CDI Corp. Reports First Quarter 2001 Earnings

Apr 25, 2001, 01:00 ET from CDI Corp.

    PHILADELPHIA, April 25 /PRNewswire/ -- CDI Corp. (NYSE:   CDI) today
 reported financial results for the first quarter ended March 31, 2001.
 
     Key results and actions in the quarter included:
     -- Sequential improvement in earnings per share.
     -- Year-over-year improvement in working capital management.
     -- Strategic investments in legal staffing and in creating e-procurement
        services.
 
     Earnings Discussion
     The company announced first-quarter earnings per diluted share of $0.20 on
 consolidated revenue of $405.2 million. First-quarter earnings included
 charges totaling $2.2 million on a pre-tax basis, or $0.07 per share on an
 after-tax basis.  These charges relate to the further unwinding of actions
 taken by the company's former CEO and include a $960,000 write-off of an
 investment in e-business solutions provider, a $625,000 write-off related to
 canceling a contract with a web-based staffing solutions provider, and
 $630,000 in severance for the former president of the IT division.  The first
 two charges are reflected as increases to corporate expenses while the third
 charge is reflected as a decrease in operating profit in the IT Services
 business unit. For the fourth quarter of 2000, the company reported an
 operating loss of $0.15 per share on consolidated revenue of $416.8 million.
 Fourth-quarter earnings per share included certain event-driven charges and
 adjustments totaling $0.39 per share on an after-tax basis.
 
     Business Unit Performance
     Economic conditions for CDI's four business units continued to be very
 challenging during the first quarter.  The company's two technical units made
 sequential improvements in profitability while its temporary clerical and
 permanent placement units experienced further deterioration in market
 conditions.
     Technical Services revenue decreased 8 percent and operating profit
 decreased 79 percent compared to the first quarter of 2000.  In addition to
 the decrease in volume, year-over-year operating profit results reflect higher
 costs.  However, the unit improved profitability sequentially.  Compared to
 the fourth quarter of 2000, revenue was flat and the unit recorded positive
 operating profit of $2.3 million compared to an operating loss of about
 $300,000, excluding $8.3 million in charges and adjustments in the fourth
 quarter.  The unit achieved first-quarter contract wins for higher-margin
 engineering services to the chemical, pharmaceutical and aerospace industries
 with anticipated revenues of approximately $22 million in 2001.  In addition,
 first-quarter reductions in staffing volume during the quarter have typically
 involved lower-margin accounts, contributing to a sequential improvement in
 operating profit margins.
     Information Technology Services revenue increased 10 percent and operating
 profit, excluding first quarter 2001 charges, decreased 16 percent compared to
 the first quarter of 2000.  Year-over-year operating profit results reflect
 higher costs.  Reflecting sequential improvement in profitability, operating
 profit was flat at  $4.3 million on revenue of $92.9 million in the first
 quarter compared to revenue of $95.4 million in the fourth quarter, excluding
 charges of $630,000 in the first quarter of 2001 and $1.5 million in the
 fourth quarter of 2000.  The unit's Innovantage division, which provides
 higher-margin IT solutions and services, got off to a solid start in the first
 quarter with new contracts totaling $4.5 million in 2001 anticipated revenue.
     Todays Staffing revenue decreased 7 percent and operating profit decreased
 55 percent compared to the first quarter of 2000.  Operating profit results
 reflect a less favorable mix of business and higher operating costs in
 addition to the impact of lower volume.  Compared to the fourth quarter of
 2000, revenue decreased 10 percent and operating profit decreased 38 percent,
 excluding $304,000 in charges in the fourth quarter.  The unit has implemented
 additional programs to reduce operating costs, which should begin to benefit
 results in the second quarter.  In addition, the unit has implemented new
 programs to increase sales of higher margin services.
     Management Recruiters International revenue decreased 5 percent and
 operating profit decreased 19 percent compared to the first quarter of 2000.
 Compared to a strong fourth quarter of 2000, revenue decreased 10 percent and
 operating profit decreased 20 percent, reflecting a significant slowdown in
 the market in the first quarter.  While job orders remain relatively strong,
 placements are decreasing as hiring companies take longer to evaluate
 candidates and more candidates are holding off on career moves because of
 uncertainty about the direction of the economy.
 
     Key Initiatives
     CDI continued to make progress on its key initiatives during the quarter,
 including continued improvements in its management of working capital.  Cash
 collections for the first quarter of 2001 exceeded those of the first quarter
 of 2000 by approximately $25 million.  Receivables decreased to $372 million
 compared to $395 million the first quarter of 2000 and Days Sales Outstanding,
 or DSOs, decreased to 66 days from 70 days a year ago.  Long-term debt, which
 totaled $96.1 million at the end of the first quarter of 2000, was
 $57.9 million at the end of the first quarter of 2001.
     Corporate expenses were down 21 percent compared to the same period a year
 ago, excluding the first-quarter 2001 charges of $1.6 million discussed in the
 first paragraph of the earnings discussion.
     As part of its longer-term growth strategy, the company has indicated its
 investments in the business will be targeted to higher-margin opportunities.
 In keeping with this focus, during the quarter Todays Staffing completed its
 acquisition of Spectra Professional Search/Spectra Temps, a Boston-based
 provider of legal staffing services.  Acquisition of the privately held
 company expands Todays Legal Staffing in Boston, the sixth largest market in
 the U.S. for legal staffing services.
     CDI also has targeted creation of e-procurement services as a key
 component of its long-term growth strategy.  During the quarter, the company
 announced that CDI and LiquidMedium have created a joint venture to provide
 end-to-end e-procurement solutions for temporary, contract and permanent
 staffing.  The CDI-LiquidMedium joint venture will build and provide
 vendor-neutral, third-party administration of web-based, human capital
 exchanges for large, multi-national customers who have sophisticated staffing
 requirements.
 
     Financial Outlook
     The company has continued to experience challenging market conditions due
 to the U.S. economic slowdown.  As a result, CDI currently anticipates
 earnings per share in the second quarter of 2001 will be in the low $0.30's.
 As a result of recent economic forecasts which suggest that U.S. economic
 growth in the second half of the year may occur more slowly and be less robust
 than previously projected, the company is not currently providing a forecast
 for full-year earnings.
     "We made good progress during the quarter despite very challenging
 conditions.  Excluding identified charges and adjustments in the fourth
 quarter of 2000 and first quarter of 2001, we increased EPS from $0.24 to
 $0.27 on a lower revenue base.  As we discussed in our year-end earnings
 announcement, we anticipate a significant increase in expenses related to
 depreciation of information systems and more expensive health care benefits in
 2001.  During the first quarter, these equated to an incremental increase in
 expenses of approximately $0.03 per share over the fourth quarter of 2000.
 Our improvement in working capital management has given us an even stronger
 balance sheet.  At the same time, we are continuing to invest prudently to
 support higher-margin services that will generate a faster rate of growth for
 the company when the economy recovers," said CDI Chief Executive Officer Allen
 M. Levantin.
 
     Conference Call/Webcast
 CDI Corp. will conduct a conference call at 11 a.m. (EDT) today to discuss
 first quarter results.  The conference call will be broadcast live over the
 Internet and can be accessed by any interested party at
 http://www.streetevents.com .
 
     Company Information
     Philadelphia-based CDI Corp. (NYSE:   CDI), including its Management
 Recruiters International (MRI) and Todays Staffing subsidiaries, comprises the
 world's largest search and recruitment organization and is a global top 10
 provider of staffing, outsourcing and engineering services.  In 2000, nearly
 100,000 people worked on company assignments, including specialists in
 information technology, engineering and telecommunications, and in legal,
 administrative and office support.  MRI placed another 45,000 people in a wide
 range of careers.  In 2000, CDI had revenues of more than $1.7 billion.  CDI
 and its franchisees operate more than 1,400 offices in 28 countries.  Visit
 CDI on the web at http://www.cdicorp.com .
 
     Safe Harbor Statement
     Certain information in this news release contains forward-looking
 statements as such term is defined in Section 27A of the Securities Act of
 1933 and Section 21E of the Securities Exchange Act of 1934.  Certain
 forward-looking statements can be identified by the use of forward-looking
 terminology such as "believes," "expects," "may," "will," "should," "seeks,"
 "approximately," "intends," "plans," "estimates," or "anticipates" or the
 negative thereof or other comparable terminology, or by discussions of
 strategy, plans or intentions.  Forward-looking statements involve risks and
 uncertainties that could cause actual results to differ materially from those
 in the forward-looking statements.  These include risks and uncertainties such
 as competitive market pressures, material changes in demand from larger
 customers, availability of labor, the company's performance on contracts,
 changes in customers' attitudes towards outsourcing, government policies or
 judicial decisions adverse to the staffing industry, changes in economic
 conditions, unforeseen events associated with the disposition of discontinued
 operations, and delays or unexpected costs associated with implementation of
 computer systems.  Readers are cautioned not to place undue reliance on these
 forward-looking statements, which speak only as of the date hereof.  The
 company assumes no obligation to update such information.
 
 
                                   CDI CORP.
                               Financial Summary
                            ($000s except per share)
 
     Summary of Earnings              Three Months Ended   Three Months Ended
                                           March 31,            March 31,
                                            2001                  2000
 
     Revenues                              $405,166              $421,400
 
     Gross profit                           109,904               114,022
 
     Operating profit                         7,178                20,914
     Interest                                   938                 1,048
     Earnings before income taxes             6,240                19,866
     Income taxes                             2,390                 7,827
     Earnings before minority interests       3,850                12,039
     Minority interests                         105                   235
     Net earnings                            $3,745               $11,804
 
     Net earnings per diluted share           $0.20                 $0.62
     Diluted shares                          19,160                19,105
 
     Segment Data
     Revenues
     Technical Services                    $227,847              $246,751
     Information Technology Services         92,878                84,642
     Todays Staffing                         54,066                57,990
     Management Recruiters                   30,375                32,017
 
     Operating Profit
     Technical Services                      $2,260               $10,536
     Information Technology Services          3,706                 5,162
     Todays Staffing                          1,926                 4,291
     Management Recruiters                    5,740                 7,053
     Corporate expenses                      (6,454)               (6,128)
 
                                   CDI CORP.
                               Financial Summary
                                    ($000s)
 
     Summary Balance Sheet
                                     March 31, 2001        March 31, 2000
     Assets
     Cash                               $6,439                $15,023
     Receivables                       372,357                395,113
     Prepaid expenses                    8,069                  7,986
     Deferred taxes                     10,337                     --
     Current assets                    397,202                418,122
 
     Net fixed assets                   65,854                 58,242
     Goodwill and other intangibles     91,002                 91,936
     Other assets                       11,161                 16,552
     $565,219                         $584,852
 
     Liabilities and Shareholders'
      Equity
     Outstanding checks                $21,019                $17,096
     Accounts payable                   43,354                 44,439
     Accrued expenses                   92,751                 97,564
     Current taxes                       5,843                  4,561
     Deferred income taxes                  --                    769
     Current liabilities               162,967                164,429
 
     Long-term debt                     57,896                 96,098
     Deferred income taxes               1,313                    901
     Deferred compensation              11,726                 14,233
     Minority interests                  2,328                  3,523
     Shareholders' equity              328,989                305,668
                                      $565,219               $584,852
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE CDI Corp.
    PHILADELPHIA, April 25 /PRNewswire/ -- CDI Corp. (NYSE:   CDI) today
 reported financial results for the first quarter ended March 31, 2001.
 
     Key results and actions in the quarter included:
     -- Sequential improvement in earnings per share.
     -- Year-over-year improvement in working capital management.
     -- Strategic investments in legal staffing and in creating e-procurement
        services.
 
     Earnings Discussion
     The company announced first-quarter earnings per diluted share of $0.20 on
 consolidated revenue of $405.2 million. First-quarter earnings included
 charges totaling $2.2 million on a pre-tax basis, or $0.07 per share on an
 after-tax basis.  These charges relate to the further unwinding of actions
 taken by the company's former CEO and include a $960,000 write-off of an
 investment in e-business solutions provider, a $625,000 write-off related to
 canceling a contract with a web-based staffing solutions provider, and
 $630,000 in severance for the former president of the IT division.  The first
 two charges are reflected as increases to corporate expenses while the third
 charge is reflected as a decrease in operating profit in the IT Services
 business unit. For the fourth quarter of 2000, the company reported an
 operating loss of $0.15 per share on consolidated revenue of $416.8 million.
 Fourth-quarter earnings per share included certain event-driven charges and
 adjustments totaling $0.39 per share on an after-tax basis.
 
     Business Unit Performance
     Economic conditions for CDI's four business units continued to be very
 challenging during the first quarter.  The company's two technical units made
 sequential improvements in profitability while its temporary clerical and
 permanent placement units experienced further deterioration in market
 conditions.
     Technical Services revenue decreased 8 percent and operating profit
 decreased 79 percent compared to the first quarter of 2000.  In addition to
 the decrease in volume, year-over-year operating profit results reflect higher
 costs.  However, the unit improved profitability sequentially.  Compared to
 the fourth quarter of 2000, revenue was flat and the unit recorded positive
 operating profit of $2.3 million compared to an operating loss of about
 $300,000, excluding $8.3 million in charges and adjustments in the fourth
 quarter.  The unit achieved first-quarter contract wins for higher-margin
 engineering services to the chemical, pharmaceutical and aerospace industries
 with anticipated revenues of approximately $22 million in 2001.  In addition,
 first-quarter reductions in staffing volume during the quarter have typically
 involved lower-margin accounts, contributing to a sequential improvement in
 operating profit margins.
     Information Technology Services revenue increased 10 percent and operating
 profit, excluding first quarter 2001 charges, decreased 16 percent compared to
 the first quarter of 2000.  Year-over-year operating profit results reflect
 higher costs.  Reflecting sequential improvement in profitability, operating
 profit was flat at  $4.3 million on revenue of $92.9 million in the first
 quarter compared to revenue of $95.4 million in the fourth quarter, excluding
 charges of $630,000 in the first quarter of 2001 and $1.5 million in the
 fourth quarter of 2000.  The unit's Innovantage division, which provides
 higher-margin IT solutions and services, got off to a solid start in the first
 quarter with new contracts totaling $4.5 million in 2001 anticipated revenue.
     Todays Staffing revenue decreased 7 percent and operating profit decreased
 55 percent compared to the first quarter of 2000.  Operating profit results
 reflect a less favorable mix of business and higher operating costs in
 addition to the impact of lower volume.  Compared to the fourth quarter of
 2000, revenue decreased 10 percent and operating profit decreased 38 percent,
 excluding $304,000 in charges in the fourth quarter.  The unit has implemented
 additional programs to reduce operating costs, which should begin to benefit
 results in the second quarter.  In addition, the unit has implemented new
 programs to increase sales of higher margin services.
     Management Recruiters International revenue decreased 5 percent and
 operating profit decreased 19 percent compared to the first quarter of 2000.
 Compared to a strong fourth quarter of 2000, revenue decreased 10 percent and
 operating profit decreased 20 percent, reflecting a significant slowdown in
 the market in the first quarter.  While job orders remain relatively strong,
 placements are decreasing as hiring companies take longer to evaluate
 candidates and more candidates are holding off on career moves because of
 uncertainty about the direction of the economy.
 
     Key Initiatives
     CDI continued to make progress on its key initiatives during the quarter,
 including continued improvements in its management of working capital.  Cash
 collections for the first quarter of 2001 exceeded those of the first quarter
 of 2000 by approximately $25 million.  Receivables decreased to $372 million
 compared to $395 million the first quarter of 2000 and Days Sales Outstanding,
 or DSOs, decreased to 66 days from 70 days a year ago.  Long-term debt, which
 totaled $96.1 million at the end of the first quarter of 2000, was
 $57.9 million at the end of the first quarter of 2001.
     Corporate expenses were down 21 percent compared to the same period a year
 ago, excluding the first-quarter 2001 charges of $1.6 million discussed in the
 first paragraph of the earnings discussion.
     As part of its longer-term growth strategy, the company has indicated its
 investments in the business will be targeted to higher-margin opportunities.
 In keeping with this focus, during the quarter Todays Staffing completed its
 acquisition of Spectra Professional Search/Spectra Temps, a Boston-based
 provider of legal staffing services.  Acquisition of the privately held
 company expands Todays Legal Staffing in Boston, the sixth largest market in
 the U.S. for legal staffing services.
     CDI also has targeted creation of e-procurement services as a key
 component of its long-term growth strategy.  During the quarter, the company
 announced that CDI and LiquidMedium have created a joint venture to provide
 end-to-end e-procurement solutions for temporary, contract and permanent
 staffing.  The CDI-LiquidMedium joint venture will build and provide
 vendor-neutral, third-party administration of web-based, human capital
 exchanges for large, multi-national customers who have sophisticated staffing
 requirements.
 
     Financial Outlook
     The company has continued to experience challenging market conditions due
 to the U.S. economic slowdown.  As a result, CDI currently anticipates
 earnings per share in the second quarter of 2001 will be in the low $0.30's.
 As a result of recent economic forecasts which suggest that U.S. economic
 growth in the second half of the year may occur more slowly and be less robust
 than previously projected, the company is not currently providing a forecast
 for full-year earnings.
     "We made good progress during the quarter despite very challenging
 conditions.  Excluding identified charges and adjustments in the fourth
 quarter of 2000 and first quarter of 2001, we increased EPS from $0.24 to
 $0.27 on a lower revenue base.  As we discussed in our year-end earnings
 announcement, we anticipate a significant increase in expenses related to
 depreciation of information systems and more expensive health care benefits in
 2001.  During the first quarter, these equated to an incremental increase in
 expenses of approximately $0.03 per share over the fourth quarter of 2000.
 Our improvement in working capital management has given us an even stronger
 balance sheet.  At the same time, we are continuing to invest prudently to
 support higher-margin services that will generate a faster rate of growth for
 the company when the economy recovers," said CDI Chief Executive Officer Allen
 M. Levantin.
 
     Conference Call/Webcast
 CDI Corp. will conduct a conference call at 11 a.m. (EDT) today to discuss
 first quarter results.  The conference call will be broadcast live over the
 Internet and can be accessed by any interested party at
 http://www.streetevents.com .
 
     Company Information
     Philadelphia-based CDI Corp. (NYSE:   CDI), including its Management
 Recruiters International (MRI) and Todays Staffing subsidiaries, comprises the
 world's largest search and recruitment organization and is a global top 10
 provider of staffing, outsourcing and engineering services.  In 2000, nearly
 100,000 people worked on company assignments, including specialists in
 information technology, engineering and telecommunications, and in legal,
 administrative and office support.  MRI placed another 45,000 people in a wide
 range of careers.  In 2000, CDI had revenues of more than $1.7 billion.  CDI
 and its franchisees operate more than 1,400 offices in 28 countries.  Visit
 CDI on the web at http://www.cdicorp.com .
 
     Safe Harbor Statement
     Certain information in this news release contains forward-looking
 statements as such term is defined in Section 27A of the Securities Act of
 1933 and Section 21E of the Securities Exchange Act of 1934.  Certain
 forward-looking statements can be identified by the use of forward-looking
 terminology such as "believes," "expects," "may," "will," "should," "seeks,"
 "approximately," "intends," "plans," "estimates," or "anticipates" or the
 negative thereof or other comparable terminology, or by discussions of
 strategy, plans or intentions.  Forward-looking statements involve risks and
 uncertainties that could cause actual results to differ materially from those
 in the forward-looking statements.  These include risks and uncertainties such
 as competitive market pressures, material changes in demand from larger
 customers, availability of labor, the company's performance on contracts,
 changes in customers' attitudes towards outsourcing, government policies or
 judicial decisions adverse to the staffing industry, changes in economic
 conditions, unforeseen events associated with the disposition of discontinued
 operations, and delays or unexpected costs associated with implementation of
 computer systems.  Readers are cautioned not to place undue reliance on these
 forward-looking statements, which speak only as of the date hereof.  The
 company assumes no obligation to update such information.
 
 
                                   CDI CORP.
                               Financial Summary
                            ($000s except per share)
 
     Summary of Earnings              Three Months Ended   Three Months Ended
                                           March 31,            March 31,
                                            2001                  2000
 
     Revenues                              $405,166              $421,400
 
     Gross profit                           109,904               114,022
 
     Operating profit                         7,178                20,914
     Interest                                   938                 1,048
     Earnings before income taxes             6,240                19,866
     Income taxes                             2,390                 7,827
     Earnings before minority interests       3,850                12,039
     Minority interests                         105                   235
     Net earnings                            $3,745               $11,804
 
     Net earnings per diluted share           $0.20                 $0.62
     Diluted shares                          19,160                19,105
 
     Segment Data
     Revenues
     Technical Services                    $227,847              $246,751
     Information Technology Services         92,878                84,642
     Todays Staffing                         54,066                57,990
     Management Recruiters                   30,375                32,017
 
     Operating Profit
     Technical Services                      $2,260               $10,536
     Information Technology Services          3,706                 5,162
     Todays Staffing                          1,926                 4,291
     Management Recruiters                    5,740                 7,053
     Corporate expenses                      (6,454)               (6,128)
 
                                   CDI CORP.
                               Financial Summary
                                    ($000s)
 
     Summary Balance Sheet
                                     March 31, 2001        March 31, 2000
     Assets
     Cash                               $6,439                $15,023
     Receivables                       372,357                395,113
     Prepaid expenses                    8,069                  7,986
     Deferred taxes                     10,337                     --
     Current assets                    397,202                418,122
 
     Net fixed assets                   65,854                 58,242
     Goodwill and other intangibles     91,002                 91,936
     Other assets                       11,161                 16,552
     $565,219                         $584,852
 
     Liabilities and Shareholders'
      Equity
     Outstanding checks                $21,019                $17,096
     Accounts payable                   43,354                 44,439
     Accrued expenses                   92,751                 97,564
     Current taxes                       5,843                  4,561
     Deferred income taxes                  --                    769
     Current liabilities               162,967                164,429
 
     Long-term debt                     57,896                 96,098
     Deferred income taxes               1,313                    901
     Deferred compensation              11,726                 14,233
     Minority interests                  2,328                  3,523
     Shareholders' equity              328,989                305,668
                                      $565,219               $584,852
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X76390476
 
 SOURCE  CDI Corp.