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SECURITIES AND EXCHANGE COMMISSION 1
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
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CDI CORP.
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(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2394430
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1717 Arch Street, 35th Floor, Philadelphia, PA 19103-2768
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 569-2200
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Common stock, $.10 par value New York Stock Exchange
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(Title of each class) (Name of exchange on which registered)
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
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Indicate if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value as of February 21, 1997 of voting stock
of the Registrant held by shareholders other than officers, directors
or known beneficial owners of 10% or more of such stock of the
Registrant was:
Common stock, $.10 par value $372,400,000
Class B common stock, $.10 par value Not applicable
The outstanding shares of each of the Registrant's classes of
common stock as of February 21, 1997 were:
Common stock, $.10 par value 19,830,062 shares
Class B common stock, $.10 par value None
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K into
Documents which incorporated
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Proxy Statement for Annual Meeting
of Shareholders to be Held April 28, 1997 Part III
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2
PART I
Item 1. BUSINESS.
BUSINESS SEGMENTS
The following table sets forth (in thousands) the revenues and
operating profit attributable to the continuing operations of the
business segments of the Registrant and its consolidated subsidiaries
during the years indicated and the identifiable assets attributable to
each segment as of the end of each such year.
At the end of 1996 the Company adopted a plan to dispose of the
automotive developmental engineering division of a subsidiary. This
division provides developmental and experimental engineering and design
of automotive vehicles, components and assembly processes.
At the end of 1995 the Company adopted a plan to dispose of the
automotive manufacturing technology division of a subsidiary. This
division provides production quality prototypes and until early 1996
provided production tooling fixtures.
Each of these divisions had been a separate line of business
within the Technical Services segment and, accordingly, each has been
classified as a discontinued operation in the Company s reported
results of operations for each of the years reported upon. See the
footnote for Discontinued Operations to the financial statements for a
summary of these operations.
Years ended December 31,
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1996 1995 1994
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Revenues:
Technical Services $ 1,132,721 994,528 779,053
Temporary Services 163,206 141,779 121,180
Management Recruiters 78,954 66,629 52,350
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$ 1,374,881 1,202,936 952,583
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Operating profit:
Technical Services $ 62,538 44,955 25,855
Temporary Services 8,552 7,174 5,002
Management Recruiters 11,003 9,993 7,240
Corporate expenses (8,398) (6,652) (6,749)
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$ 73,695 55,470 31,348
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Identifiable assets:
Technical Services $ 243,373 228,587 161,685
Temporary Services 33,690 30,418 22,924
Management Recruiters 20,370 11,961 8,390
Corporate 5,484 4,412 5,756
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302,917 275,378 198,755
Net assets of discontinued operations 37,257 48,185 80,214
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$ 340,174 323,563 278,969
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3
TECHNICAL SERVICES
The Registrant's Technical Services segment, which management
believes is the nation's largest organization of its kind, provides
staffing, outsourcing and consulting services in the engineering,
technical and information technology fields.
In providing its staffing services, the segment finds, recruits
and hires a wide variety of personnel and provides their services to
customers on a contract or project basis. Customers use the segment's
personnel for expansion programs, to staff special projects, to meet
peak period manpower needs and to provide skills which the customers'
employees may not have or which are not available locally.
In managed staffing, the segment not only provides the needed
personnel but also manages the customer s entire contract staffing
needs. Although the core of managed staffing services typically is
engineering and technical personnel, a growing component of these
services is information technology personnel. When providing managed
staffing services the segment usually establishes a branch office at
the customer s facilities, staffs it with the segment's human resources
experts, and ties that branch into the segment's computer network.
In managed technical outsourcing, the segment takes over a
customer s entire technical department, staffing the department with
technical personnel and managing the production of the department's
technical output. Most managed technical outsourcing relationships
currently involve computer-aided-design. In most instances the
managed department is located on-site at the customer's premises, but
in some cases the customer may prefer an off-site location, and in
this case the segment might be called upon to furnish the site as well
as to furnish the computer systems needed to support the operations.
Technical Services performs engineering consulting, providing
services such as project planning and feasibility studies, conceptual
engineering, detail engineering and design, procurement and project
management. Additionally, the segment performs information systems
consulting, providing services such as project management, client/
server design and development, network and systems management, network
design and implementation and process re-engineering. These services
generally are directed toward the implementation of a customer's
previously conceived ideas and programs. These activities typically
take place at the segment's own facilities where the segment furnishes
the computer systems support.
During the year ended December 31, 1996, Technical Services pro-
vided services to approximately 3,000 customers. Much of its business
is performed for large industrial corporations in the aircraft/ aero-
space, automotive, chemicals/petrochemicals, construction, electronics/
information processing, industrial equipment, marine, power/energy,
telecommunications and other fields. Technical Services' customers
are widely dispersed geographically. Managed staffing, outsourcing
and consulting services are concentrated among a small number of these
customers, which tend to be among the very largest U.S. industrial
corporations.
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4
During the year ended December 31, 1996, approximately 2% of the
Registrant's consolidated revenues were derived directly from prime
contracts with the United States Government and an additional
approximately 13% of the consolidated revenues were derived from
subcontracts for the United States Government. Much of the Government
business is defense related.
Services are performed in customers' facilities ("in-customer")
and in Technical Services' own facilities ("in-house") depending upon
industry practice and the needs and preferences of customers. During
the year ended December 31, 1996, approximately 80% of the segment s
revenues were generated through in-customer work with the remaining 20%
generated in-house. As of December 31, 1996 Technical Services had
approximately 17,500 employees providing services in-customer and 2,600
employees providing services in-house.
In-customer staffing employees are hired by the segment and
assigned to work for a customer. The period of assignment depends upon
the duration of the need for the skills of an individual employee. At
the end of an assignment, an employee is either assigned to perform
services with another customer, or employment is terminated.
Technical personnel are attracted to this type of employment by
the opportunity to frequently work on "state-of-the-art" projects and
by the geographic and industry diversity of the projects. In addition,
personnel may be compensated at higher rates than the hourly rate
equivalent paid to personnel with similar backgrounds and experience
who are employed by industry or government. In many instances
Technical Services' employees work substantial overtime.
When performing services on an in-customer basis, Technical
Services personnel are on Technical Services' payroll and are subject
to its administrative control. The customer retains technical and
supervisory control over the performance of in-customer services.
When the segment provides services to manage as well as to provide
the staffing, the segment may provide additional supervision for its
employees.
When services are performed in-house, Technical Services
generally provides supervision for employees, and may have increased
responsibility for the performance of work which is monitored in
conjunction with customer personnel. Typically, in-house facilities
are established only at locations where there is a reasonably
concentrated customer base that uses technical services continuously.
The demand for managed services and in-house services is generally
more constant than for in-customer staffing services. Consequently,
the duration of employment of employees working in managed services and
in in-house services is usually greater than for employees working in
in-customer staffing. Supervisory personnel at managed programs and at
in-house facilities are generally long-term employees and are important
in the continuing relationship with customers.
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5
The ability of Technical Services to find and hire personnel with
the capabilities required by customers is critical to its operations.
Such personnel usually always have prior experience in their area of
expertise. During periods of high demand for specific skills, it is
not uncommon for Technical Services to experience pressure to pay
higher wage rates or lose employees to competitors who will pay such
rates in an attempt to attract personnel with the required skills.
To assist in fulfilling its personnel needs, a computerized retrieval
system facilitates the rapid selection of resumes on file so that
customers' requirements around the country may be filled quickly.
Pricing under most contracts between Technical Services and its
customers is based on prevailing hourly rates of pay, and contracts
generally (i) do not obligate the customer to pay for any fixed number
of hours, (ii) give the customer the right to vary the number of
technical personnel assigned and (iii) give both the customer and the
segment the right to terminate the contract, usually on short notice.
Similarly, Technical Services has the right to terminate the employment
of its employees without notice. Some of these customer contracts
contain limitations on the maximum cost to the customer expressed
either in a dollar amount or a maximum number of worker hours to be
provided.
Technical Services operates through a network of approximately 145
sales/recruiting offices and in-house facilities which are situated in
major markets throughout the United States, with 3 offices in Canada
and 7 offices located overseas. Each office is responsible for
determining the potential market for services in its geographic and
industrial area, and developing that market through personal contact
with prospective and existing customers. Additionally, Technical
Services' operating management stays abreast of emerging demand for
services so that efforts can be expanded or redirected to take
advantage of potential business either in established or new marketing
areas.
Customers typically invite several companies to bid for contracts,
which are awarded primarily on the basis of price, prior performance
and previous experience in successful project completion. Many times
customers on in-customer work grant contracts to more than one company
to perform work on the same project. Because prices charged to
customers are primarily based upon prevailing wage rates in the market-
place, customers are aware of these rates and are readily able to judge
the reasonableness of competing bids. Consequently, Technical Services
competes for contracts based upon price and performance capability and
also upon the ability to recruit personnel with the requisite
capabilities.
Reliable statistical information on the technical services
industry is not available. It is estimated that approximately 600
companies are engaged in the business of providing engineering,
technical and information systems personnel generating combined annual
revenues of approximately $11 billion. No single company or small
group of companies is dominant. Competition in the industry is intense
both from national as well as smaller local or regional companies, some
of which serve only selected markets.
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6
TEMPORARY SERVICES
The Registrant's Temporary Services segment provides clerical,
secretarial, office support, legal, financial staffing and some
semi-skilled light industrial personnel to customers on a temporary
basis.
Customers retain Temporary Services to meet peak period manpower
needs, to temporarily replace employees on vacation and to staff
special projects. During the year ended December 31, 1996, these
services were provided to approximately 11,000 customers.
Services are performed in customers' facilities by Temporary
Services' employees who are hired to work on customers' projects.
The period of assignment depends upon the duration of the need for
the skills possessed by an individual employee. At the end of an
assignment, an employee is assigned to perform services with another
customer, or employment is terminated. Temporary Services personnel
so assigned are on Temporary Services' payroll and are subject to its
administrative control. The customer retains supervisory control and
responsibility for the performance of the employee's services. As of
December 31, 1996 Temporary Services had approximately 9,000 employees
providing services to customers. The ability of Temporary Services to
locate and hire personnel with capabilities required by customers is
critical to its operations.
Pricing under contracts between Temporary Services and its
customers is based on prevailing hourly rates of pay, and contracts (i)
do not obligate the customer to pay for any fixed number of hours, (ii)
give the customer the right to vary the number of temporary personnel
assigned and (iii) give both the customer and the segment the right to
terminate the contract on short notice. Similarly, Temporary Services
has the right to terminate the employment of its temporary employees
without notice.
Competition for contracts is based upon price, successful
recruiting of personnel with requisite capabilities and, in numerous
instances, prior experience with customers.
Temporary Services operates through a network of approximately
115 sales and recruiting offices, 27 of which are franchised, situated
in the United States and Canada. Each office is responsible for
determining the potential market for services in its geographic area
and developing that market through personal contact with prospective
and existing customers.
Revenues from both company and franchised offices are reflected
in the segment's revenues. Temporary Services employs all the
temporary personnel, including those recruited by the franchised
offices, and also bears the responsibility for billing services to
customers and for collection of billings. Franchisees are responsible
for selling services to customers, recruiting temporary personnel and
their administrative costs. Franchisees are paid a portion of the
gross profit on their accounts by Temporary Services.
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7
Industry leaders Kelly Services, Manpower and Olsten each has U.S.
annual revenues exceeding $2 billion. Temporary Services competes with
these leaders as well as with a second tier of approximately a dozen
companies in the $100 million to $1 billion revenues range and
additionally with hundreds of companies in regional and local markets.
The Registrant estimates that companies in those categories of the
temporary services industry that it addresses generate annual revenues
of approximately $14 billion.
MANAGEMENT RECRUITERS
The Registrant's Management Recruiters segment is believed by
management to be the nation's largest professional contingency search
and recruiting organization. This segment primarily recruits manage-
ment, technical, sales and clerical personnel for permanent employment
positions. Candidates are recruited for many different capacities
including accounting, finance, administrative, information technology,
managerial, personnel, production, research and development, sales,
supervision and technical. Fees are paid only when a candidate is
hired by the customer-employer.
Services are performed solely for employers. The fees paid by
the employers are generally a percentage of the annual compensation to
be paid to the new employee. A fee is earned only after a qualified
candidate has been hired and remains employed for a trial period,
generally 30 days. There is no additional cost for Management
Recruiters' services. Management Recruiters markets its services to
employers through personal and telephone contact, direct mail and
national advertising in newspapers and periodicals.
Management Recruiters also provides professional, executive,
middle management and clerical personnel on a temporary basis with
the objective of permanently placing such personnel with the
customer-employer, although Management Recruiters will provide these
temporary services to customers in situations where eventual permanent
employment is not contemplated. Fee schedules are developed to provide
for reduced rates on permanent placement fees in recognition of the
temporary services fees paid prior to permanent employment. Management
Recruiters employs the temporary personnel.
As of December 31, 1996 Management Recruiters had 628 franchised
offices and 49 company-owned offices throughout North America,
providing services to both large and small employers in virtually all
industries, including nearly all of the Fortune 1,000 companies. The
broad geographic scope of operations enables franchisees and company-
owned offices to provide nationwide recruiting and matching of
employers with job candidates. The network utilizes an inter-office
referral system on both national and regional levels which enables all
offices to cooperate in fulfilling a customer's requirements.
Franchisees pay an initial fee generally approximating $50,000
to acquire a franchise. The fee is designed to cover the cost of
establishing and bringing a new franchise into the system. Franchisees
also pay ongoing royalties based on a percentage of the franchisee's
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8
placement fees. Franchisees benefit from Management Recruiters'
expertise in the business, and from its national marketing, public
relations and advertising campaigns. Further, they receive extensive
pre-opening training and start-up assistance on site, such as help in
office location and lease negotiation. Franchisees also have the
rights to use Management Recruiters' trade names, trademarks, the
inter-office referral system, operating techniques, advertising
materials, sales programs, video and live interactive training
programs, computer programs, manuals and forms.
A large number of companies are engaged in the recruitment
business and Management Recruiters encounters competition from many
of these. Employers commonly offer to more than one company the
opportunity to find qualified candidates for a position making
competition for qualified individuals intense. Management Recruiters'
ability to obtain placements with employers is determined more on its
ability to find qualified candidates than on its fee structure.
EMPLOYEES
At December 31, 1996, the Registrant had approximately 1,800 sales
and administrative staff employees. The Registrant believes that its
relations with its employees are generally good.
Item 2. PROPERTIES.
The Technical Services business segment had approximately 145
continuing facilities throughout the United States, 3 facilities in
Canada and 7 facilities overseas, occupying a total of approximately
900,000 square feet of space. Approximately 500,000 square feet was
devoted to in-house technical services and the balance to sales,
marketing and administrative functions. The facilities were leased
under terms generally extending up to five years.
The Temporary Services business segment occupied 150,000 square
feet of office space at approximately 88 locations for its company-
owned temporary services offices. These facilities are leased for
varying terms generally extending up to eight years. Temporary
Services also has 27 franchised offices. Franchisees enter into their
own leases for which the segment assumes no obligation.
The Management Recruiters business segment occupied 140,000 square
feet of office space at 49 locations, primarily for its company-owned
personnel placement offices. These facilities are leased for varying
terms, the majority of which extend up to five years. Management
Recruiters also had 628 franchised offices. Franchisees enter into
their own leases for which the segment assumes no obligation.
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9
The Registrant s corporate headquarters are located in
Philadelphia, Pennsylvania where office space of approximately 40,000
square feet is leased.
Facilities are considered suitable and adequate for present levels
of operation.
Item 3. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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10
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Stock price and other information regarding the Registrant's
common stock is for the years ended December 31, 1996 and 1995. The
Registrant's common stock is traded on the New York Stock Exchange.
1996 1995
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High Low High Low
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First quarter 28-1/2 18-1/8 26-5/8 18-5/8
Second quarter 37-1/4 26-3/4 26-1/8 19-3/8
Third quarter 34-1/8 23-1/4 22-3/4 16-7/8
Fourth quarter 30-3/8 25 21-1/8 13-1/2
No cash dividends were declared during the years ended December
31, 1996 and 1995. The Company has no present intention of paying
cash dividends during the year ending December 31, 1997.
Shareholders of record on February 20, 1997 numbered 602. The
602 counts each street name account as one shareholder, when, in fact,
such an account may represent multiple owners. Taking into account
such multiple owners, the total number of shareholders approximated
4,000.
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Item 6. SELECTED FINANCIAL DATA.
Following is Selected Financial Data for the years ended December
31, 1996, 1995, 1994, 1993 and 1992. This data, where appropriate,
has been restated to give effect to the Company s plans to dispose of
certain operations (see footnote to financial statements for
Discontinued Operations). The data presented is in thousands, except
per share data.
1996 1995 1994 1993 1992
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Earnings Data
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Revenues $ 1,374,881 1,202,936 952,583 797,234 740,295
Earnings from
continuing
operations $ 42,470 31,185 17,570 8,639 6,814
Discontinued
operations (11,072) (26,046) 4,801 (809) (3,367)
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Net earnings $ 31,398 5,139 22,371 7,830 3,447
========= ========= ======= ======= =======
Earnings per share:
Earnings from
continuing
operations $ 2.14 1.57 .89 .44 .35
Discontinued
operations $ (.56) (1.31) .24 (.04) (.17)
Net earnings $ 1.58 .26 1.13 .40 .17
Cash dividends $ - - - - -
Balance Sheet Data
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Total assets $ 340,174 323,563 278,969 254,026 234,537
Long-term debt $ 48,866 67,865 58,798 61,111 71,133
Shareholders' equity $ 176,932 145,369 138,877 116,503 108,668
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Discontinued Operations
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At the end of 1996 the Company adopted a plan to dispose of the
automotive developmental engineering division of a subsidiary. This
division provides developmental and experimental engineering and design
of automotive vehicles, components and assembly processes.
At the end of 1995 the Company adopted a plan to dispose of the
automotive manufacturing technology division of a subsidiary. This
division provides production quality prototypes and provided until
early 1996 production tooling fixtures.
Each of these divisions had been a separate line of business
within the Technical Services segment and, accordingly, each has been
classified as a discontinued operation in the Company s reported
results of operations for each of the years reported upon. See the
footnote for Discontinued Operations to the financial statements for a
summary of these operations.
Results of operations, year ended December 31, 1996 vs. year ended
December 31, 1995
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Consolidated revenues from continuing operations advanced 14% over
the prior year, and operating profit margins from continuing operations
improved to 5.4% from 4.6% in 1995.
Technical Services revenues from continuing operations, which in
1996 represented 82% of the Company's consolidated revenues from
continuing operations, grew 14% over the prior year. Operating profit
margins from continuing operations were 5.5% in 1996 compared with
margins from continuing operations of 4.5% in 1995.
During 1996 the Technical Services segment continued its expansion
of information technology staffing and services, with information
technology revenues reaching approximately $200 million. All of this
business has been generated internally.
Technical Services growth in managed staffing slowed in 1996 from
1995 primarily because the Company elected not to take large volume,
low margin managed staffing contracts, but rather will participate in
those managed staffing contracts where higher value-added content
provides better margins.
Growth in demand in the aircraft/aerospace and electronics markets
continued at high levels in 1996, while chemicals/petrochemicals demand
flattened around mid-1996 and telecommunications declined late in the
year.
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13
Third quarter 1996 Technical Services results from continuing
operations included an approximately $2 million pre-tax favorable
adjustment based on an annual actuarial study of the Company s workers
compensation liabilities. In 1995 there was a comparable adjustment
reflected in the third quarter for approximately $1 million.
Each of the Technical Services segment s many contracts is
individually price negotiated, and as a result the price-to-direct cost
mix is constantly changing. Its cost structure is generally variable.
In periods of substantial increases in revenues, operating profit
margins can widen because the segment can take advantage of certain
economies of scale in its support cost structure. Conversely, in
periods of decline in demand, operating results can deteriorate quickly
because realization of cost savings typically lags implementation of
downsizing and cost reduction programs.
The Company's Temporary Services segment operates under the name
of Todays Temporary. The segment's revenues, which in 1996 represented
12% of the Company's consolidated revenues, grew 15% over the prior
year in response to continued strong demand for office/clerical
temporary services. Operating profit margins for Temporary Services
were 5.2% in 1996 compared with 5.1% in 1995. The Temporary Services
segment is not capital intensive.
Management Recruiters' revenues, which in 1996 represented 6% of
consolidated revenues, grew 18% over the prior year in response to
continued strong demand for middle management search and recruiting
services. Operating profit margins for Management Recruiters were
13.9% in 1996 compared with 15.0% in 1995. The segment is generally
not price sensitive and it is not capital intensive.
At the end of 1995 the Company adopted a plan to dispose of the
automotive manufacturing technology division of a subsidiary. In early
1996 the Company initiated discussions with potential buyers for a
certain portion of that division while it liquidated the remaining
portion of the division. During 1996 the Company investigated
strategic alternatives for the automotive developmental engineering
division of a subsidiary, and at the end of 1996 adopted a plan to
dispose of that division. The Company is discussing the sale of these
businesses with potential buyers and expects to conclude the disposal
of these units by mid-1997.
Losses from discontinued operations in 1996 included a loss
related to a marginally priced contract in the automotive develop-
mental engineering division that was terminated and the settlement of
which is currently being negotiated. Fourth quarter 1996 discontinued
operations included a reserve of $16 million ($11 million after taxes)
for estimated losses on discontinuing the automotive developmental
engineering division and for estimated losses from operations of that
discontinued business from the beginning of 1997 until mid-1997, the
estimated time of disposal. Offsetting the reserve is a gain of $7
million ($5 million after taxes) resulting from revisions of certain
reserves set aside at the end of 1995 for estimated losses associated
with discontinuing the manufacturing technology division. In this
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14
latter instance, demand for services recovered in 1996 substantially
faster and stronger than anticipated and costs associated with a
specialized leased facility are now expected to be substantially less
than anticipated.
Results of Operations, year ended December 31, 1995 vs. year ended
December 31, 1994
- ------------------------------------------------------------------
Consolidated revenues from continuing operations advanced 26%
over the prior year, and operating profit margins from continuing
operations improved to 4.6% from 3.3% in 1994.
Technical Services revenues from continuing operations, which
in 1995 represented 83% of the Company's consolidated revenues from
continuing operations, grew 28% over the prior year. The segment's
profit margins from continuing operations were 4.5% in 1995 compared
with margins from continuing operations of 3.3% in 1994.
Telecommunications revenues were up more than 60% in 1995 over
1994, while aircraft/aerospace, electronics and chemicals/petro-
chemicals each grew 30% or more.
The segment's strong rate of growth of revenues in many of its
markets in 1995 was due to higher demand oftentimes driven by out-
sourcing. In response to this demand, the segment has been broadening
its offerings to include information technology staffing and services
and managed staffing.
The Company's Temporary Services segment s revenues, which in
1995 represented 12% of the Company's consolidated revenues, grew 17%
over the prior year in response to strong demand for office/clerical
temporary services. Operating profit margins for Temporary Services
were 5.1% in 1995 compared with 4.1% in 1994.
Management Recruiters' revenues, which in 1995 represented 6% of
consolidated revenues, grew 27% over the prior year in response to
strong demand for middle management search and recruiting services.
Operating profit margins for Management Recruiters were 15.0% in 1995
compared with 13.8% in 1994.
Third quarter 1995 losses from discontinued operations included a
receivables reserve of approximately $3 million. Fourth quarter 1995
losses from discontinued operations included a reserve of $23 million
($16 million after taxes) for estimated losses on discontinuing the
automotive manufacturing technology division and for estimated losses
from operations of that discontinued business from the beginning of
1996 until the estimated dates of final termination or sale. This
reserve was revised in 1996. A portion of this business was liquidated
in early 1996. The sale of the remainder of this business was
originally intended to be not later than the end of 1996, and now is
expected to occur by mid-1997.
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15
Inflation
- ---------
The Technical Services and Temporary Services business segments'
services are priced generally in close relationship with direct labor
costs. Management Recruiters' middle management search services are
priced as a function of salary levels of job candidates. In recent
years inflation has not been a meaningful factor.
Liquidity and Capital Resources
- -------------------------------
Expansions and contractions in the levels at which the Company's
businesses operate directly affect consolidated working capital, which
in turn has a direct relationship to total capital employed because of
the high concentration of total assets represented by current assets.
Working capital increased in 1996 primarily because of the higher
levels of business at which the Company was operating. The ratio of
current assets to current liabilities was 2.7 to 1, 2.5 to 1 and 2.7
to 1 as of December 31, 1996, 1995 and 1994, respectively. The ratio
of long-term debt to total capital (long-term debt plus shareholders'
equity) was 22% as of December 31, 1996 compared with 32% as of
December 31, 1995 and 30% as of December 31, 1994.
The Company's main sources of liquidity have been from operations
and from borrowings, including a revolving credit agreement and
short-term lines of credit with banks. The revolving credit agreement
provides for borrowings of up to $100 million. Long-term borrowings
outstanding under all agreements at December 31, 1996 were $49 million.
Considering the most restrictive of the limitations placed on bank
borrowings by the agreements, the available borrowing capacity to the
Company under the revolving credit agreement (using borrowings
outstanding as of December 31, 1996) was $58 million. These sources
have been adequate to support growth opportunities in the Company's
businesses. The Company currently is negotiating a change to its
revolving credit agreement to increase maximum borrowings permitted and
reduce the cost structure and simplify the covenants to reflect current
market conditions.
Current assets represent a high portion of consolidated total
assets and are an important source of liquidity. This source could be
tapped voluntarily by reducing the volume of business accepted, thereby
turning a portion of working capital into cash. Similarly, when the
Company s business levels contract, such as during periods of economic
decline, a portion of working capital is turned into cash. The Company
believes that the public and private debt and equity markets would be
currently available as sources of additional capital.
During 1997, as it disposes of its discontinued operations, the
Company expects to realize net proceeds of approximately $37 million.
To the extent that proceeds are realized in cash, the Company intends
to use such proceeds to pay down long-term debt.
<PAGE>
16
Forward -looking Information
- ----------------------------
Certain information in this annual 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 and Section 21E of the Exchange
Act. 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 unforseen events
associated with the divestiture of discontinued operations could cause
actual results to differ materially from those in the forward-looking
statements.
<PAGE>
17
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
Years ended December 31, 1996, 1995 and 1994
(In thousands, except per share data)
1996 1995 1994
--------- --------- -------
Revenues $ 1,374,881 1,202,936 952,583
Cost of services 1,062,409 938,680 750,969
--------- --------- -------
Gross profit 312,472 264,256 201,614
Operating and administrative costs 238,777 208,786 170,266
--------- --------- -------
Operating profit 73,695 55,470 31,348
Interest expense 3,451 3,603 2,365
--------- --------- -------
Earnings from continuing operations
before income taxes and minority
interests 70,244 51,867 28,983
Income taxes 27,607 20,562 11,382
--------- --------- -------
Earnings from continuing operations
before minority interests 42,637 31,305 17,601
Minority interests 167 120 31
--------- --------- -------
Earnings from continuing operations 42,470 31,185 17,570
Discontinued operations (11,072) (26,046) 4,801
--------- --------- -------
Net earnings $ 31,398 5,139 22,371
========= ========= =======
Earnings per share:
Earnings from continuing
operations $ 2.14 1.57 .89
Discontinued operations $ (.56) (1.31) .24
Net earnings $ 1.58 .26 1.13
See accompanying notes to financial statements.
<PAGE>
18
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Retained Earnings
Years ended December 31, 1996, 1995 and 1994
(In thousands)
1996 1995 1994
------- ------- -------
Balance at beginning of year $ 131,271 126,132 103,761
Net earnings 31,398 5,139 22,371
------- ------- -------
Balance at end of year $ 162,669 131,271 126,132
======= ======= =======
See accompanying notes to financial statements.
<PAGE>
19
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands, except share data)
Assets 1996 1995
- ------ ------- -------
Current assets:
Cash $ 6,066 4,495
Accounts receivable, less allowance for
doubtful accounts of $4,094-1996;
$3,520-1995 233,455 212,395
Prepaid expenses 3,908 3,596
Deferred income taxes 7,288 9,969
Net assets of discontinued operations 37,257 36,145
------- -------
Total current assets 287,974 266,600
Fixed assets, at cost:
Computers 34,526 31,077
Equipment and furniture 26,119 22,236
Leasehold improvements 8,151 5,073
------- -------
68,796 58,386
Accumulated depreciation 43,292 36,810
------- -------
Net fixed assets 25,504 21,576
Net assets of discontinued operations - 12,040
Deferred income taxes 4,180 3,132
Goodwill and other intangible assets, net 15,611 14,778
Other assets 6,905 5,437
------- -------
$ 340,174 323,563
======= =======
<PAGE>
20
CDI CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands, except share data)
Liabilities and Shareholders' Equity 1996 1995
- ------------------------------------ ------- -------
Current liabilities:
Obligations not liquidated because of
outstanding checks $ 6,834 9,644
Accounts payable 12,423 7,313
Withheld payroll taxes 4,950 1,477
Accrued compensation and related costs 57,606 49,164
Other accrued expenses 18,031 15,850
Currently payable income taxes 7,006 21,417
------- -------
Total current liabilities 106,850 104,865
Long-term debt 48,866 67,865
Deferred compensation 6,934 5,039
Minority interests 592 425
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 19,853,983 shares - 1996;
19,845,483 shares - 1995 1,985 1,985
Class B common stock, $.10 par value -
authorized 3,174,891 shares; none issued - -
Additional paid-in capital 12,866 12,703
Retained earnings 162,669 131,271
Less common stock in treasury, at cost -
24,921 shares - 1996; 25,055 share - 1995 (588) (590)
------- -------
Total shareholders' equity 176,932 145,369
------- -------
$ 340,174 323,563
======= =======
See accompanying notes to financial statements.
<PAGE>
21
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(In thousands)
1996 1995 1994
------ ------ ------
Continuing Operations
Operating activities:
Earnings from continuing operations $ 42,470 31,185 17,570
Minority interests 167 120 31
Depreciation 9,198 6,882 5,624
Amortization of intangible assets 1,969 1,826 1,964
Income tax provision greater (less)
than tax payments (12,778) 1,788 2,018
Change in assets and liabilities
net of effects from acquisitions:
(Increase) in accounts receivable (21,060) (62,283) (27,311)
Increase in payables and accrued
expenses 19,206 13,109 14,968
Other 48 124 325
------ ------ ------
39,220 (7,249) 15,189
------ ------ ------
Investing activities:
Purchases of fixed assets (13,545) (13,805) (7,209)
Acquisitions net of cash acquired (2,765) (103) (198)
Other 471 1,515 464
------ ------ ------
(15,839) (12,393) (6,943)
------ ------ ------
Financing activities:
Borrowings long-term debt 12,498 22,032 15,450
Payments long-term debt (31,497) (12,965) (33,763)
Obligations not liquidated
because of outstanding checks (2,810) 2,911 2,695
Exercises of stock options 165 1,353 -
------ ------ ------
(21,644) 13,331 (15,618)
------ ------ ------
Net cash flows from continuing
operations 1,737 (6,311) (7,372)
Net cash flows from discontinued
operations (166) 5,646 (7,796)
------ ------ ------
Increase (decrease) in cash 1,571 (665) (15,168)
Cash at beginning of year 4,495 5,160 20,328
------ ------ ------
Cash at end of year $ 6,066 4,495 5,160
====== ====== ======
See accompanying notes to financial statements.
<PAGE>
22
CDI CORP. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Significant Accounting Policies
- -------------------------------
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and all majority-owned subsidiaries
after elimination of intercompany balances and transactions.
Gross Profit - The Company has realigned its Statement of Earnings
presentation format to be consistent with industry practices. Under
the new format, gross profit represents the difference between revenues
and direct costs. The principal components of direct costs are the
wages and employee payroll taxes and benefits associated with employees
directly providing services to customers. Operating and administrative
costs, both variable and fixed, are shown below the gross profit line.
Prior period Statements of Earnings have been reclassified to be
consistent with the new format.
Discontinued Operations - As disclosed in the footnote for Discontinued
Operations, the Company adopted plans to discontinue the automotive
developmental engineering division of a subsidiary and the manufactur-
ing technology division of a subsidiary. As a result, all financial
information has been restated to reflect these discontinued operations.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fixed Assets - Depreciation of fixed assets is provided generally on
the straight-line method at rates calculated to provide for retirement
of assets at the end of their estimated useful lives. The annual rates
generally used are 25% for computers, 10% to 25% for equipment and
furniture and the lesser of the life of the lease or asset for lease-
hold improvements.
Goodwill and Other Intangible Assets - The net assets of subsidiaries
acquired, which were accounted for as purchases, have been reflected at
their fair values at dates of acquisition. The excess of acquisition
costs over such net assets is reflected in the consolidated balance
sheets as goodwill - $13,500,000 at December 31, 1996 and $11,807,000
at December 31, 1995. Goodwill of $12,420,000 at December 31, 1996 and
$10,727,000 at December 31, 1995 is being amortized on the straight-
line method over two to forty years. Amortization for goodwill in 1996
and 1995 was $1,036,000 and $688,000, respectively, resulting in
accumulated amortization of $5,276,000 as of December 31, 1996 and
$4,240,000 as of December 31, 1995.
<PAGE>
23
Other intangible assets, primarily arising in conjunction with
acquisitions, include agreements with individuals not to enter into
competing businesses with the Company, the value for an established
customer base and the value for acquired temporary services franchise
arrangements. Other intangible assets of $2,111,000 and $2,971,000
were recorded at December 31, 1996 and 1995, respectively, and are
being amortized on the straight-line method over five to twelve years.
Amortization for other intangible assets in 1996 and 1995 was $933,000
and $1,138,000, respectively, resulting in accumulated amortization of
$3,541,000 as of December 31, 1996 and $2,608,000 as of December 31,
1995.
Long-Lived Assets, Goodwill and Other Intangible Assets - The Company
reviews long-lived assets and certain identifiable intangibles to be
held, used or disposed of for impairment based on the undiscounted
cash flows from the related assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.
Obligations Not Liquidated Because of Outstanding Checks - The Company
manages its levels of cash in banks to minimize its cash balances.
Cash balances as reflected by banks are higher than the Company's book
balances because of checks in float throughout the banking system.
Cash is generally not provided to accounts until checks are presented
for payment. The differences in balances created by this float result
in negative cash balances in the Company's records. These negative
balances are reflected in current liabilities as Obligations Not
Liquidated Because of Outstanding Checks.
Stock-Based Compensation - The Company uses the intrinsic value based
method of accounting for stock options and similar instruments granted
to employees and directors. The Company has not adopted the fair value
based method as encouraged by Statement No. 123, Accounting for Stock-
Based Compensation, issued by the Financial Accounting Standards Board.
If the fair value based method of accounting were applied to grants of
stock options in 1996 and 1995, the effect would not be material.
Income Taxes - The Company and its wholly-owned U.S. subsidiaries file
a consolidated federal income tax return. Deferred income taxes are
recorded for taxes estimated to be payable in future years based upon
differences between the financial reporting and tax bases of assets and
liabilities and for operating loss carryforwards. Deferred tax assets
and liabilities are determined using enacted tax rates expected to
apply to taxable income in the years the temporary differences are
expected to be recovered or settled.
Fair Value of Financial Instruments - The carrying value of significant
financial instruments approximates fair value. The Company's financial
instruments are accounts receivable, accounts payable and long-term
debt. The Company does not have any off-balance sheet financial
instruments or derivatives.
Per Share Data - For the years ended December 31, 1996, 1995 and 1994,
earnings per share of common stock are based on the weighted average
number of shares of common stock and dilutive common share equivalents
<PAGE>
24
(which arise from stock options) outstanding during the years. No
further dilution resulted from a computation of fully diluted earnings
per share. The number of shares used to compute earnings per share was
19,872,405, 19,830,850 and 19,778,980 for the years ended December 31,
1996, 1995 and 1994, respectively.
Acquisitions
- ------------
During the year ended December 31, 1996 the Company invested
$2,765,000 to acquire certain operations in Temporary Services and
for additional payments related to acquisitions in a prior year.
Substantially all the investment is represented by goodwill which is
being amortized on the straight-line method over twenty years. The
operating results for the acquired businesses were not significant in
1996.
During the year ended December 31, 1995 the Company invested
$103,000 to acquire an operation in Technical Services. Goodwill equal
to the investment is being amortized on the straight-line method over
two years. The operating results for the acquired business was not
significant in 1995.
During the year ended December 31, 1994 there were investments
totaling $198,000 that relate to an acquisition in a prior year and to
the acquisition of the minority interests in a subsidiary. Goodwill
relating to these subsidiaries increased by $198,000.
Accounts Receivable
- -------------------
The Company's principal asset is accounts receivable. Receivables
arise from services provided pursuant to contracts or agreements with
customers for such services. Historically, losses due to customers'
inability to comply with the payment terms of their contracts or
agreements with the Company have not been significant. The primary
users of the Company's services are large U.S. based industrial and
commercial concerns, many of which are Fortune 500 companies.
Accounts receivable as of December 31, 1996 for Technical
Services, Temporary Services and Management Recruiters were
$204,055,000, $20,281,000 and $9,119,000, respectively, and as of
December 31, 1995 were $187,730,000, $18,310,000 and $6,082,000,
respectively. As of December 31, 1996 receivables from customers in
the aircraft/aerospace and electronics/information processing
industries each comprised approximately 20% of consolidated receivables
and receivables from customers in chemicals/petrochemicals and
telecommunications each comprised approximately 15% of consolidated
receivables. As of December 31, 1995 receivables from customers in
aircraft/aerospace comprised approximately 20% of consolidated
receivables and receivables from customers in chemicals/petrochemicals,
electronics/information processing and telecommunications each
comprised approximately 15% of consolidated receivables. It is not
Company or industry practice to require collateral or other security
for receivables because of the nature of the customer base involved.
<PAGE>
25
Long-term Debt
- --------------
Long-term debt at December 31, 1996 and 1995 was as follows
($000s):
1996 1995
------ ------
Notes payable to banks under revolving
credit agreement with interest at
5-7/8%-1996; 6-1/8%-1995 $ 42,000 46,000
Notes payable to banks under short-term
lines of credit with interest at 6-3/4%-
1996; 6-1/8%-1995 4,700 20,000
Other 2,166 1,865
------ ------
$ 48,866 67,865
====== ======
A revolving credit agreement with a syndicate of banks provides
for borrowings up to $100 million through March 31, 1999. Borrowings
outstanding on March 31, 1999 may be converted into term debt which
would mature in quarterly installments payable over four years.
There was an initial one-time fee paid equal to 1/8% of the banks'
commitments and there is an annual facility fee equal to 3/10% of the
banks' commitments. Interest rate alternatives are available whereby
the Company can elect to have interest be at either (i) rates quoted
competitively by the syndicate banks on a transactional basis with
borrowings awarded to the lowest bidder(s), (ii) rates quoted on the
Interbank Eurodollar Market ("LIBOR") (adjusted for reserve require-
ments) plus a LIBOR margin that can range from 1/2% to 1-1/2% depending
upon the ratio of all of the Company's borrowings to its cash flow, or
(iii) rates determined by the greater of either (a) the prime rate or
(b) the overnight Federal Funds rate plus 1/2%. The ratio for the
LIBOR margin is determined each quarter using borrowings outstanding at
the end of the quarter and cash flow for the four quarters then ended.
The resulting ratio is used to determine the applicable LIBOR Margin
for the ensuing quarter.
Uncommitted short-term lines of credit with six banks are also
available under which interest rates are quoted on a transactional
basis and are related to the banks' costs of funds.
All borrowings at December 31, 1996 are classified long-term
because the Company intends to finance maturities as they become due
with borrowings under the revolving credit agreement. As of December
31, 1996 borrowings scheduled to mature in 1997 were $6,804,000, with
$35,000 due in 1998, $7,885,000 due in 1999, $10,510,000 due in 2000
and $10,507,000 due in 2001.
The revolving credit agreement places limitations on certain
transactions that include acquisition by the Company of its securities,
payment of cash dividends and investments in other businesses. In
addition, the credit agreement includes certain other requirements.
<PAGE>
26
A consolidated current ratio of at least 1.5 is to be maintained.
Consolidated tangible net worth (total shareholders' equity less
goodwill and other intangible assets) shall be at least $70 million
plus 35% of consolidated net earnings after December 31, 1992
($93,358,000 as of December 31, 1996). If interest coverage (ratio
of operating profit to interest expense using the most recent four
quarters) is less than 1 to 1, the tangible net worth requirement is
increased by $5 million. The ratio of consolidated indebtedness for
borrowings to total capital (sum of consolidated current and long-
term debt, non-current deferred income taxes, minority interests and
tangible net worth) shall not exceed .60. The Company was in
compliance with the terms of the credit agreement through December 31,
1996.
Capital Stock
- -------------
Common stock and Class B common stock have equal rights except
that dividends, other than stock dividends, may be declared and paid on
common stock in excess of amounts declared and paid on Class B common
stock. The Class B common stock is convertible on a share-for-share
basis into common stock and Class B shares so converted shall be
cancelled.
At December 31, 1996, 974,750 shares of common stock were reserved
for issuance under the non-qualified stock option and stock apprecia-
tion rights plan.
During the year ended December 31, 1996, 8,500 shares of common
stock were issued pursuant to the exercise of stock options under the
Company's non-qualified stock option and stock appreciation rights
plan. The issuance of these shares increased additional paid-in
capital by $165,000. In addition, 134 shares of common stock held in
treasury were reissued. These shares had a cost of $2,000 and their
reissuance reduced additional paid-in capital by that amount.
During the year ended December 31, 1995, 105,500 shares of common
stock were issued pursuant to the exercise of stock options under the
Company's non-qualified stock option and stock appreciation rights
plan. The issuance of these shares increased common stock by $11,000
and additional paid-in capital by $1,342,000.
During the year ended December 31, 1994, 100 shares of common
stock held in treasury were reissued. These shares had a cost of
$3,000.
Stock Plan
- ----------
Under the terms of a non-qualified stock option and stock
appreciation rights plan, options and stock appreciation rights to
purchase an aggregate of 974,750 shares of common stock may be granted
separately or in tandem to salaried employees, consultants and
directors. Stock appreciation rights may also be granted with respect
to outstanding options. Grants under the plan, except for grants to
certain directors who are not full-time employees and whose retainer
fees are paid via stock options, are determined by a stock option
<PAGE>
27
committee appointed by the board of directors. Stock options granted
to directors in lieu of payment of fees in cash are not significant.
The price at which options or stock appreciation rights may be
exercised shall not be less than 50% of the market value per share of
the Company's common stock on the date of grant and, unless otherwise
determined by the committee, options or rights granted under the plan
shall not be exercised after five years from date of grant.
The plan permits optionees to purchase stock via cash payment, the
delivery of shares of the Company's common stock in lieu of cash, or a
combination of both. Upon the exercise of stock appreciation rights,
the recipient of such rights will receive an amount equal to the excess
of the then market price of the shares subject to the rights over the
exercise price of the rights. The amount of such excess is payable
one-half in cash and one-half in shares of the common stock of the
Company, valued at the then market price. The exercise of one
alternative by a holder of a tandem grant also reduces the number of
shares then exercisable with respect to the other alternative.
During the years ended December 31, 1996, 1995 and 1994 options
were granted to purchase 40,000 shares, 36,700 shares and 107,000
shares, respectively, at weighted average option prices per share of
$28.56, $19.04 and $15.06, respectively. All such options granted have
option prices equal to the per share market price of the Company's
common stock on the dates of grant. Therefore, no compensation cost
was recognized for any of these options granted. No stock appreciation
rights were granted during any of these years.
During the years ended December 31, 1996 and 1995, stock options
were exercised for 8,500 shares and 105,500 shares, respectively, at
weighted average option prices per share of $14.85 and $9.70,
respectively. No options were exercised during the year ended December
31, 1994. No stock appreciation rights were exercised during the years
ended December 31, 1996, 1995 and 1994.
During the years ended December 31, 1996, 1995 and 1994 stock
options lapsed or were forfeited for 6,750 shares, 128,000 shares and
8,000 shares, respectively, which had weighted average option prices
per share of $17.73, $10.58 and $6.75, respectively.
At December 31, 1996, 1995, 1994 and 1993 options were outstanding
to purchase 178,950, 154,200, 351,000 and 252,000 shares of common
stock, respectively, at weighted average prices of $17.83, $14.88,
$11.32 and $9.59 per share, respectively. Options to purchase 67,200
shares, 40,250 shares and 113,333 shares were exercisable at December
31, 1996, 1995 and 1994, respectively, at weighted average prices of
$17.17, $11.60 and $9.12, respectively. No stock appreciation rights
were outstanding as of December 31, 1996, 1995, 1994 or 1993.
For options outstanding on December 31, 1996 option prices ranged
from $6.25 per share to $29.75 per share and the weighted average
remaining life for such options as of December 31, 1996 was
approximately 3.5 years.
<PAGE>
28
Income Taxes
- ------------
The provision for income taxes relating to continuing operations
for the years ended December 31, 1996, 1995 and 1994 was comprised of
the following ($000s):
Total Federal State Foreign
------- ------- ------ -------
1996
- ----
Current $ 26,033 22,760 2,873 400
Deferred 1,574 1,124 535 (85)
------ ------ ----- -----
$ 27,607 23,884 3,408 315
====== ====== ===== =====
1995
- ----
Current $ 29,988 25,265 4,269 454
Deferred (9,426) (8,014) (1,413) 1
------ ------ ----- -----
$ 20,562 17,251 2,856 455
====== ====== ===== =====
1994
- ----
Current $ 11,931 9,975 1,473 483
Deferred (549) (123) (422) (4)
------ ------ ----- -----
$ 11,382 9,852 1,051 479
====== ====== ===== =====
The tax effects of the principal components creating net deferred
income tax assets as of December 31, 1996 and 1995 were as follows
($000s):
1996 1995
------ ------
Components creating deferred tax liabilities
Deferral of revenues and accounts receivable $ 7,237 2,082
Other 1,094 1,649
------ ------
8,331 3,731
Components creating deferred tax assets
Expenses not currently deductible (17,656) (14,968)
Intangible assets amortization (1,746) (1,402)
Other (184) (223)
Operating loss carryforwards (303) (438)
------ ------
(19,889) (17,031)
Valuation allowances 90 199
------ ------
$(11,468) (13,101)
====== ======
The net change in the valuation allowances for the years ended
December 31, 1996 and 1995 was a decrease of $109,000 and $320,000,
respectively. In assessing the realizability of deferred tax assets,
the Company considers whether it is more likely than not that some
<PAGE>
29
portion or all of the benefits of the deferred tax assets will not be
achieved. The ultimate realization of deferred tax assets is dependent
upon a number of things, including past and future taxable income.
Based upon the assessment of the prospects for achieving the benefits
of the deferred tax assets, net of existing valuation allowances, the
company believes it is more likely than not that such benefits will be
realized.
The effective income tax rates relating to continuing operations
for the years ended December 31, 1996, 1995 and 1994 differed from the
applicable federal rate as follows:
1996 1995 1994
---- ---- ----
Federal rate 35% 35% 35%
State income taxes 3% 4% 2%
Expenses permanently nondeductible
for tax purposes 1% 1% 2%
--- --- ---
Effective income tax rate 39% 40% 39%
=== === ===
Certain subsidiaries have operating loss carryforwards for tax
purposes the realization of which is dependent upon the respective
subsidiaries having sufficient taxable income in future years to use
the carryforwards. At December 31, 1996 for federal income tax
purposes, these carryforwards aggregated approximately $200,000 and
expire in varying amounts from 2002 through 2008. The tax benefits of
approximately $100,000 of these carryforwards reduce goodwill and have
been recognized for financial reporting purposes. Tax benefits
relating to the remaining $100,000 have also been recognized for
financial reporting purposes.
At December 31, 1996 for state income tax purposes, there were
operating loss carryforwards aggregating approximately $2,000,000
expiring in varying amounts from 1997 through 2011. Benefits relating
to approximately $1,000,000 have been recognized for financial
reporting purposes. Benefits for the remaining $1,000,000 have not
been recognized and are included in the valuation allowance as of
December 31, 1996.
Retirement Plans
- ----------------
Trusteed contributory and non-contributory defined contribution
retirement plans have been established for the benefit of eligible
employees. Costs of the plans are charged to earnings and are based
on either a formula using a percentage of compensation or an amount
determined by the board of directors of a company limited to the amount
allowable for Federal income tax purposes. Costs of these plans are
funded. Charges to earnings for contributions to these retirement
plans for the years ended December 31, 1996, 1995 and 1994 were
$2,444,000, $2,337,000 and $1,813,000, respectively.
Except for retirement plans, the Company provides no other
postretirement benefits. Further, the Company does not provide
postemployment benefits.
<PAGE>
30
Leases
- ------
Offices used for sales, recruiting and administrative functions
and facilities used for in-house engineering, design and drafting are
occupied under numerous leases which expire through 2011. In addition,
there are leases for computers and office equipment. Rentals under all
leases for the years ended December 31, 1996, 1995 and 1994 were
$15,087,000, $13,589,000 and $12,256,000, respectively.
For periods after December 31, 1996, approximate minimum annual
rentals under non-cancelable leases aggregate $44,730,000 with rentals
of $12,521,000 due in 1997, $9,058,000 due in 1998, $7,099,000 due in
1999, $4,754,000 due in 2000 and $2,327,000 due in 2001.
Business Segments
- -----------------
Technical Services - This segment provides principally technical
staffing supplying supplemental engineering, technical and information
technology personnel to a broad range of customers.
Temporary Services - This segment provides temporary office,
clerical, legal and financial staffing personnel to a broad range of
commercial customers.
Management Recruiters - This segment provides principally a search
and recruiting service for permanent employment of management in many
fields including information technology, sales and sales management,
healthcare, accounting and finance. In addition, a range of management
staffing services is provided through several specialized divisions.
Business segment data for the years ended December 31, 1996, 1995
and 1994 follows ($000s):
1996 1995 1994
--------- --------- -------
Revenues
- --------
Technical Services $ 1,132,721 994,528 779,053
Temporary Services 163,206 141,779 121,180
Management Recruiters 78,954 66,629 52,350
--------- --------- -------
$ 1,374,881 1,202,936 952,583
========= ========= =======
Operating profit
- ----------------
Technical Services $ 62,538 44,955 25,855
Temporary Services 8,552 7,174 5,002
Management Recruiters 11,003 9,993 7,240
Corporate expenses (8,398) (6,652) (6,749)
--------- --------- -------
$ 73,695 55,470 31,348
========= ========= =======
<PAGE>
31
1996 1995 1994
--------- --------- -------
Identifiable assets
- -------------------
Technical Services $ 243,373 228,587 161,685
Temporary Services 33,690 30,418 22,924
Management Recruiters 20,370 11,961 8,390
Corporate 5,484 4,412 5,756
--------- --------- -------
302,917 275,378 198,755
Net assets of discontinued
operations 37,257 48,185 80,214
--------- --------- -------
$ 340,174 323,563 278,969
========= ========= =======
Capital additions
- -----------------
Technical Services $ 7,602 9,949 5,845
Temporary Services 1,426 3,065 557
Management Recruiters 4,339 696 733
Corporate 178 95 74
--------- --------- -------
$ 13,545 13,805 7,209
========= ========= =======
Depreciation expense
- --------------------
Technical Services $ 7,080 5,503 4,436
Temporary Services 1,211 784 582
Management Recruiters 847 512 483
Corporate 60 83 123
--------- --------- -------
$ 9,198 6,882 5,624
========= ========= =======
Discontinued Operations
- -----------------------
On December 30, 1996 the Company adopted a plan to dispose of the
automotive developmental engineering division of a subsidiary. This
division provides developmental and experimental engineering and design
of automotive vehicles, components and assembly processes.
On December 28, 1995 the Company adopted a plan to dispose of the
automotive manufacturing technology division of a subsidiary. This
division provides production quality prototypes and until early 1996
provided production tooling fixtures.
Each of these divisions had been a separate line of business
within the Technical Services segment and, accordingly, each has been
classified as a discontinued operation in the Company s reported
results of operations for each of the years reported upon.
<PAGE>
32
In early 1996 the Company liquidated the production tooling
fixtures portion of the automotive manufacturing technology division.
The Company is discussing the sale of the remaining portion of the
automotive manufacturing technology division along with most of the
automotive developmental engineering division with potential buyers and
expects to conclude disposal of these units by mid-1997. The remainder
of the automotive developmental engineering division will be
liquidated.
Summary results of the discontinued operations for the years ended
December 31, 1996, 1995 and 1994 are as follows ($000s):
1996 1995 1994
------ ------- -------
Revenues:
Developmental engineering $ 79,273 67,517 60,192
Manufacturing technology - 65,588 84,824
------ ------- -------
$ 79,273 133,105 145,016
Operating profit (loss):
Developmental engineering $ (7,212) 367 1,909
Manufacturing technology - (13,525) 7,669
------ ------- -------
(7,212) (13,158) 9,578
Interest expense:
Developmental engineering 749 851 742
Manufacturing technology - 1,007 1,004
------ ------- -------
749 1,858 1,746
Earnings (loss) before income taxes
and before provisions related to
phase-out periods and disposals
and subsequent adjustments of such
provisions:
Developmental engineering (7,961) (484) 1,167
Manufacturing technology - (14,532) 6,665
------ ------- -------
(7,961) (15,016) 7,832
Income taxes:
Developmental engineering (2,826) 38 564
Manufacturing technology - (4,966) 2,467
------ ------- -------
(2,826) (4,928) 3,031
<PAGE>
33
1996 1995 1994
------ ------- -------
Earnings (loss) before provisions
related to phase-out periods and
disposals and subsequent
adjustments of such provisions:
Developmental engineering (5,135) (522) 603
Manufacturing technology - (9,566) 4,198
------ ------- -------
(5,135) (10,088) 4,801
Estimated losses during phase-out
periods (developmental engineering,
1996; manufacturing technology,
1995), net of income tax benefits
of $(680)and $(1,991) (1,264) (3,698) -
Estimated losses on disposals of
operations (developmental
engineering, 1996; manufacturing
technology, 1995), net of income
tax benefits of $(4,146) and $(4,696) (9,517) (12,260) -
Adjustments of prior-year provisions
related to phase-out periods and
disposals, net of income taxes of
$2,608 4,844 - -
------ ------ ------
$(11,072) (26,046) 4,801
====== ====== ======
Adjustments were made to prior-year provisions related to
phase-out periods and disposals because demand for services recovered
in 1996 substantially faster and stronger than anticipated and costs
associated with a specialized leased facility are expected to be
substantially less than previously anticipated.
Summary balance sheet accounts of the discontinued operations as
of December 31, 1996 and 1995 are as follows ($000s):
1996 1995
------ ------
Working capital $ 24,283 22,370
Net fixed assets 7,171 21,283
Goodwill - 1,827
Other assets 87 35
Deferred income taxes 5,716 2,670
------ ------
$ 37,257 48,185
====== ======
Net assets associated with the developmental engineering division
as of December 31, 1996 and 1995 were approximately $23 million and $30
million, respectively, and net assets for the manufacturing technology
division were approximately $14 million and $18 million, respectively.
<PAGE>
34
Interest expense was allocated to the discontinued operations
based upon their proportionate share of consolidated net assets during
each of the years.
Contracts with customers for the discontinued operations included
fixed price based contracts. Accordingly, revenues were recognized
using the percentage of completion method of accounting for those
contracts.
Effective income tax rates for the discontinued operations
differed from the federal statutory rate primarily because of expenses
permanently non-deductible for tax purposes.
Legal Proceedings and Claims
- ----------------------------
There are litigation and other claims pending which arise in the
ordinary course of business. There are substantive defenses and/or
insurance available such that the outcome of these items should not
have a material adverse effect on the financial condition or results
of operations of the Company.
<PAGE>
35
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of CDI Corp.:
We have audited the accompanying consolidated balance sheets of
CDI Corp. and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of earnings, retained earnings, and
cash flows for each of the years in the three-year period ended
December 31, 1996. In connection with our audits of the consolidated
financial statements, we also have audited the related financial
statement schedule listed under the heading "Financial statement
schedules" on page 37. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of CDI Corp. and subsidiaries as of December 31, 1996 and 1995 and the
results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also in our opinion, the
related financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
Philadelphia, PA /s/ KPMG PEAT MARWICK LLP
February 19, 1997 ---------------------------------
KPMG Peat Marwick LLP
<PAGE>
36
CDI CORP. AND SUBSIDIARIES
Quarterly Earnings
Years ended December 31, 1996 and 1995
(In thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ---------
1996
- ----
Revenues $ 330,808 338,846 353,676 351,551 1,374,881
Gross profit (a) 73,879 76,325 82,170 80,098 312,472
Operating profit 15,525 18,661 22,365 17,144 73,695
Interest expense 864 997 900 690 3,451
Earnings from
continuing
operations 8,733 10,564 12,818 10,355 42,470
Discontinued
operations (237) (1,139) (2,579) (7,117) (11,072)
Net earnings $ 8,496 9,425 10,239 3,238 31,398
Per share:
Earnings from
continuing
operations $ .44 .53 .65 .52 2.14
Discontinued
operations $ (.01) (.06) (.13) (.36) (.56)
Net earnings $ .43 .47 .52 .16 1.58
1995
- ----
Revenues $ 274,576 293,289 316,040 319,031 1,202,936
Gross profit (a) 58,479 62,713 70,193 72,871 264,256
Operating profit 10,409 11,808 17,489 15,764 55,470
Interest expense 871 1,033 860 839 3,603
Earnings from
continuing
operations 5,681 6,287 9,865 9,352 31,185
Discontinued
operations 1,459 1,474 (6,725) (22,254) (26,046)
Net earnings $ 7,140 7,761 3,140 (12,902) 5,139
Per share:
Earnings from
continuing
operations $ .29 .32 .50 .47 1.57
Discontinued
operations $ .07 .07 (.34) (1.12) (1.31)
Net earnings $ .36 .39 .16 (.65) .26
(a) See financial statement footnote for Significant Accounting
Policies for description of realignment of presentation of
gross profit.
<PAGE>
37
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
Part III of this form is omitted by the Registrant since it will
file with the Commission a definitive proxy statement pursuant to
Regulation 14A involving the election of directors not later than 120
days after the close of the fiscal year.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Documents filed as part of this report
Financial statements
The consolidated balance sheets of the Registrant as of
December 31, 1996 and 1995, the related consolidated
statements of earnings, retained earnings and cash flows
for each of the years ended December 31, 1996, 1995 and
1994, the footnotes thereto and the report of KPMG Peat
Marwick LLP, independent auditors, are filed herein.
Financial statement schedules
Schedule submitted for the years ended December 31, 1996,
1995 and 1994.
II - Valuation and Qualifying Accounts
(b) Registrant has not filed a Form 8-K during the quarter ended
December 31, 1996.
<PAGE>
38
(c) 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, incorporated herein
by reference to the Registrant's report on Form
10-Q for the quarter ended June 30, 1996 (File
No. 1-5519). (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 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. Subsidiaries of the Registrant.
23. Consents of experts and counsel.
27. Financial Data Schedule.
<PAGE>
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
- -------------------------------------
By: /s/ Walter R. Garrison
- -------------------------------------
Walter R. Garrison, President
Date: March 4, 1997
- -------------------------------------
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
By: /s/ Walter R. Garrison
- -------------------------------------
Walter R. Garrison
President and Director
(Principal Executive Officer)
Date: March 4, 1997
- -------------------------------------
By: /s/ Edgar D. Landis
- -------------------------------------
Edgar D. Landis
Executive Vice President,
Finance and Director
(Principal Financial and
Accounting Officer)
Date: March 4, 1997
- -------------------------------------
By: /s/ Walter E. Blankley
- -------------------------------------
Walter E. Blankley
Director
Date: March 4, 1997
- -------------------------------------
<PAGE>
40
By: /s/ Christian M. Hoechst
- -------------------------------------
Christian M. Hoechst
Director
Date: March 4, 1997
- -------------------------------------
By: /s/ Lawrence C. Karlson
- -------------------------------------
Lawrence C. Karlson
Director
Date: March 7,1997
- -------------------------------------
By: /s/ Allen M. Levantin
- -------------------------------------
Allen M. Levantin
Director
Date: March 6, 1997
- -------------------------------------
By: /s/ Alan B. Miller
- -------------------------------------
Alan B. Miller
Director
Date: March 6, 1997
- -------------------------------------
By: /s/ Barton J. Winokur
- -------------------------------------
Barton J. Winokur
Director
Date: March 3, 1997
- -------------------------------------
<PAGE>
41
Schedule II
-----------
CDI CORP. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Allowance for Uncollectible Receivables)
Years ended December 31, 1996, 1995 and 1994
Uncollectible
Additions receivables
Balance at charged written off, Balance
beginning to net of Other at end
of year earnings recoveries changes of year
---------- --------- ------------- ---------- ---------
December 31, 1996 $ 3,520,000 1,642,000 1,068,000 - 4,094,000
December 31, 1995 $ 2,785,000 2,489,000 1,754,000 - 3,520,000
December 31, 1994 $ 1,599,000 1,940,000 754,000 - 2,785,000
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CDI CORP.
EXHIBITS
to
Annual Report
FORM 10-K
Year ended December 31, 1996
Under
SECURITIES EXCHANGE ACT OF 1934
<PAGE>
42
INDEX TO EXHIBITS
Number Exhibit Page
- ------- ------------------------------------------------------- ----
3.(i) Articles of incorporation of the Registrant,
incorporated herein by reference to the Registrant's
report on Form 10-Q for the quarter ended June 30,
1990 (File No. 1-5519).
(ii) Bylaws of the Registrant, incorporated herein by
reference to the Registrant's report on Form 10-Q for
the quarter ended June 30, 1990 (File No. 1-5519).
10.a. CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan, incorporated herein by
reference to the Registrant's report on Form 10-Q for
the quarter ended June 30, 1996 (File No. 1-5519).
(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. 43
21. Subsidiaries of the Registrant. 44
23. Consents of experts and counsel. 46
27. Financial Data Schedule. 47
<PAGE>
43
EXHIBIT 11
Statement Re Computation of Per Share Earnings
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Primary
- -------
Earnings from continuing operations $ 42,470,000 31,185,000 17,570,000
Discontinued operations (11,072,000)(26,046,000) 4,801,000
---------- ---------- ----------
Net earnings $ 31,398,000 5,139,000 22,371,000
========== ========== ==========
Common and common equivalent
shares outstanding:
Weighted average common
shares outstanding during
the year 19,825,900 19,753,813 19,714,874
Assumed exercise of stock
options 46,505 77,037 64,106
---------- ---------- ----------
19,872,405 19,830,850 19,778,980
========== ========== ==========
Earnings per share:
Earnings from continuing operations $ 2.14 1.57 .89
Discontinued operations $ (.56) (1.31) .24
Net earnings $ 1.58 .26 1.13
Fully diluted
- -------------
Earnings from continuing operations $ 42,470,000 31,185,000 17,570,000
Discontinued operations (11,072,000)(26,046,000) 4,801,000
---------- ---------- ----------
Net earnings $ 31,398,000 5,139,000 22,371,000
========== ========== ==========
Common and common equivalent
shares outstanding:
Weighted average common
shares outstanding during
the year 19,825,900 19,753,813 19,714,874
Assumed exercise of stock
options 51,010 86,294 131,006
---------- ---------- ----------
19,876,910 19,840,107 19,845,880
========== ========== ==========
Earnings per share:
Earnings from continuing operations $ 2.14 1.57 .89
Discontinued operations $ (.56) (1.31) .24
Net earnings $ 1.58 .26 1.13
<PAGE>
44
EXHIBIT 21
Subsidiaries of the Registrant
The following are subsidiaries of the Registrant as of December 31,
1996 and the jurisdiction in which each is organized. The voting
securities of each are all owned directly or indirectly by the
Registrant, except for CDI-Anders Glaser Wills Limited, the ownership of
which is set forth below. Each of the subsidiaries conducts its business
using the names indicated except as separately set forth herein. Certain
subsidiaries are not listed. These omitted subsidiaries either
individually or in the aggregate would not constitute a significant
subsidiary.
State or
Country of
Subsidiary Organization
- ---------- ------------
Subsidiary of the Registrant:
CDI Corporation (a) Pennsylvania
Subsidiaries of CDI Corporation:
CDI Aircraft Maintenance Personnel, Inc. Delaware
CDI-Anders Glaser Wills Limited (b)(c) United Kingdom
CDI Engineering Group, Inc. Delaware
CDI Marine Company Florida
CDI Telecommunications, Inc. Pennsylvania
CompData Services Corporation Delaware
The M&T Company Pennsylvania
Management Recruiters International, Inc. (d) Delaware
Modern Engineering, Inc. Michigan
Todays Temporary, Inc. (e) Pennsylvania
1175748 Ontario Limited Canada
Subsidiary of CDI Aircraft Maintenance Personnel, Inc.:
STS Services, Inc. Nevada
Subsidiary of CDI Marine Company:
CDI Power Systems Group, Inc. Delaware
Subsidiaries of Management Recruiters International, Inc.:
InterExec, Inc. (f) Ohio
Sales Consultants, Inc. Ohio
Subsidiaries of Modern Engineering, Inc.:
Modern Engineering (Deutschland) GmbH Germany
Modern Engineering Tool Construction Delaware
Modern Prototype Company (g) Delaware
Subsidiary of Todays Temporary, Inc.:
Todays Temporary, Ltd. Canada
Todays Legal Staffing, Inc. Pennsylvania
Subsidiary of Todays Temporary, Ltd.:
142760 Canada Inc. (h) Canada
Subsidiary of 1175748 Ontario Limited:
CDI Technical Services, Ltd. Canada
<PAGE>
45
(a) CDI Corporation also conducts its business using the trade name CDI
Information Services.
(b) CDI Corporation holds a 60% ownership interest in CDI-Anders Glaser
Wills Limited.
(c) CDI-Anders Glaser Wills Limited also conducts its business using the
trade names of AGW Trade and CDI Technical Services.
(d) Management Recruiters International, Inc. also conducts its business
using the trade names of Management Recruiters, Sales Consultants,
Office Mates 5, CompuSearch, ConferView and Career Pathways.
(e) Todays Temporary, Inc. also conducts its business using the trade
name Todays Legal Staffing.
(f) InterExec, Inc. also conducts its business using the trade names of
DayStar and Sales Staffers.
(g) Modern Prototype Company also conduct its business using the trade
name Modern Engineering.
(h) 142760 Canada Inc. conducts its business using the trade name
Todays Temporary.
<PAGE>
46
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CDI Corp.:
We consent to incorporation by reference in Registration Statement
No. 33-7263 on Form S-8 of CDI Corp., in Registration Statement No.
33-30357 on Form S-8 of CDI Corp., in Registration Statement No.
33-25801 on Form S-3 of CDI Corp. and in Registration Statement No.
333-9793 on Form S-3 of CDI Corp. of our report dated February 19, 1997
relating to the consolidated balance sheets of CDI Corp. and
subsidiaries as of December 31, 1996 and 1995 and the related
consolidated statements of earnings, retained earnings, and cash flows
and the related financial statement schedule for each of the years in
the three-year period ended December 31, 1996, which report appears in
the December 31, 1996 annual report on Form 10-K of CDI Corp.
Philadelphia, PA /s/ KPMG Peat Marwick LLP
March 7, 1997 ---------------------------
KPMG PEAT MARWICK LLP
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6,066
<SECURITIES> 0
<RECEIVABLES> 237,549
<ALLOWANCES> 4,094
<INVENTORY> 0
<CURRENT-ASSETS> 287,974
<PP&E> 68,796
<DEPRECIATION> 43,292
<TOTAL-ASSETS> 340,174
<CURRENT-LIABILITIES> 106,850
<BONDS> 48,866
0
0
<COMMON> 1,985
<OTHER-SE> 174,947
<TOTAL-LIABILITY-AND-EQUITY> 340,174
<SALES> 0
<TOTAL-REVENUES> 1,374,881
<CGS> 0
<TOTAL-COSTS> 1,062,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,451
<INCOME-PRETAX> 70,244
<INCOME-TAX> 27,607
<INCOME-CONTINUING> 42,470
<DISCONTINUED> (11,072)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,398
<EPS-PRIMARY> 1.58
<EPS-DILUTED> 0
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996<F1>
<CASH> 10,257
<SECURITIES> 0
<RECEIVABLES> 282,417
<ALLOWANCES> 5,698
<INVENTORY> 0
<CURRENT-ASSETS> 306,954
<PP&E> 114,706
<DEPRECIATION> 80,191
<TOTAL-ASSETS> 371,626
<CURRENT-LIABILITIES> 123,198
<BONDS> 68,067
0
0
<COMMON> 1,985
<OTHER-SE> 171,696
<TOTAL-LIABILITY-AND-EQUITY> 371,626
<SALES> 0
<TOTAL-REVENUES> 1,023,330
<CGS> 0
<TOTAL-COSTS> 790,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,761
<INCOME-PRETAX> 53,790
<INCOME-TAX> 21,573
<INCOME-CONTINUING> 32,115
<DISCONTINUED> (3,955)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,160
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996<F1>
<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> 669,654
<CGS> 0
<TOTAL-COSTS> 519,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,861
<INCOME-PRETAX> 32,325
<INCOME-TAX> 12,984
<INCOME-CONTINUING> 19,297
<DISCONTINUED> (1,376)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,921
<EPS-PRIMARY> .90
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996<F1>
<CASH> 3,602
<SECURITIES> 0
<RECEIVABLES> 252,162
<ALLOWANCES> 4,076
<INVENTORY> 0
<CURRENT-ASSETS> 284,238
<PP&E> 106,137
<DEPRECIATION> 73,498
<TOTAL-ASSETS> 345,931
<CURRENT-LIABILITIES> 112,872
<BONDS> 73,311
0
0
<COMMON> 1,985
<OTHER-SE> 151,978
<TOTAL-LIABILITY-AND-EQUITY> 345,931
<SALES> 0
<TOTAL-REVENUES> 330,808
<CGS> 0
<TOTAL-COSTS> 256,929
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 864
<INCOME-PRETAX> 14,661
<INCOME-TAX> 5,919
<INCOME-CONTINUING> 8,733
<DISCONTINUED> (237)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,496
<EPS-PRIMARY> .43
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,495
<SECURITIES> 0
<RECEIVABLES> 215,915
<ALLOWANCES> 3,520
<INVENTORY> 0
<CURRENT-ASSETS> 266,600
<PP&E> 58,386
<DEPRECIATION> 36,810
<TOTAL-ASSETS> 323,563
<CURRENT-LIABILITIES> 104,865
<BONDS> 67,865
0
0
<COMMON> 1,985
<OTHER-SE> 143,384
<TOTAL-LIABILITY-AND-EQUITY> 323,563
<SALES> 0
<TOTAL-REVENUES> 1,202,936
<CGS> 0
<TOTAL-COSTS> 938,680
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,603
<INCOME-PRETAX> 51,867
<INCOME-TAX> 20,562
<INCOME-CONTINUING> 31,185
<DISCONTINUED> (26,046)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,139
<EPS-PRIMARY> .26
<EPS-DILUTED> 0
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995<F1>
<CASH> 3,835
<SECURITIES> 0
<RECEIVABLES> 260,483
<ALLOWANCES> 6,876
<INVENTORY> 0
<CURRENT-ASSETS> 262,024
<PP&E> 135,860
<DEPRECIATION> 88,271
<TOTAL-ASSETS> 339,849
<CURRENT-LIABILITIES> 108,732
<BONDS> 68,250
0
0
<COMMON> 1,984
<OTHER-SE> 156,204
<TOTAL-LIABILITY-AND-EQUITY> 339,849
<SALES> 0
<TOTAL-REVENUES> 883,905
<CGS> 0
<TOTAL-COSTS> 692,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,764
<INCOME-PRETAX> 36,942
<INCOME-TAX> 15,071
<INCOME-CONTINUING> 21,833
<DISCONTINUED> (3,792)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,041
<EPS-PRIMARY> .91
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995<F1>
<CASH> 5,534
<SECURITIES> 0
<RECEIVABLES> 258,687
<ALLOWANCES> 2,077
<INVENTORY> 0
<CURRENT-ASSETS> 266,014
<PP&E> 132,768
<DEPRECIATION> 85,086
<TOTAL-ASSETS> 343,838
<CURRENT-LIABILITIES> 111,476
<BONDS> 74,306
0
0
<COMMON> 1,974
<OTHER-SE> 151,804
<TOTAL-LIABILITY-AND-EQUITY> 343,838
<SALES> 0
<TOTAL-REVENUES> 567,865
<CGS> 0
<TOTAL-COSTS> 446,673
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,904
<INCOME-PRETAX> 20,313
<INCOME-TAX> 8,387
<INCOME-CONTINUING> 11,968
<DISCONTINUED> 2,933
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,901
<EPS-PRIMARY> .75
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995<F1>
<CASH> 5,692
<SECURITIES> 0
<RECEIVABLES> 259,713
<ALLOWANCES> 2,034
<INVENTORY> 0
<CURRENT-ASSETS> 268,453
<PP&E> 131,416
<DEPRECIATION> 86,564
<TOTAL-ASSETS> 343,516
<CURRENT-LIABILITIES> 112,654
<BONDS> 80,812
0
0
<COMMON> 1,974
<OTHER-SE> 144,043
<TOTAL-LIABILITY-AND-EQUITY> 343,516
<SALES> 0
<TOTAL-REVENUES> 274,576
<CGS> 0
<TOTAL-COSTS> 216,097
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 871
<INCOME-PRETAX> 9,538
<INCOME-TAX> 3,889
<INCOME-CONTINUING> 5,681
<DISCONTINUED> 1,459
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,140
<EPS-PRIMARY> .36
<EPS-DILUTED> 0
<FN>
<F1> Balance sheet items have not been restated for discontinued
operations
</FN>
</TABLE>
<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>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 5,160
<SECURITIES> 0
<RECEIVABLES> 152,897
<ALLOWANCES> 2,785
<INVENTORY> 0
<CURRENT-ASSETS> 205,710
<PP&E> 49,685
<DEPRECIATION> 35,404
<TOTAL-ASSETS> 278,969
<CURRENT-LIABILITIES> 77,461
<BONDS> 58,798
0
0
<COMMON> 1,974
<OTHER-SE> 136,903
<TOTAL-LIABILITY-AND-EQUITY> 278,969
<SALES> 0
<TOTAL-REVENUES> 952,583
<CGS> 0
<TOTAL-COSTS> 750,969
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,365
<INCOME-PRETAX> 28,983
<INCOME-TAX> 11,382
<INCOME-CONTINUING> 17,570
<DISCONTINUED> 4,801
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,371
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 0
</TABLE>
