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Index to Exhibits on page 13
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 June 28, 1998
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)
(248) 362-4444
----------------------------------------------------
(Registrant's telephone number, including area code)
No Change
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
At July 31, 1998, 34,695,228 shares of Class A and 3,569,266 shares of Class B
common stock of the Registrant were outstanding.
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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 11
Signature 12
Index to Exhibits Required by
Item 601, Regulation S-K 13
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands of dollars except per share items)
13 Weeks Ended 26 Weeks Ended
----------------------------- -----------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
Sales of services $1,001,286 $959,726 $1,960,668 $1,840,572
Cost of services 823,542 789,618 1,615,014 1,514,126
----------- --------- ----------- -----------
Gross profit 177,744 170,108 345,654 326,446
Selling, general and
administrative expenses 143,584 137,636 286,653 269,855
----------- --------- ----------- -----------
Earnings from operations 34,160 32,472 59,001 56,591
Interest income, net 793 486 1,486 490
----------- --------- ----------- -----------
Earnings before income taxes 34,953 32,958 60,487 57,081
Income taxes 14,330 13,515 24,800 23,410
----------- --------- ----------- -----------
Net earnings $ 20,623 $ 19,443 $ 35,687 $ 33,671
=========== ========= =========== ===========
Earnings per share:
Basic $.54 $.51 $.93 $.88
Diluted .54 .51 .93 .88
Average shares outstanding
(thousands):
Basic 38,238 38,078 38,207 38,069
Diluted 38,497 38,131 38,449 38,114
Dividends per share $.23 $.22 $.45 $.43
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KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS AS OF JUNE 28, 1998 AND DECEMBER 28, 1997
(In thousands of dollars)
ASSETS 1998 1997
- ------ ------------ ------------
CURRENT ASSETS: (UNAUDITED)
Cash and equivalents $ 73,328 $ 76,690
Short-term investments 92,560 67,301
Accounts receivable, less
allowances of $12,840 and
$12,375, respectively 564,807 572,134
Prepaid expenses and other
current assets 57,127 54,847
----------- ---------
Total current assets 787,822 770,972
PROPERTY AND EQUIPMENT:
Land and buildings 43,173 44,405
Equipment, furniture and
leasehold improvements 154,216 130,472
Accumulated depreciation (72,523) (62,144)
----------- ---------
Total property and equipment 124,866 112,733
INTANGIBLES AND OTHER ASSETS 89,320 83,524
----------- ---------
TOTAL ASSETS $1,002,008 $967,229
=========== =========
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 48,653 $ 54,958
Accounts payable 58,615 60,408
Payroll and related taxes 225,238 197,092
Accrued insurance 66,108 61,077
Income and other taxes 26,102 33,865
----------- ---------
Total current liabilities 424,716 407,400
----------- ---------
STOCKHOLDERS' EQUITY:
Capital stock, $1 par value 40,116 40,116
Treasury stock, 1,851,000 shares in
1998 and 1,953,000 shares in 1997,
respectively, at cost (6,143) (6,214)
Paid-in capital 13,751 10,980
Earnings invested in the business 540,526 522,039
Accumulated foreign currency adjustments (10,958) (7,092)
----------- ---------
Total stockholders' equity 577,292 559,829
----------- ---------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,002,008 $967,229
=========== =========
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands of dollars)
13 Weeks Ended 26 Weeks Ended
----------------------------- -----------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
Capital Stock
Class A common stock
Balance at beginning of period $ 36,540 $ 36,531 $ 36,538 $ 36,527
Conversions from Class B 1 6 3 10
--------- --------- --------- ---------
Balance at end of period 36,541 36,537 36,541 36,537
Class B common stock
Balance at beginning of period 3,576 3,585 3,578 3,589
Conversions to Class A (1) (6) (3) (10)
--------- --------- --------- ---------
Balance at end of period 3,575 3,579 3,575 3,579
Treasury Stock
Balance at beginning of period (6,282) (6,204) (6,214) (6,197)
Exercise of stock options 101 41 28 32
Restricted stock awards 38 59 43 61
--------- --------- --------- ---------
Balance at end of period (6,143) (6,104) (6,143) (6,104)
Paid-in Capital
Balance at beginning of period 12,627 8,365 10,980 8,265
Exercise of stock options 814 322 2,426 406
Restricted stock awards 310 393 345 409
--------- --------- --------- ---------
Balance at end of period 13,751 9,080 13,751 9,080
Earnings Invested in the Business
Balance at beginning of period 528,703 480,644 522,039 474,409
Net earnings 20,623 19,443 35,687 33,671
Cash dividends (8,800) (8,379) (17,200) (16,372)
--------- --------- --------- ---------
Balance at end of period 540,526 491,708 540,526 491,708
Accumulated Foreign Currency Adjustments
Balance at beginning of period (8,425) (4,826) (7,092) 306
Equity adjustment for foreign currency (2,533) (1,138) (3,866) (6,270)
--------- --------- --------- ---------
Balance at end of period (10,958) (5,964) (10,958) (5,964)
--------- --------- --------- ---------
Stockholders' Equity at end of period $577,292 $528,836 $577,292 $528,836
========= ========= ========= =========
Comprehensive Income
Net earnings $ 20,623 $ 19,443 $ 35,687 $ 33,671
Other comprehensive income - Foreign
currency adjustments (2,533) (1,138) (3,866) (6,270)
--------- --------- --------- ---------
Comprehensive Income $ 18,090 $ 18,305 $ 31,821 $ 27,401
========= ========= ========= =========
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE 26 WEEKS ENDED JUNE 28, 1998 AND JUNE 29, 1997
(In thousands of dollars)
1998 1997
---------- ----------
Cash flows from operating activities:
Net earnings $ 35,687 $ 33,671
Noncash adjustments:
Depreciation and amortization 13,808 12,849
Changes in certain working capital
components 26,792 26,516
--------- ---------
Net cash from operating activities 76,287 73,036
--------- ---------
Cash flows from investing activities:
Capital expenditures (25,198) (17,903)
Proceeds from sales and maturities of
short-term investments 814,996 967,617
Purchases of short-term investments (840,255) (978,024)
Increase in intangibles and other assets (8,529) (1,312)
--------- ---------
Net cash from investing activities (58,986) (29,622)
--------- ---------
Cash flows from financing activities:
(Decrease) increase in short-term
borrowings (6,305) 4,644
Dividend payments (17,200) (16,372)
Exercise of stock options and
restricted stock awards 2,842 908
--------- ---------
Net cash from financing activities (20,663) (10,820)
--------- ---------
Net change in cash and equivalents (3,362) 32,594
Cash and equivalents at beginning
of period 76,690 33,408
--------- ---------
Cash and equivalents at end of period $ 73,328 $ 66,002
========= =========
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
Second Quarter
Sales of services in the second quarter of 1998 were $1.0 billion, an
increase of 4.3% from the same period in 1997. Sales growth was
stronger in professional, technical and European operations, while U.S.
office-administrative and electronic assembly sectors grew at a more
modest rate.
Cost of services, consisting of payroll and related tax and benefit
costs of employees assigned to customers, increased 4.3% in the second
quarter as compared to the same period in 1997. Direct wage costs have
increased from 1997 at a rate somewhat higher than the general
inflation rate, due to strong worldwide demand for labor.
Gross profit of $177.7 million was 4.5% higher than the second quarter
of 1997, and gross profit as a percentage of sales increased to 17.8%
in 1998 from 17.7% in 1997. The strong performance of the
professional, technical and European businesses improved margins
slightly.
Selling, general and administrative expenses were $143.6 million in the
second quarter, an increase of 4.3% over the same period in 1997.
Expenses averaged 14.3% of sales in the second quarters of both 1998
and 1997. The moderate rate of growth of these expenses, which include
year 2000 costs and the expenditures related to the information
technology investment program, reflects the Company's commitment to
expense control.
Earnings from operations of $34.2 million were 5.2% greater than the
second quarter of 1997. Interest income (net) of $0.8 million
increased significantly as compared to the second quarter of 1997 due
to higher average cash and short-term investment balances.
Earnings before income taxes were $35.0 million, an increase of 6.1%,
compared to pretax earnings of $33.0 million for the same period in
1997. The pretax margin was 3.5% as compared to 3.4% in last year's
second quarter. Improved gross margins combined with effective expense
management were the principal reasons for the improvement. Income
taxes were 41.0% of pretax income in the second quarters of 1998 and
1997.
Net earnings were $20.6 million in the second quarter of 1998, an
increase of 6.1% over the second quarter of 1997. Basic and diluted
earnings per share were $.54 compared to $.51 in the same period last
year.
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Year-to-Date
Sales of services totaled $2.0 billion during the first six months of
1998, an increase of 6.5% over 1997. This increase reflects modest
growth in domestic sales and strong international sales.
Cost of services of $1.6 billion was 6.7% higher than last year,
reflecting volume growth and increases in payroll rates due to strong
demand for labor worldwide.
Gross profit increased 5.9% in 1998 due to increased sales, but at
lower gross profit rates. The gross profit rate was 17.6% for the
first six months of 1998 compared to 17.7% for 1997. This decline
reflects sales growth with large customers, not only in the United
States but in international markets as well.
Selling, general and administrative expenses of $286.7 million were
6.2% higher than last year. The spending rate was 14.6% of sales, 0.1
percentage point below last year's rate. Expenses included the
information technology investment program and year 2000 related
conversion costs. Strong controls continue to be effective in managing
expenses in proper relationship to sales growth.
Earnings before taxes were $60.5 million, an increase of 6.0% over
1997. These earnings averaged a pretax margin of 3.1% in the first six
months of both 1998 and 1997. Income taxes were 41.0% of pretax
earnings in the first six months of 1998 and 1997.
Net earnings were $35.7 million or 6.0% higher than the first six
months of 1997. Basic and diluted earnings per share were $.93
compared to $.88 last year. This was an increase of 5.7% over 1997.
Financial Condition
Assets totaled $1.0 billion at June 28, 1998, an increase of 3.6% over
the $967.2 million at December 28, 1997. Working capital was $363.1
million, nearly the same as the end of 1997. The current ratio was 1.9
at June 28, 1998 and December 28, 1997.
During the first six months of 1998, net cash from operating activities
was $76.3 million, an increase of 4.5% over the comparable period in
1997. This increase resulted principally from an increase in net
earnings, and depreciation and amortization. Capital expenditures of
$25.2 million in 1998 and $17.9 million in 1997 were principally for
expanding and improving the worldwide branch network and developing new
information systems.
The quarterly dividend rate applicable to Class A and Class B shares
outstanding was $.23 per share in the second quarter of 1998. This
represents a 5% increase compared to a dividend rate of $.22 per share
in the second quarter of 1997.
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The Company's financial position continues to be strong. This strength
will allow it to continue to aggressively pursue growth opportunities,
while supporting current operations.
New Accounting Standards
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information,"
effective for 1998, establishes standards for reporting information
about operating segments in annual financial statements and, beginning
in 1999, requires reporting of selected information about operating
segments in interim financial reports issued to stockholders. It also
establishes standards for related disclosures about products and
services, geographic areas, and major customers. The Company will
adopt SFAS 131 for its financial statements for the year ending
January 3, 1999. The Company has not completed its determination of
the impact that the adoption of this new accounting standard will have
on its consolidated financial statement disclosures.
In February 1998, the Financial Accounting Standards Board issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This Statement is effective for fiscal years
beginning after December 15, 1997. This Statement will not have an
impact on the Company's consolidated financial statements, because the
Company does not have a pension plan or other material postretirement
benefits as covered by the Statement.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."
This Statement requires companies to record derivatives on the balance
sheet as assets and liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would
be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. This Statement is effective for fiscal
years beginning after June 15, 1999, with earlier adoption encouraged.
This Statement will not have a material impact on the Company's
consolidated financial statements. The Company plans to adopt this
Statement beginning in the 1999 fiscal year.
Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," was issued
by the American Institute of Certified Public Accountants in March
1998. This SOP provides guidance on accounting for the costs of
computer software developed or obtained for internal use. Effective
for fiscal years beginning after December 15, 1998, this SOP requires
capitalization of certain internal-use computer software costs. The
Company does not expect it to have a material impact on its
consolidated financial statements. The Company plans to adopt this
Statement beginning in the 1999 fiscal year.
- 10 -
In April 1998, the American Institute of Certified Public Accountants
issued SOP 98-5, "Reporting on the Costs of Start-Up Activities."
Effective for fiscal years beginning after December 15, 1998, with
earlier application encouraged, this SOP provides guidance on the
financial reporting of start-up costs and organization costs. It
requires start-up activities and organization costs to be expensed as
incurred. This Statement is not expected to have a material impact on
the Company's consolidated financial statements. The Company will
adopt this Statement beginning in the 1999 fiscal year.
Forward Looking Statements
Except for the historical statements and discussions contained herein,
statements contained in this report relate to future events that are
subject to risks and uncertainties, such as: competition, changing
market and economic conditions, currency fluctuations, changes in laws
and regulations, the Company's ability to effectively implement and
manage its information technology programs and other factors discussed
in the report and in the Company's filings with the Securities and
Exchange Commission. Actual results may differ materially from any
projections contained herein.
-------------------------------------------------------------
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., 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.,
Kelly de Mexico, S.A. de C.V., Kelly Services Norge A.S., KSI
Acquisition Corp., Kelly Staff Leasing, Inc., The Wallace Law
Registry, Inc., Kelly Services (Switzerland) Inc., Kelly Services
France S.A., 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., Kelly
Services Seleccion y Formacion, S.L., Kelly Services CIS, Inc.,
Personnel Corps ZAO, Kelly Services (societa di fornitura
di lavaro temporaneo) SpA, Kelly Services Interim, Kelly Services
Interim (Belgium) SA and Kelly Services Select (Belgium) SA.
The information furnished reflects all adjustments, consisting of only
normal and recurring items, which are, in the opinion of management,
necessary for a fair presentation of the results of operations for the
period in this filing.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
(a) The annual meeting of stockholders of registrant was held
May 19, 1998.
(b) The nominee for director, as listed in the Company's
proxy statement dated April 24, 1998, was elected. The
directors whose terms of office continued after the
meeting are also listed in the proxy statement.
(c) A brief description and the results of the matters voted
upon at the meeting follow.
(1) Election of T. E. Adderley as director:
Shares voted "For" 3,522,509
Shares voted "Withhold" 1,715
(2) Approval of amendments to the standards for
performance-based annual incentive award criteria
and limitations for certain executive officers
under the Company's Short-Term Incentive Plan:
Shares voted "For" 3,513,585
Shares voted "Withhold" 7,849
Shares voted "Abstain" 2,790
(3) Ratification of the selection of
PricewaterhouseCoopers LLP as the Company's
independent auditors:
Shares voted "For" 3,522,929
Shares voted "Abstain" 1,295
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 13 of this filing.
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
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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: August 11, 1998
/s/ William K. Gerber
William K. Gerber
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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INDEX TO EXHIBITS
REQUIRED BY ITEM 601,
REGULATION S-K
---------------------
Exhibit
No. Description Document
- ------- ----------- --------
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).
10 Short-Term Incentive Plan, as amended and restated on
March 23, 1998. 2
11 Additional Earnings Per Share Information. 3
27.1 Financial Data Schedule for six months ended
June 28, 1998. 4
27.2 Restated Financial Data Schedule for six months ended
June 29, 1997. 5
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KELLY SERVICES, INC.
SHORT-TERM INCENTIVE PLAN
(As Amended and Restated by Action
of the Board of Directors)
(March 23, 1998)
Section 1 - Purposes.
This KELLY SERVICES, INC. SHORT-TERM INCENTIVE PLAN (the "Plan")
provides for annual incentive compensation payable in cash to those key
officers and employees of the Company or any affiliated entity, who, from
time to time, may be selected for participation. The Plan is intended to
provide incentives and rewards for the contributions of such employees toward
the successful achievement of the Company's financial and business goals
established for the current year.
Section 2 - Administration.
The Plan shall be administered by the Compensation Committee of the
Board of Directors. The Committee shall have authority to make rules and
adopt administrative procedures in connection with the Plan and shall have
discretion to provide for situations or conditions not specifically provided
for herein consistent with the overall purposes of the Plan.
Section 3 - Selection of Participants.
The Committee may delegate to the chief executive officer of the
Company, if also a director, its authority to select those key officers and
employees entitled to participate under the Plan each year. Approval of
eligible participants may be made at any time during each award year.
Section 4 - Establishing Performance Objectives.
The Committee annually, during the first quarter of the year, shall
establish one or more performance objectives which may consist of
quantitatively measurable performance standards or qualitative performance
standards, the achievement of which requires subjective assessment, or both.
With respect to those senior executive officers determined by the Committee
most likely to be named in the Summary Compensation Table of the Company's
proxy statement for the following year's Annual Meeting of Stockholders (the
"Named Officers"), the Committee shall apply the special provisions of
Section 7.
Section 5 - Establishing Target Awards.
During the first quarter of each year the Committee shall establish a
target award, expressed as a percentage of eligible salary for that year
(annual base salary, excluding pay for disability, overtime, bonuses, sick
pay and other reimbursements and allowances), for each officer or other
employee selected to participate under the Plan. Individual participants may
earn an award payout ranging from zero percent to the maximum percent of
their target award that the Committee may set in place from time to time.
The Committee shall also specify what portion of the target award, if any, is
based on the achievement of the Company performance objective(s) and what
-2-
portion or portions are based on the achievement of other objectives. The
Committee will establish an award payout schedule based upon the extent to
which the Company performance objective (or objectives) is or is not achieved
or exceeded.
Section 6 - Determining Final Awards.
The Committee shall have discretion to adjust final awards up or down
from the target award depending on (a) the extent to which the Company
performance objective(s) is either exceeded or not met, and (b) the extent to
which other objectives, e.g. subsidiary, division, department, unit or other
performance objectives are attained. The Committee shall have full
discretion to make other adjustments in final awards based on individual
performance as it considers appropriate in the circumstances.
Section 7 - Special Provisions Applicable to the Named Officers.
During the first quarter of each year the Committee shall consider the
establishment of a Plan target award, expressed as a percentage of eligible
salary, for each of the Named Officers.
The Committee shall next establish objective performance standards for
the corporate and/or divisional/departmental portions of the awards, and
determine what percentage of the target award, if any, will be based on each
such objective performance standard.
The Committee will select one or a combination of the following as
objective performance standards: pre-tax or after tax corporate earnings for
the year or the equivalent of such amounts in basic or diluted earnings per
share, sales, gross profit, earnings from operations, net operating profit
after taxes above the cost of capital, market share, customer satisfaction,
quality metrics, shareholder value and return on assets, investment or
equity.
The Committee shall also specify during the first quarter which, if any,
types or categories of extraordinary, unusual, non-recurring or other items
of gain or loss shall be excluded or otherwise not taken into account when
actual corporate or divisional/departmental results are calculated.
The Committee will finally establish an award payout schedule based upon
the extent to which the objective performance standard(s) is or is not
achieved or exceeded. The Committee retains the right in its discretion to
reduce an award based on Company, divisional/departmental or individual
performance, but will have no discretion to increase any award so calculated.
In addition to awards based on quantitatively determinable performance
standards, the Committee may, in its discretion and acting in the best
interests of the Company, set one or more other incentive goals for a portion
or all of a Named Officer's Plan award, the achievement of which need not be
quantitatively determinable but, instead, may require subjective assessments
of the quality of performance to which the goals relate ("qualitative
performance standards"). If a qualitative performance standard is
established with respect to a Named Officer's Plan target award, the
Committee shall specify at the time of the award what percentage of the total
award will be based on that objective. The Committee will, however, have
-3-
discretion to increase or decrease that portion of an award which does not
qualify for the performance-based exclusion from the Section 162(m) cap on
compensation deductibility.
In no event shall the total annual Plan award to a Named Officer,
including the non-performance-based portion, exceed $2,000,000 a year.
Section 8 - Time of Distribution.
Distribution of awards shall be made in one or more installments, as the
Committee shall determine. When made in one installment, distribution of the
award shall be made as soon as practicable following the close of the year
for which earned. If an award is less than $3,000, the full amount of the
award shall be paid in the year following the award year.
Section 9 - Forfeiture.
Until such time as the full amount of an award has been paid, a
participant's right to receive any unpaid amount shall be wholly contingent
and shall be forfeited if, prior to payment, the participant is no longer in
the employ of the Company, provided, however, that the Committee may in its
discretion waive such condition of continued employment. It shall be an
overriding precondition to the payment of any award (a) that the participant
not engage in any activity that, in the opinion of the Committee, is in
competition with any activity of the Company or any affiliated entity or
otherwise inimical to the best interests of the Company and (b) that the
participant furnish the Committee with all such information confirming
satisfaction of the foregoing condition as the Committee shall reasonably
request. If the Committee makes a determination that a participant has
engaged in any such competitive or otherwise inimical activity, such
determination shall operate to immediately cancel all then unpaid award
amounts.
Section 10 - Death.
Any award remaining unpaid, in whole or in part, at the death of a
participant shall be paid to the participant's legal representative or to a
beneficiary designated by the participant in accord with rules established by
the Committee.
Section 11 - No Right to Employment or Award.
No person shall have any claim or right to receive an award, and
selection to participate in the Plan shall not confer upon any employee a
right with respect to continued employment by the Company. Further the
Company and each affiliated entity reaffirms its at-will relationship with
its employees and expressly reserves the right at any time to dismiss a
participant free from any liability or claim, except as provided under this
Plan.
Section 12 - Amendment or Termination.
The term of the performance-based annual incentive criteria under
Section 7 of the Plan, assuming approval by stockholders, will be five Plan
years, 1998 through 2002, unless sooner terminated or amended by the Board.
-4-
The Board of Directors of the Company reserves the right at any time to
make any changes in the Plan as it may consider desirable or may discontinue
or terminate the Plan at any time, except that Section 7 cannot be changed in
anyway which would violate IRS regulations under Internal Revenue Code
Section 162(m) without stockholder approval.
-1-
ADDITIONAL EARNINGS PER SHARE INFORMATION
Kelly Services, Inc. and Subsidiaries
Details of the common shares used to compute earnings per share are as follows
in thousands except per share items:
13 Weeks Ended 26 Weeks Ended
--------------------- ---------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
-------- -------- -------- --------
Weighted average shares
outstanding 38,238 38,078 38,207 38,069
Adjustment for dilutive shares
from stock options under the
treasury stock method
Shares assumed issued 1,560 460 1,285 467
Less - Shares assumed
repurchased (1,301) (407) (1,043) (422)
-------- -------- -------- --------
Additional shares assumed
outstanding 259 53 242 45
-------- -------- -------- -------
Applicable shares as adjusted 38,497 38,131 38,449 38,114
======== ======== ======== ========
Net earnings $20,623 $19,443 $35,687 $33,671
======== ======== ======== ========
Diluted earnings per common
share $.54 $.51 $.93 $.88
==== ==== ==== ====
This calculation is submitted in accordance with Regulation
S-K item 601(b)(11).
5
1,000
6-MOS
JAN-03-1999
JUN-28-1998
73,328
92,560
577,647
12,840
0
787,822
197,389
72,523
1,002,008
424,716
0
0
0
40,116
537,176
1,002,008
0
1,960,668
0
1,615,014
0
0
0
60,487
24,800
35,687
0
0
0
35,687
.93
.93
5
1,000
6-MOS
DEC-28-1997
JUN-29-1997
66,002
38,442
589,922
11,880
0
727,560
177,011
73,645
911,017
382,181
0
0
0
40,116
488,720
911,017
0
1,840,572
0
1,514,126
0
0
0
57,081
23,410
33,671
0
0
0
33,671
.88
.88
