<PAGE> 1
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE,
SAVINGS AND SIMILAR PLANS PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________
Commission file number 0-1088
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
KELLY RETIREMENT PLUS
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
KELLY SERVICES, INC.
999 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
<PAGE> 2
2
REQUIRED INFORMATION
Kelly Retirement Plus (the Plan) is subject to the Employee Retirement Income
Security Act of 1974 (ERISA). Therefore, in lieu of the requirements of Items
1-3 of Form 11-K, the following financial statements and schedules have been
prepared in accordance with the financial reporting requirements of ERISA.
The following financial statements, schedules and exhibits are filed as a part
of this Annual Report on Form 11-K.
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
(a) Financial Statements of the Plan
Report of Independent Accountants 4
Statements of Net Assets Available for Benefits -
December 31, 1999 and December 31, 1998 5
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1999 6
Notes to Financial Statements 7
(b) Schedules *
Assets Held for Investment Purposes as of
December 31, 1999 14
Reportable Transactions 15
</TABLE>
*Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
<PAGE> 3
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Kelly
Services Retirement Committee, which is the Plan administrator of Kelly
Retirement Plus, has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
KELLY RETIREMENT PLUS
By: Kelly Services Retirement Committee
June 23, 2000 /s/ W. K. Gerber
-------------------------------------------
William K. Gerber
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE> 4
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
Kelly Retirement Plus
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Kelly Retirement Plus (the "Plan") at December 31, 1999 and December 31,
1998, and the changes in net assets available for benefits for the year ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes as of December 31, 1999 and of Reportable Transactions
for the year then ended are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
-------------------------------
PRICEWATERHOUSECOOPERS LLP
DETROIT, MICHIGAN
JUNE 20, 2000
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5
KELLY RETIREMENT PLUS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
----------------- ------------------
(In thousands of dollars)
<S> <C> <C>
INVESTMENTS
Cash and cash equivalents $ 45 $ 340
Investments, at fair value 79,866 67,792
----------------- ------------------
Total investments 79,911 68,132
----------------- ------------------
RECEIVABLES
Employer contributions 2,028 2,003
Participant contributions 244 24
----------------- ------------------
Total receivables 2,272 2,027
----------------- ------------------
Net assets available for benefits $ 82,183 $ 70,159
================= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
6
KELLY RETIREMENT PLUS
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------------
(In thousands of dollars)
<S> <C>
ADDITIONS
Additions to net assets attributed to:
Investment income:
Interest $ 9
Dividends 1,050
Unrealized/realized gains 17,067
-----------------------------
18,126
-----------------------------
Contributions:
Employer 3,488
Participant 6,479
-----------------------------
9,967
-----------------------------
Total additions 28,093
-----------------------------
DEDUCTIONS
Deductions from net assets attributed to:
Benefits paid to participants 7,288
Unrealized/realized losses 8,781
-----------------------------
Total deductions 16,069
-----------------------------
Net increase 12,024
Net assets available for benefits as of
December 31, 1998 70,159
-----------------------------
Net assets available for benefits as of
December 31, 1999 $ 82,183
=============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
7
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
1. ACCOUNTING PRINCIPLES AND PRACTICES
BASIS OF ACCOUNTING
The financial statements of Kelly Retirement Plus (the Plan) have been
prepared on the accrual basis in accordance with generally accepted
accounting principles and, as such, include amounts based on management's
best estimates. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Plan investments are stated at fair value as of the last day of the Plan
year. The Plan's mutual fund investments are valued based on quoted
market prices. The Bank One Stable Asset Income Fund is valued at the
unit price, as determined by Bank One, the plan trustee, which represents
fair value. Employer contributions are recorded in the period during
which they were approved by the Board of Directors of Kelly Services,
Inc. (the Company). Employee contributions are recorded in the period
during which the Company makes payroll deductions from the Plan
participants' earnings; matching company contributions are recorded in
the same period. Administrative expenses incurred shall be paid by the
Plan to the extent not paid by the Company.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in mutual funds that
hold stocks, bonds, fixed income securities and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur
in the near term, and that such changes could materially affect
participants' account balances and the amounts reported in the statement
of net assets available for benefits.
<PAGE> 8
8
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
2. INVESTMENTS
The following table presents investments that represent 5% or more of the
Plan's net assets.
<TABLE>
<CAPTION>
1999 1998
------------------ ----------------
<S> <C> <C>
Registered Investment Companies:
Stable Asset Income Fund $ 6,272 $ 5,701
One Group Intermediate Bond Fund 4,377 -
*One Group Investor Growth & Income Fund 17,959 -
One Group Equity Index Fund 31,765 -
One Group Large Cap Growth Fund 8,820 -
One Group Diversified Mid Cap Fund 7,439 -
One Group Mid Cap Value Fund 1,983 -
Pegasus Equity Index Fund - 27,306
Pegasus Intermediate Bond Fund - 4,563
Pegasus Mid-Cap Opportunity Fund - 7,071
*Pegasus Managed Assets Balanced Fund - 15,005
Pegasus Growth Fund - 4,766
Other 1,296 3,720
------------------ ----------------
Total Investments $ 79,911 $ 68,132
================== ================
</TABLE>
* Denotes that fund is both participant and nonparticipant-directed.
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9
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
2. INVESTMENTS (CONTINUED)
During 1999, the Plan's investments (including investments bought, sold
and held during the year) appreciated in value by a net $8,286.
<TABLE>
<CAPTION>
1999
---------
<S> <C>
Marketable Securities:
Common Stock - Kelly Services, Inc. $ (240)
Collective Funds:
Contribution Money Market Fund -
Fidelity Cash Portfolio -
Registered Investment Companies:
Stable Asset Income Fund 316
One Group Intermediate Bond Fund (184)
*One Group Investor Growth & Income Fund 1,308
One Group Equity Index Fund 3,664
One Group Large Cap Growth Fund 1,338
One Group Diversified Mid Cap Fund 693
One Group Mid Cap Value Fund 124
Pegasus Equity Index Fund 1,570
Pegasus Intermediate Bond Fund (56)
Pegasus Mid-Cap Opportunity Fund -
*Pegasus Managed Assets Balanced Fund (358)
Pegasus Intrinsic Value Fund (183)
Pegasus Growth Fund 294
---------
Total Investments $ 8,286
=========
</TABLE>
* Denotes that fund is both participant and nonparticipant-directed.
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10
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
3. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
Net Assets:
Investments:
<S> <C> <C>
One Group Investor Growth & Income Fund $ 16,233 $ -
Pegasus Managed Assets Balanced Fund - 13,964
Contribution Receivable 1,967 1,998
------------------ ------------------
Net Assets Available for Benefits $ 18,200 $ 15,962
================== ==================
</TABLE>
<TABLE>
<CAPTION>
1999
--------------
<S> <C>
Changes in Net Assets:
Contributions $ 2,107
Interest 1
Dividends 500
Net appreciation 866
Benefits paid to participants (1,234)
Transfers to participant-directed investments (2)
--------------
$ 2,238
==============
</TABLE>
4. PLAN DESCRIPTION
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
GENERAL
The Plan, established on January 2, 1989 and amended and restated
effective January 1, 1990 and January 1, 1993, provides benefits to
eligible employees according to the provisions of the Plan agreement. All
eligible employees, as defined by the Plan, are eligible to participate
upon completion of one year of service and attainment of age 21. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
CONTRIBUTIONS
The Plan consists of two parts: Part I is a defined contribution plan,
under which the Company may make a discretionary contribution on behalf
of all participants in an amount to be determined by the Company. The
contribution to the Plan for 1999 represented 2% of participants'
eligible wages for the year. Part II is a Section 401(k) savings plan,
which enables participants to contribute to the Plan using pre-tax
dollars, with the Company matching $.50 per dollar of their contribution
up to 4% of eligible pay.
<PAGE> 11
11
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
4. PLAN DESCRIPTION (CONTINUED)
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, the Company's matching contribution, an allocation of the
Company's discretionary contribution and Plan earnings. Earnings are
allocated by fund based on the ratio of a participant's account invested
in a particular fund to all participants' investments in that fund. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
PLAN ADMINISTRATION
The Plan is administered by a committee appointed by the Board of
Directors of the Company. This committee is composed of the Executive
Vice President and Chief Financial Officer and the Senior Vice Presidents
in charge of Human Resources and Legal and serves at the pleasure of the
Board.
INVESTMENT OPTIONS
Part I contributions are invested by the trustee as directed by the
committee and are held in the One Group Investor Growth & Income Fund,
formerly in the Pegasus Managed Assets Balanced Fund. Rollover
contributions from other qualified plans are deposited into the
Contribution Money Market Fund until allocated to participant elected
investment options. Part II contributions are directed by the participant
among any of the following funds held with the trustee (effective 4/1/99,
the Plan's investments in Pegasus Funds were liquidated and all amounts
were invested in the comparable One Group Mutual Funds):
ONE GROUP EQUITY INDEX FUND (FORMERLY PEGASUS EQUITY INDEX FUND) - This
fund seeks investment results that correspond to the aggregate price and
dividend performance of the securities in the Standard & Poor's 500
Composite Stock Price Index of common stocks.
ONE GROUP INTERMEDIATE BOND FUND (FORMERLY PEGASUS INTERMEDIATE BOND
FUND) - This fund seeks to maximize total rate of return while providing
relative stability of principal by investing predominantly in both
domestic and foreign intermediate-term debt securities. The weighted
average maturity of bonds in the fund is between three and six years.
ONE GROUP DIVERSIFIED MID CAP FUND (FORMERLY PEGASUS MID CAP OPPORTUNITY
FUND) - This fund seeks long-term capital growth by investing primarily
in equity securities of companies with intermediate capitalizations.
ONE GROUP INVESTOR GROWTH & INCOME FUND (FORMERLY PEGASUS MANAGED ASSETS
BALANCED FUND) - This fund seeks long-term capital appreciation and
growth of income by investing primarily in a diversified group of One
Group mutual funds which invest primarily in equity securities.
ONE GROUP MID CAP VALUE FUND (FORMERLY PEGASUS INTRINSIC VALUE FUND) -
This fund seeks capital appreciation with the secondary goal of achieving
current income by investing primarily in equity securities.
ONE GROUP LARGE CAP GROWTH FUND (FORMERLY PEGASUS GROWTH FUND) - This
fund seeks to provide current income while seeking capital growth by
investing primarily in common stocks of U.S. companies with dominant
market position in their industries and that have a record of paying
regular dividends on common stock or have the potential of capital
appreciation.
<PAGE> 12
12
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
4. PLAN DESCRIPTION (CONTINUED)
STABLE ASSET INCOME FUND - This fund provides a portfolio of various
types of investment contracts issued by insurance companies, banks and
other financial institutions. It provides price and income stability and
reduces volatility.
KELLY STOCK FUND - This fund allows for investment in the Company's Class
A non-voting common stock. A portion of the investments are held in the
Fidelity Cash Portfolio money market fund.
VESTING
Participants become fully vested in Company contributions upon attainment
of age sixty-five or completion of five years of service, whichever
occurs first. The first year of service begins at the later of age 18 or
date of hire. Participant contributions are 100% vested immediately. The
value of the vested portion of participants' accounts is payable to the
participant upon retirement, total and permanent disability, death or
termination of employment in a lump-sum distribution. If the vested
portion of a participant's account exceeds five thousand dollars (or such
other amount to be prescribed in regulations by the Secretary of the
Treasury or his delegate), the participant may defer receipt of the
distribution until any time prior to or upon attaining age 70-1/2. Vested
accounts five thousand dollars or less are paid in an immediate lump-sum
distribution.
PARTICIPANT FORFEITURES
Pursuant to the Plan agreement, participant forfeitures can be used by
the Plan to (1) restore the participant's account in the event of rehire
or (2) reduce the employer Part I profit-sharing or matching
contribution. The Plan administrator offset the employer Part I
profit-sharing contribution with the forfeiture balance of $633 and $270
at December 31, 1999 and 1998, respectively, by allocating these amounts
among the participant accounts.
5. PRIORITIES ON PLAN TERMINATION
In the event of termination of the Plan, the accounts of all participants
shall become fully vested and shall be distributed to the members
simultaneously with all participants receiving full value of their
accounts on the date of such distribution.
<PAGE> 13
13
KELLY RETIREMENT PLUS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
--------------------------------------------------------------------------------
6. RECONCILIATION OF FINANCIAL STATEMENTS TO IRS FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31,
1999 1998
------------------ -----------------
<S> <C> <C>
Net assets available for benefits per the financial
statements $ 82,183 $ 70,159
Amounts allocated to withdrawing participants (934) (468)
------------------ -----------------
Net assets available for benefits per the Form 5500 $ 81,249 $ 69,691
================== =================
</TABLE>
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31,
1999
---------------
<S> <C>
Benefits paid to participants per the financial statements $ 7,288
Add - Amounts allocated to withdrawing participants
at December 31, 1999 934
Less - Amounts allocated to withdrawing participants
at December 31, 1998 (468)
---------------
Benefits paid to participants per the Form 5500 $ 7,754
===============
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
7. FEDERAL INCOME TAX STATUS
The Internal Revenue Service (IRS) has determined that the Plan, as
amended and restated effective January 1, 1993, meets the requirements of
Section 401(a) of the Internal Revenue Code (the Code) and is exempt from
federal income tax under Section 501(a) of the Code. Management believes
that the Plan is currently being operated in compliance with relevant
regulations to maintain its qualified status.
8. PARTY-IN-INTEREST TRANSACTIONS
Investments are held in mutual funds sponsored by Bank One, the Plan
trustee, and all investment transactions are conducted through Bank One.
All transactions with Bank One are considered party-in-interest
transactions, however, these transactions are not considered prohibited
transactions under ERISA.
<PAGE> 14
14
KELLY RETIREMENT PLUS SCHEDULE I
FORM 5500, SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
IDENTITY OF ISSUER, DESCRIPTION OF INVESTMENT, INCLUDING
PARTY-IN BORROWER, LESSOR MATURITY DATE, RATE OF INTEREST, CURRENT
INTEREST OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE
(A) (B) (C) (D) (E)
---------- ---------------------------------------- --------------------------------------- ------------- ------------
<S> <C> <C> <C> <C>
* One Group Investor Growth & Income Fund 1,305,127.566 shares $ 16,802,716 $17,958,555
* One Group Equity Index Fund 947,366.205 shares ** 31,765,189
* One Group Intermediate Bond Fund 435,531.944 shares ** 4,377,096
* One Group Diversified Mid Cap Fund 385,425.123 shares ** 7,438,705
* Stable Asset Income Fund 25,092.413 shares ** 6,272,100
* Kelly Services, Inc. Common Stock 49,307 shares ** 1,251,452
* One Group Mid Cap Value Fund 152,308.544 shares ** 1,983,057
* One Group Large Cap Growth Fund 321,082.842 shares ** 8,820,146
* Contribution Money Market Fund 3,393.23 shares ** 3,393
Fidelity Cash Portfolio 41,627.06 shares ** 41,627
-----------
$79,911,320
===========
</TABLE>
* Indicates party-in-interest
** Not required per Department of Labor reporting
<PAGE> 15
15
KELLY RETIREMENT PLUS SCHEDULE II
FORM 5500 - SCHEDULE H, LINE 4J - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ASSET
IDENTITY OF PARTY (INCLUDE INTEREST RATE AND PURCHASE SELLING
INVOLVED MATURITY IN CASE OF A LOAN) PRICE PRICE
(A) (B) (C) (D)
------------------------------------------------ ----------------------------------- -------------- ---------------
<S> <C> <C> <C> <C>
1. A single transaction within plan year One Group Investor Growth & Income
in excess of 5% of current value of Purchase/Individual $14,729,355.10
Plan assets:
Pegasus Managed Assets Balanced A
Sale/Individual $14,722,361.11
2. Any series of transactions (other than
with respect to securities) with, or
conjunction with, the same person which
amount in the aggregate to more than 5% of
current value of Plan assets:
None
3. A series of transactions within the Plan One Group Investor Growth & Income
year with respect to securities of the 68 sales 1,386,277.07
same issue which amount in the 76 purchases 18,151,269.14
aggregate to more than 5% of the
current value of Plan assets: Pegasus Managed Assets Balanced A
20 sales 14,938,494.70
24 purchases 1,110,587.14
4. Any transaction with respect to
securities with, or in conjunction with,
a person if single transaction with
such person exceeds 5% of the current
value of Plan assets:
None
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ASSET
IDENTITY OF PARTY (INCLUDE INTEREST RATE AND COST OF NET GAIN
INVOLVED MATURITY IN CASE OF A LOAN) ASSET OR (LOSS)
(A) (B) (E) (F)
------------------------------------------------ ----------------------------------- -------------- ---------------
<S> <C> <C> <C> <C>
1. A single transaction within plan year One Group Investor Growth & Income
in excess of 5% of current value of Purchase/Individual $14,729,355.10
Plan assets:
Pegasus Managed Assets Balanced A
Sale/Individual 17,458,272.37 $(2,735,911.26)
2. Any series of transactions (other than
with respect to securities) with, or
conjunction with, the same person which
amount in the aggregate to more than 5% of
current value of Plan assets:
None
3. A series of transactions within the Plan One Group Investor Growth & Income
year with respect to securities of the 68 sales 1,347,663.24 38,613.83
same issue which amount in the 76 purchases 18,151,269.14
aggregate to more than 5% of the
current value of Plan assets: Pegasus Managed Assets Balanced A
20 sales 17,700,760.44 (2,762,265.74)
24 purchases 1,110,587.14
4. Any transaction with respect to
securities with, or in conjunction with,
a person if single transaction with
such person exceeds 5% of the current
value of Plan assets:
None
</TABLE>
<PAGE> 16
16
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
23.1 Consent of Independent Accountants
</TABLE>
