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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 26, 2004
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 of incorporation or organization) |
(I.R.S. Employer 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)
No Change
(Former name, former address and former fiscal year, if changed since last report.)
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 ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
At October 27, 2004, 31,749,442 shares of Class A and 3,472,598 shares of Class B common stock of the Registrant were outstanding.
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KELLY SERVICES, INC. AND SUBSIDIARIES
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KELLY SERVICES, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands of dollars except per share data)
| 13 Weeks Ended |
39 Weeks Ended | ||||||||||||||
| Sept. 26, 2004 |
Sept. 28, 2003 |
Sept. 26, 2004 |
Sept. 28, 2003 | ||||||||||||
| Revenue from services |
$ | 1,244,854 | $ | 1,097,268 | $ | 3,628,129 | $ | 3,160,182 | |||||||
| Cost of services |
1,042,486 | 924,661 | 3,044,323 | 2,649,619 | |||||||||||
| Gross profit |
202,368 | 172,607 | 583,806 | 510,563 | |||||||||||
| Selling, general and administrative expenses |
189,908 | 169,898 | 560,654 | 505,015 | |||||||||||
| Earnings from operations |
12,460 | 2,709 | 23,152 | 5,548 | |||||||||||
| Interest (expense) income, net |
(194 | ) | (84 | ) | (716 | ) | 42 | ||||||||
| Earnings before income taxes |
12,266 | 2,625 | 22,436 | 5,590 | |||||||||||
| Income taxes |
4,894 | 1,121 | 8,952 | 2,292 | |||||||||||
| Net earnings |
$ | 7,372 | $ | 1,504 | $ | 13,484 | $ | 3,298 | |||||||
| Earnings per share: |
|||||||||||||||
| Basic |
$ | .21 | $ | .04 | $ | .38 | $ | .09 | |||||||
| Diluted |
.21 | .04 | .38 | .09 | |||||||||||
| Average shares outstanding (thousands): |
|||||||||||||||
| Basic |
35,199 | 35,321 | 35,046 | 35,488 | |||||||||||
| Diluted |
35,424 | 35,490 | 35,400 | 35,549 | |||||||||||
| Dividends per share |
$ | .10 | $ | .10 | $ | .30 | $ | .30 | |||||||
See accompanying Notes to Financial Statements.
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KELLY SERVICES, INC. AND SUBSIDIARIES
(In thousands of dollars)
| Sept. 26, 2004 |
December 28, 2003 |
|||||||
| (UNAUDITED) | ||||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and equivalents |
$ | 87,236 | $ | 76,378 | ||||
| Short-term investments |
377 | 457 | ||||||
| Trade accounts receivable, less allowances of $16,637 and $14,983, respectively |
741,938 | 658,090 | ||||||
| Prepaid expenses and other current assets |
36,834 | 31,784 | ||||||
| Deferred taxes |
21,287 | 24,962 | ||||||
| Total current assets |
887,672 | 791,671 | ||||||
| PROPERTY AND EQUIPMENT: |
||||||||
| Land and buildings |
57,687 | 57,543 | ||||||
| Equipment, furniture and leasehold improvements |
318,319 | 302,938 | ||||||
| Accumulated depreciation |
(204,066 | ) | (172,359 | ) | ||||
| Total property and equipment |
171,940 | 188,122 | ||||||
| NONCURRENT DEFERRED TAXES |
11,741 | 14,606 | ||||||
| GOODWILL, NET |
84,875 | 85,788 | ||||||
| OTHER ASSETS |
58,674 | 57,550 | ||||||
| TOTAL ASSETS |
$ | 1,214,902 | $ | 1,137,737 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Short-term borrowings |
$ | 43,109 | $ | 39,190 | ||||
| Accounts payable |
91,458 | 92,265 | ||||||
| Accrued payroll and related taxes |
254,813 | 200,503 | ||||||
| Accrued insurance |
38,602 | 36,016 | ||||||
| Income and other taxes |
47,503 | 49,342 | ||||||
| Total current liabilities |
475,485 | 417,316 | ||||||
| NONCURRENT LIABILITIES: |
||||||||
| Accrued insurance |
62,982 | 58,763 | ||||||
| Accrued retirement benefits |
49,274 | 48,025 | ||||||
| Total noncurrent liabilities |
112,256 | 106,788 | ||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Capital stock, $1.00 par value |
||||||||
| Class A common stock, shares issued 36,619,693 at 2004 and 36,619,148 at 2003 |
36,620 | 36,619 | ||||||
| Class B common stock, shares issued 3,496,173 at 2004 and 3,496,718 at 2003 |
3,496 | 3,497 | ||||||
| Treasury stock, at cost |
||||||||
| Class A common stock, 4,878,891 shares at 2004 and 5,319,995 at 2003 |
(103,204 | ) | (112,535 | ) | ||||
| Class B common stock, 23,575 shares at 2004 and 23,475 at 2003 |
(626 | ) | (623 | ) | ||||
| Paid-in capital |
20,917 | 19,096 | ||||||
| Earnings invested in the business |
659,693 | 656,726 | ||||||
| Accumulated foreign currency adjustments |
10,265 | 10,853 | ||||||
| Total stockholders’ equity |
627,161 | 613,633 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 1,214,902 | $ | 1,137,737 | ||||
See accompanying Notes to Financial Statements.
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KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands of dollars)
| 13 Weeks Ended |
39 Weeks Ended |
|||||||||||||||
| Sept. 26, 2004 |
Sept. 28, 2003 |
Sept. 26, 2004 |
Sept. 28, 2003 |
|||||||||||||
| Capital Stock |
||||||||||||||||
| Class A common stock |
||||||||||||||||
| Balance at beginning of period |
$ | 36,620 | $ | 36,619 | $ | 36,619 | $ | 36,619 | ||||||||
| Conversions from Class B |
— | — | 1 | — | ||||||||||||
| Balance at end of period |
36,620 | 36,619 | 36,620 | 36,619 | ||||||||||||
| Class B common stock |
||||||||||||||||
| Balance at beginning of period |
3,496 | 3,497 | 3,497 | 3,497 | ||||||||||||
| Conversions to Class A |
— | — | (1 | ) | — | |||||||||||
| Balance at end of period |
3,496 | 3,497 | 3,496 | 3,497 | ||||||||||||
| Treasury Stock |
||||||||||||||||
| Class A common stock |
||||||||||||||||
| Balance at beginning of period |
(104,523 | ) | (90,196 | ) | (112,535 | ) | (91,648 | ) | ||||||||
| Exercise of stock options, restricted stock awards and other |
1,319 | 436 | 9,331 | 1,888 | ||||||||||||
| Purchase of treasury stock |
— | (26,037 | ) | — | (26,037 | ) | ||||||||||
| Balance at end of period |
(103,204 | ) | (115,797 | ) | (103,204 | ) | (115,797 | ) | ||||||||
| Class B common stock |
||||||||||||||||
| Balance at beginning of period |
(626 | ) | (578 | ) | (623 | ) | (511 | ) | ||||||||
| Purchase of treasury stock |
— | (37 | ) | (3 | ) | (104 | ) | |||||||||
| Balance at end of period |
(626 | ) | (615 | ) | (626 | ) | (615 | ) | ||||||||
| Paid-in Capital |
||||||||||||||||
| Balance at beginning of period |
20,042 | 18,332 | 19,096 | 17,902 | ||||||||||||
| Exercise of stock options, restricted stock awards and other |
875 | 72 | 1,821 | 502 | ||||||||||||
| Balance at end of period |
20,917 | 18,404 | 20,917 | 18,404 | ||||||||||||
| Earnings Invested in the Business |
||||||||||||||||
| Balance at beginning of period |
655,841 | 660,438 | 656,726 | 66 | ||||||||||||