board of Directors.
Assets of this plan are held in trust for the sole benefit of employees.
Prior to the merger, Source merged its profit sharing plan and 401(k) plan
("Source plan") effective October 1, 1997. The Source plan covered all active
participants who were participating in either the previous 401(k) plan or
profit sharing plan or those employees who met the Source Plan's requirements
for eligibility. This plan was merged with the Company's 401(k) plan ("the
Plan") effective July 1, 1998. At December 31, 1999 and 1998, the Plan held
1,772 and 2,303, respectively, of the Company's stock, representing
approximately 4.0% and 5.0%, respectively of the Company's outstanding shares.
Employer contributions to the 401(k) plans totaled $892, $1,609 and $2,084 in
1999, 1998 and 1997, respectively.
Prior to their mergers into the Company, certain franchisees had separate
qualified defined contribution 401(k) plans covering substantially all
full-time employees of the subsidiaries. No employer matching contributions
were made for these plans for the years ended December 31, 1999, 1998 and 1997.
Employees of these franchisees are now covered under the Company's plan
described above.
- 34 -
35
EMPLOYEE STOCK PURCHASE PLAN
During 1996, Source enacted an Employee Stock Purchase Plan. This plan allowed
employees to purchase stock at the current market price through payroll
deductions, without paying commissions on purchases. Only Source employees
hired prior to April 20, 1998 were eligible to participate in the Employee
Stock Purchase Plan. There was no waiting period for enrollment prior to April
20, 1998.
Subsequent to December 31, 1999 the Company placed into effect a new Employee
Stock Purchase Plan which had been approved during 1999 and which allows
employees to purchase stock at a 15% discount from market prices and without
commissions on the purchases. Employees are eligible to participate in the plan
as of the next plan enrollment date following their date of hire. This plan
replaces the prior Source plan.
DEFERRED COMPENSATION PLAN
The Company has a non-qualified deferred compensation plan pursuant to which
eligible officers and highly compensated key employees may elect to defer part
of their compensation to later years. The Company accrues interest and
discretionary Company matching contributions. These amounts, which are
classified as other long-term liabilities, are payable upon retirement or
termination of employment, and at December 31, 1999 and 1998, aggregated
$14,001 and $6,773, respectively. The Company has insured the lives of the
participants in the deferred compensation program to assist in the funding of
the deferred compensation liability. The cash surrender value of these
Company-owned life insurance policies, $10,435 and $5,114 at December 31, 1999
and 1998, respectively, is included in other assets. Compensation expense of
$1,938, $825 and $234 was recognized for the plan for the years ended December
31, 1999, 1998 and 1997, respectively.
SPLIT DOLLAR LIFE INSURANCE
In 1995, the Company entered into split dollar and cross-purchase split dollar
life insurance agreements with several officers and their estates whereby the
Company pays a portion of the life insurance premiums on behalf of the officers
and their estates. The Company has been granted a security interest in the cash
value and death benefit of each policy equal to the amount of the cumulative
premium payments made by the Company. The intent of these agreements was to, in
the event of an officer's death, provide liquidity to pay estate taxes and to
provide surviving officers with the ability to purchase shares from a deceased
officer's estate, minimizing the possibility of a large block of the Company's
common shares being put on the open market to the potential detriment of the
Company's market price and to allow the Company to maintain a concentration of
voting power among its officers. During 1999, the Company decided to cancel
these policies.
Premiums paid to date that have not been recovered from policy cancellations
and which are included in related party receivables were $760 and $1,298 at
December 31, 1999 and 1998, respectively.
10. STOCK OPTION PLANS
During 1994, the Company established an employee incentive stock option plan
which authorized the issuance to employees of options to purchase common stock.
During 1996, this plan was amended to increase the number of shares of common
stock that may be issued under the plan to 6,000 to allow persons other than
employees to participate in the plan, to allow incentives in the form of
Nonqualified Stock Options, Stock Appreciation Rights and Restricted Stock to
be awarded under the plan and to effect a change in the plan name to the Romac
International, Inc. Stock Incentive Plan. During 1997, the Plan was amended to
increase the number of shares of common stock that may be issued under the Plan
to 9,000.
During 1995, the Company established a non-employee director stock option plan
which authorized the issuance to non-employee directors of options to purchase
common stock. The maximum number of shares of common stock that can be issued
under this plan is 400.
- 35 -
36
Prior to the merger, Source had an incentive stock option plan for eligible
employees of Source and a non-employee director option plan. Effective with the
merger, all stock options previously granted and outstanding under these plans
were exchanged for approximately 638 of the Company's stock options.
A summary of the Company's stock option activity is as follows:
NON- WEIGHTED WEIGHTED
EMPLOYEE EMPLOYEE AVERAGE AVERAGE
INCENTIVE DIRECTOR EXERCISE FAIR VALUE
STOCK OPTION STOCK OPTION PRICE PER OF OPTIONS
PLAN PLAN TOTAL SHARE GRANTED
------------ ------------ ------ --------- ----------
Outstanding as of
December 31, 1996 .......... 4,299 120 4,419 $ 6.74
Granted .................... 1,279 71 1,350 $13.05 $ 5.88
Exercised .................. (1,078) -- (1,078) $ 2.98
Forfeited .................. (304) -- (304) $10.91
------ ---- ------
Outstanding as of
December 31, 1997 .......... 4,196 191 4,387 $ 9.36
Granted .................... 1,899 101 2,000 $25.71 $10.86
Exercised .................. (933) -- (933) $ 6.75
Forfeited .................. (587) -- (587) $15.54
------ ---- ------
Outstanding as of
December 31, 1998 .......... 4,575 292 4,867 $15.84
Granted .................... 2,353 60 2,413 $ 7.68 $ 7.73
Exercised .................. (342) -- (342) $ 5.26
Forfeited .................. (1,522) (127) (1,649) $19.19
------ ---- ------
Outstanding as of
December 31, 1999 .......... 5,064 225 5,289 $11.76
====== ==== ======
Exercisable at
December 31:
1999 .................... 1,535 127 1,662
2000 .................... 847 42 889
2001 .................... 1,322 38 1,360
2002 .................... 1,321 18 1,339
2003 .................... 39 -- 39
Options granted during each of the three years ended December 31, 1999
have vesting requirements ranging from three to four years. Options expire at
the end of ten years from the date of grant.
The following table summarizes information about employee and director
stock options :
OPTIONS OUTSTANDING
--------------------------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED
OUTSTANDING AT REMAINING AVERAGE
DECEMBER 31, CONTRACTUAL EXERCISE
RANGE OF EXERCISE PRICES 1999 (SHARES) LIFE (YEARS) PRICE ($)
------------------------ -------------- ------------ ---------
$ 0.980 - $ 1.490 ....... 66 5.2 $ 1.33
$ 4.188 - $ 8.845 ....... 2,897 8.5 $ 7.03
$ 9.565 - $12.180 ....... 737 5.9 $11.34
$12.875 - $18.060 ....... 571 7.5 $14.08
$18.938 - $24.375 ....... 529 7.7 $22.29
$26.125 - $31.500 ....... 489 7.8 $27.72
-----
5,289 7.9 $11.76
=====
- 36 -
37
OPTIONS EXERCISABLE
-------------------------------
NUMBER WEIGHTED
EXERCISABLE AT AVERAGE
DECEMBER 31, EXERCISE
RANGE OF EXERCISE PRICES 1999 (SHARES) PRICE ($)
------------------------ -------------- ---------
$ 0.980 - $ 1.490 ............... 66 $ 1.34
$ 4.188 - $ 8.845 ............... 556 $ 5.77
$ 9.565 - $12.180 ............... 569 $ 11.50
$12.875 - $18.060 ............... 248 $ 14.18
$18.938 - $24.375 ............... 115 $ 22.13
$26.125 - $31.500 ............... 108 $ 27.74
-----
1,662 $ 11.37
=====
Had compensation cost for the Company's option plans been determined based on
the fair value at the grant dates, as prescribed by SFAS 123, the Company's net
income and net income per share would have been as follows:
YEARS ENDED
DECEMBER 31,
-----------------------------
1999 1998 1997
-------- ------- -------
Net income:
As Reported .......................... $(23,516) $15,439 $22,071
Compensation expense per SFAS
123 ............................. (11,113) (6,100) (3,786)
Tax benefit, pro forma ............ 890 532 456
-------- ------- -------
$(33,739) $ 9,871 $18,741
======== ======= =======
Net income per share:
Basic:
As Reported ....................... $ (.53) $ .34 $ .55
Pro forma ......................... $ (.75) $ .22 $ .46
Diluted:
As reported ....................... $ (.53) $ .33 $ .52
Pro forma $ (.75) $ .21 $ .44
The fair value of each option is estimated on the date of grant using the
minimum value method with the following assumptions used for grants during the
applicable period: dividend yield of 0.0% for all three periods; risk-free
interest rates of 4.95%-5.74% for options granted during the year ended
December 31, 1999, 4.77%-5.71% for options granted during the year ended
December 31, 1998 and 5.85%-7.03% for options granted during the year ended
December 31, 1997; a weighted average expected option term of 5 - 6 years for
1999, 4-7 years for 1998 and 4-10 years for 1997; and a volatility factor of
45.59% for 1999, 40.69% for 1998 and 35.12% for 1997.
Tax benefits resulting from the disqualifying dispositions of shares acquired
under the Company's employee incentive stock option plan reduced taxes
currently payable by $122 and $545 in 1999 and 1998, respectively.
These tax benefits are credited to additional paid-in-capital.
- 37 -
38
11. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases office space for use as its headquarters under an operating
lease with monthly payments of $31 expiring in 2001 from a related party. The
Company also leases office space for one of its operating locations from a
related party at an annual rental of $74 subject to adjustment as defined
through December 31, 2000. The Company leases other space and various equipment
under operating leases expiring at various dates with some leases cancelable
upon 30 to 90 days notice. The leases require payment of taxes, insurance and
maintenance costs in addition to rental payments.
Future minimum lease payments under operating leases are summarized as follows:
2000, $12,911; 2001, $9,519; 2002, $5,730; 2003, $4,214; 2004, $1,950; $1,313
thereafter.
Rental expense under all operating leases was $12,187, $10,226 and $7,155 for
1999, 1998 and 1997, respectively.
NONCANCELABLE PROCESSING COMMITMENT
The Company has an agreement with a third party processor ("Processor") who
previously provided certain services for some of the Company's franchised and
licensed temporary placement operations. The cost of such services was a
percentage of gross billings as defined within the agreement. Pursuant to
certain contract termination provisions, the Company would have been required
to pay $500 in the event of early termination of such agreement. The agreement
continues in effect until the aggregate of all amounts actually collected and
paid to the Processor from September 1, 1985 exceeds $5,000. Since the Company
no longer uses the services provided under the agreement, the remaining balance
due was accrued at December 31, 1999. The cumulative amounts accrued under the
agreement were $5,000, $4,482 and $4,373 as of December 31, 1999, 1998 and
1997, respectively.
LITIGATION
The Company is involved in litigation in the ordinary course of business which
will not, in the opinion of management, have a material effect on the results
of operations or financial condition of the Company.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain executive
officers which provide for minimum compensation, salary and continuation of
certain benefits for a two year period under certain circumstances. The
agreements also provide for a payment of two times their annual salary if a
change in control (as defined) of the Company occurs and include a covenant
against competition with the Company which extends for one year after
termination for any reason. The Company's liability at December 31, 1999 would
have been approximately $1,870 in the event of a change in control or if all of
the employees under contract were to be terminated by the Company without good
cause (as defined) under these contracts.
- 38 -
39
12. SUPPLEMENTAL CASH FLOWS INFORMATION
The Company's non-cash investing and financing activities and cash payments for
interest and income taxes were as follows:
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------- ------- ------
Notes payable issued in settlement of
contingent purchase price of previous
Acquisitions ............................. $ -- $11,100 $ 5,640
Capital lease transaction .................. $ -- $ -- $ 2,526
Cash paid during the year for:
Interest ................................. $ 423 $ 216 $ 308
Income taxes ............................. $12,027 $19,905 $12,862
13. SEGMENT ANALYSIS (UNAUDITED)
In 1998, the Company adopted Statement of Financial 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,
Romac revised its organizational structure to provide internal reporting
following its four functional service offerings, including: Information
Technology, Finance and Accounting, Human Resources and Operating Specialties.
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.
Information concerning operations in these segments of business is as follows:
INFORMATION FINANCE & HUMAN OPERATING
TECHNOLOGY ACCOUNTING RESOURCES SPECIALTY TOTAL
----------- ---------- --------- --------- --------
1999
Sales ...................... $448,640 $205,646 $18,317 $74,029 $746,632
Gross Profit ............... 175,117 114,321 6,191 27,002 322,631
1998
Sales ...................... $431,921 $191,086 $17,575 $39,504 $680,086
Gross Profit ............... 169,429 104,765 5,672 11,715 291,581
1997
Sales ...................... $296,914 $154,594 $11,524 $16,711 $479,743
Gross Profit* ..............
* Due to the Company's 1998 merger with Source Services and due to the fiscal
1997 change to a functional based organization, it is impracticable to recreate
comparable data for this period.
- 39 -
40
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTER ENDED
-----------------------------------------
MAR 31 JUN 30 SEPT 30 DEC 31
-------- -------- -------- --------
Fiscal 1999
Net service revenues ................ $184,095 $189,390 $191,707 $181,440
Gross profit ........................ 78,832 81,208 82,215 80,376
Net income (loss) ................... 9,128 332 904 (33,880)
Net income (loss) per share-basic ... $ .20 $ .01 $ .02 $ (.77)
Net income (loss) per
share-diluted .................... $ .20 $ .01 $ .02 $ (.77)
Fiscal 1998
Net service revenues ................ $155,402 $166,321 $174,361 $184,002
Gross profit ........................ 67,101 72,984 74,179 77,317
Net income .......................... 6,249 (3,688) 6,192 6,686
Net income per share-basic........... $ .14 $ (.08) $ .14 $ .15
Net income per share-diluted......... $ .13 $ (.08) $ .13 $ .15
- 40 -
41
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of
Romac International, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 8, 2000 appearing in this Form 10-K of Romac International, Inc.
also included an audit of the Financial Statement Schedule listed in Item 14 of
this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Tampa, Florida
February 8, 2000
- 41 -
42
SCHEDULE II
ROMAC INTERNATIONAL, INC.
VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
SUPPLEMENTAL SCHEDULE
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ------------- ----------------------- ---------- -------------
CHARGED TO CHARGED TO
BALANCE AT COSTS AND OTHER BALANCE AT
DESCRIPTION BEGINNING OF EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
----------- ------------- ---------- ---------- ---------- -------------
Allowance Reserve...... 1997 3,207 4,271 2,055 5,423
1998 5,423 4,049 3,710 5,762
1999 5,762 9,768 11,113 4,417
- 42 -
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ROMAC INTERNATIONAL, INC.
Date: March 28, 2000 By: /s/ DAVID L. DUNKEL
-------------------------------
David L. Dunkel
Chairman of the Board,
Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 28, 2000 By: /s/ DAVID L. DUNKEL
----------------------------------------------------
David L. Dunkel
Director and Chief Executive Officer
Date: March 28, 2000 By: /s/ WILLIAM L. SANDERS
----------------------------------------------------
William L. Sanders
Vice President, Chief Financial Officer
Date: March 28, 2000 By: /s/ JOHN N. ALLRED
----------------------------------------------------
John N. Allred
Director
Date: March 28, 2000 By: /s/ W.R. CAREY, JR.
----------------------------------------------------
W.R. Carey, Jr.
Director
Date: March 28, 2000 By: /s/ RICHARD M. COCCHIARO
----------------------------------------------------
Richard M. Cocchiaro
Vice President and Director
Date: March 28, 2000 By: /s/ WAYNE EMIGH
----------------------------------------------------
Wayne Emigh
Director
Date: March 28, 2000 By: /s/ TODD MANSFIELD
----------------------------------------------------
Todd Mansfield
Director
Date: March 28, 2000 By: /s/ HOWARD W. SUTTER
----------------------------------------------------
Howard W. Sutter
Vice President and Director
Date: March 28, 2000 By: /s/ GORDON TUNSTALL
----------------------------------------------------
Gordon Tunstall
Director
Date: March 28, 2000 By: /s/ KARL VOGELER
----------------------------------------------------
Karl Vogeler
Director
- 43 -
44
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
3.1 Amended and Restated Articles of Incorporation(1) --
3.2 Amended and Restated Bylaws(1) --
4.1 $30,000,000 Revolving Line of Credit Agreement between
NationsBank, National Association and Romac International,
Inc. dated September 11, 1997(2) --
4.2 Rights Agreement, dated October 28, 1998, between Romac
International, Inc. and State Street Bank and Trust Company
as Rights Agent(3) --
10.1 Employment Agreement, dated as of March 1, 1997, between the
Company and David L. Dunkel(4) --
10.2 Employment Agreement, dated as of March 1, 1997, between the
Company and Howard W. Sutter(4) --
10.3 Employment Agreement, dated as of March 1, 1997, between the
Company and Peter Dominici(4) --
10.4 Employment Agreement, dated as of March 1, 2000, between the
Company and David L. Dunkel 45
10.5 Employment Agreement, dated as of March 1, 2000, between the
Company and William L. Sanders 62
10.6 1999 Romac International, Inc. Employee Stock Purchase Plan 79
21.1 List of subsidiaries of the Company 86
23.1 Consent of PricewaterhouseCoopers LLP 87
27.1 Financial Data Schedule (for SEC use only) 88
- -------------------------
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-91738) filed May 9, 1996.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K (File
No. 0-26058), filed March 17, 1998.
(3) Incorporated by reference to the Company's Current Report on Form 8-K (File
No. 0-26058), dated October 29, 1998.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K (File
No. 0-26058), filed March 28, 1997.
- 44 -