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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
---------------
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED NOVEMBER 2, 1996
AMENDMENT NO. 1
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
------------------------
COMMISSION FILE NUMBER 0-27130
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WESTERN STAFF SERVICES, INC.
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C>
DELAWARE 94-1266151
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) No.)
</TABLE>
301 LENNON LANE, WALNUT CREEK, CALIFORNIA 94598-2453
(Address of Principal Executive Offices, including Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 428-5100
------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01
par value per share
------------------------
Indicate by check mark 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 report), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark 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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. / /
The aggregate market value of voting stock held by non affiliates of the
Registrant, as of January 31, 1997 was approximately $24,769,883 (based upon the
closing price for shares of the Registrant's Common Stock as reported by the
Nasdaq National Market for the last trading date prior to that date). Shares of
Common Stock held by each officer, director and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
On January 31, 1997, approximately 10,338,116 shares of the Registrant's
Common Stock, $0.01 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
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<PAGE>
FORM 10-K/A
AMENDMENT NO. 1
THE UNDERSIGNED REGISTRANT HEREBY AMENDS THE INFORMATION SET FORTH ON THE
COVER PAGE IMMEDIATELY FOLLOWING THE HEADING "DOCUMENTS INCORPORATED BY
REFERENCE," TO READ IN FULL AS FOLLOWS:
NOT APPLICABLE.
THE UNDERSIGNED REGISTRANT HEREBY AMENDS THE INFORMATION SET FORTH IN PART
II ITEM 5 ENTITLED "MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS" AND PART III IN ITS ENTIRETY, BY DELETING SAME IN THEIR
ENTIRETY.
THE UNDERSIGNED REGISTRANT HEREBY AMENDS PART II, ITEM 5, TO READ IN FULL AS
FOLLOWS:
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock commenced trading on the Nasdaq National Market
on April 30, 1996 under the symbol WSTF. The following table indicates the range
of the high and low prices as reported by Nasdaq.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
FISCAL 1996
Third Quarter ended July 6, 1996(1)....................... $18 1/8 $13
Fourth Quarter ended November 2, 1996(1).................. $15 3/4 $11
FISCAL 1997
First Quarter ended January 25, 1997...................... $15 1/4 $ 9
Second Quarter (through January 31, 1997)................. $10 1/4 $6 3/4
</TABLE>
On January 31, 1997, the closing price of the Common Stock on the Nasdaq
National Market was $8.125 per share. As of January 31, 1997, there were 42
holders of record of Common Stock of the Company.
The Company has paid no cash dividends on its Common Stock since the
Offering. The payment of cash dividends depends on the Company's earnings,
financial condition and capital needs and on other factors deemed pertinent by
the Board of Directors. The Board of Directors intends to retain earnings to
finance the operations and expansion of the Company's business. In addition, the
Company's credit agreement contains covenants that prohibit the payment of
dividends under certain circumstances. Accordingly, the Company does not
anticipate declaring or paying any dividends on the Common Stock in the
foreseeable future.
(1) Since the Company's quarters and fiscal year end fall on Saturday, all high
and low prices as reported by Nasdaq are given for the preceding Friday.
2
<PAGE>
THE UNDERSIGNED REGISTRANT HEREBY AMENDS PART III, TO READ IN FULL AS
FOLLOWS:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information as of January 31, 1997
with respect to each person who is a director, executive officer or key employee
of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --------- ----------------------------------------------------------------------
<S> <C> <C>
W. Robert Stover(1)(2)(3).......... 75 Chairman of the Board of Directors and Chief Executive Officer
Michael K. Phippen................. 44 President, Chief Operating Officer and Director
Harvey L. Maslin................... 57 Vice Chairman of the Board of Directors and Chief Administrative
Officer
Paul A. Norberg.................... 56 Executive Vice President, Chief Financial Officer and Director
Robin A. Herman.................... 45 Senior Vice President, General Counsel and Secretary
Michael W. Ehresman................ 39 Vice President and Treasurer
Dirk A. Sodestrom.................. 39 Vice President and Controller
Michael J. Nicholson............... 45 President, Western Medical Services Division
A. Terry Slocum.................... 51 President, Franchise Division
Ronald C. Picco.................... 48 Senior Vice President, Operations
Christopher J. Boyer............... 36 Director of MIS Services
Gilbert L. Sheffield(1)(2)(3)...... 67 Director
Jack D. Samuelson(1)(2)(3)......... 72 Director
</TABLE>
- ------------------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
(3) Member of the Strategic Planning Committee of the Board of Directors.
W. ROBERT STOVER founded the Company in 1948 and has been continuously
involved in the management and long-term operation and planning of the Company
since that time. The Company was incorporated in 1954, and since that time Mr.
Stover has held the position of Chairman of the Board of Directors. From 1954 to
1985, Mr. Stover served as President of the Company. Since 1985, Mr. Stover has
served as Chief Executive Officer.
MICHAEL K. PHIPPEN joined the Company in October 1995 as an Executive Vice
President. Mr. Phippen became President, Chief Operating Officer and a director
of the Company in January 1996. Mr. Phippen directs the daily field operations
of all light industrial, clerical and light technical offices in the United
States, as well as the Company's planning, sales, franchise operations and
marketing development. Mr. Phippen's affiliation with Western began in 1987 with
the opening of his first franchise in Minneapolis. Under his leadership, the
affiliate group, Merbco Inc., grew to encompass 14 offices. Western acquired the
3
<PAGE>
assets of Merbco Inc. in October 1995. From 1977 to 1987, Mr. Phippen served in
various positions for Kelly Services, Inc., including as Branch Manager and
Regional Manager.
HARVEY L. MASLIN has been employed by the Company since 1967, initially as
General Counsel. Mr. Maslin became Vice President in 1972, Senior Vice President
in 1979 and President in 1985. He served as both President and Chief Operating
Officer of the Company from 1991 to January 1996, when he was named Vice
Chairman of the Board of Directors and Chief Administrative Officer. Mr. Maslin
is an inactive member of the state bar associations of Arizona and California.
Mr. Maslin is serving a three-year term on the Board of Directors of the
National Association of Temporary Staffing Services ("NATSS").
PAUL A. NORBERG has been employed by the Company since 1979, initially as
Vice President and Chief Financial Officer, and was promoted in 1985 to Senior
Vice President and in 1988 to Executive Vice President. Previously he had been
employed by Liken Home Furnishings Division of Beatrice Foods Co., a
manufacturer of window coverings, from 1973 to 1979 in the position of
Controller and subsequently Vice President, Finance. He is a certified public
accountant on inactive status.
ROBIN A. HERMAN has been employed by the Company as a lawyer since February
1986 after leaving private practice. She was employed by the Company initially
as Litigation Counsel and in January 1991 was elected to the position of Vice
President and named Assistant General Counsel. In March 1992, she was promoted
to General Counsel and elected to the additional position of Secretary. In May
1996, Ms. Herman was named Senior Vice President.
MICHAEL W. EHRESMAN joined the Company in July 1992 as Director of Corporate
Taxes. In October 1995, Mr. Ehresman assumed his current positions of Vice
President and Treasurer. From 1988 to 1992, Mr. Ehresman was with Price
Waterhouse LLP in San Francisco, California, most recently as a Senior Tax
Manager. From 1982 to 1988, Mr. Ehresman was employed by KPMG Peat Marwick in
Chicago, Illinois. He is a certified public accountant on inactive status.
DIRK A. SODESTROM joined the Company in the position of Controller in
February 1991. In December 1992, he was elected to the additional position of
Vice President. Mr. Sodestrom was employed from 1980 to 1991 by Price Waterhouse
LLP, most recently as a Senior Audit Manager. He is a certified public
accountant on inactive status.
MICHAEL J. NICHOLSON joined the Company in October 1989 as an Area Manager
of the Western Medical Services Division when Western acquired Temp Resources,
Inc., an independent temporary services business that Mr. Nicholson opened and
operated as President/Owner since April 1987. He was promoted to East Coast
Regional Manager of the Western Medical Services Division in April 1990, and
became President of the Western Medical Services Division in November 1991.
Prior to starting Temp Resources, Mr. Nicholson was Vice President of Operations
for First Temporary Services of Worcester, Massachusetts.
A. TERRY SLOCUM joined the Company in January 1980, after practicing law for
10 years in Oregon, Washington and California. Mr. Slocum serves as President of
the Franchise Division, which consists of all franchise agent and licensed
offices nationwide.
RONALD C. PICCO joined the Company in September 1995 as Vice President,
Office Development, and was named Senior Vice President, Operations in November
1996. Mr. Picco was employed by Interim Services Inc. from April 1992 to
February 1995, most recently as Vice President, Branch Operations. From January
1991 to January 1992, Mr. Picco served as President of Alliance Hospital
Services and from 1985 to 1991 he held various corporate and regional positions
with Adia Services, Inc., a temporary staffing services company.
CHRISTOPHER J. BOYER joined the Company in March 1995 as the Director of MIS
Services. From October 1990 to March 1995, Mr. Boyer served as Director of
Global Information Services for The ASK Group, a computer software company. Mr.
Boyer previously served as Manager, Data Center Systems for
4
<PAGE>
Combustion Engineering, a nuclear and fossil fuel plant engineering company for
four years, and as the Manager of Information Systems at Skidmore, Owings &
Merrill, an architecture firm. Mr. Boyer holds commendations from the United
States Marine Corps for his efforts in automating the Rapid Deployment Force and
the Maritime Pre-Placement System.
GILBERT L. SHEFFIELD has been a director of the Company since March 1995. He
has served in a number of capacities in the telecommunications industry, most
recently as the President, Chief Executive Officer and a director of PacTel
Communications Companies from 1987 to 1990. Mr. Sheffield began his career in
1953 with Pacific Telephone and Telegraph, where he was employed until 1969,
when he was appointed the first Director of the California Department of Human
Resources Development. In 1971, Mr. Sheffield returned to Pacific Telephone and
Telegraph, from which he retired in 1984 as Executive Vice President of
Operations. Following two years in the real estate investment business, he
returned to Pacific Telesis in 1986 as Executive Vice President and Chief
Operating Officer of PacTel Corporation. Mr. Sheffield is now retired.
JACK D. SAMUELSON has been a director of the Company since March 1995. Mr.
Samuelson co-founded Samuelson Brothers in 1957 to engage in general
construction and commercial real estate development. Mr. Samuelson has been its
President and Chairman of the Board from incorporation to the present. Samuelson
Brothers sold its construction business in 1979 and since then has continued to
develop industrial and commercial real estate, with headquarters in Los Angeles
and partnerships in a number of cities.
The Company's Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a three-year term.
Following the Offering, two directors were designated to serve in Class I, two
directors to serve in Class II and two directors to serve in Class III. The
initial directors in each class will hold office for terms of one year, two
years and three years, respectively. Thereafter each class will serve a
three-year term. Messrs. Samuelson and Sheffield, the two independent directors,
serve as Class I directors, Messrs. Phippen and Norberg serve as the Class II
directors and Messrs. Stover and Maslin serve as the Class III directors.
Executive officers serve at the discretion of the Board.
DIRECTOR COMPENSATION
Non-employee Board members will receive an annual fee of $6,000 for service
on the Board and a fee of $1,000 for each meeting attended. Non-employee Board
members will also be reimbursed for their reasonable expenses incurred in
connection with attending Board meetings. In addition, the non-employee Board
members are eligible to receive periodic option grants under the Automatic
Option Grant Program in effect under the Company's 1996 Stock Option/Stock
Issuance Plan. Accordingly, Messrs. Sheffield and Samuelson, the two individuals
serving as non-employee Board members at the time of the Offering, each received
an option grant for 1,000 shares with an exercise price per share equal to the
$14.00 per share price at which the common stock was sold in the Offering. Each
individual who subsequently joins the Board as a non-employee director will
receive at that time an option grant for 1,000 shares with an exercise price
equal to the fair market value of the shares on the grant date, provided such
individual has not previously been in the Company's employ. In addition, at each
annual stockholders meeting, beginning with the 1997 Annual Meeting, each
individual who is continue to serve as a non-employee Board member will receive
an option grant for 1,000 shares with an exercise price equal to the fair market
value of the option shares on the grant date, provided such individual has
served as a Board member for at least six months.
Each automatic option grant will have a maximum term of ten (10) years
measured from the grant date, subject to earlier termination following the
optionee's cessation of Board service. The option will become exercisable for
all the option shares upon the optionee's completion of one year of Board
service measured from the grant date. However, the option will become
immediately exercisable for all the option
5
<PAGE>
shares should the optionee cease Board service by reason of death or disability
or should the Company be acquired by merger or asset sale during the period of
the optionee's service on the Board.
In addition to their April 1996 automatic option grants, Messrs. Sheffield
and Samuelson were each granted special options on November 1, 1996 to purchase
1,500 shares at $14.25 per share, the closing selling price of the Company's
common stock on that date. Each of these options has a maximum term of ten (10)
years measured from the grant date, subject to earlier termination following the
optionee's cessation of Board service. The option will become exercisable for
all the option shares upon the optionee's completion of one year of Board
service measured from the grant date. However, the option will become
immediately exercisable for all the option shares should the optionee cease
Board service by reason of death or disability or should the Company be acquired
by merger or asset sale during the period of the optionee's service on the
Board.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Certificate of Incorporation provides that its directors will
not be liable to the Company or its stockholders for monetary damages for
breaches of fiduciary duty to the fullest extent permitted by Delaware law. This
provision is intended to allow the Company's directors the benefit of Delaware
General Corporation Law which provides that directors of Delaware corporations
may be relieved of monetary liability for breaches of their fiduciary duty of
care except under certain circumstances, including breach of the duty of
loyalty, acts or omission not in good faith or involving intentional misconduct
or knowing violation of law, or any transaction from which the director derived
an improper personal benefit.
The Company has entered into separate indemnification agreements with each
of the directors, executive officers and key employees whereby the Company
agrees, among other things, to indemnify them against certain liabilities that
may arise by reason of their status or service as directors, executive officers
or key employees, and to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified. There is no
pending litigation or proceeding involving a director, officer, or key employee
of the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director, officer, or key employee.
AUDIT COMMITTEE
The Board of Directors established an Audit Committee in March 1995. The
Audit Committee is currently composed of Messrs. Stover, Sheffield and
Samuelson. Mr. Samuelson is its Chairman. The Audit Committee's duties include
reviewing internal financial information, monitoring cash flow, budget variances
and credit arrangements, reviewing the audit program of the Company, reviewing
with the Company's independent accountants the results of all audits upon their
completion, annually selecting and recommending independent accountants,
overseeing the quarterly unaudited reporting process and taking such other
action as may be necessary to assure the adequacy and integrity of all financial
information distributed by the Company.
COMPENSATION COMMITTEE
The Board of Directors established a Compensation Committee in March 1995.
The Compensation Committee is currently composed of Messrs. Stover, Sheffield
and Samuelson. Mr. Sheffield is its Chairman. The Compensation Committee has the
exclusive authority to administer the Company's 1996 Stock Option/Stock Issuance
Plan, the Employee Stock Purchase Plan and the International Employee Stock
Purchase Plan. The Compensation Committee's duties include recommending
compensation levels of senior management and working with senior management on
benefit and compensation programs for Company employees, including matters
related to participation in profit sharing, bonus plans and stock
6
<PAGE>
option plans and preparing reports to the extent necessary to comply with
applicable disclosure requirements established by the Securities and Exchange
Commission or other regulatory bodies.
STRATEGIC PLANNING COMMITTEE
The Board of Directors established a Strategic Planning Committee in March
1995. The Strategic Planning Committee currently consists of three directors, W.
Robert Stover, Gilbert L. Sheffield and Jack D. Samuelson. Mr. Stover is its
Chairman. The Committee is responsible for evaluating the Company's business
plans and future business including, but not limited to, the evaluation of
potential acquisitions and new business opportunities.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.
W. Robert Stover, Chairman of the Board and Chief Executive Officer,
belatedly filed Forms 3 and 4 on June 10, 1996. Mr. Stover also belatedly filed
a Form 4 on November 27, 1996 with respect to a gift of shares made on September
25, 1996. Certain other reporting person belatedly filed the required Forms 4.
Michael K. Phippen, President, Chief Operating Officer and Director of the
Company, Harvey L. Maslin, Vice Chairman of the Board of Directors and Chief
Administrative Officer of the Company, Paul A. Norberg, Executive Vice
President, Chief Financial Officer and Director of the Company, Michael J.
Nicholson, President, Western Medical Services Division, A. Terry Slocum,
President, Franchise Division, Gilbert L. Sheffield and Jack D. Samuelson,
Director of the Company belatedly filed Forms 4 in connection with open market
purchases. These Forms 4 were subsequently filed on June 8, 1996, except for Mr.
Samuelson's, whose Form 4 was filed on July 9, 1996. Mr. Samuelson also
belatedly filed Forms 4 in connection with options granted to him on April 30,
1996 and November 1, 1996. These Forms 4 were subsequently filed on July 9, 1996
and December 30, 1996, respectively. Mr. Sheffield also belatedly filed Forms 4
for options granted to him on April 30, 1996 and November 1, 1996. These Forms 4
were filed on June 8, 1996 and January 9, 1997, respectively. Certain other
reporting persons also belatedly filed Forms 4 in connection with options
granted to them on April 30, 1996. Messrs. Phippen, Maslin, Norberg, Nicholson
and Slocum filed these Forms 4 on June 8, 1996. In addition, these Forms 4 were
filed on June 8, 1996 by Robin A. Human, Senior Vice President, General Counsel
and Secretary, Michael W. Ehresman, Vice President and Treasurer, Dirk A.
Sodestrom, Vice President and Controller, Ronald C. Picco, Senior Vice
President, Operations and Christopher J. Boyer, Director of MIS Services.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all other executive officers, directors and greater than 10% stockholders
complied with all other filing requirements applicable to them with respect to
transactions during fiscal year 1996.
7
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned, by the Company's
Chief Executive Officer and the four other highest-paid executive officers whose
salary and bonus for fiscal 1996 was in excess of $100,000, for services
rendered in all capacities to the Company and its subsidiaries for each of the
last two fiscal years.(1) No executive officer who would have otherwise been
includable in such table on the basis of salary and bonus earned for fiscal 1996
has been excluded by reason of his or her termination of employment or change in
executive status during that fiscal year. The individuals included in the table
will be collectively referred to as the "Named Officers."
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)
- ---------------------------------------- ----- ------------- ------- -----------
<S> <C> <C> <C> <C>
W. Robert Stover ....................... 1996 244,616 -- --
Chairman of the Board of Directors 1995 215,000 -- --
and Chief Executive Officer
Michael K. Phippen ..................... 1996 177,826 37,527 100,000
President, Chief Operating Officer 1995 6,731(2) -- --
and Director
Harvey L. Maslin ....................... 1996 189,423 46,909 60,000
Vice Chairman of the Board of 1995 185,000 35,410 --
Directors
and Chief Administrative Officer
Paul A. Norberg ........................ 1996 180,000 28,145 60,000
Executive Vice President, Chief 1995 180,000 32,910 --
Financial Officer and Director
Michael J. Nicholson ................... 1996 109,519 36,166 7,500
President, Western Medical Services 1995 85,000 52,266 --
Division
</TABLE>
- ------------------------
(1) Long-term compensation and all other compensation figures have not been
included in the table because such information is not applicable.
(2) Mr. Phippen joined the Company in October 1995. The salary reported above
represents annual compensation earned by Mr. Phippen for the fiscal year
ended October 28, 1995.
8
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to the stock option
grants made during fiscal 1996 under the Company's 1996 Stock Option/Stock
Issuance Plan to the Named Officers. No stock appreciation rights were granted
to the Named Officers during such fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1996 POTENTIAL REALIZABLE
- -------------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME GRANTED(1) FISCAL 1996 SHARE(2) DATE 5%(3) 10%(3)
- ------------------------------------ ----------- --------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
W. Robert Stover.................... -- -- -- -- -- --
Michael K. Phippen.................. 100,000 23.3% $ 14.00 4/29/2006 $ 880,148 $ 2,230,291
Harvey L. Maslin.................... 60,000 14.0% $ 14.00 4/29/2006 $ 528,089 $ 1,338,175
Paul A. Norberg..................... 60,000 14.0% $ 14.00 4/29/2006 $ 528,089 $ 1,338,175
Michael J. Nicholson................ 7,500 1.7% $ 14.00 4/29/2006 $ 66,011 $ 167,272
</TABLE>
- ------------------------
(1) The options were granted on April 30, 1996 and have a maximum term of 10
years measured from the grant date, subject to earlier termination in the
event of the optionee's cessation of service with the Company. Each option
will become exercisable for 25% of the option shares upon the completion of
one year of service measured from the grant date and will become exercisable
for the remaining shares in equal monthly installments over the next 36
months of service thereafter. However, the option will immediately become
exercisable for all of the option shares in the event the Company is
acquired by a merger or asset sale, unless the options are assumed by the
acquiring entity.
(2) The exercise price may be paid in cash, in shares of the Company's common
stock valued at fair market value on the exercise date or through a cashless
exercise procedure involving the same day sale of the purchased shares. The
Company may also finance the option exercise by loaning the optionee
sufficient funds to pay the exercise price for the purchased shares and the
federal and state tax liability incurred in connection with such exercise.
(3) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the 10-year option term will be at the assumed 5% and 10% annual rates of
compounded stock price appreciation or at any other defined level. Unless
the market price of the Company's common stock appreciates over the option
term, no value will be realized from the option grants made to the Named
Officers.
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AGGREGATE OPTION EXERCISES AND FISCAL YEAR END VALUES
The table below sets forth information with respect to the Named Officers
concerning their exercise of options during fiscal 1996 and the unexercised
options held by them as of the end of such fiscal year. No stock appreciation
rights were exercised during such fiscal year, and no stock appreciation rights
were outstanding at the end of such fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS
OPTIONS AT FISCAL AT FISCAL YEAR
YEAR END(#) END($)(1)(2)
---------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
W. Robert Stover.......................................... -- -- -- --
Michael K. Phippen........................................ -- 100,000 -- $ 25,000
Harvey L. Maslin.......................................... 3,084 60,000 $ 14,341 $ 15,000
Paul A. Norberg........................................... 3,084 60,000 $ 14,341 $ 15,000
Michael J. Nicholson...................................... -- 7,500 -- $ 1,875
</TABLE>
- ------------------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option.
(2) Calculated by determining the difference between the fair market value of
the securities underlying the in-the-money options at November 2, 1996
(based on the closing price of $14.25 for the Company's Common Stock on the
Nasdaq National Stock Market for November 1, 1996, the trading day
immediately preceding the end of fiscal 1996) and the exercise price of the
options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE IN
CONTROL AGREEMENTS
The Company entered into an employment agreement with W. Robert Stover on
September 29, 1994 which provides his continuing employment until he chooses to
retire or until his death. In addition to base annual compensation of $250,000
for fiscal 1996, subject to adjustment with the mutual agreement of the parties,
the agreement provides that Mr. Stover may be paid bonuses based on the
Company's economic circumstances and his extraordinary efforts and
contributions. The agreement was amended as of November 2, 1996 to eliminate the
death benefits otherwise payable to Mr. Stover's widow or estate upon his death
during the employment term and to maintain Mr. Stover's base salary at $250,000
for fiscal 1997.
The Company does not have employment agreements with any other Named
Officers, and their employment with the Company may be terminated at any time at
the discretion of the Board of Directors. However, the Compensation Committee of
the Board of Directors has authority as Plan Administrator of the 1996 Stock
Option Plan/Stock Issuance to provide for the accelerated vesting of the shares
of Common Stock subject to outstanding options held by the Chief Executive
Officer and the Company's other executive officers, whether granted under that
plan or any predecessor plan, in the event their employment were to be
terminated (whether involuntarily or through a forced resignation) following:
(i) an acquisition of the Company by merger or asset sale, or (ii) a hostile
takeover of the Company effected through a successful tender offer for more than
50% of the Company's outstanding Common Stock or through a change in the
majority of the Board as a result of one or more contested elections for Board
membership.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established a Compensation Committee in March 1995.
The Compensation Committee currently consists of Messrs. Stover, Sheffield and
Samuelson. Except for Mr. Stover, no member of such Committee was at any time
during fiscal 1996 or at any other time an officer or employee of the Company.
10
<PAGE>
No executive officer of the Company served on the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
For a description of transactions between the Company and members of the
Compensation Committee or their affiliates, see the "Certain Transactions"
section.
11
<PAGE>
WESTERN STAFF SERVICES, INC.
COMPENSATION COMMITTEE
OF THE
BOARD OF DIRECTORS
EXECUTIVE COMPENSATION REPORT
The Compensation Committee was formed on March 9, 1995 in anticipation of
the Company's initial public offering. It consists of three Board members,
namely, W. Robert Stover, Gilbert L. Sheffield and Jack D. Samuelson. Mr. Stover
is Chairman of the Board of Directors and Chief Executive Officer. Messrs.
Sheffield and Samuelson are not officers or employees of the Company. Mr.
Sheffield is presently the Chairman of the Compensation Committee.
It is the duty of the Compensation Committee to review and establish the
compensation of executive officers of the Company, including base salary,
participation in profit sharing, bonus and other cash incentive plans, subject
to ratification by the Board. During fiscal 1996, the Compensation Committee
also had the exclusive authority to administer the Company's 1996 Stock
Option/Stock Issuance Plan under which grants may be made to such officers.
In October 1996, the Compensation Committee engaged Strategic Compensation
Associates ("SCA") to make a comprehensive review and competitive assessment of
existing executive compensation packages in total and by component, including
salary, annual bonus, stock options and major benefits. SCA made specific
recommendations to the Compensation Committee pertaining to each of these
topics.
GENERAL COMPENSATION POLICY
The fundamental policy of the Compensation Committee in compensation matters
is to offer the Company's executive officers competitive compensation
opportunities based upon their personal performance and their contribution to
the financial success of the Company. To achieve this policy, a substantial
portion of each executive officer's total annual compensation is made contingent
upon the achievement of designated financial and performance goals. Accordingly,
each executive officer's compensation package is comprised of three elements:
(i) base salary which is designed primarily to be competitive with base salary
levels in effect both at companies within the temporary staffing industry which
are of comparable size to the Company and at companies outside of such industry
with which the Company competes for executive talent, (ii) annual bonuses
payable in cash and tied to the Company's attainment of financial milestones
based on criteria established by the Compensation Committee, and (iii) long-term
stock-based incentive awards which strengthen the mutuality of interests between
the executive officers and the Company's stockholders. As an employee's level of
responsibility and accountability within the Company increases over time, a
greater portion of his or her total compensation is intended to be dependent
upon the Company's performance, and stock price appreciation rather than upon
base salary.
FACTORS. The principal factors considered by the Compensation Committee in
establishing the components of each executive officer's compensation package for
fiscal 1996 are summarized below. However, the Compensation Committee may in its
discretion apply entirely different factors, particularly different measures of
financial performance, in setting executive compensation for future fiscal
years.
* BASE SALARY. The base salary for each executive officer is determined on
the basis of internal comparability considerations and the base salary levels in
effect for comparable positions at the Company's principal competitors, both
within and outside the temporary staffing industry. The base salary level for
executive officers is generally at a level determined for such individuals on
the basis of the external salary data of temporary staffing service companies
within the same geographic area and with small to medium market capitalization.
This group of companies is less inclusive than the temporary staffing index in
the performance graph included in this proxy statement for purposes of comparing
the stock price performance of the Company's common stock. However, the Company
believes this smaller group of companies
12
<PAGE>
gives a more accurate indication of the market for executive services in which
the Company competes. Salaries are reviewed on an annual basis, and adjustments
to each executive officer's base salary are based upon individual performance
and salary increases paid by the Company's competitors.
* ANNUAL INCENTIVE COMPENSATION. An annual bonus may be earned by selected
executive officers except the Chief Executive Officer based upon their
participating interest in a bonus pool tied to Company performance. Each
officer's participating interest is determined by the Compensation Committee at
the start of the fiscal year and may vary from year to year. The bonus pool for
fiscal 1996 was set at ten percent (10%) of the increase in net income of fiscal
1996 over fiscal 1995. For such purpose, net income was defined as the Company's
consolidated income before taxes less a provision for income taxes equal to
thirty-nine percent (39%) of pre-tax income. The Chief Executive Officer's
bonus, if any, is at the discretion of the Compensation Committee and the Board.
For fiscal 1996, no specific personal performance goals were established for the
executive officers as a condition to their participation in the bonus pool;
however, no bonus payout was to be made to any officer unless his or her
performance for the fiscal year was considered to be at a satisfactory level.
Accordingly, the Compensation Committee reviewed the performance of the Chief
Executive Officer, and the Chief Executive Officer reviewed the performances of
the other senior executive officers, namely, the President and Chief Operating
Officer, the Vice Chairman of the Board and Chief Administrative Officer, and
the Executive Vice President and Chief Financial Officer, and made his
recommendations to the Compensation Committee. The Compensation Committee has
delegated to those senior executive officers the authority to review the
performances of the other officers and key employees who report to them
directly. For fiscal 1996, the executive bonuses ranged from 13.52% to 24.82% of
total compensation.
For each subsequent fiscal year, the Compensation Committee will determine
whether or not to continue or modify the executive bonus program for that year
and, specifically, will designate the executive officers eligible to participate
in the program, specify what percentage of the bonus pool each of the
participants may earn, and determine the eligibility criteria for participation.
* LONG-TERM INCENTIVE COMPENSATION. Option grants are intended to align the
interests of each executive officer with those of the Company's stockholders and
to provide each individual with a significant incentive to manage the Company
from the perspective of an owner with an equity stake in the business. The
Compensation Committee determines the size of the option grant according to each
executive's position within the Company and sets a level it considers
appropriate to create a meaningful opportunity for stock ownership. In addition,
the Compensation Committee takes into account an individual's recent
performance, his or her potential for future responsibility and promotion,
comparable awards made to individuals in similar positions within the industry,
and the number of unvested options held by each individual at the time of the
new grant. The relative weight given to each of these factors varies among
individuals at the Compensation Committee's discretion.
Each option grant allows the officer to acquire shares of the Company's
common stock at a fixed price per share (the market price on the date preceding
the grant date) over a specified period of time (up to 10 years). The options
generally vest in equal installments over a four-year period, contingent upon
the executive officer's continued employment with the Company. Accordingly, the
option will provide a return to the executive officer only if the executive
officer remains employed by the Company for one or more years during which the
option vests, and then only if the market price of the underlying shares
appreciates over the option term.
TAX LIMITATION. As a result of federal tax legislation enacted in 1993, a
publicly-held company such as Western Staff Services, Inc. will not be allowed a
federal income tax deduction for compensation paid to the executive officers
named in the Summary Compensation Table, to the extent that compensation exceeds
$1 million per officer. The compensation paid to the Company's executive
officers for fiscal 1996 did not exceed the one $1 million dollar limit per
officer, nor is the compensation to be paid to the Company's executive officers
for fiscal 1997 expected to reach that level. Because it is very unlikely that
the
13
<PAGE>
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the one $1 million dollar limitation, the
Compensation Committee has decided not to take any action at this time to limit
or restructure the elements of compensation payable to the Company's executive
officers. The Committee will reconsider this decision should the individual
compensation of any executive officer ever approach the one $1 million dollar
level.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In setting the compensation payable to the Company's Chief Executive
Officer, Mr. Stover, the Compensation Committee has sought to establish a
competitive rate of base salary, realizing that a significant percentage of his
overall compensation package is directly tied to Company performance and stock
price appreciation because of his position as a principal Shareholder.
Mr. Stover's base salary is established through an evaluation of salaries
paid to similarly situated chief executive officers both at companies in the
industry which are of comparable size to the Company and at companies in other
industries with which the Company competes for executive personnel. In setting
Mr. Stover's base salary, it is the intent of the Compensation Committee to
provide him with a level of stability and certainty each year and not have this
particular component of compensation affected to any significant degree by
Company performance factors. In fiscal 1996, the Compensation Committee
conducted its annual review of Mr. Stover's base salary level and increased his
base salary from $215,000 to $250,000 for fiscal 1996.
On the basis of the Company's economic circumstances, the Compensation
Committee did not award a cash bonus to Mr. Stover for fiscal 1996, despite his
efforts and contributions in the successful completion of the Offering and
otherwise throughout fiscal 1996. The Committee granted no option shares to Mr.
Stover during fiscal 1996 since he is a principal shareholder of the Company.
Compensation Committee
Gilbert L. Sheffield, Chairman of
Compensation Committee
Jack D. Samuelson
Member of Compensation Committee
W. Robert Stover
Member of Compensation Committee
14
<PAGE>
COMPARISON OF STOCKHOLDER RETURN
The graph depicted below reflects a comparison of the cumulative total
return (change in stock price plus reinvestment dividends) of the Company's
Common Stock with the cumulative total returns of the Standard and Poor's 500
Index and peer issuers in the temporary staffing industry.(1) The graph covers
the period from April 30, 1996, the date of the Company's Offering, through the
fiscal year ended November 2, 1996.
The graph assumes that $100 was invested on April 30, 1996 in the Company's
Common Stock and in each index and that all dividends were reinvested. No cash
dividends have been declared on the Company's Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
WESTERN STAFF SERVICES, S & P 500 INDEX AND PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WESTERN STAFF
SERVICES S&P 500 PEER GROUP
<S> <C> <C> <C>
4/30/96 100 100 100
11/1/96 89.76 107.58 88.39
</TABLE>
The Company's stock was first traded publicly on April 30, 1996. The graph
depicts cumulative returns calculated on an annual basis on $100 invested in
Western stock, the S&P 500 Index and Peer Group Index comparing Kelly Services
Inc., Interim Services Inc., Manpower Inc., Olsten Corporation and Personnel
Group of America Inc.
- ------------------------
Notes
(1) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
15
<PAGE>
ITEM 12. SECURITY OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 1, 1997 for (i) all
persons who are beneficial owners of five percent (5%) or more of the
outstanding shares of the Company's Common Stock, (ii) each director and nominee
of the Company, (iii) the Company's Chief Executive Officer and the four other
most highly paid executive officers as of the fiscal year ended November 2,
1996, and (iv) all executive officers and directors of the Company as a group.
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned, subject to
community property laws, where applicable.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT
- -------------------------------------------------------------------------------------- ----------------- ---------
<S> <C> <C>
W. Robert Stover(1)................................................................... 5,873,718 56.8%
Joan C. Stover(1)..................................................................... 5,873,718 56.8%
Amy J. Stover(2)...................................................................... 474,288 4.6%
Stephen R. Stover(3).................................................................. 473,268 4.6%
Susan J. Stover(4).................................................................... 473,269 4.6%
Michael K. Phippen.................................................................... 13,750 *
Harvey L. Maslin(5)................................................................... 5,834 *
Paul A. Norberg(6).................................................................... 5,705 *
Michael J. Nicholson.................................................................. 500 *
Jack D. Samuelson..................................................................... 6,000 *
Gilbert L. Sheffield.................................................................. 2,000 *
All executive officers and directors as a group (13 persons)(7)....................... 5,910,485 57.2%
</TABLE>
- ------------------------
* Less than one percent
(1) Includes 5,873,718 shares of Common Stock held by the W. Robert Stover and
Joan C. Stover as Co-Trustees of the Stover Revocable Trust dated 11/16/88,
as amended, the beneficial ownership of which may be attributable to each of
Mr. Stover and Mrs. Stover. Does not include 60,000 shares of Common Stock
owned by the Stover Foundation (the "Old Foundation") and 25,433 shares of
Common Stock owned by the Stover Foundation, a California nonprofit
religious corporation (the "New Foundation") as to which Mr. Stover has
shared voting power. Does not include 749,160 shares of Common Stock
contributed to the Stover Charitable Lead Annuity Trust as to which Mr.
Stover has no voting power.
(2) Includes 90,979 shares of Common Stock held by the Amy J. Stover Trust dated
11/16/88, the beneficial ownership of which may be attributable to Ms. Amy
J. Stover Newton. Includes 1,020 shares of Common Stock held by the Newton
Family Trust dated 11/12/96, as amended, the beneficial ownership of which
may be attributable to Ms. Amy J. Stover Newton.
(3) Includes 90,979 shares of Common Stock held by the Stephen R. Stover Trust
dated 11/16/88, the beneficial ownership of which may be attributable to Mr.
Stephen Stover.
(4) Includes 90,979 shares of Common Stock held by the Susan J. Stover Trust
dated 11/16/88, the beneficial ownership of which may be attributable to Ms.
Susan Stover.
(5) Includes options to purchase 3,084 shares of Common Stock held by Mr.
Maslin, which are immediately exercisable.
(6) Includes options to purchase 3,084 shares of Common Stock held by Mr.
Norberg, which are immediately exercisable.
(7) Includes options to purchase 6,168 shares of Common Stock held by all
executive officers and directors, which are immediately exercisable.
16
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CONTRIBUTION OF MINORITY INTERESTS IN SUBSIDIARIES AND NORWEGIAN
BRANCH. Prior to the Offering, Mr. Stover owned minority interests in certain
of the Company's foreign subsidiaries and in the Company's principal domestic
subsidiary, Western Staff Services (USA), Inc. In addition, in 1989,
Kontorservice, Inc., a corporation controlled by Mr. Stover, acquired a group of
Norwegian temporary services businesses (collectively, the "Norwegian Branch")
for approximately $2.8 million. After the acquisition, Mr. Stover invested
approximately $800,000 to fund the ongoing operations of the Norwegian Branch.
Upon consummation of the Offering, Mr. Stover contributed all of the shares of
capital stock owned by him in the Company's foreign and domestic subsidiaries as
well as the capital stock of the Norwegian Branch to the Company in return for
202,857 shares of Common Stock of the Company valued at approximately $2.8
million. The $2.8 million value was determined based upon the results of an
independent appraisal commissioned by the Company. The Company believes that
this valuation reflected a valuation that was no less favorable to the Company
than would otherwise have been received in a similar transaction with an
unaffiliated third party.
SALE OF WESTERN VIDEO IMAGES. During the fourth fiscal quarter of 1994, the
Company sold the common stock of, and certain intercompany receivables due from,
Western Video Images ("WVI"), a majority-owned subsidiary of the Company, to Mr.
Stover, the principal stockholder of the Company, for an aggregate purchase
price of $3.0 million. The $3.0 million purchase price reflected the valuation
of WVI determined through an independent appraisal commissioned by the Company.
The Company believes that this valuation reflected a valuation that was no less
favorable to the Company than would otherwise have been received in a similar
transaction with an unaffiliated third party. WVI provides video post-production
services including digital visual effects and graphic production operations and
is in an industry unrelated to the Company's principal business. Furthermore,
WVI has historically operated independent of the Company, and there are no
significant shared costs.
The Company has previously provided services to WVI for a management fee
based upon the gross sales of WVI. Management fees charged to WVI for fiscal
1996, fiscal 1995 and fiscal 1994 were $197,000, $226,000 and $211,000,
respectively. The Company and WVI have renegotiated a management services
contract under which the Company will continue to provide accounting, legal,
administrative and management support and services to WVI for a fee based upon
the gross sales of WVI. The fee will be paid monthly in arrears for actual
services rendered. The Company believes that the terms of the new management
services contract are commercially reasonable. WVI will arrange separate
financing for itself as required by its operations and will not receive any
future financing from the Company.
In addition, the Company is the lessee of the principal facilities in which
WVI operates. WVI is charged for all costs of the lease for these facilities.
The Company will remain the lessee and has subleased the facilities to WVI until
October 31, 2000, the termination date of the lease obligation. The Company has
entered into an arrangement with WVI, whereby WVI will indemnify the Company
against any and all liability arising out of the Company's continuing
obligations under the lease.
As of November 2, 1996, the Company guaranteed approximately $1.9 million
worth of WVI's debt. As of December 1996, the Company no longer guarantees WVI's
debt.
OTHER TRANSACTIONS WITH AFFILIATES. Between November 1990 and December
1995, the Company made distributions to its stockholders totaling approximately
$14.7 million. As required by the Company's covenants under its credit
agreements, stockholders are required to loan back to the Company any
distributions received in excess of their actual tax liabilities. Such sums were
loaned back to the Company in the form of promissory notes due on demand.
Between December 7, 1992 and October 28, 1995, the following loans by
stockholders were made to the Company: W. Robert Stover loaned the Company an
aggregate of approximately $1.3 million; Stephen R. Stover loaned the Company an
aggregate of approximately $212,114; Susan J. Stover loaned the Company an
aggregate of approximately $477,159; and Amy J. Stover loaned the Company an
aggregate of approximately $229,747. All such loans were made on
17
<PAGE>
commercially reasonable terms, bore variable interest rates equal to the lowest
short-term rate charged the Company by Bank of America NT & SA, adjusted on the
first day of each fiscal quarter, and, pursuant to an amendment and a waiver to
the credit agreement, all were fully repaid as of October 28, 1995. There were
no such loans from the Stockholders to the Company in fiscal 1996, and there are
none presently.
On the date of the closing of the Offering, the Company and all of its
current stockholders entered into a Tax Indemnification Agreement relating to
their respective income tax liabilities. Because the Company became fully
subject to corporate income taxation after the termination of the Company's S
corporation status ("Effective Termination Date"), the reallocation of income
and deductions between the period during which the Company was treated as an S
corporation and the period during which the Company became subject to corporate
income taxation may increase the taxable income of one party while decreasing
that of another party. The Tax Indemnification Agreement was intended to assure
that taxes would be borne by the Company on the one hand and by the current
stockholders on the other, only to the extent that such parties were treated as
receiving the related income for income tax purposes. Subject to certain
limitations, the Tax Indemnification Agreement generally provides that the
current stockholders will be indemnified by the Company with respect to federal
and state income taxes shifted from a Company taxable year subsequent to the
Effective Termination Date to a taxable year in which the Company was an S
corporation, and the Company will be indemnified by the current stockholders
with respect to federal and state income taxes shifted from an S corporation
taxable year to a Company taxable year subsequent to the Effective Termination
Date. The Tax Indemnification Agreement also provides that the current
stockholders will pay or reimburse the Company for any and all taxes of the
Company which was formerly taxed as an S corporation for any period ending on or
prior to the Effective Termination Date (other than certain taxes reflected in
the Company's fiscal 1995 Consolidated Financial Statements). In addition, the
Tax Indemnification Agreement provides that the amount of the S corporation
distribution to current stockholders will not exceed $5.0 million. Any payment
made by the Company to the current stockholders pursuant to the Tax
Indemnification Agreement may be considered by the Internal Revenue Service or
state taxing authorities to be non-deductible by the Company for income tax
purposes.
In April 1996, prior to the Offering, the Company executed a Promissory Note
in the principal amount of $3,888,393 payable to the Stover Revocable Trust
dated 11/16/88, as amended. The Company likewise executed Promissory Notes
payable to Stephen R. Stover, Susan J. Stover and Amy J. Stover in the principal
amounts of $317,857 each and Promissory Notes payable to the Stephen R. Stover
Irrevocable Trust dated 11/16/88, the Susan J. Stover Irrevocable Trust dated
11/16/88 and the Amy J. Stover Irrevocable Trust dated 11/16/88 in the principal
amounts of $52,679 each. The principal amounts of these non-interest bearing
notes were calculated based on the $5.0 million limitation of the S corporation
distribution to current stockholders. The repayment schedules under these notes
include four consecutive quarterly installments equal to one-quarter of the
principal amounts on July 15, 1996, October 15, 1996, January 15, 1997 and April
15, 1997. The Company has paid to date in aggregate a total of $3.75 million
under these notes, and it intends to pay the final installments of $1.25 million
in the aggregate on or before April 15, 1997.
During October 1995, the Company purchased the operations of one of its
franchise agents, Michael K. Phippen, now President and Chief Operating Officer
of the Company, for a total price of $5.9 million. The Company paid $1.5 million
in cash and agreed to make installment payments for the balance at an interest
rate of 6.50%. An additional $1.5 million was paid in fiscal 1996 and three
additional installments will be paid in fiscal 1997, fiscal 1998 and fiscal 1999
in the amounts of $973,000, $973,000 and $972,000, respectively.
Any future transactions between the Company and its officers, directors, and
affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated third parties. Such transactions with such persons
will be subject to approval by a majority of the Company's outside directors or
will be consistent with policies approved by such outside directors.
18
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment
on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 3, 1997 WESTERN STAFF SERVICES, INC.
BY: *
-----------------------------------------
W. Robert Stover
CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
Pursuant to the requirements of the Securities Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board of
* Directors and Chief
- ------------------------------ Executive Officer March 3, 1997
W. Robert Stover (Principal Executive
Officer)
*
- ------------------------------ President, Chief Operating March 3, 1997
Michael K. Phippen Officer and Director
Vice Chairman of the Board
* of Directors Chief
- ------------------------------ Administrative Officer March 3, 1997
Harvey L. Maslin and Director
Executive Vice President,
* Chief Financial Officer
- ------------------------------ and Director (Principal March 3, 1997
Paul A. Norberg Financial Officer)
* Vice President and
- ------------------------------ Controller (Principal March 3, 1997
Dirk A. Sodestrom Accounting Officer)
*
- ------------------------------ Director March 3, 1997
Gilbert L. Sheffield
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
- ------------------------------ Director , 1997
Jack D. Samuelson
</TABLE>
*By: -------------------------
HARVEY L. MASLIN,
ATTORNEY-IN-FACT
*By:
-------------------------
PAUL A. NORBERG,
ATTORNEY-IN-FACT
20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGES
- ----------- -------------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
24.1 Consent of Price Waterhouse LLP, Independent Accountants.
</TABLE>
21
<PAGE>
Exhibit 24.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Stockholders of
Western Staff Services, Inc.
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-10429) of Western Staff Services, Inc. of
our report dated December 31, 1996, appearing on page F-1 of the Annual
Report on Form 10-K of which this Form 10-K/A is a part.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
San Francisco, California
March 3, 1997
