EX-99.1 2 dex991.htm PRESS RELEASE Press Release

5

 

Exhibit 99.1

 

LOGO

 

ANALYST CONTACT:   MEDIA CONTACT:
James Polehna   Renee Walker
(248) 244-4586   (248) 244-5362
james_polehna@kellyservices.com   renee_walker@kellyservices.com

 

KELLY SERVICES REPORTS RECORD REVENUE AND FOUR-FOLD

 

EARNINGS GROWTH FOR THE 4th QUARTER AND FULL YEAR OF 2004

 

TROY, MI (January 26, 2005)—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.

 

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.

 

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“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

 

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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:

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: KELYA, 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 www.kellyservices.com.

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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                

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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.

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KELLY SERVICES, INC.

RESULTS OF OPERATIONS BY SEGMENT

(In thousands of dollars)

 

     Fourth Quarter (Unaudited)
  
    

2004

(14 weeks)

    

2003

(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

(53 weeks)

    

2003

(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 %
    
 
 
 

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KELLY SERVICES, INC.

RECONCILIATION OF CONSTANT CURRENCY

REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES

UNAUDITED

(In thousands of dollars)

 

     Fourth Quarter
  
    

2004

(14 weeks)

   

2003

(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

(53 weeks)

   

2003

(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.

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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
    2003
            
    

Reported
Revenue

14 Weeks

    Less: 14th
Week
Revenue
   

Adjusted
Revenue

13 Weeks

   

Reported
Revenue

13 Weeks

    Change
    % Change
  

U.S. Commercial Staffing

    $ 623,049    $ 29,936    $ 593,113    $ 569,210    $ 23,903    4.2 %

PTSA

      277,294      13,552      263,742      228,557      35,185    15.4  

International—constant currency

      423,980      17,072      406,908      367,206      39,702    10.8  
    
  
  
  
  
  

Revenue from services—constant currency

      1,324,323      60,560      1,263,763      1,164,973      98,790    8.5  

Foreign currency impact

      31,599      1,170      30,429             30,429       
    
  
  
  
  
      

Revenue from services

    $ 1,355,922    $ 61,730    $ 1,294,192    $ 1,164,973    $ 129,219    11.1 %
    
  
  
  
  
  
     2004
    2003
            
    

Reported
Revenue

53 Weeks

    Less: 53rd
Week
Revenue
   

Adjusted
Revenue

52 Weeks

   

Reported
Revenue

52 Weeks

    Change
    % Change
  

U.S. Commercial Staffing

    $ 2,327,910    $ 29,936    $ 2,297,974    $ 2,131,529    $ 166,445    7.8 %

PTSA

      1,033,427      13,552      1,019,875      895,002      124,873    14.0  

International—constant currency

      1,493,831      17,072      1,476,759      1,298,624      178,135    13.7  
    
  
  
  
  
  

Revenue from services—constant currency

      4,855,168      60,560      4,794,608      4,325,155      469,453    10.9  

Foreign currency impact

      128,883      1,170      127,713             127,713       
    
  
  
  
  
      

Revenue from services

    $ 4,984,051    $ 61,730    $ 4,922,321    $ 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.

13

 

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  
    
 

14

 

KELLY SERVICES, INC. AND SUBSIDIARIES

BALANCE SHEETS

(In thousands of dollars)

 

     January 2,
2005
     December 28,
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