1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
----- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
| X | EXCHANGE ACT OF 1934 [FEE REQUIRED]
-----
For the fiscal year ended January 1, 1995
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Commission File No. 0-3532
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THE OLSTEN CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 13-2610512
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Broad Hollow Road, Melville, New York 11747-8905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 844-7800
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $.10 par value New York Stock Exchange
Class B Common Stock Purchase Warrants New York Stock Exchange
4-7/8% Convertible Subordinated Debentures New York Stock Exchange
due 2003
Securities registered pursuant to Section 12(g) of the act:
Class B Common Stock, $.10 par value
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(Title of class)
[Cover page 1 of 2 pages]
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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 reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
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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 Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Registrant's voting stock (Common Stock and
Class B Common Stock, assuming conversion of Class B Common Stock into Common
Stock on a share for share basis) held by nonaffiliates of Registrant, as of
March 10, 1995, was $1,031,623,788 based on the closing price of the Common
Stock on the New York Stock Exchange on such date.
The number of shares outstanding of Registrant's Common Stock and Class B
Common Stock, as of March 10, 1995, were 32,436,556 shares and 9,254,716
shares, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Proxy Statement for 1995 Annual Meeting of Shareholders of
Registrant. Certain information to be included therein is
incorporated by reference into PART III hereof.
[Cover page 2 of 2 pages]
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PART I
Item 1. Business.
General
Olsten Corporation (herein, together with its subsidiaries unless the
context otherwise requires, generally referred to as "Registrant") was
incorporated in Delaware in 1967 as the successor to a business founded in 1950.
On July 30, 1993, Lifetime Corporation merged into Registrant. The merger was
accounted for as a pooling of interests and materially increased Registrant's
health care business.
Registrant operates through subsidiaries principally under the trade
names "Olsten Kimberly QualityCare" and "Olsten Staffing Services" and engages
in and derives substantially all of its revenues from two industry segments,
HealthCare Services and Staffing Services. Registrant furnishes, through offices
operated or licensed by it and its subsidiaries or pursuant to franchises
granted by Registrant, health care personnel ("caregivers") in home, health care
facility and business settings and temporary personnel ("assignment employees")
to business, industry and government. Registrant also provides management
services for hospital-based home health agencies and, through its ASB Meditest
subsidiary, provides on-site diagnostic and paramedical examination services for
insurance, corporate and government clients. A full range of permanent and
temporary placement services are also offered in Great Britain through
Registrant's Office Angels subsidiary. Registrant's owned, licensed and
franchised operations conduct business through approximately 1,200 offices in
50 states, the District of Columbia, Puerto Rico, the Canadian provinces of
Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia,
Ontario and Quebec, Great Britain and Mexico.
Selected financial information relating to Registrant's industry
segments is contained herein in Note 9 of Notes to Consolidated Financial
Statements.
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Systemwide HealthCare and Staffing sales accounted for approximately
47% and 53%, respectively, of Registrant's 1994 systemwide sales, approximately
54% and 46%, respectively, of Registrant's 1993 systemwide sales and
approximately 58% and 42%, respectively, of Registrant's 1992 systemwide sales.
Systemwide sales represent all services and home care visits provided by or
through Registrant's entire network, including Registrant, licensed and
franchised offices and hospital-based home health agencies under management.
In HealthCare Services, Registrant provides home health care through
Registrant's licensed health care personnel, such as registered nurses, offering
a broad range of services, including physician-prescribed skilled nursing
treatments, patient and family education, case management, pediatric and
perinatal care, physical, occupational, neurological and speech therapies,
intravenous administration of drugs, nutrients and other solutions, and
rehabilitation. Through its clinical pharmacy network, Registrant has the
ability to deliver nutrients and medications utilized in certain of its home
health care services. Home health care provided by Registrant's unlicensed
personnel, such as home health aides and homemakers, may involve assistance with
personal hygiene, feeding, dressing, preparation of meals and light
housekeeping. In carrying out supplemental institutional staffing, Registrant's
health care professionals perform services for hospitals, nursing homes, clinics
and other health care facilities and furnish business and industry with
specialized staffing. Health care institutions use supplemental staffing for
peak periods, illnesses and vacations, helping these facilities control employee
costs.
Factors that Registrant believes have contributed to the development
of home health care in particular include institutional, governmental and third-
party payor recognition that home health care is a cost-effective alternative
to lengthy, more expensive institutional care; an aging population;
creasing consumer awareness and interest in home health care; the psychological
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benefits of recuperating from an illness or accident in one's own home; and
advanced technology that allows more health care procedures to be provided at
home instead of only in hospital settings. Of Registrant's systemwide
HealthCare sales, approximately 38% is attributable to Medicare cost
reimbursement. The federal government, in terms of its Medicare program, and
various states where Registrant operates have enacted laws and regulations that
affect the provision of home health care services by Registrant, including
reimbursement for such services.
Registrant is expanding its health care service delivery capabilities
through hospital management contracts to manage hospital home health operations
in exchange for management fees. In 1994, Registrant entered into hospital
management contracts with, among others, Columbia/HCA Healthcare Corporation
whereby Registrant manages certain of that Corporation's hospital-based home
health agencies in Florida and provides patients with a comprehensive range of
home health care services.
Registrant is also actively pursuing relationships with managed care
organizations as a provider and is expanding its capabilities as a home health
managed care delivery network. In this role, Registrant manages and contracts
for all home health care services. Registrant's nationwide office network and
the quality, range and cost-effectiveness of its services are important factors
as it seeks opportunities in the managed care delivery network. In its managed
care relationships, Registrant offers the direct and managed provision of care
as a single gatekeeper, thereby optimizing utilization.
In Staffing Services, Registrant provides assignment employees in more
then 300 skill categories in the following broad service areas: general office
and administrative services, office automation, accounting,
production/assembly/distribution, technical, legal support, records management,
marketing support and telemarketing. Registrant furnishes assignment employees
who provide accounting services to business and industry under the trade name
"Olsten Professional Accounting Services."
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In general, Registrant obtains clients through personal sales
presentations, telephone marketing calls, direct mail solicitation, referrals
from other clients and advertising in a variety of local and national media,
including the Yellow Pages, newspapers, magazines and trade publications.
Registrant's marketing efforts for HealthCare Services also involve personal
contact with case managers for managed health care programs, such as those
involving Health Maintenance Organizations (HMOs) and Preferred Provider
Organizations (PPOs), physicians and their staffs, hospital discharge planners,
nursing home supervisors, insurance company representatives and employers with
self-funded employee health benefit programs.
By supplying an auxiliary work force to its Staffing Services clients,
Registrant believes it affords them economies and flexibility in meeting their
requirements for peak periods caused by such recurring factors as seasonal
demands, inventories, month-end requirements and vacations and such
unpredictable factors as special projects, marketing promotions, illnesses and
emergencies. Assignments of personnel may be for hours, days, weeks, months or
longer periods.
Utilization of assignment employees has become a valuable and
recognized management tool for many companies to convert fixed costs to variable
costs, especially in view of corporate reengineering and restructuring in a more
competitive global environment. With the availability of such services, a
client can maintain on a cost-effective basis a core level of permanent
personnel required by normal business activities which may not expand much even
as business conditions improve. The expense and inconvenience to a client of
hiring additional permanent employees for assignments of a limited duration,
including advertising, interviewing and testing, are eliminated. The use of
Registrant's services also enables clients to eliminate the record
keeping, payroll taxes, insurance and administrative costs usually associated
with permanent personnel. A client pays only for actual hours worked by
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Registrant's assignment employees and may terminate their services immediately
upon completion of the job assignment without the adverse effects of lay-offs.
In Staffing Services, Registrant is pursuing outsourcing service
relationships with client companies. Outsourcing, which is becoming
increasingly important to Registrant, typically involves an arrangement between
a personnel staffing company and the client, with the staffing company moving
management personnel on site at the client to coordinate temporary staffing from
within or with the staffing company taking some or all of the responsibility for
the supply, supervision and operation of personnel for whole departments within
a client. Registrant's services may also include customized training, billing
and electronic information exchange programs for its clients. Outsourcing can
enable a client to better manage personnel expenses and can save a client time
and money by reducing its employee recruitment and training efforts,
particularly if the client is experiencing a high employee turnover rate.
Registrant, through its Partnership Program SM services with major corporate
clients, recruits, trains and manages large groups of employees, allowing its
clients to better focus on their core businesses.
Registrant believes that its success in furnishing caregivers and
assignment employees is based, among other factors, on its reputation for
quality and its extensive office network. Registrant utilizes an established
system of procedures aimed at custom matching its assignment employees to the
specific requirements of its clients. Registrant has implemented an
interviewing and evaluation process that determines the level of skills of its
caregivers and assignment employees and aids in their proper selection and
placement. Thereafter, the employees' performance is reviewed with the client
to provide quality control. Registrant empowers its branch managers and branch
directors with a high level of responsibility, providing strong incentives to
manage the business effectively at the local level--one of the central
ingredients in a business where relationships are vital for success.
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There is no one client that accounts for as much as 10% of Registrant's
revenues. In the opinion of Registrant, its business is not seasonal to any
material degree. Except for the expansion of management services for hospital-
based home health agencies and services as a home health care delivery network
manager, there have not been any significant changes in the kinds of services
rendered or methods of distribution of Registrant since the end of the last
fiscal year.
Registrant's caregivers and assignment employees, as well as the
employees of other firms providing similar services, are paid weekly for their
services while payments are generally received from customers within five to ten
weeks on average of the related billings for such services. Consequently, as
new offices are established or acquired, or as existing offices expand, there
is an ongoing requirement for cash resources to fund current operations as well
as to provide for the expansion of the business.
Registrant has grown and is pursuing expansion opportunities through
the acquisition of companies, the opening of additional Registrant-owned and
licensed area representative offices and through the development and extension
of specialized services, particularly health care, office automation, accounting
and technical services.
Franchise Operations
Approximately 105 offices were operated by nine franchisees under
franchises granted by Registrant. Franchisees, most of whom provide only
Staffing Services, have the exclusive right to market and furnish assignment
employees within a designated geographic area using Registrant's trade names,
service marks, advertising materials, sales programs, manuals and forms.
Franchisees receive training from Registrant, attend seminars, participate in
marketing programs and utilize Registrant's sales literature. Registrant has
established operating procedures and standards to be followed by its
franchisees. Registrant provides franchisees with billing, payroll and other
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data processing systems and services and offers them accounts receivable
financing. Registrant also assists its franchisees in obtaining business from
its national accounts and through its national and cooperative local
advertising.
Franchisees operate their businesses autonomously within the framework
of Registrant's policies and standards, and recruit, employ and pay their own
permanent and assignment employees. Registrant receives royalty fees from each
franchise based upon its gross franchise sales. Royalty fees generally start
at 5% of gross franchise sales and decrease based upon volume. Sales by
franchisees to their clients are not included in Registrant's service sales.
Franchise agreements are generally for a term of ten years and typically are
renewable at the option of the franchisee for five additional five-year terms.
Registrant may terminate a franchise if the franchisee fails to meet
Registrant's standards or otherwise breaches the franchise agreement.
Registrant is not granting new franchises and has not granted any since 1980.
Licensed Area Representative Operations
Approximately 90 offices were operated by 60 licensed area
representatives. Substantially all of these offices provided only Staffing
Services. A licensed area representative is a person authorized by Registrant
to operate Registrant's Staffing Services business within an exclusive marketing
area. The agreements governing licensed area representative operations do not
have a stated term. The licensed area representative does not have an ownership
interest in the business but receives approximately 50% of the office's gross
profit margin in the form of commissions, which are reflected in Registrant's
selling, general and administrative expenses. The licensed area representative
is responsible for the office's operating expenses, such as rent, utilities and
permanent staff salaries, and Registrant is responsible for the assignment
employee wages and related payroll taxes and insurances. Registrant also
provides national advertising, shares in the costs of certain local advertising,
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conducts training seminars and furnishes operating manuals, automated payroll
systems, forms, sales materials and basic supplies to the licensed area
representatives.
Licensed area representatives are required to observe Registrant's
operating procedures and standards and act for Registrant in recruiting,
screening, classifying and employing assignment employees. The licensed area
representatives solicit orders for assignment employees from clients and assign
Registrant's assignment employees to clients in response to such orders.
Registrant's experience has shown that licensing is a more profitable method of
operation than franchising.
Source and Availability of Personnel
Caregivers and assignment employees are recruited through advertising
in local and, to a lesser extent, national media. In addition, a substantial
portion of new employees is obtained through referrals by other employees of
Registrant. Registrant interviews, screens, checks references and evaluates the
skills of applicants for employment, utilizing systems and procedures that it
has developed and enhanced over the years. Caregivers and assignment employees
are generally employed by Registrant on an as-needed basis dependent upon client
demand. Registrant's employees are paid by Registrant only for time they
actually work, subject to a four-hour daily minimum on the days they work.
Although conditions may vary in different areas of the country and with respect
to different skill categories, caregivers and assignment employees were
generally less available during 1994 than they were in the preceding year.
Importance and Effect of Trademarks Held
Various trademarks are registered with the United States Patent and
Trademark Office protecting the name OLSTEN (R). Other marks that are
registered and utilized in Registrant's business include MATURE ADVANTAGE (R),
PRECISE (R), PROFILER (R) and THE WORKING SOLUTION (R). Under current law,
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these federal trademark registrations can be renewed indefinitely. National
advertising and usage have, in the belief of Registrant, given significance to
these marks in the United States and Canada.
Competitive Position
The HealthCare Services and Staffing Services provided by Registrant
also are provided by several companies which operate, as Registrant does,
nationally throughout the United States and by numerous regional and local firms
and are highly competitive. Unlike Registrant, such companies and firms usually
provide either HealthCare Services or Staffing Services, but not both.
Registrant believes that it is North America's largest provider of home health
care services and third largest provider of staffing services.
The principal methods of competing are availability of personnel,
quality of services and the price of such services. Registrant believes that
its favorable competitive position is attributable to its early industry entry,
to its widespread office network and to the consistently high quality and
targeted services it has provided over the years to its clients, as well as to
its screening and evaluation procedures, its training programs and its employee
retention techniques.
Number of Persons Employed
At January 1, 1995, Registrant employed approximately 7,900 permanent
employees and during 1994 employed approximately 550,000 caregivers and
assignment employees. In addition, Registrant's franchisees employed
approximately 600 permanent employees as well as approximately 90,000 assignment
employees during 1994. Employees of franchisees are not Registrant's employees.
As the employer of its caregivers and assignment employees, Registrant
is responsible for and pays the employer's share of Social Security taxes,
federal and state unemployment taxes, workers' compensation insurance and other
similar costs. Wages are paid to caregivers and assignment employees by
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Registrant on an hourly basis and may vary in different geographic areas to give
effect to prevailing wages paid for particular skills in the community where the
services are performed. Registrant believes that its relationships with its
employees are generally good.
All caregivers and assignment employees of Registrant are covered by
general liability insurance and by a fidelity bond maintained by Registrant.
In addition, caregivers are covered by professional medical liability insurance.
Registrant believes that its insurance coverages are adequate for the purposes
of its business.
Operations in Great Britain, Canada and Mexico
Registrant, through its Office Angels subsidiary, operated
approximately 45 offices in Great Britain to provide temporary and permanent
placement services. Registrant, through subsidiaries, operated approximately
20 offices to provide assignment employees and 15 offices to provide caregivers
in Canada. In addition, five Canadian offices were operated by licensed area
representatives to provide caregivers. In 1994 Registrant acquired a majority
interest in a Mexican staffing services company, now called Olsten STAFF, which
operates three offices in Mexico. The British, Canadian and Mexican operations
do not account for a significant percentage of Registrant's assets, revenues or
net income.
Item 2. Properties.
The international corporate headquarters of Registrant are located at
175 Broad Hollow Road, Melville, New York. The building in which the
headquarters are located is owned by Registrant through a subsidiary and
contains approximately 120,000 square feet of office space.
The leases for the operating offices utilized by Registrant's
subsidiaries expire at various dates. Registrant believes that such facilities
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are adequate for its immediate needs. Registrant does not anticipate that it
will have any problem obtaining additional space if needed in the future.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which Registrant or
any of its subsidiaries is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
fourth quarter of Registrant's 1994 fiscal year.
Item 4(a). Executive Officers of Registrant.
The following table sets forth certain information regarding each of
the executive officers of Registrant:
Executive Expiration
Officer of Term Positions and Offices
Name Since Age of Office with Registrant
---- --------- --- ---------- ---------------------
Frank N. Liguori 1976 48 April 1995 Chairman of the Board and
Chief Executive Officer
Stuart Olsten 1987 42 April 1995 President and
Vice Chairman
Robert A. Fusco 1992 44 April 1995 Executive Vice President and
President, Olsten Kimberly
QualityCare
Richard A. Piske, III 1993 46 April 1995 Executive Vice President and
President, Olsten Staffing
Services
Gerald J. Kapalko 1993 48 April 1995 Executive Vice President
William P. Costantini 1992 47 April 1995 Senior Vice President and
General Counsel
Anthony J. Puglisi 1993 45 April 1995 Senior Vice President-
Finance and Treasurer
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Frank N. Liguori has been Chairman of the Board of Registrant since
February 1992 and its Chief Executive Officer since April 1990. He was Vice
Chairman of Registrant from April 1990 to February 1992, President
of Registrant from January 1986 to April 1990 and its Chief Operating Officer
from April 1983 to April 1990.
Stuart Olsten has been Vice Chairman of Registrant since August 1994
and President of Registrant since April 1990. He was Chief Operating Officer
of Registrant from April 1990 through July 1993 and was Executive Vice President
of Registrant from November 1987 to April 1990.
Robert A. Fusco has been Executive Vice President of Registrant since
January 1992 and President, Olsten Kimberly QualityCare, since July 1993. He
was General Manager, Olsten HealthCare, from January 1992 to July 1993. From
November 1990 to December 1991, Mr. Fusco was Senior Vice President of Olsten
HealthCare. From September 1989 to November 1990, he was President of
Protocare, Inc., a provider of home infusion therapy services.
Richard A. Piske, III has been Executive Vice President of Registrant
and President, Olsten Staffing Services, since September 1993. From March 1990
to September 1993, he was Senior Vice President - Southeast Division of
Registrant and was Vice President - Southeast Division from October 1989 to
March 1990.
Gerald J. Kapalko has been Executive Vice President of Registrant since
July 1993. From August 1987 to July 1993, he was Senior Vice President -
Corporate Development of Registrant.
William P. Costantini has been Senior Vice President and General
Counsel of Registrant since June 1992. For more than five years prior thereto,
he was Vice President, General Counsel and Secretary of GEO International
Corporation, which had holdings in oil field services, quality assurance and
graphic arts.
Anthony J. Puglisi has been Senior Vice President-Finance and Treasurer
of Registrant since April 1993. From December 1988 to April 1993, he was Chief
Financial Officer of NMB (USA) Inc., a high technology manufacturer, and was
President of IMC Magnetics Corp. from July 1988 to April 1993.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
Market Information
Registrant has outstanding two classes of common equity securities:
Common Stock and Class B Common Stock. Registrant's Common Stock (symbol OLS)
has been listed on the New York Stock Exchange since December 15, 1994. Prior
thereto it was listed on the American Stock Exchange. The following table sets
forth the high and low prices of the Common Stock for each quarter during fiscal
1994 and 1993, as reported by the applicable Exchange:
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1994 1993
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High Low High Low
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1st Quarter $34-7/8 $28-1/8 $32 $24-7/8
2nd Quarter 34-3/8 29 30 22-1/8
3rd Quarter 37-3/4 31 31-1/4 25
4th Quarter 38-7/8 28-7/8 30 25-1/8
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There is no established public trading market for Registrant's Class
B Common Stock, which is subject to significant restrictions on sale.
Registrant's Class B Common Stock, which has ten votes per share, is convertible
at any time on a share for share basis into Registrant's Common Stock, which has
one vote per share.
Holders
On March 17, 1995 there were approximately 1,290 holders of record of
Registrant's Common Stock (including brokerage firms holding Registrant's Common
Stock in "street name" and other nominees) and 570 holders of record of
Registrant's Class B Common Stock.
Dividends Fiscal Year
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1994 1993
--------------------------------
Per share data
Cash dividends*
Common Stock $.24 $.24
Class B Common Stock .24 .24
*Registrant paid quarterly dividends in its two most recent fiscal years.
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Item 6. Selected Financial Data.
OLSTEN CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
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(In thousands, except share amounts)
1994 1993 1992 1991 1990
$ $ $ $ $
Service sales, franchise fees,
management fees and other
income 2,260,331 2,157,535 1,956,094 1,696,703 1,331,485
Income before merger and
integration costs,
restructuring charges
and impairment charge,
net of tax 70,121 46,712 33,888 32,462 31,693
Income (loss)
before extraordinary charge 70,121 (11,939) 26,763 (10,392) 29,480
Net income (loss) 70,121 (26,607) 26,763 (10,392) 30,104
Total assets 725,958 690,094 661,991 631,946 623,551
Working capital 274,470 241,031 230,884 215,456 149,692
Long-term debt 125,000 176,057 150,419 211,471 170,217
Shareholders' equity 386,003 304,320 318,722 237,936 242,348
SHARE INFORMATION:
Primary earnings (loss) per share:
Income before merger and
integration costs,
restructuring charges
and impairment charge,
net of tax 1.67 1.16 .93 .90 .92
Income (loss)
before extraordinary
charge 1.67 (.30) .73 (.29) .85
Net income (loss) 1.67 (.67) .73 (.29) .87
Fully diluted earnings (loss)
per share:
Income before merger and
integration costs,
restructuring charges
and impairment charge,
net of tax 1.61 1.16 .93 .90 .92
Income (loss)
before extraordinary
charge 1.61 (.30) .73 (.29) .85
Net income (loss) 1.61 (.67) .73 (.29) .87
Cash dividends .24 .24 .19 .16 .16
Book value 9.30 7.52 8.26 6.80 7.04
SYSTEMWIDE SALES:
HealthCare Services 1,214,543 1,288,870 1,238,221 1,115,377 768,755
Staffing Services 1,344,006 1,086,751 903,275 738,242 736,314
--------- --------- --------- --------- ---------
Total 2,558,549 2,375,621 2,141,496 1,853,619 1,505,069
========= ========= ========= ========= =========
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OLSTEN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
Operating results reflect the combined operations of Olsten Corporation (the
"Company") and Lifetime Corporation ("Lifetime"), pursuant to the merger
completed on July 30, 1993, which was accounted for as a pooling of interests.
Comparisons with prior years are based on restated combined results. Results
for 1993 included merger and integration costs of $80.9 million, as well as an
extraordinary charge, net of taxes, of $14.7 million relating to the prepayment
of debt assumed in the Lifetime merger. In 1992, Lifetime recorded a charge of
$11.7 million relating to the restructuring of certain operations and severance
pay provided to the former chairman.
Excluding the effects of these non-recurring charges, primary earnings per
share increased 44 percent to $1.67 in 1994 versus $1.16 in 1993. Primary
earnings per share for 1993 increased 25 percent from 93 cents in 1992.
Included in net income for 1994 was $1.9 million, or 5 cents per share, related
primarily to the recognition, net of tax, of a previously deferred gain and
related interest income on the sale of National Mentor, Inc.
Revenues increased 5 percent to $2.3 billion in 1994 compared to $2.2 billion
in 1993. Revenues in 1993 rose 10 percent from $2 billion in 1992.
HealthCare Services' revenues decreased 10 percent in 1994 and increased 4
percent in 1993, over the prior years. Adverse sales comparisons in 1994
resulted from the sale, transfer, or repositioning of certain parts of our
Olsten Kimberly QualityCare business for future growth in a changing health
care marketplace. We entered into contracts with a number of major managed
care providers that give us access to millions of covered lives. In October
1994, we became the largest provider of management services to hospital-based
home health agencies when we announced an agreement with Columbia/HCA
Healthcare Corporation, the nation's largest hospital system, to manage home
health agencies in 22 of its hospitals. The modest growth in 1993 was
attributable to the management and operational focus on the immediate
integration of the combined Olsten and Lifetime health care organizations.
Staffing Services' revenues increased 24 percent and 21 percent in 1994 and
1993, respectively, as the Company took advantage of an improving economy and
a surging demand for assignment employees. We continued to provide Partnership
Program SM services to major corporations in North America and Great Britain,
bringing to them a broad array of staffing solutions as they restructured and
reengineered their operations in a competitive global environment.
Cost of services sold increased 6 percent, to $1.6 billion in 1994; 11 percent,
to $1.5 billion in 1993; and 17 percent, to $1.3 billion in 1992. As a
percentage of revenues, such expenses were 70.3 percent, 69.3 percent and 68.7
percent in 1994, 1993 and 1992, respectively. Gross margins as a percentage of
revenues decreased to 29.7 percent in 1994 from 30.7 percent in 1993, and 31.3
percent in 1992 as a result of the faster growth of the Staffing Services
business, which operates at lower average gross margins than HealthCare
Services.
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Selling, general and administrative expenses as a percentage of revenues were
24.2 percent, 26 percent and 27.2 percent in 1994, 1993 and 1992, respectively.
The decrease resulted from the effective management of operating costs, and
operating efficiencies achieved in the integration of Lifetime into the Company.
Net interest expense of $5.1 million, $17.9 million and $19.8 million, in 1994,
1993 and 1992, respectively, reflected borrowing costs on long-term debt offset
by interest income on investments. The decrease in net interest expense in 1994
resulted from the repayment of $137 million of double-digit coupon Lifetime debt
in 1993, the conversion to equity of $14 million of high coupon debt assumed in
the merger with Lifetime, and the repayment of $34 million of borrowings under
our revolving credit agreement. The decrease in 1993 resulted primarily from
the repayment of the $137 million of Lifetime debt in the latter half of 1993.
The combination of the factors previously described increased pre-tax income
from operations, excluding the merger and integration costs and the
restructuring charges, to $120.9 million in 1994, compared to $83 million in
1993 and $60.3 million in 1992.
Excluding the impact of the non-recurring charges, the 1994 effective income
tax rate was 42 percent, compared to 43.7 percent in 1993 and 43.8 percent in
1992. The Company's effective rate has exceeded the Federal statutory rate
primarily because of non-deductible goodwill amortization and state income
taxes, which vary from year to year in relation to the mix of taxable income
by state.
Systemwide Sales
Systemwide sales for our two segments increased 8 percent, to $2.6 billion in
1994; 11 percent, to $2.4 billion in 1993; and 16 percent, to $2.1 billion in
1992. Systemwide sales represent all services and home care visits provided
by or through the entire Olsten network, including Company, licensed and
franchised offices and hospital-based home health agencies under management.
The presentation of systemwide sales is provided to reflect the entire scope
of Olsten's operations. This has become a key statistic, particularly in
measuring the effect of the hospital management contracts entered into by the
Company's HealthCare Services subsidiary.
Liquidity and Capital Resources
Working capital at January 1, 1995, including $68.3 million in cash, was $274
million, an increase of 14 percent over the prior year. Cash increased $43.6
million to $68.3 million in 1994 as a result of revenue growth and cash
collection efforts which reduced receivable balances. Fixed assets, net,
increased $12.4 million primarily relating to the purchase of the Company's new
international headquarters building.
The Company has a revolving credit agreement with six banks for up to $200
million in borrowings and letters of credit. As of January 1, 1995, there were
no borrowings and $67.7 million in standby letters of credit outstanding. The
Company believes that its levels of working capital and liquidity and its
available sources of funds are sufficient to support present operations and to
continue to fund future growth and business opportunities as the Company
increases its scope of services.
The Company's annual dividend on common stock and Class B common stock was 24
cents per share.
- 18 -
19
Item 8. Financial Statements and Supplementary Data.
The following financial statements of Registrant are included in this Report:
Page(s) in this Report
----------------------
Consolidated Financial Statements:
Balance Sheets at January 1, 1995 and F-2
January 2, 1994
Statements of Income for the three years F-3
ended January 1, 1995
Statements of Changes in Shareholders' Equity F-4
for the three years ended January 1, 1995
Statements of Cash Flows for the three years F-5
ended January 1, 1995
Notes to Consolidated Financial Statements F-6 - F-15
Report of Independent Auditors F-16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There have been no such changes or disagreements.
PART III
Item 10. Directors and Executive Officers of the Registrant.
See the information under the caption "Election of Directors" in
Registrant's definitive Proxy Statement with respect to its 1995 Annual Meeting
of Shareholders to be filed with the Securities and Exchange Commission, which
information is incorporated herein by reference. See also the information with
respect to executive officers of Registrant under Item 4(a) of PART I hereof,
which information is incorporated herein by reference.
- 19 -
20
Item 11. Executive Compensation.
See the information under the captions "Election of Directors,"
"Summary Compensation Table," "Option Grants in Last Fiscal Year," "Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values,"
"Retirement Plan," "Employment Contracts, Termination of Employment and Change-
in-Control Arrangements" and "Compensation Committee Report on Executive
Compensation" in Registrant's definitive Proxy Statement with respect to its
1995 Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission, which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
See the information under the caption "Security Ownership of Certain
Beneficial Owners and Management" in Registrant's definitive Proxy Statement
with respect to its 1995 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission, which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
There have been no relationships or transactions, the disclosure of
which is called for by this Item 13.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) Financial Statements
See Index to Financial Statements attached (Page F-1).
- 20 -
21
(a)(2) Financial Statement Schedules
Schedules have been omitted since they are either not required
or are not applicable or the required information is shown in
the financial statements or related notes.
(a)(3) Exhibits:
3(a) Restated Certificate of Incorporation of
Registrant, filed as Exhibit 3(a) to Registrant's
Annual Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein by
reference.
3(b) By-Laws of Registrant, filed as Exhibit 3(b) to
Registrant's Annual Report on Form 10-K for the
year ended January 2, 1994, is incorporated herein
by reference.
4(a) Restated Certificate of Incorporation of
Registrant, filed as Exhibit 3(a).
4(b) By-Laws of Registrant, filed as Exhibit 3(b).
4(c) Amended and Restated Agreement and Plan of Merger
dated as of May 10, 1993 between Registrant and
Lifetime Corporation, filed as Exhibit 2(a) to
Registrant's Current Report on Form 8-K/A dated May
17, 1993, is incorporated herein by reference.
4(d) Indenture dated as of March 15, 1993 between
Registrant and Bankers Trust Company, as Trustee,
relating to Registrant's 4-7/8% Convertible
Subordinated Debentures due 2003, filed as Exhibit
4 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended April 4, 1993, is incorporated
herein by reference.
4(e) Warrant Agreement between Lifetime Corporation and
American Stock Transfer and Trust Company dated
November 4, 1986, as amended as of December 11,
1989 and July 23, 1993, filed as Exhibit 1 to
Registrant's Registration Statement on Form 8-A
dated July 23, 1993, is incorporated herein by
reference.
- 21 -
22
*10(a) Registrant's 1984 Incentive Stock Option Plan, as
amended, filed as Exhibit 10(a) to Registrant's
Annual Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein by
reference.
*10(b) Registrant's 1984 Non-Qualified Stock Option Plan,
as amended, filed as Exhibit 10(b) to Registrant's
Annual Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein by
reference.
*10(c) Registrant's Incentive Restricted Stock Plan, as
amended, filed as Exhibit 10(e) to Registrant's
Annual Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein by
reference.
*10(d) Form of agreement under Registrant's Incentive
Restricted Stock Plan, filed as Exhibit 10(g) to
Registrant's Annual Report on Form 10-K for the
year ended December 30, 1990, is incorporated
herein by reference.
+10(e) Amended and Restated Credit Agreement dated as of
September 9, 1994 among Registrant and certain of
its Subsidiaries signatory thereto, the Banks
signatory thereto and The Chase Manhattan Bank,
N.A., as Agent, covering $200 million credit
facility.
*10(f) Registrant's 1990 Non-Qualified Stock Option Plan
for Non-Employee Directors and Consultants, as
amended and restated, is incorporated by reference
to Exhibit C to Registrant's definitive Proxy
Statement with respect to its 1995 Annual Meeting
of Shareholders.
*10(g) Registrant's Supplemental Retirement Plan for Key
Executives filed as Exhibit 10(k) to Registrant's
Annual Report on Form 10-K for the year ended
January 3, 1993, is incorporated herein by
reference.
*Management contract or compensatory plan or arrangement.
+Filed herewith.
- 22 -
23
*10(h) Registrant's Executive Voluntary Deferred
Compensation Plan and Trust Agreement between
Registrant and Prudential Trust Company, filed as
Exhibit 10(k) to Registrant's Annual Report on Form
10-K for the year ended January 2, 1994, is
incorporated herein by reference.
*10(i) Registrant's Retirement Plan for Outside Directors
and Consultants, filed as Exhibit 10(l) to
Registrant's Annual Report on Form 10-K for the
year ended January 2, 1994, is incorporated herein
by reference.
*10(j) Registrant's Deferred Compensation Plan for Outside
Directors, filed as Exhibit 10(m) to Registrant's
Annual Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein by
reference.
*10(k) 1987 Stock Option Plan, as amended, of Lifetime
Corporation, filed as Exhibit 10(c) to Lifetime
Corporation's Annual Report on Form 10-K for the
year ended December 31, 1992, is incorporated
herein by reference.
*10(l) 1989 Non-Employee Directors Stock Option Plan, as
amended, of Lifetime Corporation, filed as Exhibit
10(d) to Lifetime Corporation's Annual Report on
Form 10-K for the year ended December 31, 1992, is
incorporated herein by reference.
*10(m) Employment Agreement dated March 28, 1994 between
Registrant and Frank N. Liguori, filed as Exhibit
10(q) to Registrant's Annual Report on Form 10-K
for the year ended January 2, 1994, is incorporated
herein by reference.
*10(n) Agreement dated November 8, 1993 between Registrant
and Frank N. Liguori covering incentive award under
Incentive Restricted Stock Plan and amendment
thereto dated March 27, 1994, filed as Exhibit
10(r) to Registrant's Annual Report on Form 10-K
for the year ended January 2, 1994, is incorporated
herein by reference.
*Management contract or compensatory plan or arrangement.
- 23 -
24
+*10(o) Form of change in control agreement between
Registrant and each of Robert A. Fusco, Richard A.
Piske, III and Gerald J. Kapalko.
10(p) Amended and Restated Agreement and Plan of Merger
dated as of May 10, 1993 between Registrant and
Lifetime Corporation, filed as Exhibit 2(a) to
Registrant's Current Report on Form 8-K/A dated May
17, 1993, is incorporated herein by reference.
*10(q) Registrant's 1994 Stock Incentive Plan, as amended
and restated, is incorporated by reference to
Exhibit B to Registrant's definitive Proxy
Statement with respect to its 1995 Annual Meeting
of Shareholders.
*10(r) Registrant's Executive Officer Bonus Plan is
incorporated by reference to Exhibit C to
Registrant's definitive Proxy Statement with
respect to its 1994 Annual Meeting of Shareholders.
+21 Subsidiaries of Registrant.
+23 Consent of Coopers & Lybrand, independent auditors,
appearing on page F-14 of this Annual Report on
Form 10-K.
+27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last
quarter of the period covered by the report.
*Management contract or compensatory plan or arrangement.
+Filed herewith.
- 24 -
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OLSTEN CORPORATION
Date: March 29, 1995 By:/s/ Frank N. Liguori
Frank N. Liguori
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 29, 1995 By:/s/ Frank N. Liguori
Frank N. Liguori
Chairman and Chief
Executive Officer and Director
(Principal Executive Officer)
Date: March 29, 1995 By:/s/ Anthony J. Puglisi
Anthony J. Puglisi
Senior Vice President-Finance and
Treasurer
(Principal Financial and Accounting
Officer)
Date: March 29, 1995 By:/s/ Allan Tod Gittleson
Allan Tod Gittleson
Director
Date: March 29, 1995 By:/s/ Andrew N. Heine
Andrew N. Heine
Director
Date: March 29, 1995 By:/s/ John M. May
John M. May
Director
Date: March 29, 1995 By:/s/ Miriam Olsten
Miriam Olsten
Director
Date: March 29, 1995 By:/s/ Stuart Olsten
Stuart Olsten
Director
Date: March 29, 1995 By:/s/ Richard J. Sharoff
Richard J. Sharoff
Director
Date: March 29, 1995 By:/s/ Raymond S. Troubh
Raymond S. Troubh
Director
- 25 -
26
OLSTEN CORPORATION and SUBSIDIARIES
INDEX to FINANCIAL STATEMENTS
--------------
Pages
-----
Consolidated Financial Statements:
Balance Sheets at January 1, 1995 and F-2
January 2, 1994
Statements of Income for the three years F-3
ended January 1, 1995
Statements of Changes in Shareholders' Equity F-4
for the three years ended January 1, 1995
Statements of Cash Flows for the three F-5
years ended January 1, 1995
Notes to Consolidated Financial Statements F-6 - F-15
Report of Independent Auditors F-16
Consent of Independent Auditors F-17
F-1
27
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands, except share amounts) January 1, 1995 January 2, 1994
--------------- ---------------
ASSETS
Current assets
Cash $ 68,338 $ 24,709
Receivables, less allowance for
doubtful accounts of $13,682
and $15,532, respectively 319,613 325,122
Refundable and deferred taxes (Note 7) 28,969 43,375
Prepaid expenses and other current assets 22,606 13,432
------- --------
Total current assets 439,526 406,638
Fixed assets, net (Note 3) 72,543 60,185
Intangibles, principally goodwill, net of
accumulated amortization of $61,393
and $52,059, respectively 200,972 204,670
Other assets 12,917 18,601
------- -------
$725,958 $690,094
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accrued expenses (Note 2) $ 71,889 $ 76,137
Insurance costs 47,301 45,730
Payroll and related taxes 30,241 31,143
Accounts payable 15,625 12,597
------- -------
Total current liabilities 165,056 165,607
Long-term debt (Note 4) 125,000 176,057
Other liabilities 49,899 44,110
Commitments (Note 10) -- --
Shareholders' equity (Notes 2, 5, and 6)
Common stock $.10 par value; authorized
110,000,000 shares; issued 32,257,321
shares and 29,976,240 shares,
respectively 3,226 2,998
Class B common stock $.10 par value;
authorized 50,000,000 shares;
issued 9,266,496 shares and 10,482,514
shares, respectively 927 1,048
Additional paid-in capital 232,594 211,331
Retained earnings 150,506 90,280
Cumulative translation adjustment (1,250) (1,337)
------- -------
Total shareholders' equity 386,003 304,320
------- -------
$725,958 $690,094
======== ========
See notes to consolidated financial statements. F-2
28
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
For the Three Years Ended January 1, 1995
(In thousands, except share amounts) January 1, 1995 January 2, 1994 January 3, 1993
--------------- --------------- ---------------
Service sales, franchise
fees, management fees and
other income $2,260,331 $2,157,535 $1,956,094
Cost of services sold 1,588,148 1,494,690 1,344,654
--------- --------- ---------
Gross profit 672,183 662,845 611,440
Selling, general and administrative
expenses 546,178 561,956 531,384
Interest expense, net (Note 4) 5,106 17,920 19,806
Merger and integration costs and
restructuring charges (Note 2) -- 80,911 11,700
------- ------- -------
Income before income taxes
and extraordinary charge 120,899 2,058 48,550
Income taxes (Note 7) 50,778 13,997 21,787
------- ------- -------
Income (loss) before extraordinary
charge 70,121 (11,939) 26,763
Extraordinary charge, net -- (14,668) --
------- ------- -------
Net income (loss) $ 70,121 $ (26,607) $ 26,763
======== ========= ========
SHARE INFORMATION:
------------------
Primary earnings (loss) per share:
Income (loss) before extraordinary
charge $1.67 $(.30) $.73
Extraordinary charge, net -- (.37) --
----- ----- -----
Net income (loss) $1.67 $(.67) $.73
===== ===== =====
Average shares outstanding 42,003 39,450 36,475
====== ====== ======
Fully diluted earnings (loss) per share:
Income (loss) before extraordinary
charge $1.61 $(.30) $.73
Extraordinary charge, net -- (.37) --
----- ----- ----
Net income (loss) $1.61 $(.67) $.73
===== ===== =====
Average shares outstanding 45,807 39,450 36,475
====== ====== ======
See notes to consolidated financial statements. F-3
29
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------
For the Three Years Ended January 1, 1995
Common stock Additional Cumulative
--------------- paid-in Retained translation
(In thousands, except share amounts) Shares Amount capital earnings adjustment Total
---------- ------- --------- ---------- ----------- --------
Balance at December 29, 1991 $ 27,176,568 $ 2,717 $ 128,931 $ 102,596 $ 3,692 $ 237,936
Net income -- -- -- 26,763 -- 26,763
Cash dividends -- -- -- (4,475) -- (4,475)
Conversion of debentures 2,034,134 203 51,415 -- -- 51,618
Issuance of stock for
acquisitions 118,680 12 1,463 -- -- 1,475
Translation adjustment -- -- -- -- (2,486) (2,486)
Exercise of stock options and
employee stock purchases 402,150 40 7,287 -- -- 7,327
Issuance of restricted stock, net 17,000 2 -- -- -- 2
Amortization of restricted stock -- -- 562 -- -- 562
Three-for-two stock split 8,859,041 886 (886) -- -- --
---------- ----- ------- ------- ----- -------
Balance at January 3, 1993 38,607,573 3,860 188,772 124,884 1,206 318,722
Net loss -- -- -- (26,607) -- (26,607)
Cash dividends -- -- -- (7,997) -- (7,997)
Translation adjustment -- -- -- -- (2,543) (2,543)
Exercise of stock options and
employee stock purchases 1,509,181 152 17,509 -- -- 17,661
Issuance of restricted stock 342,000 34 -- -- -- 34
Amortization of restricted stock -- -- 5,050 -- -- 5,050
---------- ----- ------- ------ ----- -------
Balance at January 2, 1994 40,458,754 4,046 211,331 90,280 (1,337) 304,320
Net income -- -- -- 70,121 -- 70,121
Cash dividends -- -- -- (9,895) -- (9,895)
Conversion of debentures 636,109 64 13,819 -- -- 13,883
Translation adjustment -- -- -- -- 87 87
Exercise of stock options and
employee stock purchases 428,954 43 5,145 -- -- 5,188
Amortization of restricted stock -- -- 2,299 -- -- 2,299
---------- ----- ------- ------- ------ -------
Balance at January 1, 1995 $ 41,523,817 $ 4,153 $ 232,594 $ 150,506 $ (1,250) $ 386,003
=========== ====== ======== ======== ======== =========
See notes to consolidated financial statements. F-4
30
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the Three Years Ended January 1, 1995
(In thousands) January 1, 1995 January 2, 1994 January 3, 1993
--------------- --------------- ---------------
OPERATING ACTIVITIES:
Net income (loss) $ 70,121 $(26,607) $ 26,763
Adjustments to reconcile net
income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 23,523 25,663 26,005
Deferred income taxes 16,116 (15,653) (3,111)
Extraordinary charge, net -- 14,668 --
Changes in assets and liabilities,
net of effects from acquisitions:
Accounts receivable, refundable
taxes and prepaid expenses (3,567) (20,390) (41,126)
Current liabilities 7,890 21,137 12,688
Other, net 9,794 ( 3,071) 4,812
Net cash provided by (used in) ------- -------- -------
operating activities 123,877 (4,253) 26,031
------- -------- -------
INVESTING ACTIVITIES:
Purchases of fixed assets (42,136) (30,070) (20,743)
Disposition of fixed assets and
businesses 6,698 6,988 --
Acquisitions of businesses and
reacquisitions of franchises (6,103) (2,797) (6,467)
Net cash used in investing -------- -------- --------
activities (41,541) (25,879) (27,210)
-------- -------- --------
FINANCING ACTIVITIES:
Retirement of long-term debt -- (136,821) --
Proceeds from issuance (and expenses
for conversion) of convertible
debentures -- 122,105 (839)
Net proceeds from (repayment of)
line of credit agreements (34,000) 26,596 (20,953)
Issuances of common stock under
stock plans 5,188 17,661 5,387
Cash dividends (9,895) (7,997) (4,475)
Net cash provided by (used in) -------- -------- --------
financing activities (38,707) 21,544 (20,880)
-------- -------- --------
Net increase (decrease) in cash 43,629 (8,588) (22,059)
Cash at beginning of year 24,709 33,297 55,356
-------- -------- --------
Cash at end of year $ 68,338 $ 24,709 $ 33,297
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments for interest $ 7,450 $ 20,604 $ 22,057
Cash payments for income taxes $ 19,534 $ 11,639 $ 20,335
Conversion of debt to equity $ 13,883 $ -- $ 53,500
See notes to consolidated financial statements. F-5
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share amounts)
Note 1. Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. The Company's fiscal year ends on the Sunday
nearest to December 31st. Certain prior period amounts have been reclassified
to conform with the current year presentation.
Revenue Recognition
Service sales and the related labor costs and payroll taxes are recorded in the
period in which the services are performed. Franchise fees, which are based
upon contractual percentages of franchise sales, and management fees generated
from management services provided to hospital-based home health agencies, are
included with Company service sales and recorded in the period in which the
services are provided.
Cash
Cash includes equivalents which are highly liquid investments with maturities
of three months or less.
Fixed Assets
Fixed assets are stated at cost and depreciated over the estimated useful lives
of the assets using the straight-line method. Leasehold improvements are
amortized over the shorter of the life of the lease or the life of the
improvement.
Intangibles
Intangibles, principally goodwill, associated with acquired businesses and the
unexpired terms of reacquired franchise contracts are being amortized on a
straight-line basis over periods ranging from three to forty years.
Foreign Currency Translation
The functional currencies of the Company's foreign subsidiaries are Canadian
dollars, United Kingdom pounds sterling and Mexican pesos. Assets and
liabilities of these subsidiaries are translated into U.S. dollars at the rates
of exchange in effect at the appropriate balance sheet date. Results of
operations are translated using an average exchange rate for the appropriate
periods. Translation gains and losses and intercompany foreign currency
transactions which are long-term in nature are reflected as adjustments to
shareholders' equity. Net foreign currency transaction gains and losses
recognized by the Company have not been significant. Foreign currency exchange
rate fluctuations have not had a material effect on operating cash balances.
Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109
"Accounting for Income Taxes," effective January 4, 1993. The adoption of SFAS
109 changed the Company's method of accounting for income taxes from the
deferred method under Accounting Principles Board Opinion (APB) No. 11 to an
asset and liability approach. Deferred income taxes are recognized for all
temporary differences between the tax and financial reporting bases of the
Company's assets and liabilities based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to
affect taxable income.
F-6
32
Earnings Per Share
Primary earnings per share are based on the weighted average number of shares
of common stock and Class B common stock outstanding during the period, after
giving effect to potentially dilutive options and warrants under the treasury
stock method. In calculating fully diluted earnings per share, both net income
and shares outstanding have been adjusted to assume the Company's convertible
debt had been converted to common stock at the beginning of the period.
Note 2. Merger of Lifetime Corporation
On July 30, 1993, following approval by the shareholders of both companies,
Lifetime Corporation was merged into the Company. As a result, the Company
issued approximately 13.5 million shares of Class B common stock in exchange for
all of the outstanding Lifetime common stock and vested options based upon the
conversion ratio of 1.27 shares of Class B common stock for each share of
Lifetime common stock. Substantially all of the Class B common stock issued in
the merger was subsequently converted into common stock. The merger was
accounted for as a pooling of interests and, accordingly, the consolidated
financial statements of the Company were restated for all periods prior to the
merger to combine the accounts and operations of the Company and Lifetime.
Additionally, certain reclassifications were made in order to conform Lifetime's
accounts to the Company's presentation.
In the third quarter of 1993, the Company recorded merger and integration costs
of $80.9 million, consisting of transaction costs of $15 million, compensation
and severance costs of $33 million, asset writedowns of $16 million and
integration costs of $17 million. These costs reduced net income by $58.7
million, net of tax, or $1.46 per share. At January 1, 1995 and January 2,
1994, $11.7 million and $38.8 million, respectively, of these costs remained
unpaid and were included in accrued expenses.
In the last half of 1993, the Company prepaid $136.8 million representing
outstanding principal balances on certain Notes which were assumed as part of
the Lifetime merger. In connection with this early repayment, the Company paid
prepayment penalties, reflected as an extraordinary charge, totaling $14.7
million, net of income tax benefit of $16.4 million.
In the second quarter of 1992, Lifetime recorded a charge of $11.7 million
relating to the restructuring of certain operations and severance payable to the
former chairman. This charge reduced 1992 net income by $7.1 million, net of
tax, or 20 cents per share.
In the fourth quarter of 1993, the Company sold National Mentor Inc.
("Mentor"), a subsidiary engaged in the provision of community-based
psychiatric care, for $13.6 million, in cash. In conjunction with the sale, the
Company loaned Mentor $6 million in 9% subordinated debt and purchased 9,913
shares of common stock for $1 million. The Company deferred the recognition of
the after-tax gain on the sale of $3.9 million until the Company's interest in
the subordinated debt and stock was deemed fully realizable. As a result of the
subsequent resale of Mentor, the previously deferred gain and related interest
income was recognized in the fourth quarter of 1994, and is included in
revenues.
F-7
33
Note 3. Fixed Assets, Net
January 1, 1995 January 2, 1994
--------------- ---------------
Furniture and fixtures $ 79,478 $ 73,379
Buildings and improvements 32,527 21,519
Machinery and equipment 12,595 14,683
------- -------
124,600 109,581
Less accumulated depreciation and amortization 52,057 49,396
------- -------
$ 72,543 $ 60,185
======== ========
Note 4. Long-Term Debt
January 1, 1995 January 2, 1994
4-7/8% Convertible Subordinated Debentures --------------- ---------------
due 2003 $ 125,000 $ 125,000
11.2% Convertible Senior Subordinated
Notes due 1995 -- 13,883
Revolving credit agreements and other -- 37,174
------- -------
$ 125,000 $ 176,057
======== ========
In March 1993, the Company issued $125 million of 4-7/8% Convertible
Subordinated Debentures maturing in 2003 which are convertible into the
Company's common stock at $34.80 per share. The Debentures are redeemable in
whole or in part at the option of the Company, together with accrued interest,
except that no redemption may be made prior to May 16, 1996.
On April 12, 1994, the Company called for redemption all $14 million of its
11.2% Convertible Senior Subordinated Notes, representing the last of the high
coupon debt assumed in the Lifetime merger. At the option of the noteholders,
all $14 million was converted into 636,109 shares of Class B common stock, and
subsequently converted into common stock.
In September 1994, the Company's existing revolving credit agreement with six
banks was amended and extended through the year 2000. The agreement provides
for up to $200 million in borrowings and letters of credit with interest rates
based on London Interbank Offered Rate (LIBOR). Under the provisions of the
agreement, on December 15, 1996, any amounts outstanding will be converted to
a term loan and amortized over the remaining life of the facility. As of
January 1, 1995 there were no borrowings and $67.7 million in standby letters
of credit outstanding.
The revolving credit agreement contains various covenants which, among other
things, require the maintenance of certain financial ratios and restrict the
incurrence of liens, additional indebtedness, payment of dividends, purchase
or redemption of stock or warrants, ability to merge, consolidate, or dispose
of assets.
Interest expense is net of interest income of $3 million in 1994, $2.7 million
in 1993, and $1.7 million in 1992.
F-8
34
Note 5. Shareholders' Equity
Common stock consists of shares of common stock and Class B common stock as
follows:
January 1, 1995 January 2, 1994 January 3, 1993
--------------- --------------- ---------------
Common stock 32,257,321 29,976,240 17,243,517
Class B common stock 9,266,496 10,482,514 21,364,056
---------- ---------- ----------
41,523,817 40,458,754 38,607,573
========== ========== ==========
Each share of Class B common stock is convertible into one share of common
stock, has a par value of $.10 and is entitled to ten votes. The Company is
also authorized to issue 250,000 shares of preferred stock; no shares have
been issued.
Lifetime had previously issued warrants to purchase shares of its common stock
in connection with the sale of convertible debentures which Lifetime
subsequently repaid. As a result of the merger, the warrant holders were
entitled to exchange six warrants plus $27 for 1.27 Olsten Class B common
shares. Additionally, on January 31, 1995, the Company announced an agreement
in principle for settlement of a class action lawsuit that, among its terms,
would reduce the cash payment required to exchange six warrants to $24.17 per
share. The settlement is subject to the execution of a definitive settlement
agreement and approval of the Court of Chancery of the State of Delaware. At
January 1, 1995, 4,530,000 warrants to purchase 959,000 shares of Olsten Class
B common stock, as adjusted for the merger, were exercisable and expire on
October 31, 1996.
Note 6. Stock Plans
In 1994, shareholders of the Company approved the adoption of the 1994 Stock
Incentive Plan ("1994 Plan") under which an aggregate of 2,000,000 shares of
common stock are reserved for issuance upon exercise of options thereunder.
These options may be awarded in the form of incentive stock options ("ISOs")
or non-qualified stock options ("NQSOs"). The option price of an ISO cannot
be less than 100%, and the option price of the NQSO cannot be less than 85%,
of the fair market value at the date of the grant. This plan replaces the
1984 Incentive Stock Option Plan ("1984 ISO Plan") and the 1984 Non-Qualified
Stock Option Plan ("1984 NQSO Plan"), which terminated in February 1994 except
as to options then outstanding. At January 1, 1995, there were options
outstanding of 351,150, 412,319 and 187,500 for the 1994 Plan, 1984 ISO Plan
and 1984 NQSO Plan, respectively. Options become cumulatively exercisable
commencing one year after grant in four equal annual installments under the
1994 Plan and 1984 ISO Plan and in five equal annual installments under the
1984 NQSO Plan.
F-9
35
In 1991, shareholders of the Company approved the adoption of the Non-
Qualified Stock Option Plan for Non-Employee Directors and Consultants (the
"Non-Employee Plan") authorizing the grant of options to outside directors and
consultants to purchase up to an aggregate of 150,000 shares of common stock.
At January 1, 1995, there were options outstanding of 51,500 under this plan.
Under the Non-Employee Plan, options may be granted at prices not less than
fair market value at the date of grant and become exercisable no earlier than
six months nor later than five years from the date of grant.
Lifetime maintained four Stock Option Plans, including a Non-Employee Director
Stock Option Plan. All plans involved options which were granted at not less
than the fair market value at the date of grant. At the merger date, all of
the currently vested options under these plans were exchanged for Olsten Class
B common stock equal to their net economic value. Remaining outstanding
options were converted to options for Olsten Class B shares and are
exercisable over various periods not exceeding three years. At January 1,
1995, 161,005 options were outstanding under this plan.
Options under the 1994 Plan and Non-Employee Plan generally expire 10 years
after grant, subject to shareholder approval, except that options granted
under the Non-Employee Plan prior to 1995 expire five years after grant.
Options under the other plans generally expire five years after grant. A
summary of activity under all plans during 1994 follows:
Incentive stock option plan Shares Price
under option per share
------------ ---------
Options outstanding at
January 2, 1994 524,922 $ 8.00 - 25.75
Granted 351,150 $ 31.00
Exercised (78,970) $ 8.00 - 25.75
Cancelled (33,633) $ 9.33 - 25.75
-------- ------------
Options outstanding at
January 1, 1995 763,469 $ 8.00 - 31.00
======== ============
Non-qualified stock option plans
Options outstanding at
January 2, 1994 742,124 $ 8.93 - 26.00
Granted 18,000 $ 31.625
Exercised (349,851) $ 8.00 - 26.00
Cancelled (10,268) $11.61 - 19.39
--------- --------------
Options outstanding at
January 1, 1995 400,005 $ 8.00 - 31.625
======== ==============
During 1993 and 1992, options on 1,440,242 and 337,052 shares, respectively,
were exercised under all plans at prices of $7.87 to $24.80 per share.
At January 1, 1995, options for an aggregate of 422,473 shares were
exercisable under all plans and options for an aggregate of 1,732,850 shares
were available for grant (972,204 shares at January 2, 1994) under the four
Olsten plans.
F-10
36
Under an Incentive Restricted Stock Plan adopted in 1990 and amended in 1993,
up to 875,000 shares of common stock may be granted or sold at prices less
than the prevailing market price to officers, key employees and others subject
to restrictions as to transfer or sale. During 1993, 327,000 shares of common
stock were granted under this plan. At January 1, 1995, 297,500 shares were
available for future grants. Shares under the plan are generally subject to
restrictions as to transfer which lapse ratably in three and five equal annual
installments commencing one year from the date of grant, provided that
recipients are continuously employed by the Company. Additional paid-in
capital is net of unearned compensation related to restricted stock of $2.7
million, $5 million and $1.7 million for 1994, 1993, and 1992, respectively.
Note 7. Income Taxes
Comparative analysis of the provisions for income taxes before extraordinary
charge follows:
January 1, 1995 January 2, 1994 January 3, 1993
Current --------------- --------------- ---------------
Federal $29,939 $22,525 $18,314
State and local 2,434 5,350 4,965
Foreign 2,289 1,775 1,619
------ ------ ------
34,662 29,650 24,898
======= ======= =======
Deferred
Federal 12,332 (11,574) (2,421)
State and local 3,784 (4,079) (690)
------ -------- -------
16,116 (15,653) (3,111)
------ -------- -------
$50,778 $13,997 $21,787
======= ======== ========
Reconciliations of the differences between income taxes computed at Federal
statutory rates and consolidated provisions for income taxes before
extraordinary charge follow:
January 1, 1995 January 2, 1994 January 3, 1993
Income taxes computed at Federal --------------- --------------- ---------------
statutory tax rate $42,315 $ 720 $16,617
State income taxes, net of Federal
benefit 3,612 1,174 2,502
Amortization 2,404 2,822 2,077
Foreign net operating losses not
currently utilizable -- 677 482
Non-deductible merger costs -- 8,841 --
Other, net 2,447 (237) 109
------ ------- ------
$50,778 $13,997 $21,787
======= ======== ========
F-11
37
Under SFAS 109, assets and liabilities acquired in purchase business
combinations are assigned their fair values, and deferred taxes are provided
for lower or higher tax bases. In adopting the provisions of SFAS 109,
effective January 4, 1993, the Company adjusted the carrying amounts of its
purchase business acquisitions. Such adjustments reduced goodwill by
approximately $7 million with a corresponding adjustment to deferred taxes.
The cumulative effect of this change in accounting principle on income before
income taxes and on income (loss) before extraordinary charge was not
material.
Deferred tax assets and liabilities follow:
January 1, 1995 January 2, 1994
--------------- ---------------
Deferred tax assets
Reserves $18,126 $37,761
Intangible assets 1,112 617
Other 459 --
------ ------
19,697 38,378
======= =======
Deferred tax liabilities
Capitalized software (3,073) (5,020)
Investments (623) (989)
Other (578) (721)
------- -------
(4,274) (6,730)
------- -------
Net deferred tax asset $ 15,423 $ 31,648
======== ========
The components of income tax expense and variations between income tax expense
and the Federal statutory rate under SFAS 109 do not differ significantly from
those previously reported under APB 11 in the Company's 1992 consolidated
financial statements.
Note 8. Benefit Plans for Permanent Employees
The Company maintains qualified and non-qualified defined contribution
retirement plans for its salaried employees which provide for a partial match
of employee savings under the plans and for discretionary profit sharing
contributions based on employee compensation. The Company also maintains a
non-qualified defined benefit retirement program for key employees and
officers which provides supplemental retirement benefits funded in part by
profit sharing contributions.
Company contributions under the above plans were approximately $4.4 million
in both 1994 and 1993, and $4 million in 1992.
Note 9. Business Segment Information
The Company operates in two business segments:
F-12
38
HealthCare Services
Provides home health care, including skilled nursing, home health aides,
physical/occupational/ neurological/speech therapies, pediatric and perinatal
care, rehabilitation services, infusion therapy and hospice services;
management services for hospital-based home health care agencies; paramedical
and occupational health services; and institutional staffing.
Staffing Services
Provides office services, including general office and administrative
services, office automation and records management; accounting services; legal
and paralegal services; technical services; production/distribution/assembly
services; marketing support and telemarketing services; and managed services
for corporations.
Information about the Company's operations in different geographic areas and
sales between segments is not significant.
Information about the Company's operations, net of merger and integration
costs and restructuring charges of $80.9 million and $11.7 million in 1993 and
1992, respectively, related to HealthCare Services, included in Corporate and
other, is as follows:
Service sales,
franchise fees, Income before
management fees income taxes
and other and extraordinary Identifiable Depreciation Capital
income charge assets and amortization expenditures
--------------- ----------------- ------------ ---------------- ------------
Year ended January 1, 1995
--------------------------
HealthCare Services $1,147,336 $ 64,836 $ 382,091 $ 17,027 $14,251
Staffing Services 1,098,635 45,272 165,108 2,789 5,755
Corporate and other 14,360 10,791 178,759 3,707 22,130
--------- ------- ------- ------ ------
$2,260,331 $ 120,899 $ 725,958 $ 23,523 $42,136
========== ========= ========= ======== =======
Year ended January 2, 1994
--------------------------
HealthCare Services $1,278,219 $ 48,002 $ 201,458 $ 17,655 $15,584
Staffing Services 882,846 28,226 136,580 2,720 3,444
Corporate and other (3,530) (74,170) 352,056 5,288 11,042
--------- ------- -------- ------ ------
$2,157,535 $ 2,058 $ 690,094 $ 25,663 $30,070
========== ========= ========= ======== =======
Year ended January 3, 1993
--------------------------
HealthCare Services $1,226,620 $ 34,664 $ 228,826 $ 16,836 $10,750
Staffing Services 729,168 17,129 113,691 2,744 2,376
Corporate and other 306 (3,243) 319,474 6,425 7,617
--------- ------- ------- ------ ------
$1,956,094 $ 48,550 $ 661,991 $ 26,005 $20,743
========== ========= ========= ======== =======
F-13
39
Note 10. Lease Commitments
The Company rents certain properties under noncancellable, long-term operating
leases which expire at various dates. Certain of these leases require
additional payments for taxes, insurance and maintenance and, in many cases,
provide for renewal options. Rent expense, in millions, under all leases was
$37 in 1994, $40 in 1993, and $36 in 1992.
Future minimum rental commitments for all noncancellable leases having a
remaining term in excess of one year at January 1, 1995, follow:
1995 $ 29,565
1996 $ 21,573
1997 $ 15,400
1998 $ 10,302
1999 $ 6,062
Thereafter $ 22,949
F-14
40
Note 11. Quarterly Financial Information (Unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Year ended January 1, 1995
$ $ $ $
Service sales, franchise fees,
management fees and other income 537,483 562,922 578,299 581,627
Gross profit 161,951 163,606 170,539 176,087
Net income 14,347 16,404 18,184 21,186
SHARE INFORMATION:
Primary earnings per share .35 .39 .43 .50
Fully diluted earnings per share .34 .38 .41 .48
Year ended January 2, 1994
Service sales, franchise fees,
management fees and other income 515,349 538,970 556,675 546,541
Gross profit 162,184 166,931 168,797 164,933
Income (loss) before extraordinary
charge 10,347 10,785 (46,203) 13,132
Net income (loss) 10,347 10,785 (60,871) 13,132
SHARE INFORMATION:
Primary earnings (loss) per share
Income (loss) before extraordinary
charge .26 .27 (1.14) .32
Net income (loss) .26 .27 (1.50) .32
Fully diluted earnings (loss) per share
Income (loss) before extraordinary
charge .26 .27 (1.14) .31
Net income (loss) .26 .27 (1.50) .31
F-15
41
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Board of Directors of Olsten Corporation:
We have audited the accompanying consolidated balance sheets of OLSTEN
CORPORATION AND SUBSIDIARIES as of January 1, 1995 and January 2, 1994 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the three years in the period ended January 1, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
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 consolidated financial position of OLSTEN
CORPORATION and SUBSIDIARIES at January 1, 1995 and January 2, 1994 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 1, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 6, 1995
F-16
42
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
-----------
We consent to the incorporation by reference in the Registration
Statements of Olsten Corporation on Form S-8 (Registration Nos. 33-9804, 33-
41603, 33-66782 and 33-66784) and on Form S-3 (Registration Nos. 33-54463 and
33-66016) of our report dated February 6, 1995, on our audits of the
consolidated financial statements of OLSTEN CORPORATION AND SUBSIDIARIES at
January 1, 1995 and January 2, 1994, and for each of the three years in the
period ended January 1, 1995, which report is included in this Annual Report on
Form 10-K.
COOPERS & LYBRAND L.L.P.
New York, New York
March 29, 1995
F-17
43
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
3(a) Restated Certificate of Incorporated by
Incorporation of Registrant, filed reference
as Exhibit 3(a) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
3(b) By-Laws of Registrant, filed as Incorporated by
Exhibit 3(b) to Registrant's Annual reference
Report on Form 10-K for the year
ended January 2, 1994, is
incorporated herein by reference.
4(a) Restated Certificate of Incorporated by
Incorporation of Registrant, filed reference
as Exhibit 3(a).
4(b) By-Laws of Registrant, filed as Incorporated by
Exhibit 3(b). reference
4(c) Amended and Restated Agreement and Incorporated by
Plan of Merger dated as of May 10, reference
1993 between Registrant and
Lifetime Corporation, filed as
Exhibit 2(a) to Registrant's
Current Report on Form 8-K/A dated
May 17, 1993, is incorporated
herein by reference.
4(d) Indenture dated as of March 15, Incorporated by
1993 between Registrant and Bankers reference
Trust Company, as Trustee, relating
to Registrant's 4 % Convertible
Subordinated Debentures due 2003,
filed as Exhibit 4 to Registrant's
Quarterly Report on Form 10-Q for
the quarter ended April 4, 1993, is
incorporated herein by reference.
4(e) Warrant Agreement between Lifetime Incorporated by
Corporation and American Stock reference
Transfer and Trust Company dated
November 4, 1986, as amended as of
December 11, 1989 and July 23,
1993, filed as Exhibit 1 to
Registrant's Registration Statement
on Form 8-A dated July 23, 1993, is
incorporated herein by reference.
i
44
Exhibit No. Description How Filed
----------- ----------- ---------
*10(a) Registrant's 1984 Incentive Stock Incorporated by
Option Plan, as amended, filed as reference
Exhibit 10(a) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(b) Registrant's 1984 Non-Qualified Incorporated by
Stock Option Plan, as amended, reference
filed as Exhibit 10(b) to
Registrant's Annual Report on Form
10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(c) Registrant's Incentive Restricted Incorporated by
Stock Plan, as amended, filed as reference
Exhibit 10(e) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(d) Form of agreement under Incorporated by
Registrant's Incentive Restricted reference
Stock Plan, filed as Exhibit 10(g)
to Registrant's Annual Report on
Form 10-K for the year ended
December 30, 1990, is incorporated
herein by reference.
10(e) Amended and Restated Credit Filed herewith
Agreement dated as of September 9,
1994 among Registrant and certain
of its Subsidiaries signatory
thereto, the Banks signatory
thereto and The Chase Manhattan
Bank, N.A., as Agent, covering $200
million credit facility.
*10(f) Registrant's 1990 Non-Qualified Incorporated by
Stock Option Plan for Non-Employee reference
Directors and Consultants, as
amended and restated, is
incorporated by reference to
Exhibit C to Registrant's
definitive Proxy Statement with
respect to its 1995 Annual Meeting
of Shareholders.
*Management contract or compensatory plan or arrangement.
ii
45
Exhibit No. Description How Filed
----------- ----------- ---------
*10(g) Registrant's Supplemental Incorporated by
Retirement Plan for Key Executives reference
filed as Exhibit 10(k) to
Registrant's Annual Report on Form
10-K for the year ended January 3,
1993, is incorporated herein by
reference.
*10(h) Registrant's Executive Voluntary Incorporated by
Deferred Compensation Plan and reference
Trust Agreement between Registrant
and Prudential Trust Company, filed
as Exhibit 10(k) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(i) Registrant's Retirement Plan for Incorporated by
Outside Directors and Consultants, reference
filed as Exhibit 10(l) to
Registrant's Annual Report on Form
10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(j) Registrant's Deferred Compensation Incorporated by
Plan for Outside Directors, filed reference
as Exhibit 10(m) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(k) 1987 Stock Option Plan, as amended, Incorporated by
of Lifetime Corporation, filed as reference
Exhibit 10(c) to Lifetime
Corporation's Annual Report on Form
10-K for the year ended December
31, 1992, is incorporated herein by
reference.
*10(l) 1989 Non-Employee Directors Stock Incorporated by
Option Plan, as amended, of reference
Lifetime Corporation, filed as
Exhibit 10(d) to Lifetime
Corporation's Annual Report on Form
10-K for the year ended December
31, 1992, is incorporated herein by
reference.
*10(m) Employment Agreement dated March Incorporated by
28, 1994 between Registrant and reference
Frank N. Liguori, filed as Exhibit
10(q) to Registrant's Annual Report
*Management contract or compensatory plan or arrangement.
iii
46
Exhibit No. Description How Filed
----------- ----------- ---------
on Form 10-K for the year ended
January 2, 1994, is incorporated
herein by reference.
*10(n) Agreement dated November 8, 1993 Incorporated by
between Registrant and Frank N. reference
Liguori covering incentive award
under Incentive Restricted Stock
Plan and amendment thereto dated
March 27, 1994, filed as Exhibit
10(r) to Registrant's Annual Report
on Form 10-K for the year ended
January 2, 1994, is incorporated
herein by reference.
*10(o) Form of change in control agreement Filed herewith
between Registrant and each of
Robert A. Fusco, Richard A. Piske,
III and Gerald J. Kapalko.
10(p) Amended and Restated Agreement and Incorporated by
Plan of Merger dated as of May 10, reference
1993 between Registrant and
Lifetime Corporation, filed as
Exhibit 2(a) to Registrant's
Current Report on Form 8-K/A dated
May 17, 1993, is incorporated
herein by reference.
*10(q) Registrant's 1994 Stock Incentive Incorporated by
Plan, as amended and restated, is reference
incorporated by reference to
Exhibit B to Registrant's
definitive Proxy Statement with
respect to its 1995 Annual Meeting
of Shareholders.
*10(r) Registrant's Executive Officer Incorporated by
Bonus Plan is incorporated by reference
reference to Exhibit C to
Registrant's definitive Proxy
Statement with respect to its 1994
Annual Meeting of Shareholders.
21 Subsidiaries of Registrant. Filed herewith
23 Consent of Coopers & Lybrand, Filed herewith
independent auditors, appearing on
page F-17 of this Annual Report on
Form 10-K.
27 Financial Data Schedule. Filed herewith
*Management contract or compensatory plan or arrangement.
iv