10-Q 1 g69454e10-q.txt PERSONNEL GROUP OF AMERICA INC 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 1, 2001 OR [ ] 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 001-13956 PERSONNEL GROUP OF AMERICA, INC. -------------------------------- (Exact name of registrant as specified in its charter) Delaware 56-1930691 -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 5605 Carnegie Blvd., Suite 500, Charlotte, North Carolina 28209 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (704) 442-5100 -------------- (Registrant's telephone number including area code) None ---- (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. [X] Yes [ ] No As of May 11, 2001, there were 26,534,458 shares of outstanding common stock, par value $.01 per share. 2 PERSONNEL GROUP OF AMERICA, INC. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial Statements (unaudited) Unaudited Consolidated Statements of Income............... 3 Unaudited Consolidated Balance Sheets..................... 4 Unaudited Consolidated Statements of Cash Flows........... 5 Notes to Unaudited Consolidated Financial Statements...... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............. 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk......................................... 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................... 12 Signatures................................................................ 13 Exhibit Index ............................................................ 14 2 3 PERSONNEL GROUP OF AMERICA, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED APRIL 1, 2001 AND APRIL 2, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA) Three months ended April 1, April 2, 2001 2000 -------- -------- REVENUES $209,196 $216,856 DIRECT COSTS OF SERVICE 152,522 155,875 -------- -------- GROSS PROFIT 56,674 60,981 OPERATING EXPENSES Selling, general and administrative 43,957 42,198 Depreciation and amortization 6,068 5,781 Non-recurring costs -- 1,452 -------- -------- OPERATING INCOME 6,649 11,550 INTEREST EXPENSE 4,751 4,434 -------- -------- INCOME BEFORE INCOME TAXES 1,898 7,116 PROVISION FOR INCOME TAXES 968 3,074 -------- -------- NET INCOME $ 930 $ 4,042 ======== ======== NET INCOME PER BASIC SHARE $ 0.04 $ 0.16 NET INCOME PER DILUTED SHARE $ 0.04 $ 0.16 The accompanying notes are an integral part of these statements. 3 4 PERSONNEL GROUP OF AMERICA, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS APRIL 1, 2001 AND DECEMBER 31, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA)

April 1, December 31, ASSETS 2001 2000 --------- --------- Current assets: Cash and cash equivalents $ 2,647 $ 6,233 Accounts receivable, net 124,543 127,292 Prepaid expenses and other current assets 8,721 6,537 Deferred income taxes 10,283 10,064 Notes receivable from sale of discontinued operations 885 885 --------- --------- Total current assets 147,079 151,011 Property and equipment, net 25,176 25,986 Intangible assets, net 558,926 563,031 Other assets 4,396 3,565 --------- --------- Total assets $ 735,577 $ 743,593 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 498 $ 647 Accounts payable 13,604 13,910 Accrued wages, benefits and other 52,664 53,877 --------- --------- Total current liabilities 66,766 68,434 Long-term debt 255,000 265,000 Other long-term liabilities 48,300 45,860 --------- --------- Total liabilities 370,066 379,294 Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value; shares authorized 5,000; No shares issued and outstanding -- -- Common stock, $.01 par value; shares authorized 95,000; 33,065 shares issued and outstanding 331 331 Additional paid-in capital 318,013 319,910 Retained earnings 93,591 92,661 --------- --------- 411,935 412,902 Less common stock held in treasury at cost - 6,576 shares at April 1, 2001 and 6,873 shares at December 31, 2000 (46,424) (48,603) --------- --------- Total shareholders' equity 365,511 364,299 --------- --------- Total liabilities and shareholders' equity $ 735,577 $ 743,593 ========= =========

The accompanying notes are an integral part of these balance sheets. 4 5 PERSONNEL GROUP OF AMERICA, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED APRIL 1, 2001 AND APRIL 2, 2000 (IN THOUSANDS)

Three months ended April 1, April 2, 2001 2000 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 930 $ 4,042 Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: Depreciation and amortization 6,068 5,781 Deferred income taxes, net 736 -- Changes in assets and liabilities: Accounts receivable 2,749 (751) Accounts payable and accrued liabilities (129) 453 Income taxes payable -- 1,627 Other, net (1,168) (1,345) -------- -------- Net cash provided by operating activities 9,186 9,807 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition-related payments (525) (25,438) Purchases of property and equipment, net (1,153) (1,958) -------- -------- Net cash used in investing activities (1,678) (27,396) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments under credit facility (11,000) (11,000) Borrowings under credit facility 1,000 29,000 Credit facility amendment fees (1,227) -- Repurchases of common stock -- (5,874) Repayments of seller notes and other borrowings (149) (374) Proceeds from employee stock purchase plan and exercise of stock options 282 661 -------- -------- Net cash provided by (used in) financing activities (11,094) 12,413 Net decrease in cash and cash equivalents (3,586) (5,176) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,233 5,752 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,647 $ 576 ======== ========

The accompanying notes are an integral part of these statements. 5 6 PERSONNEL GROUP OF AMERICA, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (1) GENERAL The unaudited consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles; however, they do include all adjustments of a normal recurring nature that, in the opinion of management, are necessary to present fairly the results of operations of the Company for the interim periods presented. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year. (2) INTANGIBLE ASSETS Intangible assets primarily consist of goodwill associated with acquired businesses. The Company allocates the excess of cost over the fair value of net tangible assets first to identifiable intangible assets, if any, and then to goodwill. Although the Company believes that goodwill has an unlimited life, the Company amortizes such costs on a straight-line basis over 40 years. Other intangibles consist primarily of covenants not to compete. Accumulated amortization of intangible assets amounted to $58,852 and $54,747 at April 1, 2001 and December 31, 2000, respectively. Amortization expense for the quarters ended April 1, 2001 and April 2, 2000 was $4,105 and $4,019, respectively. (3) LONG-TERM DEBT Long-term debt consisted of the following at April 1, 2001 and December 31, 2000:

April 1, December 31, 2001 2000 --------- --------- 5-3/4% Convertible Subordinated Notes due July 2004 (the "Notes") $ 115,000 $ 115,000 Revolving credit facility due June 2002 140,000 150,000 Notes payable to sellers of acquired companies and other 498 647 --------- --------- 255,498 265,647 Less current portion (498) (647) --------- --------- $ 255,000 $ 265,000 ========= =========

The revolving credit facility expires in June 2002. As a result, the Company expects to reclassify the revolving credit debt outstanding to current liabilities on the balance sheet at the end of the second quarter of 2001. 6 7 The Credit Facility was amended in March 2001 to cure fourth quarter technical violations of certain financial covenants. The amendment provides for a $180.0 million reducing revolving line of credit due June 2002. The amended Credit Facility contains customary covenants that require quarterly maintenance of certain financial ratios, minimum net worth and a restriction on the payment of cash dividends on Common Stock. It also places additional limitations on share repurchases, acquisitions and capital expenditures. Under the terms of the amendment, the maximum principal amount available for borrowing is scheduled to reduce to $176.0 million by the end of the third quarter of 2001, $171.0 million by the end of the fourth quarter of 2001 and $166.0 million by the end of the first quarter of 2002. Interest rates payable under the amended Credit Facility were increased to reflect current market and credit conditions, and are currently set at LIBOR plus 300 basis points. The amended Credit Facility is collateralized by substantially all of the Company's tangible and intangible assets. (4) NET INCOME PER SHARE In accordance with FAS 128, the following tables reconcile net income and weighted average diluted shares outstanding to the amounts used to calculate basic and diluted earnings per share for each of the quarters ended April 1, 2001 and April 2, 2000:

April 1, April 2, 2001 2000 ------- ------- BASIC EARNINGS PER SHARE: Net income $ 930 $ 4,042 ======= ======= Weighted average shares outstanding 26,183 25,194 Basic earnings per share $ 0.04 $ 0.16 ======= ======= DILUTED EARNINGS PER SHARE: Net income $ 930 $ 4,042 Add: Interest expense on Convertible Notes, net of tax -- 1,064 ------- ------- Diluted net income 930 5,106 Weighted average shares outstanding 26,183 25,194 Add: Dilutive employee stock options 165 173 Add: Assumed conversion of Convertible Notes -- 6,456 ------- ------- Diluted weighted average shares outstanding 26,348 31,823 Diluted earnings per share $ 0.04 $ 0.16 ======= =======

Stock options to purchase 3,715,432 and 2,703,660 shares of Common Stock were outstanding during the three months ended April 1, 2001 and April 2, 2000, respectively, but were excluded from the computation of net income per diluted share because their effect was antidilutive. The conversion of the Notes into 6,456,140 common shares was also excluded from the computation of net income per diluted share in 2001 because their effect was antidilutive. 7 8 (5) SEGMENT INFORMATION The Company is organized in two segments: Information Technology Services ("IT Services") and Commercial Staffing Services ("Commercial Staffing"). IT Services provides technical staffing, training, information technology consulting services and technology tools for human capital management. Commercial Staffing provides temporary staffing services, placement of full-time employees and on-site management of temporary employees. The Company evaluates segment performance based on income from operations before corporate expenses, amortization of intangible assets, interest and income taxes. Because of the Company's substantial intangible assets, management does not consider total assets by segment an important management tool and, accordingly, the Company does not report this information separately. The table below presents segment information for the quarters ended April 1, 2001 and April 2, 2000: April 1, April 2, 2001 2000 -------- -------- Revenues IT Services $131,777 $132,699 Commercial Staffing 77,419 84,157 -------- -------- Total revenues 209,196 216,856 -------- -------- Operating income IT Services 9,058 11,754 Commercial Staffing 5,810 8,139 -------- -------- Total operating income 14,868 19,893 Corporate expenses 4,114 2,872 Amortization of intangible assets 4,105 4,019 Non-recurring costs -- 1,452 Interest expense 4,751 4,434 -------- -------- Income before income taxes $ 1,898 $ 7,116 ======== ======== The following table sets forth identifiable assets by segment at April 1, 2001 and December 31, 2000: April 1, December 31, 2001 2000 -------- -------- Accounts receivable, net IT Services $ 88,459 $ 85,344 Commercial Staffing 35,470 41,398 Corporate 614 550 -------- -------- Total accounts receivable, net $124,543 $127,292 ======== ======== (6) NON-RECURRING COSTS In connection with the retirement of the Company's Chief Executive Officer in February 2000, the Company agreed to provide certain severance, retirement and other benefits to such officer. The total pre-tax cost to the Company of this arrangement (reduced by amounts that the Company had previously accrued for retirement benefits for this officer) was approximately $1.5 million and was recorded in the quarter ended April 2, 2000. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The following discussion and analysis should be read in conjunction with the Company's unaudited consolidated financial statements and related notes appearing elsewhere in this report. The Company's fiscal year ends on the Sunday nearest to December 31. The Company is organized into two Divisions: the Information Technology Services Division ("IT Services"), which provides information technology staffing and consulting services in a range of computer-related disciplines and technology tools for human capital management, and the Commercial Staffing Services Division ("Commercial Staffing"), which provides a variety of temporary office, clerical, accounting and finance, light technical and light industrial staffing services. Approximately 63% of the Company's first quarter 2001 revenues came from IT Services and 37% came from Commercial Staffing. The information technology services business is affected by the timing of holidays and seasonal vacation patterns, generally resulting in lower IT revenues and gross margins in the fourth quarter of each year. The commercial staffing business is subject to the seasonal impact of summer and holiday employment trends. Typically, the commercial staffing business is stronger in the second half of each calendar year than in the first half. RESULTS OF OPERATIONS QUARTER ENDED APRIL 1, 2001 VERSUS QUARTER ENDED APRIL 2, 2000 Revenues. Total revenues declined 3.5% to $209.2 million in the first quarter of 2001 from $216.9 million in 2000. IT Services revenues declined 0.7% to $131.8 million in the first quarter of 2001 primarily as the result of the continuing industry-wide slowdown in customer demand for IT staffing services. IT Services billable consultants on assignment declined from approximately 3,750 at the end of 2000 to approximately 3,500 at the end of the first quarter. Commercial Staffing revenues declined 8.0% to $77.4 million in the first quarter of 2001 from $84.2 million in 2000 primarily due to an uncertain economic climate that resulted in declines in permanent placement revenues and the retail component of the Company's temporary staffing business. Permanent placement revenues were 8.4% of Commercial Staffing revenues in the first quarter of 2001, down from 9.9% during the first quarter of 2000. The Company does not expect improvements in demand for its services in 2001 due to the ongoing weak economic conditions. Direct Costs of Service and Gross Profit. Direct costs, consisting of payroll and related expenses of consultants and temporary workers, decreased 2.2% to $152.5 million in the first quarter of 2001 on the lower revenues. Gross margin as a percentage of revenues decreased 100 basis points to 27.1% for the first quarter of 2001 from 28.1% in 2000. This decrease primarily was the result of the continued softening in the higher margin sectors of the staffing and consulting businesses and the decline in permanent placement services. Operating Expenses. Operating expenses, consisting of selling, general and administrative expenses, before non-recurring charges, and depreciation and amortization expense, increased 4.3% to $50.0 million in the first quarter of 2001 from $48.0 million in 2000. As a percentage of revenues, selling, general and administrative expenses, before nonrecurring charges, increased to 21.0% in the 9 10 first quarter, up 150 basis points from last year. This increase was caused by continuing investments in information systems and inflationary increases in personnel and office lease costs. In addition, depreciation and amortization expense increased to 2.9% of revenues in the first quarter of 2001 from 2.7% last year primarily due to increased amortization expense resulting from earn-out payments related to prior acquisitions and continuing investments in management information systems. Interest Expense. Interest expense increased slightly to $4.8 million in the first quarter of 2001 from $4.4 million in 2000. The average interest rate on borrowings was 7.8%, up 40 basis points over the first quarter last year. See "--Liquidity and Capital Resources." Income Tax Expense. The effective tax rate increased to 51.0% in the first quarter of 2001 from 43.2% in 2000 primarily because nondeductible amortization expense related to acquisitions increased during the year as a percentage of the Company's pretax income. The Company's effective tax rate has historically been higher than the U.S. federal statutory rate of 35.0% primarily due to state income taxes and nondeductible amortization expense. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of cash are from operations and borrowings under the Company's bank revolving credit facility (the "Credit Facility"). The Company's principal uses of cash are to fund working capital, capital expenditures and contingent earn-out payments related to previous acquisitions. For the quarter ended April 1, 2001, cash provided by operating activities decreased to $7.9 million from $9.8 million for the quarter ended April 2, 2000, primarily as a result of lower earnings before depreciation and amortization in the quarter. In the aggregate, day's sales outstanding increased to 54 days at April 1, 2001, from 52 days at April 2, 2000. Cash used for investing activities decreased to $1.7 million in the quarter from $27.4 million in 2000 primarily as a result of lower contingent earn-out payments relating to acquisitions. As of April 1, 2001, the Company was obligated to make certain contingent earn-out payments to former owners of acquired businesses. Earn-out payments made during the first quarter of 2001 were approximately $0.5 million in the aggregate. The Company is obligated to make additional earn-out payments based on earnings of acquired businesses for the year ended December 31, 2000 and estimates that these payments will be in the range of $10.5 million to $11.5 million in the aggregate. The Company is obligated to make one earn-out payment based on earnings of an acquired business for the 12-month period ended June 30, 2001, and estimates that this payment will be immaterial. There can be no assurance, however, that the actual amounts of any earn-out payments will not differ materially from the estimates set forth herein. Following the 2001 earn-out payments, the Company will have no further earn-out obligations with respect to any of its existing operations. The Credit Facility was amended in March 2001 to cure fourth quarter technical violations of certain financial covenants. The amendment provides for a $180.0 million reducing revolving line of credit due June 2002. As of April 1, 2001, $140.0 million of borrowings were outstanding under the amended Credit Facility and approximately $6.7 million had been used for the issuance of undrawn letters of credit to secure the Company's workers' compensation programs. The Company had borrowing capacity of $33.3 million. The amended Credit Facility also includes covenants that require maintenance of certain financial ratios on a quarterly basis, and placed additional limitations on share repurchases, acquisitions and capital expenditures. 10 11 Also under the terms of the amendment, the maximum principal amount available for borrowing is scheduled to reduce to $176.0 million by the end of the third quarter of 2001, $171.0 million by the end of the fourth quarter of 2001 and $166.0 million by the end of the first quarter of 2002. Interest rates payable under the amended Credit Facility were increased to reflect current market and credit conditions, and are currently set at LIBOR plus 300 basis points. Additionally, the Company paid bank fees of $1.2 million in connection with the amendment to the Credit Facility in March 2001. These fees will be amortized over the remaining term of the Credit Facility. The daily weighted average interest rate under the Credit Facility was 7.8% during the first quarter of 2001. The weighted average interest rate of the Company's borrowings under the Credit Facility was 8.3% at April 1, 2001. The amended Credit Facility is collateralized by a pledge of substantially all of the Company's tangible and intangible assets. The Company expects to spend less than 3/4 of 1% of its 2001 revenues on management information systems and other capital expenditures. The Company reduced capital spending in the first quarter of 2001 to less than $1.2 million, down from approximately $2.0 million in the first quarter of 2000 and $1.6 million in the fourth quarter of 2000. The Company believes that cash flow from operations and borrowing capacity under the amended Credit Facility will be adequate to meet its presently anticipated needs for working capital and capital expenditures and its diminishing needs for contingent earn-out payments. In the event of unanticipated short-term needs, the Company would likely be required to seek alternative sources of capital. Additionally, the Credit Facility expires in June 2002. The Company intends to seek an extension to, or a refinancing of, the Credit Facility. There can be no assurance, however, that alternative sources of capital will be available, if and when needed, on favorable terms. 11 12 FORWARD-LOOKING INFORMATION This report, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," may contain various "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, that are based on management's belief and assumptions, as well as information currently available to management. These statements may be identified by words such as "estimate," "forecast," "plan," "intend," "believe," "expect," "anticipate," or variations or negatives thereof, or by similar or comparable words or phrases. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in such statements. These risks and uncertainties include, but are not limited to, the following: changes in levels of unemployment and other economic conditions in the United States, or in particular regions or industries; adverse changes in credit and capital markets conditions that may affect the Company's ability to obtain financing or refinancing on favorable terms; adverse changes to management's periodic estimates of future cash flows that may affect management's assessment of its ability to fully recover its intangible assets; reduction in the supply of qualified candidates for temporary employment or the Company's ability to attract qualified candidates; the entry of new competitors into the marketplace or expansion by existing competitors; the ability of the Company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions; the impact of competitive pressures, including any change in the demand for PGA's services, or the Company's ability to maintain its profit margins; the possibility that the Company will incur liability for the activities of its temporary employees or for events affecting its temporary employees on clients' premises; the success of the Company in attracting, training and retaining qualified management personnel and other staff employees; and whether governments will impose additional regulations or licensing requirements on personnel services businesses in particular or on employer/employee relationships in general, and other matters discussed in this report and the Company's other filings with the Securities and Exchange Commission. Because long-term contracts are not a significant part of PGA's business, future results cannot be reliably predicted by considering past trends or extrapolating past results. The Company undertakes no obligation to update information contained in this report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company's outstanding debt under the Credit Facility at April 1, 2001, was $140.0 million. Interest on borrowings under the Credit Facility is based on LIBOR plus a variable margin. Based on the outstanding balance at April 1, 2001, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.4 million on an annual basis. PART II - OTHER INFORMATION ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - The exhibits filed with or incorporated by reference into this Form 10-Q are set forth in the Exhibit Index, which immediately precedes the exhibits to this report. (b) Reports on Form 8-K - None. 12 13 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. PERSONNEL GROUP OF AMERICA, INC. (Registrant) Date: May 16, 2001 By: /s/ Larry L. Enterline -------------------------------------- Larry L. Enterline Chief Executive Officer Date: May 16, 2001 By: /s/ James C. Hunt -------------------------------------- James C. Hunt President and Chief Financial Officer 13 14 EXHIBIT INDEX

FILED HEREWITH(*),OR INCORPORATED BY REFERENCE FROM PREVIOUS EXHIBIT EXHIBIT COMPANY REG. NO. NUMBER DESCRIPTION NUMBER OR REPORT ------- ----------- ------ ---------------- 3.1 Restated Certificate of Incorporation of the 3.1 333-31863 Company, as amended 3.2 Amended and Restated Bylaws of the Company 3.2 33-95228 4.0 Specimen Stock Certificate 4.0 33-95228 4.1 Rights Agreement between the Company and 1 0-27792 First Union National Bank (as successor trustee) 4.2 Indenture between the Company and First Union 4.2 333-31863 National Bank, as Trustee 4.3 Form of Note Certificate for 5-3/4% 4.3 333-31863 Convertible Subordinated Notes 10.1+ 1995 Equity Participation Plan, as amended 10.1 333-31863 10.2+ Amended and Restated Management Incentive 10.2 10-K for year Compensation Plan ended 1/3/99 10.3+ 1997 Employee Stock Purchase Plan, as amended 10.3 10-K for year ended 12/31/00 10.4#+ Director and Officer Indemnification 10.3 10-K for year Agreement of James V. Napier ended 12/31/95 10.5+ Letter of Employment between the Company and 10.5 10-K for year Larry L. Enterline ended 12/31/00 10.6+ Supplemental Retirement Plan for Edward P. 10.7 10-K for year Drudge, Jr. ended 1/2/00 10.7+ Form of Retirement Agreement between the 10.8 10-K for year Company and Edward P. Drudge, Jr. ended 1/2/00

14 15

FILED HEREWITH(*),OR INCORPORATED BY REFERENCE FROM PREVIOUS EXHIBIT EXHIBIT COMPANY REG. NO. NUMBER DESCRIPTION NUMBER OR REPORT ------- ----------- ------ ---------------- 10.8+ Employment Agreement between the Company and 10.10 10-K for year James C. Hunt ended 12/29/96 10.9+ Employment Agreement between the Company and 10.13 10-K for year Ken R. Bramlett, Jr. ended 12/29/96 10.10+ Employment Agreement between the Company and 10.9 10-K for year Michael H. Barker ended 1/3/99 10.11 Amended and Restated Non-Qualified 10.16 10-K for year Profit-Sharing Plan ended 12/29/96 10.12+ Director's Non-Qualified Deferred Fee Plan 10.12 10-K for year ended 12/28/97 10.13 Amendment No. 3 to Amended and Restated 10.13 10-K for year Credit Agreement among the Company and its ended 12/31/00 subsidiaries, the lenders party thereto and Bank of America, as Agent 10.14 Stock Purchase Agreement for the sale of 1 8-K dated 12/26/97 Nursefinders between PFI Corp., Nursefinders, Inc., and Nursefinder Acquisition Corp. 10.15 Registration Rights Agreement between the 10.17 333-31863 Company and the Initial Purchasers

# This Exhibit is substantially identical to Director and Officer Indemnification Agreements (i) of the same date between the Company and the following individuals: Kevin P. Egan, J. Roger King and William Simione, Jr.; (ii) dated April 17, 1998 between the Company and each of James C. Hunt and Ken R. Bramlett, Jr.; and (iii) dated August 9, 1999 between the Company and Janice L. Scites. + Management contract or compensatory plan required to be filed under Item 14(c) of this report and Item 601 of Regulation S-K of the Securities and Exchange Commission. 15