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, 1998.
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>
3
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, 1998 and 1997
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1998. 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, 1998 and 1997, and the changes in
its net assets available for benefits for the year ended December 31, 1998 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
June 16, 1999
2
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Statements of Net Assets Available for Benefits as of December 31,
1998 and 1997 4-6
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1998 7-11
Notes to the Financial Statements 12-17
Schedule of Assets Held for Investment Purposes as of
December 31, 1998 18-19
Schedule of Reportable Transactions for the Year Ended
December 31, 1998 20-24
</TABLE>
3
<PAGE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
1998 FUND INFORMATION
-----------------------------------------------------------------------------------------
Spartan U.S.
Treasury Money Fidelity U.S. SteinRoe
Market Bond Index Intermediate Loomis Sayles Fidelity Puritan
Fund Fund Bond Fund Bond Fund Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ - $ 361,965 $ 79,060 $ 143,136 $ 393,759
Money market 968,776 - - - -
RECEIVABLES:
Participants' contributions 9,079 3,683 3,737 5,243 9,112
Employer contributions 32,443 18,892 5,372 19,831 34,318
-----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,010,298 $ 384,540 $ 88,169 $ 168,210 $ 437,189
=========================================================================================
<CAPTION>
1998 FUND INFORMATION
----------------------------------------------------------------------------------------
Fidelity Dreyfus Dreyfus Neuberger Managers
Equity Income S&P 500 Appreciation Berman Special Equity
I Fund Index Fund Fund Genesis Trust Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ 488,514 $ 739,737 $ 655,376 $ 326,565 $ 292,061
RECEIVABLES:
Participants' contributions 10,809 23,055 14,212 6,064 8,081
Employer contributions 49,237 45,908 45,389 18,017 33,256
----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 548,560 $ 808,700 $ 714,977 $ 350,646 $ 333,398
========================================================================================
</TABLE>
The accompanying notes are an
integral part of these statements.
4
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (continued)
AS OF DECEMBER 31, 1998
<CAPTION>
1998 FUND INFORMATION
-----------------------------------------------------------------------------------
Templeton Cohen & Steers
Hotchkiss & Wiley Developing Realty Shares Participant
International Fund Markets Trust Fund Loans
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ 103,157 $ 24,118 $ 54,874 $ -
Loans receivable - - - 49,058
RECEIVABLES:
Participants' contributions 3,798 303 1,680 -
Employer contributions 6,999 3,554 7,997 -
-----------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 113,954 $ 27,975 $ 64,551 $ 49,058
===================================================================================
<CAPTION>
1998 FUND INFORMATION
-----------------------------------------------------------------------------------
Kemper Advantage III
SOS Stock Fund Other Total
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENTS:
Mutual fund $ - $ - $ - $ 3,662,322
Money market - - - 968,776
Common stock 148,241 - - 148,241
Pooled separate account - 83,972 - 83,972
Loans receivable - - - 49,058
RECEIVABLES:
Participants' contributions 5,112 - - 103,968
Employer contributions 26,298 - - 347,511
CASH 47 - 18,448 18,495
-----------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 179,698 $ 83,972 $ 18,448 $ 5,382,343
===================================================================================
</TABLE>
The accompanying notes are an
integral part of these statements.
5
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<CAPTION>
1997 FUND INFORMATION
--------------------------------------------------------------------------------------
Fidelity Fidelity
Fidelity Money Fidelity Equity Blue Chip
Market Intermediate Fidelity Income II Growth
Fund Bond Fund Puritan Fund Fund 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
======================================================================================
<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.
6
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
Fidelity
Fidelity Fidelity Equity Fidelity
Fidelity Intermediate Puritan Income II Blue Chip
Money Bond Fund Fund Fund Growth Fund
Market Fund
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 11,247 $ 963 $ 139,571 $ 5,699 $ 6,541
Employer - - 34,318 - -
Rollover - - 34,083 - -
------------------------------------------------------------------------------------
Total contributions 11,247 963 207,972 5,699 6,541
------------------------------------------------------------------------------------
Investment income:
Net appreciation (depreciation) in
fair value of investments - (20) 9,986 21,806 43,293
Interest and dividends 3,402 910 34,872 2,902 34
------------------------------------------------------------------------------------
Total investment income 3,402 890 44,858 24,708 43,327
------------------------------------------------------------------------------------
Total additions 14,649 1,853 252,830 30,407 49,868
------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (10,276) - (9,972) (2,996) (2,137)
Administrative fees (1,548) (331) (1,205) (883) (1,474)
------------------------------------------------------------------------------------
Total deductions (11,824) (331) (11,177) (3,879) (3,611)
------------------------------------------------------------------------------------
INTERFUND TRANSFERS (285,555) (41,460) (58,727) (191,908) (343,551)
------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (282,730) (39,938) 182,926 (165,380) (297,294)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 282,730 39,938 254,263 165,380 297,294
------------------------------------------------------------------------------------
End of year $ - $ - $ 437,189 $ - $ -
====================================================================================
The accompanying notes are an
integral part of these statements.
</TABLE>
7
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------------------
Fidelity Fidelity Kemper Spartan U.S.
Emerging Worldwide SOS Stock Advantage Treasury Money
Growth Fund Fund Fund III Market Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 4,554 $ 2,523 $ 115,868 $ - $ 300,778
Employer - - 26,298 - 32,443
Rollover - - 10,553 - 82,920
----------------------------------------------------------------------------------------
Total contributions 4,554 2,523 152,719 - 416,141
----------------------------------------------------------------------------------------
Investment income:
Net appreciation (depreciation) in
fair value of investments 39,371 25,376 (287,022) 8,291 -
Interest and dividends 901 49 232 - 44,062
----------------------------------------------------------------------------------------
Total investment income 40,272 25,425 (286,790) 8,291 44,062
----------------------------------------------------------------------------------------
Total additions 44,826 27,948 (134,071) 8,291 460,203
----------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (947) - (19,878) (6,386) (190,601)
Administrative fees (1,643) (923) (1,357) (372) -
----------------------------------------------------------------------------------------
Total deductions (2,590) (923) (21,235) (6,758) (190,601)
----------------------------------------------------------------------------------------
INTERFUND TRANSFERS (297,105) (130,779) 145,838 - 740,696
----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (254,869) (103,754) (9,468) 1,533 1,010,298
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 254,869 103,754 189,166 82,439 -
----------------------------------------------------------------------------------------
End of year $ - $ - $ 179,698 $ 83,972 $ 1,010,298
========================================================================================
</TABLE>
The accompanying notes are an
integral part of these statements.
8
<PAGE>
<TABLE>
<CAPTION>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
FUND INFORMATION
----------------------------------------------------------------------------------------
Fidelity SteinRoe Dreyfus
U.S. Bond Index Intermediate Loomis Sayles Fidelity Equity S&P 500 Index
Fund Bond Fund Bond Fund Income I Fund Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 70,978 $ 21,218 $ 82,443 $ 215,968 $ 195,204
Employer 18,892 5,372 19,831 49,237 45,818
Rollover 21,140 2,344 4,361 24,838 19,387
----------------------------------------------------------------------------------------
Total contributions 111,010 28,934 106,635 290,043 260,409
----------------------------------------------------------------------------------------
Investment income:
Net appreciation (depreciation) in
fair value of investments
3,850 (718) (14,635) (19,288) 51,052
Interest and dividends 9,392 1,977 14,741 19,085 7,781
----------------------------------------------------------------------------------------
Total investment income
13,242 1,259 106 (203) 58,833
----------------------------------------------------------------------------------------
Total additions 124,252 30,193 106,741 289,840 319,242
----------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (3,671) (3,625) (3,869) (11,845) (20,545)
Administrative fees - - - - -
----------------------------------------------------------------------------------------
Total deductions (3,671) (3,625) (3,869) (11,845) (20,545)
----------------------------------------------------------------------------------------
INTERFUND TRANSFERS 263,959 61,601 65,338 270,565 510,003
----------------------------------------------------------------------------------------
NET INCREASE 384,540 88,169 168,210 548,560 808,700
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year - - - - -
========================================================================================
End of year $ 384,540 $ 88,169 $ 168,210 $ 548,560 $ 808,700
========================================================================================
</TABLE>
The accompanying notes are an
integral part of these statements.
9
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------------------------
Hotchkiss &
Dreyfus Neuberger Managers Wiley Templeton
Appreciation Berman Equity Special International Developing Markets
Fund Genesis trust Fund Fund Trust
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 176,953 $ 94,791 $ 156,347 $ 29,907 $ 11,547
Employer 45,389 18,017 33,256 6,999 3,554
Rollover 32,762 6,382 7,905 590 844
----------------------------------------------------------------------------------------
Total contributions 255,104 119,190 197,508 37,496 15,945
----------------------------------------------------------------------------------------
Investment income:
Net appreciation (depreciation) in
fair value of investments 44,329 (31,764) (5,750) (10,536) (1,626)
Interest and dividends 4,900 5,176 580 2,806 321
----------------------------------------------------------------------------------------
Total investment income 49,229 (26,588) (5,170) (7,730) (1,305)
----------------------------------------------------------------------------------------
Total additions 304,333 92,602 192,338 29,766 14,640
----------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (18,924) (1,918) (10,342) (303) (150)
Administrative fees - - - - -
----------------------------------------------------------------------------------------
Total deductions (18,924) (1,918) (10,342) (303) (150)
----------------------------------------------------------------------------------------
INTERFUND TRANSFERS 429,568 259,962 151,402 84,491 13,485
----------------------------------------------------------------------------------------
NET INCREASE 714,977 350,646 333,398 113,954 27,975
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year - - - - -
----------------------------------------------------------------------------------------
End of year $ 714,977 $ 350,646 $ 333,398 $ 113,954 $ 27,975
========================================================================================
</TABLE>
The accompanying notes are an
integral part of these statements.
10
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------------------------
Nationwide Life
Cohen & Steers Insurance
Realty Shares Participant Pooled Separate
Fund Loans Accounts Other Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Participants $ 34,840 $ - $ - $ - $ 1,677,940
Employer 7,997 - - - 347,421
Rollover 1,899 - - - 250,008
Transfers from Wolfe & Associates
401(k) Plan - 57,083 1,693,183 - 1,750,266
----------------------------------------------------------------------------------------
Total contributions 44,736 57,083 1,693,183 - 4,025,635
----------------------------------------------------------------------------------------
Investment income:
Net appreciation (depreciation) in
fair value of investments (9,653) - 235,322 - 101,664
Interest and dividends 3,374 4,968 - - 162,465
----------------------------------------------------------------------------------------
Total investment income (6,279) 4,968 235,322 - 264,129
----------------------------------------------------------------------------------------
Total additions 38,457 62,051 1,928,505 - 4,289,764
----------------------------------------------------------------------------------------
DEDUCTIONS:
Benefits paid to participants (417) - (248,716) - (567,518)
Administrative fees - - - - (9,736)
----------------------------------------------------------------------------------------
Total deductions (417) - (248,716) - (577,254)
----------------------------------------------------------------------------------------
INTERFUND TRANSFERS 26,511 (12,993) (1,679,789) 18,448 -
----------------------------------------------------------------------------------------
NET INCREASE 64,551 49,058 - 18,448 3,712,510
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year - - - - 1,669,833
----------------------------------------------------------------------------------------
End of year $ 64,551 $ 49,058 $ - $ 18,448 $ 5,382,343
========================================================================================
</TABLE>
11
<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. The Plan was established to provide employees with an opportunity
to accumulate funds for retirement or disability and to provide death benefits
for employees' dependents and beneficiaries. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
Through December 31, 1997, the Plan's trustee was First Security Bank of Utah,
N.A. Effective January 1, 1998, the Company appointed Reliance Trust Company as
Plan trustee. Additionally, effective January 1, 1998, Inteliant Corporation,
formerly Wolfe & Associates, Inc. ("Inteliant"), a wholly-owned subsidiary of
the Company, adopted the Plan, with certain modifications, as a replacement of
the Wolfe & Associates, Inc. 401(k) Profit Sharing Plan and Trust (the "Wolfe
Plan").
Employees of SOS Staffing Services, Inc. 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. Inteliant employees who have reached the age of 21 are
eligible to participate in the Plan as of the ninety-first day following the day
on which the employee first performs an hour of service for Inteliant.
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, 1998, 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 $2,000 per
each such participant.
12
<PAGE>
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, 1998, forfeited nonvested accounts totalled approximately
$19,447. These amounts will be used to reduce future employer contributions.
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, 1998, participants may direct their contributions, the
employer matching contributions and any related earnings into several investment
options. Participants may change their investment elections on a daily basis. A
brief description of each investment option is provided below:
Spartan U.S. Treasury Money Market Fund
---------------------------------------
This fund's objective is to seek high current income while maintaining
a stable share price by investing in high quality, short-term money
market securities, such as US Treasury securities.
13
<PAGE>
Fidelity U.S. Bond Index Fund
-----------------------------
This fund's objective is to track, rather than beat, the performance of
the Lehman Brothers Aggregate Bond Index by investing in various types
of medium to high-quality debt obligations.
SteinRoe Intermediate Bond Fund
-------------------------------
This fund's objective is to seek to provide a high level of current
income consistent with the preservation of capital, through an
investment portfolio with a primary emphasis on marketable debt
securities.
Loomis Sayles Bond Fund
-----------------------
This fund's objective is to obtain high total investment return through
a combination of current income and capital appreciation. The fund
normally invests all of its assets in fixed income securities, although
up to 20 percent of its total assets may be invested in preferred
stocks.
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 I Fund
-----------------------------
This fund's objective is to seek reasonable income by investing mainly
in income-producing equity securities and those that offer potential
for capital appreciation.
Dreyfus S&P 500 Index Fund
--------------------------
This fund's objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks in
the aggregate as represented by the Standard & Poor's 500 Composite
Stock Price Index.
Dreyfus Appreciation Fund
-------------------------
This fund's primary objective is to seek long-term capital growth
consistent with the preservation of capital with a secondary goal of
current income. The fund generally invests at 80 percent of net assets
in the common stock of U.S. and foreign companies.
Neuberger Berman Genesis Trust
------------------------------
This fund's investment objective is capital appreciation. The fund
invests primarily in common stocks and securities convertible into or
exchangeable for common stocks of companies with small-to-medium market
capitalization.
14
<PAGE>
Manager's Special Equity Fund
-----------------------------
This fund's objective is to seek long-term capital appreciation from
investments in companies with the potential for long-term growth as
well as undervalued investments. The fund invests principally in equity
securities of small- to medium-sized U.S. companies.
Hotchkiss & Wiley International Fund
------------------------------------
This fund's objective is to seek to provide current income and
long-term growth of income, accompanied by growth of capital. The fund
invests primarily in international equity securities.
Templeton Developing Markets Trust
----------------------------------
This fund's objective is to seek long-term capital growth by investing
primarily in equity securities of companies in countries that have
developing markets. The fund invests at least 65 percent of its total
assets in equity securities of developing market issuers in at least
three different developing markets.
Cohen & Steers Realty Shares Fund
---------------------------------
This fund's objective is to seek maximum total return through both
current income and capital appreciation. This fund invests primarily in
real estate investment trusts.
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. This fund was an investment option offered by
the former trustee. When the funds were transferred from the former
trustee to the current trustee, participants were no longer allowed to
contribute to this investment. However, funds that were invested in
this option were allowed to remain in this investment and earn money
until the participant elects to have the funds withdrawn or transferred
to another investment option.
Participant Loans
------------------
The Participant Loan Fund is invested solely in promissory notes
executed by participants. The Plan document does not allow for
participant loans. However, the Wolfe Plan allowed for participant
loans prior to the merger with the Plan. All loans outstanding from the
Wolfe Plan at the time of the merger remained outstanding subsequent to
the merger. As of December 31, 1998, the loans bear interest at rates
ranging from 8.75 to 9.5 percent. These loans will be repaid within the
next twelve years. All loans, regardless of term, become due and
payable when the participant's employment terminates.
15
<PAGE>
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
III investment option is reported at contract value which approximates fair
value. Participant loans are reported at book 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.
3. WOLFE PLAN MERGER
Although the merger with the Wolfe Plan was effective January 1, 1998, the funds
were transferred to the Plan's investment options on July 2, 1998. The funds
(except for the participant loan fund) of the Wolfe Plan were invested in pooled
16
<PAGE>
separate accounts with Nationwide Life Insurance. The changes in the investments
of the pooled separate accounts from January 1, 1998 to July 2, 1998 are as
follows:
<TABLE>
<CAPTION>
Balance, Investment Balance,
Investment January 1, 1998 Income Distributions Transfers July 2, 1998
- ------------------------------- -------------------- ----------------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Dreyfus S&P 500 Fund $ 206,051 $ 36,653 $ (52,200) $ 43,637 $ 234,141
Fidelity Growth Opportunity 225,021 28,514 (27,845) 397 226,087
Fidelity VIP Growth Fund 115,844 21,821 (21,986) 338 116,017
Janus Fund 304,337 64,585 (52,874) 657 316,705
Nationwide Bond Fund 30,914 1,166 (923) - 31,157
Nationwide Money Market Fund 207,985 3,360 (3,550) (45,737) 162,058
Neuberger Berman Guardian 38,902 5,354 (627) - 43,629
Oppenheimer Global Fund A 101,070 17,479 (29,730) 46,665 135,484
20th Century Ultra Fund 147,651 43,401 (27,188) 43,051 206,915
20th Century U.S. Government
Short-term Fund 121,814 847 (2,050) (120,520) 91
Van Eck Gold Natural
Resources Fund 47,904 (5,730) (12,380) 82 29,876
Warburg Pincus Emerging
Growth Fund 145,690 17,872 (17,363) 36,929 183,128
-------------------- ----------------- ------------------ --------------- ---------------
Total $ 1,693,183 $ 235,322 $ (248,716) $ 5,499 $ 1,685,288
==================== ================= ================== =============== ===============
</TABLE>
4. 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, as amended, is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
5. 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.
17
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
<CAPTION>
(b) Identity of Issuer,
Borrower, Lessor (c) Description (e)Current Value
(a) or Similar Party of Investment (d) Cost
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Spartan U.S. Treasury Market Fund 968,776 shares of $ 968,776 $ 968,776
money market fund
Fidelity U.S. Bond Index Fund 32,847 shares of 358,172 361,965
mutual fund
SteinRoe Intermediate Bond Fund 8,893 shares of 79,732 79,060
mutual fund
Loomis Sayles Bond Fund 11,978 shares of 153,349 143,136
mutual fund
Fidelity Puritan Fund 19,620 shares of 401,462 393,759
mutual fund
Fidelity Equity Income I Fund 8,794 shares of 496,208 488,514
mutual fund
Dreyfus S&P 500 Index Fund 20,328 shares of 682,726 739,737
mutual fund
Dreyfus Appreciation Fund 15,578 shares of 611,650 655,376
mutual fund
Neuberger & Berman Genesis Trust 16,055 shares of 349,746 326,565
mutual fund
Managers Special Equity Fund 4,771 shares of 294,481 292,061
mutual fund
Hotchkiss & Wiley International Fund 4,431 shares of 113,349 103,157
mutual fund
</TABLE>
18
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (continued)
AS OF DECEMBER 31, 1998
<CAPTION>
(b) Identity of Issuer,
Borrower, Lessor (c) Description (e)Current Value
(a) or Similar Party of Investment (d) Cost
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Templeton Developing Markets Trust 2,341 shares of $ 25,558 $ 24,118
mutual fund
Cohen & Steers Realty Shares Fund 1,445 shares of 64,471 54,874
mutual fund
* SOS Staffing Services, Inc. 20,447 shares of 414,132 148,241
common stock
Kemper Investors Life Advantage III 83,972 83,972
Insurance Company Investment option
Participant loans Interest rates ranging from - 49,058
8.75% to 9.5%
* Denotes party-in-interest
</TABLE>
19
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(h) Current
Value of
(c) (d) (g) Asset on (i) Net
(a) Identity of (b) Description Purchase Selling Cost of Transaction Gain
Party Involved of Asset Price Price Asset Date (Loss)
- ----------------------------- ---------------------- ---------------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dreyfus Appreciation Fund Mutual Fund $ 637,968 $ N/A $ 637,968 $ 637,968 $ -
Dreyfus Appreciation Fund Mutual Fund N/A 26,284 26,921 26,284 (637)
Fidelity Blue Chip Fund Mutual Fund 12,000 N/A 12,000 12,000 -
Fidelity Blue Chip Fund Mutual Fund N/A 339,996 254,489 339,996 85,507
Fidelity Emerging Growth Mutual Fund 8,195 N/A 8,195 8,195 -
Fund
Fidelity Emerging Growth Mutual Fund N/A 305,865 283,106 305,865 22,759
Fund
Fidelity Equity Income I Mutual Fund 604,295 N/A 604,295 604,295 -
Fund
Fidelity Equity Income I Mutual Fund N/A 96,492 109,088 96,492 (12,596)
Fund
Fidelity Equity Income II Mutual Fund 14,863 N/A 14,863 14,863 -
Fund
Fidelity Equity Income II Mutual Fund N/A 189,721 157,476 189,721 32,245
Fund
</TABLE>
20
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(h)Current
Value of
(c) (d) (g) Asset on (i) Net
(a) Identity of (b) Description Purchase Selling Cost of Transaction Gain
Party Involved of Asset Price Price Asset Date (Loss)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity Institutional Mutual Fund $ 92,934 $ N/A $ 92,934 $ 92,934 $ -
Money Market Fund
Fidelity Institutional Mutual Fund N/A 362,835 362,835 362,835 -
Money Market Fund
Fidelity Puritan Fund Mutual Fund 465,898 N/A 465,898 465,898 -
Fidelity Puritan Fund Mutual Fund N/A 329,661 291,224 329,661 38,437
Fidelity Spartan U.S. Mutual Fund 2,507,805 N/A 2,507,805 2,507,805 -
Treasury Money Market
Fund
Fidelity Spartan U.S. Mutual Fund N/A 1,539,029 1,539,029 1,539,029 -
Treasury Money Market
Fund
Dreyfus S&P 500 Index Fund Mutual Fund 809,323 N/A 809,323 809,323 -
Dreyfus S&P 500 Index Fund Mutual Fund N/A 361,072 329,135 361,072 31,937
Fidelity Worldwide Fund Mutual Fund 17,677 N/A 17,677 17,677 -
Fidelity Worldwide Fund Mutual Fund N/A 137,144 114,721 137,144 22,423
</TABLE>
21
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(h) Current
Value of
(c) (d) (g) Asset on (i) Net
(a) Identity of (b) Description Purchase Selling Cost of Transaction Gain
Party Involved of Asset Price Price Asset Date (Loss)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hotchkiss & Wiley Mutual Fund $ 119,267 $ N/A $ 119,267 $ 119,267 $ -
International Fund
Hotchkiss & Wiley Mutual Fund N/A 5,574 6,424 5,574 (850)
International Fund
Loomis Sayles Bond Fund Mutual Fund 205,251 N/A 205,251 205,251 -
Loomis Sayles Bond Fund Mutual Fund N/A 47,479 52,468 47,479 (4,989)
Managers Special Equity Fund Mutual Fund 329,332 N/A 329,332 329,332 -
Managers Special Equity Fund Mutual Fund N/A 31,521 37,589 31,521 (6,068)
Neuberger & Berman Genesis Mutual Fund 403,281 N/A 403,281 403,281 -
Trust
Neuberger & Berman Genesis Mutual Fund N/A 44,953 56,769 44,953 (11,816)
Trust
SOS Staffing Services, Inc. Common Stock 520,825 N/A 520,825 520,825 -
SOS Staffing Services, Inc. Common Stock N/A 61,779 129,539 61,779 (67,760)
</TABLE>
22
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(h) Current
Value of
(c) (d) (g) Asset on (i) Net
(a) Identity of (b) Description Purchase Selling Cost of Transaction Gain
Party Involved of Asset Price Price Asset Date (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spartan Intermediate Bond Mutual Fund $ 365,250 $ N/A $ 365,250 $ 365,250 $ -
Fund
Spartan Intermediate Bond Mutual Fund N/A 7,135 6,983 7,135 152
Fund
SteinRoe Intermediate Bond Mutual Fund 83,630 N/A 83,630 83,630 -
Fund
SteinRoe Intermediate Bond Mutual Fund N/A 3,852 3,909 3,852 (57)
Fund
Fidelity Growth Opportunity Mutual Fund 1,728 N/A 1,728 1,728 -
Fund
Fidelity Growth Opportunity Mutual Fund N/A 253,933 225,418 253,933 28,515
Fund
Fidelity VIP Growth Fund Mutual Fund 1,667 N/A 1,667 1,667 -
Fidelity VIP Growth Fund Mutual Fund N/A 138,002 116,182 138,002 21,820
Janus Fund Mutual Fund 1,712 N/A 1,712 1,712 -
Janus Fund Mutual Fund N/A 369,579 304,994 369,579 64,585
Nationwide Money Market Fund Mutual Fund 558 N/A 558 558 -
Nationwide Money Market Fund Mutual Fund N/A 211,346 207,985 211,346 3,361
</TABLE>
23
<PAGE>
<TABLE>
SOS STAFFING SERVICES, INC. 401(k) PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(h) Current
Value of
(c) (d) (g) Asset on (i) Net
(a) Identity of (b) Description Purchase Selling Cost of Transaction Gain
Party Involved of Asset Price Price Asset Date (Loss)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer Global Fund A Mutual Fund $ 47,958 $ N/A $ 47,958 $ 47,958 $ -
Oppenheimer Global Fund A Mutual Fund N/A 165,215 147,735 165,215 17,480
20th Century Ultra Fund Mutual Fund 44,799 N/A 44,799 44,799 -
20th Century Ultra Fund Mutual Fund N/A 234,103 190,703 234,103 43,400
20th Century U.S. Mutual Fund 53 N/A 53 53 -
Government Short-term
Fund
20th Century U.S. Mutual Fund N/A 122,661 121,814 122,661 847
Government Short-term
Fund
Warburg Pincus Emerging Mutual Fund 37,809 N/A 37,809 37,809 -
Growth Fund
Warburg Pincus Emerging Mutual Fund N/A 200,491 182,619 200,491 17,872
Growth Fund
</TABLE>
24
<PAGE>
SIGNATURES
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.
SOS STAFFING SERVICES, INC. 401(k) PLAN
Date: June 28, 1999 By: /s/ John K. Morrison
------------------- ---------------------
John K. Morrison
General Counsel & Secretary
SOS Staffing Services, Inc.
25
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
26
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in the Form 11-K into the Company's previously filed
Registration Statement on Form S-8, File Nos. 33-96362 and 333-1422.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
June 28, 1999
27
