INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
The following pro forma condensed consolidated statements of earnings of
the Company for the six months ended June 27, 1997 and the year ended December
27, 1996 and the pro forma condensed consolidated balance sheet of the Company
as of June 27, 1997 are based on historical financial statements of the Company
and have been adjusted to reflect the acquisition of Michael Page and other
acquisitions, and the sale of the Company's Healthcare Business.
On September 26, 1997, Interim completed the sale of substantially all of
its healthcare business. The consummation of the sale of IHNY has been
postponed but is reflected in the following pro forma financial information as
being sold with a promissory note receivable from Interim Healthcare Inc., a
wholly-owned subsidiary of Catamaran Acquisition Corp (Refer to ITEM 2.).
The pro forma condensed consolidated statements of earnings for the periods
ended June 27, 1997 and December 27, 1996 give effect to each of these
transactions as if such transactions had been completed as of December 28, 1996
and December 30, 1995. The pro forma condensed consolidated balance sheet as
of June 27, 1997 gives effect to the sale of the Company's Healthcare Business
as if it had been sold on June 27, 1997.
The pro forma condensed consolidated financial information does not purport
to represent the actual financial position or results of operations of the
Company had the transactions assumed therein in fact occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future. The pro forma condensed consolidated financial
information is based on certain assumptions and adjustments described in the
notes hereto and should be read in conjunction therewith.
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INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE SIX MONTHS ENDED JUNE 27, 1997
---------------------------------------------------------------------------------------------------------
ACQUISITIONS
-------------------------------------------- PRO FORMA PRO FORMA EFFECT
HISTORICAL MICHAEL OTHER PRO FORMA AFTER OF HEALTHCARE
INTERIM PAGE a) ACQUISITIONS a) ADJUSTMENTS ACQUISITIONS BUSINESS DIVESTMENT PRO FORMA
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Revenues from services $ 739,618 $ 76,253 $ 20,514 $ (107) b) $ 836,278 $ (125,842) h) $ 710,436
Cost of services 500,220 38,213 11,712 (107) b) 550,038 (74,868) h) 475,170
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Gross Profit 239,398 38,040 8,802 - 286,240 (50,974) 235,266
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Selling, general and
administrative
expenses 172,062 25,073 5,856 84 c) 203,075 (40,324) h) 162,751
Licensee commissions 20,462 - - (84) c) 20,378 (423) h) 19,955
Amortization of
intangibles 7,365 - - 3,757 d) 11,122 (1,195) h) 9,927
Interest expense 6,460 (964) - 13,182 e) 18,678 (3,462) i) 15,216
Merger expense - 5,064 - (5,064) f) - - -
---------- ----------- --------------- ----------- ------------ ------------------- ----------
206,349 29,173 5,856 11,875 253,253 (45,404) 207,849
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Earnings before taxes 33,049 8,867 2,946 (11,875) 32,987 (5,570) 27,417
Income taxes 14,602 4,593 - (3,197) g) 15,998 (2,860) j) 13,138
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings $ 18,447 $ 4,274 $ 2,946 $(8,678) $ 16,989 $ (2,710) $ 14,279
---------- ----------- --------------- ----------- ------------ ------------------- ----------
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings per common
and common equivalant
shares $ 0.46 $ 0.36
---------- ----------
Weighted average shares
outstanding 39,880 39,880
---------- ----------
---------- ----------
SEE NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
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INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 27, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA EFFECT
HISTORICAL OF HEALTHCARE PRO FORMA
INTERIM BUSINESS DIVESTMENT AS ADJUSTED
----------- ------------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 25,548 $ 118,590 k)
(1,770) k)
(100,000) l) $ 42,368
Receivables 268,753 (47,769) k)
15,410 k) 236,394
Insurance deposits 21,449 - 21,449
Other current assets 40,789 (1,707) k)
4,000 k) 43,082
----------- ------------------- -----------
TOTAL CURRENT ASSETS 356,539 (13,246) 343,293
INTANGIBLE ASSETS, NET 731,668 (40,337) k) 691,331
PROPERTY AND EQUIPMENT, NET 71,413 (9,116) k) 62,297
OTHER ASSETS 36,436 (17,242) k) 19,194
----------- ------------------- -----------
$ 1,196,056 $ (79,941) $ 1,116,115
----------- ------------------- -----------
----------- ------------------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Notes payable to banks
and other $ 31,900 $ (5,700) l) $ 26,200
Accounts payable and other
accrued expenses 78,057 (5,159) k)
17,000 k) 89,898
Accrued salaries, wages,
and payroll taxes 73,403 (7,782) k) 65,621
Accrued Insurance 23,980 - 23,980
Accrued income taxes 19,534 12,000 k) 31,534
----------- ------------------- -----------
TOTAL CURRENT LIABILITIES 226,874 10,359 237,233
LONG-TERM DEBT 524,458 (94,300) l) 430,158
DEFERRED TAX LIABILITY 4,155 - 4,155
STOCKHOLDERS' EQUITY:
Common stock 392 - 392
Additional paid-in capital 253,174 - 253,174
Treasury stock (460) (460)
Retained earnings 182,397 4,000 k) 186,397
Cumulative translation
adjustment 5,066 5,066
----------- ------------------- -----------
TOTAL STOCKHOLDERS' EQUITY 440,569 4,000 444,569
----------- ------------------- -----------
$ 1,196,056 $ (79,941) $ 1,116,115
----------- ------------------- -----------
----------- ------------------- -----------
SEE NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION.
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INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE TWELVE MONTHS ENDED DECEMBER 27,1996
---------------------------------------------------------------------------------------------------------
ACQUISITIONS
-------------------------------------------- PRO FORMA PRO FORMA EFFECT
HISTORICAL MICHAEL OTHER PRO FORMA AFTER OF HEALTHCARE
INTERIM PAGE a) ACQUISITIONS a) ADJUSTMENTS ACQUISITIONS BUSINESS DIVESTMENT PRO FORMA
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Revenues from services $ 1,147,151 $ 221,745 $ 64,922 $ (1,002) b) $ 1,432,816 $ (231,268) h) $1,201,548
Cost of services 795,789 153,162 21,984 (1,002) b) 969,933 (136,862) h) 833,071
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Gross Profit 351,362 68,583 42,938 - 462,883 (94,406) 368,477
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Selling, general and
administrative
expenses 243,652 23,565 39,519 (553) m) 306,183 (72,029) h) 234,154
Licensee commissions 39,500 - - (870) c) 38,630 (990) h) 37,640
Amortization of
intangibles 8,802 - 135 13,865 d) 22,802 (2,288) h) 20,514
Interest expense, net 5,696 (2,469) 220 41,121 e) 44,568 (7,757) i) 36,811
Merger expense 8,600 - - 8,600 - 8,600
----------- ----------- --------------- ----------- ------------ ------------------- ----------
306,250 21,096 39,874 53,563 420,783 (83,064) 337,719
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Earnings before taxes 45,112 47,487 3,064 (53,563) 42,100 (11,342) 30,758
Income taxes 22,097 16,630 - (13,758) g) 24,969 (5,711) j) 19,258
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings $ 23,015 $ 30,857 $ 3,064 $ (39,805) $ 17,131 $ (5,631) $ 11,500
----------- ----------- --------------- ----------- ------------ ------------------- ----------
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings per common
and common equivalant
shares $ 0.69 $ 0.34
----------- ----------
Weighted average shares
outstanding 33,418 33,418
----------- ----------
----------- ----------
SEE NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
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INTERIM SERVICES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
a) Reflects the historical financial statements of the acquired companies.
Michael Page's financial statements have been adjusted for differences
between U.S. and U.K. Generally Accepted Accounting Principles. Michael
Page's statement of income has been translated into U.S. dollars using
average exchange rates for the period.
b) To eliminate royalties as a result of the repurchase of an Interim
franchise.
c) To eliminate licensee commissions as a result of the repurchase of several
Interim license operations.
d) To reflect amortization of goodwill and other intangibles generated by the
acquisitions on a straight-line basis over a weighted average life of 40
years.
e) To reflect the pro forma effect of interest on the additional borrowings
used to fund the acquisitions. Interest on the credit facilities is
computed at LIBOR plus 95 basis points. The acquisitions were funded by
borrowings of approximately $580 million under a $675 million syndicated
credit facility entered into as of May 1, 1997. This credit facility
consists of a revolving loan facility of $400 million (terminating in 2003)
and a term loan of $275 million (due through 2002). Interest rates on
amounts outstanding under the facility are based on LIBOR plus a variable
margin.
f) To eliminate one-time costs incurred by Michael Page related to it being
acquired by the Company.
g) To reflect the aggregate tax benefit associated with the pro forma
adjustments to the statement of earnings.
h) To eliminate the results of operations of the healthcare business. A
portion of the eliminated selling, general and administrative costs
reflect corporate expenses that have been transferred to the healthcare
business or that will be eliminated. These corporate expenses reflect
management's best estimate of the costs no longer expected to be incurred
by Interim subsequent to the disposition of the healthcare business.
i) To reduce interest expense due to the reduction of debt from cash flows
generated from the sale.
j) To reflect the aggregate tax benefit of eliminating the healthcare business
and reducing borrowings.
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k) To reflect the stock sale of the company's healthcare business. The net
book value of this business as of June 30, 1997 is not expected to vary
materially with its book value as of the sale date. The sales price of $134
million was not adjusted for changes in the net book value.
The estimated pro forma increase to retained earnings of $4 million is
calculated as follows (in thousands):
Proceeds:
Cash $118,590
Subordinated note for IHNY 15,410
--------
134,000
Less:
Estimated book value of
business sold (including cash) 105,000
Transaction related costs 17,000
--------
12,000
Income Tax Benefit (Expense):
Current (12,000)
Deferred 4,000
--------
Estimated net increase to retained
earnings $4,000
--------
--------
Transaction related costs include investment banking expenses, legal and
audit fees, transaction related compensation costs and transaction related
cost indemnifications.
l) To reflect the usage of the net cash proceeds after taxes and certain
transaction related costs to reduce debt by approximately $100 million.
m) Represents the net adjustment (in thousands) to reflect: 1) a
reclassification of licensee commissions as a result of repurchase of
Interim licensees operations - $870; 2) the elimination of shareholder bonus
for payment of taxes of an S-corporation - $(800); and 3) the elimination of
legal fees related to a liability that was not assumed - $(623).
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