Kelly Services Reports Increased Revenue and Earnings for the 1st
Quarter of 2004 TROY, Mich., April 20 /PRNewswire-FirstCall/ --
Kelly Services, Inc., a global provider of staffing services, today
announced revenue and earnings results for the first quarter ended
March 28, 2004. (Logo:
http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO ) Terence E.
Adderley, Kelly Services chairman and chief executive officer,
announced revenue for the first quarter of 2004 totaled $1.159
billion, a 15.5% increase compared to the $1.003 billion for the
corresponding quarter in 2003. Net earnings for the first quarter
of 2004 totaled $1.1 million, compared to $310 thousand reported
for the first quarter of 2003. Diluted earnings per share in the
first quarter of 2004 were $0.03, as compared to first quarter 2003
earnings of $0.01 per share. Commenting on the results, Adderley
said, "The economic recovery is well underway, and I am pleased
with our first quarter results. We achieved a new first quarter
sales record of $1.159 billion. Revenue growth of 15.5% for the
quarter was the strongest growth achieved since the second quarter
of 1997. Additionally, the first quarter earnings improvement puts
us on track to achieve strong earnings growth in 2004. "We're off
to a great start, and we expect it to continue. Assuming just
moderate economic growth, second quarter 2004 earnings per share
should range from $0.08 to $0.13, as compared to $0.04 per share in
the second quarter of 2003. "Revenue in our U.S. Commercial
staffing segment increased 8.9% year over year during the first
quarter, compared to the 4.0% increase reported in the fourth
quarter of 2003. The gross profit rate in this segment decreased
nine- tenths of a percent, primarily due to increased workers'
compensation costs, higher state unemployment taxes, and the impact
of customer mix. Expenses increased 3.2% compared to last year.
Operating earnings totaled $24.3 million, an increase of 0.9%
compared to last year. "Revenue in our Professional, Technical, and
Staffing Alternatives (PTSA) segment increased 7.7% year over year
during the first quarter, compared to the prior quarter's increase
of 4.1%. Kelly Law Registry and Kelly Healthcare Resources were the
leading professional and technical performers in the first quarter.
Kelly HR First and Kelly Vendor Management were the leading
staffing alternatives units. Kelly Home Care and the Automotive
Services Group experienced revenue decreases during the quarter.
The PTSA gross profit rate decreased two-tenths of one percent,
primarily due to increased workers' compensation costs at Kelly
Staff Leasing. Expenses increased 7.4% as compared to last year
principally due to planned expansion of Kelly Vendor Management and
Kelly FedSecure. Operating earnings totaled $14.2 million and
increased 5.8% on a year-over-year basis. "Revenue in our
International segment, as measured in U.S. dollars, increased 33.6%
year over year during the first quarter, as compared to a 30.6%
increase in the fourth quarter. The International gross profit rate
decreased by nine-tenths of a percent, primarily due to gross
profit rate decreases in Europe. Fee based income showed a modest
increase. Operating expenses increased by 20.9% in U.S. dollar
terms. The international operating loss totaled $952 thousand, a
significant improvement compared to a loss of $3.2 million last
year. "On a constant currency basis, International revenue
increased 17.8% year over year in the first quarter, as compared to
16.0% growth in the fourth quarter. Total company revenue for the
first quarter of 2004 increased 11.1% on a constant currency basis
compared to the corresponding quarter of 2003. Constant currency
revenue growth was positive in all regions: Americas increased 15%,
Europe increased 18%, and Asia Pacific increased 21%. International
expenses increased by 6.3% on a constant currency basis." In
conjunction with its first quarter earnings release, Kelly
Services, Inc. will host a conference call at 9:00 a.m. (ET) on
April 20, 2004 to review the results. The call may be accessed in
one of the following ways: Via the Telephone: U.S. 888-730-9134
International 1-773-756-4625 The conference call leader is Terence
Adderley The passcode is Kelly Services Via the Internet: You may
access the call via 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 services, staff leasing, outsourcing, vendor
on-site and full-time placement. Kelly serves 200,000 customers
through 2,500 company owned and operated offices in 26 countries.
Kelly provides employment for nearly 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 2003 was $4.3
billion. Visit http://www.kellyservices.com/ . KELLY SERVICES, INC.
AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 13 WEEKS ENDED
MARCH 28, 2004 AND MARCH 30, 2003 (UNAUDITED) (In thousands of
dollars except per share data) 2004 2003 Change % Change Revenue
from services $1,158,811 $1,003,397 $155,414 15.5% Cost of services
975,455 837,845 137,610 16.4 Gross profit 183,356 165,552 17,804
10.8 Selling, general and administrative expenses 181,342 165,162
16,180 9.8 Earnings from operations 2,014 390 1,624 416.4 Interest
(expense) income, net (239) 122 (361) (295.9) Earnings before taxes
1,775 512 1,263 246.7 Income taxes 710 202 508 251.5 Net earnings
$1,065 $310 $755 243.5% Basic earnings per share $0.03 $0.01 $0.02
200.0% Diluted earnings per share $0.03 $0.01 $0.02 200.0%
STATISTICS: Gross profit rate 15.8% 16.5% (0.7)% Expenses as a % of
revenue 15.6 16.5 (0.9) % Return - Earnings from operations 0.2 0.0
0.2 Earnings before taxes 0.2 0.1 0.1 Net earnings 0.1 0.0 0.1
Effective income tax rate 40.0% 39.5% 0.5% Average number of shares
outstanding (thousands): Basic 34,881 35,548 Diluted 35,302 35,626
KELLY SERVICES, INC. RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED)
(In thousands of dollars) March Year to Date 2004 2003 Change %
Change Revenue from Services: U.S. Commercial Staffing $549,422
$504,309 $45,113 8.9% PTSA 238,698 221,659 17,039 7.7 International
370,691 277,429 93,262 33.6 Consolidated Total $1,158,811
$1,003,397 $155,414 15.5% Earnings (Loss) from Operations: U.S.
Commercial Staffing $24,313 $24,100 $213 0.9% PTSA 14,162 13,388
774 5.8 International (952) (3,157) 2,205 69.8 Corporate (35,509)
(33,941) (1,568) (4.6) Consolidated Total $2,014 $390 $1,624 416.4%
KELLY SERVICES, INC. RECONCILIATION OF CONSTANT CURRENCY REVENUE
FROM SERVICES TO REPORTED REVENUE FROM SERVICES (UNAUDITED) (In
thousands of dollars) March Year to Date 2004 2003 Change % Change
US Commercial $549,422 $504,309 $45,113 8.9% PTSA 238,698 221,659
17,039 7.7 International - constant currency* 326,841 277,429
49,412 17.8 Revenue from services - constant currency 1,114,961
1,003,397 111,564 11.1% Foreign currency impact 43,850 - 43,850
Revenue from services $1,158,811 $1,003,397 $155,414 15.5% *
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) March 28, December 28, March 30, 2004 2003 2003 Current
Assets (UNAUDITED) (UNAUDITED) Cash and equivalents $55,347 $76,378
$72,637 Short-term investments 452 457 493 Trade accounts
receivable, less allowances of $16,004, $14,983 and $13,155,
respectively 704,771 658,090 593,858 Prepaid expenses and other
current assets 34,777 31,784 37,298 Deferred taxes 24,530 24,962
22,586 Total current assets 819,877 791,671 726,872 Property and
Equipment, Net 181,487 188,122 198,982 Noncurrent Deferred Taxes
14,378 14,606 21,055 Goodwill, Net 84,398 85,788 81,027 Other
Assets 58,847 57,550 48,798 Total Assets $1,158,987 $1,137,737
$1,076,734 Current Liabilities Short-term borrowings $37,904
$39,190 $24,441 Accounts payable 96,561 92,265 79,194 Accrued
payroll and related taxes 218,792 200,503 192,021 Accrued insurance
33,674 36,016 27,877 Income and other taxes 52,754 49,342 45,647
Total current liabilities 439,685 417,316 369,180 Noncurrent
Liabilities Accrued insurance 54,941 58,763 45,467 Accrued
retirement benefits 48,788 48,025 40,689 Total noncurrent
liabilities 103,729 106,788 86,156 Stockholders' Equity Common
stock 40,116 40,116 40,116 Treasury stock (108,023) (113,158)
(90,883) Paid-in capital 19,651 19,096 18,285 Earnings invested in
the business 654,300 656,726 662,514 Accumulated foreign currency
adjustments 9,529 10,853 (8,634) Total stockholders' equity 615,573
613,633 621,398 Total Liabilities and Stockholders' Equity
$1,158,987 $1,137,737 $1,076,734 STATISTICS: Working Capital
$380,192 $374,355 $357,692 Current Ratio 1.9 1.9 2.0
Debt-to-capital % 5.8% 6.0% 3.8% Global Days Sales Outstanding Year
to Date 55 55 54 KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS
OF CASH FLOWS FOR THE 13 WEEKS ENDED MARCH 28, 2004 AND MARCH 30,
2003 (UNAUDITED) (In thousands of dollars) 2004 2003 Cash flows
from operating activities Net earnings $1,065 $310 Noncash
adjustments: Depreciation and amortization 11,326 11,908 Increase
in trade accounts receivable, net (47,447) (22,552) Changes in
operating assets and liabilities 18,743 (4,391) Net cash from
operating activities (16,313) (14,725) Cash flows from investing
activities Capital expenditures (4,375) (8,445) Decrease in
short-term investments 5 106 Increase in other assets (173) (951)
Net cash from investing activities (4,543) (9,290) Cash flows from
financing activities Decrease in short-term borrowings (708)
(1,034) Dividend payments (3,491) (3,555) Stock options and other
4,169 6 Purchase of treasury stock (3) (38) Net cash from financing
activities (33) (4,621) Effect of exchange rates on cash and
equivalents (142) 337 Net change in cash and equivalents (21,031)
(28,299) Cash and equivalents at beginning of period 76,378 100,936
Cash and equivalents at end of period $55,347 $72,637
http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO DATASOURCE:
Kelly Services, Inc. CONTACT: ANALYST CONTACT: James Polehna,
Director, Investor Relations, +1-248-244-4586, , or MEDIA CONTACT:
Robert Doetsch, Director, Public Relations, +1-248-244-5362, , both
of Kelly Services, Inc. Web site: http://www.kellyservices.com/
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