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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
__X__ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 29, 1996.
______ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-26094
SOS STAFFING SERVICES, INC.
(Exact name of Registrant as specified in its charter)
Utah 87-0295503
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
1415 South Main Street, Salt Lake City, Utah 84115
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 484-4400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered__
None None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.01 par value
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant, on March 3, 1997, based upon the closing sales price of the Common
Stock of $12.125 per share on that date, as reported on the Nasdaq Stock Market,
was approximately $62,898,195. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of March 3, 1997, the Registrant had outstanding 9,037,820 shares of Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 29, 1996 are incorporated by reference into Parts II and IV of
this Annual Report on Form 10-K. Portions of the Proxy Statement for
Registrant's 1997 Annual Meeting of Shareholders to be held May 14, 1997 are
incorporated by reference in Part III.
PART I
ITEM 1. BUSINESS
General
SOS Staffing Services, Inc. ("SOS" or the "Company") is a leading
independent regional provider of staffing services in the Mountain States (Utah,
Colorado, Arizona, Nevada, Idaho, Wyoming, New Mexico and Montana). In addition,
the Company has recently expanded its office network into other western states
(California, Oregon and Texas). SOS, a Utah corporation, began business in 1973,
initially doing business as SOS Employment Services and subsequently as SOS
Temporary Services. During 1996, the Company provided over 56,000 clerical,
light industrial, industrial, information technology and technical and
professional temporary staffing employees to approximately 8,000 businesses,
professional and service organizations and government agencies. In addition to
the SOS Staffing Services(R) trademark, the Company does business under
service-specific names in various markets where size permits diversification,
including Skill Staff (construction and manufacturing services), Industrial
Specialists (warehousing and labor services, and trucking), AccountStaff
(accounting services), SOS Technical Services (engineering, programming, design
and other technical services), PAMS (medical administrative support services),
ServCom Management Services (professional employer services), CGS Personnel
(mining, mineral exploration and environmental professional services), The
Performance Group (information technology services), Impact Staffing
(information technology services), and Wolfe & Associates (consulting and
information technology services). In February 1997 the Company purchased the
stock of Computer Group, Inc. (CGI) of Bellevue, Washington. CGI provides
information technology services. The Company's network consisted of 87 offices
as of December 29, 1996. There were 28 offices in Colorado, 24 in Utah, 9 in
Arizona, 6 in Nevada, 5 in Idaho, 4 in Texas, 3 in Wyoming, 3 in California, 2
in Oregon, 2 in New Mexico and 1 in Montana.
Business Strategy
SOS seeks to differentiate its services and enhance its growth and
profitability through the specific business strategies outlined below:
Focus on Higher Margin Business. The Company's operating results since
1991 have been significantly improved by its strategy to focus on higher margin
business. The Company has implemented this business strategy two ways. First,
the Company has expanded its range of services, in part through acquisitions, to
include higher margin specialty services such as information technology,
administrative staffing support services for medical facilities and other
professional staffing and consulting services. The Company intends to continue
to develop its capability to provide qualified employees to the information
technology sector, one of the fastest growing segments of the temporary staffing
industry. Second, the Company has continued its efforts to market temporary
staffing services to higher margin accounts. The Company has de-emphasized
marketing to accounts where competitive pricing makes margins unacceptable or to
accounts where workers' compensation costs adversely affect profitability. As
part of this continuing strategy, managers are trained in flexible pricing of
services.
Wide Variety of Services. The Company's strategy includes offering its
customers a wide variety of temporary staffing services, including clerical,
light industrial, industrial, construction, manufacturing, information
technology and technical and professional services. The Company also provides
related services to its customers including payrolling, professional employer
services, skill and drug testing and risk management consulting. In larger
markets, the Company offers these services through several separate offices
operating under established names. The Company also provides outsourcing
services to customers whereby the Company contracts to perform a particular
business function for an agreed price which includes providing staffing,
equipment and supplies. In a limited number of markets the Company provides
professional employer organization ("PEO") services, which offers to SOS
customers the benefit of employee leasing. The Company is also expanding its
on-site services where SOS locates an on-site manager to manage all of the
customer's temporary employee staffing requirements. The recent acquisition of
Wolfe & Associates allows the Company to provide business strategy, information
technology and telecommunication consulting services and offer staff
augmentation services for any follow-on projects.
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Pursue Opportunities in Smaller Markets. Over the last several years,
SOS has focused on opening hub offices in key metropolitan areas followed by
establishing offices in surrounding markets. This decentralized office
management strategy locates multiple offices in close proximity to customers and
temporary staff employees. The Company believes this strategy has allowed it to
rapidly gain market share with low entry costs. Once a hub office has been
established, the Company focuses on leveraging hub office resources to market
and deliver services to surrounding smaller markets. In these markets, which are
often too small to attract competition from national companies, the Company has
achieved significant penetration in relatively short periods and often becomes
the dominant provider of temporary staffing services.
Provide Entrepreneurial Offices with Strong Central Support. The
Company's offices are supported by strong central functions at corporate
headquarters which include marketing, recruiting and retention programs,
workers' compensation and other insurance services, training, accounts payable,
purchasing, credit, collection, legal review and other administrative support
services. Each office has access to the Company's computer system and its
proprietary software which provides information on customer requirements,
available applicants, temporary staffing employees on assignment and other
information which facilitates efficient response to customer job orders.
The Company has established budgets and quality performance standards
which are utilized at all offices. A substantial portion of region, area,
district and office manager compensation is incentive-based and focused on
meeting budgets and quality standards. Managers are also given considerable
discretion to respond to specific customer requirements. Office managers report
to region, area or district managers who typically have responsibility for three
to ten offices.
Emphasize Service and Value. The Company focuses on providing service
and value to its customers. The Company's staff employees seek to establish and
maintain long-term relationships with customers by developing knowledge of
customers' businesses, responding promptly to customer orders and monitoring job
performance and customer satisfaction. The Company has implemented this strategy
by targeting customer accounts where service and quality are perceived to be as
important as pricing of services, which allows the Company to be more selective
and to provide higher quality staffing while maintaining desired profit margins.
Focus on Risk Management. A significant component of the Company's
direct cost of providing services is workers' compensation expense. The Company
utilizes a comprehensive workers' compensation insurance program that includes
aggregate and occurrence loss caps with full insurance above the loss caps. SOS
utilizes the same insurance carrier to handle claims administration. The Company
has also developed claims avoidance and claims management procedures involving
loss control programs, monitoring of safety conditions at customer locations and
policies which prohibit staffing of high-risk work, such as logging or roofing.
This risk management strategy has favorably impacted rates and contributed to
improvements in gross profit margins. Under the direction of the Company's
professional risk manager, claims are investigated and closely monitored.
Reserves for claims below the loss cap are established by the Company's insurer
and supplemented with additional reserves established by the Company.
Growth Strategy
Management believes the Company has substantial opportunities to expand
the geographic range of its office network and to broaden the range of services
it offers to its customers. The Company's growth strategy is to increase sales,
profitability and market share by increasing revenues from existing offices,
opening offices in the Mountain States and other western states and completing
acquisitions in targeted markets and industry segments. Since its initial public
offering in June 1995, the Company has added a total of 17 offices through
internal growth and 28 offices through acquisitions, resulting in 87 offices as
of December 29, 1996.
Internal Growth. The Company maintains an aggressive posture in
increasing revenues from existing offices. Growth of any specific office is
restricted by its proximity to clients and by the availability of temporary
workers. As offices exceed certain thresholds, SOS has determined that dividing
such offices into one or more additional offices results in continued growth and
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greater recruiting capabilities, market penetration and profitability. Economies
of scale benefit the offices due to common area management and the spreading of
management and administrative costs over a larger revenue base. A key element of
the Company's growth strategy is the establishment of hub offices in key
population areas followed by the clustering of additional offices (including
offices providing specialized staffing services) in existing and surrounding
markets.
The Company estimates the capital cost of establishing a new office
ranges from $10,000 to $25,000, exclusive of working capital requirements. The
Company's new offices have historically achieved profitability in six to twelve
months while offices created by division of an existing office are usually
profitable from inception. The Company currently operates at least one office in
every major market in the Mountain States with a population base in excess of
100,000. SOS has identified over 40 additional potential office sites in smaller
Mountain States markets, specialty office sites in existing markets and office
sites in new markets to which it intends to expand.
Acquisitions. From the date of its initial public offering, the Company
has completed the acquisition of 20 staffing companies in the Mountain States
and other western states. The Company intends to continue to pursue acquisitions
as a key element of its growth strategy. The Company will target acquisitions in
markets in the western United States where the Company seeks to establish or
develop staffing operations, particularly acquisitions of specialty providers
such as information technology companies. The Company will also seek additional
acquisitions in the consulting area to augment the Wolfe & Associates base of
business. In addition, the Company will target major markets in the Mountain
States where the Company seeks to increase its market share and smaller markets
in the Mountain States where SOS does not currently have offices. The Company
has identified a number of potential acquisition candidates that provide
specialized staffing services in the Mountain States and other western states
for continued expansion. In targeting acquisitions, SOS focuses on established
businesses with a history of profitable operations. Acquisition criteria include
the strength of an acquisition candidate's operations, the quality of its
management, its market share and its compatibility with the Company's existing
lines of business. Compatibility may include having lines of business consistent
with those of SOS or specialty lines of business that can be expanded through
the Company's existing office network or compliment existing lines of business.
Management believes the Company's expertise and experience allows acquired
businesses to be integrated into the Company at relatively low incremental costs
and enables fixed costs to be spread over an increasing base.
Operations
Offices. As of December 29, 1996, the Company operated 87 offices in
eleven western states, including 28 in Colorado, 24 in Utah, 9 in Arizona, 6 in
Nevada, 5 in Idaho, 4 in Texas, 3 in Wyoming, 3 in California, 2 in Oregon, 2 in
New Mexico and 1 in Montana. Each of the offices operates as an independent
profit center with each manager having overall responsibility for sales and
marketing, recruiting and retention of temporary staffing employees and customer
relations. An office staff typically consists of the manager and up to six
regular staff personnel who market to the Company's customers, process
applicants, match customer needs with available temporary staffing employees and
monitor temporary staffing employee performance. Office managers report to
region, area or district managers who typically have responsibility for three to
ten offices. The Company has established two regions for management purposes -
Utah and Eastern Colorado. Where possible, the offices are grouped around a hub
office in a key metropolitan center or organized into regions, areas or
districts supervised by an area or district manager. The Company believes that
grouping of offices permits leveraging of marketing and administrative costs and
facilitates market penetration.
During 1996, the Company's light industrial, clerical, industrial,
information technology and technical and professional groups contributed 41%,
20%, 11%, 5% and 5% of revenues, respectively. In addition, the Company offers
payrolling and professional employer services, which contributed approximately
14% and 4% of revenues for 1996, respectively. Payrolling services are offered
in most offices. PEO services (employee leasing) are offered through a single
office under the ServCom tradename. The Company's SOS Staffing Services offices
provide personnel for a wide range of temporary staffing needs. In larger
markets these offices focus on providing clerical and light industrial personnel
while specialty needs, such as construction and industrial services are provided
by specialty offices. In smaller markets, SOS offices offer a broader variety of
temporary staffing services, including these specialty services. The Company's
Skill Staff offices provide temporary staff services in the construction,
manufacturing, steel fabrication, machining, welding and other skilled labor
occupations. Some of the Skill Staff offices are stand-alone, while operations
in smaller markets are combined with a SOS Staffing Services office. Industrial
Specialists offices provide temporary staff laborers, warehouse workers, drivers
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and dock workers. SOS Technical Services offices provide temporary staffing for
customers with technical job requirements, including engineers, chemists,
designers, drafters, technicians, information systems and technology personnel,
system designers, illustrators, artists and writers. The Company's AccountStaff
offices provide temporary staffing for accounting, bookkeeping, auditing, data
entry and financial analysis. The PAMS division specializes in providing
temporary help in the medical administrative support area and, through the trade
name of National Collex, provides collection services and special project
billing services to medical facilities. CGS Personnel provides contract and
temporary geologists and related personnel to the mining, mineral exploration
and environmental industries. During 1996 the Company augmented its capabilities
in the information technology segment with its acquisitions of Wolfe &
Associates, Impact Staffing and The Performance Group. In February 1997, the
Company completed the acquisition of Computer Group, Inc., its fourth
acquisition in the information technology area.
Other Services. The Company offers payrolling, outsourcing and on-site
services. Payrolling typically involves the transfer of a customer's short-term,
seasonal or special-use employees to the Company's payroll for a designated
period. Outsourcing represents a growing trend among businesses to contract with
third parties to provide a particular function or business department for an
agreed price over a designated period. On-site services involve locating a
regular SOS employee at the customer's place of business to manage all of the
customer's temporary staffing requirements. The Company views outsourcing and
on-site services as significant opportunities to expand its business and to
utilize its temporary staffing employees to provide these services. Finally, the
Company provides administrative professional services which offer customers
skills testing, drug testing and risk management services. Skills testing
available to customers through SOS offices include cognitive, personality and
psychological evaluations. Drug tests are confirmed through an independent
certified laboratory. Risk management services include on-site safety inspection
and consulting services. These services are made available to customers for a
fee on a cost-effective and convenient basis.
Customers and Marketing. The Company provided more than 56,000
temporary staffing employees to approximately 8,000 customers in 1996. No
customer accounted for more than three percent of the Company's service revenues
in 1996 and the Company's top ten customers accounted for less than 12% of
service revenues for the same period. SOS's services are marketed through its
network of offices whose managers, supported by the Company's marketing staff,
make regular personal sales visits to larger customers and prospects. The
Company emphasizes long-term personal relationships with customers which are
developed through regular contact, periodic assessment of customer requirements
and regular monitoring of temporary employee performance. New customers are also
obtained through customer referrals, telemarketing and advertising in a variety
of local and regional media, including television, radio, direct mail, Yellow
Pages, newspapers, magazines and trade publications. The Company is also a
sponsor of job fairs and other community events.
Temporary Staffing Employee Recruitment. The Company employs recruiters
who regularly visit schools, clubs and professional associations and present
career development programs to various organizations. In addition, the Company
obtains applicants from referrals by its temporary staffing employees and from
advertising on radio, television, in the Yellow Pages and through other print
media. The SOS Technical division also recruits over the Internet.
At SOS, each applicant is interviewed with emphasis on past work
experience, personal characteristics and individual skills. The Company utilizes
the Dictionary of Occupational Titles ("DOT" codes), published by the U.S.
Department of Labor, to evaluate and assign temporary staffing employees. The
Company maintains software training centers for applicants who may be trained
and tested at no cost to the applicant or to the Company's customers. During
1996, the Company assigned over 56,000 temporary staffing employees to
customers. To promote loyalty and retention among its temporary staffing
employees, the Company emphasizes issuance of paychecks during the same week
worked, and provides its temporary staffing employees with certain employee
benefits, including access to a Section 401(k) defined contribution plan, a
credit union and health insurance programs offered through the National
Association of Temporary Staffing Services ("NATSS").
Risk Management Program. SOS is responsible for all employee-related
expenses for its temporary staff employees, including workers' compensation,
unemployment insurance, social security taxes, state and local taxes and other
general payroll expenses. From 1993 through 1995 the Company maintained a paid
loss retro workers' compensation program through American International Group
("AIG"). Under the terms of that agreement, the Company maintained a loss cap of
5
$250,000, except for Skill Staff and ServCom, which maintained loss caps of
$100,000 under a separate policy. In those years, the Company made deposits and
paid premiums and expenses in advance for all anticipated costs to AIG. The
difference between payments made and actual expenses for each year are returned
to the Company over the next succeeding four years. In 1996, the Company
implemented a deductible workers' compensation program through CIGNA Property
and Casualty ("CIGNA"). The loss cap under the new policy is $200,000. Under the
CIGNA program, the Company deposits a one-month escrow for paid losses,
reimburses that escrow deposit monthly for actual losses and pays all other
costs and premiums over the course of the year. CIGNA has assigned full-time
adjusters on-site at the Company's corporate office. The Company believes that
its has benefited, and will continue to benefit, from the change in insurance
carriers, due principally to reduced deposit requirements, reduced excess
insurance premiums and more efficient claims handling. Temporary staffing
employees in Wyoming, Nevada and - most recently - Washington are insured
through those states' insurance funds because private insurance is not permitted
in those states. The Company employs a full-time professional risk manager and
staff who work closely with the insurance carriers to manage claims and
establish appropriate reserves.
The Company has also developed workers' compensation loss control
programs which seek to limit claims through employee training and avoidance of
high-risk job assignments, such as roofing or logging. All temporary staffing
employees are required to agree in advance to drug testing following any
work-related accident and all major accidents are investigated. Finally, all
claims are monitored in cooperation with the Company's insurance carriers with
regular review and emphasis on early closure. The Company believes that its risk
management programs have contributed to improved gross profit margins.
The Company estimates its workers' compensation reserves and expense
for each period based upon an estimate of the costs of reported claims and
incurred but not yet reported claims. These estimates are based upon information
provided by the insurance carrier and historical claims information monitored by
the Company. In addition, the Company provides additional reserves based upon
expected future development of those claims. Such reserve amounts are only
estimates and there can be no assurance that the Company's future workers'
compensation obligations will not exceed the amount of its reserves or that
actual claim costs will not rise in the future. However, management believes
that the difference, if any, between the amounts recorded for its estimated
liability and the costs of settling actual claims, will not be material to the
results of operations.
Seasonality
The Company's business follows the seasonal trends of its customers'
business, which are, in turn, significantly affected by the climate in which the
customers do business. The Company usually experiences higher revenues in its
third quarter because of favorable weather conditions, higher overall economic
activity and hiring of temporary staffing employees to replace student workers
who return to school in August and September. Historically, the Company has
experienced lower revenues in the first quarter due to unfavorable weather
conditions and lower overall economic activity; however, as the Company expands
its office network to include western states with more moderate climates, the
Company may experience less impact from unfavorable weather conditions.
Information Systems
The Company's central management information system is linked to all of
the Company's offices either through a frame-relay system or modem. Smaller
offices also utilize stand-alone computers and software for routine office
functions. The centralized system supports Company-wide operations such as
payroll, billing, accounting and sales management reports. The Company's
retrieval software permits efficient matching of customers' requirements with
available temporary staffing employees. All of the offices acquired by the
Company, with the exception of Wolfe & Associates, have been integrated into the
Company's management information system.
The operating system software utilized by the Company is licensed on a
perpetual royalty-free basis. The Company's proprietary application software is
regularly updated and revised to meet the Company's specific requirements. All
files are backed up daily and stored off-site. The present system has capacity
to service the Company's anticipated growth without significant capital
expenditures for the foreseeable future.
6
Competition
The temporary staffing industry is comprised of more than 3,500
national, regional and independent companies operating over 12,000 offices
throughout the nation, making the industry highly competitive and highly
fragmented. The Company faces competition from large national and international
companies, including Manpower Inc., Kelly Services Inc., Adia/Ecco, The Olsten
Corporation, Personnel Group of America and Accustaff, Inc. In addition, SOS
competes with many regional and local temporary service companies.
The Company competes for qualified temporary staffing employees and for
customers who require the services of such employees. The principal competitive
factors in attracting and retaining qualified temporary staffing employees are
competitive salaries and benefits, quality and frequency of assignments and
responsiveness to employee needs. The Company believes that many persons who
seek temporary employment are also seeking regular employment and that the
availability of assignments, which may lead to regular employment, is an
important factor in its ability to attract qualified temporary staffing
employees.
The principal competitive factors in obtaining customers are a strong
sales and marketing program, having qualified temporary staffing employees to
assign in a timely manner, matching of customer requirements with available
temporary staffing employees, pricing services competitively and satisfactory
work production. The Company believes its strong emphasis on providing service
and value to its customers and temporary staffing employees are important
competitive advantages.
Trade Names
The Company uses a variety of trademarks and trade names which are
generally descriptive of the temporary staffing services offered, including SOS
Staffing Services, Skill Staff, AccountStaff, Industrial Specialists, SOS
Technical Services, ServCom, PAMS Employment Services, National Collex, CGS
Personnel, Wolfe & Associates, Impact Staffing and The Performance Group.
Effective in February 1997, the Company began utilizing the Computer Group, Inc.
tradename. The Company has registered or reserved these names in the Mountain
States and in a number of other states where they may be used in the future. The
Company anticipates that at some future date the information technology names of
Wolfe & Associates, Impact Staffing, The Performance Group and Computer Group,
Inc. may be modified or changed to reflect their association.
Employees
At December 29, 1996, the Company had approximately 472 staff employees
including 33 administrative employees, 13 region, area and district managers, 87
office managers and 339 other staff employees. The Company's training department
provides general and job specific training to all Company staff employees,
including continuing training with experienced counterparts. None of the
Company's staff employees is covered by collective bargaining agreements. The
Company considers its relationship with its staff employees to be good.
ITEM 2. PROPERTIES
The Company's executive offices are located in leased office space in
Salt Lake City, Utah. The premises consist of approximately 15,600 square feet
and are leased from a related party for a term ending on March 31, 2005, with an
option to renew for ten additional years. The Company believes that the lease
terms are at least as favorable as could be obtained from any unrelated third
party. The Company also leases office space in various locations in which it
operates for local branch operations including sales, recruiting, dispatching
and customer support operations.
The Company owns substantially all equipment used in its facilities.
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ITEM 3. LEGAL PROCEEDINGS
On February 26, 1996, a former employee of the Company served the
Company with a wrongful termination lawsuit in the Third District Court, Sale
Lake County, Sate of Utah. The complaint seeks compensatory damages in excess of
$4.5 million and punitive damages of $4.0 million. The court entered a final
order dismissing the case in February 1997, however, until May 5, 1997, the
plaintiff may appeal or ask the court to set aside the dismissal. The Company
does not believe there is sufficient basis for either action to be successful.
In the ordinary course of its business, the Company is from time to
time threatened with or named as a defendant in various lawsuits. The Company
maintains insurance in such amounts and with such coverage and deductibles as
management believes to be reasonable and prudent. The principal risks covered by
insurance include workers' compensation, personal injury, bodily injury,
property damage, errors and omissions, fidelity losses and general liability.
There is no other pending litigation which the Company currently
anticipates will have a material adverse effect on the Company's financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The information required by this Item is incorporated by reference
to page 25 of the Company's 1996 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference
to page 1 of the Company's 1996 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this Item is incorporated by reference to
pages 7 through 9 of the Company's 1996 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information required by this Item is incorporated by reference
to pages 10 through 24 of the Company's 1996 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
8
PART III
Certain information required by Part III of this Annual Report on Form
10-K is omitted from this Report in that the Registrant will file a definitive
proxy statement for the Annual Meeting of Shareholders of the Company to be held
on May 14, 1997 as required pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended (the "Proxy Statement"), not later than 120
days after the end of the fiscal year covered by this Report and certain
information included therein is incorporated herein by reference. Only those
sections of the Proxy Statement specifically identified below which address the
items set forth herein are incorporated by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors" and "Executive Officers" in the
Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors-Director Compensation" and
"Executive Officers-Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to
the section entitled "Principal Holders of Voting Securities" in the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to
the section entitled "Certain Relationships and Related Transactions" in the
Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL SATEMENT SCHEDULES AND REPORTS OF FORM 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements: The following Consolidated Financial Statements
of SOS Staffing Services, Inc. and Report of Arthur Andersen LLP,
Independent Public Accountants, are incorporated by reference to pages
10 through 24 of the Registrant's 1996 Annual Report to Shareholders:
Consolidated Balance Sheets - As of December 29, 1996 and December 31,
1995
Consolidated Statements of Income--For the Fiscal Years Ended December
29, 1996, December 31, 1995 and January 1, 1995
Consolidated Statements of Shareholders' Equity--For the Fiscal Years
Ended December 29, 1996, December 31, 1995 and January 1, 1995
Consolidated Statements of Cash Flows--For the Fiscal Years Ended
December 29, 1996, December 31, 1995 and January 1, 1995
Notes to Consolidated Financial Statements
Report of Arthur Andersen LLP, Independent Public Accountants
2. Financial Statement Schedules:
No schedules submitted
(b) Reports on Form 8-K: During the fourth quarter of fiscal 1996, the
Company filed a Current Report on Form 8-K dated November 6, 1996 with
respect to the acquisition of all of the outstanding common stock of
Wolfe & Associates, Inc., a New Mexico corporation. Wolfe & Associates
is an information technology company providing consulting services,
project management, information systems design, programming and other
information technology related staffing services to private-sector and
public-sector clients throughout the United States.
(c) Exhibits
Incorporated
Exhibit by Filed
No. Exhibit Reference Herewith
3.1 Amended and Restated Articles of Incorporation (1)
of the Company
3.2 Amended and Restated Bylaws of the Company (1)
4.1 Specimen Certificate of the Company's Common (1)
Stock, par value $.01 per share
4.2 Amended and Restated Articles of Incorporation (1)
of the Company
4.3 Amended and Restated Bylaws of the Company (1)
10
Incorporated
Exhibit by Filed
No. Exhibit Reference Herewith
10.1 SOS Staffing Services, Inc. Stock Incentive Plan (3)
dated May 4, 1995, as amended
10.2 Form of Employment Agreement entered into by the (1)
Company and each of Messrs. Richard D. Reinhold,
Howard W. Scott, Jr. and Richard J. Tripp
10.3 Form of Consulting Agreement between the Company (2)
and Ms. JoAnn W. Wagner, effective as of July 1, 1995
10.4 Lease Agreement between the Company and Reed F. (1)
Reinhold, Rand F. Reinhold, Rena R. Qualls and Robb
F. Reinhold, dated April 1, 1995, covering the
Company's Corporate office building
10.5 Assignments of Accounts Receivable from the Company (2)
to Richard D. Reinhold and Sandra E. Reinhold,
dated April 25 and May 15, 1995, and related
Accounts Receivable Servicing Agreement
10.6 Franchise Agreement between the Company and TSI of (1)
Utah, Inc., dated January 1, 1995, as amended
10.7 Asset Purchase Agreement between the Company (3)
and Add-A-Temp, Inc., dated August 15, 1995
10.8 Asset Purchase Agreement between the Company, (3)
Patient Accounting Management Services and National
Collex Corporation, dated November 9, 1995
10.9 Asset Purchase Agreement between the Company and (3)
Geomine Personnel, Inc., dated December 19, 1995
10.10 Credit Agreement dated as of July 11, 1996 by and (4)
among the Company, First Security Bank, N.A. and
NBD Bank, together with Security Agreement and
Revolving Credit Notes
10.11 Stock Purchase Agreement between the Company, Wolfe (5)
& Associates, Inc. and certain shareholders of
Wolfe & Associates, Inc. dated November 5, 1996
13 Annual Report to Shareholders for the year ended (7)
December 29, 1996. Certain portions of this exhibit are
incorporated by reference into Items 5 through 8 of this
Annual Report on Form 10-K and, except as so
incorporated by reference, the Annual Report to
Shareholders is not deemed to be filed as part of this
Report.
21 Subsidiaries of the Company (6)
11
Incorporated
Exhibit by Filed
No. Exhibit Reference Herewith
23.2 Consent of Arthur Andersen LLP, Independent Public (7)
Accountants
27 Financial Data Schedule (7)
(1) Incorporated by reference to the exhibits to a Registration Statement
on Form S-1 filed by the Company on May 17, 1995, Registration No.
33-92268.
(2) Incorporated by reference to the exhibits to Amendment No. 1 to a
Registration Statement on Form S-1 filed on June 22, 1995,
Registration No. 33-92268.
(3) Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 filed by the
Company on March 29, 1996.
(4) Incorporated by reference to the exhibits to a Quarterly Report on
Form 10-Q for the quarter ended September 26, 1996 filed by the
Company on November 14, 1996.
(5) Incorporated by reference to the exhibits to a Current Report on Form
8-K filed by the Company on November 14, 1996.
(6) Incorporated by reference to the exhibits to Amendment No. 1 to a
Registration Statement on Form S-1 filed by the Company on December
12, 1996, Registration No. 333-16187.
(7) Filed herewith and attached to this Report following page 13 hereof.
(d) Financial Statement Schedules:
No schedules submitted
12
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.
SOS STAFFING SERVICES, INC.
By: /s/ Gary B. Crook
Date: March 24, 1997 Gary B. Crook,
Vice President, Treasurer and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/ Stanley R. deWaal Director March 24, 1997
- ---------------------
Stanley R. deWaal
/s/ Richard D. Reinhold Chairman of the Board and March 24, 1997
- -----------------------
Richard D. Reinhold Chief Executive Officer
/s/ R. Thayne Robson Director March 24, 1997
- --------------------
R. Thayne Robson
/s/ Randolph K. Rolf Director March 24, 1997
- --------------------
Randolph K. Rolf
/s/ Howard W. Scott, Jr. Director, President and March 24, 1997
- ------------------------
Howard W. Scott, Jr. Chief Operating Officer
/s/ Richard J. Tripp Director and March 24, 1997
- --------------------
Richard J. Tripp Senior Vice President
/s/ JoAnn W. Wagner Director March 24, 1997
- -------------------
JoAnn W. Wagner
13