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Exhibit 99.1
Wednesday October 28, 1998 - 9:58 a.m. Eastern Time
Company Press Release
Source: Romac International, Inc.
Romac International Announces 43% Revenue and 63% Earnings Growth For
Third Quarter of 1998
TAMPA, Fla., Oct. 28 /PR Newswire/ -- Romac International, Inc. (Nasdaq: ROMC),
which completed its merger with Source Services Corporation ("Source") on April
20, 1998, today announced results for the third quarter of 1998. Revenues
increased by 43% to $174.4 million, net income, excluding merger, restructuring
and integration costs, increased 63% to $9.8 million and diluted earnings per
share, excluding merger, restructuring and integration costs, increased by 50%
to $.21. This merger was accounted for under the pooling of interests method;
accordingly, all historical results have been restated.
Third Quarter Performance
Net service revenues for the third quarter of 1998 increased to $174.4
million from $122.3 million for the same period in 1997. This represents an
increase of 43 percent. Net income for the quarter, excluding merger,
restructuring and integration costs of $3.3 million, increased to $9.8 million
for the third quarter of 1998 from $6.0 million for the same period in 1997.
This represents an increase of 63 percent. Merger, restructuring and integration
expenses related to the Source merger for the quarter consisted primarily of
$3.3 million related to restructuring and integration related expenses. Diluted
earnings per share before merger, restructuring and integration costs, increased
to $.21 for the third quarter of 1998 from $.14 for the same period in 1997.
This represents an increase of 50 percent.
Diluted weighted average shares outstanding for the third quarter increased by
14 percent to 47.4 million from 41.6 million for the same period in 1997.
Nine Month Performance
Net service revenues for the first nine months of 1998 increased to $496.1
million from $333.3 million for the same period in 1997. This represents an
increase of 49 percent. Net income for the first nine months of 1998, excluding
merger, restructuring and integration costs of $23.5 million associated with the
Source merger, increased to $25.9 million for the first nine months of 1998 from
$14.8 million for the same period in 1997. This represents an increase of 75
percent. Merger, restructuring and integration
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expenses for the nine month period ended September 30, 1998 consisted primarily
of $8.2 million of direct costs related to the merger and $15.3 million of
restructuring and integration related expenses. Diluted earnings per share
before merger, restructuring and integration costs, increased to $.55 for the
first nine months of 1998 from $.36 for the same period in 1997. This represents
an increase of 53 percent. Diluted weighted average shares outstanding for the
first nine months of 1998 increased by 15 percent to 47.5 million from 41.2
million for the same period in 1997.
Source Services Integration
David L. Dunkel, chairman and chief executive officer, commented, "The
integration of Source continues at a rapid pace. During the quarter, we
announced corporate executive and operating line management appointments which
reflect the functional realignment and operational integration of Source's
management with Romac's existing management team. Our goal has been to organize
in a manner conducive to maintaining our central theme of customer intimacy. Our
management team is now aligned to meet the needs of the organization and both of
our customers -- client companies and the KnowledgeForce. Other integration
milestones we achieved during the quarter include the completion of a computer
hardware, software and communication network upgrade that standardizes and
connects the entire Source heritage organization to Romac's existing
infrastructure system. The entire combined entity now operates on a common
technology platform with full, national network connectivity. Our customers are
already realizing the power of this capability. With regards to corporate
service functions, we integrated the accounts payable, general ledger, core
employee and billable personnel payroll systems into our PeopleSoft platform.
Benefit plan administration, facilities management, help desk operations and
other corporate service functions are now managed out of our corporate
facilities in Tampa, Florida."
Dunkel continued, "Total merger, restructuring and integration costs through
the end of the third quarter of 1998 have totaled $23.5 million. This includes
direct costs such as accounting, legal, and investment banking fees, document
printing and mailing costs and SEC registration fees totaling $8.2 million and
restructuring and integration costs such as employee severance, lease
terminations and other direct restructuring and integration expenses totaling
$15.3 million. We now estimate that an additional $8.5 million of restructuring
and integration costs will be incurred during the fourth quarter of 1998 and as
a result, our new estimate of the total merger, restructuring and integration
costs related to the Source merger is $32 million. This revises our previously
announced estimate of $40 to $45 million. There were two primary reasons for the
substantial reduction in the new estimate of total merger related costs. First,
our decision to maintain the Romac brand name and secondly, our diligence in
managing the merger process. Both of these events resulted in significantly
lower merger related costs.
New Business Initiatives
Dunkel said, "After implementation of integration processes and subsequent
to the realignment of executive and operational management, we implemented a
number of new business initiatives. Within Information Technology, and more
specifically within our Emerging Technologies arena, highlights for the quarter
included the rollout of our Education Services Practice which focuses on
training our customer's end user community, the attainment of Alliance Partner
status with Oracle, the graduation of a Lotus Notes/Domino class, and
geographical expansion of Emerging Technology services into three new markets
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(Southern California, San Francisco and Denver). Within Finance & Accounting,
Executive Solutions, our contract and permanent placement service focused on
highly skilled finance and accounting executives expanded into the Houston,
Dallas and Atlanta markets, more than doubling the number of markets it serves.
Romac Human Resources named Candace H. Solhjou as president, expanded its
services into the Atlanta market and announced that four additional markets (New
York, San Francisco, Dallas and Chicago) are expected to be opened by year-end.
Pete Alonso, president of Romac Operating Specialties announced a planned
expansion of Health Care services into three new markets (St Louis, Columbus and
Miami) and an expansion of Pharmaceutical services into two new markets
(Charlotte and Philadelphia), all by year end. These expansions of our service
offerings leveraged the existing infrastructure now in place as a result of the
Source merger and further exemplify our commitment to a diverse and balanced
growth strategy. To further illustrate the geographical recruiting and
distribution benefits of this enlarged infrastructure, our Major and National
Accounts team brought to the table a total of nine new or expanded relationships
during the quarter."
Business Climate
"In a quarter where public stock markets expressed concern over potential
industry-wide slowing growth, we have delivered record results," stated Dunkel.
"Each of our functional business units delivered solid performance, business
demand for all our services is currently strong and we are encouraged by the
outlook going forward." Dunkel concluded, "We believe our patience in the
process of evaluating the international market has put us in a favorable
position to capitalize upon opportunities in this changing business climate."
The Services
Romac International, Inc., "The KnowledgeForce Resource(SM)," provides
flexible and permanent staffing solutions for organizations and career
management for individuals in the specialty skill areas of information
technology, finance and accounting, human resources, engineering,
pharmaceutical, health care, legal and financial services. The Company partners
primarily with Fortune 1000 companies.
Adoption of Shareholder Rights Plan
Romac also announced that its Board of Directors approved the adoption of a
Shareholder Rights Plan (the "Rights Plan") by which rights will be distributed
as a dividend at the rate of one right for each share of common stock, par value
$.01 per share (the "Common Stock"), of the Company held by shareholders of
record as of October 28, 1998 (the "Record Date").
The Rights Plan is intended to protect shareholders by deterring coercive
takeover tactics, including the accumulation of 15% or more of the Company's
Common Stock in the open market or through private transactions and to prevent
an acquirer from gaining control of the Company without offering a fair price to
all of the Company's shareholders. Acquisitions of shares of Common Stock by
David L. Dunkel, the Company's chief executive officer and principal
shareholder, are exempt from the operation of the Rights Plan. The adoption of
the Rights Plan was not in response to any takeover proposal. The Rights Plan
will expire on October 28, 2008.
Additional information regarding the Rights Plan will be contained in a
report on Form 8-K that is being filed by the Company today with the
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Securities and Exchange Commission, and in summary to be mailed to all
shareholders following the Record Date.
Conference Call
A conference call regarding this press release is scheduled for Wednesday,
October 28, 1998, at 11:00a.m., Eastern Standard Time (10:00 Central -- 9:00
Mountain - 8:00 a.m. Pacific). The call in number for this conference is:
1-706-645-9716 Reservation #495679
Certain of the above statements contained in this press release are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements are within the meaning of that term in Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Act of 1934, as amended. Factors that could cause actual results to differ
materially include the following: business conditions and growth in the staffing
industry and general economy; competitive factors, risks due to shifts in the
market demand; changes in the service mix; ability of the Company to complete
acquisitions; and the risk factors listed from time to time in the Company's
reports filed with the Securities and Exchange Commission, as well as
assumptions regarding the foregoing. The words "believe," "estimate," "expect,"
"intend," "anticipate" and similar expressions and variations thereof identify
certain of such forward-looking statements, which speak only as of the dates on
which they were made. The Company undertakes no obligation to publicly update or
revise any forward- looking statement, whether as a result of such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those indicated in the forward-looking statements as a result of various
factors. Readers are cautioned not to place undue reliance on these
forward-looking statements.
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ROMAC INTERNATIONAL, INC.
STATEMENT OF SELECTED OPERATING DATA
FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
(in thousands except (in thousands except
per share data) per share data)
Net Service Revenues:
Information Technology $114,394 $ 75,672 $311,855 $203,550
Finance and Accounting 47,683 39,437 142,266 110,164
Human Resources 4,509 2,647 13,366 8,473
Operating Specialties 7,775 4,570 28,597 11,092
$174,361 $122,326 $496,084 $333,279
Earnings before merger
and integration
expenses $ 16,931 $ 10,171 $ 44,713 $ 25,329
Merger and integration
expenses (3,272) (23,493)
Income before taxes $ 13,659 $ 10,171 $ 21,220 $ 25,329
Net Income:
Net income before
merger and integration
expenses $ 9,820 $ 5,995 $ 25,934 $ 14,783
Less: merger and
integration expenses,
net of tax (3,628) (17,181)
$ 6,192 $ 5,995 $ 8,753 $ 14,783
Earnings Per Share -
Basic
Before merger and
integration expenses $ 0.22 $ 0.15 $ 0.57 $ 0.37
Merger and integration
expenses, net of tax (0.08) 0.00 (0.38) 0.00
Net earnings per share
basic $ 0.14 $ 0.15 $ 0.19 $ 0.37
Weighted Average Shares
O/S-Basic 45,498 40,066 45,307 39,714
Earnings Per Share -
diluted
Before merger and
integration expenses $ 0.21 $ 0.14 $ 0.55 $ 0.36
Merger and integration
expenses, net of tax (0.08) 0.00 (0.37) 0.00
Net earnings per share -
diluted $ 0.13 $ 0.14 $ 0.18 $ 0.36
Weighted Average Shares
O/S-diluted 47,436 41,612 47,464 41,183
ROMAC INTERNATIONAL, INC.
STATEMENT OF SELECTED OPERATING DATA
FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
(in thousands) (in thousands)
Net Service Revenues:
Flexible Billings $140,365 $ 91,317 $394,160 $244,868
Search Fees 33,996 31,009 101,924 88,411
$174,361 $122,326 $496,084 $333,279