-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B9cTztFKLJX/LnNVo+r0ANz6dUyYrTfruxSlywXuDTJOHMoln2pSNjilDpk8Ljud KFJTcEENo42NYsWO9fVPlg== 0000950134-99-009880.txt : 19991115 0000950134-99-009880.hdr.sgml : 19991115 ACCESSION NUMBER: 0000950134-99-009880 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAFFMARK INC CENTRAL INDEX KEY: 0001017968 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 710788538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20971 FILM NUMBER: 99748483 BUSINESS ADDRESS: STREET 1: 234 EAST MILLSAP CITY: FAYETTEVILLE STATE: AR ZIP: 72703 BUSINESS PHONE: 5019736000 MAIL ADDRESS: STREET 1: 234 EAST MILLSAP CITY: FAYETTEVETTE STATE: AR ZIP: 72703 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) Quarterly report pursuant to Section 13 or 15(d) of the [X] Securities Exchange Act of 1934 for the quarterly period ended September 30, 1999 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: 0-20971 STAFFMARK, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 71-0788538 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 234 EAST MILLSAP ROAD FAYETTEVILLE, AR 72703 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (501) 973-6000 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 --- --- The number of shares of Common Stock of the Registrant, par value $.01 per share, outstanding at November 10, 1999 was 29,391,041. 1 2 STAFFMARK, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 INDEX
INDEX ----- PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS StaffMark, Inc. Consolidated Financial Statements Consolidated Statements of Income 3 Consolidated Balance Sheets 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction 11 Results for the Three and Nine Months Ended September 30, 1999 Compared to Results for the Three and Nine Months Ended September 30, 1998 11 Liquidity and Capital Resources 14 Year 2000 Compliance 15 Foreign Currency Translation 16 Special Note Regarding Forward Looking Statements 16 ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17 PART II -- OTHER INFORMATION ITEM 1 -- LEGAL PROCEEDINGS 17 ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS 17 ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17 ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K 18 (a) Exhibits (b) Reports on Form 8-K SIGNATURES 19
2 3 STAFFMARK, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------- --------------------- 1999 1998 1999 1998 -------- -------- -------- -------- SERVICE REVENUES $319,155 $264,341 $903,739 $722,047 COST OF SERVICES 239,065 194,252 676,449 531,764 -------- -------- -------- -------- Gross profit 80,090 70,089 227,290 190,283 -------- -------- -------- -------- OPERATING EXPENSES: Selling, general and administrative 56,316 43,685 158,570 124,767 Depreciation and amortization 5,510 3,822 15,641 9,802 Nonrecurring costs 2,153 536 2,153 1,656 -------- -------- -------- -------- Operating income 16,111 22,046 50,926 54,058 -------- -------- -------- -------- OTHER EXPENSE: Interest expense 4,708 2,121 12,209 3,993 Other, net -- 201 239 251 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 11,403 19,724 38,478 49,814 PROVISION FOR INCOME TAXES 3,581 7,487 13,490 19,350 -------- -------- -------- -------- NET INCOME $ 7,822 $ 12,237 $ 24,988 $ 30,464 ======== ======== ======== ======== BASIC EARNINGS PER SHARE $ 0.27 $ 0.42 $ 0.85 $ 1.07 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE $ 0.27 $ 0.41 $ 0.85 $ 1.03 ======== ======== ======== ======== BASIC EARNINGS PER SHARE EXCLUDING NONRECURRING COSTS $ 0.32 $ 0.44 $ 0.90 $ 1.10 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE EXCLUDING NONRECURRING COSTS $ 0.32 $ 0.42 $ 0.90 $ 1.06 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. 3 4 STAFFMARK, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 779 $ 12,812 Accounts receivable, net 196,364 155,796 Prepaid expenses and other 14,515 10,063 Deferred income taxes 3,172 2,569 ---------- ---------- Total current assets 214,830 181,240 PROPERTY AND EQUIPMENT, net 28,730 22,450 INTANGIBLE ASSETS, net 436,539 375,682 OTHER ASSETS 2,736 1,573 ---------- ---------- $ 682,835 $ 580,945 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued liabilities $ 33,407 $ 35,068 Payroll and related liabilities 41,180 40,309 Reserve for workers' compensation claims 9,091 8,087 Income taxes payable 1,854 3,318 ---------- ---------- Total current liabilities 85,532 86,782 LONG TERM DEBT 298,150 176,700 OTHER LONG TERM LIABILITIES 18 47,737 DEFERRED INCOME TAXES 13,422 9,634 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; no shares issued or outstanding -- -- Common stock, $.01 par value; 29,316,594 and 29,083,379 shares issued and outstanding as of September 30, 1999 and December 31, 1998 293 291 Paid-in capital 215,336 214,271 Retained 71,260 46,263 earnings Accumulated other comprehensive income (1,176) (733) ---------- ---------- Total stockholders' equity 285,713 260,092 ---------- ---------- $ 682,835 $ 580,945 ========== ==========
The accompanying notes are an integral part of these balance sheets. 4 5 STAFFMARK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- -------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,822 $ 12,237 $ 24,988 $ 30,464 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,510 3,822 15,641 9,802 Provision for bad debts 1,303 69 1,870 1,323 Deferred income taxes 398 357 3,535 (1,203) Effect of compensatory stock options -- (1,390) -- (1,429) Change in operating assets and liabilities, net of acquisitions: Accounts receivable (9,901) (11,778) (34,093) (32,469) Prepaid expenses and other (971) (23) (3,935) 385 Other assets (693) 663 (1,545) 2,666 Accounts payable and other accrued liabilities (3,287) 2,786 9,191 1,435 Payroll and related liabilities (712) 10,441 (96) 16,131 Payment of nonrecurring merger expenses (904) -- (14,537) -- Reserve for workers' compensation claims 675 472 714 836 Income taxes payable (4,062) (3,080) (2,143) (2,831) Other long term liabilities 18 (899) (548) (2,729) Other, net (729) (510) (1,112) (338) ---------- ---------- ---------- ---------- Net cash provided by (used in) operating activities (5,533) 13,167 (2,070) 22,043 ---------- ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of businesses, net of cash acquired (27,323) (35,416) (120,518) (135,037) Capital expenditures (2,875) (2,019) (9,318) (8,344) ---------- ---------- ---------- ---------- Net cash used in investing activities (30,198) (37,435) (129,836) (143,381) ---------- ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 69,284 60,918 316,274 203,118 Payments on borrowings (42,662) (34,670) (195,321) (76,310) Proceeds from stock purchase plan and stock option exercises 34 275 1,023 803 Deferred financing costs -- (269) (585) (839) ---------- ---------- ---------- ---------- Net cash provided by financing activities 26,656 26,254 121,391 126,772 ---------- ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents (9,075) 1,986 (10,515) 5,434 Effect of foreign currency translation on cash and cash equivalents 198 188 (1,518) (471) CASH AND CASH EQUIVALENTS, beginning of period 9,656 9,444 12,812 6,655 ---------- ---------- ---------- ---------- CASH AND CASH EQUIVALENTS, end of period $ 779 $ 11,618 $ 779 $ 11,618 ========== ========== ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 4,181 $ 2,384 $ 10,919 $ 3,956 ========== ========== ========== ========== Income taxes paid $ 7,815 $ 8,770 $ 14,152 $ 20,359 ========== ========== ========== ==========
The accompanying notes are an integral part of these statements. 5 6 STAFFMARK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION: We (StaffMark, Inc. and our subsidiaries) are an international provider of diversified staffing, information technology ("IT"), professional, consulting and solutions services to businesses, professional and service organizations and governmental agencies. Revenues are recognized upon the performance of services. We generally compensate our associates and consultants only for hours actually worked and, therefore, wages of associates and consultants are a variable cost that increase or decrease as revenues increase or decrease. However, we do have associates and consultants that are full-time, salaried employees who are paid even when not engaged in staffing or consulting. Cost of services primarily consists of wages paid to associates and consultants, payroll taxes, workers' compensation, foreign statutory taxes, national insurance and other related employee benefits. Selling, general and administrative expenses are comprised primarily of administrative salaries and benefits, marketing, rent, recruitment, training, IT systems and communications expenses. As of September 30, 1999, we operated over 310 offices in 32 states and 15 countries and provide staffing in the Commercial and Professional/Information Technology ("Professional/IT") service lines. We extend trade credit to customers representing a variety of industries. There are no individual customers that account for more than 5% of our service revenues in any of the periods presented. 2. BASIS OF PRESENTATION: The accompanying interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to ensure the information presented is not misleading. The accompanying interim financial statements reflect all adjustments (which were of a normal, recurring nature) that, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows as of and for the interim periods presented. All significant intercompany transactions have been eliminated in the accompanying consolidated financial statements. Additionally, certain reclassifications have been made to prior period balances in order to conform with the current period presentation. These financial statements should be read in conjunction with our audited financial statements and notes thereto included in our 1998 Annual Report on Form 10-K as filed with the Commission on March 16, 1999. 3. SEASONALITY: The timing of certain holidays, weather conditions and seasonal vacation patterns can cause our results of operations to fluctuate. We generally expect to realize higher revenues, operating income and net income during the second and third quarters and relatively lower revenues, operating income and net income during the first and fourth quarters. Accordingly, the results of operations for an interim period are not necessarily indicative of the results of operations for a full fiscal year. 4. BUSINESS COMBINATIONS: On November 25, 1998, we completed our acquisition of Robert Walters plc ("Robert Walters"). In connection with the acquisition, each outstanding share of Robert Walters common stock was converted into the right to receive 0.272 shares of StaffMark's common stock, totaling 6,687,704 common shares in the aggregate. The merger has been accounted for as a pooling-of-interests. Accordingly, the accompanying consolidated financial statements have been restated to include the accounts of Robert Walters for all periods presented. 6 7 In addition to Robert Walters, we acquired 17 staffing and professional service companies during 1998. The 1998 acquisitions of Strategic Legal Resources, Inc., and Progressive Personnel Resources, Inc. at the time were considered significant. We have also included certain financial information in the tables below from our acquisition of the staffing services division of WorldTec Group International, Inc. ("WGI") during the fourth quarter of 1998. These three 1998 acquisitions are referred to as the "Acquisitions." The unaudited consolidated results of operations on a pro forma basis as though the Acquisitions had been acquired as of the beginning of 1998 are presented below. The pro forma information presented below does not reflect the reductions in salaries that certain owners of the Acquisitions agreed to and does not reflect any nonrecurring costs incurred in connection with several of our 1998 pooling-of-interests transactions and the 1999 restructure of IntelliMark, our IT platform in the Professional/IT segment. The remaining 1998 and 1999 acquisitions were not individually significant and, therefore, have not been included in the following pro forma presentation. We believe this information reflects all adjustments necessary for a fair presentation of results for the interim periods. The pro forma results of operations for the three and nine months ended September 30, 1999 and 1998 are not necessarily indicative of the results to be expected for the full year.
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, (IN THOUSANDS) 1999 1998 1999 1998 -------------- ------------- ------------- ------------- Revenue $ 319,154 $ 286,208 $ 903,739 $ 791,112 ============ ============ ============ ============ Net income $ 9,299 $ 12,504 $ 26,465 $ 30,832 ============ ============ ============ ============ Basic earnings per share $ 0.32 $ 0.43 $ 0.90 $ 1.07 ============ ============ ============ ============ Diluted earnings per share $ 0.32 $ 0.42 $ 0.90 $ 1.03 ============ ============ ============ ============
Consideration paid with respect to acquisitions during the three and nine months ended September 30, 1999 includes cash consideration paid for companies acquired in the current period, as well as contingent consideration paid to the former owners of companies acquired in previous periods. The aggregate consideration paid consisted of $27.3 million in cash for the three months ended September 30, 1999 and $120.5 million in cash and approximately 200,000 shares of common stock for the nine months ended September 30, 1999. 5. NONRECURRING COSTS: During the fourth quarter of 1998, we recorded merger and integration expenses totaling approximately $24.6 million related to the merger with Robert Walters and other pooling-of-interests transactions completed during 1998. Included in these costs were approximately $13.3 million for professional and financial advisors' fees, approximately $10.8 million related to integration expenses and approximately $500,000 for severance and employee-related expenses. Integration expenses consisted primarily of costs related to office closings and contract terminations pursuant to management's plan of integration, which was completed by September 30, 1999. Substantially all costs associated with severance had been incurred as of December 31, 1998. As the remaining balance of approximately $828,000 represented an overaccrual of merger and integration expenses relating to the merger with Robert Walters, this amount was reversed into income during September 1999. The following is a summary of our merger and integration accrual:
(IN THOUSANDS) Total merger and integration expenses $ 24,626 Cash outlays (23,798) Reversal of excess accrual (828) --------- Accrual at September 30, 1999 $ -- =========
7 8 During the third quarter of 1999, we recorded restructure expenses totaling approximately $3.0 million relating to the restructure of IntelliMark. Included in these costs are approximately $2.2 million for severance costs, approximately $280,000 for office closing costs, and approximately $457,000 for other costs including legal and travel expenses. These restructure expenses of approximately $3.0 million were offset by the reversal of the Robert Walters merger and integration accrual of approximately $828,000. Our IT platform in the Professional/IT segment closed 12 offices and is implementing a "hub-and-spoke" branch structure to serve certain markets where a full branch office may not be required. The implementation of a new front-end system throughout our domestic IT offices altered branch staff requirements and reduced the need for certain positions. As part of the IT restructuring, we are in the process of separating sales and certain management functions between our IT staffing, e-solutions, and end-user solutions deliveries. Approximately 80 employees were let go or reassigned in the restructuring process, which also involved the hiring of about 25 new IT salespeople, service specialists and managers. In addition to costs that have been incurred, the restructure expense also includes future obligations to severed employees which extend through September 2001. The following is a summary of our restructure accrual:
(IN THOUSANDS) Total restructure expenses $ 2,980 Cash outlays (904) ----------- Accrual at September 30, 1999 $ 2,076 ===========
6. EARNINGS PER COMMON SHARE: A reconciliation of net income and weighted average shares used in computing basic and diluted earnings per share is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, (IN THOUSANDS EXCEPT PER SHARE DATA) 1999 1998 1999 1998 -------- -------- -------- -------- BASIC EARNINGS PER SHARE: Net income applicable to common shares $ 7,822 $ 12,237 $ 24,988 $ 30,464 ======== ======== ======== ======== Weighted average common shares outstanding 29,301 28,841 29,266 28,497 ======== ======== ======== ======== Basic earnings per share of common stock $ 0.27 $ 0.42 $ 0.85 $ 1.07 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE: Net income applicable to common shares $ 7,822 $ 12,237 $ 24,988 $ 30,464 ======== ======== ======== ======== Weighted average common shares outstanding 29,301 28,841 29,266 28,497 Dilutive effect of stock options 214 780 229 1,124 -------- -------- -------- -------- Weighted average common shares including dilutive effect of stock options 29,515 29,621 29,495 29,621 ======== ======== ======== ======== Diluted earnings per share of common stock $ 0.27 $ 0.41 $ 0.85 $ 1.03 ======== ======== ======== ========
Excluding the restructure expenses of approximately $2.2 million that were incurred during the third quarter of 1999 relating to the restructure of IntelliMark, basic and diluted earnings per share were both $0.32 for the three months ended September 30, 1999 and basic and diluted earnings per share were both $0.90 for the nine months ended September 30, 1999. 8 9 Excluding the nonrecurring merger costs related to 1998 pooling-of-interests transactions, basic and diluted earnings per share were $0.44 and $0.42 for the three months ended September 30, 1998 and were $1.10 and $1.06 for the nine months ended September 30, 1998. Options to purchase approximately 2.4 million shares of common stock at prices ranging from $10.06 to $40.75 per share were outstanding during the three months ended September 30, 1999, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of our common shares. These options, which expire ten years from the date of grant, were still outstanding as of September 30, 1999. 7. SEGMENT INFORMATION: In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about Segments of an Enterprise and Related Information," which requires reporting segment information consistent with the way management internally disaggregates an entity's operations to assess performance and to allocate resources. As required, we have adopted the provisions of SFAS No. 131 and have presented below the required segment information for the three and nine months ended September 30, 1999 and 1998. We segment our operations based upon differences in services. Our Commercial segment provides clerical and light industrial staffing services in the United States. Our Professional/IT segment provides staffing, consulting, solutions, technical and support services primarily in the areas of finance, accounting, information technology and legal services in the United States, the United Kingdom, Australia and twelve other foreign countries. The Corporate column includes general corporate expenses, headquarters facilities and equipment, internal-use software, and other expenses not allocated to the segments. The accounting policies used in measuring segment assets and operating results are the same as those described in Note 2 to our audited financial statements and notes thereto included in our 1998 Annual Report on Form 10-K as filed with the Commission on March 16, 1999. We evaluate performance of the segments based on segment operating income, excluding corporate overhead. We do not have any significant intersegment sales or transfers. The results of the business segments as of and for the three and nine months ended September 30, 1999 and 1998 are as follows:
PROFESSIONAL/ INFORMATION CONSOLIDATED (IN THOUSANDS) TECHNOLOGY COMMERCIAL CORPORATE TOTALS ------------- ---------- --------- ------------ THREE MONTHS ENDED SEPTEMBER 30, 1999 Total service revenues $154,691 $164,464 $ -- $319,155 Operating income 11,164 10,226 (5,279) 16,111 Depreciation and amortization 3,275 1,769 466 5,510 Capital expenditures 869 272 1,734 2,875 Total assets 433,358 215,384 34,093 682,835 THREE MONTHS ENDED SEPTEMBER 30, 1998 Total service revenues $144,459 $119,882 $ -- $264,341 Operating income 15,453 9,253 (2,660) 22,046 Depreciation and amortization 2,389 1,048 385 3,822 Capital expenditures 433 527 1,059 2,019 Total assets 306,947 143,835 57,039 507,821 NINE MONTHS ENDED SEPTEMBER 30, 1999 Total service revenues $454,615 $449,124 $ -- $903,739 Operating income 35,510 27,596 (12,180) 50,926 Depreciation and amortization 9,295 5,123 1,223 15,641 Capital expenditures 2,224 1,817 5,277 9,318 NINE MONTHS ENDED SEPTEMBER 30, 1998 Total service revenues $395,513 $326,534 $ -- $722,047 Operating income 37,371 24,739 (8,052) 54,058 Depreciation and amortization 6,239 2,659 904 9,802 Capital expenditures 2,767 1,259 4,318 8,344
9 10
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, REVENUES BY COUNTRY 1999 1998 1999 1998 ---------- ---------- ---------- ---------- United States $ 245,016 $ 196,387 $ 691,762 $ 536,234 United Kingdom 56,134 52,695 162,983 144,330 Australia 13,857 12,647 38,042 33,587 Other 4,148 2,612 10,952 7,896 ---------- ---------- ---------- ---------- Total revenues $ 319,155 $ 264,341 $ 903,739 $ 722,047 ========== ========== ========== ==========
AT SEPTEMBER 30, PROPERTY AND EQUIPMENT BY COUNTRY 1999 1998 ------- ------- United States $24,520 $15,957 United Kingdom 2,712 3,445 Australia 509 523 Other 989 905 ------- ------- Total property and equipment $28,730 $20,830 ======= =======
8. COMPREHENSIVE INCOME: Comprehensive income was as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, (IN THOUSANDS) 1999 1998 1999 1998 -------- -------- -------- -------- Net income $ 7,822 $ 12,237 $ 24,988 $ 30,464 Other comprehensive income: Change in cumulative foreign currency translation adjustments 198 188 (1,518) (471) -------- -------- -------- -------- Total comprehensive income $ 8,020 $ 12,425 $ 23,470 $ 29,993 ======== ======== ======== ========
10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The information below discusses the results of operations for the three and nine months ended September 30, 1999 as compared to the results of operations for the three and nine months ended September 30, 1998. Our services are provided through two segments: Professional/IT and Commercial. The Professional/IT segment provides staffing, consulting, solutions, technical and support services primarily in the areas of finance, accounting, information technology, and legal services. The Commercial segment provides clerical and light industrial staffing services. Our services are provided through our network of over 310 offices located in 32 states and 15 countries including, but not limited to, the United States, the United Kingdom, Australia, Germany, New Zealand, Belgium, the Netherlands, Singapore and Japan. Revenues are recognized upon the performance of services. We generally compensate our associates and consultants only for hours actually worked and, therefore, wages of associates and consultants are a variable cost that increase or decrease as revenues increase or decrease. However, we do have associates and consultants that are full-time, salaried employees who are paid even when not engaged in staffing or consulting. Cost of services primarily consists of wages paid to associates and consultants, payroll taxes, workers' compensation, foreign statutory taxes, national insurance and other related employee benefits. Selling, general and administrative expenses are comprised primarily of administrative salaries and benefits, marketing, rent, recruitment, training, IT systems and communications expenses. Earnings before interest, taxes, depreciation and amortization ("EBITDA") are included in the following discussion because we believe the period-to-period change in EBITDA is a meaningful measure due principally to the role acquisitions have played in our development and because the non-cash expenses of depreciation and amortization have a significant impact on operating income and operating margins. EBITDA should not be construed as an alternative measure to net income or cash flows from operations as determined by generally accepted accounting principles as EBITDA excludes certain significant costs of doing business. The financial information provided below has been rounded in order to simplify its presentation. The amounts and percentages below have been calculated using the detailed financial information contained in the financial statements, the notes thereto and the other financial data included in this Quarterly Report on Form 10-Q. RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 Revenues. Consolidated revenues increased $54.8 million, or 20.7%, to $319.2 million for the three months ended September 30, 1999 compared to $264.3 million for the three months ended September 30, 1998. Consolidated revenues increased $181.7 million, or 25.2%, to $903.7 million for the nine months ended September 30, 1999 compared to $722.0 million for the nine months ended September 30, 1998. The purchase acquisitions completed during 1998 and 1999 in both the Professional/IT and Commercial segments accounted for approximately $32.9 million and $115.0 million of the increase for the three and nine months ended September 30, 1999, respectively. Revenues for the Professional/IT segment increased $10.2 million, or 7.1%, to $154.7 million for the three months ended September 30, 1999 compared to $144.5 million for three months ended September 30, 1998. Revenues for the Professional/IT segment increased $59.1 million, or 14.9%, to $454.6 million for the nine months ended September 30, 1999 compared to $395.5 million for nine months ended September 30, 1998. This increase is primarily the result of acquisitions and internal growth, particularly in the expansion of contracting professional and information technology consultants in the United Kingdom and other European locations, as well as in Australia and certain Asian markets. The purchase acquisitions completed during 1998 and 1999 in the Professional/IT segment accounted for approximately $9.6 million and $31.1 million of the increase for the three and nine months ended September 30, 1999, respectively. For the three months ended September 30, 1999, the Professional/IT segment had internal growth of approximately 1%. Domestic IntelliMark revenues decreased 6% on an internal basis compared with the third quarter of 1998, while the rest of the 11 12 Professional/IT segment recorded an internal growth rate of approximately 10%. For the nine months ended September 30, 1999, the Professional/IT segment had internal growth of approximately 8%. We believe the domestic IT staffing business was affected adversely by industry trends, including customers' focus on Year 2000 compliance spending and anticipated deferrals of other IT spending and staffing requirements until calendar year 2000. Revenues for the Commercial segment increased $44.6 million, or 37.2%, to $164.5 million for the three months ended September 30, 1999 compared to $119.9 million for three months ended September 30, 1998. Revenues for the Commercial segment increased $122.6 million, or 37.5%, to $449.1 million for the nine months ended September 30, 1999 compared to $326.5 million for nine months ended September 30, 1998. This revenue growth is the result of internal growth and acquisitions completed during 1998, particularly the fourth quarter acquisition of WGI. Commercial companies purchased during 1998 accounted for $23.0 million and $83.9 million of the change for the three and nine months ended September 30, 1999, respectively. For the three months ended September 30, 1999, the Commercial segment had internal growth of approximately 12%. For the nine months ended September 30, 1999, the Commercial segment had internal growth of approximately 8%. No Commercial acquisitions have been made during the nine months ended September 30, 1999. Gross Profit, SG&A and EBITDA. For the three months ended September 30, 1999, gross profit as a percentage of revenue decreased from 26.5% to 25.1%, while SG&A as a percentage of revenue increased from 16.5% to 17.7%; however, SG&A for the three months ended September 30, 1998 was partially reduced by compensatory stock option income that was recorded for Robert Walters. Excluding these nonrecurring stock option amounts, SG&A as a percentage of revenue was 17.1% for the three months ended September 30, 1998. For the nine months ended September 30, 1999, gross profit as a percentage of revenue decreased from 26.4% to 25.2% while SG&A as a percentage of revenue increased from 17.3% to 17.6%. Excluding the compensatory stock option income that was recorded for Robert Walters, SG&A as a percentage of revenue was 17.5% for the nine months ended September 30, 1998. EBITDA decreased $4.2 million, or 16.4%, to $21.6 million for the three months ended September 30, 1999 as compared to $25.9 million for the three months ended September 30, 1998. EBITDA increased $2.7 million, or 4.2%, to $66.6 million for the nine months ended September 30, 1999 as compared to $63.9 million for the nine months ended September 30, 1998. EBITDA as a percentage of revenues was 6.8% and 7.4% for the three and nine months ended September 30, 1999, respectively, and 9.8% and 8.8% for the three and nine months ended September 30, 1998, respectively. Excluding the compensatory stock option income that was recorded for Robert Walters, EBITDA as a percentage of revenues was 9.3% and 8.6% for the three and nine months ended September 30, 1998, respectively. The decrease in gross margin and EBITDA is primarily the result of the faster growth of our commercial staffing segment, which has grown to 52% of total revenues up from 45% in this quarter last year. Our commercial staffing growth was related primarily to the Strategic Resource Group, which targets large accounts that typically bill at lower gross margins than our retail business in exchange for higher volume, and the acquisition of WGI, which also has lower margins. The decline in our higher margin Professional/IT revenues as a percentage of our total consolidated revenues further contributes to the decline in consolidated margins. We are modifying our IT business model and are reacting to the Year 2000 issues affecting our revenue and margins as described below. Exclusive of the 1999 restructure expenses and the 1998 nonrecurring merger costs as discussed below, EBITDA was $23.8 million and $68.7 million for the three and nine months ended September 30, 1999 and $26.4 million and $65.5 million for the three and nine months ended September 30, 1998, respectively, and EBITDA margins were 7.5% and 7.6% for the three and nine months ended September 30, 1999, respectively, and 10.0% and 9.1% for the three and nine months ended September 30, 1998, respectively. Nonrecurring Charges. For the three and nine months ended September 30, 1999, the charge for restructuring our IT platform in the Professional/IT segment of approximately $3.0 million is comprised primarily of severance, office closing costs related to management changes, and the redesign of key business processes in our domestic and international IT operations. Our IT platform in the Professional/IT segment closed 12 offices and is implementing a "hub-and-spoke" branch structure to serve certain markets where a full branch office may not be required. The implementation of a new front-end system throughout our domestic IT offices altered branch staff requirements and reduced the need for certain positions. As part of the IT restructuring, we are in the process of separating sales and certain management functions between our IT staffing, e-solutions, and end-user solutions deliveries. Approximately 80 employees were let go or reassigned in the restructuring process, which also involved the hiring of about 25 new IT salespeople, service specialists and managers. These restructure expenses of approximately $3.0 million were offset by the reversal of the Robert Walters merger and integration accrual of approximately $828,000. For the three and nine months ended September 30, 1998, we incurred nonrecurring merger costs of $536,000 and $1.7 million, respectively, associated with pooling-of-interests business combinations. 12 13 Depreciation and Amortization Expense. Depreciation and amortization expense increased $1.7 million, or 44.2%, to $5.5 million for the three months ended September 30, 1999 as compared to $3.8 million for the three months ended September 30, 1998. Depreciation and amortization expense increased $5.8 million, or 59.6%, to $15.6 million for the nine months ended September 30, 1999 as compared to $9.8 million for the nine months ended September 30, 1998. This increase is primarily attributable to amortization of goodwill associated with our purchase business combinations. Depreciation expense also increased as a result of continuing development of our corporate infrastructure and information systems network, as well as assets acquired in acquisitions. Operating Income. Operating income decreased $5.9 million, or 26.9%, to $16.1 million for the three months ended September 30, 1999 compared to $22.0 million for the same period last year and decreased $3.1 million, or 5.8%, to $50.9 million for the nine months ended September 30, 1999 compared to $54.0 million for the nine months ended September 30, 1998. Operating margin was 5.1% and 5.6% for the three and nine months ended September 30, 1999, respectively, as compared to 8.3% and 7.5% for the three and nine months ended September 30, 1998, respectively. Although operating income increased as a result of higher revenues, the operating margin declined due to lower gross profit and higher depreciation and amortization expense as discussed above. Exclusive of the 1999 restructure expenses and the 1998 nonrecurring merger costs, operating income was $18.3 million and $53.1 million for the three and nine months ended September 30, 1999 and $22.6 million and $55.7 million for the three and nine months ended September 30, 1998, respectively. Operating margin excluding these costs were 5.7% and 5.9% for the three and nine months ended September 30, 1999, respectively, and 8.5% and 7.7% for the three and nine months ended September 30, 1998, respectively. The following operating income discussion at the Professional/IT and Commercial segment levels excludes unallocated corporate SG&A of $5.3 million and $12.2 million for the three and nine months ended September 30, 1999, respectively, and $2.7 million and $8.0 million for the three and nine months ended September 30, 1998, respectively. The increase in unallocated corporate SG&A was primarily a result of increased staff health costs associated with our self-insurance plan, increased rent, utilities and telephone and equipment lease costs associated with our new corporate headquarters and increased professional fees primarily associated with international and domestic tax restructuring, state unemployment tax planning and work opportunity tax credit consultation. Operating income for the Professional/IT segment decreased $4.3 million, or 27.8%, to $11.2 million for the three months ended September 30, 1999 as compared to $15.5 million for the three months ended September 30, 1998. Operating income for the Professional/IT segment decreased $1.9 million, or 5.0%, to $35.5 million for the nine months ended September 30, 1999 as compared to $37.4 million for the nine months ended September 30, 1998. The operating margin for the Professional/IT segment decreased from 10.7% for the three months ended September 30, 1998 to 7.2% for the three months ended September 30, 1999 and decreased from 9.4% for the nine months ended September 30, 1998 to 7.8% for the nine months ended September 30, 1999. Negative growth in domestic IT staffing, which we believe is associated with Year 2000 spending, deferral of non-Year 2000 related developments projects, and higher depreciation and amortization expenses were the primary reasons for the decreases in operating income and operating margin. Operating income for the Commercial segment increased $1.0 million, or 10.5%, to $10.2 million for the three months ended September 30, 1999 as compared to $9.2 million in the same period last year. Operating income for the Commercial segment increased $2.9 million, or 11.5%, to $27.6 million for the nine months ended September 30, 1999 as compared to $24.7 million for the nine months ended September 30, 1998. Continued growth from our Strategic Resource Group and purchase acquisitions completed during 1998 were the primary factors contributing to the increase in operating income for the three and nine months ended September 30, 1999. The activity from our Strategic Resource Group, which provides customers with dedicated on-site account management, tend to have lower gross margins than traditional temporary staffing services. However, the higher volumes and relatively long-term contracts associated with these relationships have resulted in operating profit growth. The operating margin of the Commercial segment decreased from 7.7% for the three months ended September 30, 1998 to 6.2% for the three months ended September 30, 1999. The operating margin for the Commercial segment was 6.1% and 7.6% for the nine months ended September 30, 1999 and 1998, respectively. The decrease in operating margins resulted from lower gross margins due to decreased permanent placement fees and higher revenues from our Strategic Resource Group, as well as higher depreciation and amortization expense. Operating margins have also been affected by the movement of certain support functions from corporate in 1998 to the Commercial segment in 1999. 13 14 Interest Expense. We incurred interest expense of $4.7 million for the three months ended September 30, 1999 as compared to $2.1 million of interest expense for the three months ended September 30, 1998. Interest expense was $12.2 million and $4.0 million for the nine months ended September 30, 1999 and 1998, respectively. Interest expense in all periods is primarily related to borrowings on our Credit Facility (as defined below) to fund working capital requirements, the cash portion of our acquisitions and additions to property and equipment. Net Income. Net income decreased $4.4 million, or 36.1%, to $7.8 million for the three months ended September 30, 1999 as compared to $12.2 million for the same period last year. Net margin was 2.5% for the three months ended September 30, 1999 as compared to 4.6% for the three months ended September 30, 1998. Net income decreased $5.5 million, or 18.0%, to $25.0 million for the nine months ended September 30, 1999 as compared to $30.5 million for the same period in 1998. Net margin was 2.8% for the nine months ended September 30, 1999 as compared to 4.2% for the nine months ended September 30, 1998. Exclusive of the 1999 restructure expenses and the 1998 nonrecurring merger costs, net income was $9.3 million and $26.5 million for the three and nine months ended September 30, 1999 and $12.6 million and $31.5 million for the three and nine months ended September 30, 1998, respectively. Net margin excluding these costs was 2.9% for both the three and nine months ended September 30, 1999 and was 4.8% and 4.4% for the three and nine months ended September 30, 1998, respectively. LIQUIDITY AND CAPITAL RESOURCES Our primary historical sources of funds are from operations, the proceeds from securities offerings, if any, and borrowings under our credit facility with a consortium of banks (the "Credit Facility"). Our principal historical uses of cash have been to fund acquisitions, working capital requirements and capital expenditures. We generally pay our temporary associates and professionals weekly for their services, while receiving payments from customers 30 to 60 days from the date of the invoice. In May 1999, we expanded the Credit Facility from $300 million to $325 million. On March 31, 2000, the maximum amount of borrowings under the Credit Facility is scheduled to revert back to $300 million. The $300 million portion of the Credit Facility matures in August 2003. The Credit Facility is secured by all of the issued and outstanding capital stock of our domestic subsidiaries and 65% of the issued and outstanding capital stock of our first tier foreign subsidiaries. Interest on any borrowings is computed at our option of either the bank group's prime rate or the London interbank offered rate, incrementally adjusted based on our operating leverage ratios. We pay a quarterly facility fee determined by multiplying the total amount of the Credit Facility by a percentage which varies based on our operating leverage ratios. During the three and nine months ended September 30, 1999, our net additional borrowings on the Credit Facility were approximately $26.6 million and $121.0 million, the majority of which was used to pay the cash consideration for several of our acquisitions and for general corporate purposes. As of November 9, 1999, $300.7 million was outstanding on the Credit Facility. In 1998, we entered into fixed interest rate swap agreements with a notional amount of $60.0 million related to borrowings under the Credit Facility to hedge against increases in interest rates which would increase the cost of variable rate borrowings under the Credit Facility. These swaps did not have a material impact on recorded interest expense during the periods presented. Net cash (used in) provided by operating activities was ($5.5) million and $13.1 million for the three months ended September 30, 1999 and 1998, respectively, and ($2.1) million and $22.0 million for the nine months ended September 30, 1999 and 1998, respectively. The net cash provided by or used in operating activities for the periods presented was primarily attributable to net income and changes in operating assets and liabilities. Excluding approximately $904,000 and $14.5 million in nonrecurring merger expenses paid during the three and nine months ended September 30, 1999, respectively, net cash provided by (used in) operating activities was ($4.6) million and $12.5 million for the three and nine months ended September 30, 1999, respectively. Net cash used in investing activities was $30.2 million and $37.4 million for the three months ended September 30, 1999 and 1998, respectively, and $129.8 million and $143.4 million for the nine months ended September 30, 1999 and 1998, respectively. Cash used in investing activities for all periods was primarily related to our acquisitions and capital expenditures. 14 15 Net cash provided by financing activities was $26.7 million and $26.3 million for the three months ended September 30, 1999 and 1998, respectively, and $121.4 million and $126.8 million for the nine months ended September 30, 1999 and 1998, respectively. Cash provided by financing activities for the periods presented were primarily attributable to the proceeds from Credit Facility borrowings used in conjunction with our acquisitions. As a result of the above and the related foreign currency translations, combined cash and cash equivalents decreased $8.9 million and $12.0 million for the three and nine months ended September 30, 1999, respectively. Cash and cash equivalents increased $2.2 million and $5.0 million for the three and nine months ended September 30, 1998, respectively. We believe that our cash flows from operations and borrowings available under the Credit Facility will provide sufficient liquidity for our existing operations. However, if we make any acquisitions or there is a slowdown in the economy or our business is adversely influenced by other factors, we may need to seek additional financing through the public or private sale of equity or debt securities or request our bank group to increase the Credit Facility. See "Year 2000 Compliance" and "Special Note Regarding Forward Looking Statements." There can be no assurance that we could secure such financing, if and when it is needed, or on terms we deem acceptable. We periodically reassess the adequacy of our liquidity position, taking into consideration current and anticipated operating cash flow, anticipated capital expenditures, acquisition plans, public or private offerings of debt or equity securities and borrowing availability under the Credit Facility. YEAR 2000 COMPLIANCE The Year 2000 issue is the result of computer programs (whether related to IT systems or non-IT systems) being written using two digits rather than four digits to define the applicable year. Computer programs that have time sensitive software may recognize a date using "00" as the Year 1900 rather than the Year 2000. We have assembled a Year 2000 compliance team that is working on these compliance matters company-wide. As part of this project and consistent with our operating strategy, we are implementing one primary front office software package (Caldwell-Spartin) in a majority of our Commercial offices. In a majority of our Professional/IT offices, we have implemented one primary search and retrieval software package (EZaccess) and one primary back office software package (MAS 90). In addition, we have selected and implemented the PeopleSoft system for our back office, administrative and accounting systems. All of these software systems have the ability to process transactions with dates for the Year 2000 and beyond at no incremental cost and, accordingly, we believe that Year 2000 costs with respect to these software systems are not expected to have a material impact on our financial condition or results of operations. As to non-IT systems and vendor services, other than banking relationships and utilities (which includes electrical power, water and related items), we believe there is no single system or vendor service that is material to our operations. As to banking needs, our banking relationships are primarily with large, national and international financial institutions which have undertaken their own Year 2000 compliance procedures and certified their compliance to us. Certain of our utility vendors have certified and are certifying their Year 2000 compliance to us. To the extent that a utility vendor fails to certify its Year 2000 compliance capability, our contingency plan is to identify and install back-up utility sources necessary to maintain the critical information systems at our corporate headquarters. Utility failures at our corporate or branch offices or the inability of our customers to operate could have a material adverse effect on our revenue sources and could disrupt our customers' payment cycle. We believe our Year 2000 compliance project will be materially complete by December 15, 1999. We believe that the costs of our Year 2000 compliance project for each matter individually and all matters in the aggregate will not be material to our financial condition or results of operations. As to software systems and applications utilized by entities acquired or to be acquired by us, we anticipate that upgrades and/or conversions may be required to ensure that these systems and applications are Year 2000 compliant. We believe that any such upgrades and/or conversions will be timely made and are not expected to have a material impact on our financial condition or results of operations. 15 16 We believe that Year 2000 related issues will affect our results of operations during the remainder of 1999 as our customers delay projects or implement hiring freezes due to their focus on Year 2000 spending and/or delay requests for services or expenditure decisions with regard to their existing IT systems until after the beginning of the 2000 year. Additionally, we could be adversely affected by delayed payments from customers because of uncertainty relating to their Year 2000 compliance matters. Due to the diverse services we provide and the unknown effect of Year 2000 issues on customer spending decisions that could impact our revenues and results, these Year 2000 uncertainties will have a material adverse impact on our results of operations for the balance of the 1999 fiscal year. FOREIGN CURRENCY TRANSLATION Operations outside of the United States expose us to foreign currency exchange rate changes and could impact translations of foreign denominated assets and liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies. We operate outside the United States primarily through wholly owned subsidiaries in the United Kingdom and Australia. These foreign subsidiaries use the local currency as their functional currency as sales are generated and expenses are incurred in such currencies. The translation from the applicable foreign currencies to United States dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains or losses resulting from such translations are included in stockholders' equity. We continuously monitor our exposure to changes in foreign currency exchange rates. From time to time, we may enter into foreign currency forward and option contracts to manage this exposure. SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS Some of the statements in this Quarterly Report on Form 10-Q (this "10-Q") constitute forward-looking statements under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to our future liquidity, our IT business model and organization, Year 2000 compliance matters, operations and/or future growth opportunities. These statements involve known and unknown risks, uncertainties and other factors that may cause results, levels of activity, growth, performance, earnings per share or achievements to be materially different from any future results, levels of activity, growth, performance, earnings per share or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, those listed below, as well as those listed under "Business - Factors Affecting Finances, Business Prospects and Stock Volatility" and elsewhere in our 1998 Annual Report on Form 10-K as filed with the Commission on March 16, 1999 and under the headings "Potential Risks, Detriments and Other Considerations Associated with the Transaction," and "Forward Looking Statements" in our proxy statement filed with the Commission on September 25, 1998. The forward-looking statements included in this 10-Q relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "believe," "will," "provide," "anticipate," "future," "could," "growth," "increase," "modifying," "reacting" or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this 10-Q. Factors that may cause actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecast, estimated, anticipated, planned or budgeted in such forward-looking statements include, among others, the following possibilities: (1) an inability to successfully implement the business model and organizational changes previously announced; (2) the continuation or worsening of declines in demand for placement (permanent or temporary) or staffing services; (3) changes in industry trends such as changes in the demand for or supply of commercial or professional/information technology personnel, whether on a temporary or permanent placement basis and whether arising out of Year 2000 uncertainties and spending delays or otherwise; (4) adverse developments involving currency exchange rates that have an effect on our operations; (5) unanticipated problems associated with integrating acquired companies and their operations; (6) failure to obtain new customers or retain significant existing customers; (7) inability to carry out or timely carry out marketing and sales plans, including Web-based services; (8) inability to obtain capital or refinance debt for future internal and external growth; (9) loss of key executives; and (10) general economic and business conditions (whether foreign, national, state or local) which 16 17 are less favorable than expected, including but not limited to adverse changes in interest rates. Actual events or results may differ materially. These factors may cause our actual results to differ materially from any forward-looking statement. Although we believe that the expectations in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We are under no duty to update any of the forward-looking statements after the date of this 10-Q to conform such statements to actual results. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For the nine months ended September 30, 1999, we did not enter into new arrangements, or modify existing arrangements, concerning market risk. For a description of such existing arrangements, see Note 8 to our audited financial statements filed as part of our 1998 Annual Report on Form 10-K as filed with the Commission on March 16, 1999. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - - Foreign Currency Translation." PART II ITEM 1. LEGAL PROCEEDINGS From March 12, 1999 through April 22, 1999, John A. Jennen, Richard A. Watson, Rick W. Johnson, Edward D. LaFrance and Trust Equity Advisors Plus, LLC, each purporting to act on behalf of a class of our stockholders, filed complaints against us in the United States District Court for the Eastern District (in the case of each plaintiff except Mr. LaFrance) and Western District (in the case of Mr. LaFrance) of Arkansas, alleging that the defendants (which in addition to us includes one of our officer/directors and an officer of one of our subsidiaries), violated the federal securities laws, and seeks unspecified compensatory and other damages. By order entered May 6, 1999, the four cases pending in the Eastern District of Arkansas were consolidated into one action, and on July 15, 1999, the LaFrance action in the Western District of Arkansas was transferred to the Eastern District to be consolidated with the other four cases. Motions for the appointment of lead plaintiff and lead plaintiff counsel are pending. The defendants believe that these complaints are without merit and deny all of the allegations of wrongdoing and are vigorously defending the suits. We also are a party to litigation incidental to our business. We believe that these routine legal proceedings will not have a material adverse effect on the results of operations or financial condition. We maintain insurance in amounts, with coverages and deductibles, that we believe are reasonable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 17 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.32 Employment Agreement between StaffMark, Inc. (the "Company") and Stephen R. Bova dated as of August 18, 1999. 10.33 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Clete T. Brewer, amending that certain Employment Agreement dated as of October 1, 1996, by and among the Company, Brewer Personnel Services, Inc. and Clete T. Brewer, which original agreement is incorporated by reference from Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.34 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Terry C. Bellora, amending that certain Employment Agreement dated as of August 20, 1996, by and among the Company and Terry C. Bellora, which original agreement is incorporated by reference from Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.35 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and David Bartholomew, amending that certain Employment Agreement dated as of October 1, 1996, by and among the Company, HRA, Inc. n/k/a StaffMark, Inc. - Nashville and David Bartholomew, which original agreement is incorporated by reference from Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.36 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Gordon Y. Allison, amending that certain Employment Agreement dated as of June 23, 1997, by and among the Company and Gordon Y. Allison, which original agreement is incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 1997, filed with the Commission on July 28, 1997. 11.1 Statement re: computation of per share earnings, reference is made to Note 6 of the StaffMark, Inc. Consolidated Financial Statements contained in this Form 10-Q. 27.1 Financial Data Schedule for the three months ended September 30, 1999, submitted to the Commission in electronic format. (b) Reports on Form 8-K 1. A Form 8-K was filed with the Commission on August 31, 1999 relating to the Company's press release which was disseminated publicly on August 29, 1999. 18 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. STAFFMARK, INC. Date: November 10, 1999 /s/ CLETE T. BREWER ------------------------------------- Clete T. Brewer Chief Executive Officer and Chairman Date: November 10, 1999 /s/ TERRY C. BELLORA ------------------------------------- Terry C. Bellora Chief Financial Officer 19 20 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.32 Employment Agreement between StaffMark, Inc. (the "Company") and Stephen R. Bova dated as of August 18, 1999. 10.33 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Clete T. Brewer, amending that certain Employment Agreement dated as of October 1, 1996, by and among the Company, Brewer Personnel Services, Inc. and Clete T. Brewer, which original agreement is incorporated by reference from Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.34 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Terry C. Bellora, amending that certain Employment Agreement dated as of August 20, 1996, by and among the Company and Terry C. Bellora, which original agreement is incorporated by reference from Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.35 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and David Bartholomew, amending that certain Employment Agreement dated as of October 1, 1996, by and among the Company, HRA, Inc. n/k/a StaffMark, Inc. - Nashville and David Bartholomew, which original agreement is incorporated by reference from Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-15059). 10.36 First Amendment to Employment Agreement dated as of September 17, 1999, between the Company and Gordon Y. Allison, amending that certain Employment Agreement dated as of June 23, 1997, by and among the Company and Gordon Y. Allison, which original agreement is incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 1997, filed with the Commission on July 28, 1997. 11.1 Statement re: computation of per share earnings, reference is made to Note 6 of the StaffMark, Inc. Consolidated Financial Statements contained in this Form 10-Q. 27.1 Financial Data Schedule for the three months ended September 30, 1999, submitted to the Commission in electronic format.
EX-10.32 2 EMPLOYMENT AGREEMENT - STEPHEN R. BOVA 1 EXHIBIT 10.32 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of August 18, 1999, among StaffMark, Inc., a Delaware corporation (hereinafter referred to as the "Company" or "StaffMark"), and Stephen R. Bova, (hereinafter referred to as "Employee"). WITNESSETH WHEREAS, in the course of building the business of StaffMark, and in his capacity as an executive officer thereof, Employee will be engaged in a confidential relationship and will gain knowledge of the business, affairs, customers and methods of StaffMark and each of StaffMark's direct and indirect subsidiaries during his employment with StaffMark and will have access to lists of StaffMark's and its affiliates' customers and their needs, and will become personally known to and acquainted with StaffMark's and its affiliates' customers, thereby establishing a personal relationship with such customers for the benefit of StaffMark. WHEREAS, the Compensation Committee of the Board of Directors of StaffMark has been delegated authority, by the Board of Directors of StaffMark at its meeting on August 12, 1999, to determine the terms of, and approve, this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. TERM OF AGREEMENT. The term of this Agreement shall commence on the date hereof and shall continue until the third anniversary thereof, unless terminated sooner in accordance with Sections 5 or 6 hereof, and shall automatically renew for successive one year periods unless one party gives written notice to the other at least 90 days prior to any such renewal date that the Agreement shall not be further extended. During the term of this Agreement, the calendar year shall be referred to herein as a "Compensation Year." 2. DUTIES AND PERFORMANCE. (1) During the term of this Agreement, Employee shall be employed by the Company on a full-time basis as its President and Chief Operating Officer and shall have such authority and shall perform such duties consistent with his position as may be reasonably assigned to him by, and shall report to, the Chief Executive Officer of the Company, the Board of Directors of the Company or any other member of senior management designated by the Chief Executive Officer or the Board of Directors; provided, however, that without the approval of the Board of Directors of StaffMark, Employee may not, on behalf of StaffMark (A) enter into term employment arrangements for StaffMark's employees of terms longer than those in place on the date hereof or as standard Company policy permits, (B) borrow funds or make material capital expenditures or commitments, or (C) alter or adopt any employee benefit plans. Employee shall use all reasonable efforts to further the interests of StaffMark and shall devote substantially all of his business time 1 2 and attentions to his duties hereunder; provided, however, that Employee shall not be required to locate outside the Fayetteville area without Employee's consent. (2) Employee shall be entitled to be reimbursed in accordance with the policies of StaffMark, as adopted and amended from time to time, for all reasonable and necessary expenses incurred by him in connection with the performance of his duties of employment hereunder; provided Employee shall, as a condition of such reimbursement, submit verification of the nature and amount of such expenses in accordance with the reimbursement policies from time to time adopted by StaffMark. 3. BASE SALARY. StaffMark shall pay to Employee a base salary at the rate of $325,000 per annum, payable on a regular basis in accordance with StaffMark's standard payroll procedures, but not less than bi-monthly. On at least an annual basis, the Board of Directors of StaffMark or a duly constituted committee thereof will review Employee's performance and increase Employee's base salary if and to the extent it determines, in its discretion, that any such increase is warranted. 4. BENEFITS. (1) When eligible under non-discriminatory standards, Employee shall be entitled to participate in any employee benefit plan maintained by the Company for its full time employees and shall be entitled to four (4) weeks vacation per annum and such holidays as the Company may establish as company policy. (2) The Company shall pay to Employee on or about the first (1st) day of each month an automobile allowance in the amount of $500 per month which shall be used to pay all automobile related expenses. Employee shall maintain with respect to any automobile used for business purposes such insurance coverage as may be reasonably required by the Company, the cost of which shall be paid by Employee from such monthly allowance. Employee shall provide the Company with a copy of such insurance policy, which policy shall name the Company as an additional insured party. (3) The Company shall reimburse Employee for club dues actually incurred by Employee for full golf membership at Pinnacle Country Club, Rogers, Arkansas, provided that such club is used at least 50 percent of the time for business purposes and such usage is subject to audit by the Company. (4) Employee shall be eligible to participate in the Executive Incentive Compensation Plan of StaffMark and its affiliates at the highest participatory level of 150% of base salary paid. (5) Employee shall be eligible to participate in the Company's nonqualified executive deferred compensation programs. (6) Company shall provide Employee with life insurance in a face amount of $500,000. 2 3 (7) Employee shall be reimbursed for relocation expenses actually incurred in accordance with the Company's executive relocation policy, and shall be reimbursed for Employee's share of the New York stock transfer tax. 5. TERMINATION OF AGREEMENT. (1) The Company, by the approval of a 75% vote of its Board of Directors, shall be entitled to terminate Employee's services, in any of the following circumstances: (1) For "cause," which shall mean by reason of any of the following: (A) Employee's conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or any of its affiliates (whether or not for personal gain) or involving acts of theft, fraud, embezzlement, moral turpitude or similar conduct, (B) Employee's violation of the Company's substance abuse policy, (C) malfeasance in the conduct of Employee's duties, including but not limited to (i) willful and intentional misuse or diversion of the Company's or any of its affiliates' funds, (ii) embezzlement, and/or (iii) fraudulent, willful or material misrepresentations or concealments on any written reports submitted to the Company or its affiliates, (D) material failure to perform the duties of such person's employment, (E) material failure to follow or comply with the reasonable and lawful directives of the Chief Executive Officer, any member of senior management designated by the Chief Executive Officer, or the Board of Directors of the Company, (F) a material breach by Employee of the provisions of this Agreement (including without limitation any breach of Section 7 of this Agreement), or (G) a determination by an applicable adjudicative entity that Employee has violated a non-competition agreement with a former employer, or a settlement of a claim of such violation that results in material expense to the Company; provided, however, that in the case of the foregoing clauses (D) and (E), Employee shall have been informed, in writing, of such material failure referred to in the foregoing clauses (D) and (E), respectively; (2) If, for any reason, Employee is unable to perform the essential functions of such person's duties, with or without reasonable accommodation, for a consecutive period of six (6) months, or such other period as may be required by applicable employment laws; or (3) The death of Employee. (2) Except as provided in Section 6 hereof, in the event of the termination of Employee's employment: (1) For cause, or in the event of the resignation of Employee (excluding circumstances involving Good Reason, as defined below), then as of the date of such termination all of the Company's obligations hereunder, including, without limitation, the Company's obligations to pay Employee's base salary accruing after the date of such termination, and any benefits (except as otherwise required by applicable law), other than 3 4 those obligations which have accrued but remain unpaid as of the date of such termination (such as accrued but unpaid salary, expense reimbursements, health insurance premiums, retirement plan contributions, if any, vacation pay, sick pay, etc.), shall cease and Employee shall not be entitled to receive any incentive compensation for the Compensation Year of such termination; (2) By the Company for any other reason other than for the reasons set forth in clause (i) above, or by Employee for Good Reason (as defined below), then in such event the Company shall pay Employee's base salary, in such amount as is determined by reference to clauses (A) and (B) below and on such payment terms as set forth in the last sentence of this paragraph (ii)(without offset for any compensation received by Employee from any subsequent employment by any person other than by an affiliate of the Company or in violation of Section 7 hereof) and provide for the continuation of any Company health insurance benefits for which he would be eligible but for such termination, for a period which is the greater of (A) sixty (60) days from the date of such termination, or (B) the lesser of two (2) years or the remaining term of this Agreement. The continuation of health insurance benefits referenced above in this Section 5(b)(iii) shall extend to (i) Employee and his eligible dependants under the terms of the applicable StaffMark sponsored health care plan by which he was covered at the time of such termination of employment, as such plan may be in effect or may be modified from time to time, in consideration for Employee's payment of such premiums as may be required to be paid by active employees of StaffMark from time to time ("Required Premium Payments") or (ii) if such StaffMark sponsored health care plan does not by its terms allow Employee's participation or continued participation, StaffMark shall obtain (in return for Required Premium Payments) insurance coverage on behalf of Employee and/or Employee's eligible dependents that provides all benefits otherwise provided under such StaffMark sponsored health care plan or, at StaffMark's election (in return for Required Premium Payments) shall provide such benefits from its own assets (collectively, "Continued Health Care Coverage"). "Good Reason" shall mean any of the following circumstances unless remedied by StaffMark within thirty (30) days after receipt of written notification by Employee that such circumstances exist or have occurred: (A) assignment to Employee of any duties inconsistent with Employee's position, authority, duties or responsibilities as contemplated by Section 2 of the Agreement, or any other action by StaffMark that results in diminution of such position, authority, duties or responsibilities; or (B) any failure by StaffMark to comply with any of the material provisions of the Agreement. The payment of Employee's base salary amount under the circumstances set forth in the first sentence of this paragraph shall be made in two equal payments (equal to one-half of such aggregate amount) on each of the effective date of termination and ninety days after the effective date of termination. 6. CHANGE IN CONTROL (a) If Employee's employment with StaffMark is terminated within two years following a Change in Control either by StaffMark for any reason or no reason or by the Employee for Good Reason only, StaffMark shall pay Employee a lump sum in the amount of two (2) times the sum of (i) Employee's base salary then in 4 5 effect and (ii) the greater of (A) $100,000.00 or (B) his bonus percentage for the year immediately preceding the year in which the termination of his employment occurs, multiplied by his base salary in effect at the time of such termination. Such lump sum payment shall be due on the effective date of the termination of Employee's employment. In addition, in the case of any such termination, Employee shall be permitted to receive Continued Health Care Coverage for the period described in clause 5(b)(iii)(B). (b) A "Change in Control" shall be deemed to have occurred if: (i) any person, other than StaffMark or an employee benefit plan of StaffMark, acquires directly or indirectly the "beneficial ownership" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, "Beneficial Ownership") of any voting security of StaffMark and immediately after such acquisition such person is, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding StaffMark voting securities of StaffMark; (ii) the individuals (A) who, as of the effective date of StaffMark's registration statement with respect to its initial public offering, constitute the Board of Directors of StaffMark (the "Original Directors") or (B) who thereafter are elected to the Board of Directors of StaffMark and whose election, or nomination for election to the Board of Directors of StaffMark was approved by vote of at least two-thirds (2/3) of the Original Directors then still in office (such directors becoming "Additional Original Directors" immediately following their election) or (C) who are elected to the Board of Directors of StaffMark and whose election, or nomination for election, to the Board of Directors of StaffMark was approved by a vote of at least two-thirds (2/3) of the Original Directors and Additional Original Directors then still in office (such directors also becoming Additional Original Directors immediately following their election), cease for any reason to constitute a majority of the members of the Board of Directors of StaffMark; (iii) the stockholders of StaffMark shall approve a merger or merger agreement involving StaffMark, a consolidation transaction involving StaffMark, a recapitalization or reorganization of StaffMark, a reverse stock split of outstanding StaffMark voting securities, or the consummation of any such transaction if stockholder approval is not sought nor obtained, provided, however, that the foregoing referenced transactions or events in this clause (iii) shall not constitute a "Change of Control" if such transaction or event would result in at least 75% of the total voting power represented by outstanding securities of the surviving or resulting entity (immediately after such transaction or event after giving effect to the consideration issued or transferred in such 5 6 transaction or event on an as-converted or fully-diluted basis) being Beneficially Owned by at least 75% of the holders of outstanding voting securities of StaffMark immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not altered in the transaction in any material way; or (iv) the stockholders of StaffMark shall approve a plan of complete liquidation of StaffMark or an agreement for the sale or disposition by StaffMark of all or a substantial portion of StaffMark's assets (i.e., 50% or more of the total assets of StaffMark). (c) (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment or distribution by StaffMark to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), amounts payable or distributable to or for the benefit of Employee pursuant to this Agreement that are determined to be "parachute payments" within the meaning of section 280G(b)(2) of the Code (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall not be paid or distributed in the amounts or at the times otherwise required by this Agreement, but shall instead be paid or distributed annually, beginning as of the effective date of the termination of Employee's employment and thereafter on each anniversary thereof, in the maximum substantially equal amounts and over the minimum number of years that are determined to be required to reduce the aggregate present value of Agreement Payments to an amount that will not cause any Payment to be non-deductible under section 280G of the Code. For purposes of this Section 6, present value shall be determined in accordance with section 280G(d)(4) of the Code. (ii) All determinations to be made under this Section 6 shall be made by StaffMark's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to StaffMark and Employee within 10 days of the effective date of the termination of Employee's employment. Any such determination by the Accounting Firm shall be binding upon StaffMark and Employee. (iii) Within two years after the effective date of the termination of Employee's employment, the Accounting Firm shall review the determinations made by it pursuant to paragraph (i), above. If at that time, as a result of the uncertainty in the application of section 6 7 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, the annual amounts of Agreement Payments or the period over which Agreement Payments are paid or distributed, as determined pursuant to paragraph (i), above, are determined not to satisfy the requirements of paragraph (i), then the annual amounts of future Agreement Payments and/or the period over which future Agreement Payments are paid or distributed shall be redetermined to satisfy the requirements of paragraph (i), and all future Agreement Payments shall be paid or distributed in accordance with such redetermination. (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in paragraphs (ii) and (iii) above shall be borne solely by StaffMark. StaffMark agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to paragraphs (ii) and (iii) above, except for claims, damages or expenses resulting from the negligence or misconduct of the Accounting Firm. 7. COVENANT NOT TO COMPETE, CONFIDENTIALITY. (1) Employee acknowledges that in the course of his employment by the Company he has and will become privy to various economic and trade secrets and relationships of the Company and its affiliates. Therefore, in consideration of this Agreement, Employee hereby agrees that neither he nor his spouse nor any member of his immediate family that resides with him will, directly or indirectly, except for the benefit of the Company or its affiliates or subsidiaries, or with the prior written consent of the Board of Directors of the Company, which consent may be granted or withheld at the sole discretion of the Company's Board of Directors: (1) During the Noncompetition Period (as hereinafter defined), become an officer, director, stockholder, partner, member, manager, associate, employee, owner, agent, creditor, independent contractor, co-venturer, consultant or otherwise, or be interested in or associated with any other person, corporation, firm or business engaged in providing temporary or permanent staffing services, or clinical staffing or recruiting (a "StaffMark, Inc. Services Business") in the State of Arkansas and, outside the State of Arkansas, within a radius of fifty (50) miles from any office operated during the Noncompetition Period by the Company, or any of its affiliates (collectively, the "Territory") or in any StaffMark, Inc. Services Business directly competitive with that of the Company, or any of its affiliates, or itself engage in such business; provided, however, that (1) Nothing herein shall be construed to prohibit Employee from owning not more than five percent (5%) of any class of securities issued by an 7 8 entity which is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or which is traded over the counter; (2) The foregoing shall not restrict Employee with respect to businesses, other than StaffMark, Inc. Services Businesses, engaged in by the Company or its affiliates during the Noncompetition Period unless Employee either is or was substantially involved in such other businesses of the Company or such affiliates or had access to Confidential Information (as hereinafter defined) with respect to such other businesses; or (2) During the Noncompetition Period, in the Territory, solicit, cause or authorize, directly or indirectly, to be solicited for or on behalf of himself or third parties, from parties who are or were customers of the Company or its affiliates, any StaffMark, Inc. Services Business transacted by or with such customer by the Company or its affiliates; or (3) During the Noncompetition Period, in the Territory, accept or cause or authorize, directly or indirectly, to be accepted for or on behalf of himself or for third parties, any such StaffMark, Inc. Services Business from any such customers of the Company or its affiliates; or (4) During the Noncompetition Period, use, publish, disseminate or otherwise disclose, directly or indirectly, any information heretofore or hereafter acquired, developed or used by the Company or its affiliates relating to their business or the operations, employees or customers of the Company or its affiliates which constitutes proprietary or confidential information of the Company or its affiliates ("Confidential Information"), including without limitation any Confidential Information contained in any customer lists, mailing lists and sources thereof, statistical data and compilations, patents, copyrights, trademarks, trade names, inventions, formulae, methods, processes, agreements, contracts, manuals or any other documents; and (B) from and after the date hereof, use, publish, disseminate or otherwise disclose, directly or indirectly, any information heretofore or hereafter acquired, developed or used by the Company or its affiliates which constitutes Confidential Information, but excluding any Confidential Information which has become part of common knowledge or understanding in the StaffMark, Inc. Services Business industry or otherwise in the public domain (other than from disclosure by Employee in violation of this Agreement); provided, however, this subparagraph (iv) shall not be applicable to the extent Employee is required to testify in. a judicial or regulatory proceeding pursuant to the order of a judge or administrative law judge after Employee requests that such Confidential Information be preserved; or (5) During the Noncompetition Period, in the Territory, (1) Solicit, entice, persuade or induce, directly or indirectly, any employee (or person who within the preceding ninety (90) days was an employee) of the Company or its affiliates or any other person who is under contract with or rendering services to the Company or its affiliates, to terminate his or her 8 9 employment by, or contractual relationship with, such person or to refrain from extending or renewing the same (upon the same or new terms) or to refrain from rendering, services to or for such person or to become employed by or to enter into contractual relations with any persons other than such person or to enter into a relationship with a competitor of the Company or its affiliates; (2) Approach any such employee for any of the foregoing purposes; or (3) Authorize or knowingly approve or assist in the taking of any such actions by any person other than the Company or its affiliates. (2) For purposes of this Agreement, the term "Noncompetition Period" shall mean the period commencing on the date hereof and ending twenty-four (24) months after the date Employee ceases to be an officer or employee of, or consultant to the Company or any of its affiliates; provided, however, that the Noncompetition Period shall end immediately upon a termination of the employment of Employee by the Company under this Agreement which is not for cause or by Employee for Good Reason. (3) The invalidity or non-enforceability of this Section 7 in any respect shall not affect the validity or enforceability of this Section 7 in any other respect or of any other provisions of this Agreement. In the event that any provision of this Section 7 shall be held invalid or unenforceable by a court of competent jurisdiction by reason of the Geographic or business scope or the duration thereof, such invalidity or unenforceability shall attach only to the scope or duration of such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement, and, to the fullest extent permitted by law, this Agreement shall be construed as if the geographic or business scope or the duration of such provision had been more narrowly drafted so as not to be invalid or unenforceable and further, to the extent permitted by law, such geographic or business scope or the duration thereof may be re-written by a court of competent jurisdiction to make such sufficiently limited to be enforceable. (4) Employee acknowledges that the Company's remedy at law for any breach of the provisions of this Section 7 is and will be insufficient and inadequate and that the Company shall be entitled to equitable relief, including by way of temporary and permanent injunction, in addition to any remedies the Company may have at law. (5) The provisions of this Section 7 shall survive termination of this Agreement. 8. DIVISIBILITY OF AGREEMENT. In the event that any term, condition or provision of this Agreement is for any reason rendered void, all remaining terms, conditions and provisions shall remain and continue as valid and enforceable obligations of the parties hereto. 9. NOTICES. Any notices or other communications required or permitted to be sent hereunder shall be in writing and shall be duly given if personally delivered or sent postage prepaid by certified or registered mail, return receipt requested, or sent by prepaid overnight courier service, delivery confirmed, as follows: 9 10 (1) If to Employee: Stephen R. Bova (2) If to the Company: Clete T. Brewer c/o StaffMark, Inc. 302 E. Millsap Road Fayetteville, Arkansas 72703 Attn: Chief Executive Officer Either party may change his or its address for the sending of notice to such party by written notice to the other party sent in accordance with the provisions hereof. 10. COMPLETE AGREEMENT. This Agreement contains the entire understanding of the parties with respect to the employment of Employee and supersedes all prior arrangements or understandings with respect thereto. This Agreement may not be altered or amended except by a writing, duly executed by the party against whom such alteration or amendment is sought to be enforced. 11. ASSIGNMENT. This Agreement is personal and non-assignable by Employee. It shall inure to the benefit of any corporation or other entity with which the Company shall merge or consolidate or to which the Company shall lease or sell all or substantially all of its assets and may be assigned by the Company to any affiliate of the Company or to any corporation or entity with which such affiliate shall merge or consolidate or which shall lease or acquire all or substantially all of the assets of such affiliate. 12. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 13. GOVERNING LAW. This Agreement shall in all respects be construed according to the laws of the State of Delaware. 10 11 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement in multiple counterparts as of the day and year first above written. EMPLOYEE /s/ STEPHEN R. BOVA --------------------------- Stephen R. Bova /s/ RANDALL E. GRIGG - -------------------------- Witness STAFFMARK, INC. By: /s/ CLETE T. BREWER ------------------------------- Clete T. Brewer, Chief Executive Officer 11 EX-10.33 3 1ST AMENDMENT TO EMPLOYMENT AGREEMENT-BREWER 1 EXHIBIT 10.33 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT This first amendment (the "Amendment") to the employment agreement dated as of October 1, 1996 (the "Agreement") among StaffMark, Inc. ("StaffMark"), Brewer Personnel Services, Inc. ("Brewer") and Clete T. Brewer ("Employee"), is made and entered as of September 17, 1999 by and between StaffMark and Employee. WHEREAS, the terms of Employee's overall executive compensation package and the terms of this Amendment have been the subject of deliberation by the Compensation Committee of the Board of Directors of StaffMark (the "Compensation Committee") at meetings held on March 11, 1999, May 7, 1999, June 17, 1999, August 2, 1999, August 12, 1999, September 15, 1999, and September 17, 1999. WHEREAS, the Compensation Committee has been delegated authority, by the Board of Directors of StaffMark at its meeting on August 12, 1999, to determine the terms of, and approve, the Amendment; WHEREAS, StaffMark believes that its interests would best be served by securing Employee's continued employment; and WHEREAS, StaffMark believes that, to achieve this goal, it is necessary to extend the term of the Agreement, to revise the Agreement to reflect certain modifications to the terms of the Employee's employment, to provide severance benefits in additional specified circumstances, and to provide certain benefits in the event of a change in control of StaffMark; and 1 2 WHEREAS, the Compensation Committee has determined that the Amendment is in the best interests of StaffMark and has approved the Amendment on September 17, 1999. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Section 1 of the Agreement is amended by deleting "September 30, 2001" in the second line thereof and replacing it with "April 1, 2002." 2. Effective January 1, 1999, the second sentence of Section 1 of the Agreement is deleted and replaced with the following provision: "During the term of this Agreement, the calendar year shall be referred to herein as a "Compensation Year."" 3. Effective April 1, 1999, Section 3 of the Agreement is deleted and replaced with the following provision: "3. BASE SALARY. StaffMark shall pay to Employee a base salary at the rate of $215,000 per annum through September 30, 1999 and thereafter at the rate of $350,000 per annum, in each case payable on a regular basis in accordance with StaffMark's standard payroll procedures, but not less than bi-monthly. On at least an annual basis, the Board of Directors of StaffMark or a duly-constituted committee thereof will review Employee's performance and increase Employee's base salary if and to the extent it determines, in its discretion, that any such increase is warranted." 4. Section 5(b) of the Agreement is amended by inserting "Except as provided in Section 6 hereof" (as renumbered) at the beginning of the initial clause thereof. 5. Section 5(b)(i) of the Agreement is amended by adding "(excluding circumstances involving Good Reason, as defined below)" immediately following the word "Employee" in the second line thereof. 2 3 6. Section 5(b)(iii) of the Agreement is amended (a) by inserting "or by Employee for Good Reason (as defined below)," immediately following the comma in the second line thereof, and (b) by deleting the words "continue to" on the third line thereof and inserting after the word "pay" on the third line thereof the phrase ", in such amount as is determined by reference to clauses (A) and (B) below and on such payment terms set forth in the last sentence of this paragraph (iii)," and by deleting the word "to" on the fifth line thereof, and (c) by inserting "the lesser of three (3) years or" at the beginning of clause 5(b)(iii)(B), and (d) by adding the following provision to the end thereof: ""Good Reason" shall mean any of the following circumstances unless remedied by StaffMark within thirty (30) days after receipt of written notification by Employee that such circumstances exist or have occurred: (A) assignment to Employee of any duties inconsistent with Employee's position, authority, duties or responsibilities as contemplated by Section 2 of the Agreement, or any other action by StaffMark that results in diminution of such position, authority, duties or responsibilities; or (B) any material failure by StaffMark to comply with any of the material provisions of the Agreement. The continuation of health insurance benefits referenced above in this Section 5(b)(iii) shall extend to (i) Employee and his eligible dependants under the terms of the applicable StaffMark sponsored health care plan by which he was covered at the time of such termination of employment, as such plan may be in effect or may be modified from time to time, in consideration for Employee's payment of such premiums as may be required to be paid by active employees of StaffMark from time to time ("Required Premium Payments") or (ii) if such StaffMark sponsored health care plan does 3 4 not by its terms allow Employee's participation or continued participation, StaffMark shall obtain (in return for Required Premium Payments) insurance coverage on behalf of Employee and/or Employee's eligible dependents that provides all benefits otherwise provided under such StaffMark sponsored health care plan or, at StaffMark's election (in return for Required Premium Payments) shall provide such benefits from its own assets (collectively, "Continued Health Care Coverage"). The payment of Employee's base salary amount under the circumstances set forth in the first sentence of this paragraph shall be made in two equal payments (equal to one-half of such aggregate amount) on each of the effective date of termination and ninety days after the effective date of termination." 7. The following new Section 6 is inserted immediately following Section 5 of the Agreement, and subsequent Sections of the Agreement and all references thereto are renumbered accordingly: "6. CHANGE IN CONTROL (a) If Employee's employment with StaffMark is terminated within two years following a Change in Control, either by StaffMark for any reason or no reason or by the Employee for Good Reason only, StaffMark shall pay Employee a lump sum in the amount of two (2) times the sum of (i) Employee's base salary then in effect and (ii) the greater of $125,000.00 or his bonus for the year immediately preceding the year in which the termination of his employment occurs. Such lump sum payment shall be due on the effective date of the termination of Employee's employment. In addition, in the case of any such termination, Employee shall be permitted to receive Continued Health Care Coverage for a period of three (3) years. 4 5 (b) ""Change in Control" shall be deemed to have occurred if: (i) any person, other than StaffMark or an employee benefit plan of StaffMark, acquires directly or indirectly the "beneficial ownership" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, "Beneficial Ownership") of any voting security of StaffMark and immediately after such acquisition such person is, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding voting securities of StaffMark; (ii) the individuals (A) who, as of the effective date of StaffMark's registration statement with respect to its initial public offering, constitute the Board of Directors of StaffMark (the "Original Directors") or (B) who thereafter are elected to the Board of Directors of StaffMark and whose election, or nomination for election to the Board of Directors of StaffMark was approved by vote of at least two-thirds (2/3) of the Original Directors then still in office (such directors becoming "Additional Original Directors" immediately following their election) or (C) who are elected to the Board of Directors of StaffMark and whose election, or nomination for election, to the Board of Directors of StaffMark was approved by a vote of at least two-thirds (2/3) of the Original Directors and Additional Original Directors then still in office (such directors also becoming Additional Original Directors immediately following their election), cease for any reason to constitute a majority of the members of the Board of Directors of StaffMark; (iii) the stockholders of StaffMark shall approve 5 6 a merger or merger agreement involving StaffMark, a consolidation transaction involving StaffMark, a recapitalization or reorganization of StaffMark, a reverse stock split of outstanding StaffMark voting securities, or the consummation of any such transaction if stockholder approval is not sought nor obtained, provided, however, that the foregoing referenced transactions or events in this clause (iii) shall not constitute a "Change of Control" if such transaction or event would result in at least 75% of the total voting power represented by outstanding securities of the surviving or resulting entity outstanding (immediately after such transaction after giving effect to the consideration issued or transferred in such transaction or event on an as converted or fully diluted basis) being Beneficially Owned by at least 75% of the holders of outstanding voting securities of StaffMark immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction in any material way; or (iv) the stockholders of StaffMark shall approve a plan of complete liquidation of StaffMark or an agreement for the sale or disposition by StaffMark of all or a substantial portion of StaffMark's assets (i.e., 50% or more of the total assets of StaffMark). (c) (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment or distribution by StaffMark to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of 6 7 the Internal Revenue Code of 1986, as amended (the "Code"), amounts payable or distributable to or for the benefit of Employee pursuant to this Agreement that are determined to be "parachute payments" within the meaning of section 280G(b)(2) of the Code (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall not be paid or distributed in the amounts or at the times otherwise required by this Agreement, but shall instead be paid or distributed annually, beginning as of the effective date of the termination of Employee's employment and thereafter on each anniversary thereof, in the maximum substantially equal amounts and over the minimum number of years that are determined to be required to reduce the aggregate present value of Agreement Payments to an amount that will not cause any Payment to be non-deductible under section 280G of the Code. For purposes of this Section 6, present value shall be determined in accordance with section 280G(d)(4) of the Code. (ii) All determinations to be made under this Section 6 shall be made by StaffMark's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to StaffMark and Employee within 10 days of the effective date of the termination of Employee's employment. Any such determination by the Accounting Firm shall be binding upon StaffMark and Employee. (iii) Within two years after the effective date of the termination of Employee's employment, the Accounting Firm shall review the determinations made by it pursuant to paragraph (i), above. If at that time, as a result of the uncertainty in the application of section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, the annual amounts of Agreement Payments or the period over which Agreement Payments are paid or distributed, as determined pursuant to paragraph (i), above, are determined not to satisfy the requirements of paragraph (i), then the annual amounts of future Agreement Payments and/or the period over which future Agreement Payments are paid or distributed shall be redetermined to satisfy the requirements of paragraph (i), and all future Agreement 7 8 Payments shall be paid or distributed in accordance with such redetermination. (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in paragraphs (ii) and (iii) above shall be borne solely by StaffMark. StaffMark agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to paragraphs (ii) and (iii) above, except for claims, damages or expenses resulting from the negligence or misconduct of the Accounting Firm." 8. The provisions of Section 10 (formerly Section 9) of the Agreement shall be effective as of the date hereof. 9. Except as otherwise set forth herein, the Agreement shall remain in full force and effect in accordance with its terms from and after the date hereof. All references to the Agreement from and after the date hereof shall be deemed to include the Agreement as amended by the terms hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written. EMPLOYEE: STAFFMARK, INC.: /s/ CLETE T. BREWER By: /s/ TERRY C. BELLORA ----------------------- --------------------------- Clete T. Brewer Title: Chief Financial Officer ------------------------ WITNESS: /s/ GORDON Y. ALLISON ------------------------ 8 EX-10.34 4 1ST AMENDMENT TO EMPLOYMENT AGREEMENT-BELLORA 1 EXHIBIT 10.34 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT This first amendment (the "Amendment") to the employment agreement dated as of August 20, 1996 (the "Agreement") by and between StaffMark, Inc. (the "Company"), and Terry Bellora ("Employee"), is made and entered as of September 17, 1999 between the Company and Employee. WHEREAS, the terms of Employee's overall executive compensation package and the terms of this Amendment have been the subject of deliberation by the Compensation Committee of the Board of Directors of StaffMark (the "Compensation Committee") at meetings held on March 11, 1999, May 7, 1999, June 17, 1999 , August 2, 1999, August 12, 1999, September 15, 1999, and September 17, 1999. WHEREAS, the Compensation Committee of the Board of Directors of StaffMark has been delegated authority, by the Board of Directors of StaffMark at its meeting on August 12, 1999, to determine the terms of, and approve, the Amendment; WHEREAS, the Company believes that its interests would best be served by securing Employee's continued employment; and WHEREAS, the Company believes that, to achieve this goal, it is necessary to extend the term of the Agreement, to revise the Agreement to reflect certain modifications to the terms of the Employee's employment, to provide severance benefits in additional specified circumstances, and to provide certain benefits in the event of a change in control of the Company; and 1 2 WHEREAS, the Compensation Committee has determined that the Amendment is in the best interests of StaffMark and has approved the Amendment on September 17, 1999. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Effective April 1, 1999, paragraph 2(a) of the Agreement is amended by deleting "$150,000 per year" in the first line thereof and replacing it with "$200,000 per year through September 30, 1999 and thereafter $250,000 per year, in each case." 2. Paragraph 4(a) of the Agreement is deleted and is replaced with the following provisions: "(a) Employee agrees to provide services hereunder at the Company's corporate headquarters in Fayetteville, Arkansas as required or as requested by the Company's Chief Executive Officer, and to travel as necessary to provide such services; provided, however, that the Company will provide office space and necessary clerical and technical support at its Jacksonville and Orlando, Florida offices, and will provide necessary office equipment and technical support at Employee's Palm Coast, Florida residence, for the convenience of Employee when he is neither traveling on Company business nor required to be at corporate headquarters." 3. Paragraph 5 of the Agreement is amended by (a) deleting "for five (5) years" in the first line thereof and replacing it with "until April 1, 2002." (b) inserting (i) the phrase "or Resignation without Good Reason" following the caption "Good Cause" in subparagraph (c) and (ii) the phrase "or termination by Employee for circumstances other than Good Reason (as defined herein)," before the word "Employee" on the last line of subparagraph (c). 2 3 (c) deleting subparagraphs (d) - (f) (excluding the final unlettered paragraph of paragraph 5) and replacing them with the following provisions: "(d) Without Cause or for Good Reason. Except under circumstances described in paragraph 9 of this Agreement, at any time after the commencement of employment, the Company may, without cause, terminate this Agreement and Employee's employment, or Employee may terminate this Agreement and his employment for Good Reason (as defined below), effective thirty (30) days after written notice is provided to the other party by the party terminating this Agreement. In either case, Employee shall receive from the Company two payments, each equal to one-half of the following: the amount of Employee's base salary (without offset for any compensation received by Employee from any subsequent employment by any person other than by any affiliate of the Company or in violation of Section 3 of this Agreement) for a period which is the greater of (A) sixty (60) days from the date of such termination or (B) the lesser of two years or the remaining term of this Agreement. The first payment shall be due on the effective date of termination and the second payment shall be due ninety days after the effective date of termination. Upon the effective date of termination in either case, all Options granted to Employee in paragraph 2(c)(viii) shall become immediately exercisable. Further, any such termination shall operate to shorten the period set forth in paragraph 3(b) and during which the terms of paragraph (3) apply to one (1) year from the date of 3 4 termination of employment. In addition, in the case of any such termination, Employee shall be permitted to continue health care coverage for himself and his eligible dependents until he reaches age 65, (i) under the terms of the applicable Company sponsored health care plan by which he was covered at the time of such termination of employment, as such plan may be in effect or may be modified from time to time, in consideration for Employee's payment of such premiums as may be required to be paid by active employees of the Company from time to time ("Required Premium Payments") or (ii) if such Company sponsored health care plan does not by its terms allow Employee's participation or continued participation, the Company shall obtain (in return for Required Premium Payments) insurance coverage on behalf of Employee and/or Employee's eligible dependents that provides all benefits otherwise provided under such Company sponsored health care plan or, at the Company's election (in return for Required Premium Payments), shall provide such benefits from its own assets (collectively, "Continued Health Care Coverage"). "Good Reason" shall mean any of the following circumstances unless remedied by the Company within thirty (30) days after receipt of written notification by Employee that such circumstances exist or have occurred: (A) assignment to Employee of any duties inconsistent with Employee's position, authority, duties or responsibilities as contemplated by paragraph 1 of the Agreement, or any other action by the Company that results in diminution of such position, authority, duties or 4 5 responsibilities; (B) any material failure by the Company to comply with any of the material provisions of the Agreement; or (C) without Employee's consent, a requirement that Employee perform services hereunder at a location or locations other than the locations contemplated by paragraph 4 of the Agreement." (d) deleting "(e)" in the first line of the final paragraph thereof and replacing it with "(d)," and inserting "Except as otherwise provided in clauses (a) through (d) above," at the beginning of the second sentence of such final paragraph. 4. Paragraph 9 of the Agreement is amended by deleting the comma and the words preceding the comma on the first line of subparagraph (a), and by deleting subparagraphs (b) and (c) thereof and replacing them with the following new subparagraphs (b) and (c): "(b) If Employee's employment with the Company is terminated within two years following a Change in Control, either by the Company for any reason or no reason or by the Employee for Good Reason only, (i) the Company shall pay Employee a lump sum in the amount of two (2) times the sum of (A) Employee's base salary then in effect and (B) the greater of $100,000.00 or his bonus for the year immediately preceding the year in which the termination of his employment occurs, such lump sum payment to be due and payable on the effective date of the termination of Employee's employment; (ii) the provisions of paragraph 5(d) relating to exercisability of Options and Continued Health Care Coverage shall apply; and (iii) the non-competition provisions of paragraph 3 shall apply for a period of one (1) year from the effective date of termination if employment is terminated by Employee, and shall not apply at all if employment is terminated by the Company. (c) (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment or distribution by StaffMark to or for the benefit of 5 6 Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), amounts payable or distributable to or for the benefit of Employee pursuant to this Agreement that are determined to be "parachute payments" within the meaning of section 280G(b)(2) of the Code (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall not be paid or distributed in the amounts or at the times otherwise required by this Agreement, but shall instead be paid or distributed annually, beginning as of the effective date of the termination of Employee's employment and thereafter on each anniversary thereof, in the maximum substantially equal amounts and over the minimum number of years that are determined to be required to reduce the aggregate present value of Agreement Payments to an amount that will not cause any Payment to be non-deductible under section 280G of the Code. For purposes of this paragraph 9, present value shall be determined in accordance with section 280G(d)(4) of the Code. (ii) All determinations to be made under this paragraph 9 shall be made by StaffMark's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to StaffMark and Employee within 10 days of the effective date of the termination of Employee's employment. Any such determination by the Accounting Firm shall be binding upon StaffMark and Employee. (iii) Within two years after the effective date of the termination of Employee's employment, the Accounting Firm shall review the determinations made by it pursuant to clause (i), above. If at that time, as a result of the uncertainty in the application of section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, the annual amounts of Agreement Payments or the period over which Agreement Payments are paid or distributed, as determined pursuant to clause (i), above, are determined not to satisfy the requirements of clause (i), then the annual amounts of future Agreement Payments and/or the period over which future Agreement Payments are paid or distributed shall be redetermined to satisfy the requirements of clause (i), and all future Agreement Payments shall be paid or distributed in accordance with such redetermination. 6 7 (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in clauses (ii) and (iii) above shall be borne solely by StaffMark. StaffMark agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to clauses (ii) and (iii) above, except for claims, damages or expenses resulting from the negligence or misconduct of the Accounting Firm." 5. Paragraph 9(d) is amended by inserting "and paragraph 9(b)" immediately following "paragraph 5" in the first line thereof and by deleting "and (c)" in the first line thereof. 6. Paragraph 9(e) shall be deleted and replaced in its entirety by the following: (e) ""Change in Control" shall be deemed to have occurred if: (i) any person, other than StaffMark or an employee benefit plan of StaffMark, acquires directly or indirectly the "beneficial ownership" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, "Beneficial Ownership") of any voting security of StaffMark and immediately after such acquisition such person is, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding StaffMark voting securities of StaffMark; (ii) the individuals (A) who, as of the effective date of StaffMark's registration statement with respect to its initial public offering, constitute the Board of Directors of StaffMark (the "Original Directors") or (B) who thereafter are elected to the Board of Directors of StaffMark and whose election, or nomination for election to the Board of Directors of StaffMark was approved by vote of at least two-thirds (2/3) of the Original Directors then still in office (such directors becoming "Additional Original Directors" immediately following their election) or (C) who are elected to the Board of Directors of StaffMark and whose election, or nomination for election, to the Board of Directors of StaffMark was approved by a vote of at least two-thirds (2/3) of the Original Directors and Additional Original Directors then still in office (such directors also becoming Additional Original Directors immediately following their election), cease for any reason to constitute a majority of the members of the Board of Directors of StaffMark; (iii) the stockholders of StaffMark shall approve a merger or merger agreement involving StaffMark, a consolidation transaction involving StaffMark, a recapitalization or reorganization of 7 8 StaffMark, a reverse stock split of outstanding StaffMark voting securities, or the consummation of any such transaction if stockholder approval is not sought nor obtained, provided, however, that the foregoing referenced transactions or events in this clause (iii) shall not constitute a "Change of Control" if such transaction or event would result in at least 75% of the total voting power represented by outstanding securities of the surviving or resulting entity (immediately after such transaction or event after giving effect to the consideration issued or transferred in such transaction or event on an as-converted or fully-diluted basis) being Beneficially Owned by at least 75% of the holders of outstanding voting securities of StaffMark immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not altered in the transaction in any material way; or (iv) the stockholders of StaffMark shall approve a plan of complete liquidation of StaffMark or an agreement for the sale or disposition by StaffMark of all or a substantial portion of StaffMark's assets (i.e., 50% or more of the total assets of StaffMark)." 7. The provisions of paragraph 10 of the Agreement shall be effective as of the date hereof. 8. Except as otherwise set forth herein, the Agreement shall remain in full force and effect in accordance with its terms from and after the date hereof. All references to the Agreement from and after the date hereof shall be deemed to include the Agreement as amended by the terms hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written. EMPLOYEE: STAFFMARK, INC.: /s/ TERRY C. BELLORA By: /s/ CLETE T. BREWER - ---------------------- --------------------- Terry C. Bellora Title: Chief Executive Officer 8 EX-10.35 5 1ST AMENDMENT TO EMPLOYMENT AGREEMENT-BARTHOLOMEW 1 EXHIBIT 10.35 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT This first amendment (the "Amendment") to the employment agreement dated as of October 1, 1996 (the "Agreement") among StaffMark, Inc. ("StaffMark"), HRA, Inc., a wholly-owned subsidiary of StaffMark and W. David Bartholomew ("Employee"), is made and entered as of September 17, 1999 by and between StaffMark and Employee. WHEREAS, the terms of Employee's overall executive compensation package and the terms of this Amendment have been the subject of deliberation by the Compensation Committee of the Board of Directors of StaffMark (the "Compensation Committee") at meetings held on March 11, 1999, May 7, 1999, June 17, 1999, August 2, 1999, August 12, 1999, September 15, 1999 and September 17, 1999; and WHEREAS, the Compensation Committee has been delegated authority, by the Board of Directors of StaffMark at its meeting on August 12, 1999, to determine the terms of, and approve, the Amendment; WHEREAS, StaffMark believes that its interests would best be served by securing Employee's continued employment; and WHEREAS, StaffMark believes that, to achieve this goal, it is necessary to extend the term of the Agreement, to revise the Agreement to reflect certain modifications to the terms of the Employee's employment, to provide severance benefits in additional specified circumstances, and to provide certain benefits in the event of a change in control of StaffMark; and 1 2 WHEREAS, the Compensation Committee has determined that the Amendment is in the best interests of StaffMark and has approved the Amendment on September 17, 1999. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Section 1 of the Agreement is amended by deleting "September 30, 2001" in the second line thereof and replacing it with "April 1, 2002." 2. Effective January 1, 1999, the second sentence of Section 1 of the Agreement is deleted and replaced with the following provision: "During the term of this Agreement, the calendar year shall be referred to herein as a "Compensation Year."" 3. Section 2(a) of the Agreement is amended by deleting (i) ", the Board of Directors of the Company" in the fourth and fifth lines thereof and (ii) "the Board of Directors or" in the fifth and sixth lines thereof. 4. Section 3 of the Agreement is amended by deleting "$125,000 per annum through the expiration of the term of the Agreement," and is replacing it with "$145,000 per year through September 30, 1999, and thereafter throughout the term of this Agreement, $225,000 per year, in each case." 5. Section 5(b) of the Agreement is amended by inserting "Except as provided in Section 6 hereof" (as renumbered) at the beginning of the initial clause thereof. 6. Section 5(b)(i) of the Agreement is amended by adding "(excluding circumstances involving Good Reason, as defined below)" immediately following the word "Employee" in the second line thereof. 7. Section 5(b)(iii) of the Agreement is amended 2 3 (a) by inserting "or by Employee for Good Reason (as defined below)," immediately following the comma in the second line thereof, and (b) by deleting the words "continue to" on the third line thereof and inserting after the word "pay" on the third line thereof the phrase ", in such amount as is determined by reference to clauses (A) and (B) below and on such payment terms set forth in the last sentence of this paragraph (iii)," and by deleting the word "to" on the fifth line thereof, and (c) by inserting "the lesser of two (2) years or" at the beginning of clause 5(b)(iii)(B), and (d) by adding the following provision to the end thereof: ""Good Reason" shall mean any of the following circumstances unless remedied by StaffMark within thirty (30) days after receipt of written notification by Employee that such circumstances exist or have occurred: (A) assignment to Employee of any duties inconsistent with Employee's position, authority, duties or responsibilities as contemplated by paragraph 2 of the Agreement, or any other action by StaffMark that results in diminution of such position, authority, duties or responsibilities; or (B) any material failure by StaffMark to comply with any of the material provisions of the Agreement. The continuation of health insurance benefits referenced above in this Section 5(b)(iii) shall extend to (i) Employee and his eligible dependants under the terms of the applicable StaffMark sponsored health care plan by which he was covered at the time of such termination of employment, as such plan may be in effect or may be modified from time to time, in consideration for Employee's payment of such premiums as may be required to be paid by active employees of StaffMark from time to time ("Required Premium Payments") or (ii) if such StaffMark sponsored health care plan does not by its terms allow Employee's participation or continued 3 4 participation, StaffMark shall obtain (in return for Required Premium Payments) insurance coverage on behalf of Employee and/or Employee's eligible dependents that provides all benefits otherwise provided under such StaffMark sponsored health care plan or, at StaffMark's election (in return for Required Premium Payments) shall provide such benefits from its own assets (collectively, "Continued Health Care Coverage"). The payment of Employee's base salary amount under the circumstances set forth in the first sentence of this paragraph shall be made in two equal payments (equal to one-half of such aggregate amount) on each of the effective date of termination and ninety days after the effective date of termination." 8. The following new Section 6 is inserted immediately following Section 5 of the Agreement, and subsequent Sections of the Agreement and all references thereto are renumbered accordingly: "6. CHANGE IN CONTROL (a) If Employee's employment with StaffMark is terminated within two years following a Change in Control either by StaffMark for any reason or no reason or by the Employee for Good Reason only, StaffMark shall pay Employee a lump sum in the amount of two (2) times Employee's base salary then in effect and his bonus for the year in which the termination of his employment occurs, such lump sum payment shall be due on the effective date of the termination of Employee's employment. In addition, in the case of any such termination, Employee shall be permitted to receive Continued Health Care Coverage for the period described in clause 5(b)(iii)(B). (b) A "Change in Control" shall be deemed to have occurred if: (i) any person, other than StaffMark or an employee benefit plan of StaffMark, acquires directly or indirectly the "beneficial ownership" (as defined in 4 5 Section 13(d) of the Securities Exchange Act of 1934, as amended, "Beneficial Ownership") of any voting security of StaffMark and immediately after such acquisition such person is, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding StaffMark voting securities of StaffMark; (ii) the individuals (A) who, as of the effective date of StaffMark's registration statement with respect to its initial public offering, constitute the Board of Directors of StaffMark (the "Original Directors") or (B) who thereafter are elected to the Board of Directors of StaffMark and whose election, or nomination for election to the Board of Directors of StaffMark was approved by vote of at least two-thirds (2/3) of the Original Directors then still in office (such directors becoming "Additional Original Directors" immediately following their election) or (C) who are elected to the Board of Directors of StaffMark and whose election, or nomination for election, to the Board of Directors of StaffMark was approved by a vote of at least two-thirds (2/3) of the Original Directors and Additional Original Directors then still in office (such directors also becoming Additional Original Directors immediately following their election), cease for any reason to constitute a majority of the members of the Board of Directors of StaffMark; (iii) the stockholders of StaffMark shall approve a merger or merger agreement involving StaffMark, a consolidation transaction involving StaffMark, a recapitalization or reorganization of StaffMark, a reverse stock split of outstanding StaffMark voting securities, 5 6 or the consummation of any such transaction if stockholder approval is not sought nor obtained, provided, however, that the foregoing referenced transactions or events in this clause (iii) shall not constitute a "Change of Control" if such transaction or event would result in at least 75% of the total voting power represented by outstanding securities of the surviving or resulting entity (immediately after such transaction or event after giving effect to the consideration issued or transferred in such transaction or event on an as-converted or fully-diluted basis) being Beneficially Owned by at least 75% of the holders of outstanding voting securities of StaffMark immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not altered in the transaction in any material way; or (iv) the stockholders of StaffMark shall approve a plan of complete liquidation of StaffMark or an agreement for the sale or disposition by StaffMark of all or a substantial portion of StaffMark's assets (i.e., 50% or more of the total assets of StaffMark). (c) (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment or distribution by StaffMark to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate 6 7 present value of Agreement Payments without causing any Payment to be subject to the taxation under section 4999 of the Code. For purposes of this Section 6, present value shall be determined in accordance with section 280G(d)(4) of the Code. (ii) All determinations to be made under this Section 6 shall be made by StaffMark's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to StaffMark and Employee within 10 days of the effective date of the termination of Employee's employment. Any such determination by the Accounting Firm shall be binding upon StaffMark and Employee. (iii) As a result of the uncertainty in the application of section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by StaffMark which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by StaffMark could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the effective date of the termination of Employee's employment, the Accounting Firm shall review the determination made by it pursuant to paragraph (i), above. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to Employee which Employee shall repay to StaffMark together with interest at the applicable Federal rate provided for in section 7872(f)(2) of the Code (the "Federal Rate"); provided, however, that no amount shall be payable by Employee to StaffMark if and to the extent such payment would not reduce the amount which is subject to taxation under section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by StaffMark to or for the benefit of Employee together with interest at the Federal Rate. (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in paragraphs (ii) and (iii) above shall be borne solely by StaffMark. StaffMark agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to paragraphs (ii) and (iii) above, 7 8 except for claims, damages or expenses resulting from the negligence or misconduct of the Accounting Firm." 8. The provisions of Section 10 (formerly Section 9) of the Agreement shall be effective as of the date hereof. 9. Except as otherwise set forth herein, the Agreement shall remain in full force and effect in accordance with its terms from and after the date hereof. All references to the Agreement from and after the date hereof shall be deemed to include the Agreement as amended by the terms hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.
EMPLOYEE: STAFFMARK, INC.: /s/ W. DAVID BARTHOLOMEW --------------------------- W. David Bartholomew By: /s/ CLETE T. BREWER ------------------------------ WITNESS: /s/ KATHY S. McNEELEY Title: Chief Executive Officer --------------------------- ---------------------------
8 EX-10.36 6 1ST AMENDMENT TO EMPLOYMENT AGREEMENT-ALLISON 1 EXHIBIT 10.36 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT This first amendment (the "Amendment") to the employment agreement dated as of June 23, 1997 (the "Agreement") by and between StaffMark, Inc. ("the Company" or "StaffMark"), and Gordon Y. Allison ("Employee"), is made and entered as of September 17, 1999 between the Company and Employee. WHEREAS, the terms of Employee's overall executive compensation package and the terms of this Amendment have been the subject of deliberation by the Compensation Committee of the Board of Directors of StaffMark (the "Compensation Committee") at meetings held on March 11, 1999, May 7, 1999, June 17, 1999, August 2, 1999, August 12, 1999, September 15, 1999 and September 17, 1999; and WHEREAS, the Compensation Committee of the Board of Directors of StaffMark has been delegated authority, by the Board of Directors of StaffMark at its meeting on August 12, 1999, to determine the terms of, and approve, the Amendment; WHEREAS, the Company believes that its interests would best be served by securing Employee's continued employment; and WHEREAS, the Company believes that, to achieve this goal, it is necessary to extend the term of the Agreement, to revise the Agreement to reflect certain modifications to the terms of the Employee's employment, to provide certain severance benefits in additional specified circumstances, and to provide certain additional benefits in the event of a change in control of the Company; and 1 2 WHEREAS, the Compensation Committee has determined that the Amendment is in the best interests of StaffMark and has approved the Amendment on September 17, 1999. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Effective April 1, 1999, paragraph 2(a) of the Agreement is amended by deleting "$120,000" in the first line thereof and replacing it with "$140,000." 2. Paragraph 5 of the Agreement is amended by (a) deleting "for four (4) years" in the second line thereof and replacing it with "until April 1, 2002;" (b) inserting (i) the phrase "or Resignation without Good Reason" following the caption "Good Cause" in subparagraph (c) and (ii) the phrase "or termination by Employee for circumstances other than Good Reason (as defined herein)," before the word "Employee" on the last line of subparagraph (c). (c) deleting subparagraphs (d) - (f) and replacing them with the following provisions: "(d) Without Cause or for Good Reason. Except under circumstances described in paragraph 9 of this Agreement, at any time after the commencement of employment, the Company may, without cause, terminate this Agreement and Employee's employment, or Employee may terminate this Agreement and his employment for "Good Reason" (as defined below) effective thirty (30) days after written notice is provided to the other party by the party terminating this Agreement. In either case, Employee 2 3 shall receive from the Company two payments, each equal to one-half of the following: the amount of Employee's base salary (without offset for any compensation received by Employee from any subsequent employment by any person other than by any affiliate of the Company or in violation of Section 3 of this Agreement) for a period which is the greater of (A) sixty (60) days from the date of such termination or (B) the lesser of two years or the remaining term of this Agreement. The first payment shall be due on the effective date of termination and the second payment shall be due ninety days after the effective date of termination. Upon the effective date of termination in either case, all Options granted to Employee in paragraph 2(c)(viii) shall become immediately exercisable. Further, any such termination shall operate to shorten the period set forth in paragraph 3(b) and during which the terms of paragraph (3) apply to one (1) year from the date of termination of employment. In addition, in the case of any such termination, Employee shall be permitted to continue health care coverage for himself and his eligible dependents for the period described in clause (B) of this subparagraph 5(d), (i) under the terms of the applicable Company sponsored health care plan by which he was covered at the time of such termination of employment, as such plan may be in effect or may be modified from time to time, in consideration for Employee's payment of such premiums as may be required to be paid by active employees of the Company from time to time ("Required Premium Payments") or (ii) if such Company sponsored health care plan does not by its terms allow Employee's 3 4 participation or continued participation, the Company shall obtain (in return for Required Premium Payments) insurance coverage on behalf of Employee and/or Employee's eligible dependents that provides all benefits otherwise provided under such Company sponsored health care plan or, at the Company's election (in return for Required Premium Payments), shall provide such benefits from its own assets (collectively, "Continued Health Care Coverage"). "Good Reason" shall mean any of the following circumstances unless remedied by the Company within thirty (30) days after receipt of written notification by Employee that such circumstances exist or have occurred: (A) assignment to Employee of any duties inconsistent with Employee's position, authority, duties or responsibilities as contemplated by paragraph 1 of the Agreement, or any other action by the Company that results in diminution of such position, authority, duties or responsibilities; or (B) any material failure by the Company to comply with any of the material provisions of the Agreement." 3. Paragraph 9 of the Agreement is amended by deleting the comma and all of the words preceding the comma on the first line of subparagraph (a), and by deleting subparagraphs (b) and (c) thereof and replacing them with the following new subparagraphs (b) and (c): "(b) If Employee's employment with the Company is terminated within two years following a Change in Control, either by the Company for any reason or no reason or by the Employee for Good Reason only, (i) the Company shall pay Employee a lump sum in the amount of two (2) times the sum of Employee's base 4 5 salary then in effect and his bonus for the year immediately preceding the year in which the termination of his employment occurs, such lump sum payment to be due and payable on the effective date of the termination of Employee's employment; (ii) the provisions of paragraph 5(d) relating to exercisability of Options and Continued Health Care Coverage shall apply; and (iii) the non-competition provisions of paragraph 3 shall apply for a period of one (1) year from the effective date of termination if employment is terminated by Employee, and shall not apply at all if employment is terminated by the Company. (c) (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment or distribution by StaffMark to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), amounts payable or distributable to or for the benefit of Employee pursuant to this Agreement that are determined to be "parachute payments" within the meaning of section 280G(b)(2) of the Code (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall not be paid or distributed in the amounts or at the times otherwise required by this Agreement, but shall instead be paid or distributed annually, beginning as of the effective date of the termination of Employee's employment and thereafter on each anniversary thereof, in the maximum substantially equal amounts and over the minimum number of years that are determined to be required to reduce the aggregate present value of Agreement Payments to an amount that will not cause any Payment to be non-deductible under section 280G of the Code. For purposes of this paragraph 9, present value shall be determined in accordance with section 280G(d)(4) of the Code. (ii) All determinations to be made under this paragraph 9 shall be made by StaffMark's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to StaffMark and Employee within 10 days of the effective date of the termination of Employee's 5 6 employment. Any such determination by the Accounting Firm shall be binding upon StaffMark and Employee. (iii) Within two years after the effective date of the termination of Employee's employment, the Accounting Firm shall review the determinations made by it pursuant to clause (i), above. If at that time, as a result of the uncertainty in the application of section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, the annual amounts of Agreement Payments or the period over which Agreement Payments are paid or distributed, as determined pursuant to clause (i), above, are determined not to satisfy the requirements of clause (i), then the annual amounts of future Agreement Payments and/or the period over which future Agreement Payments are paid or distributed shall be redetermined to satisfy the requirements of clause (i), and all future Agreement Payments shall be paid or distributed in accordance with such redetermination. (iv) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in clauses (ii) and (iii) above shall be borne solely by StaffMark. StaffMark agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to clauses (ii) and (iii) above, except for claims, damages or expenses resulting from the negligence or misconduct of the Accounting Firm." 4. Paragraph 9(d) is amended by inserting "and paragraph 9(b)" immediately following "paragraph 5" in the first line thereof and by deleting "and (c)" in the first line thereof. 5. Paragraph 9(e) shall be deleted and replaced in its entirety by the following: (e) A "Change in Control" shall be deemed to have occurred if: (i) any person, other than StaffMark or an employee benefit plan of StaffMark, acquires directly or indirectly the "beneficial ownership" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, "Beneficial Ownership") of any voting security of StaffMark and immediately after such acquisition such 6 7 person is, directly or indirectly, the Beneficial Owner of voting securities representing 50% or more of the total voting power of all of the then-outstanding StaffMark voting securities of StaffMark; (ii) the individuals (A) who, as of the effective date of StaffMark's registration statement with respect to its initial public offering, constitute the Board of Directors of StaffMark (the "Original Directors") or (B) who thereafter are elected to the Board of Directors of StaffMark and whose election, or nomination for election to the Board of Directors of StaffMark was approved by vote of at least two-thirds (2/3) of the Original Directors then still in office (such directors becoming "Additional Original Directors" immediately following their election) or (C) who are elected to the Board of Directors of StaffMark and whose election, or nomination for election, to the Board of Directors of StaffMark was approved by a vote of at least two-thirds (2/3) of the Original Directors and Additional Original Directors then still in office (such directors also becoming Additional Original Directors immediately following their election), cease for any reason to constitute a majority of the members of the Board of Directors of StaffMark; (iii) the stockholders of StaffMark shall approve a merger or merger agreement involving StaffMark, a consolidation transaction involving StaffMark, a recapitalization or reorganization of StaffMark, a reverse stock split of outstanding StaffMark voting securities, or the consummation of any such transaction if stockholder approval is not sought nor obtained, provided, however, that the foregoing referenced transactions or events in this clause (iii) shall not constitute a "Change of Control" if such transaction or event would result in at least 75% of the total voting power represented by outstanding securities of the surviving or resulting entity (immediately after such transaction or event after giving effect to the consideration issued or transferred in such transaction or event on an as-converted or fully-diluted basis) being Beneficially Owned by at least 75% of the holders of outstanding voting securities of StaffMark immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not altered in the transaction in any material way; or (iv) the stockholders of StaffMark shall approve a plan of complete liquidation of StaffMark or an agreement for the sale or disposition by StaffMark of all or a substantial portion of StaffMark's assets (i.e., 50% or more of the total assets of StaffMark)." 6. The provisions of paragraph 10 of the Agreement shall be effective as of the date hereof. 7 8 7. Except as otherwise set forth herein, the Agreement shall remain in full force and effect in accordance with its terms from and after the date hereof. All references to the Agreement from and after the date hereof shall be deemed to include the Agreement as amended by the terms hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.
EMPLOYEE: STAFFMARK, INC.: /s/ GORDON Y. ALLISON --------------------------- By: /s/ CLETE T. BREWER Gordon Y. Allison ------------------------------- Title: Chief Executive Officer ----------------------------
8 EX-27.1 7 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 779 0 201,267 4,903 0 214,830 42,306 13,576 682,835 85,532 0 0 0 293 285,420 682,835 903,739 903,739 676,449 176,364 239 0 12,209 38,478 13,490 24,988 0 0 0 24,988 0.85 0.85
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