Kelly Services Reports Record Revenue and Four-Fold Earnings Growth
for the 4th Quarter and Full Year of 2004 TROY, Mich., Jan. 26
/PRNewswire-FirstCall/ -- Kelly Services, Inc., a global provider
of staffing services, today announced record revenue and strong
earnings growth for fourth quarter and full year ended January 2,
2005. (Logo: http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO
) Terence E. Adderley, Kelly Services chairman and chief executive
officer, announced revenue for the 14 week fourth quarter of 2004
totaled $1.356 billion, a 16.4% increase compared to the $1.165
billion for the corresponding 13 week quarter in 2003. Sales for
the 53 week fiscal year totaled $4.984 billion, a 15.2% increase
compared to the $4.325 billion for the 52 week fiscal year of 2003.
Net earnings for the fourth quarter of 2004 totaled $8.6 million,
compared to $1.8 million reported for the fourth quarter of 2003.
Net earnings for the full year of 2004 totaled $22.1 million,
compared to the $5.1 million earned during 2003. Diluted earnings
per share in the fourth quarter of 2004 were $0.24, as compared to
fourth quarter 2003 earnings of $0.05 per share. Diluted earnings
per share for the full year of 2004 were $0.62, compared to the
$0.14 per share earned in 2003. Commenting on the results, Adderley
said, "Kelly turned in a very good year. Our full year sales of
nearly $5 billion achieved a new sales record, exceeding the
previous record we set in 2003 by $659 million. "As the new year
begins, we expect first quarter 2005 earnings to be in the range of
$0.09 to $0.14, as compared to $0.03 per share in the first quarter
of 2004. For the full year of 2005, we are currently forecasting
earnings between $1.00 and $1.20 per share. This forecast is based
on solid, but not robust, global economic growth in 2005. "Revenue
in our U.S. Commercial staffing segment, which accounted for 46% of
total sales, increased 9.5% year over year during the 14 week
fourth quarter. The gross profit rate in this segment increased
eight-tenths of a percent, primarily due to lower workers
compensation costs. Expenses decreased 2.0% compared to last year.
Operating earnings totaled $36.3 million, an increase of 56.5%
compared to last year. "Revenue in our Professional, Technical, and
Staffing Alternatives (PTSA) segment, which accounted for 20% of
total sales, increased 21.3% year over year during the 14 week
fourth quarter. Kelly Scientific Resources and Kelly Engineering
Resources were the leading professional and technical performers in
the fourth quarter. Kelly HR First and Kelly Vendor Management
continue to be the leading staffing alternatives units. Kelly Home
Care and the Automotive Services Group experienced small revenue
decreases during the quarter. The PTSA gross profit rate decreased
2.1 percentage points, primarily due to gross profit decreases at
Kelly Staff Leasing and Kelly Home Care, partially offset by higher
fee based income. Expenses increased 7.4% as compared to last year.
Operating earnings totaled $16.1 million and increased 8.9% on a
year over year basis. "Revenue in our International segment, which
accounted for 34% of total sales, increased 24.1% year over year
during the 14 week fourth quarter. The International gross profit
rate decreased by four-tenths of a percent, primarily due to lower
temporary staffing gross profit offset by growth in fee based
income. Operating expenses increased by 15.2% in U.S. dollar terms.
Operating earnings totaled $5.5 million, a significant improvement
compared to earnings of $1.6 million last year. "On a 13 week
constant currency basis, International segment revenue increased
10.8% year over year in the fourth quarter. On a 13 week constant
currency basis, total company revenue increased 8.5% year over year
in the fourth quarter." Mr. Adderley concluded, "In short, as we
see it, 2005 should be another good year for Kelly. We expect to
set sales records, gain market share, improve operating efficiency,
and rapidly grow earnings." In conjunction with its fourth quarter
earnings release, Kelly Services, Inc. will host a conference call
at 9:00 a.m. (ET) on January 26, 2005 to review the results. The
call may be accessed in one of the following ways: Via the
Telephone: U.S. 1-800-553-0329 International 1-612-332-0630 The
conference call leader is Terence Adderley The passcode is Kelly
Services Via the Internet: You may access the call via the internet
through the Kelly Services website: http://www.kellyservices.com/
This release contains statements that are forward looking in nature
and accordingly, are subject to risks and uncertainties. These
factors include: competition, changing market and economic
conditions, currency fluctuations, changes in laws and regulations,
including tax laws, the company's ability to effectively manage its
information technology programs, and other factors discussed in
this release and in the company's filings with the Securities and
Exchange Commission. Actual results may differ materially from any
projections contained herein. Kelly Services, Inc.
(NASDAQ:KELYANASDAQ:KELYB) is a Fortune 500 company headquartered
in Troy, Mich., offering staffing solutions that include temporary
staffing services, staff leasing, outsourcing, vendor on-site and
full-time placement. With nearly 2,500 company owned and operated
offices in 27 countries, Kelly provides to its customers nearly
700,000 employees annually, with skills including office services,
accounting, engineering, information technology, law, science,
marketing, light industrial, education and health care. Revenue in
2004 was $4.98 billion. Visit http://www.kellyservices.com/ . KELLY
SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 14
WEEKS ENDED JANUARY 2, 2005 AND 13 WEEKS ENDED DECEMBER 28, 2003
(UNAUDITED) (In thousands of dollars except per share data) 2004
2003 Change % Change Revenue from services $1,355,922 $1,164,973
$190,949 16.4% Cost of services 1,141,222 978,905 162,317 16.6
Gross profit 214,700 186,068 28,632 15.4 Selling, general and
administrative expenses 202,359 182,879 19,480 10.7 Earnings from
operations 12,341 3,189 9,152 287.0 Interest expense, net (145)
(119) (26) (21.8) Earnings before taxes 12,196 3,070 9,126 297.3
Income taxes 3,550 1,258 2,292 182.2 Net earnings $8,646 $1,812
$6,834 377.2% Basic earnings per share $0.24 $0.05 $0.19 380.0%
Diluted earnings per share $0.24 $0.05 $0.19 380.0% STATISTICS:
Gross profit rate 15.8% 16.0% (0.2)% Expenses as a % of revenue
14.9 15.7 (0.8) % Return - Earnings from operations 0.9 0.3 0.6
Earnings before taxes 0.9 0.3 0.6 Net earnings 0.6 0.2 0.4
Effective income tax rate 29.1 41.0 (11.9) Average number of shares
outstanding (thousands): Basic 35,306 34,692 Diluted 35,588 34,945
KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR
THE 53 WEEKS ENDED JANUARY 2, 2005 AND 52 WEEKS ENDED DECEMBER 28,
2003 (In thousands of dollars except per share data) 2004 2003
Change % Change Revenue from services $4,984,051 $4,325,155
$658,896 15.2% Cost of services 4,185,545 3,628,524 557,021 15.4
Gross profit 798,506 696,631 101,875 14.6 Selling, general and
administrative expenses 763,013 687,894 75,119 10.9 Earnings from
operations 35,493 8,737 26,756 306.2 Interest expense, net (861)
(77) (784) NM Earnings before taxes 34,632 8,660 25,972 299.9
Income taxes 12,502 3,550 8,952 252.2 Net earnings $22,130 $5,110
$17,020 333.1% Basic earnings per share $0.63 $0.14 $0.49 350.0%
Diluted earnings per share $0.62 $0.14 $0.48 342.9% STATISTICS:
Gross profit rate 16.0% 16.1% (0.1)% Expenses as a % of revenue
15.3 15.9 (0.6) % Return - Earnings from operations 0.7 0.2 0.5
Earnings before taxes 0.7 0.2 0.5 Net earnings 0.4 0.1 0.3
Effective income tax rate 36.1 41.0 (4.9) Average number of shares
outstanding (thousands): Basic 35,115 35,289 Diluted 35,461 35,355
NM Percentage change not meaningful. KELLY SERVICES, INC. RESULTS
OF OPERATIONS BY SEGMENT (In thousands of dollars) Fourth Quarter
(Unaudited) 2004 2003 (14 weeks) (13 weeks) Change % Change Revenue
from Services: U.S. Commercial Staffing $623,049 $569,210 $53,839
9.5% PTSA 277,294 228,557 48,737 21.3 International 455,579 367,206
88,373 24.1 Consolidated Total $1,355,922 $1,164,973 $190,949 16.4%
Earnings from Operations: U.S. Commercial Staffing $36,320 $23,210
$13,110 56.5% PTSA 16,141 14,826 1,315 8.9 International 5,514
1,645 3,869 235.2 Corporate (45,634) (36,492) (9,142) (25.1)
Consolidated Total $12,341 $3,189 $9,152 287.0% December Year to
Date 2004 2003 (53 weeks) (52 weeks) Change % Change Revenue from
Services: U.S. Commercial Staffing $2,327,910 $2,131,529 $196,381
9.2% PTSA 1,033,427 895,002 138,425 15.5 International 1,622,714
1,298,624 324,090 25.0 Consolidated Total $4,984,051 $4,325,155
$658,896 15.2% Earnings (Loss) from Operations: U.S. Commercial
Staffing $119,974 $93,429 $26,545 28.4% PTSA 63,005 52,856 10,149
19.2 International 12,831 (751) 13,582 1,808.5 Corporate (160,317)
(136,797) (23,520) (17.2) Consolidated Total $35,493 $8,737 $26,756
306.2% KELLY SERVICES, INC. RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES UNAUDITED
(In thousands of dollars) Fourth Quarter 2004 2003 (14 weeks) (13
weeks) Change % Change U.S. Commercial Staffing $623,049 $569,210
$53,839 9.5% PTSA 277,294 228,557 48,737 21.3 International -
constant currency* 423,980 367,206 56,774 15.5 Revenue from
services - constant currency 1,324,323 1,164,973 159,350 13.7%
Foreign currency impact 31,599 31,599 Revenue from services
$1,355,922 $1,164,973 $190,949 16.4% December Year to Date 2004
2003 (53 weeks) (52 weeks) Change % Change U.S. Commercial Staffing
$2,327,910 $2,131,529 $196,381 9.2% PTSA 1,033,427 895,002 138,425
15.5 International - constant currency* 1,493,831 1,298,624 195,207
15.0 Revenue from services - constant currency 4,855,168 4,325,155
530,013 12.3% Foreign currency impact 128,883 128,883 Revenue from
services $4,984,051 $4,325,155 $658,896 15.2% * Information on
constant currencies is provided to allow investors to separate the
impact of foreign currency translations on reported results.
Constant currency results are calculated by translating the current
year results at prior year average exchange rates. KELLY SERVICES,
INC. RECONCILIATION OF CONSTANT CURRENCY REVENUE FROM SERVICES TO
REPORTED REVENUE FROM SERVICES ADJUSTED FOR THE 53rd WEEK
(UNAUDITED) (In thousands of dollars) 2004 Reported Less: 14th
Adjusted Revenue Week Revenue 14 Weeks Revenue 13 Weeks U.S.
Commercial Staffing $623,049 $29,936 $593,113 PTSA 277,294 13,552
263,742 International - constant currency 423,980 17,072 406,908
Revenue from services - constant currency 1,324,323 60,560
1,263,763 Foreign currency impact 31,599 1,170 30,429 Revenue from
services $1,355,922 $61,730 $1,294,192 2003 Reported Revenue 13
Weeks Change % Change U.S. Commercial Staffing $569,210 $23,903
4.2% PTSA 228,557 35,185 15.4 International - constant currency
367,206 39,702 10.8 Revenue from services - constant currency
1,164,973 98,790 8.5 Foreign currency impact 30,429 Revenue from
services $1,164,973 $129,219 11.1% 2004 Reported Less: 53rd
Adjusted Revenue Week Revenue 53 Weeks Revenue 52 Weeks U.S.
Commercial Staffing $2,327,910 $29,936 $2,297,974 PTSA 1,033,427
13,552 1,019,875 International - constant currency 1,493,831 17,072
1,476,759 Revenue from services - constant currency 4,855,168
60,560 4,794,608 Foreign currency impact 128,883 1,170 127,713
Revenue from services $4,984,051 $61,730 $4,922,321 2003 Reported
Revenue 52 Weeks Change % Change U.S. Commercial Staffing
$2,131,529 $166,445 7.8% PTSA 895,002 124,873 14.0 International -
constant currency 1,298,624 178,135 13.7 Revenue from services -
constant currency 4,325,155 469,453 10.9 Foreign currency impact
127,713 Revenue from services $4,325,155 $597,166 13.8% Information
on the 14th week of the 2004 fourth quarter and 53rd week of the
2004 fiscal year is provided to allow investors to separate the
impact of this extra week on reported results, in comparison to
2003 reported results. Information on constant currencies is
provided to allow investors to separate the impact of foreign
currency translations on reported results. Constant currency
results are calculated by translating the current year results at
prior year average exchange rates. Management believes these
measurements are an important analytical tool to aid in
understanding underlying operating trends without distortion due to
the extra week included in the 2004 fiscal year and currency
fluctuations. KELLY SERVICES, INC. AND SUBSIDIARIES BALANCE SHEETS
(In thousands of dollars) January 2, December 28, 2005 2003 Current
Assets Cash and equivalents $87,554 $76,378 Short-term investments
1,288 457 Trade accounts receivable, less allowances of $16,228 and
$14,983, respectively 727,366 658,090 Prepaid expenses and other
current assets 40,736 31,784 Deferred taxes 34,967 24,962 Total
current assets 891,911 791,671 Property and Equipment, Net 179,786
188,122 Noncurrent Deferred Taxes 17,960 14,606 Goodwill, Net
94,652 85,788 Other Assets 63,059 57,550 Total Assets $1,247,368
$1,137,737 Current Liabilities Short-term borrowings $34,289
$39,190 Accounts payable 102,264 92,265 Accrued payroll and related
taxes 246,061 200,503 Accrued insurance 33,165 36,016 Income and
other taxes 67,839 49,342 Total current liabilities 483,618 417,316
Noncurrent Liabilities Accrued insurance 58,548 58,763 Accrued
retirement benefits 50,892 48,025 Total noncurrent liabilities
109,440 106,788 Stockholders' Equity Common stock 40,116 40,116
Treasury stock (97,693) (113,158) Paid-in capital 22,530 19,096
Earnings invested in the business 664,813 656,726 Accumulated other
comprehensive income 24,544 10,853 Total stockholders' equity
654,310 613,633 Total Liabilities and Stockholders' Equity
$1,247,368 $1,137,737 STATISTICS: Working Capital $408,293 $374,355
Current Ratio 1.8 1.9 Debt-to-Capital % 5.0% 6.0% Global Days Sales
Outstanding Quarter 53 51 Year-to-date 54 55 KELLY SERVICES, INC.
AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE 53 WEEKS ENDED
JANUARY 2, 2005 AND 52 WEEKS ENDED DECEMBER 28, 2003 (In thousands
of dollars) 2004 2003 Cash flows from operating activities Net
earnings $22,130 $5,110 Noncash adjustments: Depreciation and
amortization 44,137 47,795 Increase in trade accounts receivable,
net (48,755) (63,516) Changes in other operating assets and
liabilities 41,848 41,204 Net cash from operating activities 59,360
30,593 Cash flows from investing activities Capital expenditures
(35,556) (30,222) Decrease in short-term investments 105 142
Increase in other assets (736) (2,487) Net cash from investing
activities (36,187) (32,567) Cash flows from financing activities
(Decrease) increase in short-term borrowings (8,188) 10,280
Dividend payments (14,043) (14,143) Stock options and other 8,422
3,865 Purchase of treasury stock (3) (26,149) Net cash from
financing activities (13,812) (26,147) Effect of exchange rates on
cash and equivalents 1,815 3,563 Net change in cash and equivalents
11,176 (24,558) Cash and equivalents at beginning of period 76,378
100,936 Cash and equivalents at end of period $87,554 $76,378
http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO DATASOURCE:
Kelly Services, Inc. CONTACT: ANALYST CONTACT: James Polehna,
+1-248-244-4586, , or MEDIA CONTACT: Renee Walker, +1-248-244-5362,
, both of Kelly Services, Inc. Web site:
http://www.kellyservices.com/
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