1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from TO
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Commission file number 1-5519
------
CDI CORP.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2394430
------------------------- -----------------------
(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification Number)
organization)
1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768
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(Address of principal executive offices)
Registrant's telephone number, including area code: (215) 569-2200
--------------
Indicate 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
----- -----
Outstanding shares of each of the Registrant's classes of common
stock as of July 31, 1995 were:
Common stock, $.10 par value 19,714,928 shares
Class B common stock, $.10 par value None
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PART 1. FINANCIAL INFORMATION
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
Assets 1995 1994
------ -------- ------------
Current assets:
Cash $ 5,534 5,160
Accounts receivable, less allowance
for doubtful accounts of $2,077 -
June 30, 1995; $3,184 - December 31,
1994 256,610 214,867
Prepaid expenses 3,870 4,389
------- -------
Total current assets 266,014 224,416
Fixed assets, at cost:
Land 2,647 3,013
Buildings 8,732 9,884
Computer-aided design systems 24,590 26,328
Equipment and furniture 82,712 76,412
Leasehold improvements 14,087 11,976
------- -------
132,768 127,613
Accumulated depreciation 85,086 84,560
------- -------
Net fixed assets 47,682 43,053
Deferred income taxes 2,342 2,124
Goodwill and other intangible assets 21,103 22,048
Other assets 6,697 6,034
------- -------
$ 343,838 297,675
======= =======
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CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
June 30, December 31,
Liabilities and Shareholders' Equity 1995 1994
------------------------------------ -------- ------------
Current liabilities:
Obligations not liquidated because of
outstanding checks $ 10,107 6,733
Accounts payable 11,587 10,766
Withheld payroll taxes 712 5,635
Accrued expenses 73,172 59,138
Currently payable income taxes 12,012 10,016
Deferred income taxes 3,886 3,879
------- -------
Total current liabilities 111,476 96,167
Long-term debt 74,306 58,798
Deferred compensation 4,015 3,528
Minority interests 263 305
Shareholders' equity:
Preferred stock, $.10 par value -
authorized 1,000,000 shares; none
issued - -
Common stock, $.10 par value -
authorized 100,000,000 shares;
issued 19,739,983 shares 1,974 1,974
Class B common stock, $.10 par value -
authorized 3,174,891 shares; none
issued - -
Additional paid-in capital 11,361 11,361
Retained earnings 141,033 126,132
Less 25,055 shares of common stock
in treasury, at cost (590) (590)
------- -------
Total shareholders' equity 153,778 138,877
------- -------
$ 343,838 297,675
======= =======
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CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data)
Quarter ended Six months ended
June 30, June 30,
---------------- ----------------
1995 1994 1995 1994
------- ------- ------- -------
Revenues $ 332,058 264,901 651,060 514,132
Cost of operations 302,727 243,764 594,351 473,647
------- ------- ------- -------
Gross profit 29,331 21,137 56,709 40,485
General and administrative
expenses 14,651 12,675 28,870 24,434
------- ------- ------- -------
Operating profit 14,680 8,462 27,839 16,051
Interest expense 1,555 892 2,867 1,868
------- ------- ------- -------
Earnings before income taxes
and minority interests 13,125 7,570 24,972 14,183
Income taxes 5,374 3,027 10,113 5,673
------- ------- ------- -------
Earnings before minority
interests 7,751 4,543 14,859 8,510
Minority interests (10) 82 (42) 105
------- ------- ------- -------
Net earnings $ 7,761 4,461 14,901 8,405
======= ======= ======= =======
Per share $ .39 .23 .75 .43
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5
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Six months ended June 30,
-------------------------
1995 1994
------ ------
Operating activities:
Net earnings $ 14,901 8,405
Minority interests (42) 105
Depreciation 6,308 6,092
Amortization of intangible assets 1,004 1,242
Income tax provision greater
than tax payments and refunds 1,785 3,846
Change in assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (41,743) (26,756)
Increase in payables and accrued
expenses 9,932 11,272
Other 284 1,177
------ ------
(7,571) 5,383
------ ------
Investing activities:
Purchases of fixed assets (12,459) (5,821)
Other 1,522 125
------ ------
(10,937) (5,696)
------ ------
Financing activities:
Borrowings long-term debt 15,541 -
Payments long-term debt (33) (19,928)
Obligations not liquidated because
of outstanding checks 3,374 3,916
------ ------
18,882 (16,012)
------ ------
Increase (decrease) in cash 374 (16,325)
Cash at beginning of period 5,160 20,361
------ ------
Cash at end of period $ 5,534 4,036
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6
CDI CORP. AND SUBSIDIARIES
Comments to Financial Statements
Earnings per share of common stock are based on the weighted
average number of shares of common stock and dilutive common share
equivalents, which arise from stock options, outstanding during the
periods. No further dilution resulted from a computation of fully
diluted earnings per share. The number of shares used to compute
earnings per share for the second quarter and six months of 1995 was
19,816,166 and 19,819,383 shares, respectively. For the second quarter
and six months of 1994, 19,783,355 and 19,772,288 shares, respectively,
were used.
Revenues and operating profit attributable to the business
segments of the Company for the second quarter and six months ended
June 30, 1995 and 1994 follows ($000s):
Second quarter Six months
1995 1994 1995 1994
------- ------- ------- -------
Revenues:
Technical Services $ 281,968 222,523 551,993 432,341
Temporary Services 34,152 30,213 66,423 58,510
Management Recruiters 15,938 12,165 32,644 23,281
------- ------- ------- -------
$ 332,058 264,901 651,060 514,132
======= ======= ======= =======
Operating profit:
Technical Services $ 12,374 7,148 23,814 14,154
Temporary Services 1,437 1,122 2,726 1,839
Management Recruiters 2,448 1,808 4,939 3,159
Corporate expenses (1,579) (1,616) (3,640) (3,101)
------- ------- ------- -------
$ 14,680 8,462 27,839 16,051
======= ======= ======= =======
These comments contain only the information which is required by
Form 10-Q. Further reference should be made to the comprehensive
disclosures contained in the Company's annual report on Form 10-K for
the year ended December 31, 1994.
The financial statements included in this report reflect all
adjustments which, in the opinion of management, are necessary for a
fair statement of the results for the periods presented.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Consolidated revenues for the six months and quarter ended June
30, 1995 were 27% and 25% higher, respectively, compared to the same
period a year ago. Operating profit for the six months and second
quarter in 1995 was 4.3% and 4.4% of revenues, respectively, compared
to 3.1% and 3.2% for the six months and second quarter in 1994.
Technical Services' revenues for the six months and second quarter
of 1995 grew 28% and 27%, respectively, from last year's comparable
periods. Operating profit margins for the six months and second
quarter of 1995 were 4.3% and 4.4%, respectively, vs. 3.3% and 3.2% for
last year's comparable periods. Technical Services telecommunications
revenues and profits were up sharply from a year ago, and chemicals/
petrochemicals has shown good growth. Customer response to Technical
Services multi-year managed outsource programs is excellent, and these
programs are expanding. Some easing off in demand has been noted in
certain areas of automotive, even though the manufacturers appear
dedicated to maintaining steady levels of design activity. CDI's
concentration in automotive is lower than it was a few years ago and
its automotive customer base is more diversified.
Temporary Services' revenues for the six months and second quarter
of 1995 were 14% and 13% higher, respectively, compared to the same
periods a year ago. Operating profit margins for the six months and
second quarter of 1995 were 4.1% and 4.2%, respectively, vs. 3.1% and
3.7% for last year's comparable periods. Todays Temporary is expanding
its outsource programs, but growth rates in its basic business are
slowing.
Management Recruiters' revenues were up 40% for the six months of
this year and up 31% compared to last year's second quarter. Operating
profit margins for the six months and second quarter of 1995 were 15.1%
and 15.4%, respectively, compared to 13.6% and 14.9%, respectively, for
the same periods in 1994. Management Recruiters' markets remain strong
as demand for middle-manager candidates continues to increase.
Financial Condition
-------------------
The ratio of current assets to current liabilities was 2.4 to 1
as of June 30, 1995 compared to 2.3 to 1 as of December 31, 1994.
The ratio of long-term debt to total capital (long-term debt plus
shareholders' equity) was 33% as of June 30, 1995, compared to 30% at
December 31, 1994. Working capital needs expanded during the six
months ended June 30, 1995 as a result of the increased volume of
business conducted as well as higher levels of receivables. Funding
for the increased investment in working capital was provided, in part,
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8
by additional borrowings of long-term debt. The Company believes that
capital resources available from operations and financing arrangements
are adequate to support the Company's businesses.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 2, 1995 the Company held its annual meeting of
shareholders. The matters of business conducted at the meeting were
the election of nine directors of the Company, a proposal to increase
the number of shares of common stock which may be issued under the CDI
Corp. Non-Qualified Stock Option and Stock Appreciation Rights Plan
from 800,000 to 1,100,000 and a proposed amendment to the Non-Qualified
Stock Option and Stock Appreciation Rights Plan limiting the number of
options and stock appreciation rights that may be granted to one
eligible individual in any one calendar year.
The name of each director elected at the meeting and a tabulation
of the voting by nominee follows:
Votes Votes
for withheld
---------- --------
Walter E. Blankley 18,438,930 20,428
Walter R. Garrison 18,393,650 65,708
Christian M. Hoechst 18,387,168 72,190
Lawrence C. Karlson 18,033,138 426,220
Edgar D. Landis 18,393,688 65,670
Allen M. Levantin 18,441,488 17,870
Alan B. Miller 18,438,180 21,178
John W. Pope 18,439,418 19,940
Barton J. Winokur 18,033,388 425,970
There were no abstentions or broker non-votes.
9
The vote to increase the number of shares of common stock which
may be issued under the Non-Qualified Stock Option and Stock
Appreciation Rights Plan from 800,000 to 1,100,000 was as follows:
Votes Votes
for against Abstentions Broker non-votes
---------- --------- ----------- ----------------
15,657,505 2,752,803 49,050 - 0 -
The vote to limit the number of options and stock appreciation
rights that may be granted to any eligible individual in any one
calendar year under the Non-Qualified Stock Option and Stock
Appreciation Rights Plan was as follows:
Votes Votes
for against Abstentions Broker non-votes
---------- --------- ----------- ----------------
18,083,464 321,083 54,811 - 0 -
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10
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.(i) Articles of incorporation of the Registrant,
incorporated herein by reference to the
Registrant's report on Form 10-Q for the
quarter ended June 30, 1990 (File No. 1-5519).
(ii) Bylaws of the Registrant, incorporated herein
by reference to the Registrant's report on
Form 10-Q for the quarter ended June 30, 1990
(File No. 1-5519).
10.a. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan. (Constitutes a
management contract or compensatory plan or
arrangement)
b. Employment Agreement dated May 1, 1973 by and
between Comprehensive Designers, Inc. and Walter
R. Garrison, incorporated herein by reference to
Exhibit 10.e. to Registrant's registration state-
ment on Form 8-B (File No. 1-5519). (Constitutes
a management contract or compensatory plan or
arrangement)
c. Employment Agreement dated April 1, 1963, as
amended and restated effective May 1, 1986, by
and between Registrant and Christian M. Hoechst,
incorporated herein by reference to Registrant's
report on Form 10-K for the year ended April 30,
1987 (File No. 1-5519). (Constitutes a manage-
ment contract or compensatory plan or arrangement)
d. Employment Agreement dated April 30, 1973 by and
between Comprehensive Designers, Inc. and Edgar
D. Landis, incorporated herein by reference to
Exhibit 10.g. to Registrant's registration state-
ment on Form 8-B (File No. 1-5519). (Constitutes
a management contract or compensatory plan or
arrangement)
e. Supplemental Pension Agreement dated April 11,
1978 between CDI Corporation and Walter R.
Garrison, incorporated herein by reference to
the Registrant's report on Form 10-K for the
year ended December 31, 1989 (File No. 1-5519).
(Constitutes a management contract or compensa-
tory plan or arrangement)
11. Statement re computation of per share earnings.
27. Financial Data Schedule.
(b) The Registrant has not filed a Form 8-K during the quarter
ended June 30, 1995.
<PAGE>
11
SIGNATURES
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.
CDI CORP.
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August 9, 1995 By: /s/ Edgar D. Landis
-----------------------------------
EDGAR D. LANDIS
Executive Vice President, Finance
(Duly authorized officer and
principal financial officer of
Registrant)
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INDEX TO EXHIBITS
Number Exhibits Page
------ ------------------------------------------------------ ----
3.(i) Articles of incorporation of the Registrant,
incorporated herein by reference to the Registrant's
report on Form 10-Q for the quarter ended June 30,
1990 (File No. 1-5519).
(ii) Bylaws of the Registrant, incorporated herein by
reference to the Registrant's report on Form 10-Q
for the quarter ended June 30, 1990 (File No. 1-5519).
10.a. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan. (Constitutes a management
contract or compensatory plan or arrangement) 13
b. Employment Agreement dated May 1, 1973 by and between
Comprehensive Designers, Inc. and Walter R. Garrison,
incorporated herein by reference to Exhibit 10.e. to
Registrant's registration statement on Form 8-B (File
No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
c. Employment Agreement dated April 1, 1963, as amended
and restated effective May 1, 1986, by and between
Registrant and Christian M. Hoechst, incorporated
herein by reference to Registrant's report on Form
10-K for the year ended April 30, 1987 (File No.
1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
d. Employment Agreement dated April 30, 1973 by and
between Comprehensive Designers, Inc. and Edgar D.
Landis, incorporated herein by reference to Exhibit
10.g. to Registrant's registration statement on Form
8-B (File No. 1-5519). (Constitutes a management
contract or compensatory plan or arrangement)
e. Supplemental Pension Agreement dated April 11, 1978
between CDI Corporation and Walter R. Garrison,
incorporated herein by reference to the Registrant's
report on Form 10-K for the year ended December 31,
1989 (File No. 1-5519). (Constitutes a management
contract or compensatory plan or arrangement)
11. Statement re computation of per share earnings. 21
27. Financial Data Schedule. 22
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13
(As amended on 5/2/95)
CDI CORP.
NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1. Purpose. The purpose of this plan ("Plan") is to provide a
more effective method of compensating employees, consultants and
directors of the Company than is currently available and to complement
the other incentive plans of the Company, thus encouraging greater
personal interest in the success of the Company on the part of such
personnel and furnishing them with a further incentive to remain with
the Company and to increase their efforts on its behalf.
2. Definitions:
(a) "Board" means the board of directors of the Parent
Company.
(b) "Committee" means the committee described in Paragraph 5.
(c) "Company" means CDI Corp. and each of its Subsidiary
Companies.
(d) "Date of Exercise" means the date on which notice of
exercise of an Option or SAR is delivered to the Parent
Company.
(e) "Date of Grant" means the date on which an Option or SAR
is granted.
(f) "Eligible Director" means any director of the Parent
Company who is neither a full-time employee of the
Parent Company or any Subsidiary Company nor a member of
the Committee.
(g) "Fair Market Value" means the closing price of actual
sales of Shares on the New York Stock Exchange on a given
date or, if there are no such sales on such date, the
closing price of the Shares on such Exchange on the last
date on which there was a sale.
(h) "Holder" means a person to whom an SAR not attached to an
Option has been granted under the Plan, which SAR has not
been exercised and has not expired or terminated.
(i) "Option" means a non-qualified stock option granted under
the Plan and described in Paragraph 4(a).
(j) "Optionee" means a person to whom an Option or an Option
with an SAR attached has been granted under the Plan,
which Option or SAR has not been exercised and has not
expired or terminated.
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14
(k) "Parent Company" means CDI Corp.
(l) "Retainer Fee" means the annual retainer fee payable to
directors of the Board who are not full-time employees
of the Parent Company or any Subsidiary Company for
their service as directors of the Parent Company during
a Retainer Fee Year. A Retainer Fee does not include
attendance or committee fees.
(m) "Retainer Fee Option" means any Option granted to an
Eligible Director in partial payment of such Eligible
Director's Retainer Fee, whether such Option is granted
automatically or by election of the Eligible Director
pursuant to the terms of this Plan.
(n) "Retainer Fee Year" means the one year period between
consecutive annual meetings of the shareholders of the
Parent Company, beginning on the date immediately
following the annual meeting.
(o) "SAR" means a stock appreciation right granted under the
Plan and described in Paragraphs 4(b) or 4(c).
(p) "Shares" means shares of common stock, par value $.10
per share, of the Parent Company.
(q) "Subsidiary Company" means any corporation controlled by
the Parent Company or by a subsidiary controlled by the
Parent Company ("control" having the meaning set forth
in Section 368(c) of the Internal Revenue Code or
corresponding provisions of successor laws), provided
that if the corporation is controlled by a subsidiary of
the Parent Company, either the Parent Company must own
100% of the stock of the subsidiary or the subsidiary
must own 100% of the stock of the corporation.
(r) "Value" of an SAR shall mean the excess of the Fair
Market Value of a Share on the Date of Exercise over an
amount fixed by the Committee on the Date of Grant (the
"SAR Reference Price"); provided that the SAR Reference
Price may not be less than 50% of the Fair Market Value
of a Share on the Date of Grant. Where an SAR is
attached to an Option, the SAR Reference Price shall be
equal to the Option price of one Share under the attached
Option.
3. Shares Subject to the Plan. On and after April 30, 1991, not
more than 1,100,000 Shares may be delivered pursuant to the exercise of
Options or SARs under the Plan. The Shares so delivered may, at the
election of the Company, be either treasury Shares or Shares originally
issued for the purpose. When an Option is granted (whether or not
attached to an SAR), the number of Shares subject to such Option shall
be reserved for issuance out of the Shares remaining available for
grant under the Plan. When SARs not attached to an Option are granted,
there shall be reserved for issuance thereunder Shares in an amount
equal to one-half of the number of SARs granted. If Options or SARs
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15
granted under the Plan terminate or expire without being exercised in
whole or in part, other Options or SARs may be granted covering the
Shares not delivered. No individual shall be eligible to receive, in
any one calendar year, Options or SARs with respect to more than
400,000 Shares (which number is subject to adjustment as provided in
Paragraph 15 hereof).
4. Rights to be Granted. Rights which may be granted under the
Plan are:
(a) Options, which give the Optionee the right for a specified
time period to purchase a specified number of Shares at a specified
price;
(b) SARs, which are attached to Options and which give the
Optionee the right for a specified time period, without payment to the
Company, to receive the Value of such SARs, to be paid in cash and
Shares in accordance with Paragraph 9 below, in lieu of purchasing
Shares under the related Option; and
(c) SARs, which are not attached to Options and which give the
Holder the right for a specified time period, without payment to the
Company, to receive the Value of such SARs, to be paid in cash and
Shares in accordance with Paragraph 9 below.
5. Administration. The Plan shall be administered by the Stock
Option Committee, which shall be composed of not less than two
directors of the Parent Company, appointed by the Board, none of whom
shall be eligible (or shall have been eligible within one year prior to
the date of their appointments) to be granted Options or SARs under the
Plan or to be selected as a participant under any other discretionary
plan of the Company or any of its affiliates entitling them to acquire
stock, stock options or stock appreciation rights of the Company or any
of its affiliates. Except with respect to Retainer Fee Options, the
Committee may determine from time to time which eligible participants
shall be granted Options or SARs under the Plan, the number of Shares
to be subject to the Option in each case, the number and type of SARs,
if any, to be awarded in each case, and the other substantive
provisions of each Option and SAR agreement. However, any Options,
other than Retainer Fee Options, or SARs granted to a member of the
Board must also be approved by a majority of the Board not including
the recipient. At least 60 days before the next annual meeting of
shareholders of the Parent Company, the Committee may determine that
Retainer Fee Options will not be made available with respect to the
Retainer Fees to be earned during the Retainer Fee Year beginning on
the day following such annual meeting.
6. Retainer Fee Options.
(a) Mandatory Retainer Fee Options. Unless the Committee
determines, as provided in Paragraph 5, not to make Retainer Fee
Options available with respect to a Retainer Fee Year, an Eligible
Director will be granted, on the first business day of such Retainer
Fee Year, Retainer Fee Options, having a value, determined in
accordance with Paragraph 6(c), equal to one half of the cash value of
his Retainer Fee for such Retainer Fee Year.
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16
(b) Elective Retainer Fee Options. Unless the Committee
determines, as provided in Paragraph 5, not to make Retainer Fee
Options available with respect to a Retainer Fee Year, an Eligible
Director may, in lieu of receiving in cash all or any portion of his
Retainer Fee due in cash for such Retainer Fee Year, irrevocably elect
to receive Retainer Fee Options having a value, determined in
accordance with Paragraph 6(c), equal to the portion of such Retainer
Fee he elects not to receive in cash. This election must be made by an
Eligible Director no later than the day before the first day of such
Retainer Fee Year. Grants made pursuant to such an Eligible Director's
election will be made on the first business day that is six months
after the first day of the Retainer Fee Year.
(c) Value of Retainer Fee Options. For purposes of this
Paragraph 6 and unless otherwise determined by the Committee, the value
of a Retainer Fee Option to purchase one Share shall equal 25% (the
"Option Percentage") of the Fair Market Value of one Share on the last
trading day immediately preceding the Date of Grant; provided, however,
that the Committee may change the Option Percentage only if such change
is made at least 60 days before the beginning of any Retainer Fee Year
in which Retainer Fee Options affected by such change would be granted.
Retainer Fee Options to purchase fractional Shares shall not be
granted; instead the number of Shares for which a Retainer Fee Option
is exercisable shall be rounded down to eliminate any fractional Share.
If the Committee determines that another method of valuing Retainer Fee
Options would be more appropriate, the Committee may implement an
alternative method of determining the value of Retainer Fee Options.
(d) Terms of Retainer Fee Options. The Committee may determine
from time to time the terms of the Retainer Fee Options, provided such
terms are consistent with the terms of the Plan. Unless otherwise
determined by the Committee, (a) Retainer Fee Options shall not vest
until (and therefore will not be exercisable until) one year after the
Date of Grant and (b) if an Eligible Director ceases to be a member of
the Board for any reason: (i) unvested Retainer Fee Options shall
expire and be unexercisable and the portion of the Eligible Director's
Retainer Fee earned as of the date of cessation that is represented by
such unvested Retainer Fee Options shall be paid in cash, and (ii)
Retainer Fee Options elected, but not granted prior to such cessation,
shall not be granted and the portion of the Retainer Fee earned but not
paid in such Retainer Fee Options shall be paid in cash.
7. Eligibility. Eligible participants under the Plan shall be all
salaried employees, consultants and directors of the Parent Company or
any Subsidiary Company, except members of the Committee. Only Eligible
Directors shall be eligible to receive Retainer Fee Options pursuant to
Paragraph 6.
8. Option Exercise Price.
(a) The price at which Shares may be purchased on exercise of an
Option shall be determined in each case by the Committee, but may not
be less than 50% of the Fair Market Value of the Shares on the Date of
Grant; provided, however, that unless otherwise determined by the
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17
Committee, the price at which Shares may be purchased on exercise of a
Retainer Fee Option shall be the Fair Market Value of the Shares on the
last trading day immediately preceding the Date of Grant.
(b) Upon exercise of any Option granted pursuant to this Plan,
the Optionee shall pay to the Parent Company the full Option price:
(i) By check or in cash; or
(ii) By delivering to the Parent Company certificates for
Shares owned by the Optionee and endorsed to the Parent
Company representing a number of Shares having a then
current Fair Market Value equal to the Option price; or
(iii) Any combination of the above.
Upon payment of the Option price the appropriate accounts of the Parent
Company shall then be credited accordingly.
9. Issuance of Certificates; Payment of Cash.
(a) Upon payment of the Option price, a certificate for the
number of whole Shares and a check for the Fair Market Value on the
Date of Exercise of the fractional Share, if any, to which the Optionee
is entitled shall be delivered to such Optionee by the Parent Company,
provided that the Optionee has remitted to his employer an amount,
determined by such employer, sufficient to satisfy the applicable
requirements to withhold federal, state, and local taxes, or made other
arrangements with his employer for the satisfaction of such withholding
requirements.
(b) Upon exercise of SARs, the Value of such SARs shall be paid
one-half in cash and one-half in Shares. The number of Shares to be
delivered by the Parent Company shall be an amount equal to 50% of the
Value of such SARs divided by the Fair Market Value of a Share on the
Date of Exercise of such SARs. Any right to a fractional Share shall
be satisfied by the Parent Company in cash. The employer of the
Optionee or Holder shall deduct from the amount of cash payable any
amount necessary to satisfy applicable federal, state, or local
withholding requirements.
10. Term. Unless otherwise determined by the Committee, Options
or SARs granted under the Plan shall not be exercisable after five
years from the Date of Grant.
11. Exercise of Options and SARs. Unless otherwise determined by
the Committee and subject to the provisions of Paragraphs 12 and 14, an
Option or SAR may be exercised in whole or in part during its term,
provided that an Option or SAR shall be exercisable only by the
Optionee or Holder during his lifetime and, unless otherwise determined
by the Committee and subject to the provisions of Paragraph 6, only
while he is a salaried employee, consultant or director of the Parent
Company or of a Subsidiary Company.
<PAGE>
18
12. Death or Termination of Qualifying Relationship. Unless
otherwise determined by the Committee, Options (other than Retainer Fee
Options) and SARs shall terminate upon the termination for any reason
of the Optionee's or Holder's qualifying relationship with the Company,
except that if an Optionee or Holder dies while holding a vested Option
or SAR not fully exercised or expired, the unexercised portion may be
exercised by his estate or his heirs or beneficiaries within the period
of six months following the date of death (in no event, however, may an
Option or SAR be exercised after its stated date of expiration). For
purposes of this Plan, a transfer of a participant between two
employers, each of which is a part of the Company, shall not be deemed
a termination of employment.
13. Relationship Between Options and SARs. Upon exercise of an
Option, any SAR attached to such Option shall automatically expire.
Upon exercise of an SAR attached to an Option, the related Option shall
automatically expire. Except as set forth above, the grant, exercise,
termination or expiration of any Option granted to an Optionee or
Holder shall have no effect upon any SAR held by such Optionee or
Holder, and the grant, exercise, termination or expiration of an SAR
granted to any Optionee or Holder shall have no effect upon any Option
held by such Optionee or Holder.
14. Transferability of Options and SARs. No Option or SAR may be
transferred except by will or the applicable laws of descent and
distribution.
15. Adjustment on Change in Capitalization. In case the number of
outstanding Shares is changed as a result of a stock dividend, stock
split, recapitalization, combination, subdivision, issuance of rights
or other similar corporate change, the Board shall make an appropriate
adjustment in the aggregate number of Shares which may be issued under
the Plan, in the per individual annual limitation set forth in
Paragraph 3 above and in the number of Shares subject to, and the
Option price or Value of, any then outstanding Options or SARs.
16. Certain Corporate Transactions. If during the term of any
Option or SAR, or after an Eligible Director has elected to receive,
but before he has received, Retainer Fee Options, the Parent Company or
any of the Subsidiary Companies shall be merged into or consolidated
with or otherwise combined with or acquired by another person or
entity, or there is a divisive reorganization or a liquidation or
partial liquidation of the Parent Company, the Parent Company may (but
shall not be required to) take any of the following courses of action:
(a) Not less than 10 days nor more than 60 days prior to any such
transaction, all Optionees and Holders shall be notified that their
Options and SARs shall expire on the 10th day after the date of such
notice, in which event all Optionees and Holders shall have the right
to exercise all of their Options and SARs prior to such new expiration
date; or
(b) The Parent Company shall provide in any agreement with
respect to any such merger, consolidation, combination or acquisition
that the surviving, new or acquiring corporation shall grant options
<PAGE>
19
and stock appreciation rights to the Optionees and Holders to acquire
shares, or stock appreciation rights in shares, in such corporation
provided that the excess of the fair market value of the shares of such
corporation immediately after the consummation of such merger,
consolidation, combination or acquisition over the option price, or the
value of such stock appreciation rights at the time of grant, shall not
be greater than the excess of the Fair Market Value of the Shares over
the Option price of Options, or the Value of the SARs as determined
under Paragraph 2(r), immediately prior to the consummation of such
merger, consolidation, combination or acquisition; or
(c) Cancel an Eligible Director's right to receive Retainer Fee
Options elected, but not yet granted, and on the date the Eligible
Directors would otherwise have received Retainer Fee Options, the
Parent Company or any successor corporation shall pay the Retainer Fees
to which such elected but ungranted Retainer Fee Options relate in
cash; or
(d) The Parent Company shall take such other action as the Board
shall determine to be reasonable under the circumstances in order to
permit Optionees, Holders and Eligible Directors to realize the value
of rights granted to them under the Plan.
17. Plan Not to Affect Relationship With the Company. Neither the
Plan nor any Option or SAR shall confer upon any participant any right
to continue in the service of the Company.
18. Amendment. The Board may at any time terminate the Plan or
make such changes therein as it shall deem advisable. The Board may
not, however, without the approval of the voting shareholders of the
Parent Company, (i) increase the total number of Shares which may be
delivered under the Plan, (ii) change the class of persons eligible to
receive Options or SARs, (iii) withdraw the authority to administer the
Plan from a committee consisting of directors or (iv) otherwise amend
the Plan in a manner which would require the approval of the
shareholders of the Parent Company in order to maintain the exemption
available under Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission. No outstanding Option or SAR shall be affected by
any such amendment without the written consent of the Optionee, Holder
or other person then entitled to exercise such Option or SAR.
19. Securities Laws. The Committee shall make each grant under
the Plan subject to such conditions as shall cause both the grant and
exercise of any Option or SAR to comply with the then-existing
requirements of Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission.
Unless otherwise permitted by the Committee, the date of any
exercise of an SAR by a Holder or an Optionee who is an officer,
director or beneficial owner of ten percent or more of any class of any
registered equity security of the Parent Company shall be required to
occur within the period beginning with the third and ending with the
twelfth business day after the date of the release of the Parent
Company's quarterly or annual sales and earnings information to the
public.
<PAGE>
20
20. Performance-Based Compensation. Unless otherwise provided by
the Committee in their discretion pursuant to the first sentence of
Paragraph 8(a), it is intended that all compensation income recognized
by employees as the result of the exercise of Options or SARs, or the
disposition of Shares acquired on exercise of Options or SARs, shall be
considered performance-based compensation excludable from such
employee's "applicable employee remuneration" pursuant to section
162(m)(4)(C) of the Internal Revenue Code of 1986, as amended.
21. General. Each Option or SAR granted shall be evidenced by a
written instrument containing such terms and conditions not
inconsistent with the Plan as the Committee may determine. The
issuance of Shares on the exercise of an Option or SAR shall be subject
to all of the applicable requirements of the Pennsylvania Business
Corporation Law and other applicable laws. Among other things the
Optionee or Holder may be required to deliver an investment
representation to the Company in connection with any exercise of an
Option or SAR or to agree to refrain from selling or otherwise
disposing of the Shares acquired for a specified period of time.
<PAGE>
21
EXHIBIT 11
Statement Re Computation of Per Share Earnings
Quarter ended Six months ended
June 30, June 30,
--------------------- ---------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
Primary
-------
Net earnings $ 7,761,000 4,461,000 14,901,000 8,405,000
========== ========== ========== ==========
Common and common
equivalent shares
outstanding:
Weighted average
common shares
outstanding
during the period 19,714,928 19,714,828 19,714,928 19,714,828
Assumed exercise of
stock options 101,238 68,527 104,455 57,460
---------- ---------- ---------- ----------
19,816,166 19,783,355 19,819,383 19,772,288
========== ========== ========== ==========
Earnings per share of
common stock $ .39 .23 .75 .43
Fully diluted
-------------
Net earnings $ 7,761,000 4,461,000 14,901,000 8,405,000
========== ========== ========== ==========
Common and common
equivalent shares
outstanding:
Weighted average
common shares
outstanding
during the period 19,714,928 19,714,828 19,714,928 19,714,828
Assumed exercise of
stock options 101,238 68,527 121,209 61,604
---------- ---------- ---------- ----------
19,816,166 19,783,355 19,836,137 19,776,432
========== ========== ========== ==========
Earnings per share of
common stock $ .39 .23 .75 .43
22
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,534
<SECURITIES> 0
<RECEIVABLES> 258,687
<ALLOWANCES> 2,077
<INVENTORY> 0
<CURRENT-ASSETS> 266,014
<PP&E> 132,768
<DEPRECIATION> 85,086
<TOTAL-ASSETS> 343,838
<CURRENT-LIABILITIES> 111,476
<BONDS> 74,306
<COMMON> 1,974
0
0
<OTHER-SE> 151,804
<TOTAL-LIABILITY-AND-EQUITY> 343,838
<SALES> 0
<TOTAL-REVENUES> 651,060
<CGS> 0
<TOTAL-COSTS> 594,351
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,867
<INCOME-PRETAX> 24,972
<INCOME-TAX> 10,113
<INCOME-CONTINUING> 14,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,901
<EPS-PRIMARY> .75
<EPS-DILUTED> 0
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