KELYA Kelly Services Inc

TROY, Mich., Oct. 25 /PRNewswire-FirstCall/ -- Kelly Services, Inc., a global provider of staffing services, today announced record revenue and strong earnings growth for third quarter ended October 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 third quarter of 2005 totaled $1.345 billion, an 8.0% increase compared to the $1.245 billion for the corresponding quarter in 2004. Revenue for the nine-month period totaled $3.906 billion, a 7.7% increase compared to the $3.628 billion for the first nine months of 2004. Net earnings for the third quarter of 2005 totaled $12.7 million, a 57% increase compared to $8.1 million reported for the third quarter of 2004. Net earnings for the first nine months of 2005 totaled $25.9 million, a 96% increase compared to the $13.3 million earned during the comparable nine-month period of 2004. Diluted earnings per share in the third quarter of 2005 were $0.35, a 52% increase as compared to third quarter 2004 earnings of $0.23 per share. Diluted earnings per share for the first nine months of 2005 were $0.72, a 95% increase compared to the $0.37 per share earned in the first nine months of 2004. Commenting on the results, Adderley said, "Our revenue of $1.345 billion achieved a new sales record for the third quarter, exceeding the previous record we set in 2004 by nearly $100 million. "We expect fourth quarter 2005 earnings to be in the range of $0.28 to $0.33, as compared to $0.22 per share in the fourth quarter of 2004. Our 2005 year to date results, combined with our fourth quarter guidance, will bring us to earnings that will range between $1.00 and $1.05 per share for the full year. This forecast is based on moderate global economic growth over the balance of 2005. "Revenue in our U.S. Commercial staffing segment, which accounted for 46% of total sales, increased 7.9% year over year during the third quarter. The gross profit rate in this segment increased four-tenths of a percent, due to a combination of improved pricing, lower workers compensation costs, and higher fee based income. Expenses increased 6.8% compared to last year. Operating earnings totaled $34.8 million, an increase of 18.4% compared to last year. "Revenue in our Professional, Technical, and Staffing Alternatives (PTSA) segment, which accounted for 21% of total sales, increased 9.1% year over year during the third quarter. Kelly Engineering Resources and Kelly IT Resources were the leading professional and technical performers in the third quarter. Vendor Management Services and Kelly HRfirst were the leading staffing alternatives units. The Automotive Services Group and the Kelly Law Registry experienced revenue decreases during the quarter. Kelly Staff Leasing revenue also declined, reflecting the repositioning of its customer mix. The PTSA gross profit rate decreased seven-tenths of a percent, primarily due to changes in business unit mix and rates, partially offset by higher fee based income. Expenses increased 3.5% as compared to last year. Operating earnings totaled $17.6 million and increased 7.1% on a year over year basis. "Revenue in our International segment, which accounted for 33% of total sales, increased 7.4% year over year during the third quarter. The International gross profit rate decreased by two-tenths of a percent, primarily due to lower temporary staffing gross profit rates partially offset by growth in fee based income. Operating expenses increased by 6.5% in U.S. dollar terms. Operating earnings totaled $6.4 million, an increase of 3.1% compared to last year. "On a constant currency basis, International segment revenue increased 5.7%, and total Company revenue increased 7.4% year over year in the third quarter." In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on October 25, 2005 to review the results. The call may be accessed in one of the following ways: Via the Telephone: U.S. 1-800-553-0273 International 1-612-332-0335 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. Kelly owns and operates nearly 2,600 offices in 29 countries and territories. Kelly provides employment to over 700,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, light industrial, education, health care, and home care. Revenue in 2004 was $4.98 billion. Visit http://www.kellyservices.com/ . KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 13 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004 (UNAUDITED) (In thousands of dollars except per share data) 2005 2004 Change % Change Revenue from services $1,344,644 $1,244,854 $99,790 8.0% Cost of services 1,126,466 1,042,486 83,980 8.1 Gross profit 218,178 202,368 15,810 7.8 Selling, general and administrative expenses 200,849 190,037 10,812 5.7 Earnings from operations 17,329 12,331 4,998 40.5 Interest income (expense), net 10 (194) 204 105.2 Earnings before taxes 17,339 12,137 5,202 42.9 Income taxes 4,664 4,043 621 15.4 Net earnings $12,675 $8,094 $4,581 56.6% Basic earnings per share $0.35 $0.23 $0.12 52.2% Diluted earnings per share $0.35 $0.23 $0.12 52.2% STATISTICS: Gross profit rate 16.2% 16.3% (0.1)% Expenses as a % of revenue 14.9 15.3 (0.4) % Return - Earnings from operations 1.3 1.0 0.3 Earnings before taxes 1.3 1.0 0.3 Net earnings 0.9 0.7 0.2 Effective income tax rate 26.9% 33.3% (6.4)% Average number of shares outstanding (thousands): Basic 35,725 35,199 Diluted 36,006 35,424 KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 39 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004 (UNAUDITED) (In thousands of dollars except per share data) 2005 2004 Change % Change Revenue from services $3,905,883 $3,628,129 $277,754 7.7% Cost of services 3,269,519 3,044,323 225,196 7.4 Gross profit 636,364 583,806 52,558 9.0 Selling, general and administrative expenses 599,332 561,013 38,319 6.8 Earnings from operations 37,032 22,793 14,239 62.5 Interest expense, net (177) (716) 539 75.3 Earnings before taxes 36,855 22,077 14,778 66.9 Income taxes 10,909 8,816 2,093 23.7 Net earnings $25,946 $13,261 $12,685 95.7% Basic earnings per share $0.73 $0.38 $0.35 92.1% Diluted earnings per share $0.72 $0.37 $0.35 94.6% STATISTICS: Gross profit rate 16.3% 16.1% 0.2% Expenses as a % of revenue 15.3 15.5 (0.2) % Return - Earnings from operations 0.9 0.6 0.3 Earnings before taxes 0.9 0.6 0.3 Net earnings 0.7 0.4 0.3 Effective income tax rate 29.6% 39.9% (10.3)% Average number of shares outstanding (thousands): Basic 35,619 35,046 Diluted 35,903 35,400 KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In thousands of dollars) Third Quarter 2005 2004 Change % Change Revenue from Services: U.S. Commercial Staffing $619,324 $573,873 $45,451 7.9% PTSA 284,889 261,064 23,825 9.1 International 440,431 409,917 30,514 7.4 Consolidated Total $1,344,644 $1,244,854 $99,790 8.0% Earnings from Operations: U.S. Commercial Staffing $34,821 $29,410 $5,411 18.4% PTSA 17,569 16,410 1,159 7.1 International 6,351 6,161 190 3.1 Corporate Expense (41,412) (39,650) (1,762) (4.4) Consolidated Total $17,329 $12,331 $4,998 40.5% September Year to Date 2005 2004 Change % Change Revenue from Services: U.S. Commercial Staffing $1,787,263 $1,704,567 $82,696 4.9% PTSA 838,275 756,427 81,848 10.8 International 1,280,345 1,167,135 113,210 9.7 Consolidated Total $3,905,883 $3,628,129 $277,754 7.7% Earnings from Operations: U.S. Commercial Staffing $96,780 $83,152 $13,628 16.4% PTSA 50,098 46,640 3,458 7.4 International 11,318 7,187 4,131 57.5 Corporate Expense (121,164) (114,186) (6,978) (6.1) Consolidated Total $37,032 $22,793 $14,239 62.5% KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF CONSTANT CURRENCY REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES (UNAUDITED) (In thousands of dollars) Third Quarter 2005 2004 Change % Change U.S. Commercial $619,324 $573,873 $45,451 7.9% PTSA 284,889 261,064 23,825 9.1 International - constant currency* 433,304 409,917 23,387 5.7 Revenue from services - constant currency 1,337,517 1,244,854 92,663 7.4% Foreign currency impact 7,127 7,127 Revenue from services $1,344,644 $1,244,854 $99,790 8.0% September Year to Date 2005 2004 Change % Change U.S. Commercial $1,787,263 $1,704,567 $82,696 4.9% PTSA 838,275 756,427 81,848 10.8 International - constant currency* 1,240,053 1,167,135 72,918 6.2 Revenue from services - constant currency 3,865,591 3,628,129 237,462 6.5% Foreign currency impact 40,292 40,292 Revenue from services $3,905,883 $3,628,129 $277,754 7.7% * 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. AND SUBSIDIARIES BALANCE SHEETS (In thousands of dollars) October 2, January 2, September 26, 2005 2005 2004 (UNAUDITED) (UNAUDITED) Current Assets Cash and equivalents $59,286 $79,348 $69,562 Short-term investments 221 6,288 16,182 Trade accounts receivable, less allowances of $17,320, $16,228 and $16,637, respectively 811,583 727,366 741,938 Prepaid expenses and other current assets 47,032 43,942 39,508 Deferred taxes 37,702 36,055 21,827 Total current assets 955,824 892,999 889,017 Property and Equipment, Net 165,947 181,086 173,098 Noncurrent Deferred Taxes 18,353 17,960 11,741 Goodwill, Net 88,723 94,652 84,875 Other Assets 87,082 63,059 58,674 Total Assets $1,315,929 $1,249,756 $1,217,405 Current Liabilities Short-term borrowings $47,991 $34,289 $43,109 Accounts payable 115,252 105,685 94,859 Accrued payroll and related taxes 277,392 246,802 254,813 Accrued insurance 33,683 33,165 38,602 Income and other taxes 64,561 67,839 47,503 Total current liabilities 538,879 487,780 478,886 Noncurrent Liabilities Accrued insurance 59,883 58,548 62,982 Accrued retirement benefits 56,024 50,892 49,274 Total noncurrent liabilities 115,907 109,440 112,256 Stockholders' Equity Common stock 40,116 40,116 40,116 Treasury stock (91,666) (97,693) (103,830) Paid-in capital 23,830 22,530 20,917 Earnings invested in the business 678,298 663,039 658,615 Accumulated foreign currency adjustments 10,565 24,544 10,445 Total stockholders' equity 661,143 652,536 626,263 Total Liabilities and Stockholders' Equity $1,315,929 $1,249,756 $1,217,405 STATISTICS: Working Capital $416,945 $405,219 $410,131 Current Ratio 1.8 1.8 1.9 Debt-to-capital % 6.8% 5.0% 6.4% Global Days Sales Outstanding Quarter 55 53 54 Year-to-date 57 54 56 KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE 39 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004 (UNAUDITED) (In thousands of dollars) 2005 2004 Cash flows from operating activities Net earnings $25,946 $13,261 Noncash adjustments: Depreciation and amortization 31,709 33,478 Increase in trade accounts receivable, net (103,981) (83,377) Changes in other operating assets and liabilities 61,232 54,816 Net cash from operating activities 14,906 18,178 Cash flows from investing activities Capital expenditures (17,899) (17,650) Decrease in short-term investments 1,135 80 Increase in other assets (8,422) (769) Investments in unconsolidated affiliates (19,681) - Net cash from investing activities (44,867) (18,339) Cash flows from financing activities (Decrease) increase in short-term borrowings (2,708) 3,896 Financing to fund long-term investments in unconsolidated affiliates 19,681 - Dividend payments (10,687) (10,517) Stock options and other stock sales 5,031 8,532 Other financing activities 1,168 (5,964) Purchase of treasury stock - (3) Net cash from financing activities 12,485 (4,056) Effect of exchange rates on cash and equivalents (2,586) (232) Net change in cash and equivalents (20,062) (4,449) Cash and equivalents at beginning of period 79,348 74,011 Cash and equivalents at end of period $59,286 $69,562 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/

Copyright