-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 GjIyNny5vCIOl6pMWAVMTeGrBSmTo3sHKQRYGV3Mac1G720btMfy1+CvOswgx8wO
 xkpA90P811ydHxq0GV9t3w==

<SEC-DOCUMENT>0001045969-01-500873.txt : 20010815
<SEC-HEADER>0001045969-01-500873.hdr.sgml : 20010815
ACCESSION NUMBER:		0001045969-01-500873
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20010701
FILED AS OF DATE:		20010814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KELLY SERVICES INC
		CENTRAL INDEX KEY:			0000055135
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-HELP SUPPLY SERVICES [7363]
		IRS NUMBER:				381510762
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-01088
		FILM NUMBER:		1708316

	BUSINESS ADDRESS:	
		STREET 1:		999 W BIG BEAVER RD
		CITY:			TROY
		STATE:			MI
		ZIP:			48084
		BUSINESS PHONE:		2483624444

	MAIL ADDRESS:	
		STREET 1:		999 WEST BIG BEAVER RD
		CITY:			TROY
		STATE:			MI
		ZIP:			48084
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>QUARTER REPORT FOR PERIOD ENDING JULY 1, 2001
<TEXT>
<PAGE>

                                       1


                          Index to Exhibits on page 14


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended July 1, 2001

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                          Commission File Number 0-1088


                              KELLY SERVICES, INC.
      ---------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

               DELAWARE                              38-1510762
   ----------------------------------           --------------------
     (State or other jurisdiction                 (I.R.S. Employer
   of incorporation or organization)             Identification No.)


                 999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
 -------------------------------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (248) 362-4444
     ----------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                    No Change
     -----------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

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
    ---      ---

At August 3, 2001, 32,345,486 shares of Class A and 3,494,209 shares of Class B
common stock of the Registrant were outstanding.
<PAGE>

                                       2


                      KELLY SERVICES, INC. AND SUBSIDIARIES



                                                                            Page
                                                                          Number
                                                                          ------

PART I.  FINANCIAL INFORMATION

         Item 1. Financial Statements (unaudited)

                   Statements of Earnings                                     3

                   Balance Sheets                                             4

                   Statements of Stockholders' Equity                         5

                   Statements of Cash Flows                                   6

                   Notes to Financial Statements                              7

         Item 2. Management's Discussion and Analysis of Results
                 of Operations and Financial Condition                        9

PART II. OTHER INFORMATION AND SIGNATURE

         Item 4. Submission of Matters to a Vote of Security Holders         12

         Item 6. Exhibits and Reports on Form 8-K                            12

         Signature                                                           13

         Index to Exhibits Required by Item 601, Regulation S-K              14
<PAGE>

                                       3


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

                      KELLY SERVICES, INC. AND SUBSIDIARIES

                             STATEMENTS OF EARNINGS
                                   (UNAUDITED)
                 (In thousands of dollars except per share data)

<TABLE>
<CAPTION>
                                                 13 Weeks Ended                       26 Weeks Ended
                                     -----------------------------------    -----------------------------------

                                      July 1, 2001        July 2, 2000       July 1, 2001       July 2, 2000
                                     ----------------    ---------------    ---------------    ----------------

<S>                                <C>                 <C>                <C>                <C>
Sales of services                  $       1,066,255   $      1,106,740   $      2,153,453   $       2,186,809

Cost of services                             887,936            909,731          1,793,760           1,801,826
                                     ----------------    ---------------    ---------------    ----------------

Gross profit                                 178,319            197,009            359,693             384,983

Selling, general and
  administrative expenses                    167,448            160,342            340,647             321,748
                                     ----------------    ---------------    ---------------    ----------------

Earnings from operations                      10,871             36,667             19,046              63,235

Interest (expense) income, net                  (101)              (167)              (276)                120
                                     ----------------    ---------------    ---------------    ----------------

Earnings before income taxes                  10,770             36,500             18,770              63,355

Income taxes                                   4,310             14,675              7,510              25,470
                                     ----------------    ---------------    ---------------    ----------------

Net earnings                       $           6,460   $         21,825   $         11,260   $          37,885
                                     ================    ===============    ===============    ================

Earnings per share:
  Basic                            $             .18   $            .61   $            .31   $            1.06
  Diluted                                        .18                .61                .31                1.06

Average shares outstanding
  (thousands):
  Basic                                       35,834             35,714             35,799              35,709
  Diluted                                     35,919             35,779             35,908              35,777

Dividends per share                $             .25   $            .25   $            .50   $             .49
</TABLE>


See accompanying Notes to Financial Statements.
<PAGE>

                                       4

                      KELLY SERVICES, INC. AND SUBSIDIARIES

             BALANCE SHEETS AS OF JULY 1, 2001 AND DECEMBER 31, 2000
                            (In thousands of dollars)

<TABLE>
<CAPTION>

ASSETS                                                         2001                  2000
- ------                                                  -----------------      -----------------
                                                           (UNAUDITED)
<S>                                                    <C>                   <C>
CURRENT ASSETS:
  Cash and equivalents                                 $           67,252    $           43,318
  Short-term investments                                            1,314                 2,394
  Accounts receivable, less allowances of
    $13,166 and $13,614, respectively                             581,898               631,771
  Prepaid expenses and other current assets                        25,371                24,903
  Deferred taxes                                                   51,532                52,209
                                                         -----------------     -----------------
  Total current assets                                            727,367               754,595

PROPERTY AND EQUIPMENT:
  Land and buildings                                               57,217                44,971
  Equipment, furniture and
    leasehold improvements                                        273,359               253,666
  Accumulated depreciation                                       (114,577)              (97,552)
                                                         -----------------     -----------------
  Total property and equipment                                    215,999               201,085

INTANGIBLES AND OTHER ASSETS                                      123,944               133,896
                                                         -----------------     -----------------

TOTAL ASSETS                                           $        1,067,310    $        1,089,576
                                                         =================     =================


LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
CURRENT LIABILITIES:
  Short-term borrowings                                $           45,138    $           57,839
  Accounts payable                                                 68,249                69,375
  Payroll and related taxes                                       241,567               234,807
  Accrued insurance                                                59,427                55,272
  Income and other taxes                                           42,458                48,814
                                                         -----------------     -----------------
  Total current liabilities                                       456,839               466,107

STOCKHOLDERS' EQUITY:
  Capital stock, $1.00 par value
    Class A common stock, shares issued 36,608,540
    at 2001 and 36,609,040 at 2000                                 36,609                36,609
    Class B common stock, shares issued 3,507,326
    at 2001 and 3,506,826 at 2000                                   3,507                 3,507
  Treasury stock, at cost
    Class A common stock, 4,263,275 shares at 2001
    and 4,363,578 shares at 2000                                  (82,315)              (84,251)
    Class B common stock, 13,017 shares at 2001
    and 12,817 shares at 2000                                        (376)                 (371)
  Paid-in capital                                                  16,871                16,371
  Earnings invested in the business                               668,747               675,388
  Accumulated foreign currency adjustments                        (32,572)              (23,784)
                                                         -----------------     -----------------

  Total stockholders' equity                                      610,471               623,469
                                                         -----------------     -----------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY               $        1,067,310    $        1,089,576
                                                         =================     =================
</TABLE>


See accompanying Notes to Financial Statements.
<PAGE>

                                       5

                      KELLY SERVICES, INC. AND SUBSIDIARIES

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                            (In thousands of dollars)


<TABLE>
<CAPTION>
                                                                13 Weeks Ended                       26 Weeks Ended
                                                        --------------------------------     -------------------------------
                                                        July 1, 2001      July 2, 2000       July 1, 2001      July 2, 2000
                                                        -------------     --------------     -------------     -------------
<S>                                                   <C>               <C>                <C>               <C>
Capital Stock
   Class A common stock
      Balance at beginning of period                  $       36,609    $        36,606    $       36,609    $        36,602
      Conversions from Class B                                     -                  3                 -                  7
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                                36,609             36,609            36,609             36,609

   Class B common stock
      Balance at beginning of period                           3,507              3,510             3,507              3,514
      Conversions to Class A                                       -                 (3)                -                 (7)
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                                 3,507              3,507             3,507              3,507

Treasury Stock
  Class A common stock
      Balance at beginning of period                         (82,498)           (84,888)          (84,251)           (80,538)
      Exercise of stock options, restricted stock
        awards and other                                         139                 96             1,485              1,196
      Treasury stock issued for acquisitions                      44                  -               451                164
      Purchase of treasury stock                                   -                  -                 -             (5,614)
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                               (82,315)           (84,792)          (82,315)           (84,792)

  Class B common stock
      Balance at beginning of period                            (376)              (248)             (371)              (248)
      Purchase of treasury stock                                   -                (36)               (5)               (36)
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                                  (376)              (284)             (376)              (284)

Paid-in Capital
      Balance at beginning of period                          16,808             16,167            16,371             15,761
      Exercise of stock options, restricted stock
        awards and other                                          54                 45               398                412
      Treasury stock issued for acquisitions                       9                  -               102                 39
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                                16,871             16,212            16,871             16,212

Earnings Invested in the Business
      Balance at beginning of period                         671,247            631,067           675,388            623,564
      Net earnings                                             6,460             21,825            11,260             37,885
      Dividends                                               (8,960)            (8,927)          (17,901)           (17,484)
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                               668,747            643,965           668,747            643,965

Accumulated Foreign Currency Adjustments
      Balance at beginning of period                         (31,687)           (20,850)          (23,784)           (16,282)
      Equity adjustment for foreign currency                    (885)            (2,282)           (8,788)            (6,850)
                                                        -------------     --------------     -------------     --------------
      Balance at end of period                               (32,572)           (23,132)          (32,572)           (23,132)
                                                        -------------     --------------     -------------     --------------

Stockholders' Equity at end of period                 $      610,471    $       592,085    $      610,471    $       592,085
                                                        =============     ==============     =============     ==============

Comprehensive Income
      Net earnings                                    $        6,460    $        21,825    $       11,260    $        37,885
      Other comprehensive income - Foreign
        currency adjustments                                    (885)            (2,282)           (8,788)            (6,850)
                                                        -------------     --------------     -------------     --------------
      Comprehensive Income                            $        5,575    $        19,543    $        2,472    $        31,035
                                                        =============     ==============     =============     ==============
</TABLE>

See accompanying Notes to Financial Statements.
<PAGE>

                                       6

                      KELLY SERVICES, INC. AND SUBSIDIARIES

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
              FOR THE 26 WEEKS ENDED JULY 1, 2001 AND JULY 2, 2000
                           (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                                2001                2000
                                                                            -------------       --------------
<S>                                                                       <C>                 <C>
Cash flows from operating activities:
   Net earnings                                                           $       11,260      $        37,885
   Noncash adjustments:
     Depreciation and amortization                                                21,447               19,308
   Decrease (increase) in accounts receivable, net                                37,105              (40,837)
   Changes in certain working capital components                                  14,124               26,345
                                                                            -------------       --------------

        Net cash from operating activities                                        83,936               42,701
                                                                            -------------       --------------
Cash flows from investing activities:
   Capital expenditures                                                          (23,751)             (24,007)
   Acquisition of building                                                       (11,783)                   -
   Proceeds from sales and maturities of short-term investments                  381,416              532,384
   Purchases of short-term investments                                          (380,336)            (532,834)
   Decrease (increase) in other assets                                             5,089               (8,951)
   Acquisition of companies, net of cash received                                   (180)              (1,534)
                                                                            -------------       --------------

        Net cash from investing activities                                       (29,545)             (34,942)
                                                                            -------------       --------------

Cash flows from financing activities:
   Decrease in short-term borrowings                                             (12,701)              (2,583)
   Dividend payments                                                             (17,874)             (17,460)
   Purchase of treasury stock                                                         (5)              (5,650)
   Stock options and other                                                           123                   57
                                                                            -------------       --------------

        Net cash from financing activities                                       (30,457)             (25,636)
                                                                            -------------       --------------

Net change in cash and equivalents                                                23,934              (17,877)
Cash and equivalents at beginning of period                                       43,318               54,032
                                                                            -------------       --------------

Cash and equivalents at end of period                                     $       67,252      $        36,155
                                                                            =============       ==============
</TABLE>


See accompanying Notes to Financial Statements.
<PAGE>

                                       7

                      KELLY SERVICES, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)
                            (In thousands of dollars)

1.  Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with Rule 10-01 of Regulation S-X and do not include
all the information and notes required by generally accepted accounting
principles for complete financial statements. All adjustments, consisting only
of normal recurring adjustments, have been made which, in the opinion of
management, are necessary for a fair presentation of the results of the interim
periods. The results of operations for such interim periods are not necessarily
indicative of results of operations for a full year. The unaudited consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto for the fiscal year ended
December 31, 2000 (the 2000 consolidated financial statements).

 2.  Segment Disclosures
The Company's reportable segments, which are based on the Company's method of
internal reporting, are: (1) U.S. Commercial Staffing, (2) Professional,
Technical and Staffing Alternatives (PTSA) and (3) International. The following
table presents information about the reported sales and earnings from operations
of the Company for the 13-week and 26-week periods ended July 1, 2001 and July
2, 2000. Segment data presented is net of intersegment revenues. Asset
information by reportable segment is not presented, since the Company does not
produce such information internally.

<TABLE>
<CAPTION>

                                            13 Weeks Ended                           26 Weeks Ended
                                        2001              2000                   2001              2000
                                    --------------    --------------         -------------     -------------
<S>                               <C>               <C>                    <C>               <C>
Sales:
U.S. Commercial Staffing          $       529,660   $       574,338        $    1,078,878    $    1,123,438
PTSA                                      270,680           260,745               537,170           518,857
International                             265,915           271,657               537,405           544,514
                                    --------------    --------------         -------------     -------------

   Consolidated Total             $     1,066,255   $     1,106,740        $    2,153,453    $    2,186,809
                                    ==============    ==============         =============     =============

Earnings from Operations:
U.S. Commercial Staffing          $        31,014   $        45,671        $       63,040    $       85,933
PTSA                                       13,568            16,466                25,952            32,212
International                               1,994             7,264                 3,571            12,128
Corporate                                 (35,705)          (32,734)              (73,517)          (67,038)
                                    --------------    --------------         -------------     -------------

   Consolidated Total             $        10,871   $        36,667        $       19,046    $       63,235
                                    ==============    ==============         =============     =============
</TABLE>

3.  Contingencies
The Company is subject to various legal proceedings, claims and liabilities
which arise in the ordinary course of its business. Litigation is subject to
many uncertainties, the outcome of individual litigated matters is not
predictable with assurance and it is reasonably possible that some of the
foregoing matters could be decided unfavorably to the Company. Although the
amount of the liability at July 1, 2001 with respect to these matters cannot be
ascertained, the Company believes that any resulting liability will not be
material to the financial statements of the Company at July 1, 2001.
<PAGE>

                                       8

                      KELLY SERVICES, INC. AND SUBSIDIARIES

                    NOTES TO FINANCIAL STATEMENTS (continued)
                                   (UNAUDITED)
                            (In thousands of dollars)


4.  Earnings Per Share
The reconciliations of earnings per share computations for the 13-week and
26-week periods ended July 1, 2001 and July 2, 2000 were as follows:

<TABLE>
<CAPTION>
                                                              13 Weeks Ended                  26 Weeks Ended
                                                           2001            2000            2001            2000
                                                        -----------     -----------     -----------     -----------
<S>                                                   <C>             <C>             <C>             <C>
Net earnings                                          $      6,460    $     21,825    $     11,260    $     37,885
                                                        ===========     ===========     ===========     ===========

Determination of shares (thousands):
    Weighted average common
    shares outstanding                                      35,834          35,714          35,799          35,709
Effect of dilutive securities:
    Stock options                                                -               -              13               -
    Restricted and performance awards and other                 85              65              96              68
                                                        -----------     -----------     -----------     -----------
Weighted average common shares
    outstanding - assuming dilution                         35,919          35,779          35,908          35,777
                                                        ===========     ===========     ===========     ===========

Earnings per share - basic                            $        .18    $        .61    $        .31    $       1.06
Earnings per share - assuming dilution                $        .18    $        .61    $        .31    $       1.06
</TABLE>
<PAGE>

                                       9


Item 2. Management's Discussion and Analysis of Results of Operations
        and Financial Condition.

Results of Operations:
Second Quarter
Sales of services in the second quarter of 2001 were $1.066 billion, a decrease
of 3.7% from the same period in 2000. Sales declined in the U.S. Commercial
Staffing segment by 7.8% in the second quarter as compared to last year. Sales
declined 6% in April, 8% in May and 9% in June. The trend worsened over the
course of the quarter, leading the Company to expect continued negative U.S.
Commercial sales comparisons for the third quarter.

Professional, Technical and Staffing Alternatives (PTSA) sales grew collectively
by 3.8% compared to last year. Although this is a slight increase over the first
quarter PTSA growth rate of 3.1%, individual business unit performance was
mixed.

Kelly Staff Leasing (KSL) sales grew over 10% in the second quarter, reflecting
a new management team and operational changes in the business. Without this
improvement in KSL growth, the overall PTSA growth rate would have been only 2%.
In the remainder of PTSA, the slowdown was not uniform across all business
units. Kelly Healthcare Resources and Kelly Finance and Accounting Resources had
strong sales growth, while the Automotive Services Group and the Kelly Law
Registry had lower year-over-year sales in the second quarter.

The impact of unfavorable foreign currency translation on international revenue
continues to be significant. Translated U.S. dollar sales in the International
segment decreased by 2.1% as compared to the second quarter of 2000. However, on
a constant currency basis, international revenue growth was approximately 4%,
which reflected slowing from the 7% growth rate in the first quarter.

Cost of services, consisting of payroll and related tax and benefit costs of
employees assigned to customers, decreased 2.4% in the second quarter as
compared to the same period in 2000.

Gross profit of $178.3 million was 9.5% lower than the second quarter of 2000,
and gross profit as a percentage of sales was 16.7% in 2001, which was down from
the 17.8% rate in 2000. However, the 16.7% gross profit rate was consistent with
the first quarter rate. The gross profit rates of all three of the Company's
business segments showed decreases, as compared to last year, primarily due to
an ongoing shift in mix of sales to larger customers, combined with decreases in
recruitment fee income.

Selling, general and administrative expenses were $167.4 million in the second
quarter, an increase of 4.4% over the same period in 2000. Expenses averaged
15.7% of sales in the second quarter of 2001, a 1.2% increase versus the 14.5%
rate in 2000. That is an improvement over the $173.2 million or 15.9% of sales
in the first quarter of this year. The Company implemented a number of expense
reduction initiatives that began to show results during the second quarter.

Earnings from operations of $10.9 million were 70.4% lower than the second
quarter of 2000. U.S. Commercial earnings totaled $31.0 million, a decrease of
32.1% compared to earnings of $45.7 million last year. Although U.S. Commercial
expenses were held virtually flat versus last year, the 7.8% sales decrease,
combined with the decrease in gross profit rate, produced the significant
earnings decline.

PTSA earnings totaled $13.6 million, a 17.6% decrease compared to earnings of
$16.5 million last year. During the last year, the Company continued to invest
heavily in the professional and technical businesses, opening over twenty-five
new branches, which impacted the expense rates in the first and second quarters.
In addition, recruitment fee income decreased significantly in many business
units, which negatively impacted the gross profit rate.

International earnings totaled $2.0 million, down 72.5%, compared to earnings of
$7.3 million last year. The strong U.S. dollar significantly weakened both
translated sales and profit results. In addition to the currency effects, the
continued slowing of staffing demand in Canada, Puerto Rico and Australia
further reduced operating results. Operating earnings in the U.K., although
still running below last year, showed improvement as compared to the first
quarter.

Net interest expense was $101 thousand, a 39.5% improvement compared to last
year's net interest expense of $167 thousand. The improvement is primarily
attributable to higher cash levels than last year, offset by lower interest
rates.
<PAGE>

                                       10

Earnings before income taxes were $10.8 million, a decrease of 70.5%, compared
to pretax earnings of $36.5 million earned for the same period in 2000. Income
taxes were 40.0% of pretax income in the second quarter of 2001 and 40.2% in the
second quarter of 2000.

Net earnings were $6.5 million in the second quarter of 2001, a decrease of
70.4% from the second quarter of 2000. Diluted earnings per share were $.18, a
decrease of 70.5% as compared to $.61 in the same period last year.

Year-to-Date
Sales of services totaled $2.153 billion during the first six months of 2001, a
decrease of 1.5% from 2000. Sales in the U.S. Commercial Staffing segment
declined by 4.0%, while PTSA sales grew by 3.5% compared to last year.
International sales declined by 1.3% as compared to the first six months of
2000. The strong U.S. dollar significantly weakened translated sales for the
international segment.

Gross profit of $359.7 million was 6.6% lower than the second quarter of 2000,
and gross profit as a percentage of sales was 16.7% in 2001, which decreased
0.9% compared to the 17.6% rate recorded last year. This reflected modest
decreases in the gross profit rates of all three business segments.

Selling, general and administrative expenses of $340.6 million were 5.9% higher
than last year. The expense rate was 15.8% of sales in 2001 and 14.7% in 2000.
Compared to last year, increased depreciation and the opening of new
professional and technical branches contributed to the increase.

Earnings before taxes were $18.8 million, a decrease of 70.4% from 2000. These
earnings averaged a pretax margin of 0.9% in the first six months of 2001 and
2.9% in 2000. Income taxes were 40.0% of pretax earnings in the first six months
of 2001 and 40.2% in 2000.

Net earnings were $11.3 million or 70.3% below the first six months of 2000.
Basic and diluted earnings per share were $.31, a decrease of 70.8% as compared
to $1.06 in the first six months of 2000.

Financial Condition
Assets totaled $1.067 billion at July 1, 2001, a decrease of 2.0% from the
$1.090 billion at December 31, 2000. Working capital decreased $18.0 million
during the six-month period. The current ratio was 1.6 at July 1, 2001 and
December 31, 2000.

During the first six months of 2001, net cash from operating activities was
$83.9 million, an increase of 96.6% from the comparable period in 2000. This
increase resulted principally from a decrease in the accounts receivable balance
offset by a decline in net earnings. The Company's global day's sales
outstanding for the second quarter were 50 days in 2001, an improvement of two
days over the 52 days reported in 2000.

Capital expenditures for the first six months totaled $23.8 million, consistent
with the $24.0 million spent during the same period of 2000. Of the total, over
75% related to information technology investments. Annual capital expenditures
are projected to total between $45 to $50 million in 2001.

During the first quarter, the Company acquired a fully leased commercial office
building that will be used for future expansion. This transaction was the second
leg of a tax-free exchange for undeveloped land the Company initiated in the
fourth quarter of 2000. The land was effectively swapped for the building, but
in accordance with generally accepted accounting principles, it is shown as a
cash acquisition for $11.8 million in the first six months of 2001.

The quarterly dividend rate applicable to Class A and Class B shares outstanding
was $.25 per share in the second quarter of 2001.

The Company's financial position continues to be strong. The Company continues
to carry no long-term debt and expects to meet its growth requirements
principally through cash generated from operations.
<PAGE>

                                       11

Market Risk-Sensitive Instruments And Positions
The Company does not hold or invest in derivative contracts. The Company is
exposed to foreign currency risk primarily due to its net investment in foreign
subsidiaries. This risk is mitigated by the use of the Company's multi-currency
line of credit. This credit facility is used to borrow in local currencies which
mitigates the exchange rate risk resulting from foreign currency-denominated net
investments fluctuating in relation to the U.S. dollar. In addition, the Company
is exposed to interest rate risks through its use of the multi-currency line of
credit.

Overall, the Company's holdings and positions in market risk-sensitive
instruments do not subject the Company to material risk.

New Accounting Standards
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
No. 141, Business Combinations. Statement 141 requires that the purchase method
be used for business combinations initiated after June 30, 2001. The Company
does not expect it to have a material impact on the Company's consolidated
financial statements.

In July 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible
Assets. Statement 142 requires that goodwill no longer be amortized to earnings,
but instead be reviewed for impairment. The provisions of this Statement are
required to be applied starting with fiscal years beginning after December 15,
2001. This Statement is required to be applied at the beginning of an entity's
fiscal year and to be applied to all goodwill and other intangible assets
recognized in its financial statements at that date. Impairment losses for
goodwill and indefinite-lived intangible assets that arise due to the initial
application of this Statement are to be reported as resulting from a change in
accounting principle. Goodwill and intangible assets acquired after June 30,
2001, will be subject immediately to the nonamortization and amortization
provisions of this Statement. The Company has not completed its determination of
the impact that the adoption of this new accounting standard will have on its
consolidated financial statements.

Forward-Looking Statements
Except for the historical statements and discussions contained herein,
statements contained in this report relate to future events that are subject to
risks and uncertainties, such as: competition, changing market and economic
conditions, currency fluctuations, changes in laws and regulations, the
Company's ability to effectively implement and manage its information technology
programs and other factors discussed in the report and in the Company's filings
with the Securities and Exchange Commission. Actual results may differ
materially from any projections contained herein.
<PAGE>

                                       12

                    PART II. OTHER INFORMATION AND SIGNATURE


Item 4. Submission of Matters to a Vote of Security Holders.

         (a)      The annual meeting of stockholders of registrant was held May
                  14, 2001.

         (b)      The nominee for director, as listed in the Company's proxy
                  statement dated April 13, 2001, was elected. The directors
                  whose terms of office continued after the meeting are also
                  listed in the proxy statement.

         (c)      A brief description and the results of the matters voted upon
                  at the meeting follow.

                  (1)      Election of T.E. Adderley as director:

                           Shares voted "For"                   3,325,343
                           Shares voted "Withhold"                111,498

                  (2)      Ratification of the selection of
                           PricewaterhouseCoopers LLP as the Company's
                           independent auditors:

                           Shares voted "For"                   3,436,725
                           Shares voted "Withhold"                    116

Item 6. Exhibits and Reports on Form 8-K.

         (a)      See Index to Exhibits required by Item 601, Regulation S-K,
                  set forth on page 14 of this filing.

         (b)      No reports on Form 8-K were filed during the quarter for which
                  this report is filed.
<PAGE>

                                       13

                                    SIGNATURE


Pursuant to the requirements 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.


                                          KELLY SERVICES, INC.

Date: August 14, 2001



                                          /s/ William K. Gerber
                                          ------------------------------------
                                          William K. Gerber

                                          Executive Vice President and
                                          Chief Financial Officer
                                          (Principal Financial Officer and
                                          Principal Accounting Officer)
<PAGE>

                                       14


                                INDEX TO EXHIBITS
                              REQUIRED BY ITEM 601,
                                 REGULATION S-K

Exhibit
  No.             Description                                          Document
- -------           -----------                                          --------


  3            Composite Certificate of Incorporation.                     2

  4            Rights of security holders are defined in Articles
               Fourth, Fifth, Seventh, Eighth, Ninth, Tenth,
               Eleventh, Twelfth, Thirteenth, Fourteenth and
               Fifteenth of the Composite Certificate of
               Incorporation, Exhibit 3.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>3
<FILENAME>dex3.txt
<DESCRIPTION>COMPOSITE CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                       1



Exhibit 3

                                    COMPOSITE
                          CERTIFICATE OF INCORPORATION
                                       OF
                              KELLY SERVICES, INC.

                                  ARTICLE FIRST

         The name of the corporation is Kelly Services, Inc.

                                 ARTICLE SECOND

         Its principal office in the State of Delaware is located at No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name and
address of its resident agent is The Corporation Trust Company, No. 100 West
Tenth Street, Wilmington, Delaware.

                                  ARTICLE THIRD

         The nature of the business, or objects or purposes to be transacted,
promoted, or carried on are:

         To furnish office, clerical, supervisory and consultant services.

         To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal
in and deal with goods, wares and merchandise and personal property of every
class and description.

         To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.

         To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.

         To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital stock,
or any voting trust certificates in respect of the shares of capital stock,
scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political subdivision or
by any governmental agency, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in value
thereof.

         To enter into, make and perform contracts of every kind and description
with any person, firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof.

         To borrow or raise moneys for any of the purposes of the corporation
and, from time to time, without limit as to amount to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon or pledge, conveyance or assignment in
trust of the whole or any part of the property of the corporation, whether at
the time owned or thereafter acquired, and to sell, pledge or otherwise dispose
of such bonds or other obligations of the corporation for its corporate
purposes.

         To loan to any person, firm, or corporation any of its surplus funds,
either with or without security.

         To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital except as otherwise permitted by law, and provided further that shares
of its own capital stock belonging to it shall not be voted upon directly or
indirectly.

         To operate a private trade school and business school in the State of
Michigan after obtaining the necessary license for such operation for the
instruction of students in various office skills, including, but not by way of
limitation, instruction in the use of various office equipment and machines.

         To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as to amount to purchase or
otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of
real and personal property of every class and description in any of the States,
Districts, Territories or Colonies of the United States, and in any and all
foreign countries, subject to the laws of such State, District, Territory,
Colony or Country.
<PAGE>

                                       2

         In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware, and to do any or all of the things hereinbefore set forth to the
same extent as natural persons might or could do.

         The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the objects and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent objects
and purposes.

                                 ARTICLE FOURTH
                                   Division A

         (a) The total number of shares of stock which the corporation shall
have authority to issue is 110,000,000 shares, the par value of each of the
shares is $1.00, amounting in the aggregate to $110,000,000, and the shares are
divided into two classes consisting of 100,000,000 shares of Class A Common
Stock and 10,000,000 shares of Class B Common Stock.

         (b) Each of the 7,021,879 issued shares of Common Stock of the
Corporation is hereby reclassified and changed into one and one-half (1-1/2)
shares of Class A Common Stock and one-half (1/2) share of Class B Common Stock,
provided that no fractional shares of Class A Common Stock or Class B Common
Stock shall be issued, but in the case of each holder of issued Common Stock who
would otherwise be entitled to a fractional share of Class A Common Stock and
Class B Common Stock, the fractional shares shall be combined into a whole share
of Class B Common Stock.

                                   Division B

         The designations, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions in
respect of the shares of each class are as follows:

         (a) Dividends. Holders of the Class A Common Stock and the Class B
Common Stock shall be entitled to receive dividends, out of funds legally
available therefor, when and as declared by the Board of Directors, subject only
to the limitations that (1) no cash dividend payable on the shares of the Class
B Common Stock shall be declared unless the Board of Directors shall
concurrently declare a cash dividend on the shares of the Class A Common Stock
at a rate which is not less than the rate of the cash dividend payable on the
shares of the Class B Common Stock (but a cash dividend may be declared on the
Class A Common Stock without declaring a cash dividend on the Class B Common
Stock), and (2) no dividend payable in shares of the Class B Common Stock shall
be declared on the Class A Common Stock (but a dividend payable in shares of
Class A Common Stock may be declared on the Class A Common Stock or the Class B
Common Stock and a dividend payable in shares of Class B Common Stock may be
declared on the Class B Common Stock).

         (b) Voting Rights. Except on matters where their vote is required by
Delaware law, the holders of the Class A Common Stock shall not be entitled to
vote on any matter coming before any meeting of stockholders. The holders of the
Class B Common Stock shall be entitled to one vote per share upon each matter
coming before any meeting of stockholders.

         (c) Conversion of Class B Common Stock.

         1. Shares of Class B Common Stock shall be convertible, at the option
of the respective holders thereof, at any time, into fully paid and
non-assessable shares of Class A Common Stock on the basis of one share of Class
A Common Stock for each share of Class B Common Stock.

         2. No payment or adjustment with respect to dividends on shares of the
Class A Common Stock or on the Class B Common Stock shall be made in connection
with any conversion of shares of Class B Common Stock into shares of Class A
Common Stock.

         3. The holders of a certificate or certificates for Class B Common
Stock, in order to effect the conversion of shares represented thereby, shall
surrender the certificate or certificates to the corporation or to the Transfer
Agent for the shares of the Class B Common Stock, with request for conversion.
If the shares of the Class A Common Stock issuable upon conversion are to be
issued in a name other than that in which the shares of the Class B Common Stock
to be converted are registered, the certificate or certificates shall be duly
endorsed for transfer or accompanied by a duly executed stock transfer power,
and shall also be accompanied by the necessary stock transfer stamps or
equivalent funds.

         Upon surrender of the certificate or certificates, the corporation
shall issue and deliver or cause to be issued and delivered to the person
entitled thereto a certificate or certificates for the number of full shares of
the Class A Common Stock issuable upon conversion. The corporation shall pay all
original issue taxes, if any, payable upon the issue of shares of the Class A
Common Stock issued upon any conversion.

         The conversion shall be deemed to have been effected on the date of the
surrender of the certificate or certificates of shares of the Class B Common
Stock, and the person in whose name the certificate or certificates of the
shares of the Class A Common Stock issuable upon conversion are to be issued
shall be deemed to be the holder of record of the shares as of that date.
<PAGE>

                                       3

         4. If there should be any capital reorganization or any
reclassification of the Class A Common Stock, the shares of the Class B Common
Stock shall thereafter have the right to be converted into the number of shares
of stock or other securities or property of the corporation to which outstanding
shares of the Class A Common Stock would have been entitled upon the effective
date of the reorganization or reclassification. The Board of Directors shall
make an appropriate adjustment in the application of the provisions of this
paragraph (c) with respect to the conversion rights of the holders of the shares
of the Class B Common Stock after the reorganization or reclassification, to the
end that the provisions shall be applicable, as nearly as reasonably may be, in
respect to any shares or other securities or property thereafter issuable or
deliverable upon the conversion of shares of the Class B Common Stock. The
provisions of this sub-paragraph shall not apply to a reorganization or
reclassification involving merely a subdivision or combination of outstanding
shares of the Class A Common Stock.

         5. In case the corporation shall be consolidated with or merged into
any other corporation or shall sell or transfer its property and business as or
substantially as an entirety, then the stock or other securities or other
property, including cash, issuable or deliverable in connection with such
consolidation, merger or sale in respect of each share of the Class A Common
Stock then outstanding, shall thereafter, for the purposes of the conversion
rights of the Class B Common Stock, be deemed the equivalent of one share of
Class A Common Stock. Upon the exercise of conversion rights, holders of Class B
Common Stock shall be entitled to receive on an equivalent basis and at the same
rate and on the other terms and conditions set forth in this paragraph (c), the
stock or other securities or property, including cash, deemed to be the
equivalent of Class A Common Stock. Lawful provisions to this effect shall be
made a part of and condition to the consolidation, merger or sale.

         6. In case the corporation shall propose (i) to effect any
reclassification of the Class A Common Stock or any capital reorganization
involving a change in the Class A Common Stock, other than a reclassification or
reorganization involving merely a subdivision or combination of outstanding
shares of the Class A Common Stock, or (ii) to consolidate with or merger into
another corporation, or to sell or transfer its property and business as or
substantially as an entirety, then, in each such case, the corporation shall
file with each Transfer Agent for the shares of the Class B Common Stock and
shall mail to the holders of record of the shares at their respective addresses
then appearing on the records of the corporation a statement, signed by an
officer of the corporation, with respect to the proposed action, the statement
to be so filed and mailed at least 30 days prior to the record date for holders
of the Class A Common Stock for the purposes thereof. The statement shall set
forth such facts with respect to the proposed action as shall be reasonably
necessary to inform each Transfer Agent for the shares of the Class B Common
Stock and the holders of those shares as to the effect of the action upon the
conversion rights of the holders.

         7. The corporation shall at all times have authorized but unissued, or
in its treasury, a number of shares of the Class A Common Stock sufficient for
the conversion of all shares of the Class B Common Stock from time to time
outstanding.

         8. In case the shares of the Class A Common Stock or the Class B Common
Stock at any time outstanding shall, by reclassification or otherwise, be
subdivided into a greater number of shares or combined into a lesser number of
shares, the shares of Class B Common Stock or Class A Common Stock,
respectively, then outstanding shall, at the same time, be subdivided or
combined, as the case may be, on the same basis.

         (d) Preemptive Rights. Holders of the Class A Common Stock shall have
no preemptive right to subscribe to any securities issued by the corporation.
Holders of the Class B Common Stock shall have the preemptive right to subscribe
to additional shares of Class B Common Stock, or any other voting stock or any
security convertible into Class B Common Stock or other voting stock, hereafter
issued by the corporation.

         (e) Liquidation Preferences.

         1. In the event of dissolution, liquidation or winding up of the
corporation, whether voluntary or involuntary, holders of the Class A Common
Stock and of the Class B Common Stock shall be entitled to payment out of the
assets of the corporation ratably in accordance with the number of shares held
by them respectively.

         2. Neither a consolidation nor a merger of the corporation with or into
any other corporation, nor a merger of any other corporation into the
corporation, nor the purchase or other acquisition by the corporation of all or
a part of the outstanding shares of any class or classes of its stock, nor the
sale or transfer of the property and business of the corporation, as or
substantially as an entirety, shall be considered a dissolution, liquidation or
winding up of the corporation within the meaning of the foregoing provisions.
<PAGE>

                                       4

                                  ARTICLE FIFTH

         The business, property and affairs of this corporation shall be managed
by a Board of Directors consisting of no fewer than five (5) and no more than
nine (9) members, the exact number to be determined from time to time by
resolution of the Board of Directors. The directors shall be classified with
respect to the term for which they shall severally hold office by dividing them
into three classes, as nearly equal in number as may be, the classes to hold
office for successive terms of three years, respectively, but all directors of
the corporation shall hold office until their successors are elected and
qualified. The Board of Directors may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by the by-laws directed or required to be
exercised or done by the stockholders.

         Newly created directorships resulting from any increase in the
authorized number of directors and vacancies in the Board of Directors from
death, resignation, retirement, disqualification, removal from office or other
cause, shall be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office for a term expiring at the annual meeting
at which the term of the class to which they shall have been elected expires. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.

         Any director, or the entire Board of Directors, may be removed at any
time, but only for cause. The affirmative vote of the holders of 75% of the
voting power of all of the stock of this corporation entitled to vote in
elections of directors shall be required to remove a director from office. The
stockholders of the corporation are expressly prohibited from cumulating their
votes in any election of directors of the corporation.

                                  ARTICLE SIXTH

         The names and places of residence of the incorporators are as follows:

                  NAMES                     RESIDENCES
                  L. E. Gray                Wilmington, Delaware
                  S. M. Brown               Wilmington, Delaware
                  A. D. Atwell              Wilmington, Delaware.

                                 ARTICLE SEVENTH

         By-laws of the corporation may be adopted, amended or repealed by the
affirmative vote of a majority of the total number of directors or by the
affirmative vote of the holders of 75% of the voting power of all of the stock
of this corporation entitled to vote in elections of directors. The by-laws may
contain any provision for the regulation and management of the affairs of the
corporation and the rights or powers of its stockholders, directors, officers,
or employees not inconsistent with the laws of the State of Delaware.

                                 ARTICLE EIGHTH

         (a) Except as set forth in paragraph (d) of this Article, the
affirmative vote of the holders of 75% of the voting power of all of the stock
of this corporation entitled to vote in elections of directors shall be
required:

                  (i) for a merger or consolidation of this corporation or any
         subsidiary thereof with or into any other corporation, or

                  (ii) for any sale or lease of all or any substantial part of
         the assets of this corporation or any subsidiary thereof to any other
         corporation, person or other entity, or

                  (iii) for any sale or lease to this corporation or any
         subsidiary thereof of any assets (except assets having an aggregate
         fair market value of less than $5,000,000) in exchange for voting
         securities (or securities convertible into voting securities or
         options, warrants or rights to purchase voting securities or securities
         convertible into voting securities) of this corporation or any
         subsidiary by any other corporation, person or other entity, if as of
         the record date for the determination of stockholders entitled to
         notice thereof and to vote thereon the other corporation, person or
         other entity which is party to the transaction is the beneficial owner,
         directly or indirectly, of 5% or more in number of shares of the
         outstanding shares of any class of stock of this corporation entitled
         to vote in elections of directors.

         (b) For purposes of this Article, any corporation, person or other
entity shall be deemed to be the beneficial owner of any shares of stock of this
corporation,

                  (i) which it owns directly, whether or not of record; or

                  (ii) which it has the right to acquire pursuant to any
         agreement or understanding or upon exercise of conversion rights,
         warrants or options or otherwise, whether or not presently exercisable;
         or
<PAGE>

                                       5

                  (iii) which are beneficially owned, directly or indirectly
         (including shares deemed to be owned through application of clause (ii)
         above) by an "affiliate" or "associate" as those terms are defined
         herein; or

                  (iv) which are beneficially owned, directly or indirectly by
         any other corporation, person or entity (including any shares which the
         other corporation, person or entity has the right to acquire pursuant
         to any agreement or understanding or upon exercise of conversion
         rights, warrants or options or otherwise, whether or not presently
         exercisable) with which it or its "affiliates" or "associates" has any
         agreement or arrangement or understanding for the purpose of acquiring,
         holding, voting or disposing of stock of this corporation.

         For the purpose of this Article EIGHTH, the outstanding shares of stock
of this corporation shall include shares deemed owned through the application of
clauses (b)(ii), (iii) and (iv) above, but shall not include any other shares
which may be issuable pursuant to any agreement or upon exercise of conversion
rights, warrants, options or otherwise.

         For the purposes of this Article EIGHTH, the term "affiliate" shall
mean any person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the corporation,
person or other entity. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, or
indirectly, of the power to direct or cause the direction of the management and
policies of the corporation, person or other entity, whether through the
ownership of voting securities, by contract, or otherwise.

         For the purposes of this Article EIGHTH, the term "associate" shall
mean (1) any corporation or organization (other than this corporation or a
majority-owned subsidiary of this corporation) of which the corporation, person
or other entity is an officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity securities; (2) any trust
or other estate in which the corporation, person or other entity has a
substantial beneficial interest or as to which the corporation, person or other
entity serves as a trustee or in a similar fiduciary capacity; and (3) any
relative or spouse of a person, or any relative of a spouse, who has the same
home as the person or who is a director or officer of this corporation or any of
its subsidiaries.

         (c) The Board of Directors shall have the power and duty to determine
for the purpose of this Article EIGHTH on the basis of information known to the
Board of Directors of this corporation, whether

                  (i) the other corporation, person or other entity beneficially
         owns more than 5% in number of shares of the outstanding shares of any
         class of stock of this corporation entitled to vote in elections of
         directors;

                  (ii) a corporation, person or other entity is an "affiliate"
         or "associate" (as defined in paragraph (b) above) of another; and

                  (iii) the assets being acquired by this corporation, or any
         subsidiary thereof, have an aggregate fair market value of less than
         $5,000,000.

         Any such determination shall be conclusive and binding for all purposes
of this Article EIGHTH.

         (d) The provisions of this Article EIGHTH shall not apply to any merger
or other transaction referred to in this Article EIGHTH with any corporation,
person or other entity if (1) the Board of Directors of this corporation has
approved a memorandum of understanding with the other corporation, person or
other entity with respect to the transaction prior to the time that the other
corporation, person or other entity shall have become a beneficial owner of more
than 5% in number of shares of the outstanding shares of stock of any class of
this corporation entitled to vote in elections of directors; or (2) the
transaction is otherwise approved by the Board of Directors of this corporation,
provided that a majority of the members of the Board of Directors voting for the
approval of the transaction were duly elected and acting members of the Board of
Directors prior to the time that the other corporation, person or other entity
shall have become a beneficial owner of more than 5% in number of shares of the
outstanding shares of stock of any class of this corporation entitled to vote in
elections of directors. In addition, the provisions of this Article EIGHTH shall
not apply to any merger or other transaction referred to in this Article EIGHTH
with a subsidiary (which terms shall mean a corporation of which a majority of
the outstanding shares of stock entitled to vote in elections of directors is
owned by this corporation directly, and/or indirectly through one or more other
subsidiaries).

                                  ARTICLE NINTH

         In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:

         To fix the amount to be reserved as working capital over and above its
capital stock paid in, to authorize and cause to be executed mortgages and liens
upon the real and personal property of this corporation.
<PAGE>

                                       6

         From time to time to determine whether and to what extent, and at what
times and places, and under what conditions and regulations, the accounts and
books of this corporation (other than the stock ledger), or any of them, shall
be open to inspection of stockholders; and no stockholder shall have any right
of inspecting any account, book or document of this corporation except as
conferred by statute unless authorized by a resolution of the stockholders or
directors.

         By resolution or resolutions, passed by a majority of the whole board
to designate one or more committees, each committee to consist of two or more of
the directors of the corporation, which, to the extent provided in said
resolution or resolutions, or in the by-laws of this corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of this corporation, and may have power to authorize the
sale of this corporation to be affixed to all papers which may require it. The
Committee or committees shall have the name or names as may be stated in the
by-laws of this corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.

         This corporation may, in its by-laws confer powers upon its directors
in addition to the foregoing, and in addition to the powers and authorities
expressly conferred upon them by the statute.

         Both stockholders and directors shall have power, if the by-laws so
provide, to hold their meetings and to have one or more offices within or
without the State of Delaware, and to keep the books of this corporation
(subject to the provisions of the statutes), outside of the State of Delaware at
such places as may be from time to time designated by the Board of Directors.

                                  ARTICLE TENTH

         Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 3883 of the Revised Code of 1915 of said State, or on
the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 43 of the General
Corporation Law of the State of Delaware, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said Court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the Court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.

                                ARTICLE ELEVENTH

         The Board of Directors of this corporation, when evaluating any offer
of another party to (a) make a tender or exchange offer for any equity security
of this corporation; (b) merge or consolidate this corporation with another
corporation; or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of this corporation, shall, in connection with the
exercise of its judgment in determining what is in the best interest of this
corporation and its stockholders, give due consideration to such factors as the
Board of Directors determined to be relevant, including without limitation, the
social, legal, and economic effects of the proposed transaction upon employees,
customers, suppliers, and other affected persons, firms and corporations and on
the communities in which this corporation and its subsidiaries operate or are
located.

                                 ARTICLE TWELFTH

         No action required or permitted to be taken at any annual or special
meeting of the stockholders of this corporation may be taken without a meeting
and the power of stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.
<PAGE>

                                       7

                               ARTICLE THIRTEENTH

         No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article
THIRTEENTH shall not eliminate or limit liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. The foregoing provisions of this Article THIRTEENTH
shall not eliminate the liability of a director for any act or omission
occurring prior to the date on which this Article THIRTEENTH becomes effective.
No amendment or repeal of this Article THIRTEENTH shall apply to or have any
effect on the liability or alleged liability of any director of the corporation
for or with respect to any acts or omissions of such director occurring prior to
such amendment or repeal.

                               ARTICLE FOURTEENTH

         Special meetings of the stockholders of this corporation for any
purpose or purposes may be called at any time by the Board of Directors or by a
committee of the Board of Directors which has been duly designated by the Board
of Directors and whose powers and authority, as provided in a resolution of the
Board of Directors or in the by-laws of this corporation, include the power to
call such meetings, but such special meetings may not be called by any other
person or persons.

                                ARTICLE FIFTEENTH

         This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. Notwithstanding any other
provision of the Certificate of Incorporation or the by-laws of this corporation
(and in addition to any other vote that may be required by law, this Certificate
of Incorporation, or by the by-laws of this corporation), the affirmative vote
of the holders of 75% of the voting power of all stock of this corporation
entitled to vote in elections of directors shall be required to amend, alter,
change, or repeal Article FIFTH, SEVENTH, EIGHTH, NINTH, ELEVENTH, TWELFTH,
THIRTEENTH, FOURTEENTH and FIFTEENTH of this Certificate of Incorporation .

         WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named
for the purpose of forming a corporation in pursuance of the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set our hands and seals this 26th day of August, A. D. 1952.


                                     s/      L.E. Gray (SEAL)
                                    ------------------------------------------

                                     s/      S.M. Brown (SEAL)
                                    ------------------------------------------

                                     s/      A.D. Atwell (SEAL)
                                    ------------------------------------------


As Amended June 20, 1996

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
