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 85% NET EARNINGS GROWTH FOR THE FULL YEAR OF 2005

 

TROY, MI (January 25, 2006) – 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 1, 2006.

 

Terence E. Adderley, Kelly Services chairman and chief executive officer, announced revenue for the 13 week fourth quarter of 2005 totaled $1.384 billion, a 2.1% increase compared to the $1.356 billion for the corresponding 14 week quarter in 2004. On a comparable 13 week basis, fourth quarter revenue increased 6.9%.

 

Sales for the 52 week fiscal year totaled $5.290 billion, a 6.1% increase compared to the $4.984 billion for the 53 week fiscal year of 2004. On a comparable 52 week basis, total year revenue increased 7.5%.

 

Net earnings for the fourth quarter of 2005 totaled $13.3 million, a 68% increase compared to $8.0 million reported for the fourth quarter of 2004. Net earnings for the full year of 2005 totaled $39.3 million, an 85% increase compared to the $21.2 million earned during 2004.

 

Diluted earnings per share in the fourth quarter of 2005 were $0.37, an increase of 68% as compared to fourth quarter 2004 earnings of $0.22 per share. Diluted earnings per share for the full year of 2005 were $1.09, an increase of 82% compared to the $0.60 per share earned in 2004.

 

Commenting on the results, Adderley said, “Kelly turned in a very good year. Our full year sales of nearly $5.3 billion achieved a new sales record, exceeding the previous record we set in 2004 by over $300 million.

 

“As the new year begins, we expect first quarter 2006 earnings to be in the range of $0.14 to $0.19, as compared to $0.11 per share in the first quarter of 2005. For the full year of 2006, we are currently forecasting earnings between $1.45 and $1.60 per share. This forecast is based on continued moderate global economic growth in 2006.

 

“Revenue in our U.S. Commercial staffing segment, which accounted for 47% of total sales, increased 9.5% year over year in the fourth quarter on a comparable 13 week basis. The gross profit rate in this segment increased four-tenths of a percent, primarily due to lower workers compensation costs and higher fee based income. Expenses increased 8.3% compared to last year. Operating earnings totaled $38.0 million, an increase of 6.1% compared to last year.

 

- more -

6

 

“Revenue in our Professional, Technical, and Staffing Alternatives (PTSA) segment, which accounted for 21% of total sales, increased 10.0% year over year in the fourth quarter on a comparable 13 week basis. Kelly Engineering Resources and Kelly IT 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, the Automotive Services Group, Kelly Law Registry and Kelly Staff Leasing experienced revenue decreases during the quarter. The PTSA gross profit rate increased four tenths of a percent, primarily due to lower workers compensation expense and higher fee based income. Expenses decreased 1.1% as compared to last year. Operating earnings totaled $19.0 million and increased 23.6% on a year over year basis.

 

“Revenue in our International segment, which accounted for 32% of total sales, increased 1.5% year over year during the fourth quarter on a comparable 13 week basis. The International gross profit rate increased by one-tenth of a percent, primarily due to growth in fee based income. Operating expenses decreased by 1.7% in U.S. dollar terms. Operating earnings totaled $5.2 million, compared to earnings of $5.5 million last year.

 

“On a 13 week constant currency basis, International segment revenue increased 5.7% year over year in the fourth quarter. On a 13 week constant currency basis, total company revenue increased 8.3% year over year in the fourth quarter.”

 

Mr. Adderley concluded, “We believe 2006 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 25, 2006 to review the results. The call may be accessed in one of the following ways:

 

Via the Telephone:

                
U.S.   1-800-230-1951            
International   1-651-291-0618            

 

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, 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. Kelly operates in 30 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 2005 was $5.3 billion. Visit www.kellyservices.com.

7

 

KELLY SERVICES, INC. AND SUBSIDIARIES

STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED JANUARY 1, 2006 AND 14 WEEKS ENDED JANUARY 2, 2005

(UNAUDITED)

(In thousands of dollars except per share data)

 

     2005
(13 weeks)
     2004
(14 weeks)
     Change
     % Change
  

Revenue from services

    $ 1,383,942     $ 1,355,922     $ 28,020     2.1 %

Cost of services

      1,161,412       1,141,962       19,450     1.7  
    
 
 
 

Gross profit

      222,530       213,960       8,570     4.0  

Selling, general and administrative
expenses

      203,410       202,743       667     0.3  
    
 
 
 

Earnings from operations

      19,120       11,217       7,903     70.5  

Interest expense, net

      (10 )     (145 )     135     93.1  
    
 
 
 

Earnings before taxes

      19,110       11,072       8,038     72.6  

Income taxes

      5,793       3,122       2,671     85.6  
    
 
 
 

Net earnings

    $ 13,317     $ 7,950     $ 5,367     67.5 %
    
 
 
 

Basic earnings per share

    $ 0.37     $ 0.23     $ 0.14     60.9 %
    
 
 
 

Diluted earnings per share

    $ 0.37     $ 0.22     $ 0.15     68.2 %
    
 
 
 

STATISTICS:

                               

Gross profit rate

      16.1 %     15.8 %     0.3 %      

Expenses as a % of revenue

      14.7       15.0       (0.3 )      

% Return - Earnings from operations

      1.4       0.8       0.6        

    Earnings before taxes

      1.4       0.8       0.6        

    Net earnings

      1.0       0.6       0.4        

Effective income tax rate

      30.3 %     28.2 %     2.1 %      

Average number of shares outstanding
(thousands):

                               

Basic

      35,812       35,306                

Diluted

      36,064       35,588                

8

 

KELLY SERVICES, INC. AND SUBSIDIARIES

STATEMENTS OF EARNINGS

FOR THE 52 WEEKS ENDED JANUARY 1, 2006 AND 53 WEEKS ENDED JANUARY 2, 2005

(In thousands of dollars except per share data)

 

     2005
(52 weeks)
     2004
(53 weeks)
     Change
     % Change
  

Revenue from services

    $ 5,289,825     $ 4,984,051     $ 305,774     6.1 %

Cost of services

      4,430,931       4,186,285       244,646     5.8  
    
 
 
 

Gross profit

      858,894       797,766       61,128     7.7  

Selling, general and administrative
expenses

      802,742       763,756       38,986     5.1  
    
 
 
 

Earnings from operations

      56,152       34,010       22,142     65.1  

Interest expense, net

      (187 )     (861 )     674     78.3  
    
 
 
 

Earnings before taxes

      55,965       33,149       22,816     68.8  

Income taxes

      16,702       11,938       4,764     39.9  
    
 
 
 

Net earnings

    $ 39,263     $ 21,211     $ 18,052     85.1 %
    
 
 
 

Basic earnings per share

    $ 1.10     $ 0.60     $ 0.50     83.3 %
    
 
 
 

Diluted earnings per share

    $ 1.09     $ 0.60     $ 0.49     81.7 %
    
 
 
 

 

STATISTICS:

                               

Gross profit rate

      16.2 %     16.0 %     0.2 %      

Expenses as a % of revenue

      15.2       15.3       (0.1 )      

% Return - Earnings from operations

      1.1       0.7       0.4        

    Earnings before taxes

      1.1       0.7       0.4        

    Net earnings

      0.7       0.4       0.3        

Effective income tax rate

      29.8 %     36.0 %     (6.2 )%      

Average number of shares outstanding
(thousands):

                               

Basic

      35,667       35,115                

Diluted

      35,949       35,461                

9

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(In thousands of dollars)

 

     Fourth Quarter (Unaudited)
  
     2005
(13 weeks)
     2004
(14 weeks)
     Change
     % Change
  

Revenue from Services:

                               

U.S. Commercial Staffing

    $ 649,709     $ 623,025     $ 26,684     4.3 %

PTSA

      290,160       277,318       12,842     4.6  

International

      444,073       455,579       (11,506 )   (2.5 )
    
 
 
 

Consolidated Total

    $ 1,383,942     $ 1,355,922     $ 28,020     2.1 %
    
 
 
 

Earnings from Operations:

                               

U.S. Commercial Staffing

    $ 37,977     $ 35,782     $ 2,195     6.1 %

PTSA

      18,957       15,336       3,621     23.6  

International

      5,212       5,469       (257 )   (4.7 )

Corporate Expense

      (43,026 )     (45,370 )     2,344     5.2  
    
 
 
 

Consolidated Total

    $ 19,120     $ 11,217     $ 7,903     70.5 %
    
 
 
 
     December Year to Date
  
     2005
(52 weeks)
     2004
(53 weeks)
     Change
     % Change
  

Revenue from Services:

                               

U.S. Commercial Staffing

    $ 2,436,972     $ 2,327,592     $ 109,380     4.7 %

PTSA

      1,128,435       1,033,745       94,690     9.2  

International

      1,724,418       1,622,714       101,704     6.3  
    
 
 
 

Consolidated Total

    $ 5,289,825     $ 4,984,051     $ 305,774     6.1 %
    
 
 
 

Earnings from Operations:

                               

U.S. Commercial Staffing

    $ 134,757     $ 118,934     $ 15,823     13.3 %

PTSA

      69,055       61,976       7,079     11.4  

International

      16,530       12,656       3,874     30.6  

Corporate Expense

      (164,190 )     (159,556 )     (4,634 )   (2.9 )
    
 
 
 

Consolidated Total

    $ 56,152     $ 34,010     $ 22,142     65.1 %
    
 
 
 

10

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF CONSTANT CURRENCY

REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES

(UNAUDITED)

(In thousands of dollars)

 

     Fourth Quarter
  
     2005
(13 weeks)
     2004
(14 weeks)
    Change
     % Change
  

U.S. Commercial

    $ 649,709     $ 623,025    $ 26,684     4.3 %

PTSA

      290,160       277,318      12,842     4.6  

International - constant currency*

      462,079       455,579      6,500     1.4  
    
 
  
 

Revenue from services - constant currency

      1,401,948       1,355,922      46,026     3.4 %

Foreign currency impact

      (18,006 )            (18,006 )      
    
 
  
     

Revenue from services

    $ 1,383,942     $ 1,355,922    $ 28,020     2.1 %
    
 
  
 
     December Year to Date
  
     2005
(52 weeks)
     2004
(53 weeks)
    Change
     % Change
  

U.S. Commercial

    $ 2,436,972     $ 2,327,592    $ 109,380     4.7 %

PTSA

      1,128,435       1,033,745      94,690     9.2  

International - constant currency*

      1,702,132       1,622,714      79,418     4.9  
    
 
  
 

Revenue from services - constant currency

      5,267,539       4,984,051      283,488     5.7 %

Foreign currency impact

      22,286              22,286        
    
 
  
     

Revenue from services

    $ 5,289,825     $ 4,984,051    $ 305,774     6.1 %
    
 
  
 

 

* 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.

11

 

KELLY SERVICES, INC.

RECONCILIATION OF CONSTANT CURRENCY

REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES

ADJUSTED FOR THE 53rd WEEK IN 2004

(UNAUDITED)

(In thousands of dollars)

 

    2005
     Revenue from Services
2004
   Change
     % Change
  
    Reported
Revenue
13 Weeks
     Reported
Revenue
14 Weeks
   Less: 14th
Week
Revenue
   Adjusted
Revenue
13 Weeks
    

U.S. Commercial Staffing

   $ 649,709     $ 623,025   $ 29,936   $ 593,089   $ 56,620     9.5 %

PTSA

     290,160       277,318     13,552     263,766     26,394     10.0  

International - constant currency

     462,079       455,579     18,242     437,337     24,742     5.7  
   
 
 
 
 
 

Revenue from services - constant currency

     1,401,948       1,355,922     61,730     1,294,192     107,756     8.3  

Foreign currency impact

     (18,006 )                       (18,006 )      
   
 
 
 
 
     

Revenue from services

   $ 1,383,942     $ 1,355,922   $ 61,730   $ 1,294,192   $ 89,750     6.9 %
   
 
 
 
 
 
    2005
     Revenue from Services
2004
   Change
     % Change
  
    Reported
Revenue
52 Weeks
     Reported
Revenue
53 Weeks
   Less: 53rd
Week
Revenue
   Adjusted
Revenue
52 Weeks
    

U.S. Commercial Staffing

   $ 2,436,972     $ 2,327,592   $ 29,936   $ 2,297,656   $ 139,316     6.1 %

PTSA

     1,128,435       1,033,745     13,552     1,020,193     108,242     10.6  

International - constant currency

     1,702,132       1,622,714     18,242     1,604,472     97,660     6.1  
   
 
 
 
 
 

Revenue from services - constant currency

     5,267,539       4,984,051     61,730     4,922,321     345,218     7.0  

Foreign currency impact

     22,286                         22,286        
   
 
 
 
 
     

Revenue from services

   $ 5,289,825     $ 4,984,051   $ 61,730   $ 4,922,321   $ 367,504     7.5 %
   
 
 
 
 
 

 

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 2005 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.

12

 

KELLY SERVICES, INC. AND SUBSIDIARIES

BALANCE SHEETS

(In thousands of dollars)

 

     January 1,
2006
     January 2,
2005
  

Current Assets

                 

Cash and equivalents

    $ 63,699     $ 79,348  

Short-term investments

      154       6,288  

Trade accounts receivable, less allowances of
$16,648 and $16,228, respectively

      803,812       727,366  

Prepaid expenses and other current assets

      47,434       43,942  

Deferred taxes

      33,805       36,055  
    
 

Total current assets

      948,904       892,999  

Property and Equipment, Net

      165,757       181,086  

Noncurrent Deferred Taxes

      22,088       17,960  

Goodwill, Net

      88,217       94,652  

Other Assets

      87,891       63,059  
    
 

Total Assets

    $ 1,312,857     $ 1,249,756  
    
 

Current Liabilities

                 

Short-term borrowings

    $ 56,644     $ 34,289  

Accounts payable

      110,411       102,947  

Accrued payroll and related taxes

      263,112       241,651  

Accrued insurance

      34,097       33,165  

Income and other taxes

      56,651       67,839  
    
 

Total current liabilities

      520,915       479,891  

Noncurrent Liabilities

                 

Accrued insurance

      54,517       58,548  

Accrued retirement benefits

      57,443       50,892  

Other long-term liabilities

      7,939       6,374  
    
 

Total noncurrent liabilities

      119,899       115,814  

Stockholders’ Equity

                 

Common stock

      40,116       40,116  

Treasury stock

      (90,919 )     (97,693 )

Paid-in capital

      27,015       24,045  

Earnings invested in the business

      688,033       663,039  

Accumulated other comprehensive income

      7,798       24,544  
    
 

Total stockholders’ equity

      672,043       654,051  
    
 

Total Liabilities and Stockholders’ Equity

    $ 1,312,857     $ 1,249,756  
    
 

STATISTICS:

                 

Working Capital

    $ 427,989     $ 413,108  

Current Ratio

      1.8       1.9  

Debt-to-capital %

      7.8 %     5.0 %

Global Days Sales Outstanding

                 

Quarter

      53       53  

Year-to-date

      55       54  

13

 

KELLY SERVICES, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

FOR THE 52 WEEKS ENDED JANUARY 1, 2006 AND 53 WEEKS ENDED JANUARY 2, 2005

(In thousands of dollars)

 

     2005
     2004
  

Cash flows from operating activities

                 

Net earnings

    $ 39,263     $ 21,211  

Noncash adjustments:

                 

Depreciation and amortization

      42,215       44,435  

Increase in trade accounts receivable, net

      (97,880 )     (10,175 )

Changes in other operating assets and liabilities

      40,666       (705 )
    
 

Net cash from operating activities

      24,264       54,766  
    
 

Cash flows from investing activities

                 

Capital expenditures

      (28,527 )     (36,801 )

Decrease in short-term investments

      1,203       105  

Increase in other assets

      (8,911 )     (736 )

Investments in unconsolidated affiliates

      (19,681 )     —    
    
 

Net cash from investing activities

      (55,916 )     (37,432 )
    
 

Cash flows from financing activities

                 

Increase (decrease) in short-term borrowings

      6,833       (8,188 )

Financing to fund long-term investments in unconsolidated affiliates

      19,681       —    

Dividend payments

      (14,269 )     (14,043 )

Stock options and other stock sales

      5,786       15,199  

Other financing activities

      1,949       (6,777 )

Purchase of treasury stock

      —         (3 )
    
 

Net cash from financing activities

      19,980       (13,812 )
    
 

Effect of exchange rates on cash and equivalents

      (3,977 )     1,815  
    
 

Net change in cash and equivalents

      (15,649 )     5,337  

Cash and equivalents at beginning of period

      79,348       74,011  
    
 

Cash and equivalents at end of period

    $ 63,699     $ 79,348