TROY, Mich., Oct. 24 /PRNewswire-FirstCall/ -- Kelly Services,
Inc., a global provider of staffing services, today announced
record revenue and a 41% increase in net earnings for the third
quarter ended October 1, 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO ) Carl T.
Camden, President and Chief Executive Officer, announced revenue
for the third quarter of 2006 totaled $1.419 billion, a 5.5%
increase compared to the $1.345 billion for the corresponding
quarter in 2005. Revenue for the nine-month period totaled $4.195
billion, a 7.4% increase compared to the $3.906 billion for the
first nine months of 2005. Net earnings for the third quarter of
2006 totaled $17.8 million, a 40.6% increase compared to $12.7
million reported for the third quarter of 2005. Net earnings for
the first nine months of 2006 totaled $39.0 million, a 50.5%
increase compared to the $25.9 million earned in the comparable
period of 2005. Diluted earnings per share in the third quarter of
2006 were $0.49, an increase of 40.0% as compared to third quarter
2005 earnings of $0.35 per share. Diluted earnings per share for
the first nine months of 2006 were $1.08, a 50.0% increase compared
to the $0.72 per share earned last year. Commenting on the results,
Camden said, "We're pleased that we delivered solid earnings
performance despite a slowdown in the U.S. economy. Our PTSA and
International segments delivered particularly strong profit
increases. "Our earnings before taxes grew by nearly 48% during the
third quarter. However, our net earnings after taxes increased at a
lower rate of 41%, because our tax rate was higher than last year.
This was primarily due to the fact that legislation to
retroactively extend Work Opportunity Credits for 2006 was not
passed in the third quarter, as was originally expected. It is not
unusual for the credits to be delayed, and we still believe that
this legislation will be passed before year end. "Revenue in our
U.S. Commercial segment, which accounted for 44% of total sales,
increased 1.0% year over year in the third quarter. Operating
earnings totaled $32.5 million, an increase of 5.4% compared to
last year. "Revenue in our Professional, Technical, and Staffing
Alternatives (PTSA) segment, which accounted for 20% of total
sales, increased 0.9% year over year in the third quarter.
Operating earnings totaled $20.8 million and increased 25.0% on a
year over year basis. "Revenue in our International segment, which
accounted for 36% of total sales, increased 14.9% year over year in
the third quarter. Operating earnings totaled $10.4 million, and
increased 77.9% compared to last year. "On a constant currency
basis, International segment revenue increased 10.8% year over year
in the third quarter. On a constant currency basis, total company
revenue increased 4.2% year over year in the third quarter.
"Corporate expenses totaled $38.5 million and increased 6.8%
compared to last year. Operating earnings totaled $25.3 million,
and increased 45.7% on a year over year basis." Mr. Camden
concluded, "We expect fourth quarter 2006 earnings to be in the
range of $0.46 to $0.51 per share, as compared to $0.37 per share
in the fourth quarter of 2005. This guidance includes a tax rate of
approximately 24%, which assumes legislation to retroactively
extend Work Opportunity Credits to the beginning of 2006 will be
signed during the fourth quarter. For the full year, we now
forecast earnings between $1.54 and $1.59 per share." In
conjunction with its third quarter earnings release, Kelly
Services, Inc. will host a conference call at 9:00 a.m. (ET) on
October 24, 2006 to review the results and answer questions. The
call may be accessed in one of the following ways: Via the
Telephone: U.S. 1-866-269-9613 International 1-651-291-0900 The
pass code is Kelly Services Via the Internet: The call is also
available via the internet through the Kelly Services website:
http://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:KELYANASDAQ: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 more than
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
http://www.kellyservices.com/ . KELLY SERVICES, INC. AND
SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 13 WEEKS ENDED OCTOBER
1, 2006 AND OCTOBER 2, 2005 (UNAUDITED) (In thousands of dollars
except per share data) 2006 2005 Change % Change Revenue from
services $1,418,804 $1,344,644 $74,160 5.5% Cost of services
1,180,207 1,126,466 53,741 4.8 Gross profit 238,597 218,178 20,419
9.4 Selling, general and administrative expenses 213,345 200,849
12,496 6.2 Earnings from operations 25,252 17,329 7,923 45.7 Other
income, net 348 10 338 NM Earnings before taxes 25,600 17,339 8,261
47.6 Income taxes 7,782 4,664 3,118 66.9 Net earnings $17,818
$12,675 $5,143 40.6% Basic earnings per share $0.49 $0.35 $0.14
40.0% Diluted earnings per share $0.49 $0.35 $0.14 40.0%
STATISTICS: Gross profit rate 16.8% 16.2% 0.6% Expenses as a % of
revenue 15.0 14.9 0.1 % Return - Earnings from operations 1.8 1.3
0.5 Earnings before taxes 1.8 1.3 0.5 Net earnings 1.3 0.9 0.4
Effective income tax rate 30.4% 26.9% 3.5% Average number of shares
outstanding (thousands): Basic 35,997 35,725 Diluted 36,225 36,006
KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR
THE 39 WEEKS ENDED OCTOBER 1, 2006 AND OCTOBER 2, 2005 (UNAUDITED)
(In thousands of dollars except per share data) 2006 2005 Change %
Change Revenue from services $4,195,302 $3,905,883 $289,419 7.4%
Cost of services 3,507,120 3,269,519 237,601 7.3 Gross profit
688,182 636,364 51,818 8.1 Selling, general and administrative
expenses 628,167 599,332 28,835 4.8 Earnings from operations 60,015
37,032 22,983 62.1 Other income (expense), net 853 (177) 1,030 NM
Earnings before taxes 60,868 36,855 24,013 65.2 Income taxes 21,819
10,909 10,910 100.0 Net earnings $39,049 $25,946 $13,103 50.5%
Basic earnings per share $1.09 $0.73 $0.36 49.3% Diluted earnings
per share $1.08 $0.72 $0.36 50.0% STATISTICS: Gross profit rate
16.4% 16.3% 0.1% Expenses as a % of revenue 15.0 15.3 (0.3) %
Return - Earnings from operations 1.4 0.9 0.5 Earnings before taxes
1.5 0.9 0.6 Net earnings 0.9 0.7 0.2 Effective income tax rate
35.8% 29.6% 6.2% Average number of shares outstanding (thousands):
Basic 35,937 35,619 Diluted 36,226 35,903 KELLY SERVICES, INC. AND
SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In
thousands of dollars) Third Quarter 2006 2005 Change % Change
Revenue from Services: U.S. Commercial Staffing $625,241 $619,324
$5,917 1.0% PTSA 287,592 284,889 2,703 0.9 International 505,971
440,431 65,540 14.9 Consolidated Total $1,418,804 $1,344,644
$74,160 5.5% Earnings from Operations: U.S. Commercial Staffing
$32,531 $30,866 $1,665 5.4% PTSA 20,821 16,659 4,162 25.0
International 10,390 5,842 4,548 77.9 Corporate Expense (38,490)
(36,038) (2,452) (6.8) Consolidated Total $25,252 $17,329 $7,923
45.7% September Year to Date 2006 2005 Change % Change Revenue from
Services: U.S. Commercial Staffing $1,883,297 $1,787,263 $96,034
5.4% PTSA 879,190 838,275 40,915 4.9 International 1,432,815
1,280,345 152,470 11.9 Consolidated Total $4,195,302 $3,905,883
$289,419 7.4% Earnings from Operations: U.S. Commercial Staffing
$95,619 $85,144 $10,475 12.3% PTSA 58,644 47,467 11,177 23.5
International 18,889 9,819 9,070 92.4 Corporate Expense (113,137)
(105,398) (7,739) (7.3) Consolidated Total $60,015 $37,032 $22,983
62.1% Note: Earnings from Operations for 2005 were reclassified to
reflect the chargeback of payroll, billing and accounts receivable
costs previously included in Corporate Expense to the U.S.
Commercial, PTSA and International segments. This change did not
affect Consolidated Total Earnings from Operations. KELLY SERVICES,
INC. AND SUBSIDIARIES RECONCILIATION OF CONSTANT CURRENCY REVENUE
FROM SERVICES TO REPORTED REVENUE FROM SERVICES (UNAUDITED) (In
thousands of dollars) Third Quarter 2006 2005 Change % Change U.S.
Commercial $625,241 $619,324 $5,917 1.0% PTSA 287,592 284,889 2,703
0.9 International - constant currency* 487,977 440,431 47,546 10.8
Revenue from services - constant currency 1,400,810 1,344,644
56,166 4.2% Foreign currency impact 17,994 17,994 Revenue from
services $1,418,804 $1,344,644 $74,160 5.5% September Year to Date
2006 2005 Change % Change U.S. Commercial $1,883,297 $1,787,263
$96,034 5.4% PTSA 879,190 838,275 40,915 4.9 International -
constant currency* 1,430,407 1,280,345 150,062 11.7 Revenue from
services - constant currency 4,192,894 3,905,883 287,011 7.3%
Foreign currency impact 2,408 2,408 Revenue from services
$4,195,302 $3,905,883 $289,419 7.4% * 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. KELLY SERVICES, INC.
AND SUBSIDIARIES BALANCE SHEETS (UNAUDITED) (In thousands of
dollars) October 1, January 1, October 2, 2006 2006 2005 Current
Assets Cash and equivalents $77,493 $63,699 $59,286 Short-term
investments 227 154 221 Trade accounts receivable, less allowances
of $17,840, $16,648 and $17,320, respectively 878,336 803,812
811,583 Prepaid expenses and other current assets 44,849 47,434
47,032 Deferred taxes 34,693 33,805 37,702 Total current assets
1,035,598 948,904 955,824 Property and Equipment, Net 162,791
165,757 165,947 Noncurrent Deferred Taxes 23,128 22,088 18,353
Goodwill, Net 94,592 88,217 88,723 Other Assets 113,599 87,891
87,082 Total Assets $1,429,708 $1,312,857 $1,315,929 Current
Liabilities Short-term borrowings $58,375 $56,644 $47,991 Accounts
payable 125,213 110,411 111,246 Accrued payroll and related taxes
293,223 263,112 270,672 Accrued insurance 32,728 34,097 33,683
Income and other taxes 63,559 56,651 64,561 Total current
liabilities 573,098 520,915 528,153 Noncurrent Liabilities Accrued
insurance 53,294 54,517 59,883 Accrued retirement benefits 63,641
57,443 56,024 Other long-term liabilities 15,238 7,939 8,236 Total
noncurrent liabilities 132,173 119,899 124,143 Stockholders' Equity
Common stock 40,116 40,116 40,116 Treasury stock (86,665) (90,919)
(91,666) Paid-in capital 28,955 27,015 26,320 Earnings invested in
the business 715,249 688,033 678,298 Accumulated other
comprehensive income 26,782 7,798 10,565 Total stockholders' equity
724,437 672,043 663,633 Total Liabilities and Stockholders' Equity
$1,429,708 $1,312,857 $1,315,929 STATISTICS: Working Capital
$462,500 $427,989 $427,671 Current Ratio 1.8 1.8 1.8
Debt-to-capital % 7.5% 7.8% 6.7% Global Days Sales Outstanding
Quarter 56 53 55 Year-to-date 57 55 57 KELLY SERVICES, INC. AND
SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE 39 WEEKS ENDED
OCTOBER 1, 2006 AND OCTOBER 2, 2005 (UNAUDITED) (In thousands of
dollars) 2006 2005 Cash flows from operating activities Net
earnings $39,049 $25,946 Noncash adjustments: Depreciation and
amortization 30,949 31,709 Stock-based compensation 3,913 2,448
Increase in trade accounts receivable, net (56,252) (103,981)
Changes in other operating assets and liabilities 41,455 58,784 Net
cash from operating activities 59,114 14,906 Cash flows from
investing activities Capital expenditures (26,111) (17,899)
(Increase) decrease in short-term investments (73) 1,135 Increase
in other assets (468) (8,422) Acquisition of company, net of cash
received (4,531) - Investment in unconsolidated affiliates -
(19,681) Net cash from investing activities (31,183) (44,867) Cash
flows from financing activities Net (decrease) increase in short-
term borrowings (289) 16,973 Dividend payments (11,833) (10,687)
Stock options and other stock sales 1,683 5,031 Other financing
activities (4,504) 1,168 Net cash from financing activities
(14,943) 12,485 Effect of exchange rates on cash and equivalents
806 (2,586) Net change in cash and equivalents 13,794 (20,062) Cash
and equivalents at beginning of period 63,699 79,348 Cash and
equivalents at end of period $77,493 $59,286
http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO DATASOURCE:
Kelly Services, Inc. CONTACT: ANALYST CONTACT: James Polehna,
+1-248-244-4586, , or MEDIA CONTACT: Renee Walker, +1-248-244-5362,
, both of Kelly Services, Inc. Web site:
http://www.kellyservices.com/
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