As filed with the Securities and Exchange Commission on June 2, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WESTERN STAFF SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 7363 94-1266151
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
301 Lennon Lane
Walnut Creek, California 94598-2453
(925) 930-5300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
W. Robert Stover
Chairman and Chief Executive Officer
301 Lennon Lane
Walnut Creek, California 94598-2453
(925) 930-5300
Facsimile (925) 937-0593
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
copies to:
Robin A. Herman, Esq. John W. Campbell III, Esq.
Senior Vice President, General Counsel MORRISON & FOERSTER LLP
and Secretary 425 Market Street
301 Lennon Lane San Francisco, California 94105-2482
Walnut Creek, California 94598-2453 (415) 268-7000
(925) 930-5300 Facsimile (415) 268-7522
Facsimile (925) 937-0593
----------------------------
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after the effective date of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
1
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ______
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SECURITIES BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE
Common Stock,
$.01 par value 1,500,000 $15.83 $23,745,000 $7,004.78
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based on the average high and low sales prices of
the Common Stock reported by the Nasdaq National Market on May 26, 1998. The
Offering Price per Share and Aggregate Offering Price have been calculated to
give effect to the payment of the Company's previously declared three-for-two
Common Stock split effected in the form of a stock dividend payable on May 29,
1998 to shareholders of record at the close of business on May 18, 1998.
-----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
2
PROSPECTUS
WESTERN STAFF SERVICES, INC.
1,500,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
Western Staff Services, Inc. (the "Company"), has registered 1,500,000 of
its shares of Common Stock, $.01 par value per share (the "Common Stock"), which
may be offered by this Prospectus in connection with acquisitions. No period of
time has been fixed within which such shares may be offered or sold. Such
shares may be issued in exchange for the shares of capital stock, partnership
interests or other assets representing an interest, direct or indirect, in other
companies or other entities, or in exchange for assets used in or related to the
business of such entities. The terms of such acquisitions will generally be
determined by direct negotiations with the owners of the business or assets to
be acquired or, in the case of entities which are more widely held, through
exchange offers to stockholders or documents soliciting the approval of
statutory mergers, consolidations or sales of assets. Underwriting discounts or
commissions will generally not be paid by the Company. However, under some
circumstances, the Company may issue Common Stock covered by this Prospectus to
pay brokers' commissions incurred in connection with acquisitions.
This Prospectus, as amended or supplemented if appropriate, has also been
prepared for use by the persons who have or will receive shares issued by the
Company in acquisitions, including shares sold hereunder or received upon
exercise of rights to exchange equity securities of the Company's subsidiaries
issued in acquisitions, and who wish to offer and sell such shares, on terms
then obtainable, in transactions in which they may be deemed underwriters within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
Any profits realized on such sales by such persons may be regarded as
underwriting compensation under the Securities Act.
At April 18, 1998, the end of the second quarter of fiscal 1998, the
Company had 15,507,518 shares of Common Stock outstanding, after giving effect
to a three-for-two Common Stock split effected in the form of a dividend paid
on May 29, 1998. The Company's Common Stock is traded on the Nasdaq National
Market ("Nasdaq"). On June 1, 1998, the last sale price of the Common Stock
on Nasdaq was $17.75 per share.
All expenses of this offering will be paid by the Company.
The term "Company" refers to Western Staff Services, Inc., a Delaware
corporation and its subsidiaries, affiliates and predecessors, unless the
context requires otherwise. The executive offices of the Company are located at
301 Lennon Lane, Walnut Creek, California 94598-2453. The telephone number is
(925) 930-5300.
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 5.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 2, 1998
3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files, reports, proxy statements and other information with the
Securities and Exchange Commission ("SEC"). Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any part
thereof may be obtained at prescribed rates from the Commission's Public
Reference Section at such addresses. Also, the Commission maintains a World Wide
Web site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Company's Common Stock is listed on
Nasdaq, and such reports, proxy and information statements and other information
concerning the Company may be inspected at the office of Nasdaq, 1735 K Street,
Washington D.C. 20006. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the SEC
under the Exchange Act are incorporated herein by reference: (a) the
Company's Annual Report on Form 10-K for the year ended November 1, 1997; (b)
the Company's Quarterly Report on Form 10-Q for the quarter ended January 24,
1998; (c) the Company's quarterly report on Form 10-Q for the quarter ended
April 18, 1998; and (d) the description of the Registrant's Common Stock
which is contained in its Registration Statement on Form 8-A dated March 18,
1996 filed under the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded. All information appearing in this Prospectus is qualified in its
entirety by the information and financial statements (including notes thereto)
appearing in the documents incorporated herein by reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS THERETO) ARE
AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY PERSON TO WHOM
THIS PROSPECTUS HAS BEEN DELIVERED, FROM PAUL A. NORBERG, 301 LENNON LANE,
WALNUT CREEK, CALIFORNIA 94598-2453 (TELEPHONE: 925/930-5300), IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE AT LEAST
FIVE DAYS PRIOR TO THE DATE ON WHICH A FINAL INVESTMENT DECISION IS TO BE MADE.
4
RISK FACTORS
THE FOLLOWING RISK FACTORS MAY AFFECT THE VALUE OF THE SECURITIES AND
THEREFORE SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, IN CONJUNCTION WITH THE
OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
BEFORE MAKING AN INVESTMENT DECISION. SEE ALSO "FORWARD-LOOKING STATEMENTS."
POSSIBLE ADVERSE EFFECTS OF FLUCTUATIONS IN THE GENERAL ECONOMY
Historically, the general level of economic activity has significantly
affected the demand for temporary personnel. As economic activity has slowed,
the use of temporary employees often has been curtailed before permanent
employees have been released. In addition, an economic downturn may adversely
affect the demand for temporary personnel and may have a material adverse effect
on the Company's business, results of operations, cash flows and financial
condition. As economic activity has increased and employment rates have
increased, temporary employees often have been added to the work force before
permanent or regular staff employees have been hired. During these periods of
increased economic activity and employment rates, the competition among
temporary services firms for qualified temporary personnel is intense. Further,
the Company may face increased competitive pricing pressures during such
periods. There can be no assurance that during these periods the Company will
be able to recruit the temporary personnel necessary to fill its customers' job
orders or that such pricing pressures will not adversely affect the Company's
business, results of operations, cash flows and financial condition. See "--
Forward-Looking Statements."
RELIANCE ON MANAGEMENT INFORMATION SYSTEMS
The Company's results of operations are significantly affected by its
management information systems. Starting in fiscal 1995, the Company began
conversion of all domestic business services offices to a new comprehensive
payroll and billing system. This conversion was completed during the first
quarter of fiscal 1998. The Company is currently in the process of completing
the development of an integrated search and retrieval function within the
payroll and billing system and expects to begin roll-out of this feature
starting in the fourth quarter of fiscal 1998. The Company is also in the
process of evaluating and implementing available hardware and programming
options to increase the capacity of the current system to meet projected
volume increases. The Company anticipates changing certain of its back office
financial accounting and reporting systems during fiscal 1999 to enhance
processing, inquiry and reporting functions. Furthermore, during the second
quarter of fiscal 1998, the Company began implementation of a wide area network
(WAN) to improve communication and data flow amongst the field offices and
corporate headquarters. The Company expects to have a pilot project relating
to the WAN completed during the fourth quarter of fiscal 1998. In addition to
the business services systems, the Company completed the conversion of its
medical services offices to a comprehensive clinical and financial accounting
and reporting package during the first quarter of fiscal 1998. The Company is
currently working on additional enhancements to the medical system to improve
efficiency and performance of the system. There can be no assurance that the
Company will meet its anticipated completion dates for planned system
enhancements relating to its WAN, search and retrieval systems, financial and
accounting reporting systems or its medical system, or that such enhancements
will support the Company's actual future growth or provide significant gains
in efficiency. The failure of the enhancements to meet these expected goals
could result in increased system costs and could have a material adverse
effect on the Company's business, results of operations, cash flows and
financial condition. See "--Forward-Looking Statements."
5
VARIABILITY OF OPERATING RESULTS; SEASONALITY
The Company has experienced significant fluctuations in its operating
results and anticipates that these fluctuations may continue. Operating results
may fluctuate due to a number of factors, including the demand for the Company's
services, the competition within its markets, the loss of a principal customer
and the Company's ability to increase the productivity of its existing offices,
to control costs and to expand operations and the availability of sufficient
personnel. In addition, the Company's results of operations could be adversely
affected by severe weather conditions in regions where it operates its business.
While the Company has recorded operating income in each of the past five fiscal
years, there can be no assurance that it will be able to sustain profitability
or that conditions will not have a material adverse effect on its business,
results of operations, cash flows and financial condition. Due to all of the
foregoing factors, the Company has experienced in the past, and may possibly
experience in the future, results of operations below the expectations of public
market analysts and investors. The occurrence of such an event would likely
have a material adverse effect on the price of the Company's Common Stock. See
"-- Forward-Looking Statements" and "--Variability of Employee-Related Costs."
Additionally, the Company's results of operations have historically been
subject to seasonal fluctuations. Demand for temporary staffing historically
has been greatest during the Company's fourth fiscal quarter due largely to the
planning cycles of many of its customers. Sales for the first fiscal quarter
are typically lower due to national holidays as well as plant shutdowns during
and after the holiday season. These shutdowns and post-holiday season declines
significantly affect job orders received by the Company, particularly in the
light industrial sector.
UNCERTAIN ABILITY TO CONTINUE AND MANAGE COMPANY GROWTH; RISKS RELATED TO
ACQUISITIONS
The Company's continued growth depends on a number of factors, including
the strength of demand for the Company's services, continued improvements in the
productivity of its offices, the ability to open and successfully operate new
offices, the ability to maintain margins in the face of competitive pressures
and changing regulatory environments, the availability of sufficient working
capital, the recruitment, motivation and retention of its branch office or key
managers, the recruitment and retention of qualified temporary personnel. See
"-- Forward-Looking Statements."
The Company plans to continue its practice of acquiring independent
temporary services firms. The Company may also consider further acquisitions of
franchise agents and licensees. There can be no assurance that the Company will
be able to successfully identify suitable acquisition candidates, complete
acquisitions, integrate acquired businesses into its operations or expand into
new markets. The Company is unable to predict whether or when any prospective
acquisition candidate will become available or the likelihood that a material
acquisition will be completed should any negotiations commence. If the Company
proceeds with a relatively large acquisition, and the consideration is in the
form of cash, a substantial portion of the Company's cash and surplus borrowing
capacity could be used to consummate such an acquisition. If the Company
proceeds with an acquisition, and the consideration is in the form of the
Company's Common Stock, investors participating in these offerings may incur
dilution. There can be no assurance that the Company will be able to integrate
any such acquisitions in a timely manner without substantial costs or delays or
other problems. Once integrated, the acquired entities may not achieve levels
of sales, profitability or productivity comparable to the Company's existing
offices or perform as otherwise anticipated. In addition, acquisitions involve
a number of special risks, such as diversion of management's attention,
difficulties in the integration of acquired operations and retention of key
personnel, unanticipated problems or legal liabilities, the integration of
management information systems, and the amortization of acquired intangible
assets, some or all of which could have a material adverse effect on the
Company's business, results of operations, cash flows and financial condition.
To date, the collective acquisitions consummated by the Company have not been
material. If the Company were to proceed with a substantial acquisition
relative to its operations, the risks of integration would be increased. See
"-- Forward-Looking Statements."
6
To the extent the Company chooses to use cash consideration for
acquisitions in the future, the Company may be required to obtain additional
financing in excess of amounts currently available under its existing credit
facilities, and there can be no assurance that such financing will be available
on favorable terms, if at all.
AVAILABILITY OF QUALIFIED TEMPORARY PERSONNEL
The Company competes with other temporary staffing companies, as well as
customers of the Company and other employers, for qualified personnel. A
substantial number of the Company's temporary employees during any given year
will terminate their employment with the Company to accept permanent or regular
staff employment with customers of the Company. The Company may, in the future,
encounter difficulty in recruiting sufficient temporary employees of the caliber
the Company is committed to providing to its customers. In addition, during
periods of decreased unemployment, the Company may incur increased expenses
associated with recruiting qualified temporary employees as the pool of
potential temporary employees is substantially shallower during such periods,
intensifying competition among temporary staffing companies for such employees.
The Company's inability to attract and retain a sufficient number of additional
qualified temporary employees to support the Company's projected growth or the
loss of a significant number of qualified temporary employees could have a
material adverse effect on the Company's business, results of operations, cash
flows and financial condition. See "-- Forward-Looking Statements."
VARIABILITY OF EMPLOYEE-RELATED COSTS
The Company is responsible for all employee related expenses for the
Company's temporary staff employees of its Company-owned and franchise agent
offices including workers' compensation, unemployment insurance, social security
taxes, state and local taxes, and other general payroll expenses. The Company's
workers' compensation costs were 3.5% of payroll for the fiscal quarter ended
April 18, 1998 and 3.6% of payroll for the fiscal quarter ended April 19, 1997.
The Company's workers' compensation costs may vary depending upon the mix of
business among clerical, light industrial and medical.
The Company self-insures the deductible amount related to workers'
compensation claims under its paid loss retrospective program. The deductible
amounts were $500,000 per claim for policy year 1997 and $350,000 for policy
years 1996 and 1995. The Company accrues for workers' compensation costs based
upon payroll dollars paid to temporary employees. The accrual rates vary based
upon the specific risks associated with the work performed by the temporary
employee. At the beginning of each policy year, the Company reviews the overall
accrual rates with its outside actuaries and makes changes to the rates as
necessary based primarily upon historical loss trends.
Each year, the Company adjusts its historical accruals to the actuarially
developed estimate of the ultimate cost for each open policy year. These
adjustments can either be increases to workers' compensation costs or decreases,
depending upon the actual loss experience of the Company. There can be no
assurance that the Company's programs to control worker's compensation expenses
will be effective or that loss development trends will not require a charge to
costs of services in future periods to increase worker's compensation accruals.
See "-- Forward-Looking Statements."
GOVERNMENTAL REGULATION RELATING TO HEALTH CARE PROVIDERS
As a provider of home care services, the Company is subject to changing
federal and state regulations relating to the licensing and certification of its
offices and the sale and delivery of its services. Changes in the law and
regulations as well as new interpretations enforced by the relevant regulatory
agencies could have a material adverse effect on the Company's business, results
of operations, cash flows and financial condition.
7
On August 5, 1997, President Clinton signed into law the Balanced Budget
Act of 1997 (the "Budget Act"), resulting in significant changes to cost based
reimbursement for Medicare services provided by home health care providers.
Cost limits were reduced for fiscal years beginning on or after October 1, 1997.
Home health agencies will be reimbursed the lowest of: (1) actual costs of
operating the agency's Medicare services; (2) a reduced aggregate cost per visit
rate; or (3) an aggregate per beneficiary limit.
The Budget Act requires the Health Care Financing Administration of the
U.S. Department of Health and Human Services ("HCFA") to implement a Prospective
Payment System ("PPS") for fiscal years beginning on or after October 1, 1999 to
replace this cost-based system. The PPS will pay home health agencies a fixed
amount for services rendered without regard to their costs. There can be no
assurance that such reimbursement rates will cover the costs incurred by the
Company to provide Medicare home health care services.
The impact of these changes on the Company will be to reduce the amount of
costs that will be reimbursable, pursuant to the Medicare program, effective
November 2, 1997. However, as the Company has not yet received its specific
provider based per-beneficiary limits from HCFA it is not possible to quantify
the actual amount of the impact of the new reimbursement rates on the Company's
results of operations. To address the potential impact of these reimbursement
reductions, the Company is assessing the effectiveness of its patient care
services and is developing strategies to increase efficiency in providing care
to patients. In addition, the Company is reviewing its expenditures for
operating costs and general and administrative expenses in an effort to ensure
that its costs will be within the amounts that may be reimbursable under the
new regulations. The Company currently estimates that the potential effect of
the new regulations will not be material to the Company's results of operations
for fiscal 1998. However, because the Company cannot presently determine the
actual number of patients that will be serviced, the severity of their illnesses
or the extent of its ability to reduce general or administrative expenses, and
as the Company has not yet been furnished with its specific provider based
per-beneficiary limits, there can be no assurance that the ultimate adjustments
to revenue as a result of the new regulations will not have a material adverse
effect on the business, financial condition, cash flows or results of operations
of the Company.
Additionally, a number of states have adopted laws regulating companies
that provide health care services. In many of the states, the Company need only
be licensed. In 20 states, a certificate of need ("CON") from the state must be
obtained to be a Medicare provider. CON laws restrict the types of care that
may be provided and can limit or prohibit the Company's ability to provide
certain services and to establish or expand its medical operations. CON
requirements and restrictions vary substantially from state to state.
In addition, the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO") accreditation has become important in providing home
health care services. As of April 18, 1998, 19 of the Company-owned offices,
six franchise agent offices and five licensed offices are accredited by JCAHO.
RISKS RELATED TO THE LOSS OF CUSTOMERS
As is common in the temporary staffing industry, the Company's engagements
to provide services to its customers are generally non-exclusive, of a
short-term nature and subject to termination by the customer with little or no
notice. During fiscal 1997 and fiscal 1996, no single customer of the Company
accounted for more than 1.0% and 1.5%, respectively, of the Company's sales,
excluding license fees. Nonetheless, the loss of any of the Company's
significant customers would have an adverse effect on the Company's business,
results of operations, cash flows and financial condition. The Company is also
subject to credit risk associated with its trade receivables. Should any of the
Company's principal customers default on a large receivable, the Company's
business, results of operations, cash flows and financial condition could be
adversely affected. See "-- Forward-Looking Statements."
8
RELIANCE ON MANAGERS AND KEY PERSONNEL
The Company's success depends in part upon its ability to identify, develop
and retain qualified employees, particularly branch office, area, regional and
zone managers. The Company recruits such personnel from a limited pool of
available applicants. In addition, given the relatively decentralized nature of
the Company's business, the Company is heavily dependent on the performance and
productivity of its branch office managers. The Company establishes performance
standards for its branch office managers, and, to the extent these standards are
not met, its business, results of operations, cash flows and financial condition
could be adversely affected. From time to time, the Company has terminated
branch office managers who have failed to meet its performance standards. There
can be no assurance that the Company will be able to continue to identify,
develop and retain qualified managers or that existing or new branch office
managers will be able to meet performance standards set by the Company. The
loss of some of its key managers could have a material adverse effect on the
Company's business, results of operations, cash flows and financial condition,
particularly its ability to establish and maintain customer relationships. See
"-- Forward-Looking Statements."
In addition, the Company is highly dependent on its senior executives,
including W. Robert Stover, its Chairman and Chief Executive Officer, Michael K.
Phippen, its President and Chief Operating Officer, and Paul A. Norberg, its
Executive Vice President and Chief Financial Officer, and on the other members
of its executive management team. The Company has entered into an employment
agreement with its Chief Executive Officer for continuing employment until he
chooses to retire or until his death. The Company does not have employment
agreements with its other senior executives, but the Company has entered into
employment agreements with certain other members of its executive management
team. The loss of the services of any of these key personnel or the inability
to attract, retain and motivate sufficient numbers of qualified key employees
could have a material adverse effect on the Company's business, results of
operations, cash flows and financial conditions. See "-- Forward-Looking
Statements."
RISKS RELATED TO FRANCHISE AGENT AND LICENSED OPERATIONS
Franchise agent and licensed operations comprise a significant portion of
the Company's sales of services and license fees. For the fiscal year 1997 and
fiscal year 1996, 27.4% and 31.3%, respectively, of the Company's sales of
services and license fees were derived from such operations. The Company's ten
largest franchise agents for fiscal 1997 (based on sales volume) accounted for
10.1% of total Company sales, excluding license fees. The loss of one or more
of the Company's franchise agents or licensees and the associated loss of
customers and sales could have a material adverse effect on the Company's
business, results of operations, cash flows and financial condition. See "--
Forward-Looking Statements."
The Company's franchise agent and license agreements contain two-year
non-competition covenants which the Company vigorously seeks to enforce.
Efforts to enforce the non-competition covenants have resulted in litigation
brought by the Company following termination of certain franchise agent
agreements. In the past three fiscal years, the Company has commenced a total
of two actions to enforce the non-competition covenants, and both actions are
presently pending. Should former franchise agents ultimately prevail at trial
or successfully appeal, the Company's ability to prevent franchise agents or
licensees from operating competitive temporary staffing business could be
adversely affected. The Company has incurred, and may continue to incur,
substantial attorneys' fees and litigation expenses for such lawsuits, both in
furtherance of the Company's role as plaintiff and in defense of counterclaims
or cross complaints for which insurance coverage typically is not available.
See "-- Forward-Looking Statements."
The Company's sales of franchises and licenses is regulated by the Federal
Trade Commission and by state business opportunity and franchise laws. The
Company has either registered, or been exempted from registration, in 14 of the
15 states which require registration in order to offer franchises or licenses.
In one of the 15 states, the
9
Company has not yet sought registration and is therefore not currently
authorized to offer franchise or license arrangements.
INTERNATIONAL OPERATIONS
The Company's international operations are subject to inherent risks,
including unexpected changes in regulatory requirements, tariffs and other
barriers, fluctuating exchange rates, difficulties in staffing and managing
foreign operations, greater working capital requirements and political and
economic instability. A portion of the Company's sales outside of North America
are denominated in local currencies, and accordingly, the Company is subject to
the risks associated with fluctuations in currency rates. There can be no
assurance that any of these factors will not have a material adverse effect on
the Company's future international sales and, consequently, on the Company's
business, operating results, cash flows and financial condition. See "--
Forward-Looking Statements."
MEDICAL SERVICES
The Company's medical services subsidiary has completed the migration from
the Company's general information system to a comprehensive, industry-specific
clinical and financial accounting and reporting system. The system was acquired
from a nationally known medical information system company. It is designed to
organize and present information in a manner that facilitates the ability of the
Company to obtain appropriate and timely reimbursement under Medicare and other
programs through electronic billing, while integrating the financial and
clinical information which is vital to future managed care controls. The
Company is currently working on additional enhancements to the medical systems
to improve efficiency and performance of the system. The Company believes that
the completed conversion and its planned system enhancements will allow for
operating efficiencies in future years. However, there can be no assurance that
the completed conversion and any such enhancement will support the Company's
actual future growth or provide significant gains in efficiency. Any
significant defects in the software, delay in implementing the additional
enhancements or failure of the completed enhancements to meet these expected
goals could result in increased system costs and have a material adverse effect
on the Company's business, results of operations, cash flows and financial
condition. See "-- Forward-Looking Statements" and "--Governmental Regulation
Relating to Healthcare Providers."
HIGHLY COMPETITIVE MARKET
The temporary staffing industry is highly competitive. The Company
competes for customers and qualified temporary personnel with other full service
providers, specialized temporary services firms and home care providers. The
majority of its competitors are significantly smaller than the Company; however,
many competitors have greater marketing and financial resources. There can be
no assurance that the Company will not encounter increased competition in the
future, which could limit the Company's ability to maintain or increase its
market share or maintain gross margins, and which could have a material adverse
effect on the Company's business, results of operations, cash flows and
financial conditions. See "-- Forward-Looking Statements."
YEAR 2000 COMPLIANCE
The Company is in the process of evaluating the impact of the Year 2000
issue and expects to complete such evaluation during fiscal 1998. The Year
2000 issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations. The Company presently believes that, with minor modifications
to existing software and planned software upgrades and replacements, the Year
2000 issue will not pose significant operational concerns
10
nor have a material adverse effect on the Company's business, financial
condition, cash flows or results of operations in any given year. Although the
Company does not currently expect that the impact of this computer program flaw
will be material, there can be no assurance that the Company will not discover
Year 2000 issues with respect to the Company's computer systems in the course
of its evaluation process that would have a material adverse effect on the
business, financial condition, cash flows or results of operations of the
Company. In addition, the Year 2000 issue may impact other entities with
which the Company transacts business, and there can be no assurance that such
impact will not have a material adverse effect on the business, financial
condition, cash flows or results of operations of the Company. See "--
Forward-Looking Statements."
CONTROL BY PRINCIPAL STOCKHOLDER
The Company's principal stockholder, Mr. Stover, beneficially owns
approximately 64.0% of the outstanding shares of Common Stock of the Company
and therefore effectively controls the Company. Accordingly, Mr. Stover will
have sufficient voting power (without the need to obtain the approval of the
Company's other stockholders) to elect the entire Board of Directors of the
Company and, in general, to determine the outcome of all matters submitted to
the stockholders for approval that require a majority vote. In addition,
future sales by Mr. Stover of substantial amounts of Common Stock, or the
potential for such sales, could adversely affect the prevailing market price
of the Common Stock.
EMPLOYER LIABILITY RISKS
The Company is in the business of employing people and placing them in the
workplace of other businesses. Attendant risks include claims against the
Company by regular staff or temporary employees, or by third persons, for
physical or emotional injury, harassment, discrimination and other claims.
Additional risks include, but are not limited to, fraudulent payroll practices
by regular staff or temporary employees of the Company, by franchise agents and
licensees and their employees and the unlawful employment by the Company of
undocumented workers. The Company's medical services subsidiary places
temporary personnel in private homes with limited on-site supervision, thereby
subjecting the Company to the additional risk of malpractice and other types of
claims. Although the Company has policies and guidelines in place to reduce its
exposure to these risks and carries insurance, a failure to follow these
policies and guidelines may result in negative publicity and the payment by the
Company of monetary damages or fines. See "-- Forward-Looking Statements."
SHARES ELIGIBLE FOR FUTURE SALE
As of April 18, 1998, the Company had 15,507,518 shares of Common Stock
outstanding, after giving effect to a three-for-two Common Stock Split
effected in the form of a dividend paid on May 29, 1998. Of these shares,
3,389,433 shares are freely tradeable under the Securities Act by persons who
are not "affiliates" of the Company (in general, an affiliate is any person
who has a control relationship with the Company). The remaining 12,118,085
outstanding shares of Common Stock are deemed to be "restricted securities" as
that term is defined in Rule 144, all of which are qualified for sale in the
public market in compliance with Rule 144.
No prediction can be made as to the effect, if any, that market sales of
shares of Common Stock that are restricted securities, or the availability of
such shares for sale, will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of Common Stock, or
the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock and could impair the Company's future ability
to raise capital through an offering of equity securities. See "--
Forward-Looking Statements."
As part of the Company's acquisition strategy, the Company may issue
additional shares of its Common Stock. To the extent that the Company is able
to execute its acquisition strategy, the number of outstanding shares of Common
Stock that will be eligible for sale in the future is likely to increase
substantially. In addition, the potential issuance of additional shares in
connection with anticipated acquisitions could depress demand for the
11
Common Stock and result in a lower price than would otherwise be obtained. See
"-- Forward-Looking Statements."
POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS
Certain provisions of Delaware law applicable to the Company could have the
effect of delaying, deterring or preventing a change in control of the Company,
including Section 203 of the Delaware General Corporation Law, which prohibits a
Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years from the date the person
became an interested stockholder unless certain conditions are met. In
addition, the Company's Certificate of Incorporation and By-laws contain certain
provisions that could discourage potential takeover attempts and make more
difficult attempts by stockholders to change management. The Company's Board of
Directors has the authority without action by the Company's stockholders to fix
the rights and preferences and issue shares of the Preferred Stock, and to
impose various procedural and other requirements that could make it more
difficult for stockholders to effect certain corporate actions. The Company's
Certificate of Incorporation provides that directors may be removed only by the
affirmative vote of the holders of two-thirds of the shares of the Company's
capital stock entitled to vote. Any vacancy on the board of directors may be
filled only by vote of the majority of directors then in office. Further, the
Company's Certificate of Incorporation provides that any "Business Combination"
(as therein defined) requires the affirmative vote of 66 2/3% of the shares
entitled to vote, voting together as a single class. In addition, the Company's
By-laws provide that the Company's Board of Directors will be divided into three
classes with staggered terms. These provisions, and certain other provisions of
the Certificate of Incorporation which may have the effect of delaying proposed
stockholder actions until the next annual meeting of stockholders, could have
the effect of delaying or preventing a tender offer for the Company's Common
Stock or other changes of control or management of the Company, which could
adversely affect the market price of the Company's stock. See "--
Forward-Looking Statements."
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act which are
subject to the "safe harbor" created by those sections. These forward-looking
statements include, but are not limited to, statements concerning the Company's
strategy, mission, acquisition program, opportunities and goals and the
potential development of the market for temporary staffing services.
These forward-looking statements may be found in the "Prospectus Summary,"
"Risk Factors," and "The Company." Forward-looking statements not specifically
set forth above may also be found in these and other sections of this
Prospectus. Actual results could differ materially and adversely from those
discussed in the forward-looking statements as a result of certain factors,
including those discussed elsewhere in the foregoing in "Risk Factors" section
and elsewhere in this Prospectus.
THE COMPANY
OVERVIEW
The Company provides traditional temporary staffing services to businesses,
government agencies and health care organizations in regional and local markets
in the United States and selected international markets. Through its network of
Company-owned, franchise agent and licensed offices, the Company offers a wide
range of temporary staffing solutions, including replacement, supplemental and
on-site programs. The Company has 50 years of experience in the staffing
industry and operates over 400 offices in 44 states and the District of Columbia
as well as Guam and five foreign countries. At April 18, 1998, the end of the
second quarter of fiscal 1998,
12
approximately 69% of these offices were owned by the Company, 24% were operated
by franchise agents and 7% were operated by licensees. The Company's two
primary lines of business are business services and medical services.
The Company was founded in 1948 and incorporated in California in 1954. In
October 1995, the Company reincorporated in Delaware. The Company's executive
offices are located at 301 Lennon Lane, Walnut Creek, California 94598-2453 and
its telephone number is (925) 930-5300. The Company transacts business through
its subsidiaries, the largest of which is Western Staff Services (USA), Inc., a
California corporation, that is the primary operating entity.
References in this Prospectus to (i) the "Company" or "Western" refer to
Western Staff Services, Inc., its predecessor and their respective subsidiaries,
unless the context otherwise requires, and (ii) franchise agents' refer to the
Company's franchisees in their roles as limited agents of the Company in
recruiting job applicants, soliciting job orders, filling those orders and
handling collection matters upon request, but otherwise refer to the Company's
franchisees in their roles as independent contractors of the Company.
BUSINESS SERVICES
SERVICES. The Company provides essential support personnel to serve
clerical, light industrial, and light technical staffing needs of customers
through a network of offices. At April 18, 1998, the Company's business
services comprised 330 offices (excluding license offices) and represented
approximately 90% of the Company's fiscal 1998 year-to-date sales, excluding
license fees. In the light industrial segment, the Company's temporary
personnel perform light-duty, labor intensive tasks, such as unskilled and
semi-skilled assembly, packaging, warehousing, manufacturing and mail-house
support. The Company's temporary clerical personnel typically perform tasks
such as telemarketing, customer service, word processing, copying, data entry
and reception. The Company's temporary personnel in the light technical
segment provide services such as help desk support, laboratory testing and
support and quality control.
SALES AND MARKETING. The Company markets its temporary personnel services
to local and regional customers through its network of Company-owned, franchise
agent and licensed offices, as well as through its on-site service locations.
The Company coordinates its sales and marketing efforts through its corporate
headquarters in cooperation with branch and regional offices. The Company
targets small to mid-size companies in regional and local markets. The Company
seeks to obtain new customers by focusing on opportunities in regional and local
markets through personal sales presentations, telemarketing, direct mail
solicitation, referrals from other customers and advertising in a variety of
regional and local media, including the Yellow Pages, newspapers, magazines and
trade publications. In addition, the Company selectively utilizes local radio
advertising in certain markets to enhance its name recognition.
INTERNATIONAL OPERATIONS. The Company's international operations consist
of 63 offices, 23 in the United Kingdom, 23 in Australia, six in New Zealand,
four in Denmark and seven in Norway. All of these offices are presently
Company-owned and they provide business services. Through these offices, the
Company offers temporary personnel in the light industrial and clerical support
areas. In addition, the international offices supply permanent employment
placements. The Company employs a managing director for each country who
oversees all of the Company's operations in that country. For fiscal 1997,
12.6% of the Company's sales, excluding license fees, were derived from the
Company's international operations, and sales for the international operations
increased 23.2% as compared to fiscal 1996. See "Risk Factors -- International
Operations."
MEDICAL SERVICES
The Company provides temporary personnel to serve an array of home care and
institutional health care needs, including registered nurses, licensed
practical/vocational nurses, physical, occupational and speech therapists,
medical social workers, certified home health and personal care aides, home care
companions, and allied health
13
personnel such as pharmacists, medical technicians and phlebotomists. In the
third quarter of fiscal 1997, the Company formed a new California corporation
known as Western Medical Services, Inc. and transferred the division's assets
and liabilities to that subsidiary. Approximately half of the medical services
subsidiary's personnel are licensed. During fiscal 1997, approximately 69.1% of
the Company's medical services health care sales were derived from home care
services and 30.9% were derived from institutional staffing. At April 18,
1998, the medical services subsidiary comprised 55 domestic offices (excluding
license offices) and contributed approximately 10% of the Company's fiscal
1998 year-to-date sales, excluding license fees. See "Risk Factors -- Medical
Services."
OPERATIONS
The Company operates through a network of over 400 offices in 44 states and
the District of Columbia as well as Guam and five foreign countries. In
addition, the Company establishes from time to time recruiting offices both for
recruiting potential temporary employees and for testing demand for its services
in new market areas. The Company's operations are decentralized, with branch,
area, regional and zone managers and franchise agents and licensees enjoying
considerable autonomy in hiring, business mix and advertising. The Company
seeks highly talented managers and entrepreneurs who are capable of operating
independently and who will succeed within the Company's decentralized branch
office structure. The Company provides its decentralized branch offices with
support from its corporate headquarters in such areas as billing, payroll,
credit granting, receivables aging analysis, collections, risk management
programs, workers' compensation and state unemployment insurance, marketing
support, quality standards, guidance in hiring and training of temporary
personnel, operating procedures, customer services, training materials and
advice on legal and regulatory matters.
COMPANY-OWNED OFFICES
Employees of each Company-owned office report to a manager who is
responsible for day-to-day operations and the profitability of that office.
Office managers generally report to area and/or regional managers. As of April
18, 1998, there were two zone managers and 15 regional managers within the
Company's management structure headquartered in their respective geographic
areas as well as three regional managers of the medical services subsidiary. In
addition to salary, in the Company's business services branch offices,
commissions may be earned by all domestic and some international employees.
These commissions are based on the gross profit dollars per full-time equivalent
employee to motivate employees to maximize the growth and profitability of their
offices. In addition, office, area, regional and zone managers are eligible to
participate in a return on sales incentive plan that compensates them on a
formula based on the net income achieved in their office, area, region or zone.
FRANCHISE AGENT OFFICES
The Company's franchise agents have the exclusive right by contract to sell
certain of the Company's services and to use the Company's service marks,
business names and systems in a specified territory. The Company's franchise
agent agreements generally allow franchise agents to open multiple offices
within their exclusive territories. As of April 18, 1998, the Company's 57
franchise agents operated 100 franchise agent offices.
LICENSED OFFICES
The Company introduced its licensing program for business services in
fiscal 1993 as an alternative to its franchise agent program. In addition, in
December 1995, the Company began offering the license program through its
medical services division to independent owners who wished to affiliate with the
Company. Under the Company's license program the licensee is the employer of
the temporary employees and the owner of the customer accounts receivable. In
addition, the medical licensee retains the home health agency license and
Medicare certification, if any, in its name. The Company retains 8.0% of the
non-Medicare gross sales as a service fee and charges a service fee per visit
for Medicare services. As of April 18, 1998, the Company had 11 licensees
operating 29 licensed offices.
14
SELECTED FINANCIAL AND OPERATING DATA
The consolidated financial and operating data set forth below (except for
the Other Operating Data and System Revenue Data) as of and for the fiscal
years ended November 1, 1997, November 2, 1996, October 28, 1995, October 29,
1994 and October 30, 1993 have been derived from the audited consolidated
financial statements of the Company, including those incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended November 1, 1997. The consolidated financial and operating
data as of and for the fiscal quarters ended April 18, 1998 and January 24,
1998 (incorporated in this Prospectus by reference to the Company's Quarterly
Report on Form 10-Q) are unaudited, but have been prepared on the same basis
as the audited financial statements, and in the opinion of management, reflect
all adjustments, which are of a normal recurring nature, necessary for the
fair presentation of the financial position and results of operations for
these periods. Consolidated operating results for these fiscal quarters are
not necessarily indicative of the results that may be expected for the entire
fiscal year.
FISCAL QUARTER ENDED FISCAL YEAR
------------------------- -------------------------------------------------------------
18-APR-98 24-JAN-98 1997 1996 (3) 1995 1994 1993
---- -------- ---- ---- ----
Sales of services and license fees $ 142,565 $ 141,155 $ 576,808 $482,073 $399,663 $337,201 $280,512
Operating income 5,077 4,317 17,331 15,296 12,233 9,556 2,665
Net income (2) $ 2,700 $ 2,236 $ 9,556 $ 3,283 $ 10,741 $ 8,974 $ 2,576
------------------------- -------------------------------------------------------------
------------------------- -------------------------------------------------------------
Basic earnings per share (1),(2) $ 0.17 $ 0.15 $ 0.62 $ 0.23 $ 0.81 $ 0.68 $ 0.19
------------------------- -------------------------------------------------------------
------------------------- -------------------------------------------------------------
Diluted earnings per share (1),(2) $ 0.17 $ 0.14 $ 0.62 $ 0.23 $ 0.81 $ 0.68 $ 0.19
------------------------- -------------------------------------------------------------
------------------------- -------------------------------------------------------------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital $ 63,295 $ 44,874 $ 45,184 $ 31,982 $ 17,349 $ 24,293 $ 18,720
Total assets 157,008 153,926 154,530 120,780 96,169 76,367 59,621
Short-term debt 4,822 19,222 21,298 11,193 16,838 3,895 4,354
Long-term debt (excluding current portion) 37,417 19,233 17,631 3,603 5,623 4,776 5,093
Stockholders' equity 62,804 58,885 57,296 49,252 31,792 29,911 22,308
OTHER OPERATING DATA:
Number of offices (at end of period)
Company-owned 285 267 259 237 214 187 179
Franchise agent 100 113 120 119 106 99 97
Licensed 29 23 21 14 21 16 5
------------------------- -------------------------------------------------------------
Total 414 403 400 370 341 302 281
------------------------- -------------------------------------------------------------
------------------------- -------------------------------------------------------------
SYSTEM REVENUE DATA (EXCLUDING LICENSE
FEES):
Business Services
Domestic $117,055 $ 114,011 $ 473,192 $418,546 $384,202 $327,193 $234,251
International 16,208 16,846 72,554 58,872 48,528 35,641 26,279
------------------------- -------------------------------------------------------------
Total 133,263 130,857 545,746 477,418 432,730 362,834 260,530
Medical Services 16,149 15,768 56,176 43,907 38,491 36,791 31,501
------------------------- -------------------------------------------------------------
Total system revenue $149,412 $ 146,625 $ 601,922 $521,325 $471,221 $399,625 $292,031
------------------------- -------------------------------------------------------------
------------------------- -------------------------------------------------------------
(1) On May 7, 1998, the Board of Directors declared a three-for-two common stock
split effected in the form of a stock dividend payable on May 29, 1998 to
shareholders of record at the close of business on May 18, 1998. Per share data
has been retroactively adjusted for the stock split for all periods presented.
(2) As of April 30, 1996 and in conjunction with the its initial public
offering, the Company elected to terminate its S-corporation status. Prior to
that date the Company operated as an S-corporation under Subchapter S of the
Internal Revenue Code of 1986, as amended and comparable provisions of certain
state income tax laws and, as such, earnings of the Company were subject to
taxation at the stockholder level. Basic and diluted earnings per share, on a
proforma basis as if the Company had been subject to federal and state income
taxation as a C-corporation during each of the periods presented, is $0.61,
$0.56, $0.42 and $0.10 for fiscal years 1996, 1995, 1994 and 1993, respectively.
(3) Fiscal 1996 net income includes a non-recurring net charge to earnings of
$7,460 as a result of the Company's April 30, 1996 election to terminate its
S corporation status.
15
OFFERED SECURITIES
The securities of the Company which may be offered from time to time by
this Prospectus consist of up to 1,500,000 shares of Common Stock, which the
Company proposes to issue in its continuing program of acquisitions. The
consideration for any acquisition may consist of cash, notes or other evidences
of debt, assumptions of liabilities, equity securities, or a combination
thereof, as determined from time to time by negotiations between the Company and
the owners of business or properties to be acquired. The Company intends to
concentrate its acquisitions in the temporary staffing services industry. If
the opportunity arises, however, the Company will attempt to make acquisitions
which are either complementary to its present operations or which it considers
advantageous even though they may be dissimilar to its present activities. In
general, the terms of acquisitions will be determined by direct negotiations
between the representatives of the Company and the owners of the businesses or
properties to be acquired or, in the case of entities more widely held, through
exchange offers to stockholders or documents soliciting approval of statutory
mergers, consolidations or sales of assets. Underwriting discounts or
commissions will generally not be paid by the Company. However, under some
circumstances, the Company may issue Common Stock covered by this Prospectus to
pay brokers' commissions incurred in connection with acquisitions.
This Prospectus, as appropriately amended or supplemented, has also been
prepared for use by persons who receive shares issued by the Company in
acquisitions, including Common Stock received upon conversion of other equity
securities of the Company or its subsidiaries issued in acquisitions, and who
wish to offer and sell such shares, on terms then available, in transactions in
which they may be deemed affiliates or underwriters within the meaning of the
Securities Act (such persons being referred to under this caption as "Selling
Shareholders"). Resales may be made pursuant to this Prospectus, as amended or
supplemented, pursuant to Rule 145(d) under the Securities Act, or pursuant to
an exemption from such Act. Profits realized on resales by Selling Shareholders
under certain circumstances may be regarded as underwriting compensation under
the Securities Act.
Resales by Selling Shareholders may be made directly to investors or
through a securities firm acting as an underwriter, broker or dealer. When
resales are to be made through a securities firm, such securities firm may be
engaged to act as the Selling Shareholder's agent in the sale of shares by such
Selling Shareholder, or such securities firm may purchase shares from the
Selling Shareholder as principal and thereafter resell such shares from time to
time. The fees earned by or paid to such securities firm may be the normal
stock exchange commission or negotiated commissions or underwriting discounts to
the extent permissible. In addition, such securities firm may effect resales
through other securities dealers, and customary commissions or concessions to
such other dealers may be allowed. Sales of shares may be at negotiated prices,
at fixed prices, at market prices or at prices related to market prices then
prevailing. Any such sales may be made on Nasdaq or other exchange on which
such shares are traded, in the over-the-counter market, by block trade, in
special or other offerings, directly to investors or through a securities firm
acting as agent or principal, or a combination of such methods. Any
participating securities firm may be indemnified against certain civil
liabilities, including liabilities under the Securities Act. Any participating
securities firm may be deemed to be an underwriter within the meaning of the
Securities Act, and any commissions earned by such firm may be deemed to be
underwriting discounts or commissions under such Act.
A Prospectus Supplement, if required, will be filed under Rule 424(b) under
the Securities Act, disclosing the name of the Selling Shareholder, the
participating securities firm, if any, the number of shares involved, and other
details of such resale, if appropriate.
The Common Stock is traded on Nasdaq under the listing symbol "WSTF."
16
LEGAL MATTERS
The validity of the Company's Common Stock offered hereby will be passed
upon for the Company by Morrison & Foerster LLP, San Francisco, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended November 1, 1997,
have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
----------------
17
TABLE OF CONTENTS
PAGE
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Documents Incorporated by Reference . . . . . . . . . . . . . . . . . . . . 4
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Selected Financial and Operating Data . . . . . . . . . . . . . . . . . . . 15
Offered Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1,500,000 SHARES
WESTERN STAFF SERVICES, INC.
[LOGO]
COMMON STOCK
($.01 PAR VALUE)
--------------
PROSPECTUS
--------------
June 2, 1998
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). The Company's Bylaws provide for mandatory
indemnification of its directors and officers to the maximum extent permitted by
the Delaware General Corporation Law. In connection with the incorporation of
the registrant in the State of Delaware, the Registrant has entered into
Indemnification Agreements with its directors, certain officers and certain key
employees. The Indemnification Agreements provide such directors and officers
with further indemnification to the maximum extent permitted by the Delaware
General Corporation Law. The Company's Certificate of Incorporation also
provides that, pursuant to Delaware law, its directors shall not be liable for
monetary damages for a breach of the directors' fiduciary duty as a director to
the Company and its stockholders.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (set forth on signature page to this
Registration Statement).
(b) Financial Statement Schedules. Incorporated by reference to
Schedule II filed with the Company's Form 10-K, for the year ended
November 1, 1997.
ITEM 22. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:
to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act");
(i) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission (the "SEC") pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(ii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
II-1
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed with or
furnished to the SEC by the Company pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof, and
(5) (i) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(ii) The registrant undertakes that every prospectus: (A) that is filed
pursuant to paragraph (i) immediately preceding, or (B) that that purports
to meet the requirements of Section 10(a)(3) of the Securities Act and is
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 20 above, or otherwise, the
Company has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Walnut Creek,
State of California, on June 1, 1998.
WESTERN STAFF SERVICES, INC.
By: /s/ W. Robert Stover
------------------------------
W. Robert Stover, Chairman and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Michael K. Phippen and Paul A. Norberg his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the Registration Statement
of the Company covering one million five hundred thousand shares of stock and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his or their substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ W. Robert Stover Director and Chairman of the June 1, 1998
------------------------ Board and Chief Executive
(W. Robert Stover) Officer
/s/ Michael K. Phippen President, Chief Operating June 1, 1998
------------------------ Officer and Director
(Michael K. Phippen)
/s/ Paul A. Norberg Executive Vice President, Chief June 1, 1998
------------------------ Financial Officer and Director
(Paul A. Norberg)
/s/ Gilbert L. Sheffield Director June 1, 1998
------------------------
(Gilbert L. Sheffield)
/s/ Jack D. Samuelson Director June 1, 1998
------------------------
(Jack D. Samuelson)
/s/ Dirk A. Sodestrom Vice President and Controller June 1, 1998
------------------------
(Dirk A. Sodestrom)
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
5.1 Opinion of Morrison & Foerster LLP
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (set forth on signature page to this
Registration Statement).
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