SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number: 0-23198
SPHERION CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3536544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2050 SPECTRUM BOULEVARD, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
(954) 938-7600
(Registrant's telephone number, including area code)
INTERIM SERVICES INC.
(Former name)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
COMMON STOCK-$.01 PAR VALUE New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(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
--- ---
Number of shares of Registrant's Common Stock, par value $.01 per
share ("Common Stock"), outstanding on July 28, 2000 was 63,859,702.
TABLE OF CONTENTS
PART I Financial Information
Item 1. Financial Statements Page
----
Condensed Consolidated Statements of Earnings
Three and Six Months Ended June 30, 2000 and June 25, 1999 ........... 1
Condensed Consolidated Balance Sheets
June 30, 2000 and December 31, 1999................................... 2
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2000 and June 25, 1999 ..................... 3
Notes to Condensed Consolidated Financial Statements.................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................. 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk.............. 14
PART II Other Information
Item 4. Matters Submitted to a Vote of Security Holders ........................ 15
Item 6. Exhibits and Reports on Form 8-K........................................ 16
Signatures ...................................................................... 18
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 25, 1999 JUNE 30, 2000 JUNE 25, 1999
------------- ------------- ------------- -------------
Revenues.......................................... $ 947,022 $ 607,075 $ 1,905,284 $ 1,173,106
Cost of services.................................. 623,767 389,430 1,267,633 750,591
----------------- ---------------- ----------------- -----------------
Gross profit...................................... 323,255 217,645 637,651 422,515
----------------- ---------------- ----------------- -----------------
Selling, general and administrative expenses...... 234,278 157,331 464,807 309,433
Licensee commissions.............................. 18,107 13,515 36,976 25,229
Amortization of intangibles....................... 10,638 6,876 21,204 13,750
Interest expense.................................. 13,062 6,896 25,530 13,486
Interest income................................... (596) (628) (1,229) (1,402)
----------------- ---------------- ----------------- -----------------
275,489 183,990 547,288 360,496
-------------------------------------------------------------------------
Earnings before income taxes................. 47,766 33,655 90,363 62,019
Income taxes...................................... 20,062 14,816 37,951 27,296
----------------- ---------------- ----------------- -----------------
Net earnings...................................... $ 27,704 $ 18,839 $ 52,412 $ 34,723
================= ================ ================= =================
Earnings per share:
Basic........................................ $ 0.43 $ 0.42 $ 0.82 $ 0.75
Diluted...................................... $ 0.42 $ 0.40 $ 0.79 $ 0.73
Weighted average shares outstanding:
Basic........................................ 64,304 44,831 64,263 46,108
Diluted...................................... 70,164 50,636 70,468 51,977
See notes to Condensed Consolidated Financial Statements.
1
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 41,215 $ 37,539
Receivables, less allowance for doubtful accounts of $20,619 and $16,956....... 596,653 560,713
Deferred tax asset............................................................. 46,878 45,686
Other current assets........................................................... 59,791 64,452
------------------ ------------------
Total current assets........................................................ 744,537 708,390
Goodwill, net.................................................................... 1,312,149 1,270,562
Tradenames and other intangibles, net............................................ 185,447 200,909
Property and equipment, net...................................................... 136,459 135,976
Other assets..................................................................... 135,658 123,064
------------------ ------------------
$ 2,514,250 $ 2,438,901
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.............................................. $ 274,186 $ 216,108
Accounts payable and other accrued expenses.................................... 190,375 223,409
Accrued salaries, wages and payroll taxes...................................... 198,565 184,611
Other current liabilities...................................................... 68,724 33,774
------------------ ------------------
Total current liabilities................................................... 731,850 657,902
Long-term debt .................................................................. 485,024 513,611
Other long-term liabilities...................................................... 108,840 108,128
------------------ ------------------
Total liabilities........................................................... 1,325,714 1,279,641
------------------ ------------------
Stockholders' Equity:
Preferred stock, par value $.01 per share; authorized 2,500,000 shares;
none issued or outstanding.................................................. - -
Common stock, par value $.01 per share; authorized 200,000,000 shares;
issued 65,341,345 and 65,341,425 shares, respectively....................... 653 653
Treasury stock, at cost, 1,580,932 and 1,751,143 shares, respectively ......... (27,400) (31,628)
Additional paid-in capital..................................................... 868,802 868,572
Retained earnings.............................................................. 385,510 333,098
Accumulated other comprehensive loss........................................... (39,029) (11,435)
------------------ ------------------
Total stockholders' equity.................................................. 1,188,536 1,159,260
------------------ ------------------
$ 2,514,250 $ 2,438,901
================== ==================
See notes to Condensed Consolidated Financial Statements.
2
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30, 2000 JUNE 25, 1999
------------- -------------
Cash Flows from Operating Activities:
Net earnings................................................................... $ 52,412 $ 34,723
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization............................................... 39,783 26,417
Other non-cash charges...................................................... 4,686 1,687
Changes in assets and liabilities, net of effects of acquisitions:
Receivables............................................................... (39,133) (51,499)
Other assets.............................................................. 9,405 1,078
Accounts payable and accrued liabilities.................................. 14,990 19,360
----------------- ----------------
Net Cash Provided by Operating Activities............................... 82,143 31,766
----------------- ----------------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired............................................. (76,523) (150,723)
Capital expenditures........................................................... (24,342) (21,884)
Investments in equity securities............................................... (26,765) -
Other.......................................................................... 5,988 631
----------------- ----------------
Net Cash Used in Investing Activities................................... (121,642) (171,976)
----------------- ----------------
Cash Flows from Financing Activities:
Debt proceeds.................................................................. 64,467 71,344
Debt repayments................................................................ (14,343) -
Purchase of treasury stock..................................................... (5,855) (51,664)
Proceeds from exercise of employee stock options and stock purchase
plan........................................................................ 7,343 2,953
Other, net..................................................................... (8,437) (3,137)
----------------- ----------------
Net Cash Provided by Financing Activities............................... 43,175 19,496
----------------- ----------------
Increase/(decrease) in cash and cash equivalents............................... 3,676 (120,714)
Cash and cash equivalents, beginning of period................................. 37,539 153,314
----------------- ----------------
Cash and cash equivalents, end of period....................................... $ 41,215 $ 32,600
================= ================
See notes to Condensed Consolidated Financial Statements.
3
SPHERION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The condensed consolidated financial statements of Spherion Corporation
and subsidiaries ("Spherion"), formerly Interim Services Inc., included
herein, do not include all footnote disclosures normally included in
annual financial statements and, therefore, should be read in
conjunction with Interim's financial statements and notes thereto
for each of the fiscal years in the three year period ended December
31, 1999 included in Interim's Annual Report on Form 10-K.
The condensed consolidated financial statements for the three and six
months ended June 30, 2000 and June 25, 1999 are unaudited and, in the
opinion of management, reflect all adjustments (consisting only of
normal recurring adjustments) necessary for fair presentation of
financial position, results of operations and cash flows for such
periods. Results for the three and six months ended June 30, 2000 are
not necessarily indicative of results to be expected for the full
fiscal year ending December 29, 2000. Certain 1999 amounts have been
reclassified to conform to current year presentation.
2. Name Change
As disclosed in the Form 8-K filed with the Securities and Exchange
Commission on July 7, 2000, Interim Services Inc. changed its name to
Spherion Corporation. This change was made to better reflect the
nature of the total company, which has shifted from a traditional
staffing company to one that provides global consulting and human
capital management services. Spherion's new ticker symbol on the New
York Stock Exchange is "SFN."
3. Comprehensive Income
Comprehensive income, which totaled $8.1 million and $12.4 million for
the three months ended June 30, 2000 and June 25, 1999, respectively,
is comprised of net earnings of $27.7 million and $18.8 million,
respectively, foreign currency translation adjustments of ($15.6
million) and ($6.4 million), respectively, and a net unrealized loss on
equity securities of ($4.0 million).
Comprehensive income, which totaled $24.8 million and $14.8 million for
the six months ended June 30, 2000 and June 25, 1999, respectively, is
comprised of net earnings of $52.4 million and $34.7 million,
respectively, foreign currency translation adjustments of ($23.6
million) and ($19.9 million), respectively, and a net unrealized loss
on equity securities of ($4.0 million).
4. Earnings Per Share
Basic earnings per share is computed by dividing Spherion's earnings by
the weighted average number of shares outstanding during the period.
Diluted earnings per share is computed by dividing Spherion's earnings
by the weighted average number of shares outstanding and the impact of
all dilutive potential common shares, primarily stock options,
convertible subordinated notes, restricted stock and deferred stock
units. The dilutive impact of stock options is determined by applying
the treasury stock method and the dilutive impact of the convertible
subordinated notes is determined by applying the "if converted" method.
4
The following table reconciles the numerator (earnings) and denominator
(shares) of the basic and diluted earnings per share computations for
net earnings.
THREE MONTHS ENDED
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
-----------------------------------------------------------
JUNE 30, 2000 JUNE 25, 1999
----------------------------------------- --------------------------------------------
NET PER-SHARE NET PER-SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
-------------- ----------- ------------ ----------------- ----------- ------------
Basic EPS............................ $ 27,704 64,304 $ 0.43 $ 18,839 44,831 $ 0.42
============ =============
Effect of dilutive securities:
Stock options and other
dilutive securities .......... - 312 - 257
Convertible subordinated notes..... 1,512 5,548 1,517 5,548
-------------- ----------- ----------------- -----------
Diluted EPS.......................... $ 29,216 70,164 $ 0.42 $ 20,356 50,636 $ 0.40
============== =========== ============ ================= =========== =============
SIX MONTHS ENDED
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
-----------------------------------------------------------
JUNE 30, 2000 JUNE 25, 1999
----------------------------------------- --------------------------------------------
NET PER-SHARE NET PER-SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
------------ ----------- ------------- ---------------- ----------- -------------
Basic EPS............................ $ 52,412 64,263 $ 0.82 $ 34,723 46,108 $ 0.75
============= =============
Effect of dilutive securities:
Stock options and other
dilutive securities........... - 657 - 321
Convertible subordinated notes..... 3,024 5,548 3,037 5,548
------------- ----------- ---------------- -----------
Diluted EPS.......................... $ 55,436 70,468 $ 0.79 $ 37,760 51,977 $ 0.73
============= =========== ============= ================ =========== =============
5. Segment Information
Effective in the first quarter of 2000, Spherion changed its basis of
segmentation from a geographic approach to the following: Information
Technology, Professional Services and Commercial Staffing. Management
believes that the new reportable segments better reflect the management
and fiscal responsibilities within Spherion subsequent to the Norrell
acquisition and integration of its operations. Spherion evaluates the
performance of its operating segments and allocates resources based on
revenues, gross profit and segment operating margin. Segment operating
margin is defined as income before unallocated central costs, net
interest expense and income taxes. All material intercompany revenues
and expenses have been eliminated. All previous year amounts have been
restated for comparative purposes.
5
Information on operating segments and a reconciliation to earnings
before income taxes for the three and six months ended June 30, 2000
and June 25, 1999 are as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- ---------------------------------
JUNE 30, 2000 JUNE 25, 1999 JUNE 30, 2000 JUNE 25, 1999
------------- ------------- ------------- -------------
REVENUES:
Information Technology............. $ 194,207 $ 173,026 $ 393,475 $ 337,480
Professional Services.............. 327,501 185,073 651,419 361,483
Commercial Staffing................ 425,314 248,976 860,390 474,143
------------------ ---------------- ----------------- ----------------
$ 947,022 $ 607,075 $ 1,905,284 $ 1,173,106
================== ================ ================= ================
GROSS PROFIT:
Information Technology............. $ 64,246 $ 62,778 $ 128,084 $ 118,388
Professional Services.............. 166,591 103,308 325,562 203,567
Commercial Staffing................ 92,418 51,559 184,005 100,560
------------------ ---------------- ----------------- ----------------
$ 323,255 $ 217,645 $ 637,651 $ 422,515
================== ================ ================= ================
SEGMENT OPERATING MARGIN:
Information Technology............. $ 11,320 $ 18,043 $ 20,892 $ 31,469
Professional Services.............. 40,995 22,318 78,855 43,844
Commercial Staffing................ 20,142 7,415 37,933 14,643
------------------ ---------------- ----------------- ----------------
72,457 47,776 137,680 89,956
Unallocated central costs.......... (12,225) (7,853) (23,016) (15,853)
Interest expense, net.............. (12,466) (6,268) (24,301) (12,084)
------------------ ---------------- ----------------- ----------------
Earnings before income taxes....... $ 47,766 $ 33,655 $ 90,363 $ 62,019
================== ================ ================= ================
6. Acquisitions
During the six months ended June 30, 2000, Spherion repurchased several
licensed offices, which do not impact Spherion's reported revenues, as
sales by the licensed offices are included in Spherion's revenues, and
completed several other acquisitions for total cash consideration of
approximately $36.5 million. Additionally, Spherion made earnout
payments of $40.0 million in cash on previous acquisitions.
7. Restructuring
During 1999, Spherion incurred approximately $12.8 million of
restructuring costs related to a plan (the "Plan") adopted by
management in which certain redundant functions and assets of
Spherion, as a result of the Norrell acquisition, will be
eliminated. During the second quarter of 2000, remaining accruals of
approximately $3.0 million were identified that were not needed
primarily the result of the buyout of existing lease obligations at
better than expected rates and this $3.0 million was reversed to
income. Spherion then undertook additional restructuring actions in
the amount of $3.2 million related to the Norrell acquisition. These
additional actions included 71 positions which were eliminated due
to the integration of former Norrell operations into Spherion's
existing operations, with most of these positions concentrated in
administrative personnel within the Information Technology
segment. An additional 14 offices were selected for closure due to
continued rationalization of office space where overlapping
territories were identified.
6
An analysis of the restructuring accrual is as follows (dollar amounts
in thousands):
Utilized
Original Through Accrual at New Utilized Accrual at
Plan March 31, March 31, Reversal of Restructuring During the June 30,
Charge 2000 2000 Over Accrual Actions Quarter 2000
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Facility closures $ 6,992 ($1,671) $5,321 ($2,007) $ 845 ($874) $3,285
Severance 3,650 (1,851) 1,799 (978) 2,399 (515) 2,705
Asset
Write-offs 2,108 (2,108) - - - - -
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Total Charge $12,750 ($5,630) $7,120 ($2,985) $3,244 ($1,389) $5,990
================== =========== ============== ============ ============= ================ ================ =============
Number of offices 43 (21) 22 - 14 (24) 12
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Number of
personnel 160 (67) 93 (74) 71 (23) 67
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
The remaining accruals, which are included in accounts payable and
accrued expenses, relate to lease buyout assumptions that will be paid
out through 2004 unless early terminations can be negotiated and
severance costs which will be paid out during 2000.
8. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (the "Statement" or "SFAS No.
133"). The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair
value. The Statement requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must
formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. SFAS No. 133 was amended by
SFAS No. 137 to be effective for fiscal years beginning after June 15,
2000. Spherion has not yet quantified the impacts of adopting SFAS No.
133 on its financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
Spherion is a leader in the area of human capital management operating
in 12 countries around the world. As previously mentioned, Spherion
changed its basis of segmentation during the first quarter of 2000 from
a geographic approach to the following: Information Technology,
Professional Services and Commercial Staffing. Management believes that
the new reportable segments better reflect the management and fiscal
responsibilities within Spherion subsequent to the Norrell acquisition
and integration of its operations. In its operating segments, Spherion
provides five services: (1) consulting-including outplacement,
executive coaching and information technology consulting; (2) managed
staffing-such as temporary and permanent workforce management, which
includes On-Premise and vendor management; (3) outsourcing-includes
functional management and staffing of various administrative
functions, including full service call center management; (4)
search/recruitment-such as contingency recruiting and executive
retained search; and (5) flexible staffing-temporary personnel from
administrative to executive.
7
RESULTS OF OPERATIONS
THREE MONTHS ENDED
--------------------------------------------------------------------
JUNE 30, 2000 JUNE 25, 1999
--------------------------------- ---------------------------------
% OF % OF
TOTAL TOTAL
-------------- ---------------
REVENUES:
Information Technology................. $ 194,207 20.5% $ 173,026 28.5%
Professional Services.................. 327,501 34.6% 185,073 30.5%
Commercial Staffing.................... 425,314 44.9% 248,976 41.0%
----------------- -------------- ---------------- ---------------
$ 947,022 100.0% $ 607,075 100.0%
================= ============== ================ ===============
% OF % OF
REVENUES REVENUES
-------------- ---------------
GROSS PROFIT:
Information Technology................. $ 64,246 33.1% $ 62,778 36.3%
Professional Services.................. 166,591 50.9% 103,308 55.8%
Commercial Staffing.................... 92,418 21.7% 51,559 20.7%
----------------- -------------- ---------------- ---------------
$ 323,255 34.1% $ 217,645 35.9%
================= ============== ================ ===============
SEGMENT OPERATING MARGIN:
Information Technology.................. $ 11,320 5.8% $ 18,043 10.4%
Professional Services................... 40,995 12.5% 22,318 12.1%
Commercial Staffing..................... 20,142 4.7% 7,415 3.0%
----------------- -------------- ---------------- ---------------
72,457 7.7% 47,776 7.9%
============== ===============
Unallocated central costs............... (12,225) (7,853)
Interest expense, net................... (12,466) (6,268)
----------------- ----------------
Earnings before income taxes............ $ 47,766 $ 33,655
================= ================
THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 25, 1999
INFORMATION TECHNOLOGY. Revenues increased 12.2% to $194.2 million from
$173.0 million in the prior year due primarily to the Norrell
acquisition partially offset by industry-related decreases in customer
demand. On a pro forma basis (including Norrell as if it were acquired
at the beginning of 1999), revenues were down 15.0% from $228.6 million
in the prior year. Information Technology revenues declined from 1999
pro forma levels as many customers ended large ERP and Y2K-related
projects and recent projects, such as E-commerce, have been smaller
in size and shorter in duration. While revenues from newer contracts
have been lower than those in previous periods, demand for E-commerce
projects is very strong. However, Spherion has had difficulty in
recruiting enough qualified E-commerce consultants to fully meet
demand in this area. Consequently, Spherion made a strategic
investment in Xceed Inc., an interactive architect and eBusiness
solutions builder, to partner with on E-commerce related opportunities.
Xceed utilizes a highly-skilled pool of more than 600 web-design
consultants and professionals who specialize in the design,
architecture and development of front-end E-commerce platforms,
customer relationship management and sales automation systems.
Revenues by service line for the quarter within the group were
comprised of 65.1% consulting, 6.7% managed staffing, 1.4%
outsourcing, 1.3% search/recruitment and 25.5% flexible staffing and
were relatively unchanged compared with the prior year pro forma
revenues.
Gross profit increased 2.3% to $64.2 million from $62.8 million in the
prior year and the overall gross profit percentage decreased to 33.1%
from 36.3% as the lower margin Norrell business was added. On a pro
forma basis, gross profit percentage for the quarter was lower
than the 1999 level of 34.5% due to the slowdown in technology
8
spending, discussed above, and lower utilization of consultants.
Segment operating margin (earnings before unallocated central costs,
interest and income taxes) decreased 37.3% to $11.3 million from
$18.0 million in the prior year. The lower operating margin in the
quarter was due primarily to the increase in gross profit of $1.5
million discussed above, offset by higher operating expenses of $7.6
million and higher amortization expense of $0.6 million, both of
which are related to the Norrell acquisition. Operating costs as a
percentage of revenues increased from 25.1% in 1999 to 26.3% for
2000, since Spherion's revenue did not grow as anticipated in the
second quarter while much of the infrastructure was maintained and
integration costs related to the Norrell acquisition continued to be
incurred. Management is currently addressing the level of
infrastructure costs for this business segment.
PROFESSIONAL SERVICES. Revenues increased 77.0% to $327.5 million
from $185.1 million in the prior year, with most of the increase due
to the acquisition of Norrell's outsourcing business and strong
organic growth in U.S. and European flexible staffing and
search/recruitment. On a pro forma basis, revenues increased 18.8%
from $275.6 million due primarily to growth in financial
search/recruitment and flexible staffing in the U.S. and Europe.
Revenues by service line within the group were comprised of 3.6%
consulting, 23.7% outsourcing, 34.0% search/recruitment and 38.7%
flexible staffing. As a percentage of total Professional Services
revenues, search/recruitment revenues increased from a 1999 pro
forma level of 28.0%, while flexible staffing decreased from 42.1%.
The shift in mix was due primarily to a strong permanent placement
market as unemployment levels remained low in most of Spherion's
markets.
Gross profit increased 61.3% to $166.6 million from $103.3 million in
the prior year and the gross profit percentage decreased from 55.8% in
the prior year to 50.9% due primarily to the addition of Norrell's
outsourcing business. On a pro forma basis, gross profit percentage
increased to 50.9% in the quarter from 45.6% in 1999 due to the
increase in search/recruitment business, which yields higher gross
profit percentages.
Segment operating margin increased 83.7% to $41.0 million from $22.3
million in the prior year, due primarily to the Norrell acquisition.
Gross profit increased $63.3 million and was partially offset by
higher operating expenses of $43.7 million and higher amortization
expenses of $0.9 million. As a percentage of revenues, operating
expenses decreased from 41.5% for 1999 to 36.8% due primarily to the
inclusion of the outsourcing business in the current year (which
classifies most of its expenses in gross profit) and greater
leveraging of operating expenses.
COMMERCIAL STAFFING. Revenues increased 70.8% to $425.3 million from
$249.0 million in the prior year due primarily to the Norrell
acquisition. On a pro forma basis, revenues decreased 7.8% from
$461.5 million in the prior year as Spherion concentrated on higher
margin customers, shed some unprofitable or lower margin business
and continued to address integration issues. Revenues by service
line within the group were comprised of 34.8% managed staffing, 1.6%
search/recruitment and 63.6% flexible staffing and did not vary
significantly from the prior year pro forma amounts.
Gross profit increased 79.2% to $92.4 million from $51.6 million in the
prior year and the overall gross profit percentage increased to 21.7%
from 20.7% in the prior year. On a pro forma basis, gross profit
percentage increased to 21.7% from 20.5% in the prior year due to the
concentration on improving margins with certain customers and a
reduction in state unemployment taxes.
Segment operating margin more than doubled to $20.1 million from
$7.4 million in the prior year due primarily to the Norrell
acquisition. Gross profit increased $40.9 million and was partially
offset by higher operating expenses of $25.9 million and higher
amortization of $2.3 million. Operating expenses as a percentage of
revenue decreased from 17.2% for 1999 to 16.1% for the quarter as
Spherion was able to leverage fixed costs by eliminating redundant
personnel and offices. The segment operating margin increased from
3.0% of revenues in the prior year to 4.7%.
UNALLOCATED CENTRAL COSTS. Unallocated central costs increased 55.7% to
$12.2 million from $7.9 million in the prior year, due to the
Norrell acquisition and related integration costs. These costs as a
percentage of
9
consolidated revenues were about the same as the prior year percentage
of 1.3%, as Spherion has been unable to fully leverage its cost
structure due to the delay in the integration of back office systems
and negative sequential quarterly revenue growth.
INTEREST EXPENSE, NET. Gross interest expense increased 89.4% to $13.1
million from $6.9 million last year. This increase resulted from higher
debt levels, primarily due to acquisition activity (primarily Norrell,
licensed office buybacks and earnout payments) and additional
borrowings to fund strategic investments, and higher overall average
interest rates. Spherion had average borrowings outstanding during the
second quarter of 2000 of $777.4 million at an average rate of
interest, including the effects of interest rate swaps, of 6.7%
compared with $507.0 million outstanding during the second quarter of
1999 at an average rate of interest of 5.4%. Interest income was
relatively unchanged at $0.6 million.
INCOME TAXES. The effective income tax rate for the second quarter of
2000 was 42.0% compared with 44.0% in 1999. The decrease in the
effective tax rate resulted from an increase in earnings, higher levels
of Work Opportunity tax credits and lower state income taxes.
NET EARNINGS. Net earnings increased 47.1% to $27.7 million ($0.42 per
diluted share) from $18.8 million ($0.40 per diluted share) in the
prior year period. This represents a 5.0% increase in per share net
earnings. The weighted average number of shares (as adjusted for the
dilutive impact of common stock equivalents) increased to 70.2 million
from 50.6 million in the prior year, due primarily to the issuance of
20.8 million shares in July 1999 related to the Norrell acquisition
partially offset by stock repurchases.
RESULTS OF OPERATIONS
SIX MONTHS ENDED
------------------------------------------------------------------------
JUNE 30, 2000 JUNE 25, 1999
----------------------------------- -----------------------------------
% OF % OF
TOTAL TOTAL
--------------- ---------------
REVENUES:
Information Technology.............. $ 393,475 20.7% $ 337,480 28.8%
Professional Services............... 651,419 34.2% 361,483 30.8%
Commercial Staffing................. 860,390 45.1% 474,143 40.4%
------------------ --------------- ------------------ ---------------
$ 1,905,284 100.0% $ 1,173,106 100.0%
================== =============== ================== ===============
% OF % OF
REVENUES REVENUES
--------------- ---------------
GROSS PROFIT:
Information Technology.............. $ 128,084 32.6% $ 118,388 35.1%
Professional Services............... 325,562 50.0% 203,567 56.3%
Commercial Staffing................. 184,005 21.4% 100,560 21.2%
------------------ --------------- ------------------ ---------------
$ 637,651 33.5% $ 422,515 36.0%
================== =============== ================== ===============
SEGMENT OPERATING MARGIN:
Information Technology.............. $ 20,892 5.3% $ 31,469 9.3%
Professional Services............... 78,855 12.1% 43,844 12.1%
Commercial Staffing................. 37,933 4.4% 14,643 3.1%
------------------ --------------- ------------------ ---------------
137,680 7.2% 89,956 7.7%
=============== ===============
Unallocated central costs........... (23,016) (15,853)
Interest expense, net............... (24,301) (12,084)
------------------ ------------------
Earnings before income taxes........ $ 90,363 $ 62,019
================== ==================
10
SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE
25, 1999
INFORMATION TECHNOLOGY. Revenues increased 16.6% to $393.5 million from
$337.5 million in the prior year due primarily to the Norrell
acquisition partially offset by industry related decreases in customer
demand. On a pro forma basis (including Norrell as if it were acquired
at the beginning of 1999), revenues were down 11.8% from $446.0 million
in the prior year. Information Technology revenues declined from 1999
pro forma levels as many customers ended large ERP and Y2K-related
projects and recent projects, such as E-commerce, have been smaller
in size and shorter in duration. While revenues from newer contracts
have been lower than those in previous periods, demand for E-commerce
projects is very strong. However, Spherion has had difficulty in
recruiting enough qualified E-commerce consultants to fully meet
demand in this area. Consequently, Spherion made a strategic
investment in Xceed Inc. Revenues by service line for 2000 within
the group were comprised of 66.0% consulting, 6.2% managed staffing,
1.5% outsourcing, 1.2% search/recruitment and 25.1% flexible
staffing and were relatively unchanged compared with the prior
year pro forma revenues.
Gross profit increased 8.2% to $128.1 million from $118.4 million in
the prior year and the overall gross profit percentage decreased to
32.6% from 35.1% as the lower margin Norrell business was added. On
a pro forma basis, gross profit percentage for 2000 was lower than
the 1999 level of 33.6% due to the slowdown in technology spending,
discussed above, and lower utilization of consultants.
Segment operating margin decreased 33.6% to $20.9 million from $31.5
million in the prior year. The lower margin in 2000 was due
primarily to the increase in gross profit of $9.7 million discussed
above, offset by higher operating expenses of $19.0 million and
higher amortization expense of $1.3 million (Norrell acquisition
related). Higher operating expenses were largely due to the addition
of Norrell. Operating costs as a percentage of revenues increased
from 25.0% in 1999 to 26.2% for 2000 since Spherion's revenue did
not grow as anticipated while much of the infrastructure was
maintained and integration costs related to the Norrell
acquisition continued to be incurred. Management is currently
addressing the level of infrastructure costs for this business
segment.
PROFESSIONAL SERVICES. Revenues increased 80.2% to $651.4 million
from $361.5 million in the prior year, with most of the increase due
to the acquisition of Norrell's outsourcing business and strong
organic growth in U.S. and European flexible staffing and
search/recruitment. On a pro forma basis, revenues increased 19.6%
from $544.5 million due primarily to growth in financial
search/recruitment and flexible staffing in the U.S. and Europe.
Revenues by service line within the group were comprised of 4.0%
consulting, 23.7% outsourcing, 32.8% search/recruitment and 39.5%
flexible staffing. As a percentage of total Professional Services
revenues, search/recruitment revenues increased from a 1999 pro
forma level of 27.6%, while flexible staffing decreased from a 1999
pro forma level of 41.7%. The shift in mix was due primarily to a
strong permanent placement market as unemployment levels were low.
Gross profit increased 59.9% to $325.6 million from $203.6 million in
the prior year and the gross profit percentage decreased from 56.3% in
the prior year to 50.0% due primarily to the addition of Norrell's
outsourcing business. On a pro forma basis, gross profit percentage
increased to 50.0% in 2000 from 45.7% in 1999 due to the increase in
the proportion of search/recruitment revenues to total revenue.
Segment operating margin increased 79.9% to $78.9 million from $43.8
million in the prior year due to the increase in gross profit of $122.0
million, partially offset by higher operating expenses of $85.0 million
and higher amortization expenses of $1.9 million (Norrell acquisition
related). As a percentage of revenues, operating expenses decreased
from 41.8% for 1999 to 36.3% due primarily to the inclusion of the
outsourcing business in the current year (which classifies most of its
expenses in gross profit) and greater leveraging of operating expenses.
COMMERCIAL STAFFING. Revenues increased 81.5% to $860.4 million from
$474.1 million in the prior year due primarily to the Norrell
acquisition. On a pro forma basis, revenues decreased 3.8% from $894.2
million, as Spherion concentrated on higher margin customers and shed
some unprofitable and lower margin business in the first half of 2000.
Revenues by service line within the group were comprised of 35.1%
managed staffing, 1.5% search/recruitment and 63.4% flexible staffing
and did not vary significantly from the prior year pro forma amounts.
11
Gross profit increased 83.0% to $184.0 million from $100.6 million in
the prior year and the overall gross profit percentage increased
slightly to 21.4% from 21.2% in the prior year. On a pro forma basis,
gross profit percentage increased to 21.4% from 20.7% in the prior year
due to the concentration on improving margins with certain customers
and a reduction in state unemployment taxes.
Segment operating margin increased nearly 160% to $37.9 million from
$14.6 million in the prior year. The increase in segment operating
margin was due to the increase in gross profit of $83.4 million,
partially offset by higher operating expenses of $55.9 million and
higher amortization of $4.2 million (primarily Norrell acquisition
related). Operating expenses as a percentage of revenue decreased from
17.6% for 1999 to 16.2% for 2000 as Spherion was able to leverage fixed
costs by eliminating redundant personnel and offices. The segment
operating margin increased from 3.1% of revenues in the prior year to
4.4%.
UNALLOCATED CENTRAL COSTS. Unallocated central costs increased 45.2% to
$23.0 million from $15.9 million in the prior year, due primarily to
the Norrell acquisition and related integration costs. These costs
decreased to 1.2% of consolidated revenues from 1.4% in the prior year
due to greater leveraging of resources in the first quarter of 2000
which partially offset increased costs due to the delay in conversion
of back office systems.
INTEREST EXPENSE, NET. Gross interest expense increased 89.3% to
$25.5 million from $13.5 million last year. This increase resulted
from higher debt levels, due primarily to the Norrell acquisition,
and higher overall average interest rates. Spherion had average
borrowings outstanding during the first six months of 2000 of $760.7
million at an average rate of interest, including the effects of
interest rate swaps, of 6.7% compared with $481.0 million
outstanding during the first six months of 1999 at an average rate
of interest of 5.6%. Interest income was slightly lower at $1.2
million.
INCOME TAXES. The effective income tax rate for the first six months of
2000 was 42.0% compared with 44.0% in 1999. The decrease in the
effective tax rate resulted from an increase in earnings, higher levels
of Work Opportunity tax credits and lower state income taxes.
NET EARNINGS. Net earnings increased 50.9% to $52.4 million ($0.79 per
diluted share) from $34.7 million ($0.73 per diluted share) in the
prior year period. This represents a 8.2% increase in per share net
earnings. The weighted average number of shares (as adjusted for the
dilutive impact of common stock equivalents) increased to 70.5 million
from 52.0 million in the prior year, due primarily to the issuance of
20.8 million shares in July 1999 related to the Norrell acquisition,
offset by stock repurchases.
RESTRUCTURING
During 1999, Spherion incurred approximately $12.8 million of
restructuring costs related to a plan (the "Plan") adopted by
management in which certain redundant functions and assets of
Spherion, as a result of the Norrell acquisition, will be
eliminated. During the second quarter of 2000, remaining accruals of
approximately $3.0 million were identified that were not needed
primarily the result of the buyout of existing lease obligations at
better than expected rates and this $3.0 million was reversed to
income. Spherion then undertook additional restructuring actions in
the amount of $3.2 million related to the Norrell acquisition. These
additional actions included 71 positions which were eliminated due
to the integration of former Norrell operations into Spherion's
existing operations, with most of these positions concentrated in
administrative personnel within the Information Technology segment.
An additional 14 offices were selected for closure due to continued
rationalization of office space where overlapping territories were
identified.
An analysis of the restructuring accrual is as follows (dollar amounts
in thousands):
Utilized
Original Through Accrual at New Utilized Accrual at
Plan March 31, March 31, Reversal of Restructuring During the June 30,
Charge 2000 2000 Over Accrual Actions Quarter 2000
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Facility closures $ 6,992 ($1,671) $5,321 ($2,007) $ 845 ($874) $3,285
Severance 3,650 (1,851) 1,799 (978) 2,399 (515) 2,705
Asset
Write-offs 2,108 (2,108) - - - - -
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Total Charge $12,750 ($5,630) $7,120 ($2,985) $3,244 ($1,389) $5,990
================== =========== ============== ============ ============= ================ ================ =============
Number of offices 43 (21) 22 - 14 (24) 12
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
Number of
personnel 160 (67) 93 (74) 71 (23) 67
------------------ ----------- -------------- ------------ ------------- ---------------- ---------------- -------------
The remaining accruals, which are included in accounts payable and
accrued expenses, relate to lease buyout assumptions that will be paid
out through 2004 unless early terminations can be negotiated and
severance costs which will be paid out during 2000.
12
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Cash provided by operating activities for the six months ended June
30, 2000 was $82.1 million compared with $31.8 million in the prior
year. Higher operating cash flows this period were due primarily to
increased earnings, lower working capital needs and higher
amortization, depreciation and other non-cash charges. Cash used by
changes in working capital was $14.7 million this year compared with
$31.1 million last year. Less cash used for working capital items
resulted primarily from a lower absolute increase in receivables
during the six months ended June 30, 2000 as compared with the same
prior year period. The lower increase in receivables was due primarily
to sequential quarterly revenue declines in 2000 versus revenue
increases in 1999, partially offset by an increase in days sales
outstanding in 2000. Working capital in the first six months of
2000 also benefited from a decrease in other assets resulting from
the receipt of an $8.0 million federal income tax refund related to
Norrell partially offset by a reduction in accounts payable and
accrued liabilities.
Investing activities used $121.6 million for the six months ended June
30, 2000 due primarily to the repurchase of licensee operations to
reduce market overlap created by the Norrell merger, earnout payments
associated with prior acquisitions and strategic investments in
eBusiness alliance partners. Investing activities also included $24.3
million of capital expenditures, primarily for new computer hardware
and software to continue to upgrade and expand Spherion's information
technology capabilities. Investing activities for the six months
ended June 25, 1999 included payments on the December 1998
acquisition of Computer Power and acquisitions in the areas of
European and North American flexible staffing.
Cash provided by financing activities was $43.2 million for the six
months ended June 30, 2000 and primarily reflects increased net
borrowings to fund acquisitions and strategic investments and higher
proceeds from employee stock option and purchase plan activity.
Financing activities for the comparable 1999 period included the
repurchase of approximately 3.2 million shares of common stock in
contemplation of the Norrell acquisition.
13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 30, 2000, Spherion maintains a portion of its cash and cash
equivalents in financial instruments with original maturities of three
months or less. These financial instruments are subject to interest
rate risk and will decline in value if interest rates increase. Due to
the short duration of these financial instruments, an immediate
increase of 1% in interest rates would not have a material effect on
Spherion's financial condition.
Spherion's outstanding variable-rate debt at June 30, 2000 and June 25,
1999 was $552.2 million and $304.5 million, respectively. Interest
rates on the Credit Facility and other short-term borrowings are based
on LIBOR plus a variable margin. Interest rates on the Accounts
Receivable Securitization borrowings and the Australian dollar term
financing are based on commercial paper market rates and Australian
bank bills plus a variable margin, respectively. Based on the
outstanding balance, a change of 1% in the interest rate would cause a
change in interest expense of approximately $5.5 million and $3.0
million in 2000 and 1999, respectively, on an annual basis not
considering the offset of the interest rate swap discussed below.
Spherion utilizes interest rate swap agreements to reduce the impact on
interest expense of fluctuating interest rates on its variable rate
debt. Spherion had a variable to variable interest rate swap agreement
outstanding as of June 30, 2000 and June 25, 1999 with the notional
amount of $113.6 million and $119.0 million, respectively, which
effectively converts interest from a British Pound LIBOR basis to a
broader index and caps Spherion's exposure to upward movement in rates
at 8.5%. This agreement expires in 2002. The cost to terminate (i.e.
fair value) the outstanding interest rate swap as of June 30, 2000 and
June 25, 1999 was $2.0 million and $2.5 million, respectively.
In May 1998, Spherion issued $207.0 million of 4 1/2% Convertible
Subordinated Notes due June 2005. The fair value of Spherion's fixed
rate convertible subordinated debt as of June 30, 2000 and June 25,
1999 was $160.0 million and $177.0 million, respectively, compared with
the related carrying value of $207.0 million.
Spherion enters into foreign exchange hedging activities to mitigate
the impact of changes in foreign currency exchange rates. Spherion
attempts to hedge transaction exposures through natural offsets. To the
extent this is not practicable, exposure areas which are considered for
hedging include foreign currency denominated receivables and payables,
intercompany loans and firm committed transactions and dividends
related to foreign subsidiaries. Spherion uses financial instruments,
principally forward exchange contracts, in its management of foreign
currency exposures. Spherion does not enter into forward contracts for
trading purposes. At June 30, 2000 and June 25, 1999, Spherion had
outstanding foreign currency forward contracts to sell Australian
dollars in the notional amount of $79.9 million and $118.0 million
respectively. The fair value of the foreign currency forward contracts
included in net income for the six months ended June 30, 2000 was a
$6.7 million gain, which was offset by a $6.7 million loss on an
intercompany transaction. The amount for the six months ended June 25,
1999 was not material.
FORWARD-LOOKING STATEMENTS
Part I, Items 2 (Management's Discussion and Analysis of Financial
Condition and Results of Operations) and 3 (Quantitative and
Qualitative Disclosures about Market Risk) of this Quarterly Report on
Form 10-Q may contain forward-looking statements, including statements
regarding future prospects, industry trends, competitive conditions,
litigation, and quantitative and qualitative estimates as to market
risk. This notice is intended to take advantage of the "safe harbor"
provided by the Private Securities Litigation Reform Act of 1995 with
respect to such forward-looking statements. These forward-looking
statements involve a number of risks and uncertainties. Among others,
factors that could cause actual results to differ materially from
Spherion's beliefs or expectations are the following: industry trends
and trends in the general economy; competitive factors in the markets
in which Spherion operates; changes in regulatory requirements which
are applicable to Spherion's business; completion of the integration of
Norrell's operations; and other factors referenced herein or from time
to time in Spherion's reports to the Securities and Exchange
Commission.
14
PART II - OTHER INFORMATION
ITEM 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held on May 23, 2000.
(b) The Annual Meeting involved the re-election of Class I directors William F.
Evans and Cinda A. Hallman. The term of the following directors continued
after the Annual Meeting: Raymond Marcy, Steven S. Elbaum, Jerome B.
Grossman, J. Ian Morrison, Guy W. Millner and A. Michael Victory.
(c) At the Annual Meeting, stockholders voted on the following matters:
(1) The election of directors William F. Evans and Cinda A. Hallman to
continue in office as Class I directors for a three-year term expiring
on the date of the Annual Meeting in the year 2003.
VOTES FOR: VOTES WITHHELD: ABSTENTIONS:
---------- --------------- ------------
William F. Evans 54,689,810 1,357,998 187
Cinda A. Hallman 54,689,810 1,357,998 187
(2) A proposal to ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 29,
2000.
VOTES FOR: VOTES AGAINST: ABSTENTIONS:
---------- --------------- ------------
55,825,078 209,944 12,973
(3) A proposal to adopt the Interim Services Inc.'s 2000 Stock Incentive
Plan.
VOTES FOR: VOTES AGAINST: ABSTENTIONS: BROKER NO VOTES:
---------- -------------- ------------ ----------------
29,482,420 17,487,485 1,722,168 7,355,922
(4) A proposal to adopt the Interim Services Inc.'s 2000 Employee Stock
Purchase Plan.
VOTES FOR: VOTES AGAINST: ABSTENTIONS: BROKER NO VOTES:
--------- ------------- ----------- -----------------
45,073,352 1,901,495 1,717,226 7,355,922
(5) A proposal submitted by a stockholder of the Company to declassify the
Company's Board of Directors.
VOTES FOR: VOTES AGAINST: ABSTENTIONS: BROKER NO VOTES:
---------- -------------- ------------ -----------------
30,429,952 18,078,812 183,309 7,355,922
(d) Not applicable.
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit
Number Exhibit Name
- ------- ------------
3.1 Restated Certificate of Incorporation of Spherion Corporation, as
last amended on July 7, 2000, filed as Exhibit 3.1 to the
Company's Report on Form 8-K filed July 7, 2000, is incorporated
herein by reference.
4.6 Articles Fourth, Fifth, Seventh, Eighth and Tenth of the Restated
Certificate of Incorporation of the Registrant, as last amended
July 7, 2000, filed as Exhibit 4.6 hereto.
10.22 Interim Services Inc.'s 2000 Stock Incentive Plan, filed as
Exhibit A to the Company's Proxy Statement dated April 10, 2000,
is incorporated herein by reference.
10.39 Interim Services Inc.'s 2000 Employee Stock Purchase Plan, filed
as Exhibit B to the Company's Proxy Statement dated April 10,
2000, is incorporated herein by reference.
10.40 Amendment No. 2 dated March 10, 2000, to the Credit and Security
Agreement dated as of July 1, 1999, by and among Interim Services
Receivables Corp., the Registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia
Bank N.A., and Bank One, NA (f/k/a The First National Bank of
Chicago), filed as Exhibit 10.40 hereto.
10.41 Amendment No. 3 dated June 29, 2000, to the Credit and Security
Agreement dated as of July 1, 1999, by and among Interim Services
Receivables Corp., the Registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia
Bank N.A., and Bank One, NA (f/k/a The First National Bank of
Chicago), filed as Exhibit 10.41 hereto.
27 Financial Data Schedule.
(b) On July 7, 2000, Spherion filed a Report on Form 8-K pertaining to the name
change of Interim Services Inc. to Spherion Corporation, which name change
was accomplished by parent-subsidiary merger effective July 7, 2000. Also on
July 7, 2000, Spherion Corporation began trading under the new ticker symbol
"SFN" on the New York Stock Exchange.
(c) Exhibits filed with this form:
Exhibit
Number Exhibit Name
- ------- ------------
4.6 Articles Fourth, Fifth, Seventh, Eighth and Tenth of
the Restated Certificate of Incorporation of the
Registrant, as last amended July 7, 2000.
10.40 Amendment No. 2 dated March 10, 2000, to the Credit and Security
Agreement dated as of July 1, 1999, by and among Interim Services
Receivables Corp., the Registrant, Blue Ridge Asset Funding
Corporation, Falcon Asset Securitization Corporation, Wachovia
Bank N.A., and Bank One, NA (f/k/a The First National Bank of
Chicago).
10.41 Amendment No. 3 dated June 29, 2000, to the Credit and Security
Agreement dated as of
16
July 1, 1999, by and among Interim Services Receivables Corp., the
Registrant, Blue Ridge Asset Funding Corporation, Falcon Asset
Securitization Corporation, Wachovia Bank N.A., and Bank One, NA
(f/k/a The First National Bank of Chicago).
27 Financial Data Schedule.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPHERION CORPORATION
(Registrant)
DATE - August 14, 2000 BY /S/ ROY G. KRAUSE
---------------------------
Roy G. Krause
Executive Vice President
and Chief Financial Officer
(principal financial officer)
DATE - August 14, 2000 BY /S/ MARK W. SMITH
-----------------------------
Mark W. Smith
Vice President, Finance
(principal accounting officer)
18