FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Olsten Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLS)") else Response.Write("(NYSE: OLS)") end if %>
175 Broad Hollow Road
Melville, NY 11747-8905
http://www.olsten.com/

UNION CITY, Ca., November 2, 1996/FOOLWIRE/ --- Olsten Corporation reported their third quarter 1996 results. During the third quarter, the company continued to make good progress on many fronts. Their operating results reflect the operations of Quantum Health Resources for both the 1996 periods as well as for the 1995 periods as the 1995 numbers have all been restated. As a result, some of the comparisons will need further explanation.

SALES AND REVENUES FOR Q3. Revenues for the quarter are up 22% to $876 million. Systemwide sales, for the first time in their history, exceeded $1 billion, almost $1.1 billion, and that is an all-time high for any one single quarter for the Olsten Corporation. Their net income, before non-recurring charges increased to almost $32 million, equivalent to $0.40 per share. This represents an increase of 40% over the previous year. However, it should be noted that Quantum had a small loss in the third quarter of 1995, thus, excluding Quantum from the numbers, their net income for the quarter would have increased 12%.

NON-RECURRING CHARGES. As they mentioned on the second quarter conference call, they expected non-recurring charges of $45 million after tax, or $0.56 per share. Of that total, approximately $27 million after tax relates to the Quantum acquisition and the balance of $18 million covered certain allowances for priority and Medicare reimbursements and they talked about that as well on the last call. But they weren't specific as to the amounts and it is, in fact, $18 million. And the years involved were 1993, 1994, and 1995 and they do not anticipate that this will be an ongoing problem for their company. So, as a result of the $45 million in non-recurring charges, the company reported a net loss for the quarter of $13 million or -$0.16 per share.

THE STAFFING BUSINESS. System-wide sales for the staffing business were up 34%, with about 19% of that coming from acquisitions while staffing service revenues increased 41% with 22% coming from acquisitions. Thus, the same store sales were up 19% and the majority of that is unit growth.

So clearly the demand for their services continues to be good and their revenue gains are reflecting the strong growth from their major account business.

LARGE ACCOUNT PARTNERSHIP BUSINESS. As relates to the large account partnership business, they have been very active in this arena for the last year and a half and will continue to be active as the pipeline for these major accounts continues to be full. However, while the major account business is an important part of their leadership role in the staffing industry, it also creates pressure on their gross margins in the staffing segment. As a result, their gross margins are down over a point on the staffing side of the business. But, notwithstanding, they believe it is still a good strategy to focus on the large account partnership business and also the lower volume but higher margin transactional business. Also, it is part of their strategy to continue to build on higher margin niches such as accounting, legal, and information technology services. While the current mix of their business continues to put pressure on their margins, they think that probably the worse of the margin pressure is over. Their thinking is that the economy continues to move forward, there is still very good demand for their services and unemployment is very low at 5.2%. Therefore, recruitment is very tight in a number of markets. So, this should result in an improved pricing environment for their services even in the higher volume accounts and they intend to capitalize on that opportunity.

INFORMATION TECHNOLOGY BUSINESS. They continue to make good progress in their Information Technology business led by IMI Systems with a strong increase in both sales and operating results. They made two IT acquisitions in the third quarter and, as a result, their annualized revenues in this business are now over $200 million with an internal growth rate of at least 35%. And they expect to have strong growth in this segment for the foreseeable future as the whole segment is very hot.

ACQUISITIONS. Also during the quarter they completed the acquisition of Co-Counsel, a small publicly held legal staffing company that provides paralegals and attorneys in offices in 5 cities. Olsten has plans for its future expansion.

EUROPE. Most of Europe is doing very well. Scandinavian operations and UK operations had good earnings increases and also very good sales increases. However, in Germany they continued to see softness in the economy and, as a result, their German staffing business has yet to live up to their expectations.

HEALTHCARE SERVICES. Turning to healthcare services, their system-wide sales increased 19% in the quarter, primarily due to two factors -- an increase in Quantum sales and an increase in sales generated by hospital contract management services business. Healthcare revenues increased 2% due to Quantum's performance and an increase in Olsten's managed care business, which was offset by a decrease in the Medicare business. The increase in the managed care business comes with its own price tag as margins in this business are also lower. Thus, the gross margins in healthcare were also down more than 1%. As relates to the reduction in the Medicare business, they continue to see tremendous change in the industry with some migration of Medicare patients to HMOs and some to hospital-based home healthcare agencies. While these changes are affecting the short term results of their business, their strategy is to continue to focus on the managed care business and to strengthen their role as the leading provider of management services for hospital-based home healthcare agencies.

They continue to make good progress in integrating Quantum's operation into their organization and they are very pleased with Quantum's financial results to date as the acquisition was accretive in the third quarter. Also, they are equally pleased with the progress they have made in implementing their national contract with Cigna Healthcare and all of Cigna's health plans have now been enrolled.

To sum up their healthcare services segment, they know that while it is difficult to go through a market and a business transformation, they believe innately that home care continues to be a good business and will bring long-term value to their shareholders.

SUMMARY. Financially, their balance sheet continues to be strong with over $100 million in cash, approximately $600 million in working capital, and net worth at about $740 million. In conclusion, they think it was a good quarter. It certainly was a challenging quarter with each of their businesses making progress while dealing with the changing dynamics of both industries.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.