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, 1996
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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.
------------------------------------------------------
(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
----------------------------------------------------------
(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, 1996 were:
Common stock, $.10 par value 19,826,678 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 1996 1995
- ------ -------- ------------
Current assets:
Cash $ 6,367 4,490
Accounts receivable, less allowance
for doubtful accounts of $4,271 -
June 30, 1996; $4,059 - December 31,
1995 262,977 235,445
Prepaid expenses 3,829 4,587
Deferred income taxes 9,104 9,280
Net assets of discontinued operations 19,080 18,011
------- -------
Total current assets 301,357 271,813
Fixed assets, at cost:
Land 784 764
Buildings 3,847 3,846
Computers 56,884 53,016
Equipment and furniture 35,097 31,444
Leasehold improvements 14,710 12,211
------- -------
111,322 101,281
Accumulated depreciation 76,643 70,804
------- -------
Net fixed assets 34,679 30,477
Deferred income taxes 5,080 4,418
Goodwill and other intangible assets 18,458 16,605
Other assets 5,592 5,463
------- -------
$ 365,166 328,776
======= =======
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CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
June 30, December 31,
Liabilities and Shareholders' Equity 1996 1995
- ------------------------------------ -------- ------------
Current liabilities:
Obligations not liquidated because
of outstanding checks $ 10,896 9,644
Accounts payable 10,517 8,179
Withheld payroll taxes 3,260 1,569
Accrued expenses 80,408 69,269
Currently payable income taxes 10,261 21,417
------- -------
Total current liabilities 115,342 110,078
Long-term debt 80,319 67,865
Deferred compensation 5,632 5,039
Minority interests 469 425
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 19,851,733 shares - June 30,
1996; 19,845,483 shares - December 31,
1995 1,985 1,985
Class B common stock, $.10 par value -
authorized 3,174,891 shares; none
issued - -
Additional paid-in capital 12,817 12,703
Retained earnings 149,192 131,271
Less 25,055 shares of common stock
in treasury, at cost (590) (590)
------- -------
Total shareholders' equity 163,404 145,369
------- -------
$ 365,166 328,776
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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,
---------------- ----------------
1996 1995 1996 1995
------- ------- ------- -------
Revenues $ 357,160 312,526 708,623 604,965
Cost of operations 325,032 286,086 645,450 555,419
------- ------- ------- -------
Gross profit 32,128 26,440 63,173 49,546
General and administrative
expenses 15,047 11,913 30,788 23,331
------- ------- ------- -------
Operating profit 17,081 14,527 32,385 26,215
Interest expense 1,182 1,272 2,192 2,345
------- ------- ------- -------
Earnings from continuing
operations before income
taxes and minority
interests 15,899 13,255 30,193 23,870
Income taxes 6,439 5,418 12,228 9,736
------- ------- ------- -------
Earnings from continuing
operations before minority
interests 9,460 7,837 17,965 14,134
Minority interests 35 (10) 44 (42)
------- ------- ------- -------
Earnings from continuing
operations 9,425 7,847 17,921 14,176
Discontinued operations - (86) - 725
------- ------- ------- -------
Net earnings $ 9,425 7,761 17,921 14,901
======= ======= ======= =======
Earnings per share:
Earnings from continuing
operations $ .47 .40 .90 .72
Discontinued operations $ - - - .04
Net earnings $ .47 .39 .90 .75
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CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Six months ended June 30,
-------------------------
1996 1995
------ ------
Continuing Operations
Operating activities:
Earnings from continuing operations $ 17,921 14,176
Minority interests 44 (42)
Depreciation 5,909 4,941
Amortization of intangible assets 948 879
Income tax provision greater (less)
than tax payments (11,642) 5,079
Change in assets and liabilities,
net of effects from acquisitions:
Increase in accounts receivable (27,532) (44,966)
Increase in payables and accrued
expenses 15,168 9,861
Other 1,171 170
------ ------
1,987 (9,902)
------ ------
Investing activities:
Purchases of fixed assets (10,201) (8,019)
Acquisitions net of cash acquired (2,760) -
Other 221 220
------ ------
(12,740) (7,799)
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Financing activities:
Borrowings long-term debt 12,464 15,541
Payments long-term debt (10) (33)
Obligations not liquidated because
of outstanding checks 1,252 3,374
Exercises of stock options 114 -
------ ------
13,820 18,882
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Net cash flows from continuing operations 3,067 1,181
Net cash flows from discontinued operations (1,190) (809)
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Increase in cash 1,877 372
Cash at beginning of period 4,490 5,155
------ ------
Cash at end of period $ 6,367 5,527
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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 1996 was
19,882,671 and 19,876,795 shares, respectively. For the second quarter
and six months of 1995, 19,816,166 and 19,819,383 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, 1996 and 1995 follow ($000s):
Second quarter Six months
---------------- ----------------
1996 1995 1996 1995
------- ------- ------- -------
Revenues:
Technical Services $ 298,317 262,436 593,561 505,898
Temporary Services 39,592 34,152 77,904 66,423
Management Recruiters 19,251 15,938 37,158 32,644
------- ------- ------- -------
$ 357,160 312,526 708,623 604,965
======= ======= ======= =======
Operating profit:
Technical Services $ 14,290 12,221 27,709 22,190
Temporary Services 1,734 1,437 3,412 2,726
Management Recruiters 2,933 2,448 5,467 4,939
Corporate expenses (1,876) (1,579) (4,203) (3,640)
------- ------- ------- -------
$ 17,081 14,527 32,385 26,215
======= ======= ======= =======
During the six months ended June 30, 1996, there were 6,250 shares
of common stock issued upon the exercise of stock options granted under
the Company's non-qualified stock option and stock appreciation rights
plan. The issuance of these shares resulted in an increase in
additional paid-in capital of $114,000.
At the end of 1995 the Company adopted a plan to sell the
manufacturing technology division of a subsidiary which serves the
automotive market. That division is classified as a discontinued
operation in the Company's financial statements. The operations of a
small portion of the discontinued business were terminated by March 31,
1996. The remainder of the discontinued business continues to operate
and is expected to be sold prior to the end of 1996. A reserve was
established at December 31, 1995 for estimated costs and losses to be
incurred in 1996 through termination and sale of the discontinued
business. Charges to the reserve amounted to $300,000 for the six
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months ended June 30, 1996. These charges were for items and in
amounts that corresponded to estimates used in establishing the
reserve, except for operating results which have been favorable
compared to anticipated results. The net assets for discontinued
operations of $19 million as of June 30, 1996 are comprised primarily
of working capital and fixed assets.
The financial statements included in this report are unaudited
and reflect all adjustments which, in the opinion of management, are
necessary for a fair statement of the results for the periods
presented. All such adjustments are of a normal recurring nature.
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, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discontinued Operations
-----------------------
At the end of 1995 the Company adopted a plan to sell the
manufacturing technology division of a subsidiary which serves the
automotive market. That division is classified as a discontinued
operation in the Company's financial statements.
Results of Operations
---------------------
Consolidated revenues for the six months and quarter ended June
30, 1996 were 17% and 14% higher, respectively, compared to the same
periods a year ago. Operating profit for the six months and second
quarter in 1996 was 4.6% and 4.8% of revenues, respectively, compared
to 4.3% and 4.6% for the six months and second quarter in 1995.
Technical Services' revenues for the six months and second quarter
of 1996 grew 17% and 14%, respectively, from last year's comparable
periods. Operating profit margins for the six months and second
quarter of 1996 were 4.7% and 4.8%, respectively, vs. 4.4% and 4.7%
for last year's comparable periods. Demand in CDI's Technical Services
segment remains strong and is benefitting from the broad-based trend in
American business and industry toward greater use of outsourced
services. This segment's telecommunications and information systems
services are continuing to show excellent growth.
Temporary Services' revenues for the six months and second quarter
of 1996 were 17% and 16% higher, respectively, compared to the same
periods a year ago. Operating profit margins for the six months and
second quarter of 1996 were 4.4% vs. 4.1% and 4.2% for last year's
comparable periods. Temporary Services' markets remain firm.
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Management Recruiters' revenues were up 14% for the six months of
this year and up 21% compared to last year's second quarter. Operating
profit margins for the six months and second quarter of 1996 were 14.7%
and 15.2%, respectively, compared to 15.1% and 15.4%, respectively, for
the same periods in 1995. Management Recruiters' markets also remain
firm.
The operations of a small portion of the discontinued business
were terminated by March 31, 1996. The remainder of the discontinued
business continues to operate and is expected to be sold prior to the
end of 1996. A reserve was established as of December 31, 1995 for
expected costs and losses during 1996 relating to the discontinued
business. Charges to the reserve amounted to $300,000 for the six
months ended June 30, 1996. These charges were for items and in
amounts that corresponded to estimates used in establishing the
reserve, except for operating results which have been favorable
compared to anticipated results. For the six months and quarter ended
June 30, 1995, the discontinued business had revenues of $46,095,000
and $19,532,000, respectively. Earnings from operations were $725,000
for the six months ended June 30, 1995 and a loss of $86,000 for the
quarter then ended. The earnings for the six months and the loss for
the quarter are included in reported net earnings for each of the
periods in 1995.
The subsidiary which contains the discontinued business also
operates a technical staffing and engineering business serving the
automotive market. The Company believes it holds a valuable franchise
in the automotive staffing and engineering business and is continuing
to explore the best ways to maximize its value.
Financial Condition
-------------------
The ratio of current assets to current liabilities was 2.6 to 1
for June 30, 1996 and 2.5 to 1 for December 31, 1995. The ratio of
long-term debt to total capital (long-term debt plus shareholders'
equity) was 33% for June 30, 1996 and 32% for December 31, 1995. The
Company believes that capital resources available from operations and
financing arrangements are adequate to support the Company's
businesses.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 7, 1996 the Company held its annual meeting of
shareholders. The matters of business conducted at the meeting were
the election of eight directors of the Company and consideration of a
proposal to amend the CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan to provide that options be automatically
granted to eligible directors of the Company in lieu of cash retainer
fees.
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 17,832,953 61,635
Walter R. Garrison 17,833,753 60,835
Christian M. Hoechst 17,833,753 60,835
Lawrence C. Karlson 17,833,653 60,935
Edgar D. Landis 17,833,653 60,935
Allen M. Levantin 17,833,753 60,835
Alan B. Miller 17,832,853 61,735
Barton J. Winokur 17,833,653 60,935
There were no abstentions and there were 2,350 broker non-votes.
The vote on the amendment to the CDI Corp. Non-Qualified Stock
Option and Stock Appreciation Rights Plan providing that stock options
be automatically granted to eligible directors in lieu of cash retainer
fees was as follows:
Votes Votes
for against Abstentions Broker non-votes
---------- --------- ----------- ----------------
17,801,427 78,297 14,864 2,350
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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 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)
d. 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)
e. Non-competition and Consulting Agreement by and
between Registrant and Christian M. Hoechst dated
October 17, 1995, incorporated herein by reference
to Registrant's report on Form 10-K for the year
ended December 31, 1995 (File No. 1-5519).
(Constitutes a management contract or compensatory
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, 1996.
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.
--------------------------------------
August 7, 1996 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 13
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 statement on Form 8-B (File
No. 1-5519). (Constitutes a management contract or
compensatory plan or arrangement)
c. 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)
d. 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)
e. Non-competition and Consulting Agreement by and
between Registrant and Christian M. Hoechst dated
October 17, 1995, incorporated herein by reference
to Registrant's report on Form 10-K for the year
ended December 31, 1995 (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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(As amended on 5/7/96)
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 Non-Employee Director except
a director whose compensation for service on the Board is
included in the income of a corporation or partnership of
which the director is an employee or partner.
(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.
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(i) "Non-Employee Director" means any director of the Parent
Company who is not a full-time employee of the Parent
Company or any Subsidiary Company.
(j) "Option" means a non-qualified stock option granted under
the Plan and described in Paragraph 4(a).
(k) "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.
(l) "Parent Company" means CDI Corp.
(m) "Retainer Fee" means the annual retainer fee payable to
Non-Employee Directors for their service as directors of
the Parent Company during a Retainer Fee Year. A Retainer
Fee does not include attendance or committee fees.
(n) "Retainer Fee Option" means an Option granted to an
Eligible Director in payment of such Eligible Director's
Retainer Fee pursuant to Paragraph 6.
(o) "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.
(p) "SAR" means a stock appreciation right granted under the
Plan and described in Paragraphs 4(b) or 4(c).
(q) "Shares" means shares of common stock, par value $.10 per
share, of the Parent Company.
(r) "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.
(s) "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
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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
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. No director
serving on the Committee shall (a) be eligible to be granted Options or
SARs under the Plan except for Retainer Fee Options, 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, or
(b) have been granted Options or SARs under the Plan during the one
year period prior to service on the Committee, except for grants which
would not affect such director's status as
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16
"disinterested" for purposes of Rule 16b-3 (or any similar rule) of the
Securities and Exchange Commission. 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.
6. Retainer Fee Options.
(a) During each Retainer Fee Year, each Eligible Director will
be granted 4,000 Options in lieu of a cash Retainer Fee. Such number
of Options may be increased or decreased by the Board from time to
time, but not more often than once every six months other than to
comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder. Such number
will also be subject to adjustment as provided in Paragraph 15 hereof.
One-half of each year's Retainer Fee Options will be granted on the
first business day of each Retainer Fee Year and the remaining one-half
of the year's Retainer Fee Options will be granted on the first
business day that is six months after the first day of the Retainer Fee
Year.
(b) 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, (i)
Retainer Fee Options shall not vest (and therefore will not be
exercisable) until one year after the Date of Grant and (ii) if an
Eligible Director ceases to be a member of the Board for any reason,
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.
7. Eligibility. Eligible participants under the Plan shall be
all salaried employees, consultants and directors of the Parent Company
or any Subsidiary Company. 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 the price at which Shares may be
purchased on exercise of a Retainer
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17
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
<PAGE>
18
be exercisable only by the Optionee or Holder during his lifetime and,
unless otherwise determined by the Committee and except for vested
Retainer Fee Options, only while he is a salaried employee, consultant
or director of the Parent Company or of a Subsidiary Company.
12. Death or Termination of Qualifying Relationship. Unless
otherwise determined by the Committee, Options (other than vested
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 (a) the aggregate number of Shares
which may be issued under the Plan, (b) the per individual annual
limitation set forth in Paragraph 3 above, (c) the number of Retainer
Fee Options to be granted each year to Eligible Directors pursuant to
Paragraph 6 above, and (d) 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, 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
<PAGE>
19
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
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) 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
<PAGE>
20
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.
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,
--------------------- ---------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Primary
- -------
Earnings from
continuing operations $ 9,425,000 7,847,000 17,921,000 14,176,000
Discontinued operations - (86,000) - 725,000
---------- ---------- ---------- ----------
Net earnings $ 9,425,000 7,761,000 17,921,000 14,901,000
========== ========== ========== ==========
Common and common
equivalent shares:
Weighted average
common shares
outstanding 19,826,491 19,714,928 19,823,892 19,714,928
Assumed exercise of
stock options 56,180 101,238 52,903 104,455
---------- ---------- ---------- ----------
19,882,671 19,816,166 19,876,795 19,819,383
========== ========== ========== ==========
Earnings per share:
Earnings from
continuing operations $ .47 .40 .90 .72
Discontinued operations $ - - - .04
Net earnings $ .47 .39 .90 .75
Fully diluted
- -------------
Earnings from
continuing operations $ 9,425,000 7,847,000 17,921,000 14,176,000
Discontinued operations - (86,000) - 725,000
---------- ---------- ---------- ----------
Net earnings $ 9,425,000 7,761,000 17,921,000 14,901,000
========== ========== ========== ==========
Common and common
equivalent shares:
Weighted average
common shares
outstanding 19,826,491 19,714,928 19,823,892 19,714,928
Assumed exercise of
stock options 63,011 101,238 63,011 121,209
---------- ---------- ---------- ----------
19,889,502 19,816,166 19,886,903 19,836,137
========== ========== ========== ==========
Earnings per share:
Earnings from
continuing operations $ .47 .40 .90 .71
Discontinued operations $ - - - .04
Net earnings $ .47 .39 .90 .75
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains financial information extracted from the consolidated
financial statements of CDI Corp. and Subsidiaries and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,367
<SECURITIES> 0
<RECEIVABLES> 267,248
<ALLOWANCES> 4,271
<INVENTORY> 0
<CURRENT-ASSETS> 301,357
<PP&E> 111,322
<DEPRECIATION> 76,643
<TOTAL-ASSETS> 365,166
<CURRENT-LIABILITIES> 115,342
<BONDS> 80,319
0
0
<COMMON> 1,985
<OTHER-SE> 161,419
<TOTAL-LIABILITY-AND-EQUITY> 365,166
<SALES> 0
<TOTAL-REVENUES> 708,623
<CGS> 0
<TOTAL-COSTS> 645,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,192
<INCOME-PRETAX> 30,193
<INCOME-TAX> 12,228
<INCOME-CONTINUING> 17,921
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,921
<EPS-PRIMARY> .90
<EPS-DILUTED> 0
</TABLE>
