Kelly Services Reports Record Revenue and Strong Earnings Growth
for the 2nd Quarter of 2004 TROY, Mich., July 20
/PRNewswire-FirstCall/ -- Kelly Services, Inc.
(NASDAQ:KELYANASDAQ:KELYB), a global provider of staffing services,
today announced record revenue and strong earnings growth for the
second quarter ended June 27, 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 second quarter of 2004 totaled $1.224
billion, a 15.6% increase compared to the $1.060 billion for the
corresponding quarter in 2003. Sales for the six-month period
totaled $2.383 billion, a 15.5% increase compared to the $2.063
billion for the first six months of 2003. Net earnings for the
second quarter of 2004 totaled $5.0 million, compared to $1.5
million reported for the second quarter of 2003. Net earnings for
the first six months of 2004 totaled $6.1 million, compared to the
$1.8 million earned during the comparable six-month period in 2003.
Diluted earnings per share in the second quarter of 2004 were
$0.14, as compared to second quarter 2003 earnings of $0.04 per
share. Diluted earnings per share for the first six months of 2004
were $0.17, compared to the $0.05 per share earned in the first six
months of 2003. Commenting on the results, Adderley said, "The
economic recovery is well underway, and our second quarter sales of
$1.224 billion set a new all time record for any quarter. "We're
off to a great start this year. We believe the balance of the year
will continue on course, and our third quarter 2004 earnings per
share should range from $0.16 to $0.21, as compared to $0.04 per
share in the third quarter of 2003. "Revenue in our U.S. Commercial
staffing segment increased 11.3% year over year during the second
quarter, compared to the 8.9% increase reported in the first
quarter. The gross profit rate in this segment decreased two-tenths
of a percent, primarily due to higher state unemployment taxes.
Expenses increased 2.9% compared to last year. Operating earnings
totaled $29.6 million, an increase of 27.7% compared to last year.
"Revenue in our Professional, Technical, and Staffing Alternatives
(PTSA) segment increased 14.7% year over year during the second
quarter, compared to the prior quarter's increase of 7.7%. Kelly
Law Registry and Kelly Healthcare Resources were the leading
professional and technical performers in the second 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 increased three-tenths of one percent, primarily
due to increased fee based income. Expenses increased 11.4% as
compared to last year. Operating earnings totaled $16.4 million and
increased 27.7% on a year-over-year basis. "Revenue in our
International segment, as measured in U.S. dollars, increased 23.4%
year over year during the second quarter, as compared to a 33.6%
increase in the first quarter. The International gross profit rate
decreased by five-tenths of a percent, primarily due to gross
profit rate decreases in Europe. Operating expenses increased by
14.3% in U.S. dollar terms. Operating earnings totaled $1.9
million, a significant improvement compared to a loss of $1.0
million last year. "On a constant currency basis, International
segment revenue increased 15.9% year over year in the second
quarter, as compared to 17.8% growth in the first quarter. Total
company revenue for the second quarter of 2004 increased 13.4% on a
constant currency basis as compared to 11.1% growth in the first
quarter. Constant currency revenue growth was positive in all
regions: Americas increased 16%, Europe increased 15%, and Asia
Pacific increased 25%. International expenses increased by 7.1% on
a constant currency basis." In conjunction with its second quarter
earnings release, Kelly Services, Inc. will host a conference call
at 9:00 a.m. (ET) on July 20, 2004 to review the results. The call
may be accessed in one of the following ways: Via the Telephone:
U.S. 888-677-5721 International 1-773-756-4624 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 JUNE
27, 2004 AND JUNE 29, 2003 (UNAUDITED) (In thousands of dollars
except per share data) 2004 2003 Change % Change Revenue from
services $1,224,464 $1,059,517 $164,947 15.6% Cost of services
1,026,382 887,113 139,269 15.7 Gross profit 198,082 172,404 25,678
14.9 Selling, general and administrative expenses 189,404 169,955
19,449 11.4 Earnings from operations 8,678 2,449 6,229 254.3
Interest (expense) income, net (283) 4 (287) NM Earnings before
taxes 8,395 2,453 5,942 242.2 Income taxes 3,348 969 2,379 245.5
Net earnings $5,047 $1,484 $3,563 240.1% Basic earnings per share
$0.14 $0.04 $0.10 250.0% Diluted earnings per share $0.14 $0.04
$0.10 250.0% STATISTICS: Gross profit rate 16.2% 16.3% (0.1)%
Expenses as a % of revenue 15.5 16.0 (0.5) % 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 39.9% 39.5% 0.4%
Average number of shares outstanding (thousands): Basic 35,057
35,596 Diluted 35,431 35,624 NM Percentage change not meaningful.
KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR
THE 26 WEEKS ENDED JUNE 27, 2004 AND JUNE 29, 2003 (UNAUDITED) (In
thousands of dollars except per share data) 2004 2003 Change %
Change Revenue from services $2,383,275 $2,062,914 $320,361 15.5%
Cost of services 2,001,837 1,724,958 276,879 16.1 Gross profit
381,438 337,956 43,482 12.9 Selling, general and administrative
expenses 370,746 335,117 35,629 10.6 Earnings from operations
10,692 2,839 7,853 276.6 Interest (expense) income, net (522) 126
(648) NM Earnings before taxes 10,170 2,965 7,205 243.0 Income
taxes 4,058 1,171 2,887 246.5 Net earnings $6,112 $1,794 $4,318
240.7 % Basic earnings per share $0.17 $0.05 $0.12 240.0 % Diluted
earnings per share $0.17 $0.05 $0.12 240.0 % STATISTICS: Gross
profit rate 16.0% 16.4% (0.4)% Expenses as a % of revenue 15.6 16.2
(0.6) % Return - Earnings from operations 0.4 0.1 0.3 Earnings
before taxes 0.4 0.1 0.3 Net earnings 0.3 0.1 0.2 Effective income
tax rate 39.9% 39.5% 0.4% Average number of shares outstanding
(thousands): Basic 34,969 35,572 Diluted 35,369 35,584 NM
Percentage change not meaningful. KELLY SERVICES, INC. AND
SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In
thousands of dollars) Second Quarter 2004 2003 Change % Change
Revenue from Services: U.S. Commercial Staffing $581,467 $522,665
$58,802 11.3% PTSA 256,470 223,565 32,905 14.7 International
386,527 313,287 73,240 23.4 Consolidated Total $1,224,464
$1,059,517 $164,947 15.6% Earnings (Loss) from Operations: U.S.
Commercial Staffing $29,645 $23,215 $6,430 27.7% PTSA 16,361 12,812
3,549 27.7 International 1,931 (1,019) 2,950 NM Corporate Expense
(39,259) (32,559) (6,700) (20.6) Consolidated Total $8,678 $2,449
$6,229 254.3% June Year to Date 2004 2003 Change % Change Revenue
from Services: U.S. Commercial Staffing $1,130,889 $1,026,974
$103,915 10.1 % PTSA 495,168 445,224 49,944 11.2 International
757,218 590,716 166,502 28.2 Consolidated Total $2,383,275
$2,062,914 $320,361 15.5 % Earnings (Loss) from Operations: U.S.
Commercial Staffing $53,958 $47,367 $6,591 13.9 % PTSA 30,523
26,200 4,323 16.5 International 979 (4,176) 5,155 NM Corporate
Expense (74,768) (66,552) (8,216) (12.3) Consolidated Total $10,692
$2,839 $7,853 276.6 % NM Percentage change not meaningful. KELLY
SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES (UNAUDITED)
(In thousands of dollars) Second Quarter 2004 2003 Change % Change
U.S. Commercial $581,467 $522,665 $58,802 11.3% PTSA 256,470
223,565 32,905 14.7 International - constant currency* 363,215
313,287 49,928 15.9 Revenue from services - constant currency
1,201,152 1,059,517 141,635 13.4% Foreign currency impact 23,312
23,312 Revenue from services $1,224,464 $1,059,517 $164,947 15.6%
June Year to Date 2004 2003 Change % Change U.S. Commercial
$1,130,889 $1,026,974 $103,915 10.1% PTSA 495,168 445,224 49,944
11.2 International - constant currency* 690,056 590,716 99,340 16.8
Revenue from services - constant currency 2,316,113 2,062,914
253,199 12.3% Foreign currency impact 67,162 67,162 Revenue from
services $2,383,275 $2,062,914 $320,361 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) June
27, December 28, June 29, 2004 2003 2003 (UNAUDITED) (UNAUDITED)
Current Assets Cash and equivalents $65,006 $76,378 $76,961
Short-term investments 452 457 518 Trade accounts receivable, less
allowances of $16,314, $14,983 and $13,698, respectively 728,056
658,090 617,600 Prepaid expenses and other current assets 37,421
31,784 34,411 Deferred taxes 22,921 24,962 23,407 Total current
assets 853,856 791,671 752,897 Property and Equipment, Net 178,683
188,122 194,971 Noncurrent Deferred Taxes 13,307 14,606 21,010
Goodwill, Net 84,610 85,788 83,086 Other Assets 59,564 57,550
53,363 Total Assets $1,190,020 $1,137,737 $1,105,327 Current
Liabilities Short-term borrowings $37,537 $39,190 $24,234 Accounts
payable 94,623 92,265 76,764 Accrued payroll and related taxes
242,433 200,503 205,294 Accrued insurance 35,608 36,016 30,219
Income and other taxes 51,846 49,342 46,525 Total current
liabilities 462,047 417,316 383,036 Noncurrent Liabilities Accrued
insurance 58,096 58,763 49,304 Accrued retirement benefits 49,999
48,025 44,491 Total noncurrent liabilities 108,095 106,788 93,795
Stockholders' Equity Common stock 40,116 40,116 40,116 Treasury
stock (105,149) (113,158) (90,774) Paid-in capital 20,042 19,096
18,332 Earnings invested in the business 655,841 656,726 660,438
Accumulated foreign currency adjustments 9,028 10,853 384 Total
stockholders' equity 619,878 613,633 628,496 Total Liabilities and
Stockholders' Equity $1,190,020 $1,137,737 $1,105,327 STATISTICS:
Working Capital $391,809 $374,355 $369,861 Current Ratio 1.8 1.9
2.0 Debt-to-capital % 5.7% 6.0% 3.7% Global Days Sales Outstanding
Quarter 54 51 53 Year-to-date 56 55 54 KELLY SERVICES, INC. AND
SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE 26 WEEKS ENDED JUNE
27, 2004 AND JUNE 29, 2003 (UNAUDITED) (In thousands of dollars)
2004 2003 Cash flows from operating activities Net earnings $6,112
$1,794 Noncash adjustments: Depreciation and amortization 22,410
24,043 Increase in trade accounts receivable, net (72,036) (36,350)
Changes in other operating assets and liabilities 49,506 11,404 Net
cash from operating activities 5,992 891 Cash flows from investing
activities Capital expenditures (12,766) (15,146) Decrease in
short-term investments 5 81 Increase in other assets (731) (1,808)
Net cash from investing activities (13,492) (16,873) Cash flows
from financing activities Decrease in short-term borrowings (899)
(2,667) Dividend payments (6,997) (7,115) Stock options and other
4,234 14 Purchase of treasury stock (3) (67) Net cash from
financing activities (3,665) (9,835) Effect of exchange rates on
cash and equivalents (207) 1,842 Net change in cash and equivalents
(11,372) (23,975) Cash and equivalents at beginning of period
76,378 100,936 Cash and equivalents at end of period $65,006
$76,961 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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