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, 1997
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from TO
-------------- --------------
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, 1997 were:
Common stock, $.10 par value 19,902,285 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,
1997 December 31,
Assets (Unaudited) 1996
- ------ ----------- ------------
Current assets:
Cash $ 13,076 6,066
Accounts receivable, less allowance
for doubtful accounts of $4,227 -
June 30, 1997; $4,094 - December 31,
1996 263,716 233,455
Prepaid expenses 4,483 3,908
Deferred income taxes 7,202 7,288
Net assets of discontinued operations 37,124 37,257
------- -------
Total current assets 325,601 287,974
Fixed assets, at cost:
Computers 38,592 34,526
Equipment and furniture 25,787 26,119
Leasehold improvements 8,865 8,151
------- -------
73,244 68,796
Accumulated depreciation 46,826 43,292
------- -------
Net fixed assets 26,418 25,504
Deferred income taxes 5,062 4,180
Goodwill and other intangible assets, net 16,384 15,611
Other assets 7,765 6,905
------- -------
$ 381,230 340,174
======= =======
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3
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
June 30,
1997 December 31,
Liabilities and Shareholders' Equity (Unaudited) 1996
- ------------------------------------ ----------- ------------
Current liabilities:
Obligations not liquidated because
of outstanding checks $ 10,396 6,834
Accounts payable 15,042 12,423
Withheld payroll taxes 3,403 4,950
Accrued expenses 83,786 75,637
Currently payable income taxes 8,298 7,006
------- -------
Total current liabilities 120,925 106,850
Long-term debt 51,032 48,866
Deferred compensation 7,909 6,934
Minority interests 883 592
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 19,924,650 shares - June 30,
1997; 19,853,983 shares - December 31,
1996 1,992 1,985
Class B common stock, $.10 par value -
authorized 3,174,891 shares; none
issued - -
Additional paid-in capital 14,922 12,866
Retained earnings 185,325 162,669
Unamortized value of restricted stock
issued (1,077) -
Less common stock in treasury, at cost -
27,365 shares - June 30, 1997; 24,921
shares - December 31, 1996 (681) (588)
------- -------
Total shareholders' equity 200,481 176,932
------- -------
$ 381,230 340,174
======= =======
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4
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except per share data; unaudited)
Quarter ended Six months ended
June 30, June 30,
---------------- ----------------
1997 1996 1997 1996
------- ------- ------- -------
Revenues $ 378,144 338,846 738,605 669,654
Cost of services 289,122 262,521 567,641 519,450
------- ------- ------- -------
Gross profit 89,022 76,325 170,964 150,204
Operating and administrative
costs 68,013 57,664 131,163 116,018
------- ------- ------- -------
Operating profit 21,009 18,661 39,801 34,186
Interest expense 788 997 1,492 1,861
------- ------- ------- -------
Earnings from continuing
operations before income
taxes and minority
interests 20,221 17,664 38,309 32,325
Income taxes 8,126 7,065 15,362 12,984
------- ------- ------- -------
Earnings from continuing
operations before minority
interests 12,095 10,599 22,947 19,341
Minority interests 180 35 291 44
------- ------- ------- -------
Earnings from continuing
operations 11,915 10,564 22,656 19,297
Discontinued operations - (1,139) - (1,376)
------- ------- ------- -------
Net earnings $ 11,915 9,425 22,656 17,921
======= ======= ======= =======
Earnings per share:
Earnings from continuing
operations $ .60 .53 1.14 .97
Discontinued operations $ - (.06) - (.07)
Net earnings $ .60 .47 1.14 .90
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5
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands; unaudited)
Six months ended June 30,
-------------------------
1997 1996
------ ------
Continuing Operations
Operating activities:
Earnings from continuing operations $ 22,656 19,297
Minority interests 291 44
Depreciation 4,882 4,414
Amortization of intangible assets 972 945
Income tax provision greater (less)
than tax payments 496 (11,400)
Change in assets and liabilities
net of effects from acquisitions:
Increase in accounts receivable (30,261) (22,102)
Increase in payables and accrued
expenses 9,221 13,387
Other (404) 1,675
------ ------
7,853 6,260
------ ------
Investing activities:
Purchases of fixed assets (6,067) (8,798)
Acquisition net of cash acquired (1,746) (2,760)
Other 298 160
------ ------
(7,515) (11,398)
------ ------
Financing activities:
Borrowings long-term debt 10,313 12,474
Payments long-term debt (8,147) (20)
Obligations not liquidated because
of outstanding checks 3,562 1,252
Exercises of stock options 811 114
------ ------
6,539 13,820
------ ------
Net cash flows from continuing operations 6,877 8,682
Net cash flows from discontinued operations 133 (6,807)
------ ------
Increase in cash 7,010 1,875
Cash at beginning of period 6,066 4,495
------ ------
Cash at end of period $ 13,076 6,370
====== ======
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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 1997 was
19,961,954 and 19,930,280 shares, respectively. For the second quarter
and six months of 1996, 19,882,671 and 19,876,795 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, 1997
and 1996 follow ($000s):
Second quarter Six months
---------------- ----------------
1997 1996 1997 1996
------- ------- ------- -------
Revenues:
Technical Services $ 307,160 280,003 602,931 554,592
Temporary Services 47,243 39,592 90,970 77,904
Management Recruiters 23,741 19,251 44,704 37,158
------- ------- ------- -------
$ 378,144 338,846 738,605 669,654
======= ======= ======= =======
Operating profit:
Technical Services $ 16,021 15,870 31,502 29,510
Temporary Services 2,759 1,734 5,005 3,412
Management Recruiters 4,586 2,933 7,796 5,467
Corporate expenses (2,357) (1,876) (4,502) (4,203)
------- ------- ------- -------
$ 21,009 18,661 39,801 34,186
======= ======= ======= =======
During the six months ended June 30, 1997, there were 40,667
shares of common stock issued upon the exercises of stock options
granted under the Company's non-qualified stock option and stock
appreciation rights plan. In payment for certain of the option shares,
optionees surrendered 2,544 shares of common stock already owned which
the Company placed in treasury stock. As a result of the option
exercises, common stock was increased by $4,000, additional paid-in
capital was increased by $903,000 and treasury stock was increased by
$96,000.
During the six months ended June 30, 1997, there were 30,000 shares
of restricted common stock issued to an officer of the Company under his
employment agreement. Half of these shares will vest over time (3,000
shares on each of the first five anniversaries of the date
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7
of the employment agreement) and half (up to 3,000 shares per year for
five years) will vest depending upon the percentage achievement of
predetermined goals. Shares which do not vest are forfeited.
The 15,000 shares that will vest over time have a fixed value of
$531,000, the market value of the shares when issued. The value for the
15,000 shares that will vest based upon performance will fluctuate with
changes in their market value until there is a determination as
to their vesting. As of June 30, 1997, these performance-based shares
were valued at $625,000. Of the total value of $1,156,000 ascribed to
these restricted shares as of June 30, 1997, $3,000 increased common
stock and $1,153,000 increased additional paid-in capital.
Over the next five years there will be charges to earnings for
the value related to the aggregate number of these shares that become
vested. As such earnings charges occur, unamortized value of restricted
stock issued reflected in shareholders' equity will be reduced. Through
June 30, 1997, $79,000 has been charged to earnings. To the extent that
shares are forfeited, unamortized value of restricted stock issued will
also be reduced and the forfeited shares will be placed in treasury
stock.
During 1997, 100 shares of common stock held in treasury were
reissued. These shares had a cost of $3,000.
The automotive developmental engineering division of a subsidiary
and the automotive manufacturing technology division of the subsidiary
are classified as discontinued operations in the Company's financial
statements. As of December 31, 1996 a reserve was established for
estimated costs and losses associated with disposing of these businesses
and for operating losses through dates of disposition.
Costs and losses incurred during the six months ended June 30, 1997 of
$5.7 million, primarily operating losses during the period, relating to
the discontinued businesses were charged against the reserve. The
charges to the reserve were for items that corresponded to those
considered in establishing the reserve. The net assets of the
discontinued operations of $37 million as of June 30, 1997 were not
significantly different from December 31, 1996 and were 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, 1996.
<PAGE>
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discontinued Operations
-----------------------
The automotive developmental engineering division of a subsidiary
and the automotive manufacturing technology division of the subsidiary
are being disposed of pursuant to plans of disposition. These divisions
are classified as discontinued operations in the Company's financial
statements.
Results of Operations
---------------------
Consolidated revenues for the six months and quarter ended June 30,
1997 were 10% and 12% higher, respectively, compared to the same periods
a year ago. Operating profit for the six months and second quarter in
1997 was 5.4% and 5.6% of revenues, respectively, compared to 5.1% and
5.5% for the six months and second quarter in 1996.
Technical Services' revenues for the six months and second quarter
of 1997 grew 9% and 10%, respectively, from last year's comparable
periods. Operating profit margins for both the six months and second
quarter of 1997 were 5.2%. Last year's comparable periods were 5.3% and
5.7%,respectively. Technical Services continued to exhibit growth
during the second quarter, driven by the demand for information
technology services and staffing. Revenues for Technical Services IT
sector were up 43% this quarter from the second quarter of 1996 and are
running at an annual rate of $280 million. The gains in this segment
were offset in part by softness in the petrochemical/hydrocarbons and
telecommunications industries, although the telecommunications market
appears to have stabilized. The Company continues to identify and win
contracts in new, high growth markets, such as financial and banking
services.
Temporary Services' revenues for the six months and second quarter
of 1997 were 17% and 19% higher, respectively, compared to the same
periods a year ago. Operating profit margins for the six months and
second quarter of 1997 were 5.5% and 5.8%, respectively, vs. 4.4% for
each of last year s comparable periods. Demand for office/clerical
services remains firm.
Management Recruiters' revenues were up 20% for the six months of
this year and up 23% compared to last year's second quarter. Operating
profit margins for the six months and second quarter of 1997 were 17.4%
and 19.3%, respectively, compared to 14.7% and 15.2%, respectively, for
the same periods in 1996. The market has remained strong for Management
Recruiters' middle management search and recruiting services.
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9
The Company is progressing toward the sale or cessation of
operations of the components of the discontinued businesses. Serious
discussions with several prospective buyers are underway and a sizable
divestiture is expected soon. Costs and losses incurred during the six
months ended June 30, 1997 of $5.7 million, primarily for operating
losses, were charged against the reserve for discontinued operations
established as of December 31, 1996 for such costs and losses.
Financial Condition
-------------------
The ratio of current assets to current liabilities was 2.7 to 1
as of both June 30, 1997 and December 31, 1996. The ratio of long-
term debt to total capital (long-term debt plus shareholders' equity)
was 20% for June 30, 1997 and 22% for December 31, 1996. The Company
believes that capital resources available from operations and financing
arrangements are adequate to support the Company's businesses.
New Accounting Standards
------------------------
In February, 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share. Statement 128 supersedes Accounting Principles
Board Opinion No. 15, Earnings Per Share, and introduces new methods of
calculating earnings per share. Statement 128 is effective for
financial statements for both interim and annual periods ending after
December 15, 1997. Therefore, reported earnings per share for the
periods ended June 30, 1997 and 1996 have been determined using the
principles prescribed by Opinion No. 15. If the methods prescribed by
Statement 128 were applied for these quarterly periods, there would be
no difference in the reported per share amounts.
In June, 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income. Statement 130
requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other financial statements. Statement 130 is effective for both interim
and annual periods beginning after December 15, 1997. This Statement
affects reporting in financial statements only and will not have impact
upon results of operations, financial condition or long-term liquidity.
It is not expected that the reporting of comprehensive income will not apply
to the Company.
In June, 1997, the FASB also issued Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information. Statement No. 131 supersedes
Statement of Financial Accounting Standards No. 14, Financial Reporting
for Segments of a Business Enterprise, and establishes new standards for
reporting information about operating segments in annual financial
statements and requires selected information about operating segments in
interim financial reports. Statement 131 also establishes standards for
related disclosures about products and services, geographic areas
<PAGE>
10
and major customers. Statement 131 is effective for periods beginning
after December 15, 1997. This Statement affects reporting in financial
statements only and will not have impact upon results of operations,
financial condition or long-term liquidity. The Company will adopt the
standards established by this Statement as required.
Forward-looking Information
---------------------------
Certain information in this report, including Management's
Discussion and Analysis of Financial Condition and Results of
Operations, contains forward-looking statements as such term is defined
in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Certain factors such as competitive
market pressures, material changes in demand from larger customers,
availability of labor, the Company's performance on contracts, changes
in customers' attitudes toward outsourcing, government policies adverse
to the staffing industry, changes in economic conditions, and unfore-
seen events associated with divestiture of discontinued operations could
cause actual results to differ materially from those in the forward-
looking statements.
<PAGE>
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 28, 1997 the Company held its annual meeting of share-
holders. The matters of business conducted at the meeting were the
election of nine directors of the Company, consideration of 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 1,100,000 to 1,600,000 and a proposal to approve a
Bonus Plan for Mitchell Wienick, the then incoming President and Chief
Executive Officer of the Company.
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 15,137,898 63,049
Walter R. Garrison 15,136,546 64,401
Christian M. Hoechst 15,136,548 64,399
Lawrence C. Karlson 15,137,898 63,049
Edgar D. Landis 15,136,548 64,399
Allen M. Levantin 15,137,248 63,699
Alan B. Miller 15,137,898 63,049
Mitchell Wienick 15,137,098 63,849
Barton J. Winokur 14,624,548 576,399
There were no abstentions and there were no broker non-votes.
The vote on the amendment 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 1,100,000 to 1,600,000
was as follows:
Votes Votes
for against Abstentions Broker non-votes
---------- --------- ----------- ----------------
14,422,628 759,389 18,930 0
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The vote on the proposal to approve a Bonus Plan for Mitchell
Wienick was as follows:
Votes Votes
for against Abstentions Broker non-votes
---------- --------- ----------- ----------------
14,964,694 221,303 14,950 0
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13
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 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)
c. 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)
d. 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)
e. Employment Agreement dated March 11, 1997,
including Restricted Stock Agreement and Non-
Qualified Stock Option Agreement, by and between
Registrant and Mitchell Wienick, incorporated
herein by reference to the EDGAR filing made by
the Registrant on April 1, 1997 in connection with
the Registrant's definitive Proxy Statement for
its annual meeting of shareholders held on April
28, 1997 (File No. 1-5519). (Constitutes a
management contract or compensatory plan or
arrangement)
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14
f. Consulting Agreement dated as of April 7, 1997 by
and between Registrant and Walter R. Garrison.
(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, 1997.
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 8, 1997 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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15
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 17
Appreciation Rights Plan. (Constitutes a management
contract or compensatory plan or arrangement)
b. 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)
c. 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)
d. 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)
e. Employment Agreement dated March 11, 1997, including
Restricted Stock Agreement and Non-Qualified Stock
Option Agreement, by and between Registrant and
Mitchell Wienick, incorporated herein by reference to
the EDGAR filing made by the Registrant on April 1,
1997 in connection with the Registrant's definitive
Proxy Statement for its annual meeting of shareholders
held on April 28, 1997 (File No. 1-5519). (Constitutes
a management contract or compensatory plan or arrange-
ment)
<PAGE>
16
INDEX TO EXHIBITS
Number Exhibits Page
- ------ ------------------------------------------------------ ----
f. Consulting Agreement dated as of April 7, 1997 by and 24
between Registrant and Walter R. Garrison. (Consti-
tutes a management contract or compensatory plan or
arrangement)
11. Statement re computation of per share earnings. 31
27. Financial Data Schedule. 32
<PAGE>
17
As amended on 4/28/97
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.
(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).
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18
(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 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 1,600,000 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
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19
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 "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
<PAGE>
20
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 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
<PAGE>
21
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 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.
<PAGE>
22
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 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.
<PAGE>
23
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.
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>
24
CONSULTING AGREEMENT
THIS IS A CONSULTING AGREEMENT (hereinafter referred to as
"Agreement") made as of this 7th day of April, 1997, by and between CDI
Corp., a Pennsylvania corporation (hereinafter referred to as "CDI"; as
the context requires in this Agreement, "CDI" will also refer to CDI
Corp.'s subsidiary, CDI Corporation) and Walter R. Garrison (hereinafter
referred to as "Garrison").
Background
A. Garrison currently serves as chairman of CDI Corp.'s Board of
Directors, as its Chief Executive Officer and President and as a
director and/or officer of numerous CDI subsidiaries; and
B. Garrison and CDI entered into an employment agreement on May 1,
1973 (hereinafter referred to as the "Employment Agreement"), which
governs the terms of Garrison's employment with CDI; and
C. Garrison will retire from CDI and its subsidiaries as of April
7, 1997 and the Employment Agreement will terminate at that time; and
D. Garrison and CDI desire to set forth in writing the consulting
arrangement to which Garrison and CDI have agreed, Garrison's agreement
not to compete with CDI, and Garrison's release and waiver of claims
against CDI.
Agreement
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings set forth below, the sufficiency of which is hereby
acknowledged by both parties, and intending to be legally bound hereby,
CDI and Garrison agree as follows:
1. Term; Termination of Employment Agreement.
(a) The consulting term of this Agreement (the "Consulting
Term") shall commence as of April 7, 1997 (the "Effective Date") and,
unless sooner terminated in accordance with Section 8, shall terminate
on the third anniversary of the Effective Date.
(b) Effective as of the Effective Date, Garrison will retire
from employment with CDI, and will resign as Chief Executive Officer and
President of CDI and as a director and officer of all direct and
indirect subsidiaries of CDI (but not as a director of CDI Corp.).
Garrison will remain an employee of CDI through April 6, 1997 under
the current terms and conditions of the Employment Agreement. CDI and
Garrison agree that Garrison's employment under the Employment Agreement
will terminate on 12:01 a.m. April 7, 1997.
<PAGE>
25
(c) CDI shall pay to Garrison on or before June 6, 1997, the
bonus to which he is entitled under Section 5(a) of the Employment
Agreement. For purposes of such Section 5(a), the last complete
accounting period shall be the period ending on March 31, 1997. In
addition, CDI shall pay to Garrison on or before June 6, 1997, an amount
equal to two and three-quarters percent (2.75%) of twenty percent (20%)
of Earnings (as defined in the Employment Agreement) for the month of
April 1997.
(d) Following Garrison's termination of employment from CDI,
Garrison, with such assistance from CDI as he may reasonably request,
may choose supplemental Medicare coverage (the "Insurance Policy") at a
cost that is reasonably acceptable to CDI. During the Consulting Term,
CDI will reimburse Garrison for the same portion of the premiums for the
Insurance Policy that CDI contributed toward Garrison's medical
insurance coverage under the CDI group health insurance plan in effect
for CDI's active employees immediately prior to his termination of
employment from CDI.
2. Consulting Services. During the Consulting Term, Garrison will
render up to sixty (60) days of consulting services to CDI during the
first year of the Consulting Term, and up to forty-five (45) days of
consulting services to CDI during each of the second and third years of
the Consulting Term. These services will be rendered at the request of
the then Chief Executive Officer of CDI at times reasonably convenient
to Garrison. In consideration for the consulting services and for
Garrison's agreement not to compete contained in Section 5(b) of this
Agreement, CDI will pay Garrison $450,000 per year during the Consulting
Term, such amount to be payable in equal monthly installments with such
payments to begin on or about May 7, 1997.
To aid in the provision of these consulting services, during
the Consulting Term CDI will arrange for both adequate office space for
Garrison at Pennsylvania Institute of Technology ("PIT") and secretarial
support for Garrison. All costs of the office space at PIT and the
secretarial support provided to Garrison pursuant to this Section 2
shall be borne by CDI. CDI will reimburse Garrison for his necessary
and reasonable out of pocket expenses incurred in connection with his
performance of these consulting services. Through April 6, 2002,
Garrison also will attend World Presidents Organization ("WPO"),
Philadelphia Presidents Organization ("PPO") and World Affairs Council
("WAC") conferences and seminars on CDI's behalf as he did while
employed by CDI and will give reports to CDI regarding these conferences
and seminars as reasonably requested by CDI. CDI also will reimburse
his WPO, PPO and WAC membership fees and his travel (business class for
travel outside the United States), lodging, meals and related expenses
associated with attendance at WPO, PPO and WAC conferences and seminars
in accordance with CDI's past practice of reimbursing such expenses to
Garrison.
3. Board Service. Garrison agrees to continue to serve as a
director of CDI Corp. for the term to which he has been elected. Should
Garrison be elected to serve on the Board of Directors of CDI Corp. at
any time during the Consulting Term, Garrison agrees to serve
<PAGE>
26
on the Board of Directors of CDI Corp. for the term for which elected
and for no compensation other than the compensation provided by this
Agreement. Days of service with the Board of Directors or any
committee of the Board of Directors shall count as days of consulting
service for purposes of Section 2.
4. Confidentiality. Garrison acknowledges that during his term of
employment with CDI he has had access to confidential information of
both a technical nature and of a sensitive nature relating to CDI and
its customers and will continue to have such access during the term of
this Agreement. Garrison acknowledges that such confidential
information is proprietary, material and important to CDI and its non-
disclosure is essential to the effective and successful conduct of CDI's
business. Garrison agrees that during and after the term of this
Agreement he will hold all of this confidential information in the
strictest confidence and will not use any of it for any purpose and will
not publish, disseminate, disclose or otherwise make any such
confidential information available to any third party, except as may be
required in connection with the performance of the consulting
contemplated under Section 2 of this Agreement, or if CDI gives Garrison
prior written consent to use such confidential information. Garrison
further agrees to return to CDI upon request all CDI property and any
other items that in any way incorporate, embody or reflect any
confidential information.
5. Non-Competition. Garrison represents and warrants that his
experience and capabilities are such that the provisions of this Section
5 will not prevent him from earning his livelihood, and acknowledges
that it would cause CDI serious and irreparable injury and cost if
Garrison were to use his ability and knowledge in competition with CDI
or to otherwise breach the obligations contained in this Section 5.
(a) Garrison acknowledges that, it is essential for CDI's
protection that Garrison be restrained following the termination of
Garrison's employment with and consulting for CDI from soliciting or
inducing any of CDI's officers and management employees to leave CDI's
employ, hiring or attempting to hire any of CDI's officers or management
employees, soliciting CDI's customers and suppliers for a competitive
purpose, and competing against CDI for a reasonable period of time.
(b) For a period of time from the Effective Date to the fifth
anniversary of the Effective Date, Garrison agrees not to:
(i) own, manage, operate, finance, join, control, or
participate in the ownership, management, operation, financing or
control of, or be connected, directly or indirectly, as proprietor,
partner, shareholder, director, officer, executive, employee, agent,
creditor, consultant, independent contractor, joint venturer, investor,
representative, trustee or in any other capacity or manner whatsoever
with, any entity that engages or intends to engage in any Competing
Business anywhere in the world; but ownership of not more than one-
<PAGE>
27
tenth of one percent (.1%) of the outstanding stock of any publicly
traded company will not constitute a violation of this provision.
"Competing Business" means any business or other enterprise which
engages in any business conducted by CDI now or at any time during the
Consulting Term; and
(ii) directly or indirectly, solicit, interfere with or
attempt to entice away from CDI, any officer or management employees of
CDI or anyone who was one of CDI's officers or management employees
within 12 months prior to such contact, solicitation, interference or
enticement; and
(iii) contact, solicit, interfere with or attempt to
entice away from CDI, any customer on behalf of a Competing Business.
(c) References in this Section 5 to CDI shall include CDI, its
subsidiaries, divisions and affiliates.
(d) Garrison acknowledges that in the event of a breach or
threat of a breach of any portion of this Section 5, CDI's remedies at
law will be inadequate, and in any such event CDI will be entitled to an
injunction to prevent breaches of this Agreement and to enforce
specifically the provisions hereof, in addition to any other remedy to
which CDI may be entitled at law or equity.
6. Release. Garrison hereby, on behalf of himself, his
descendants, ancestors, dependents, heirs, executors, administrators,
assigns and successors, covenants not to make any claim or initiate any
lawsuit, and fully and forever releases and discharges CDI and its
subsidiaries, affiliates, divisions, successors, and assigns, together
with its past and present directors, officers, agents, attorneys,
insurers, employees, stockholders, and representatives (hereinafter
collectively referred to as the "CDI Group"), from any and all claims,
wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs, expenses,
attorneys' fees, damages, judgments, orders or liabilities of whatsoever
kind or nature in law, equity or otherwise, whether now known or
unknown, suspected or unsuspected which Garrison now owns or holds or
has at any time heretofore owned or held against the CDI Group, arising
out of or in any way connected with Garrison's employment or consulting
relationship with CDI, or the cessation of that employment or consulting
relationship, or any other transactions, occurrences, acts or omissions
or any loss, damage or injury whatsoever, known or unknown, suspected or
unsuspected, resulting from any act or omission by or on the part of the
CDI Group committed or omitted prior to the date of this Agreement,
including, but not limited to claims under Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, any other
federal, state or local statute or ordinance which deals with
discrimination or any claim for severance pay, bonus, salary, sick
leave, holiday pay, vacation pay, life insurance, health or medical
insurance or any other fringe benefit or disability benefit. This
release and waiver of claims will not
apply with respect to (i) amounts payable to Garrison with respect to
<PAGE>
28
his employment through April 6, 1997 under the Employment Agreement,
(ii) any vested benefits due Garrison under any CDI Corp. benefit plan,
or (iii) any amounts payable to Garrison under this Agreement.
7. Taxes. The parties agree that Garrison will perform the
consulting services contemplated by Section 2 of this Agreement as an
independent contractor, and that the parties will not take a position on
their tax returns (both federal and state, income and employment)
inconsistent with this position. Garrison warrants and agrees that he
is responsible for any federal, state, and local taxes which may be owed
by him by virtue of the receipt of any portion of the consideration paid
hereunder and agrees to fully indemnify CDI from and against any and all
claims by any governmental authority relating to Garrison's failure to
fully pay such taxes.
8. Termination. The Consulting Term shall automatically
terminate upon Garrison's death or his inability to perform the
consulting services requested of him due to his complete or partial
disability. CDI shall also have the right to terminate this Agreement,
by the vote of CDI's Board of Directors to so terminate, if Garrison
breaches the provisions of this Agreement in any material respect;
provided, however, that a termination of this Agreement by CDI shall not
be effective unless CDI provides written notice to Garrison of its
intention to terminate this Agreement due to Garrison's breach and
Garrison fails, to the reasonable satisfaction of CDI, to cure the
defects stated in such written notice within thirty (30) days after the
notice was given to Garrison.
9. Legal Advice. Garrison acknowledges that he has been
encouraged to seek the advice of an attorney of his choice in regard to
this Agreement. Garrison hereby acknowledges that he understands the
significance and consequences of this Agreement and represents that the
terms of this Agreement are fully understood and voluntarily accepted by
him.
10. Drafting. Both Garrison and CDI have cooperated in the
drafting and preparation of this Agreement. Hence, in any construction
to be made of this Agreement, the same shall not be construed against
any party on the basis that the party was the drafter.
11. Revocation Period. Garrison acknowledges that he was given at
least twenty-one (21) days to consider (while remaining free to execute
the Agreement at an earlier point in time) the terms of this Agreement
prior to his signing it. Garrison further understands that he may
revoke this Agreement any time up to seven (7) days following the date
he signs the Agreement by giving written notice of such revocation to
CDI. Such notice must be dated no later than the seventh (7th) day
following the date on which he signed the Agreement and must be received
promptly thereafter by CDI.
12. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the
same instrument. The section headings of this Agreement are for
convenience of reference only.
<PAGE>
29
13. Entire Agreement. This Agreement constitutes the entire
agreement concerning all subject matters addressed herein. This
Agreement supersedes and replaces all prior negotiations. All
agreements, proposed or otherwise, whether written or oral, concerning
all subject matters covered herein are incorporated into this Agreement.
If any provision of this Agreement is determined by any court of
competent jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too large a geographical area or
by reason of its being too extensive in any other respect, it will be
deemed reformed to extend only over the longest period of time for which
it may be enforceable, and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other
respects as to which it may be enforceable, all as determined by such
court in such action. Any such determination of unenforceability or
subsequent reformation will not affect any other provision or
application of this Agreement which can be given effect without the
unenforceable or reformed provision and will not invalidate, render
unenforceable or require the reformation of such provision in any other
jurisdiction. The time period for Garrison's obligations contained in
Section 5 of this Agreement will be extended beyond the time period
specified therein by the length of time, if any, during which he has
been in breach (as determined by a court of competent jurisdiction in a
final, nonappealable judgment, ruling or order or by an arbitration) of
the provisions in Section 5.
14. Notices. All notices required or permitted hereunder shall be
made in writing by hand-delivery, certified or registered first-class
mail or air courier guaranteeing overnight delivery to the other party
at the following addresses:
To CDI: CDI Corp.
Bell Atlantic Tower - 35th Floor
1717 Arch Street
Philadelphia, PA 19103
Attention: General Counsel
To Garrison: Mr. Walter R. Garrison
238 Sycamore Mills Road
Rose Tree, PA 19063
or to such other address as either of such parties may designate in a
written notice served upon the other party in the manner provided
herein. All notices required or permitted hereunder shall be deemed
duly given and received when delivered by hand, if personally delivered;
on the fourth (4th) day next succeeding the date of mailing if sent by
certified or registered first-class mail, and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
<PAGE>
30
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
WITNESS CDI CORP.
By:
------------------------ ------------------------
Dated: Dated:
----------------- ----------------------
------------------------ ----------------------------
Walter R. Garrison
Dated: Dated:
------------------ -----------------------
<PAGE>
31
EXHIBIT 11
Statement Re Computation of Per Share Earnings
Quarter ended Six months ended
June 30, June 30,
--------------------- ---------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Primary
- -------
Earnings from
continuing operations $11,915,000 10,564,000 22,656,000 19,297,000
Discontinued operations - (1,139,000) - (1,376,000)
---------- ---------- ---------- ----------
Net earnings $11,915,000 9,425,000 22,656,000 17,921,000
========== ========== ========== ==========
Common and common
equivalent shares:
Weighted average
common shares
outstanding 19,875,802 19,826,491 19,855,901 19,823,892
Assumed exercise of
stock options 86,152 56,180 74,379 52,903
---------- ---------- ---------- ----------
19,961,954 19,882,671 19,930,280 19,876,795
========== ========== ========== ==========
Earnings per share:
Earnings from
continuing operations $ .60 .53 1.14 .97
Discontinued operations $ - (.06) - (.07)
Net earnings $ .60 .47 1.14 .90
Fully diluted
- -------------
Earnings from
continuing operations $11,915,000 10,564,000 22,656,000 19,297,000
Discontinued operations - (1,139,000) - (1,376,000)
---------- ---------- ---------- ----------
Net earnings $11,915,000 9,425,000 22,656,000 17,921,000
========== ========== ========== ==========
Common and common
equivalent shares:
Weighted average
common shares
outstanding 19,875,802 19,826,491 19,855,901 19,823,892
Assumed exercise of
stock options 102,813 63,011 102,813 63,011
---------- ---------- ---------- ----------
19,978,615 19,889,502 19,958,714 19,886,903
========== ========== ========== ==========
Earnings per share:
Earnings from
continuing operations $ .60 .53 1.14 .97
Discontinued operations $ - (.06) - (.07)
Net earnings $ .60 .47 1.14 .90<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,076
<SECURITIES> 0
<RECEIVABLES> 267,943
<ALLOWANCES> 4,227
<INVENTORY> 0
<CURRENT-ASSETS> 325,601
<PP&E> 73,244
<DEPRECIATION> 46,826
<TOTAL-ASSETS> 381,230
<CURRENT-LIABILITIES> 120,925
<BONDS> 51,032
0
0
<COMMON> 1,992
<OTHER-SE> 198,489
<TOTAL-LIABILITY-AND-EQUITY> 381,230
<SALES> 0
<TOTAL-REVENUES> 738,605
<CGS> 0
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<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 38,309
<INCOME-TAX> 15,362
<INCOME-CONTINUING> 22,656
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,656
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 0
</TABLE>
