Index to Exhibits on page 11
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1088
KELLY SERVICES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 38-1510762
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(810) 362-4444
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
At May 8, 1995, 34,381,970 shares of Class A and 3,598,657 shares of Class B
common stock of the Registrant were outstanding.
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KELLY SERVICES, INC. AND SUBSIDIARIES
Page
Number
------
PART I. FINANCIAL INFORMATION
Statements of Earnings 3
Balance Sheets 4
Statements of Stockholders' Equity 5
Statements of Cash Flows 6
Management's Discussion and
Analysis of Results of
Operations and Financial
Condition 7
PART II. OTHER INFORMATION 9
Signature 10
Index to Exhibits Required by
Item 601, Regulation S-K 11
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands of dollars except per share items)
13 Weeks Ended
------------------------------
April 2, 1995 April 3, 1994
------------- -------------
Sales of services $620,685 $530,191
Cost of services 498,667 428,374
-------- --------
Gross profit 122,018 101,817
Selling, general and
administrative expenses 104,305 88,424
-------- --------
Earnings from operations 17,713 13,393
Interest income 2,389 1,505
-------- --------
Earnings before income taxes 20,102 14,898
-------- --------
Income taxes:
Federal 6,390 4,520
State and other 1,450 1,145
-------- --------
Total income taxes 7,840 5,665
-------- --------
Net earnings $ 12,262 $ 9,233
======== ========
Earnings per share $.32 $.24
Dividends per share $.18 $.16
Average shares outstanding
(thousands) 37,967 37,947
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KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS AS OF APRIL 2, 1995 AND JANUARY 1, 1995
(UNAUDITED)
(In thousands of dollars)
ASSETS 1995 1994
- ------ ------------ ------------
CURRENT ASSETS:
Cash and equivalents $ 60,688 $ 49,207
Short-term investments 155,440 142,723
Accounts receivable, less
allowances of $7,570 and
$5,660, respectively 314,079 307,478
Prepaid expenses and other
current assets 26,592 27,018
--------- ---------
Total current assets 556,799 526,426
PROPERTY AND EQUIPMENT:
Land and buildings 34,561 34,044
Equipment, furniture and
leasehold improvements 96,176 90,868
Accumulated depreciation (59,841) (54,731)
--------- ---------
Total property and equipment 70,896 70,181
INTANGIBLES AND OTHER ASSETS 47,351 45,491
--------- ---------
TOTAL ASSETS $675,046 $642,098
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 33,501 $ 33,716
Payroll and related taxes 119,753 102,911
Accrued insurance 57,573 57,390
Income and other taxes 21,517 16,565
--------- ---------
Total current liabilities 232,344 210,582
--------- ---------
STOCKHOLDERS' EQUITY:
Capital stock, $1 par value 40,116 40,116
Treasury stock, 2,139 shares in
1995 and 2,153 shares in 1994,
respectively, at cost (6,216) (6,186)
Paid-in capital 6,210 5,868
Earnings invested in the business 402,592 391,718
--------- ---------
Total stockholders' equity 442,702 431,516
--------- ---------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $675,046 $642,098
========= =========
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands of dollars)
13 Weeks Ended
----------------------------
April 2, 1995 April 3, 1994
------------- -------------
Capital Stock
Class A common stock
Balance at beginning of period $ 36,507 $ 36,507
Conversions from Class B 3 --
--------- ---------
Balance at end of period 36,510 36,507
Class B common stock
Balance at beginning of period 3,609 3,609
Conversions to Class A (3) --
--------- ---------
Balance at end of period 3,606 3,609
Treasury Stock
Balance at beginning of period (6,186) (6,702)
Exercise of stock options (30) 20
Treasury stock issued for acquisition -- 529
--------- ---------
Balance at end of period (6,216) (6,153)
Paid-in Capital
Balance at beginning of period 5,868 679
Exercise of stock options 342 146
Treasury stock issued for acquisition -- 4,803
--------- ---------
Balance at end of period 6,210 5,628
Earnings Invested in the Business
Balance at beginning of period 391,718 352,126
Net earnings 12,262 9,233
Cash dividends (6,834) (6,072)
Equity adjustment for foreign
currency translation (cumulative
credit of $4,038 in 1995 and
charge of $6,581 in 1994) 5,446 (68)
--------- ---------
Balance at end of period 402,592 355,219
Stockholders' Equity at end of period $442,702 $394,810
========= =========
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE 13 WEEKS ENDED APRIL 2, 1995 AND APRIL 3, 1994
(In thousands of dollars)
1995 1994
---------- ----------
Cash flows from operating activities:
Net earnings $12,262 $ 9,233
Noncash adjustments:
Depreciation 5,110 4,217
Changes in certain working capital
components 18,515 3,605
-------- --------
Cash from operating activities 35,887 17,055
-------- --------
Cash flows from investing activities:
Capital expenditures (4,995) (3,544)
Short-term investments (12,717) (3,629)
Increase in intangibles and other assets (172) (243)
-------- --------
Cash from investing activities (17,884) (7,416)
-------- --------
Cash flows from financing activities:
Dividend payments (6,834) (6,072)
Exercise of stock options 312 166
-------- --------
Net cash from financing activities (6,522) (5,906)
-------- --------
Net change in cash and equivalents 11,481 3,733
Cash and equivalents at beginning
of period 49,207 36,020
-------- --------
Cash and equivalents at end of period $60,688 $39,753
======== ========
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations:
First Quarter
Sales of services in the first quarter of 1995 totaled $620,685,000, an
increase of 17.1% from the same period in 1994. This increase
reflected growth in both domestic and international sales and the
inclusion of 1994 acquisitions.
Cost of services, consisting of payroll and related costs of temporary
employees, increased 16.4% in the first quarter as compared to the same
period in 1994. Average hourly payroll costs increased 7% over 1994
due to inflation and business mix.
The gross profit rate of 19.7% in the first quarter was .5 percentage
points higher than the previous year. Continued improvement in U.S.
temporary help margins has helped to offset pricing pressures in certain
European countries.
Selling, general, and administrative expenses of $104,305,000 in the
first quarter increased 18.0% from the same period in 1994. This
increase was due to the higher level of business activity, new programs
and operating expenses incurred by new acquisitions.
Earnings before taxes were $20,102,000, an increase of 34.9% compared
to the pretax earnings for the same period in 1994. The pretax margin
was 3.2% compared to 2.8% in the first quarter of 1994. Income taxes
as a percentage of pretax earnings were 39.0%, 1.0 percentage point
more than the rate applicable to the first quarter of 1994. The 1995
rate reflected the impact of the discontinuation of the targeted jobs
tax credit program by the U.S. Government.
Net earnings were $12,262,000 in the first quarter of 1995, compared to
$9,233,000 in 1994, an increase of 32.8%. Earnings per share were $.32
compared to the $.24 earned in the same period last year.
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Financial Condition
Assets totaled $675,046,000 at April 2, 1995, an increase of 5% over
the $642,098,000 at January 1, 1995. Working capital increased
$8,611,000 in the first quarter.
The quarterly dividend rate applicable to Class A and Class B shares
was $.18 and $.16 per share in the first quarters of 1995 and 1994,
respectively.
The Company believes it is in a sound financial position to fully meet
its current working capital needs and its longer term capital
requirements.
--------------------------------------------------------------
Companies for which this report is filed are: Kelly Services, Inc. and
its subsidiaries, Kelly Assisted Living Services, Inc., Kelly
Properties, Inc., Kelly Professional Services, Inc., Kelly Services
(Canada), Ltd., Les Services Kelly (Quebec) Inc., Lenore Simpson
Personnel, Ltd., Societe Services Kelly, Kelly Professional Services
(France), Inc., Kelly Services (UK), Ltd., Kelly Services (Ireland),
Ltd., Kelly Services (Australia), Ltd., Kelly Services (New Zealand),
Ltd., Kelly Services (Nederland), B.V., Kelly Services of Denmark,
Inc., OK Personnel Service Holding SA, Kelly de Mexico, S.A. de C.V.,
Kelly Services Norge A.S., KSI Acquisition Corp., Kelly Pinpoint, Inc.
and Your Staff, Inc.
The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results
of operations for the period in this filing.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) See Index to Exhibits required by Item 601,
Regulation S-K, set forth on page 11 of this filing.
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
KELLY SERVICES, INC.
Date: May 12, 1995
/s/ R. F. Stoner
R. F. Stoner
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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INDEX TO EXHIBITS
REQUIRED BY ITEM 601,
REGULATION S-K
---------------------
Exhibit
No. Description Document
- ------- ----------- --------
4 Rights of security holders are defined in
Articles Fourth, Fifth, Seventh, Eighth,
Ninth, Tenth, Eleventh, Twelfth, Thirteenth,
Fourteenth and Fifteenth of the Certificate
of Incorporation. (Reference is made to
Exhibit 3.2 to the Form 10-Q for the quarterly
period ended October 3, 1993, filed with the
Commission in November, 1993, which is incorporated
herein by reference.)
27 Financial Data Schedule 2
5
1,000
3-MOS
DEC-31-1995
APR-02-1995
60,688
155,440
321,649
7,570
0
556,799
130,737
59,841
675,046
232,344
0
40,116
0
0
402,586
675,046
0
620,685
0
498,667
0
0
0
20,102
7,840
12,262
0
0
0
12,262
.32
0
