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, 2002
[ ] 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 the 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
SOS STAFFING SERVICES, INC. 401(K) PLAN
FINANCIAL STATEMENTS
December 31, 2002 and 2001
1
C O N T E N T S
Page
INDEPENDENT AUDITORS' REPORT............................................... 3
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS............................ 4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS.............................................................. 5
NOTES TO FINANCIAL STATEMENTS.............................................. 6
SCHEDULE 1 - SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT
END OF YEAR).............................................................. 9
CERTIFICATIONS............................................................. 10
2
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Administrators of the
SOS Staffing Services, Inc. 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of SOS Staffing Services, Inc. 401(k) Plan as of December 31, 2002 and 2001, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2002. These financial statements and the schedule
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 SOS Staffing
Services, Inc. 401(k) Plan as of December 31, 2002 and 2001, and the changes in
net assets available for benefits for the year ended December 31, 2002, in
conformity with U.S. generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information included in
Schedule 1 - Schedule H, Line 4i - Schedule of Assets (Held at End of Year) is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements but is 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 supplemental
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Wisan, Smith, Racker & Prescott, LLP
- -----------------------------------------
Salt Lake City, Utah
June 9, 2003
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SOS STAFFING SERVICES, INC. 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2002 and 2001
2002 2001
---------- ----------
ASSETS
INVESTMENTS
Mutual funds:
Spartan U.S. Treasury Money Market Fund $ 732,307 $ 852,540
Fidelity U.S. Bond Index Fund 295,005 219,054
Loomis Sayles Bond Fund 164,729 157,665
Fidelity Puritan Fund 174,365 263,691
Fidelity Equity Income Fund 277,818 431,660
Spartan U.S. Equity Index Fund 293,504 510,762
Dreyfus Appreciation Fund 274,282 407,882
Neuberger Berman Genesis Trust 157,325 166,918
Manager's Special Equity Fund 206,626 335,917
Mercury HW International Fund 39,366 47,282
Cohen & Steers Realty Shares Fund 83,399 73,533
Gabelli Growth Fund 47,015 86,287
Janus Overseas Fund 78,012 86,812
Invesco Technology Fund 62,502 111,628
Fidelity Fredom 2010 Fund 80,088 49,439
Fidelity Fredom 2020 Fund 58,687 72,170
Fidelity Fredom 2030 Fund 35,777 52,739
Other Investments:
SOS Staffing Services, Inc. common stock 44,460 71,797
Participant loans -- 1,046
---------- ----------
TOTAL INVESTMENTS 3,105,557 3,998,822
CASH -- 4,170
RECEIVABLES:
Participant contributions 1,907 22,522
---------- ----------
TOTAL ASSETS 3,107,464 4,022,814
---------- ----------
LIABILITIES
REFUND OF EXCESS CONTRIBUTIONS -- 393
---------- ----------
TOTAL LIABILITIES -- 393
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $3,107,464 $4,022,421
========== ==========
The accompanying notes are an integral part of the financial statements.
4
SOS STAFFING SERVICES, INC. 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
Year ended December 31, 2002
ADDITIONS TO NET ASSETS
Participant contributions $ 487,809
Investment income (loss):
Net depreciation in fair value of investments $ (481,363)
Interest and dividends 10,796 (470,567)
----------- -----------
TOTAL ADDITIONS 17,242
DEDUCTIONS FROM NET ASSETS
Benefits paid to participants 932,199
-----------
NET DECREASE (914,957)
NET ASSETS AVAILABLE FOR BENEFITS
AT BEGINNING OF YEAR 4,022,421
-----------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 3,107,464
===========
The accompanying notes are an integral part of the financial statements.
5
SOS STAFFING SERVICES, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
NOTE 1 - DESCRIPTION OF PLAN
The following description of the SOS Staffing Services, Inc.
(sponsor) 401(k) Plan (the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
A. General - The Plan is a defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Employees of the sponsor 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. Employees of Inteliant
Corporation ("Inteliant"), a subsidiary of the sponsor, 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. The Plan treats employees of
Inteliant as a separate line of business for purposes of
operational testing. The Plan excludes all highly compensated
employees as defined by the Internal Revenue Service of the
sponsor and all of its subsidiaries except Inteliant. Highly
compensated employees of Inteliant are allowed to participate in
the plan.
B. Contributions - Each year participants may contribute up to 15
percent of pre-tax annual compensation, as defined in the Plan.
Participants may also contribute amounts representing
distributions from other qualified defined benefit or contribution
plans. The sponsor can elect to make discretionary matching
contributions to the Plan. As described below in forfeited
accounts, for the year ended December 31, 2002, the sponsor made
matching contributions of approximately $127,800 to the Plan
through re-allocation of forfeited accounts. Participants direct
the investment of all contributions into various investment
options offered by the Plan. The Plan currently offers 17 mutual
funds and the sponsor's outstanding common stock as investment
options.
C. Participants' Accounts - Each participant's account is credited
with the participant's contributions and related employer matching
contributions, as well as the participant's share of the Plan's
income. Allocations are based on participant account balances.
D. Vesting - Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in employer
matching contributions plus actual earnings thereon is as follows:
Years of Vested
Service Percentage
---------------------------- -----------------
Less than three years 0%
Three years 50%
Four years 75%
Five years or more 100%
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SOS STAFFING SERVICES, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
NOTE 1 - DESCRIPTION OF PLAN (CONTINUED)
E. Loans to Participants - The Plan does not allow for participant
loans. However, a retirement plan of one of the sponsor's
subsidiaries allowed for participant loans prior to merging with
the Plan. All loans outstanding from the subsidiary's plan at the
time of the merger remained outstanding subsequent to the merger.
As of December 31, 2002, there were no remaining loans
outstanding.
F. Payment of Benefits - On termination of service due to death,
disability or retirement, a participant may elect to receive
either a lump-sum amount equal to the value of the participant's
vested interest in his or her account or an annuity.
G. Forfeited Accounts - At December 31, 2002, forfeited nonvested
accounts totaled approximately $43,700. These amounts will be used
to reduce future employer contributions. During 2002,
approximately $127,800 from forfeited accounts was allocated to
participants' accounts as employer contributions.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ThePlan's accounting policies conform to U.S. generally accepted
accounting principles. The following policies are considered to be
significant:
Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires the Plan
administrator to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may
differ from those estimates.
Investment Valuation and Income Recognition
-------------------------------------------
Mutual funds and common stock are reflected at fair value as
determined by quoted market price and gain or loss is recognized in
the current period on the difference between current and prior period
market values. Participant loans are reported at book value, which
approximates fair value.
Interest income is recorded as earned on the accrual basis. Dividend
income is recorded on the ex-dividend date.
Administrative Expenses
-----------------------
The sponsor pays all administrative expenses of the Plan.
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SOS STAFFING SERVICES, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
NOTE 3 - NET DEPRECIATION IN FAIR VALUE OF INVESTMENTS
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as investments held during the
year) depreciated in value by $481,363 as follows:
Mutual funds $ 427,778
Common stock 53,585
-------------
$ 481,363
=============
NOTE 4 - INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company
by a letter dated March 9, 2000, that the Plan is qualified and the
trust established under the Plan is tax-exempt under the applicable
sections of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. The Plan has made
application to the Internal Revenue Service to receive a new
determination letter on the amended Plan, but has yet to receive such
notification. However, the Plan administrator and the Plan's tax
counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC.
Therefore, they believe that the Plan was qualified and the related
trust was tax-exempt as of the financial statement date.
NOTE 5 - PLAN TERMINATION
Although it has not expressed any intent to do so, the sponsor 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 Plan termination, participants will become fully vested in
their account balances.
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Schedule 1
SOS STAFFING SERVICES, INC. 401(K) PLAN
EIN #87-0295503-PLAN #002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2002
(b) Identity of Issuer
Borrower, Lessor, (e) Current
(a) or Similar Party (c) Description of Investment Value
- ----- ----------------------------------- ------------------------------------ -----------------
* Spartan U.S. Treasury Money Market 732,849 shares of money market
Fund fund $ 732,597
* Fidelity U.S. Bond Index Fund 26,246 shares of mutual fund
295,005
Loomis Sayles Bond Fund 14,999 shares of mutual fund
164,729
* Fidelity Puritan Fund 11,043 shares of mutual fund
174,365
* Fidelity Equity Income Fund 7,003 shares of mutual fund
277,818
* Spartan U.S. Equity Index Fund 9,422 shares of mutual fund
293,504
Dreyfus Appreciation Fund 8,791 shares of mutual fund
274,282
Neuberger Berman Genesis Trust 5,591 shares of mutual fund
157,325
Manager's Special Equity Fund 3,751 shares of mutual fund
206,626
Mercury HW International Fund 2,373 shares of mutual fund
39,366
Cohen & Steers Realty Shares Fund 1,924 shares of mutual fund
83,399
Gabelli Growth Fund 2,476 shares of mutual fund
47,015
Janus Overseas Fund 5,102 shares of mutual fund
78,012
Invesco Technology Fund 3,636 shares of mutual fund
62,502
* Fidelity Freedom 2010 Fund 7,001 shares of mutual fund
80,088
* Fidelity Freedom 2020 Fund 5,516 shares of mutual fund
58,687
* Fidelity Freedom 2030 Fund 3,494 shares of mutual fund
35,777
* SOS Staffing Services, Inc. 88,921 shares of common stock
44,460
- -------------------
* Denotes party-in-interest
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Certification
(Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
I, JoAnn W. Wagner, chief executive officer of SOS Staffing Services, Inc. (the
"Company"), do hereby certify as follows:
o The annual report on Form 11-K of the Company for the period ended
December 31, 2002 fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
o The information contained in such Form 11-K fairly presents, in
all material respects, the net assets available for benefits of
the SOS Staffing Services, Inc. 401(k) plan.
IN WITNESS WHEREOF, I have executed this Certification this 30th day of June,
2003.
/s/ JoAnn W. Wagner
---------------------------------
JoAnn W. Wagner
Chairman, President and
Chief Executive Officer
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Certification
(Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
I, Kevin Hardy, chief financial officer of SOS Staffing Services, Inc. (the
"Company"), do hereby certify as follows:
o The annual report on Form 11-K of the Company for the period ended
December 31, 2002 fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
o The information contained in such Form 11-K fairly presents, in
all material respects, the net assets available for benefits of
the SOS Staffing Services, Inc. 401(k) plan.
IN WITNESS WHEREOF, I have executed this Certification this 30th day of June,
2003.
/s/ Kevin Hardy
-------------------------------------
Kevin Hardy
Senior Vice President
and Chief Financial Officer
12