- 1 -
                          Index to Exhibits on page 12
                                           

                                  UNITED STATES        
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 29, 1996

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934




                          Commission File Number 0-1088


                              KELLY SERVICES, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                 DELAWARE                                    38-1510762
     ---------------------------------                  -------------------
       (State or other jurisdiction                      (I.R.S. Employer
     of incorporation or organization)                  Identification No.)


                 999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
                 ----------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)


                                 (810) 362-4444
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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
                                        ----       ----
At November 1, 1996, 34,474,225 shares of Class A and 3,583,605 shares of Class 
B common stock of the Registrant were outstanding.

                           
                            - 2 -


            KELLY SERVICES, INC. AND SUBSIDIARIES



                                                        Page
                                                       Number
                                                       ------

PART I.  FINANCIAL INFORMATION

      Statements of Earnings                               3

      Balance Sheets                                       4

      Statements of Stockholders' Equity                   5

      Statements of Cash Flows                             6

      Management's Discussion and
        Analysis of Results of
        Operations and Financial
        Condition                                          7



PART II.  OTHER INFORMATION                               10

      Signature                                           11

      Index to Exhibits Required by
        Item 601, Regulation S-K                          12



                                                
                                                 - 3 -


                                  KELLY SERVICES, INC. AND SUBSIDIARIES

                                         STATEMENTS OF EARNINGS
                                               (UNAUDITED)
                            (In thousands of dollars except per share items)

13 Weeks Ended 39 Weeks Ended ------------------------------ ------------------------------ Sept. 29, 1996 Oct. 1, 1995 Sept. 29, 1996 Oct. 1, 1995 ------------- ------------- ------------- ------------- Sales of services $873,242 $698,453 $2,411,435 $1,971,555 Cost of services 711,950 555,968 1,960,202 1,574,374 -------- -------- ---------- ---------- Gross profit 161,292 142,485 451,233 397,181 Selling, general and administrative expenses 125,794 111,125 367,791 323,219 -------- -------- ---------- ---------- Earnings from operations 35,498 31,360 83,442 73,962 Interest income 822 1,798 3,509 6,508 -------- -------- ---------- ---------- Earnings before income taxes 36,320 33,158 86,951 80,470 -------- -------- ---------- ---------- Income taxes: Federal 11,830 10,285 27,885 25,180 State and other 3,060 2,500 7,285 5,995 -------- -------- ---------- ---------- Total income taxes 14,890 12,785 35,170 31,175 -------- -------- ---------- ---------- Net earnings $ 21,430 $ 20,373 $ 51,781 $ 49,295 ======== ======== ========== ========== Earnings per share $.56 $.54 $1.36 $1.30 Dividends per share $.21 $.20 $.62 $.58 Average shares outstanding (thousands) 38,057 38,005 38,038 37,986
- 4 - KELLY SERVICES, INC. AND SUBSIDIARIES BALANCE SHEETS AS OF SEPTEMBER 29, 1996 AND DECEMBER 31, 1995 (UNAUDITED) (In thousands of dollars) ASSETS 1996 1995 - ------ ------------ ------------ CURRENT ASSETS: Cash and equivalents $ 9,603 $ 52,811 Short-term investments 36,424 74,737 Accounts receivable, less allowances of $11,165 and $6,950, respectively 554,915 397,534 Prepaid expenses and other current assets 38,969 33,520 --------- --------- Total current assets 639,911 558,602 PROPERTY AND EQUIPMENT: Land and buildings 36,002 35,153 Equipment, furniture and leasehold improvements 128,030 113,521 Accumulated depreciation (79,514) (64,286) --------- --------- Total property and equipment 84,518 84,388 INTANGIBLES AND OTHER ASSETS 81,101 75,697 --------- --------- TOTAL ASSETS $805,530 $718,687 ========= ========= LIABILITIES & STOCKHOLDERS' EQUITY - ---------------------------------- CURRENT LIABILITIES: Accounts payable $ 81,281 $ 53,013 Payroll and related taxes 148,729 118,996 Accrued insurance 49,175 51,309 Income and other taxes 23,423 19,265 --------- --------- Total current liabilities 302,608 242,583 --------- --------- STOCKHOLDERS' EQUITY: Capital stock, $1 par value 40,116 40,116 Treasury stock, 2,058 shares in 1996 and 2,101 shares in 1995, respectively, at cost (6,200) (6,327) Paid-in capital 8,238 7,215 Earnings invested in the business 460,768 435,100 --------- --------- Total stockholders' equity 502,922 476,104 --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $805,530 $718,687 ========= =========
- 5 - KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands of dollars)
13 Weeks Ended 39 Weeks Ended ---------------------------- ----------------------------- Sept. 29, 1996 Oct. 1, 1995 Sept. 29, 1996 Oct. 1, 1995 ------------ ------------ ------------ ------------ Capital Stock Class A common stock Balance at beginning of period $ 36,527 $ 36,511 $ 36,512 $ 36,507 Conversions from Class B -- -- 15 4 --------- --------- --------- --------- Balance at end of period 36,527 36,511 36,527 36,511 Class B common stock Balance at beginning of period 3,589 3,605 3,604 3,609 Conversions to Class A -- -- (15) (4) --------- --------- --------- --------- Balance at end of period 3,589 3,605 3,589 3,605 Treasury Stock Balance at beginning of period (6,205) (6,181) (6,327) (6,186) Exercise of stock options 2 (155) 61 (185) Restricted stock awards 3 6 66 41 --------- --------- --------- --------- Balance at end of period (6,200) (6,330) (6,200) (6,330) Paid-in Capital Balance at beginning of period 8,194 6,638 7,215 5,868 Exercise of stock options 12 475 474 948 Restricted stock awards 32 57 549 354 --------- --------- --------- --------- Balance at end of period 8,238 7,170 8,238 7,170 Earnings Invested in the Business Balance at beginning of period 447,231 411,040 435,100 391,718 Net earnings 21,430 20,373 51,781 49,295 Cash dividends (7,992) (7,603) (23,586) (22,036) Equity adjustment for foreign currency translation (cumulative charge of $406 in 1996 and credit of $3,024 in 1995) 99 (401) (2,527) 4,432 --------- --------- --------- --------- Balance at end of period 460,768 423,409 460,768 423,409 --------- --------- --------- --------- Stockholders' Equity at end of period $502,922 $464,365 $502,922 $464,365 ========= ========= ========= =========
- 6 - KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE 39 WEEKS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995 (In thousands of dollars) 1996 1995 ---------- ---------- Cash flows from operating activities: Net earnings $51,781 $49,295 Noncash adjustments: Depreciation and amortization 19,316 16,433 Changes in certain working capital components (104,052) (58,049) -------- -------- Net cash from operating activities (32,955) 7,679 -------- -------- Cash flows from investing activities: Capital expenditures (17,745) (25,192) Proceeds from sales and maturities of short-term investments 835,485 887,679 Purchases of short-term investments (797,172) (840,221) Increase in intangibles and other assets (8,385) (16,904) -------- -------- Net cash from investing activities 12,183 5,362 -------- -------- Cash flows from financing activities: Dividend payments (23,586) (22,036) Exercise of stock options and restricted stock awards 1,150 1,158 -------- -------- Net cash from financing activities (22,436) (20,878) -------- -------- Net change in cash and equivalents (43,208) (7,837) Cash and equivalents at beginning of period 52,811 49,207 -------- -------- Cash and equivalents at end of period $ 9,603 $41,370 ======== ========
- 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations: Third Quarter Sales of services in the third quarter of 1996 were $873,242,000, an increase of 25% from the same period in 1995. Domestic sales grew 25%, and reflects strong growth in the staffing business and significant expansion in our staff leasing services. International sales continued to grow at double digit rates. Cost of services, consisting of payroll and related costs of employees assigned to customers, increased 28.1% in the third quarter as compared to the same period in 1995. Average hourly wage rates and related costs from U.S. operations have increased from 1995 at a rate somewhat higher than the general inflation rate due to a tightening labor market. Gross profit of $161,292,000 was 13.2% higher than 1995, while the Company-wide gross profit rates as a percentage of sales of services declined from 20.4% in 1995 to 18.5% in 1996. Growth in the staff leasing business, with its inherently lower margins, the upward pressure on wage rates noted above and the growth of sales with our very large customers, where contracts require special pricing and additional implementation costs, all had the effect of reducing the consolidated gross profit rate. Selling, general and administrative expenses were $125,794,000 in the third quarter, an increase of 13.2% over the same period in 1995. As a percent of sales, the spending rate averaged 14.4%, compared to 15.9% in last year's third quarter. Earnings before income taxes were $36,320,000, an increase of 9.5%, compared to pretax earnings of $33,158,000 for the same period in 1995. The pretax margin was 4.2%, a .5 percentage point decrease from the third quarter of 1995. Lower interest income represented .1 percentage point of the decline while the net of the lower gross profit rate and lower expense spending rate accounted for the remaining .4 percentage point of the decrease. Income taxes were 41.0% of pretax income. This was 2.4 percentage points over the applicable tax rate for the third quarter of 1995 due to increased state taxes, reduced tax-exempt income and the expiration of tax credits against federal income tax liability earned through the targeted jobs tax credit program. - 8 - Net earnings were $21,430,000 in the third quarter of 1996, an increase of 5.2% over the third quarter of 1995. Earnings per share were $.56 compared to $.54 in the same period last year. Year-to-Date Sales of services totaled $2,411,435,000 during the first nine months of 1996, an increase of 22.3% over 1995. This increase reflects continued growth in the volume of domestic and international sales. Cost of services of $1,960,202,000 was 24.5% higher than last year, reflecting domestic and international volume growth and increases in payroll costs due to a tightening U.S. labor market. Gross profit increased 13.6% in 1996 due to strong increased sales volume, but at lower gross profit rates on sales. The gross profit rate was 18.7% for the first nine months of 1996 compared to 20.1% for 1995. This decline reflects competitive constraints on price increases in U.S. service lines, growth of sales with our very large customers and higher volume growth in the staff leasing business. Selling, general and administrative expenses of $367,791,000 were 13.8% higher than last year. The spending rate was 15.3% of sales, 1.1 percentage point below last year's rate. Expenses continue to be closely monitored in response to tightening margins in both U.S. and overseas markets. Earnings before taxes were $86,951,000, an increase of 8.1% over 1995. These earnings averaged a pretax margin of 3.6%, or .5 percentage point decrease from 1995. Lower interest income accounted for .2 percentage point of this decline, and the net of lower gross margin rates, offset by a decreased expense spending rate, accounted for the remainder. Income taxes were 40.4% of pretax earnings and were 1.7 percentage point higher than last year's first nine months' income tax rate. The absence of the targeted jobs tax credit, reduced tax exempt income, and increased state and local taxes are the largest components that account for this change. Net earnings were $51,781,000, or 5.0% higher than the first nine months of 1995. Earnings per share were $1.36 compared to $1.30 last year. - 9 - Financial Condition The Company's financial condition continues to be strong with cash and equivalents and short-term investments of $46.0 million. This compares to the $127.5 million as of December 31, 1995. This decline resulted primarily from the growth in accounts receivable; the growth in accounts receivable resulted from the strong increase in sales during the nine months of 1996. Assets totaled $805,530,000 at September 29, 1996, an increase of 12.1% over the $718,687,000 at December 31, 1995. Working capital increased $21,284,000 during the nine-month period. The components of working capital, notably accounts receivable, have changed primarily due to the strong increase in business activity during the year. The current ratio was 2.1 at September 29, 1996, a decline of .2 percentage point since December 31, 1995. The quarterly dividend rate applicable to Class A and Class B shares outstanding was $.21 per share in the third quarter of 1996. This compares to a dividend rate of $.20 per share in the third quarter of 1995. -------------------------------------------------------------- Companies for which this report is filed are: Kelly Services, Inc. and its subsidiaries, Kelly Assisted Living Services, Inc., Kelly Properties, Inc., Kelly Professional and Technical Services, Inc., Kelly Services (Canada), Ltd., Les Services Kelly (Quebec) Inc., Lenore Simpson Personnel, Ltd., Societe Services Kelly, Kelly Professional Services (France), Inc., Kelly Services (UK), Ltd., Kelly Services (Ireland), Ltd., Kelly Services (Australia), Ltd., Kelly Services (New Zealand), Ltd., Kelly Services (Nederland), B.V., Kelly Services of Denmark, Inc., OK Personnel Service Holding SA, Kelly de Mexico, S.A. de C.V., Kelly Services Norge A.S., KSI Acquisition Corp., Kelly Pinpoint, Inc., Your Staff, Inc., The Wallace Law Registry, Inc., Kelly Services France S.A., Bourse Du Travail Temporaire 2000, Kelly Formation S.A.R.L., Kelly Services Luxembourg S.A.R.L., Kelly Services Italia S.R.L., Kelly Services Iberia Holding Company, S.L., Kelly Services Empleo E.T.T., S.L. and Kelly Services Seleccion y Formacion, S.L. The information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the period in this filing. - 10 - PART II. OTHER INFORMATION Item 1. Legal Proceedings. ------------------ Reference is made to Item 3, Legal Proceedings, of the Company's Annual Report on Form 10-K for the year ended December 31, 1995 and to the description therein of the proposed imposition by the Internal Revenue Service of an accumulated earnings tax in connection with an audit of the Company's consolidated federal tax liability for the years 1988, 1989 and 1990. As disclosed in Item 1, Legal Proceedings, of the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996, this assessment was waived in its entirety by the Internal Revenue Service in April, 1996. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) See Index to Exhibits required by Item 601, Regulation S-K, set forth on page 12 of this filing. (b) No reports on Form 8-K were filed during the quarter for which this report is filed. - 11 - SIGNATURE 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. KELLY SERVICES, INC. Date: November 12, 1996 /s/ P. K. Geiger P. K. Geiger Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) - 12 - INDEX TO EXHIBITS REQUIRED BY ITEM 601, REGULATION S-K --------------------- Exhibit No. Description Document - ------- ----------- -------- 3 By-Laws, as amended on August 20, 1996. 2 4 Rights of security holders are defined in Articles Fourth, Fifth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth and Fifteenth of the Certificate of Incorporation. (Reference is made to Exhibit 3.2 to the Form 10-Q for the quarterly period ended June 30, 1996, filed with the Commission in August, 1996, which is incorporated herein by reference.) 27 Financial Data Schedule 3
                           
                            - 1 -

                     KELLY SERVICES, INC.

                        B Y - L A W S 


                          ARTICLE I

                           OFFICES

     Section 1.  The registered office shall be in the 
County of New Castle, State of Delaware.  

     Section 2.  The corporation may also have offices at 
such other places both within and without the State of 
Delaware as the board of directors may from time to time 
determine or the business of the corporation may require.  


                           ARTICLE II

                    MEETINGS OF STOCKHOLDERS

     Section 1.  All meetings of the stockholders for the 
election of directors shall be held at such place either 
within or without the State of Delaware as shall be 
designated from time to time by the board of directors and 
stated in the notice of the meeting.  Meetings of 
stockholders for any other purpose may be held at such time 
and place, within or without the State of Delaware, as shall 
be stated in the notice of the meeting or in a duly executed 
waiver of notice thereof.

     Section 2.  Annual meetings of stockholders shall be 
held on such date and at such time as shall be designated 
from time to time by the board of directors and stated in 
the notice of the meeting, at which shareholders shall elect 
by a plurality vote a board of directors, and transact such 
other business as may properly be brought before the 
meeting.  

     Section 3.  Written notice of the annual meeting 
stating the place, date, and hour of the meeting shall be 
given to each stockholder entitled to vote at such meeting 
not less than ten days nor more than 60 days before the date 
of the meeting.  

     Section 4.  The Secretary of the corporation shall 
prepare and make, at least ten days before every meeting of 
stockholders, a complete list of the stockholders entitled 
to vote at the meeting, arranged in alphabetical order, and 
showing the address of each stockholder and the number of 
shares registered in the name of each stockholder.  Such 
list shall be open to the examination of any stockholder, 
for any purpose germane to the meeting, during ordinary 
business hours, for a period of at least ten days prior to 
the meeting at the place where the meeting is to be held.  

                           
                            - 2 -


The list shall also be produced and kept at the time and 
place of the meeting during the whole time thereof, and may 
be inspected by any stockholder who is present.  

     Section 5.  Special meetings of the stockholders, for 
any purpose or purposes, may be called by the Board of 
Directors or by a committee of the Board of Directors which 
has been duly designated and empowered by the Board of 
Directors.  Such special meetings may not be called by any 
other person or persons.    

     Section 6.  Written notice of a special meeting stating 
the place, date, and hour of the meeting and the purpose or 
purposes for which the meeting is called, shall be given not 
less than ten days nor more than 60 days before the date of 
the meeting, to each stockholder entitled to vote at such 
meeting.  

     Section 7.  The holders of 60% of the stock issued and 
outstanding and entitled to vote thereat, present in person 
or represented by proxy, shall constitute a quorum at all 
meetings of the stockholders for the transaction of business 
except as otherwise provided by statute or by the 
certificate of incorporation.  If, however, such quorum 
shall not be present or represented at any meeting of the 
stockholders, the stockholders entitled to vote thereat, 
present in person or represented by proxy, shall have power 
to adjourn the meeting from time to time, without notice 
other than announcement at the meeting, until a quorum shall 
be present or represented.  At such adjourned meeting, at 
which a quorum shall be present or represented, any business 
may be transacted which might have been transacted at the 
meeting as originally notified.  If the adjournment is for 
more than thirty days or if after the adjournment a new 
record date is fixed for the adjourned meeting, a notice of 
the adjourned meeting shall be given to each stockholder of 
record entitled to vote at the meeting. 

     Section 8.  When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having 
voting power present in person or represented by proxy shall 
decide any question brought before such meeting, unless the 
question is one which by express provision of the statutes 
or of the certificate of incorporation, a different vote is 
required in which case such express provision shall govern 
and control the decision of such question.  

     Section 9.  Each stockholder shall at every meeting of 
the stockholders be entitled to one vote in person or by 
proxy appointed by an instrument in writing subscribed by 

                           
                           - 3 -


such stockholder for each share of the capital stock having 
voting power held by such stockholder, but no proxy shall be 
voted on after three years from its date, unless the proxy 
provides for a longer period. 

     Section 10.  No action required or permitted to be 
taken at any annual meeting or special meeting of the 
stockholders of this corporation may be taken without a 
meeting and the power of the stockholders to consent in 
writing, without a meeting, to the taking of any action is 
specifically denied.


                         ARTICLE III

                          DIRECTORS

     Section 1.  The number of directors which shall 
constitute the whole board shall be no fewer than five (5) 
and no more than nine (9).  The directors shall be elected 
as provided in Section 2 of this Article.  The directors 
shall be classified with respect to the term for which they 
shall severally hold office by dividing them into three 
classes, as nearly equal in number as may be, the classes to 
hold office for successive terms of three years, 
respectively, but all directors shall hold office until 
their successors are elected and qualified.  

     Section 2.  Vacancies and newly created directorships 
resulting from any increase in the authorized number of 
directors may be filled by a majority of the directors then 
in office, though less than a quorum, or by a sole remaining 
director, and a director so chosen shall hold office until 
the next annual election of the class for which such 
director shall have been chosen and until a successor is 
duly elected and qualifies, unless sooner displaced.  If 
there are no directors in office, then an election of 
directors may be held in the manner provided by statute.  

     Section 3.  The business of the corporation shall be 
managed by its board of directors which shall have and 
exercise full power in the management and conduct of the 
business and affairs of the corporation and do all such 
lawful acts and things as are not by statute or by the 
certificate of incorporation or by these by-laws directed or 
required to be exercised or done by the stockholders.  



                           
                           - 4 -


             MEETINGS OF THE BOARD OF DIRECTORS

     Section 4.  The board of directors of the corporation
may hold meetings, both regular and special, either within 
or without the State of Delaware.

     Section 5.  Immediately following and at the place of 
holding the annual meeting of stockholders, the board of 
directors, as constituted upon final adjournment of such 
annual meeting, shall convene for the purpose of electing 
officers and transacting any other business properly brought 
before it.  No notice of such meeting to the newly elected 
directors shall be necessary in order legally to constitute 
the meeting, provided a quorum shall be present.  

     Section 6.  Regular meetings of the board of directors 
may be held without notice at such time and at such place as 
shall from time to time be determined by the board.

     Section 7.  Special meetings of the board may be called 
by the president on one day's notice to each director, 
either personally or by mail or by telegram; special 
meetings shall be called by the president or secretary in 
like manner and on like notice on the written request of a 
majority of the directors then in office. 

     Section 8.  At all meetings of the board a majority of 
the board of directors shall constitute a quorum for the 
transaction of business and the act of a majority of the 
directors present at any meeting at which there is a quorum 
shall be the act of the board of directors, except as may be 
otherwise specifically provided by statute or by the 
certificate of incorporation.  If a quorum shall not be 
present at any meeting of the board of directors, the 
directors present thereat may adjourn the meeting from time 
to time, without notice other than announcement at the 
meeting, until a quorum shall be present.

     Section 9.  Unless otherwise restricted by the 
certificate of incorporation or these by-laws, any action 
required or permitted to be taken at any meeting of the 
board of directors or of any committee thereof may be taken 
without a meeting, if all members of the board or committee, 
as the case may be, consent thereto in writing, and the 
writing or writings are filed with the minutes of 
proceedings of the board or committee.



                           
                            - 5 -


                   COMMITTEES OF DIRECTORS

     Section 10.  The board of directors may, by resolution 
passed by majority of the whole board, designate one or more 
committees, each committee to consist of two or more of the 
directors of the corporation.  The board may designate one 
or more directors as alternate members of any committee, who 
may replace any absent or disqualified member at any meeting 
of the committee.  Any such committee, to the extent 
provided in the resolution, shall have and may exercise the 
powers of the board of directors in the management of the 
business and affairs of the corporation, and may authorize 
the seal of the corporation to be affixed to all papers 
which may require it.  Such committee or committees shall 
have such name or names as may be determined from time to 
time by resolution adopted by the board of directors.

     Section 11.  Each committee shall keep regular minutes 
of its meetings and report the same to the board of 
directors when required.


                  COMPENSATION OF DIRECTORS

     Section 12.  Directors, as such, shall not receive any 
stated salary for their services.  By resolution of the 
board of directors, however, directors who are not officers 
may be paid an annual retainer, a fixed sum for attendance 
at each meeting of the board of directors and its committees 
of which they are members, and their expenses of attendance 
at such meetings.


                         ARTICLE IV

                           NOTICES

     Section 1.  Whenever, under the provisions of the 
statutes or of the certificate of incorporation or of these 
by-laws, notice is required to be given to any director or
stockholder, it shall not be construed to mean personal 
notice but such notice may be given in writing, by mail, 
addressed to such director or stockholder, at his or her 
address as it appears on the records of the corporation, 
with postage thereon prepaid, and such notice shall be 
deemed to be given at the time when the same shall be 
deposited in the United States mail.  Notice to directors
may also be given by telegram.


                           
                            - 6 -


     Section 2.  Whenever any notice is required to be given 
under the provisions of the statutes or of the certificate 
of incorporation or of these by-laws, a waiver thereof in 
writing, signed by the person or persons entitled to said 
notice, whether before or after the time stated therein, 
shall be deemed equivalent thereto.


                          ARTICLE V

                           OFFICERS

     Section 1.  The officers of the corporation shall be 
chosen by the board of directors and shall be a chairman of 
the board, president, executive vice presidents, senior vice 
presidents, vice presidents, a secretary, a treasurer, one 
or more assistant secretaries and treasurers, a controller 
and such other officers and agents as the board may deem 
necessary for the transaction of the business of the 
corporation.  The same person may be selected to fill more 
than one office except the offices of president and vice 
president.  The board of directors shall choose the 
president from among their own number.  A vice president who 
is not a director shall not succeed to or fill the office of 
president.  Every officer and agent appointed by the board
of directors shall be employed on a month-to-month basis 
only, unless otherwise provided in a written contract of 
employment specifically approved by the board of directors. 

     Section 2.  The salaries of all officers and agents of 
the corporation shall be fixed by the president of the 
company subject to revision by the board of directors.  

     Section 3.  Any officer elected or appointed by the 
board of directors may be removed at any time either with or 
without cause by the affirmative vote of a majority of the 
board of directors.  Any vacancy occurring in any office of 
the corporation shall be filled by the board of directors.  


                    CHAIRMAN OF THE BOARD

     Section 4.  The chairman of the board shall have 
general control of the affairs of the corporation, subject 
only to the board of directors.  The chairman shall preside 
at all meetings of the board of directors at which he or she 
is present.



                           
                            - 7 -


                        THE PRESIDENT

     Section 5.  The president shall be the chief executive 
officer and the chief operating officer of the corporation; 
shall preside at all meetings of the stockholders; shall, in 
the absence or incapacity of the chairman of the board, 
perform all the duties and functions of that office; shall 
see that all orders and resolutions of the board of 
directors are carried into effect; and shall perform the 
duties that usually pertain to this office.


                  EXECUTIVE VICE PRESIDENTS

     Section 6.  The board of directors may appoint one or 
more executive vice presidents, who shall direct the 
administration of the affairs of the corporation, being 
responsible to the president and to the chairman of the 
board.  The president shall designate the order in which 
executive vice presidents shall perform all of the functions 
and duties of the office of president in the absence or 
incapacity of the president, and shall designate the order 
in which executive vice presidents shall perform all of the 
functions and duties of the chairman of the board in the 
absence or incapacity of both the chairman of the board and 
the president.  Executive vice presidents shall have such 
general powers and duties of supervision and management as 
shall be assigned to them by the chairman of the board and 
the president.


                   SENIOR VICE PRESIDENTS

     Section 7.  The board of directors may appoint one or 
more senior vice presidents, who shall have such general 
powers and duties of supervision and management as shall be 
assigned to them by the chairman of the board, the 
president, and the executive vice presidents.  The president 
shall designate the order in which senior vice presidents 
shall perform all of the functions and duties of the office 
of president in the absence or incapacity of the president 
and the executive vice presidents, and shall designate the 
order in which senior vice presidents shall perform all of 
the functions and duties of the chairman of the board in the 
absence or incapacity of the chairman of the board, the 
president, and the executive vice presidents.



                           
                            - 8 -


                       VICE PRESIDENTS

     Section 8.  The board of directors may appoint one or 
more vice presidents, who shall have such general powers and 
duties of supervision and management as shall be assigned to 
them by the chairman of the board, the president, the 
executive vice presidents, and the senior vice presidents.  
The president shall designate the order in which vice 
presidents shall perform all of the functions and duties of 
the office of president in the absence or incapacity of the 
president, the executive vice presidents, and the senior 
vice presidents, and shall designate the order in which vice 
presidents shall perform all of the functions and duties of 
the chairman of the board in the absence or incapacity of 
the chairman of the board, the president, the executive vice 
presidents, and the senior vice presidents.  


            THE SECRETARY AND ASSISTANT SECRETARIES

     Section 9.  The secretary shall attend all meetings of 
the board of directors and all meetings of the stockholders 
and record all the proceedings of the meetings of the 
corporation and of the board of directors in a book to be 
kept for that purpose and shall perform like duties for the 
standing committees when required.  The secretary shall 
give, or cause to be given, notice of all meetings of the 
stockholders and special meetings of the board of directors, 
and shall perform such other duties as may be prescribed by 
the board of directors or president, under whose supervision 
he or she shall be.  The secretary shall have custody of the 
corporate seal of the corporation.  The secretary, or an 
assistant secretary, shall have authority to affix the same 
to any instrument requiring it and when so affixed, it may 
be attested by the secretary's signature or by the signature 
of such assistant secretary. 

     Section 10.  The assistant secretary, or if there be 
more than one, the assistant secretaries in the order 
determined by the board of directors (or if there be no such 
determination, then in the order of their election), shall, 
in the absence of the secretary or in the event of the 
secretary's inability or refusal to act, perform the duties 
and exercise the powers of the secretary and shall perform 
such other duties and have such other powers as the board of 
directors may from time to time prescribe.  



                           
                            - 9 -


           THE TREASURER AND ASSISTANT TREASURERS

     Section 11.  The treasurer shall have the custody of 
the corporate funds and securities and shall deposit all 
moneys and other valuable effects in the name and to the 
credit of the corporation in such depositories as may be 
designated by the board of directors.  

     Section 12.  The treasurer shall disburse the funds of 
the corporation as may be ordered by the board of directors, 
taking proper vouchers for such disbursements, and shall 
render to the president and the board of directors, at its 
regular meetings, or when the board of directors so 
requires, an account of all transactions as treasurer.  
The treasurer shall have such other duties as may be delegated 
to him or her from time to time by the president, subject to 
review by the board of directors.

     Section 13.  The assistant treasurer, or if there shall 
be more than one, the assistant treasurers in the order 
determined by the board of directors (or if there be no such 
determination, then in the order of their election), shall, 
at the direction of or in the absence of the treasurer or in 
the event of his inability or refusal to act, perform the 
duties and exercise the powers of the treasurer and shall 
perform such other duties and have such other powers as the 
board of directors may from time to time prescribe.  


                         CONTROLLER

     Section 14.  The controller shall account for all 
transactions, including all receipts and disbursements, of 
the corporation and shall render to the president and the 
board of directors at its regular meetings or when the board 
of directors so requires an account of all such transactions 
and of the financial condition of the corporation.  He shall 
have such other duties as may be delegated to him from time 
to time by the president, subject to review by the board of 
directors.  


                        RESIGNATIONS

     Section 15.  Any director or officer may resign at any 
time, and if made in writing, the resignation is to be 
deemed accepted and effective from the time of its receipt 
by the corporation, unless some later time be fixed in the 
resignation, and then from that time.



                           
                           - 10 -


                         ARTICLE VI

                    CERTIFICATES OF STOCK

     Section 1.  Every holder of stock in the corporation 
shall be entitled to have a certificate, signed by, or in 
the name of the corporation by, the chairman of the board of 
directors or the president or a vice president or the 
treasurer or an assistant treasurer, or the secretary or an 
assistant secretary of the corporation, under the seal of 
the corporation, certifying the number of shares owned by 
him in the corporation.  

     Section 2.  Where a certificate is countersigned (1) by 
a transfer agent other than the corporation or its employee, 
and, (2) by a registrar other than the corporation or its 
employee, the signatures of the officers of the corporation
may be facsimiles.  In case any officer who has signed or 
whose facsimile signature has been placed upon a certificate 
shall have ceased to be such officer before such certificate 
is issued, it may be issued by the corporation with the same 
effect as if he or she were such officer at the date of 
issue.  


                      LOST CERTIFICATES

     Section 3.  The board of directors may direct a new 
certificate or certificates to be issued in place of any 
certificate or certificates theretofore issued by the 
corporation alleged to have been lost, stolen or destroyed, 
upon the making of an affidavit of the fact by the person 
claiming the certificate of stock to be lost, stolen or 
destroyed.  When authorizing such issue of a new certificate 
or certificates, the board of directors may, in its 
discretion and as a condition precedent to the issuance 
thereof, require the owner of such lost, stolen or destroyed 
certificate or certificates, or such owner's legal 
representative, to advertise the same in such manner as it 
shall require and/or to give the corporation a bond in such 
sum as it may direct as indemnity against any claim that may 
be made against the corporation with respect to the 
certificate alleged to have been lost, stolen or destroyed.  


                     TRANSFERS OF STOCK

     Section 4.  Upon surrender to the corporation or the 
transfer agent of the corporation of a certificate for 
shares duly endorsed or accompanied by proper evidence of 

                           
                           - 11 -


succession, assignment or authority to transfer, it shall be 
the duty of the corporation to issue a new certificate to 
the person entitled thereto, cancel the old certificate and 
record the transaction upon its books.  


                     FIXING RECORD DATE

     Section 5.  In order that the corporation may determine 
the stockholders entitled to notice of or to vote at any 
meeting of stockholders or any adjournment thereof, or 
entitled to receive payment of any dividend or other 
distribution or allotment of any rights, or entitled to 
exercise any rights in respect of any change, conversion or 
exchange of stock or for the purpose of any other lawful 
action, the board of directors may fix, in advance, a record 
date, which shall not be more than sixty nor less than ten 
days before the date of such meeting, nor more than sixty 
days prior to any other action.  In no event shall such 
record date precede the date of the resolution establishing 
it.  A determination of stockholders of record entitled to 
notice of or to vote at a meeting of stockholders shall 
apply to any adjournment of the meeting; provided, however, 
that the board of directors may fix a new record date for 
the adjourned meeting. 


                   REGISTERED STOCKHOLDERS

     Section 6.  The corporation shall be entitled to
recognize the exclusive right of a person registered on its 
books as the owner of shares to receive dividends, and to 
vote as such owner, and to hold liable for calls and 
assessments a person registered on its books as the owner of 
shares, and shall not be bound to recognize any equitable or 
other claim to interest in such share or shares on the part 
of any other person, whether or not it shall have express or 
other notice hereof, except as otherwise provided by the 
laws of Delaware.  


                         ARTICLE VII

                     GENERAL PROVISIONS

                          DIVIDENDS

     Section 1.  Dividends upon the common stock of the 
corporation, subject to the provisions of the certificate of 
incorporation, if any, may be declared by the board of 

                           
                           - 12 -


directors at any regular or special meeting, pursuant to 
law.  Dividends may be paid in cash, in property, or in 
shares of the common stock, subject to the provisions of the 
certificate of incorporation. 

     Section 2.  Before payment of any dividend, there may 
be set aside out of any funds of the corporation available 
for dividends such sum or sums as the directors from time to 
time, in their absolute discretion, think proper as a 
reserve or reserves to meet contingencies, or for equalizing 
dividends, or for repairing or maintaining any property of 
the corporation, or for such other purpose as the directors 
shall think conducive to the interest of the corporation, 
and the directors may modify or abolish any such reserve in 
the manner in which it was created.  


                         ANNUAL STATEMENT

     Section 3.  The board of directors shall present at 
each annual meeting a full and clear statement of the 
business and condition of the corporation.  


                        CHECKS AND NOTES

     Section 4.  All checks or demands for money of the 
corporation shall be signed by such officer or officers or 
such other person or persons as the board of directors may 
from time to time designate.  The notes of the corporation 
shall be signed by at least two of the officers of the 
corporation appointed by the board of directors.  


                          FISCAL YEAR

     Section 5.  The fiscal year of the corporation shall 
end at the close of business on the Sunday nearest 
December 31.


                             SEAL

     Section 6. The corporate seal shall be circular in form 
and contain around its circumference the full corporate name 
of the corporation and the state of incorporation and in the 
center the words "Corporate Seal" and the year of 
incorporation.  The seal may be used by causing it or a 
facsimile thereof to be impressed or affixed or reproduced 
or otherwise.



                             
                             - 13 -


                        INDEMNIFICATION

     Section 7.  A director or officer, or former director 
or officer, of the corporation, or any person who may have 
served at its request as a director or officer of 
another corporation in which it owns stock or of which it is 
a creditor, and such person's heirs, executors, and 
administrators, shall be indemnified by the corporation 
against all expenses (including attorneys' fees), judgments, 
fines and amounts paid in settlement actually and reasonably 
incurred by such person in connection with any action, suit 
or proceeding whether civil, criminal, administrative or 
investigative (other than an action by or in the right of 
the corporation) to which he or she may be made a party by 
reason of any alleged acts or omissions as such director or 
officer if such person acted in good faith and in a manner 
he or she reasonably believed to be in or not opposed to the 
best interests of the corporation and, with respect to any 
criminal action or proceeding, such person had no reasonable 
cause to believe his or her conduct was unlawful.

     Section 8.  A director or officer, or former director 
or officer, of the corporation, or any person who may have 
served at its request as a director or officer of another 
corporation in which it owns stock or of which it is a 
creditor, and such person's heirs, executors, and 
administrators, shall be indemnified by the corporation 
against all expenses (including attorneys' fees) actually 
and reasonably incurred by him or her in connection with any 
threatened, pending or completed action or suit by or in the 
right of the corporation to procure a judgment in its favor 
by reason of any alleged acts or omissions as such director 
or officer if he or she acted in good faith and in a manner 
he or she reasonably believed to be in or not opposed to the 
best interests of the corporation, and except that no 
indemnification shall be made in respect of any claim, issue 
or matter as to which such person shall have been adjudged 
to be liable to the corporation unless and only to the 
extent that the Court of Chancery or the court in which such 
action or suit was brought shall determine upon application 
that despite the adjudication of liability but in view of 
all of the circumstances of the case, such person is fairly 
and reasonably entitled to indemnity for such expenses which 
the Court of Chancery or such other court shall deem proper.

     Section 9.  To the extent that a director or officer of 
the corporation has been successful on the merits or 
otherwise in defense of any action, suit or proceeding 
referred to in Section 7 or 8 of this Article VII, or in 

                           
                           - 14 -


defense of any claim, issue or matter therein, he or she 
shall be indemnified against expenses (including attorneys' 
fees) actually and reasonably incurred by him in connection 
therewith.

     Section 10.  Expenses incurred by a director or 
officer, former director or officer, or such person's heirs, 
executors and administrators in defending a civil or 
criminal action may be paid by the corporation in advance of 
the final disposition of such action, suit or proceeding 
upon receipt of an undertaking by or on behalf of such 
director or officer, or such person's heirs, executors or 
administrators to repay such amount if it shall ultimately 
be determined that he or she is not entitled to be 
indemnified by the corporation.

     Section 11.  The foregoing rights of indemnification 
and advancement of expenses shall be in addition to and not 
exclusive of any and all other rights to which such director 
or officer, or former director or officer, or such person's 
heirs, executors or administrators might be entitled as a 
matter of law. 


                          ARTICLE VIII

                           AMENDMENTS

     Section 1.  Subject to the provisions of statute, the 
by-laws of the corporation may be adopted, amended or 
repealed by the affirmative vote of a majority of the total 
number of directors or by the affirmative vote of holders of 
75% of the voting power of all of the stock of this 
corporation entitled to vote in elections of directors, 
provided, however, that no by-law or by-laws fixing the
qualifications, classifications or term of office of any 
member or members of the then existing board shall be made 
or altered during the term of office of the then existing 
board of directors.  The by-laws may contain any provision 
for the regulation and management of the affairs of the 
corporation and the rights or powers of its stockholders, 
directors, officers, or employees not inconsistent with the 
laws of the State of Delaware.



 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 9-MOS DEC-29-1996 SEP-29-1996 9,603 36,424 566,080 11,165 0 639,911 164,032 79,514 805,530 302,608 0 0 0 40,116 462,806 805,530 0 2,411,435 0 1,960,202 0 0 0 86,951 35,170 51,781 0 0 0 51,781 1.36 0