-----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, DhzhPiTGZ6bS37GV0YiYuUw1uMirVfr0TpjARz4c9+ftFpw1npL1FewhRBK/83wy HzG5kwmqJxmktY4s+pF4ug== 0000074386-97-000009.txt : 19971114 0000074386-97-000009.hdr.sgml : 19971114 ACCESSION NUMBER: 0000074386-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLSTEN CORP CENTRAL INDEX KEY: 0000074386 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 132610512 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08279 FILM NUMBER: 97713380 BUSINESS ADDRESS: STREET 1: 175 BROAD HOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 516-844-78 MAIL ADDRESS: STREET 1: 175 BROAD HOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 10-Q 1 OLSTEN CORP. FORM 10-Q FOR QUARTER ENDING 09/28/97 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q - ----- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | X | EXCHANGE ACT OF 1934 - ----- For the quarterly period ended September 28, 1997 ------------------ Commission File No. 0-3532 -------- OLSTEN CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 13-2610512 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 175 Broad Hollow Road, Melville, New York 11747-8905 - ----------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (516) 844-7800 ------------------- Not Applicable - -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------------- ------------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 6, 1997 - ------------------------------------ ------------------------------- Common Stock, $.10 par value 67,549,822 shares Class B Common Stock, $.10 par value 13,759,160 shares INDEX ------- Page No. --------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - September 28, 1997 (Unaudited) and December 29, 1996 2 Consolidated Statements of Income (Unaudited) - Quarters and Nine Months Ended September 28, 1997 and September 29, 1996, respectively 3 Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 28, 1997 and September 29, 1996, respectively 4 Notes to Consolidated Financial Statements (Unaudited) 5 - 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings 9 Item 5. Other Information 9 - 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 1 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements. --------------------- Olsten Corporation Consolidated Balance Sheets (In thousands, except share amounts) September 28, 1997 December 29, 1996 ASSETS ------------------ ----------------- (Unaudited) CURRENT ASSETS: Cash $ 33,564 $ 105,725 Receivables, net 832,093 661,806 Other current assets 90,066 110,904 ---------- ---------- Total current assets 955,723 878,435 FIXED ASSETS, NET 172,683 130,021 INTANGIBLES, NET 539,666 413,549 OTHER ASSETS 10,897 17,235 ---------- ---------- $1,678,969 $1,439,240 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accrued expenses $ 142,460 $ 111,325 Payroll and related taxes 78,378 57,059 Accounts payable 37,298 58,920 Insurance costs 37,783 35,538 --------- ---------- Total current liabilities 295,919 262,842 LONG-TERM DEBT 432,039 330,329 OTHER LIABILITIES 116,759 76,796 SHAREHOLDERS' EQUITY: Common stock $.10 par value; authorized 110,000,000 shares; issued 67,530,896 and 66,652,997 shares, respectively 6,753 6,665 Class B common stock $.10 par value; authorized 50,000,000 shares; issued 13,761,240 and 14,086,024 shares, respectively 1,376 1,409 Additional paid-in capital 447,879 438,956 Retained earnings 373,200 320,496 Cumulative translation adjustment 5,044 1,747 ---------- ---------- Total shareholders' equity 834,252 769,273 ---------- ---------- $1,678,969 $1,439,240 ========== ========== See notes to consolidated financial statements. 2 Olsten Corporation Consolidated Statements of Income (In thousands, except share amounts) (Unaudited) Third Quarter Ended Nine Months Ended -------------------- ------------------ Sept. 28, Sept. 29, Sept. 28, Sept. 29, 1997 1996 1997 1996 --------- -------- --------- --------- Service sales, franchise fees, management fees and other income $1,063,281 $876,369 $3,028,519 $2,446,755 Cost of services sold 779,946 629,963 2,220,043 1,730,876 ---------- -------- ---------- ---------- Gross profit 283,335 246,406 808,476 715,879 Selling, general and administrative expenses 233,965 189,828 674,692 559,996 Interest expense, net 5,536 2,919 14,885 9,179 Merger, integration and other non-recurring charges -- 74,500 -- 80,000 --------- -------- ---------- ---------- Income (loss) before income taxes and minority interests 43,834 (20,841) 118,899 66,704 Income tax charge (benefit) 17,095 (8,162) 46,371 27,615 --------- -------- ---------- ---------- Income (loss) before minority interests 26,739 (12,679) 72,528 39,089 Minority interests 1,482 419 2,775 997 --------- ------- ---------- ---------- Net income (loss) $ 25,257 $(13,098) $ 69,753 $ 38,092 ========= ======== ========= ========== SHARE INFORMATION: Primary: Net income (loss) $ .31 $ (.16) $ .86 $ .49 ========= ======== ========== ========== Average shares outstanding 81,588 79,387 81,487 77,722 ========= ======== ========== ========== See notes to consolidated financial statements. 3 Olsten Corporation Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended ------------------ Sept. 28, 1997 Sept. 29, 1996 -------------- ------------- OPERATING ACTIVITIES: Net income $ 69,753 $ 38,092 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 39,365 32,730 Deferred income taxes 7,247 (1,023) Changes in assets and liabilities, net of effects from acquisitions and dispositions: Accounts receivable and other current assets (97,064) (79,339) Current liabilities (10,457) (8,477) Other, net 20,415 (12,486) --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 29,259 (30,503) --------- --------- INVESTING ACTIVITIES: Acquisitions/dispositions of businesses and reacquisitions of franchises (145,985) (106,967) Purchases of fixed assets (54,219) (32,462) Sale of investment securities 9,415 5,474 --------- --------- NET CASH USED IN INVESTING ACTIVITIES (190,789) (133,955) --------- --------- FINANCING ACTIVITIES: Net proceeds from (repayment of) line of credit agreements 104,735 (8,947) Cash dividends (17,049) (14,587) Issuances of common stock under stock plans 1,683 4,054 Net proceeds from issuance of Senior Notes - 197,672 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 89,369 178,192 --------- --------- NET (DECREASE) INCREASE IN CASH (72,161) 13,734 CASH AT BEGINNING OF PERIOD 105,725 107,418 --------- --------- CASH AT END OF PERIOD $ 33,564 $ 121,152 ========= ========= NON-CASH TRANSACTIONS: Assets acquired through the issuance of a note $ 12,719 $ - Issuance of restricted stock $ 6,437 $ - See notes to consolidated financial statements. 4 Olsten Corporation Notes to Consolidated Financial Statements (Unaudited) 1. Accounting Policies -------------------- The consolidated financial statements have been prepared by Olsten Corporation (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, include all adjustments necessary for a fair presentation of results of operations, financial position and cash flows for each period presented. 2. Interest Expense, Net --------------------- Interest expense, net, consists primarily of interest on long-term debt for the quarter of $6.5 million in 1997 and $5.3 million in 1996, offset by interest income from investments of $1 million and $2.4 million for both 1997 and 1996, respectively. Interest expense, net, for the nine months was $18.1 million, reduced by interest income of $3.2 million in 1997 and was $16.2 million in 1996 reduced by interest income of $7 million. 3. Acquisitions ------------ During the first nine months of 1997, the Company purchased various businesses which were accounted for by the purchase method of accounting. The aggregate cash outlay for these acquisitions was $144 million. Additionally, contingent payments may be made relating to one of the acquisitions if certain earnings criteria are achieved for 1997, 1998 and 1999. 4. Merger, Integration and Other Non-recurring Charges --------------------------------------------------- In the third quarter of 1996, the Company recorded merger, integration and other non-recurring charges of $74.5 million ($45 million, net of tax), or $.56 per share, consisting of costs resulting from the Quantum and Co-Counsel acquisitions aggregating $44.5 million ($27 million, net of tax), and certain allowances, which approximate $30 million ($18 million, net of tax), for a change in the methodology used by Medicare for computing reimbursements in prior years related to the Company's home health care business. In the first quarter of 1996, Quantum recorded a charge of $5.5 million ($3.2 million, net of tax), or $.04 per share, related to the settlement of shareholder litigation. 5 5. Newly Issued Accounting Standards --------------------------------- In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"), which establishes standards for computing and presenting earnings per share. SFAS No. 128 will be effective for financial statements issued for periods ending after December 15, 1997. Earlier application is not permitted. Management has not yet evaluated the effects of this change on the Company's financial statements. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"), which requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. SFAS No. 130 becomes effective in fiscal 1998. Management has not yet evaluated the effects of this change on the Company's financial statements. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("SFAS No. 131"), which changes the way public companies report information about segments. SFAS No. 131, which is based on the management approach to segment reporting, includes requirements to report selected segment information quarterly and entity-wide disclosures about products and services, major customers, and the material countries in which the entity holds and reports revenues. SFAS No. 131 becomes effective in fiscal 1998. Management has not yet evaluated the effect of this change on the Company's financial statements. 6 Item 2. Management's Discussion and Analysis of Financial Condition and ----------------------------------------------------------------- Results of Operations. ----------------------- Results of Operations - ---------------------- Net income for the third quarter of 1997 decreased 21% to $25.2 million, or $.31 per share, compared to $31.9 million, or $.40 per share for last year's third quarter, excluding the effect of non-recurring charges. Net income for the first nine months was $69.8 million, or $.86 per share, a 19% decrease, excluding the effect of the non-recurring charges, compared to $86.3 million, or $1.11 per share, reported in 1996. The results of operations for the nine months ended September 29, 1996 include merger, integration and other non-recurring charges of $80 million ($48.2 million, net of tax), or $.62 per share. These non-recurring charges, before taxes, consist of merger and integration charges resulting from the Quantum and Co-Counsel acquisitions of $44.5 million. The remaining non-recurring charges before taxes, which approximate $30 million ($18 million, net of tax), pertain to certain allowances for a change in the methodology used by Medicare for computing reimbursements in prior years related to the Company's home health care business, and Quantum's charge of $5.5 million ($3.2 million, net of tax) related to the settlement of shareholder litigation. Revenues increased $187 million, or 21%, to $1.1 billion for the third quarter, as compared to $876 million for last year's third quarter. Revenue increased $582 million, or 24%, to $3 billion for the first nine months of 1997, as compared to $2.4 billion for the comparable period of 1996. Staffing Services reported increased revenues of 34% for the third quarter and 38% for the nine months over last year's third quarter and nine-month periods. Acquisitions accounted for approximately 18% of the third quarter increase, European operations contributed 3%, Latin American operations contributed 1%, with the remaining 12% attributable to internal growth in our North American operations. The internal growth was comprised of increases in volume and pricing of 9% and 3%, respectively. Health Services' revenues grew 3% for the third quarter and 5% for the nine months compared to the same periods in 1996. This growth was primarily due to increased volume from Network services and infusion therapy, offset by a decline in Medicare volume and non-network managed care. This decline resulted from a reduction in home care referrals within the branch network and agencies under management. Cost of services sold increased $150 million, or 23.8%, to $780 million for the third quarter and 28.2% to $2.2 billion for the nine months of 1997 due primarily to the growth in revenues. Gross profit margins, as a percentage of revenues, decreased to 26.6% for the third quarter and 26.7% for the nine months from 28.1% and 29.3% for last year's third quarter and nine months. Staffing Services' gross profit margin declined due to growth in high-volume, low-margin subcontractor volume related to corporate account requirements and recruitment challenges resulting from the continued strong demand for our services. Health Services' gross margin declined due to growth in the Network business, which carries lower margin than nursing and infusion business, and a decrease in Health Management volume. 7 Selling, general and administrative expenses increased $44 million, or 23.3%, to $234 million for the third quarter and $115 million, or 20.5%, to $675 million for the nine months. As a percentage of revenues, such expenses increased to 22% from 21.7% for the quarter and decreased to 22.3% from 22.9% for the nine months. The increase in the quarter resulted from internal investments to expand our organizational infrastructure. The overall decline in expenses for the nine-month period resulted from management's ongoing cost control efforts, combined with the operating efficiencies inherent in an expanding revenue base, offset by investments in the third quarter. Net interest expense was $5.5 million and $2.9 million for the third quarters of 1997 and 1996, respectively, and $14.9 million and $9.2 million for the nine-month periods of 1997 and 1996, respectively. Net interest primarily reflected borrowing costs on long-term debt offset by interest income on investments. The increase resulted from interest expense incurred as the Company continued to fund its acquisition program. Liquidity and Capital Resources - -------------------------------- Working capital increased from $616 million at December 29, 1996 to $660 million at September 28, 1997. Cash provided by operations for the nine-month period was $29 million, net of an increase in accounts receivable and other current assets of $97 million. The increase in accounts receivable was attributed to revenue growth and consolidated billing requirements of large corporate accounts and the growth of managed care and infusion therapy accounts, which impacted the timing of the collection process. Overall, cash decreased $72 million for the nine-month period primarily as a result of acquisitions which amounted to $144 million and were partially funded by $110 million borrowed from line of credit agreements, and capital expenditures of $54 million, offset by cash generated from operations. In 1996, the Company completed a revolving credit agreement with a consortium of eleven banks for up to $400 million in borrowings and letters of credit. As of September 28, 1997, there were $147 million in borrowings outstanding and $47 million in standby letters of credit. The Company has invested available funds in short-term, interest-bearing investments. The Company believes that its levels of working capital, liquidity and available sources of funds are sufficient to support present operations and to continue to fund future growth and business opportunities as the Company increases its scope of services. OTHER - ----- INFORMATION CONTAINED HEREIN, OTHER THAN HISTORICAL INFORMATION, SHOULD BE CONSIDERED FORWARD-LOOKING AND IS SUBJECT TO VARIOUS RISK FACTORS AND UNCERTAINTIES. FOR INSTANCE, THE COMPANY'S STRATEGIES AND OPERATIONS INVOLVE RISKS OF COMPETITION, CHANGING MARKET CONDITIONS, CHANGES IN LAWS AND REGULATIONS AFFECTING THE COMPANY'S INDUSTRIES AND NUMEROUS OTHER FACTORS DISCUSSED IN THIS DOCUMENT AND IN OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings. ----------------- On August 29, 1997, a proposed class action lawsuit, captioned ELLIOTT WALDMAN v. OLSTEN CORPORATION, FRANK N. LIGUORI, MIRIAM OLSTEN, WILLIAM OLSTEN, STUART OLSTEN and ANTHONY PUGLISI, No. CV 97-5056 (DRH), was filed in the United States District Court for the Eastern District of New York. On September 19, 1997 another proposed class action lawsuit, captioned MICHAEL CANNOLD v. OLSTEN CORPORATION, FRANK N. LIGUORI, MIRIAM OLSTEN, STUART OLSTEN and ANTHONY PUGLISI, No. CV 97-5408 (DRH), was filed in the United States District Court for the Eastern District of New York. (The WALDMAN and CANNOLD actions are referred to jointly as the "Lawsuits.") The Complaints in the Lawsuits seek unspecified damages in connection with alleged violations of Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934. The Complaints allege that, as a result of certain material misstatements and omissions in connection with the Company's Medicare-reimbursed health care business, the Company's common stock was artificially inflated during the proposed Class Period, which is defined in the WALDMAN Complaint as the period from March 6, 1996 through August 25, 1997, and in the CANNOLD Complaint as the period from March 6, 1996 through July 16, 1997. Although the Company is unable at this time to assess the probable outcome of the Lawsuits or the materiality of the risk of loss in connection therewith (given that the Complaints do not allege damages with any particularity), the Company believes that it has acted responsibly and intends to vigorously defend the Lawsuits. Pending before the Court are various motions to consolidate the Lawsuits with related purported class actions filed against the Company and the individual defendants. Item 5. Other Information. ----------------- The Company's home health care business is subject to extensive federal and state regulations which govern, among other things, Medicare, Medicaid, CHAMPUS and other government-funded reimbursement programs, reporting requirements, certification and licensure standards for certain home health agencies and, in some cases, certificate-of-need and pharmacy-licensing requirements. The Company is also subject to a variety of federal and state regulations which prohibit fraud and abuse in the delivery of health care services, including, but not limited to, prohibitions against the offering or making of direct or indirect payments for the referral of patients. As part of the extensive federal and state regulation of the Company's home health care business, the Company is subject to periodic audits, examinations and investigations conducted by or at the direction of governmental investigatory and oversight agencies. Violation of the applicable federal and state regulations can result in a health care provider's being excluded from participation in the Medicare, Medicaid and/or CHAMPUS programs, and can subject the provider to civil or criminal penalties. 9 The frequency and scope of the audits, examinations and investigations by federal and state regulators of the health care industry have increased dramatically during the past year or so. The May 6, 1997 edition of THE WALL STREET JOURNAL, as well as various subsequent published articles around the country, reported that federal authorities are using recent funding increases to widen their investigations into potential health care fraud and regulatory infractions across the board, examining, among others, mainstream providers and academic medical centers. The Company continues to cooperate with the Office of Investigations section of the Office of Inspector General (an agency established at the U.S. Department of Health & Human Services) and the U.S. Department of Justice in connection with their investigation into the Company's preparation of Medicare cost reports. The Company also continues to cooperate with the federal agencies investigating certain Columbia/HCA-owned home health care operations that are managed under contract by Olsten Health Management, a unit of Olsten Health Services which provides management services to hospital-based home health agencies. The Company continues to cooperate with various agencies, including the U.S. Department of Justice, the Office of the Attorney General of New Mexico and the New Mexico Health Care Anti- Fraud Task Force ("Task Force"), in connection with their investigations into certain health care practices of Quantum Health Resources ("Quantum"). Among the matters into which those agencies are inquiring are allegations of improper billing and fraud against various federally-funded medical assistance programs on the part of Quantum and its post-acquisition successor, Olsten Health Services' Infusion Therapy division. Most of the time period which the Company understands to be at issue in the Task Force investigation (the period between January 1992 and April 1997) predates the Company's June 1996 acquisition of Quantum. Notwithstanding the Company's continuing cooperation with the government investigations referenced above, it is possible that the government may regard the Company and/or certain of its employees as subjects or targets of one or more of such investigations. Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (a) The following exhibits are filed herewith: Exhibit 10 - Amendment No. 1 dated as of August 27, 1997 to Credit Agreement dated as of August 9, 1996 among the Company, the Banks signatory thereto and The Chase Manhattan Bank, as Agent, covering $400 million credit facility. Exhibit 27 - Financial Data Schedule (b) The Company has not filed any report on Form 8-K during the period for which this report is filed. 10 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. OLSTEN CORPORATION (REGISTRANT) Date: November 12, 1997 Frank N. Liguori ------------------------------ Frank N. Liguori Chairman and Chief Executive Officer Date: November 12, 1997 Anthony J. Puglisi ------------------------------- Anthony J. Puglisi Senior Vice President and Chief Financial Officer 11 EXHIBIT INDEX Exhibit 10 - Amendment No. 1 dated as of August 27, 1997 to Credit Agreement dated as of August 9, 1996 among the Company, the Banks signatory thereto and The Chase Manhattan Bank, as Agent, covering $400 million credit facility. Exhibit 27 - Financial Data Schedule EX-10 2 CREDIT AGREEMENT AMENDMENT NO 1 AMENDMENT NO. 1 TO CREDIT AGREEMENT AMENDMENT TO CREDIT AGREEMENT, dated as of August 27, 1997, among OLSTEN CORPORATION, a corporation organized under the laws of the State of Delaware (the "Borrower"), each of the Banks which is signatory hereto and THE CHASE MANHATTAN BANK, a New York banking corporation, as agent for the Banks (in such capacity, the "Agent"). RECITALS: -------- A. The parties hereto entered into that Credit Agreement, dated as of August 9, 1996, (the "Credit Agreement"). B. The parties hereto desire to amend the Credit Agreement on the terms and conditions hereinafter set forth. C. Any capitalized terms used herein and not defined herein shall have the meanings given to them in the Credit Agreement. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT This Amendment shall be deemed to be an amendment to the Credit Agreement and shall not be construed in any way as a replacement or substitution therefor. All of the terms and provisions of this Amendment are hereby incorporated by reference into the Credit Agreement as if such terms were set forth in full therein. SECTION 1.1. Section 2.5(b) (ii) of the Credit Agreement is hereby amended by deleting the references to "$5,000,000" and "$1,000,000" therefrom and substituting the following in their respective places: "$1,500,000" and "$500,000". SECTION 1.2. Section 2.7 of the Credit Agreement is hereby further amended by deleting the reference to "$5,000,000" and the last reference to "$1,000,000" therefrom and substituting the following in their respective places: "$1,500,000" and "$500,000". SECTION 1.3. Section 8.1(b) of the Credit Agreement is hereby amended by inserting immediately after the reference to "Schedule 6.10" the following: ", as such Schedule may be amended from time to time,". The Credit Agreement is hereby further amended by deleting Schedules 6.9, 6.10 and 6.17 therefrom and by substituting in their respective places Schedules 6.9, 6.10 and 6.17 to this Amendment. ARTICLE 2. REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to the Banks that: SECTION 2.1. Except to the extent previously disclosed in writing to the Banks, each and every of the representations and warranties set forth in Article 6 of the Credit Agreement is true as of the date hereof with respect to the Borrower and, to the extent applicable, the Guarantor and each of their Subsidiaries and with the same effect as though made on the date hereof, and is hereby incorporated herein in full by reference as if fully restated herein in its entirety. In addition, in order to induce the Banks to enter into this Amendment, the Borrower hereby covenants, represents and warrants to the Banks that since June 29, 1997, there has been no material adverse change in the business, operations, properties or financial condition of the Borrower or of the Borrower, Guarantor and their Subsidiaries taken as a whole. SECTION 2.2. No Default or Event of Default now exists except as specifically waived hereby. SECTION 2.3. The Borrower has the corporate power and authority to enter into, perform and deliver this Amendment and any other documents, instruments, agreements or other writings to be delivered in connection herewith. This Amendment and all documents contemplated hereby or delivered in connection herewith, have each been duly authorized, executed and delivered and the transactions contemplated herein have been duly authorized. SECTION 2.4. This Amendment and any other documents, agreements or instruments now or hereafter executed and delivered to the Banks by the Borrower in connection herewith constitute (or shall, when delivered, constitute) valid and legally binding obligations of Borrower, each of which is and shall be enforceable against Borrower in accordance with their respective terms. SECTION 2.5. No representation, warranty or statement by the Borrower contained herein or in any other document to be furnished by the Borrower in connection herewith contains, or at the time of delivery shall contain, any untrue statement of material fact, or omits or at the time of delivery shall omit to state a material fact necessary to make such representation, warranty or statement not misleading. SECTION 2.6. No consent, waiver or approval of any entity is or will be required in connection with the execution, delivery, performance, validity or enforcement of this Amendment, or any other agreements, instruments or documents to be executed and/or delivered in connection herewith or pursuant hereto. 2 ARTICLE 3. MISCELLANEOUS SECTION 3.1. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing any such counterpart. SECTION 3.2. This Amendment shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York. SECTION 3.3. Except as specifically amended hereby, the Credit Agreement shall remain in full force and effect in accordance with its terms. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written. OLSTEN CORPORATION By:______________________ Name: Laurin L. Laderoute, Jr. Title: Vice President THE CHASE MANHATTAN BANK, as Agent and a Bank By:______________________ Name: Richard G. Williams Title: Vice President NATIONSBANK, N.A. By:______________________ Name: ______________________ Title: Vice President WELLS FARGO BANK, N.A. By:______________________ Name: ______________________ Title: Vice President 3 DRESDNER BANK AG, New York Branch and Grand Cayman Branch By:______________________ Name: ______________________ Title: Vice President By:______________________ Name: ______________________ Title: Assistant Treasurer FIRST UNION NATIONAL BANK By:______________________ Name: ______________________ Title: Vice President FLEET BANK, NATIONAL ASSOCIATION By:______________________ Name: ______________________ Title: Vice President CREDIT LYONNAIS, NEW YORK BRANCH By:______________________ Name: ______________________ Title: Vice President EUROPEAN AMERICAN BANK By:______________________ Name: ______________________ Title: Vice President 4 KEY BANK NATIONAL ASSOCIATION By:______________________ Name: ______________________ Title: Vice President MARINE MIDLAND BANK By:______________________ Name: ______________________ Title: Vice President THE BANK OF NEW YORK By:______________________ Name: ______________________ Title: Vice President 5 EX-27 3 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 This schedule contains summary financial information extracted from Olsten Corporation and Subsidiaries Consolidated Balance Sheets at September 28, 1997 (unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements of Income for the nine months ended September 28, 1997 (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-28-1997 SEP-28-1997 33,564 0 863,773 31,680 0 955,723 296,354 123,671 1,678,969 295,919 0 0 0 8,129 826,123 1,678,969 3,028,519 3,028,519 2,220,043 2,220,043 0 0 18,080 118,899 46,371 69,753 0 0 0 69,753 .86 .86
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