1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
January 22, 2003
Date of Report (Date of earliest event reported)
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)
(248) 362-4444
(Registrant’s telephone number, including area code)
2
Item |
5. Other Events |
Kelly Services, Inc. today released financial information containing highlighted financial data for the three months and year ended December 29,2002. A copy
of the press release is attached as exhibit 99.1 herein.
3
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: January 22, 2003 |
||
| /s/ William K. Gerber | ||
| | ||
| William K. Gerber | ||
| Executive Vice President and Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
4
EXHIBIT INDEX
| Exhibit No. |
||
| 99.1 |
— Registrant’s press release dated January 22, 2003 |
1
Exhibit 99.1
| ANALYST CONTACT: |
MEDIA CONTACT: | |
| James Polehna |
Robert Doetsch | |
| Director, Investor Relations |
Director, Public Relations | |
| (248) 244-4586 |
(248) 244-5362 | |
| james_polehna@kellyservices.com |
robert_doetsch@kellyservices.com |
KELLY SERVICES REPORTS SALES
INCREASED 8% AND
NET EARNINGS INCREASED TENFOLD FOR THE 4th QUARTER OF 2002
TROY, MI (January 22, 2003) — Kelly Services, Inc., a global provider of staffing services, today announced sales and earnings results for the fourth quarter and year
ended December 29, 2002.
Terence E. Adderley, Kelly Services chairman and chief executive officer, announced
sales for the fourth quarter of 2002 totaled $1.124 billion, an 8.4% increase compared to the $1.037 billion reported for the corresponding quarter in 2001. Sales for the fourth quarter increased 0.1% sequentially as compared to the third quarter of
2002. Sales for the year totaled $4.323 billion, a 1.6% increase compared to the $4.257 billion reported for 2001.
Net earnings for the fourth quarter of 2002 totaled $7.3 million, a tenfold increase from the $0.7 million reported for the fourth quarter of 2001. Net earnings for the fourth quarter increased 12.7% sequentially compared to the
third quarter of 2002. Net earnings for 2002 totaled $18.6 million, a 12.2% increase as compared to the $16.5 million earned during 2001.
Diluted earnings per share in the fourth quarter of 2002 were $0.21, a tenfold increase versus fourth quarter 2001 earnings of $0.02 per share. Diluted earnings per share increased $0.03 sequentially, as compared to third
quarter 2002 earnings of $0.18 per share. Diluted earnings per share for 2002 were $0.52 per share, a 13.0% increase compared to the $0.46 per share earned in 2001.
Commenting on the results, Adderley said, “Our earnings performance during the fourth quarter reflected a continuing pattern of sales improvement leveraged by tight
expense control. We are pleased that we have delivered significant sales and earnings growth in a still fragile economic environment.
“U.S. Commercial staffing sales increased 8.9% during the fourth quarter, an improvement compared to the 6.7% sales increase reported in the third quarter of 2002. Sales trends were relatively stable month by month over
the course of the fourth quarter. The U.S. Commercial gross profit rate increased seven-tenths of a percent and expenses increased 1.3% compared to last year. As a result, operating earnings totaled $34.4 million, an increase of 39.8% compared to
the prior year.
“Professional, Technical, and Staffing Alternatives (PTSA) sales increased by 11.1% during
the fourth quarter, compared to third quarter sales growth of 6.3%, with most of the individual business units showing improved performance. Kelly Healthcare, Kelly Financial Resources, and Kelly IT Resources exhibited strong sales growth, while
Kelly Home Care continued to experience sales declines during the quarter. The PTSA gross profit rate decreased by one-tenth of a percent and expenses grew 7.2% as compared to 2001. Operating earnings totaled $13.6 million and increased 17.8% on a
year over year basis.
- more -
2
“International revenue, as measured in U.S. dollars, increased 4.6% during
the fourth quarter, as compared to a 1.7% increase in the third quarter. On a same currency basis, international revenue decreased 2% in the fourth quarter, as compared to a 4% decrease in the third quarter. Staffing demand continued to improve in
the Americas and Asia Pacific. Sales comparisons in Continental Europe and the U.K. remained weak in the fourth quarter. The international gross profit rate decreased by seven-tenths of a percent. Operating expenses decreased by 1.4% in U.S. dollar
terms, while same currency expenses decreased by 9%. International operating earnings totaled $2.8 million, an increase of 76.7% compared to the prior year.
“Throughout the year, Kelly maintained its traditional financial strength. We’ve increased our cash position to over $100 million and the condition of our balance sheet and operating cash
flow remains excellent.
“As our fourth quarter results reflected, we are continuing to see improvement in
our U.S. and international operations. However, we believe the improving economy remains fragile. As a result, we will continue our practice of providing guidance on a quarterly basis. At this time, we expect that first quarter 2003 earnings will
range from $0.04 per share to $0.08 per share, as compared to earnings of $0.02 per share in the first quarter of 2002.”
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 federal, state and international 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 human resources solutions that include temporary services, staff leasing, outsourcing, vendor on-site and full-time
placement. With more than 2,300 company owned and operated offices in 26 countries, Kelly provides to its customers 700,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science,
marketing, light industrial, education and health care. Sales in 2002 were $4.3 billion. Visit www.kellyservices.com
3
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED DECEMBER 29, 2002 AND DECEMBER 30,
2001
(In thousands of dollars except per share data)
| 2002 |
2001 |
Change |
% Change | |||||||||||
| Sales of services |
$ |
1,123,746 |
|
$ |
1,037,059 |
|
$ |
86,687 |
|
8.4 | ||||
| Cost of services |
|
942,458 |
|
|
870,618 |
|
|
71,840 |
|
8.3 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Gross profit |
|
181,288 |
|
|
166,441 |
|
|
14,847 |
|
8.9 | ||||
| Selling, general and administrative expenses |
|
169,272 |
|
|
165,266 |
|
|
4,006 |
|
2.4 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Earnings from operations |
|
12,016 |
|
|
1,175 |
|
|
10,841 |
|
922.6 | ||||
| Interest income, net |
|
104 |
|
|
30 |
|
|
74 |
|
246.7 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Earnings before taxes |
|
12,120 |
|
|
1,205 |
|
|
10,915 |
|
905.8 | ||||
| Income taxes |
|
4,787 |
|
|
482 |
|
|
4,305 |
|
893.2 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Net earnings |
$ |
7,333 |
|
$ |
723 |
|
$ |
6,610 |
|
914.2 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Basic earnings per share |
$ |
0.21 |
|
$ |
0.02 |
|
$ |
0.19 |
|
950.0 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| Diluted earnings per share |
$ |
0.21 |
|
$ |
0.02 |
|
$ |
0.19 |
|
950.0 | ||||
| |
|
|
|
|
|
|
|
|
| |||||
| | ||||||||||||||
| STATISTICS: |
||||||||||||||
| Gross profit rate |
|
16.1 |
% |
|
16.0 |
% |
|
0.1 |
% |
|||||
| Expenses as a % of sales |
|
15.1 |
|
|
15.9 |
|
|
(0.8 |
) |
|||||
| % Return— Earnings from operations |
|
1.1 |
|
|
0.1 |
|
|
1.0 |
|
|||||
| Earnings before taxes |
|
1.1 |
|
|
0.1 |
|
|
1.0 |
|
|||||
| Net earnings |
|
0.7 |
|
|
0.1 |
|
|
0.6 |
|
|||||
| Effective income tax rate |
|
39.5 |
% |
|
40.0 |
% |
|
(0.5 |
)% |
|||||
| Average number of shares outstanding (thousands): |
||||||||||||||
| Basic |
|
35,522 |
|
|
35,866 |
|
||||||||
| Diluted |
|
35,637 |
|
|
35,950 |
|
||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 29, 2002 AND DECEMBER 30,
2001
(In thousands of dollars except per share data)
| 2002 |
2001 |
Change |
% Change |
||||||||||||
| Sales of services |
$ |
4,323,470 |
|
$ |
4,256,892 |
|
$ |
66,578 |
|
1.6 |
| ||||
| Cost of services |
|
3,630,744 |
|
|
3,559,037 |
|
|
71,707 |
|
2.0 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Gross profit |
|
692,726 |
|
|
697,855 |
|
|
(5,129 |
) |
(0.7 |
) | ||||
| Selling, general and administrative expenses |
|
662,334 |
|
|
669,888 |
|
|
(7,554 |
) |
(1.1 |
) | ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Earnings from operations |
|
30,392 |
|
|
27,967 |
|
|
2,425 |
|
8.7 |
| ||||
| Interest income (expense), net |
|
362 |
|
|
(381 |
) |
|
743 |
|
195.0 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Earnings before taxes |
|
30,754 |
|
|
27,586 |
|
|
3,168 |
|
11.5 |
| ||||
| Income taxes |
|
12,185 |
|
|
11,037 |
|
|
1,148 |
|
10.4 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Net earnings |
$ |
18,569 |
|
$ |
16,549 |
|
$ |
2,020 |
|
12.2 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Basic earnings per share |
$ |
0.52 |
|
$ |
0.46 |
|
$ |
0.06 |
|
13.0 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Diluted earnings per share |
$ |
0.52 |
|
$ |
0.46 |
|
$ |
0.06 |
|
13.0 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| | |||||||||||||||
| STATISTICS: |
|||||||||||||||
| Gross profit rate |
|
16.0 |
% |
|
16.4 |
% |
|
(0.4 |
)% |
||||||
| Expenses as a % of sales |
|
15.3 |
|
|
15.7 |
|
|
(0.4 |
) |
||||||
| % Return— Earnings from operations |
|
0.7 |
|
|
0.7 |
|
|
0.0 |
|
||||||
| Earnings before taxes |
|
0.7 |
|
|
0.6 |
|
|
0.1 |
|
||||||
| Net earnings |
|
0.4 |
|
|
0.4 |
|
|
0.0 |
|
||||||
| Effective income tax rate |
|
39.6 |
% |
|
40.0 |
% |
|
(0.4 |
)% |
||||||
| Average number of shares outstanding (thousands): |
|||||||||||||||
| Basic |
|
35,724 |
|
|
35,829 |
|
|||||||||
| Diluted |
|
35,900 |
|
|
35,930 |
|
|||||||||
5
KELLY SERVICES, INC.
RESULTS OF OPERATIONS BY SEGMENT
(In thousands of dollars)
| Fourth Quarter |
|||||||||||||||
| 2002 |
2001 |
Change |
% Change |
||||||||||||
| Sales: |
|||||||||||||||
| U.S. Commercial Staffing |
$ |
547,485 |
|
$ |
502,583 |
|
$ |
44,902 |
|
8.9 |
% | ||||
| PTSA |
|
295,007 |
|
|
265,624 |
|
|
29,383 |
|
11.1 |
| ||||
| International |
|
281,254 |
|
|
268,852 |
|
|
12,402 |
|
4.6 |
| ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| $ |
1,123,746 |
|
$ |
1,037,059 |
|
$ |
86,687 |
|
8.4 |
% | |||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Earnings from Operations: |
|||||||||||||||
| U.S. Commercial Staffing |
$ |
34,425 |
|
$ |
24,619 |
|
$ |
9,806 |
|
39.8 |
% | ||||
| PTSA |
|
13,570 |
|
|
11,518 |
|
|
2,052 |
|
17.8 |
| ||||
| International |
|
2,758 |
|
|
1,561 |
|
|
1,197 |
|
76.7 |
| ||||
| Corporate |
|
(38,737 |
) |
|
(36,523 |
) |
|
(2,214 |
) |
(6.1 |
) | ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| $ |
12,016 |
|
$ |
1,175 |
|
$ |
10,841 |
|
922.6 |
% | |||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| December Year to Date |
|||||||||||||||
| 2002 |
2001 |
Change |
% Change |
||||||||||||
| Sales: |
|||||||||||||||
| U.S. Commercial Staffing |
$ |
2,104,622 |
|
$ |
2,094,798 |
|
$ |
9,824 |
|
0.5 |
% | ||||
| PTSA |
|
1,136,895 |
|
|
1,075,095 |
|
|
61,800 |
|
5.7 |
| ||||
| International |
|
1,081,953 |
|
|
1,086,999 |
|
|
(5,046 |
) |
(0.5 |
) | ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| $ |
4,323,470 |
|
$ |
4,256,892 |
|
$ |
66,578 |
|
1.6 |
% | |||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| Earnings from Operations: |
|||||||||||||||
| U.S. Commercial Staffing |
$ |
118,656 |
|
$ |
114,688 |
|
$ |
3,968 |
|
3.5 |
% | ||||
| PTSA |
|
50,468 |
|
|
47,506 |
|
|
2,962 |
|
6.2 |
| ||||
| International |
|
5,205 |
|
|
9,414 |
|
|
(4,209 |
) |
(44.7 |
) | ||||
| Corporate |
|
(143,937 |
) |
|
(143,641 |
) |
|
(296 |
) |
(0.2 |
) | ||||
| |
|
|
|
|
|
|
|
|
|
| |||||
| $ |
30,392 |
|
$ |
27,967 |
|
$ |
2,425 |
|
8.7 |
% | |||||
| |
|
|
|
|
|
|
|
|
|
| |||||
6
KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In thousands of dollars)
| December 29, 2002 |
December 30, 2001 |
|||||||
| Current Assets |
||||||||
| Cash and equivalents |
$ |
100,936 |
|
$ |
83,461 |
| ||
| Short-term investments |
|
599 |
|
|
630 |
| ||
| Accounts receivable, less allowances of $12,533 and $12,105, respectively |
|
567,517 |
|
|
539,692 |
| ||
| Prepaid expenses and other current assets |
|
26,387 |
|
|
24,950 |
| ||
| Deferred taxes |
|
23,916 |
|
|
21,469 |
| ||
| |
|
|
|
|
| |||
| Total current assets |
|
719,355 |
|
|
670,202 |
| ||
| Property and Equipment, Net |
|
202,332 |
|
|
211,973 |
| ||
| Noncurrent Deferred Taxes |
|
21,065 |
|
|
31,415 |
| ||
| Goodwill, Net |
|
80,260 |
|
|
73,643 |
| ||
| Other Assets |
|
49,121 |
|
|
52,148 |
| ||
| |
|
|
|
|
| |||
| Total Assets |
$ |
1,072,133 |
|
$ |
1,039,381 |
| ||
| |
|
|
|
|
| |||
| Current Liabilities |
||||||||
| Short-term borrowings |
$ |
24,770 |
|
$ |
32,939 |
| ||
| Accounts payable |
|
85,310 |
|
|
88,217 |
| ||
| Payroll and related taxes |
|
181,585 |
|
|
154,813 |
| ||
| Accrued insurance |
|
27,912 |
|
|
24,071 |
| ||
| Income and other taxes |
|
47,617 |
|
|
48,149 |
| ||
| |
|
|
|
|
| |||
| Total current liabilities |
|
367,194 |
|
|
348,189 |
| ||
| Noncurrent Liabilities |
||||||||
| Accrued insurance |
|
45,540 |
|
|
39,273 |
| ||
| Accrued retirement benefits |
|
40,335 |
|
|
44,764 |
| ||
| |
|
|
|
|
| |||
| Total noncurrent liabilities |
|
85,875 |
|
|
84,037 |
| ||
| Stockholders’ Equity |
||||||||
| Common stock |
|
40,116 |
|
|
40,116 |
| ||
| Treasury stock |
|
(92,159 |
) |
|
(82,156 |
) | ||
| Paid-in capital |
|
17,902 |
|
|
17,035 |
| ||
| Earnings invested in the business |
|
665,759 |
|
|
661,483 |
| ||
| Accumulated foreign currency adjustments |
|
(12,554 |
) |
|
(29,323 |
) | ||
| |
|
|
|
|
| |||
| Total stockholders’ equity |
|
619,064 |
|
|
607,155 |
| ||
| |
|
|
|
|
| |||
| Total Liabilities and Stockholders’ Equity |
$ |
1,072,133 |
|
$ |
1,039,381 |
| ||
| |
|
|
|
|
| |||
| | ||||||||
| STATISTICS: |
||||||||
| Working Capital |
$ |
352,161 |
|
$ |
322,013 |
| ||
| Current Ratio |
|
2.0 |
|
|
1.9 |
| ||
| Stockholders’ Equity Per Share |
$ |
17.42 |
|
$ |
16.93 |
| ||
| Global Days Sales Outstanding |
||||||||
| Quarter |
|
46 |
|
|
47 |
| ||
| Year-to-date |
|
48 |
|
|
46 |
| ||
7
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 29, 2002 AND DECEMBER 30,
2001
(In thousands of dollars)
| 2002 |
2001 |
|||||||
| Cash flows from operating activities |
||||||||
| Net earnings |
$ |
18,569 |
|
$ |
16,549 |
| ||
| Noncash adjustments: |
||||||||
| Depreciation and amortization |
|
45,428 |
|
|
44,396 |
| ||
| (Increase) decrease in accounts receivable, net |
|
(9,420 |
) |
|
86,491 |
| ||
| Changes in operating assets and liabilities |
|
35,029 |
|
|
(2,211 |
) | ||
| |
|
|
|
|
| |||
| Net cash from operating activities |
|
89,606 |
|
|
145,225 |
| ||
| |
|
|
|
|
| |||
| Cash flows from investing activities |
||||||||
| Capital expenditures |
|
(33,406 |
) |
|
(42,525 |
) | ||
| Decrease in short-term investments |
|
31 |
|
|
1,764 |
| ||
| (Increase) decrease in other assets |
|
(3,476 |
) |
|
3,645 |
| ||
| Acquisition of building |
|
— |
|
|
(11,783 |
) | ||
| Acquisition of companies, net of cash received |
|
— |
|
|
(192 |
) | ||
| |
|
|
|
|
| |||
| Net cash from investing activities |
|
(36,851 |
) |
|
(49,091 |
) | ||
| |
|
|
|
|
| |||
| Cash flows from financing activities |
||||||||
| Decrease in short-term borrowings |
|
(11,723 |
) |
|
(24,900 |
) | ||
| Dividend payments |
|
(14,293 |
) |
|
(30,408 |
) | ||
| Stock options and other |
|
991 |
|
|
139 |
| ||
| Purchase of treasury stock |
|
(13,216 |
) |
|
(64 |
) | ||
| |
|
|
|
|
| |||
| Net cash from financing activities |
|
(38,241 |
) |
|
(55,233 |
) | ||
| |
|
|
|
|
| |||
| Effect of exchange rates on cash and equivalents |
|
2,961 |
|
|
(758 |
) | ||
| |
|
|
|
|
| |||
| Net change in cash and equivalents |
|
17,475 |
|
|
40,143 |
| ||
| Cash and equivalents at beginning of period |
|
83,461 |
|
|
43,318 |
| ||
| |
|
|
|
|
| |||
| Cash and equivalents at end of period |
$ |
100,936 |
|
$ |
83,461 |
| ||
| |
|
|
|
|
| |||