Kelly Services Reports Sales and Earnings for the 1st Quarter of 2001

Apr 24, 2001, 01:00 ET from Kelly Services, Inc.

    TROY, Mich., April 24 /PRNewswire Interactive News Release/ -- Kelly
 Services, Inc. (Nasdaq: KELYA, KELYB), a global provider of staffing services,
 today announced sales and earnings results for the first quarter ended
 April 1, 2001.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO )
     Terence E. Adderley, Kelly Services chairman, president and chief
 executive officer, announced sales for the first quarter ended April 1, 2001,
 of $1.087 billion, a 0.7% increase over the $1.080 billion reported for the
 corresponding quarter in 2000.
     Earnings before interest, taxes, depreciation and amortization (EBITDA)
 for the first quarter of 2001 totaled $18.7 million, a decrease of 48.3%, as
 compared to the $36.2 million earned last year.
     Net earnings for the first quarter of 2001 totaled $4.8 million, a
 decrease of 70.1% from the $16.1 million reported for the first quarter of
 2000.
     Diluted earnings per share in the first quarter of 2001 were $0.13, a
 71.1% decrease versus first quarter 2000 earnings of $0.45 per share.  The
 earnings per share were consistent with the company's public guidance issued
 in March 2001 of $0.11 to $0.15 per share for the first quarter of 2001.
     Commenting on the results, Adderley said, "The first quarter clearly
 reflected the impact of a rapidly slowing economy in all our business
 segments, and was not unexpected.
     "Revenue growth continued in our Professional, Technical and Staffing
 Alternatives (PTSA) units, but at a significantly slower rate.  PTSA sales
 increased by 3.1% during the first quarter, while operating earnings declined
 21.7%.  In particular, softness in the automobile industry caused our
 automotive services group revenues and operating earnings to sharply decline
 during the quarter.
     "The impact of unfavorable foreign currency translation on international
 revenue continues to be significant.  Translated U.S. dollar sales in
 international decreased 0.5% during the quarter.  However, constant currency
 revenue growth was 7%, consistent with our fourth quarter results.  The
 stronger U.S. currency caused international results to appear weaker when
 reported in U.S. dollar terms.
     "In addition to the currency effects, the slowing of staffing demand in
 Canada, Puerto Rico, and Australia, further reduced operating results.  While
 our new management team in the U.K. began to show positive sales trends,
 significant expense reduction initiatives are still underway, and we don't
 expect to see substantial profit improvement until later in the year.
     "Sales growth in our U.S. Commercial Staffing segment was essentially
 flat, increasing only 0.1% during the first quarter.  Expenses are being
 prudently reduced, but lagged the sales decline during the quarter.  As a
 result, U.S. Commercial reported a 20.6% decrease in operating earnings during
 the first quarter.
     "For the balance of the year, there is still a significant amount of
 economic uncertainty and lack of visibility.  Sales growth decreased as the
 first quarter progressed, leading us to expect negative sales comparisons for
 the second quarter.  For planning purposes, we are assuming that earnings per
 share comparisons will be significantly negative for the next two quarters,
 and turn modestly positive in the fourth quarter.  As a result, our best
 estimate at this point is for full year earnings to total about half of last
 year's operating results, or about $1.10 to $1.15 per share.
     "This 'best estimate' of our full year earnings fits our historical
 experience during the 1990 - 1991 recession, when sales declined 2%, and
 earnings decreased nearly 50%.  We anticipate updating our earnings guidance
 over the balance of the year as necessary."
     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, the company's ability to effectively
 implement and 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. is a Fortune 500 staffing services company
 headquartered in Troy, Mich., offering human resources solutions that include
 temporary services, staff leasing, outsourcing, vendor on-site and full-time
 placement.  With more than 2,200 company owned and operated offices in 25
 countries, Kelly provides to its customers 750,000 employees annually, with
 skills including office services, accounting, engineering, information
 technology, law, science, marketing, light industrial, education and health
 care.  Sales in 2000 were $4.5 billion.  Visit www.kellyservices.com .
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                               STATEMENTS OF EARNINGS
               FOR THE 13 WEEKS ENDED APRIL 1, 2001 AND APRIL 2, 2000
                  (In thousands of dollars except per share data)
 
 
                                      2001         2000      Change   % Change
 
     Sales of services           $1,087,198   $1,080,069     $7,129      0.7
 
     Cost of services               905,824      892,095     13,729      1.5
 
     Gross profit                   181,374      187,974     (6,600)    (3.5)
 
     Selling, general &
      administrative expenses       173,199      161,406     11,793      7.3
 
     Earnings from operations         8,175       26,568    (18,393)   (69.2)
 
     Interest (expense)
      income, net                      (175)         287       (462)  (161.0)
 
     Earnings before taxes            8,000       26,855    (18,855)   (70.2)
 
     Income taxes                     3,200       10,795     (7,595)   (70.4)
 
     Net earnings                     4,800       16,060    (11,260)   (70.1)
 
 
 
     Basic earnings per share         $0.13        $0.45     $(0.32)   (71.1)
 
     Diluted earnings per share       $0.13        $0.45     $(0.32)   (71.1)
 
 
     STATISTICS:
 
     Gross profit rate                 16.7%        17.4%      (0.7)%
 
     Expenses as a % of sales          15.9         14.9        1.0
 
     % Return - Earnings from
      operations                        0.8          2.5       (1.7)
           Earnings before
            taxes                       0.7          2.5       (1.8)
           Net earnings                 0.4          1.5       (1.1)
 
     Effective income tax rate         40.0         40.2       (0.2)
 
     EBITDA                         $18,709      $36,193   $(17,484)   (48.3)%
     EBITDA as a % of Sales             1.7%         3.4%      (1.7)%
 
     Average number of shares
      outstanding (thousands):
          Basic                      35,763       35,705
          Diluted                    35,915       35,808
 
 
                                KELLY SERVICES, INC.
                          RESULTS OF OPERATIONS BY SEGMENT
                             (In thousands of dollars)
 
 
 
                                                First Quarter
                                          2001        2000     Change  % Change
 
     Sales:
     U.S. Commercial Staffing          $550,051    $549,550      $501    0.1%
     PTSA                               265,657     257,662     7,995    3.1
     International                      271,490     272,857    (1,367)  (0.5)
 
                                     $1,087,198  $1,080,069    $7,129    0.7%
 
     Earnings from Operations:
     U.S. Commercial Staffing           $32,179     $40,519   $(8,340) (20.6)%
     PTSA                                12,231      15,627    (3,396) (21.7)
     International                        1,577       4,864    (3,287) (67.6)
     Corporate                          (37,812)    (34,442)   (3,370)  (9.8)
 
                                         $8,175     $26,568  $(18,393) (69.2)%
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                                   BALANCE SHEETS
              AS OF APRIL 1, 2001, DECEMBER 31, 2000 AND APRIL 2, 2000
                             (In thousands of dollars)
 
 
                                               April 1,  December 31,  April 2,
                                                 2001        2000        2000
     Current Assets
       Cash and equivalents                    $56,974     $43,318     $51,975
       Short-term investments                    2,394       2,394       3,340
       Accounts receivable, less allowances
        of $13,651, $13,614, and $13,605,
        respectively                           599,757     631,771     601,122
       Prepaid expenses and other current
        assets                                  27,302      24,903      23,034
       Deferred taxes                           51,776      52,209      50,725
 
               Total current assets            738,203     754,595     730,196
 
     Property and Equipment, Net               215,870     201,085     189,952
 
     Intangibles and Other Assets              124,228     133,896     114,400
 
 
     Total Assets                           $1,078,301  $1,089,576  $1,034,548
 
 
     Current Liabilities
       Short-term borrowings                   $49,460     $57,839     $41,671
       Accounts payable                         71,866      69,375      56,212
       Payroll and related taxes               236,970     234,807     239,491
       Accrued insurance                        57,181      55,272      63,238
       Income and other taxes                   49,214      48,814      52,572
 
               Total current liabilities       464,691     466,107     453,184
 
 
     Stockholders' Equity
       Common stock                             40,116      40,116      40,116
       Treasury stock                          (82,874)    (84,622)    (85,136)
       Paid-in capital                          16,808      16,371      16,167
       Earnings invested in the business       671,247     675,388     631,067
       Accumulated foreign currency
        adjustments                            (31,687)    (23,784)    (20,850)
 
               Total stockholders' equity      613,610     623,469     581,364
 
 
     Total Liabilities and
      Stockholders' Equity                  $1,078,301  $1,089,576  $1,034,548
 
 
     STATISTICS:
      Working Capital                         $273,512    $288,488    $277,012
      Current Ratio                                1.6         1.6         1.6
      Stockholders' Equity Per Share            $17.13      $17.45      $16.28
      Global Days Sales Outstanding                 50          50          51
 
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                             STATEMENTS OF CASH FLOWS
              FOR THE 13 WEEKS ENDED APRIL 1, 2001 AND APRIL 2, 2000
                             (In thousands of dollars)
 
 
                                                      2001              2000
 
 
     Cash flows from operating activities
        Net earnings                                 $4,800           $16,060
        Noncash adjustments:
          Depreciation and amortization              10,534             9,625
        Decrease (increase) in accounts
         receivable, net                             21,554            (4,180)
        Changes in certain working capital
         components                                  13,781            12,552
 
             Net cash from operating
              activities                             50,669            34,057
 
 
     Cash flows from investing activities
        Capital expenditures                        (13,849)          (12,821)
        Acquisition of building                     (11,783)                -
        Decrease in short-term investments                -             2,678
        Decrease (increase) in other
         assets                                       5,818            (4,796)
        Acquisition of companies, net of
         cash received                                    -            (1,534)
 
             Net cash from investing
              activities                            (19,814)          (16,473)
 
 
     Cash flows from financing activities
        Decrease in short-term borrowings            (8,379)           (5,539)
        Dividend payments                            (8,929)           (8,545)
        Purchase of treasury stock                       (5)           (5,614)
        Stock options and other                         114                57
 
             Net cash from financing
              activities                            (17,199)          (19,641)
 
     Net change in cash and equivalents              13,656            (2,057)
     Cash and equivalents at beginning of
      period                                         43,318            54,032
 
 
     Cash and equivalents at end of period          $56,974           $51,975
 
 
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SOURCE Kelly Services, Inc.
    TROY, Mich., April 24 /PRNewswire Interactive News Release/ -- Kelly
 Services, Inc. (Nasdaq: KELYA, KELYB), a global provider of staffing services,
 today announced sales and earnings results for the first quarter ended
 April 1, 2001.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO )
     Terence E. Adderley, Kelly Services chairman, president and chief
 executive officer, announced sales for the first quarter ended April 1, 2001,
 of $1.087 billion, a 0.7% increase over the $1.080 billion reported for the
 corresponding quarter in 2000.
     Earnings before interest, taxes, depreciation and amortization (EBITDA)
 for the first quarter of 2001 totaled $18.7 million, a decrease of 48.3%, as
 compared to the $36.2 million earned last year.
     Net earnings for the first quarter of 2001 totaled $4.8 million, a
 decrease of 70.1% from the $16.1 million reported for the first quarter of
 2000.
     Diluted earnings per share in the first quarter of 2001 were $0.13, a
 71.1% decrease versus first quarter 2000 earnings of $0.45 per share.  The
 earnings per share were consistent with the company's public guidance issued
 in March 2001 of $0.11 to $0.15 per share for the first quarter of 2001.
     Commenting on the results, Adderley said, "The first quarter clearly
 reflected the impact of a rapidly slowing economy in all our business
 segments, and was not unexpected.
     "Revenue growth continued in our Professional, Technical and Staffing
 Alternatives (PTSA) units, but at a significantly slower rate.  PTSA sales
 increased by 3.1% during the first quarter, while operating earnings declined
 21.7%.  In particular, softness in the automobile industry caused our
 automotive services group revenues and operating earnings to sharply decline
 during the quarter.
     "The impact of unfavorable foreign currency translation on international
 revenue continues to be significant.  Translated U.S. dollar sales in
 international decreased 0.5% during the quarter.  However, constant currency
 revenue growth was 7%, consistent with our fourth quarter results.  The
 stronger U.S. currency caused international results to appear weaker when
 reported in U.S. dollar terms.
     "In addition to the currency effects, the slowing of staffing demand in
 Canada, Puerto Rico, and Australia, further reduced operating results.  While
 our new management team in the U.K. began to show positive sales trends,
 significant expense reduction initiatives are still underway, and we don't
 expect to see substantial profit improvement until later in the year.
     "Sales growth in our U.S. Commercial Staffing segment was essentially
 flat, increasing only 0.1% during the first quarter.  Expenses are being
 prudently reduced, but lagged the sales decline during the quarter.  As a
 result, U.S. Commercial reported a 20.6% decrease in operating earnings during
 the first quarter.
     "For the balance of the year, there is still a significant amount of
 economic uncertainty and lack of visibility.  Sales growth decreased as the
 first quarter progressed, leading us to expect negative sales comparisons for
 the second quarter.  For planning purposes, we are assuming that earnings per
 share comparisons will be significantly negative for the next two quarters,
 and turn modestly positive in the fourth quarter.  As a result, our best
 estimate at this point is for full year earnings to total about half of last
 year's operating results, or about $1.10 to $1.15 per share.
     "This 'best estimate' of our full year earnings fits our historical
 experience during the 1990 - 1991 recession, when sales declined 2%, and
 earnings decreased nearly 50%.  We anticipate updating our earnings guidance
 over the balance of the year as necessary."
     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, the company's ability to effectively
 implement and 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. is a Fortune 500 staffing services company
 headquartered in Troy, Mich., offering human resources solutions that include
 temporary services, staff leasing, outsourcing, vendor on-site and full-time
 placement.  With more than 2,200 company owned and operated offices in 25
 countries, Kelly provides to its customers 750,000 employees annually, with
 skills including office services, accounting, engineering, information
 technology, law, science, marketing, light industrial, education and health
 care.  Sales in 2000 were $4.5 billion.  Visit www.kellyservices.com .
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                               STATEMENTS OF EARNINGS
               FOR THE 13 WEEKS ENDED APRIL 1, 2001 AND APRIL 2, 2000
                  (In thousands of dollars except per share data)
 
 
                                      2001         2000      Change   % Change
 
     Sales of services           $1,087,198   $1,080,069     $7,129      0.7
 
     Cost of services               905,824      892,095     13,729      1.5
 
     Gross profit                   181,374      187,974     (6,600)    (3.5)
 
     Selling, general &
      administrative expenses       173,199      161,406     11,793      7.3
 
     Earnings from operations         8,175       26,568    (18,393)   (69.2)
 
     Interest (expense)
      income, net                      (175)         287       (462)  (161.0)
 
     Earnings before taxes            8,000       26,855    (18,855)   (70.2)
 
     Income taxes                     3,200       10,795     (7,595)   (70.4)
 
     Net earnings                     4,800       16,060    (11,260)   (70.1)
 
 
 
     Basic earnings per share         $0.13        $0.45     $(0.32)   (71.1)
 
     Diluted earnings per share       $0.13        $0.45     $(0.32)   (71.1)
 
 
     STATISTICS:
 
     Gross profit rate                 16.7%        17.4%      (0.7)%
 
     Expenses as a % of sales          15.9         14.9        1.0
 
     % Return - Earnings from
      operations                        0.8          2.5       (1.7)
           Earnings before
            taxes                       0.7          2.5       (1.8)
           Net earnings                 0.4          1.5       (1.1)
 
     Effective income tax rate         40.0         40.2       (0.2)
 
     EBITDA                         $18,709      $36,193   $(17,484)   (48.3)%
     EBITDA as a % of Sales             1.7%         3.4%      (1.7)%
 
     Average number of shares
      outstanding (thousands):
          Basic                      35,763       35,705
          Diluted                    35,915       35,808
 
 
                                KELLY SERVICES, INC.
                          RESULTS OF OPERATIONS BY SEGMENT
                             (In thousands of dollars)
 
 
 
                                                First Quarter
                                          2001        2000     Change  % Change
 
     Sales:
     U.S. Commercial Staffing          $550,051    $549,550      $501    0.1%
     PTSA                               265,657     257,662     7,995    3.1
     International                      271,490     272,857    (1,367)  (0.5)
 
                                     $1,087,198  $1,080,069    $7,129    0.7%
 
     Earnings from Operations:
     U.S. Commercial Staffing           $32,179     $40,519   $(8,340) (20.6)%
     PTSA                                12,231      15,627    (3,396) (21.7)
     International                        1,577       4,864    (3,287) (67.6)
     Corporate                          (37,812)    (34,442)   (3,370)  (9.8)
 
                                         $8,175     $26,568  $(18,393) (69.2)%
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                                   BALANCE SHEETS
              AS OF APRIL 1, 2001, DECEMBER 31, 2000 AND APRIL 2, 2000
                             (In thousands of dollars)
 
 
                                               April 1,  December 31,  April 2,
                                                 2001        2000        2000
     Current Assets
       Cash and equivalents                    $56,974     $43,318     $51,975
       Short-term investments                    2,394       2,394       3,340
       Accounts receivable, less allowances
        of $13,651, $13,614, and $13,605,
        respectively                           599,757     631,771     601,122
       Prepaid expenses and other current
        assets                                  27,302      24,903      23,034
       Deferred taxes                           51,776      52,209      50,725
 
               Total current assets            738,203     754,595     730,196
 
     Property and Equipment, Net               215,870     201,085     189,952
 
     Intangibles and Other Assets              124,228     133,896     114,400
 
 
     Total Assets                           $1,078,301  $1,089,576  $1,034,548
 
 
     Current Liabilities
       Short-term borrowings                   $49,460     $57,839     $41,671
       Accounts payable                         71,866      69,375      56,212
       Payroll and related taxes               236,970     234,807     239,491
       Accrued insurance                        57,181      55,272      63,238
       Income and other taxes                   49,214      48,814      52,572
 
               Total current liabilities       464,691     466,107     453,184
 
 
     Stockholders' Equity
       Common stock                             40,116      40,116      40,116
       Treasury stock                          (82,874)    (84,622)    (85,136)
       Paid-in capital                          16,808      16,371      16,167
       Earnings invested in the business       671,247     675,388     631,067
       Accumulated foreign currency
        adjustments                            (31,687)    (23,784)    (20,850)
 
               Total stockholders' equity      613,610     623,469     581,364
 
 
     Total Liabilities and
      Stockholders' Equity                  $1,078,301  $1,089,576  $1,034,548
 
 
     STATISTICS:
      Working Capital                         $273,512    $288,488    $277,012
      Current Ratio                                1.6         1.6         1.6
      Stockholders' Equity Per Share            $17.13      $17.45      $16.28
      Global Days Sales Outstanding                 50          50          51
 
 
 
                       KELLY SERVICES, INC. AND SUBSIDIARIES
                             STATEMENTS OF CASH FLOWS
              FOR THE 13 WEEKS ENDED APRIL 1, 2001 AND APRIL 2, 2000
                             (In thousands of dollars)
 
 
                                                      2001              2000
 
 
     Cash flows from operating activities
        Net earnings                                 $4,800           $16,060
        Noncash adjustments:
          Depreciation and amortization              10,534             9,625
        Decrease (increase) in accounts
         receivable, net                             21,554            (4,180)
        Changes in certain working capital
         components                                  13,781            12,552
 
             Net cash from operating
              activities                             50,669            34,057
 
 
     Cash flows from investing activities
        Capital expenditures                        (13,849)          (12,821)
        Acquisition of building                     (11,783)                -
        Decrease in short-term investments                -             2,678
        Decrease (increase) in other
         assets                                       5,818            (4,796)
        Acquisition of companies, net of
         cash received                                    -            (1,534)
 
             Net cash from investing
              activities                            (19,814)          (16,473)
 
 
     Cash flows from financing activities
        Decrease in short-term borrowings            (8,379)           (5,539)
        Dividend payments                            (8,929)           (8,545)
        Purchase of treasury stock                       (5)           (5,614)
        Stock options and other                         114                57
 
             Net cash from financing
              activities                            (17,199)          (19,641)
 
     Net change in cash and equivalents              13,656            (2,057)
     Cash and equivalents at beginning of
      period                                         43,318            54,032
 
 
     Cash and equivalents at end of period          $56,974           $51,975
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
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 SOURCE  Kelly Services, Inc.