| Novacare Employee Services, Inc. | |||
| Ticker: | NCES | 2621 Van Buren Avenue | |
| Exchange: | NASDAQ-National Market | Norristown, PA 19403 | |
| Industry: | Service (SIC Code 7363) | (610) 650-4700 | |
| # of Employees: | 260 | ||
| Type of Shares: | Common Shares | Filing Date: | 9/5/97 | |
| U.S. Shares: | 5,000,000 | Offer Date: | 11/10/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $11.00 - $13.00 | |
| Primary Shares: | 5,000,000 | Offer Price: | $9.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.63 | |
| Offering Amount: | $60,000,000 | Selling: | $0.36 | |
| Expenses: | $750,000 | Reallowance: | $0.10 | |
| Shares Out After: | 25,143,187 |
| Manager | Tier | Phone |
| Robertson, Stephens & Company | Lead Manager | (415) 989-8500 |
| Smith Barney Inc. | Co-manager | (212) 723-7300 |
| Issuer's Law Firm: | Haythe & Curley |
| Bank's Law Firm: | Dewey Ballantine |
| Auditor: | Price Waterhouse |
Dollar amounts in U.S. millions except for per share data | |||||
| 8 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 6/30/97 | 6/30/97 | ||||
| Revenue: | $394.19 | Assets: | $96.00 | ||
| Net Income: | $0.69 | Curr Assets: | $39.88 | ||
| EPS: | $0.03 | Liabilities: | $92.97 | ||
| Prior EPS: | $0.15 | Curr Liabilities: | $88.72 | ||
| Cash Flow/Oper: | $26.60 | Equity: | $3.03 | ||
| Cash Flow/Fin: | -$24.97 | Cash: | $1.78 | ||
| Cash Flow/Inv: | -$24.97 | Working Cap: | -$48.84 | ||
| Business Description |
| The company is an employee services company which provides small to medium-sized businesses with fully integrated outsourcing solutions to human resource issues, including payroll management, risk management, benefits administration and other services. The Company believes its services enable small and medium-sized businesses to cost-effectively manage and enhance the employment relationship by: (i) controlling the risks and costs associated with workers' compensation, workplace safety and employee-related litigation; (ii) providing employees with high quality health care coverage and related benefits; (iii) managing the increasingly complex legal and regulatory environment affecting employment; and (iv) achieving scale advantages typically available to larger organizations. As of June 30, 1997, the Company served 1,742 clients and had 35,028 employees ("worksite employees") at over 3,000 worksites in 45 states, principally in 10 different industries. The Company was established in September 1996 by NovaCare, Inc. (the "Parent") and began operations in October 1996 with the acquisition of Resource One, Inc. ("Resource One"). Three additional acquisitions were completed in February 1997. On July 1, 1997, the Company acquired the rehabilitation temporary staffing division of the Parent. For the year ended June 30, 1997 the Company had pro forma revenues of over $878 million. |
| Competition |
| The PEO industry is highly fragmented, with at least 2,400 companies (according to an estimate by NAPEO) providing PEO services. The Company encounters competition from other national and regional PEOs and single-service and "fee for service" companies such as payroll processing firms, insurance companies, workers' compensation safety consultants and human resource consultants. In addition, the Company may encounter substantial competition from new national market entrants. Some of the Company's current and future competitors may be significantly larger, have greater name recognition and have greater financial, marketing and other resources than the Company. There can be no assurance that the Company will be able to compete effectively against such competitors in the future. There are low barriers to entry into the PEO business in most states where the Company operates and competitive pricing may adversely affect growth and/or margins. |
| Business Plan |
| The Company's objective is to be the brand, service and performance leader in the PEO industry by creating a more profitable, more productive and more satisfying relationship between employers and employees and enabling its clients to focus on their business core competencies and growth. Supporting this purpose are the Company's beliefs, respect for the individual, service to the client, pursuit of excellence and commitment to personal integrity. For this reason, the Company seeks to create a values-based culture. Relying on these values, the Company will implement a strategy focusing on growth and operational excellence. It is the Company's belief that a strong commitment to these values and a philosophy oriented toward "caring for and about people," will enable the Company to provide a level of service that will build the businesses of its clients and itself and enhance the careers of its clients' employees. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to repay debt and for general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| NovaCare, Inc. | 94.00% | 77.20% |
| Officer Name | Title | Age |
| Deborah M. Skinner | Area President Northeast | 48 |
| James E.Boyd | Area President, Southeast | 40 |
| E. Martin Gibson | Chairman of the Board, Director | 59 |
| Marie L. Martino, Esquire | General Counsel and Secretary | 37 |
| Loren J. Hulber | President, Chief Executive Officer and Director | 54 |
| Arhtur T. Locilento, Jr. | Senior Vice President of Human Resources | 53 |
| Bernard C. Byrd, Jr. | Senior Vice President of Operations | 35 |
| Christina D. Harris, Esquire | Senior Vice President of Regulatory Affairs and Compliance | 35 |
| Andrew W. Stith | Senior Vice President of Sales and Marketing | 29 |
| Robert K. Coddington | Senior Vice President of Temporary Services | 48 |
| Thomas D. Schubert | Snior Vice President and Chief Financial and Accounting Officer | 36 |