UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X Annual Report Pursuant to section 15(d) of the Securities Exchange Act of
- ---
1934 For the fiscal year ended December 31, 1997
OR
- --- Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934 For the transition period from_______________to________________
Commission File Number: 0-26094
A. Full name of the plan and the address of the plan, if different from that of
the issuer named below:
SOS Staffing Services, Inc. 401 (k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principle executive office:
SOS Staffing Services, Inc.
1415 South Main Street
Salt Lake City, UT 84115
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
SOS Staffing Services, Inc. 401 (k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the SOS Staffing Services, Inc. 401 (k) Plan as of December 31, 1997 and 1996
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1997. These financial statements and the schedules
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedules 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the SOS Staffing
Services, Inc. 401(k) Plan as of December 31, 1997 and 1996, and the changes in
its net assets available for benefits for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
Our audits were performed 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 and reportable transactions 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. The fund information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audit 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.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
May 7, 1998
2
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
Statements of Net Assets Available for Benefits
As of December 31, 1997 and 1996 4-5
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997 6-7
Notes to Financial Statements 8-11
Schedule of Assets Held for Investment Purposes
As of December 31, 1997 12
Schedule of Reportable Transactions
For the Year Ended December 13, 1997 13
Signatures 14
Index to Exhibits 15
Exhibit 16
3
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
----------------------------------------------
AS OF DECEMBER 31, 1997
-----------------------
<TABLE>
<CAPTION>
1997 FUND INFORMATION
------------------------------------------------------------------------------
Fidelity
Fidelity Money Fidelity Equity Fidelity
Market Intermediate Fidelity Income II Blue Chip
Fund Bond Fund Puritan Fund Fund Growth Fund
---- --------- ------------ ---- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ -- $ 36,231 $ 247,535 $ 153,051 $ 284,704
Money market 241,705 1,690 3,264 4,951 5,974
RECEIVABLES:
Participants' contributions 4,192 2,022 4,255 8,354 11,410
Employer contributions 58,344 -- -- -- --
Interest and dividends 1,151 6 12 17 19
EXCESS CONTRIBUTIONS
PAYABLE (22,662) (11) (803) (993) (4,813)
--------- --------- --------- --------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS $ 282,730 $ 39,938 $ 254,263 $ 165,380 $ 297,294
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1997 FUND INFORMATION
------------------------------------------------------------------------------------
Fidelity Fidelity Kemper
Emerging Worldwide SOS Stock Advantage
Growth Fund Fund Fund III Total
----------- ---- ---- --- -----
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ 258,299 $ 94,091 $ -- $ -- $ 1,073,911
Money market 4,594 3,966 3,756 -- 269,900
Common stock -- -- 185,466 -- 185,466
Pooled separate account -- -- -- 82,086 82,086
RECEIVABLES:
Participants' contributions 7,113 5,723 5,030 353 48,452
Employer contributions -- -- -- -- 58,344
Interest and dividends 16 -- 14 -- 1,235
EXCESS CONTRIBUTIONS
PAYABLE (15,153) (26) (5,100) -- (49,561)
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 254,869 $ 103,754 $ 189,166 $ 82,439 $ 1,669,833
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an
integral part of these statements
4
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
----------------------------------------------
AS OF DECEMBER 31, 1996
-----------------------
<TABLE>
<CAPTION>
1996 FUND INFORMATION
---------------------------------------------------------------------------------------
Fidelity
Fidelity Money Fidelity Equity Fidelity
Market Intermediate Fidelity Income II Blue Chip
Fund Bond Fund Puritan Fund Fund Growth Fund
---- --------- ------------ ---- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ -- $ 30,360 $ 176,014 $ 70,229 $ 182,640
Money market 241,677 -- 927 -- 2,774
RECEIVABLES:
Participants' contributions 5,701 1,452 2,973 5,008 6,041
Employer contributions 3,228 1,786 4,031 6,558 10,200
Interest and dividends 1,115 161 3 3,524 566
EXCESS CONTRIBUTIONS
PAYABLE (10,980) (750) (5,687) (10,967) (23,607)
--------- --------- --------- --------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS $ 240,741 $ 33,009 $ 178,261 $ 74,352 $ 178,614
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1996 FUND INFORMATION
--------------------------------------------------------------------------------
Fidelity Fidelity Kemper
Emerging Worldwide SOS Stock Advantage
Growth Fund Fund Fund III Total
----------- ---- ---- --- -----
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ 200,460 $ 69,162 $ -- $ -- $ 728,865
Money market -- -- 8,474 -- 253,852
Common stock -- -- 76,713 -- 76,713
Pooled separate account -- -- -- 65,639 65,639
RECEIVABLES:
Participants' contributions 6,402 1,555 5,178 1,643 35,953
Employer contributions 6,972 2,136 6,070 -- 40,981
Interest and dividends 7 3 27 -- 5,406
EXCESS CONTRIBUTIONS
PAYABLE (35,130) (6,056) (11,314) -- (104,491)
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 178,711 $ 66,800 $ 85,148 $ 67,282 $ 1,102,918
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an
integral part of these statements
5
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
Fidelity
Fidelity Fidelity Fidelity Equity Fidelity
Money Intermediate Puritan Income II Blue Chip
Market Fund Bond Fund Fund Fund Growth Fund
----------- --------- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 33,949 $ 10,782 $ 32,379 $ 55,906 $ 78,939
Employer 58,344 -- -- -- --
Rollover 14,731 38 54 11,951 10
--------- --------- --------- --------- ---------
Total contributions 107,024 10,820 32,433 67,857 78,949
--------- --------- --------- --------- ---------
Investment income:
Net appreciation
(depreciation) in fair
value of investments -- 354 22,673 9,716 39,193
Interest and dividends 13,366 2,028 19,005 15,316 13,309
--------- --------- --------- --------- ---------
Total investment income 13,366 2,382 41,678 25,032 52,502
--------- --------- --------- --------- ---------
Total additions 120,390 13,202 74,111 92,889 131,451
--------- --------- --------- --------- ---------
DEDUCTIONS:
Benefits paid to participants (53,289) (6,322) (2,969) (5,341) (15,988)
Administrative fees (413) (56) (334) (167) (370)
--------- --------- --------- --------- ---------
Total deductions (53,702) (6,378) (3,303) (5,508) (16,358)
--------- --------- --------- --------- ---------
INTERFUND TRANSFERS (24,699) 105 5,194 3,647 3,587
--------- --------- --------- --------- ---------
NET INCREASE 41,989 6,929 76,002 91,028 118,680
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 240,741 33,009 178,261 74,352 178,614
--------- --------- --------- --------- ---------
End of year $ 282,730 $ 39,938 $ 254,263 $ 165,380 $ 297,294
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an
integral part of these statements
6
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (continued)
---------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------------------------
Fidelity Fidelity Kemper
Emerging Worldwide SOS Stock Advantage Total
Growth Fund Fund Fund III
----------- ---- ---- ---
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 57,521 $ 25,610 $ 33,365 $ 6,336 $ 334,787
Employer -- -- -- -- 58,344
Rollover 11,939 -- 40 -- 38,763
----------- ----------- ----------- ----------- -----------
Total contributions 69,460 25,610 33,405 6,336 431,894
----------- ----------- ----------- ----------- -----------
Investment income:
Net appreciation
(depreciation) in fair
value of investments (16,522) (5,099) 70,505 -- 120,820
Interest and dividends 51,738 7,040 538 9,113 131,453
----------- ----------- ----------- ----------- -----------
Total investment income 35,216 1,941 71,043 9,113 252,273
----------- ----------- ----------- ----------- -----------
Total additions 104,676 27,551 104,448 15,449 684,167
----------- ----------- ----------- ----------- -----------
DEDUCTIONS:
Benefits paid to participants (18,631) (1,245) (11,128) -- (114,913)
Administrative fees (359) (131) (217) (292) (2,339)
----------- ----------- ----------- ----------- -----------
Total deductions (18,990) (1,376) (11,345) (292) (117,252)
----------- ----------- ----------- ----------- -----------
INTERFUND TRANSFERS (9,528) 10,779 10,915 -- --
----------- ----------- ----------- ----------- -----------
NET INCREASE 76,158 36,954 104,018 15,157 566,915
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 178,711 66,800 85,148 67,282 1,102,918
----------- ----------- ----------- ----------- -----------
End of year $ 254,869 $ 103,754 $ 189,166 $ 82,439 $ 1,669,833
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an
integral part of these statements
7
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
(1) PLAN DESCRIPTION
----------------
The following description of the SOS Staffing Services, Inc. 401(k) Plan (the
"Plan") is provided for general information purposes only. More complete
information regarding the Plan's provisions may be found in the plan document.
General
- -------
The Plan is a defined contribution plan established by SOS Staffing Services,
Inc. (the "Company") under the provisions of Section 401(a) of the Internal
Revenue Code ("IRC"), which includes a qualified cash or deferred arrangement as
described in Section 401(k) of the IRC, for the benefit of eligible employees of
the Company. Employees who complete 1,000 hours of service during a 12-month
period and who have reached the age of 21 are eligible to participate in the
Plan. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended.
The Plan was established to provide employees with an opportunity to accumulate
funds for retirement or disability and to provide death benefits for employees'
dependants and beneficiaries. Through December 31, 1997, the Plan's trustee was
First Security Bank of Utah, N.A. ("First Security Bank"). Effective January 1,
1998, the Company changed the trustee from First Security Bank to Reliance Trust
Company.
Contributions
- -------------
Eligible employees can elect to make contributions to the Plan and such
contribution amounts are subject to certain limitations under the IRC. The
Company can elect to make discretionary matching contributions to the Plan. For
the year ended December 31, 1997, the Company provided a matching contribution
equal to 33-1/3 percent of each non-highly compensated staff employee
participant's contribution up to a maximum matching contribution of $1,000 per
each such participant.
Effective January 1, 1998, the Plan was amended to exclude highly compensated
employees from participating in the Plan.
Vesting
- -------
Participants are fully vested in their contributions and the earnings thereon.
Vesting in employer matching contributions is based on years of continuous
service as defined by the Plan. A participant vests according to the following
schedule:
Less than three years 0%
Three years 50
Four years 75
Five years or more 100%
Forfeitures
- -----------
At December 31, 1997, forfeited non-vested accounts totalled approximately
$6,278. These amounts will be used to reduce future employer contributions.
8
<PAGE>
Benefits
- --------
Upon termination of service due to death, disability, or retirement, a
participant may elect to receive an amount equal to the value of the
participant's vested interest in his or her account. The form of payment is a
lump sum distribution or an annuity to be paid in monthly installments.
Participant Accounts
- --------------------
Individual accounts are maintained for each of the Plan's participants to
reflect the participant's contributions and related employer matching
contributions, as well as the participant's share of the Plan's income and any
related administrative expenses. Allocations are based on the proportion that
each participant's account balance has to the total of all participants' account
balances.
Investment Options
- ------------------
As of December 31, 1997 and 1996, participants may direct their contributions,
the employer matching contributions and any related earnings into several
investment options. Participants may change their investment elections
quarterly. A brief description of each investment option is provided below:
Fidelity Money Market Fund
--------------------------
This fund's objective is to obtain a high level of current income while
at the same time preserving principal and providing liquidity. The fund
invests in a broad range of high-quality short-term obligations such as
certificates of deposit, U.S. government obligations and commercial
paper.
Fidelity Intermediate Bond Fund
-------------------------------
This fund's objective is to provide security, total return and high
current income. The fund invests in bonds with a maturity of three to
ten years with a rating of BBB or higher.
Fidelity Puritan Fund
---------------------
This fund's objective is to seek income consistent with preservation of
capital. The fund invests in a broadly diversified portfolio of
high-yielding common stocks, preferred stocks and bonds of any quality.
Fidelity Equity-Income II Fund
------------------------------
This fund's objective is to seek income from equity investments with
the potential for future investment growth. The fund invests
approximately 80% of its assets in income-producing common or preferred
stock.
Fidelity Blue Chip Growth Fund
------------------------------
This fund's objective is to seek growth of capital over the long-term
by investing primarily in a broadly-diversified portfolio of common
stocks of well-known and established companies.
9
<PAGE>
Fidelity Emerging Growth Fund
-----------------------------
This fund's objective is to seek long-term capital appreciation. The
fund normally invests at least 65% of its assets in equity securities
of emerging-growth companies. It may also invest in debt securities and
foreign securities.
Fidelity Worldwide Fund
-----------------------
This fund's objective is to seek capital growth by investing in
securities issued anywhere in the world. The fund invests primarily in
common stocks and other equity securities, generally focusing in the
three major markets of the world: North America, Europe, and the
Pacific Basin.
SOS Staffing Services, Inc. Common Stock
----------------------------------------
This fund is a non-diversified investment in the outstanding public
shares of SOS Staffing Services, Inc.
Kemper Advantage III
--------------------
This fund's objective is to offer both a guaranteed option under its
fixed accounts and 26 variable investment options through its separate
account. Advantage III is a variable annuity offered by Kemper Investor
Life Insurance Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Plan's management to use estimates
and assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from these estimates.
Interest and Dividend Income
- ----------------------------
Interest income is recorded as earned on the accrual basis. Dividend income is
recorded on the ex-dividend date.
Investment Valuation
- --------------------
Securities traded on a national securities exchange are valued at the last
reported sales price on the last business day of the year. The Kemper Advantage
II investment option is reported at contract value which approximates fair
value.
Net Appreciation in Fair Value of Investments
- ---------------------------------------------
Net realized and unrealized appreciation (depreciation) is recorded in the
accompanying statement of changes in net assets available for benefits as net
appreciation (depreciation) in fair value of investments.
Benefits
- --------
Payments of benefits to participants are recorded when paid.
Administrative Expenses
- -----------------------
The Company pays all administrative expenses of the Plan, except for certain
trustee fees.
10
<PAGE>
(3) TAX STATUS
----------
The Internal Revenue Service has determined and informed the Company by a letter
dated September 23, 1996 that the Plan and related trust are designed in
accordance with applicable sections of the IRC. The Plan administrator believes
that the Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
(4) PLAN TERMINATION
----------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of termination,
participants will become fully vested in their account balances.
11
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
----------------------------------------------------------
AS OF DECEMBER 31, 1997
-----------------------
<TABLE>
<CAPTION>
(b) Identity of Issuer,
Borrower, Lessor (c) Description (e)Current
(a) or Similar Party of Investment (d) Cost Value
--- ---------------- ------------- -------- -----
<S> <C> <C> <C>
Fidelity Institutional Money Market 269,900 shares of $269,900 $269,900
Fund money market fund
Fidelity Intermediate 3,563 shares of 35,531 36,231
Bond Fund mutual fund
Fidelity Puritan Fund 12,773 shares of 226,964 247,535
mutual fund
Fidelity Equity Income II Fund 5,666 shares of 142,612 153,051
mutual fund
Fidelity Blue Chip Growth Fund 7,215 shares of 242,490 284,704
mutual fund
Fidelity Emerging Growth Fund 10,876 shares of 274,911 258,299
mutual fund
Fidelity Worldwide Fund 5,899 shares of 97,044 94,091
mutual fund
* SOS Staffing Services, Inc. 9,826 shares of 130,984 185,466
common stock
Kemper Investors Life Advantage III 82,086 82,086
Insurance Company Investment option
</TABLE>
* Denotes party-in-interest
12
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
---------------------------------------
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
(h) Current
Value of
(c) (d) (g) Asset on
(a) Identity of (b) Description Purchase Selling Cost of Transaction (i) Net
Party Involved Of Asset Price Price Asset Date Gain
- -------------------- ---------------- ----------- --------- --------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Fidelity Blue Chip Growth Mutual Fund $ 73,570 $ -- $ 73,570 $ 73,570 $ --
Fund
Fidelity Blue Chip Growth Mutual Fund -- 10,700 9,434 10,700 1,266
Fund
Fidelity Emerging Growth Mutual Fund 107,507 -- 107,507 107,507 --
Fund
Fidelity Emerging Growth Mutual Fund -- 33,150 32,863 33,150 287
Fund
Fidelity Equity Income II Mutual Fund 78,580 -- 78,580 78,580 --
Fund
Fidelity Equity Income II Mutual Fund -- 5,473 5,255 5,473 218
Fund
Fidelity Institutional Mutual Fund 486,835 -- 486,835 486,835 --
Money Market Fund
Fidelity Institutional Mutual Fund -- 470,787 470,787 470,787 --
Money Market Fund
</TABLE>
13
<PAGE>
Signatures
The Plan pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons that administer the employee benefit plan) have
duly caused this annual report to be signed on behalf of the undersigned
hereunto duly authorized in Salt Lake City, Utah on the 26th day of June, 1998.
SOS STAFFING SERVICES, INC. 401(k) PLAN
By: /s/ John K. Morrison
-------------------------
John K. Morrison
General Counsel & Secretary
SOS Staffing Services, Inc.
14
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report on Form 11-K
Exhibit
Number Description
- ------ -----------
23.1 Consent of Arthur Andersen LLP
15
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Company's previously filed
Registration Statement on Form S-8 File No. 33-92268.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
June 26, 1998
16
