Exhibit 99
CDI Corp. Reports Profitable Third Quarter 2004 Financial Results and
Announces Dividend
PHILADELPHIA, Oct. 21 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI)
today reported earnings for the third quarter and announced a quarterly cash
dividend.
For the quarter ended September 30, 2004, the company reported net
earnings of $2.3 million, or $0.11 per diluted share, on revenues of
$263.2 million. The company also announced a quarterly dividend of $0.11 per
share payable to shareholders of record as of November 3, 2004. This dividend
will be paid on November 17, 2004.
"We were disappointed with third quarter results," said President and
Chief Executive Officer Roger H. Ballou. "The results were affected by two
primary factors:
"First, we experienced continued revenue softness in our Business
Solutions segment and in the Todays Staffing segment, as we reported in our
September 9, 2004 press release. As a result, sequential revenues were
essentially flat. However, we also experienced a gross margin shortfall of
approximately $0.6 million. Included in this shortfall is approximately
$0.3 million in billable employee workers' compensation liabilities identified
in connection with an actuarial review performed in the quarter.
"Second, consolidated operating and administrative expenses increased by
$3.0 million from the second quarter, adjusted to eliminate the effect of
$1.0 million in pre-tax charges for vacated real estate reported in the second
quarter. We experienced an increase of $0.8 million in expenses associated
with regulatory and compliance spending, primarily due to Sarbanes-Oxley
requirements; we recognized a $0.4 million expense resulting from a state
escheat audit relating to issues between 1992 and 1998; and, we recognized an
additional $0.2 million expense associated with the aforementioned workers'
compensation evaluation for staff employees. Operating and administrative
expenses increased by approximately $1.6 million across the company, driven
mainly by incremental hiring of revenue-generating personnel at our Todays
Staffing and AndersElite segments. Specifically, at Anders, we experienced
significant incremental expenses driven by higher-than-normal turnover in both
the management and recruitment functions."
Business Segment Discussion
The Business Solutions segment reported slightly lower sequential revenues
in the third quarter due to ongoing delays in new account win ramp-up.
Operating profits were sequentially lower reflecting lower gross profit
margins.
AndersElite's third quarter revenues were up 6.6% sequentially, driven by
strong infrastructure spending in the U.K. However, operating profits were
adversely affected by the expenses associated with the previously mentioned
increase in turnover.
Todays Staffing revenues declined sequentially by 6.7%, a result driven by
seasonality, by continued softness in local retail business and from a loss of
national account volume due to pricing pressure. Operating profit declined
47.2%, driven primarily by expenses related to incremental hiring of permanent
placement sales people and by the aforementioned revenue declines.
Management Recruiters International (MRI) revenues increased sequentially
by 4.0%. This increase was driven by a year-over-year increase in franchise
royalty revenues as permanent placement hiring accelerated during the quarter.
During the quarter, royalty revenues increased by 22.0% over the third quarter
of 2003 and 6.1% sequentially. As a result, MRI operating profits increased
sequentially by 8.8% when adjusted for the second quarter sale of Banister
International.
Corporate Summary
Corporate overhead costs were up sequentially 26.8%, primarily reflecting
the aforementioned increase in regulatory and compliance spending. During the
quarter, the company maintained a strong working capital position with cash
and short-term investments aggregating $33.8 million at September 30, 2004.
During the third quarter, the company paid a special dividend of $2.00 per
share and a quarterly dividend of $0.11 per share, aggregating $41.6 million.
Business Outlook
"Again, we were disappointed with third quarter performance. However, our
business fundamentals are solid with a strong pipeline of new wins to support
our growth objectives and we believe that the business model we have
implemented will provide healthy earnings leverage on this growth," said
Ballou.
"Looking forward, we expect fourth quarter revenues to be slightly down
compared to the third quarter and up approximately 2% over the previous year.
We hope for revenue growth of 5 to 8% in 2005 as we experience anticipated
revenue increases from new account wins and continued improvement in the
permanent placement arena.
"In addition, we expect that between $1.5 million and $2.0 million in
third quarter margin deterioration and expense increases will not continue in
the fourth quarter. While we expect some declines in regulatory and
compliance spending in the fourth quarter, we would also hope to more
significantly reduce our level of such spending in 2005."
Financial Tables Follow
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11 a.m. (EDT) today to discuss
this announcement. The conference call will be broadcast live over the
Internet and can be accessed by any interested party at www.cdicorp.com. An
online replay will be available at www.cdicorp.com for 14 days after the call.
Company Information
CDI Corp. (NYSE: CDI) is a provider of engineering and information
technology outsourcing solutions and professional staffing. Its subsidiaries
include Todays Staffing, and Management Recruiters International, the world's
largest executive search and recruitment organization. Visit CDI on the web
at http://www.cdicorp.com.
Safe Harbor Statement
Certain information in this news release contains forward-looking
statements as such term is defined in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Certain forward-
looking statements can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "hopes," "intends," "plans," "estimates," or "anticipates"
or the negative thereof or other comparable terminology, or by discussions of
strategy, plans or intentions. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. These include risks and uncertainties such
as competitive market pressures, material changes in demand from larger
customers, availability of labor, the company's performance on contracts,
changes in customers' attitudes towards outsourcing, government policies or
judicial decisions adverse to the staffing industry and changes in economic
conditions. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
company assumes no obligation to update such information.
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
Unaudited
(in thousands, except per share data)
For the three For the nine
months ended months ended
September 30, June 30, September 30,
2004 2003 2004 2004 2003
Revenues $263,249 264,355 264,839 784,075 803,875
Cost of services 200,816 200,888 201,806 597,361 606,862
Gross profit 62,433 63,467 63,033 186,714 197,013
Operating and administrative
expenses 58,825 54,278 56,781 169,458 170,744
Provision for restructure - 69 - - 69
Gain on sale of assets - - (1,295) (1,295) -
Operating profit 3,608 9,120 7,547 18,551 26,200
Interest income, net and
other 39 170 136 443 796
Earnings before income taxes 3,647 9,290 7,683 18,994 26,996
Income tax expense 1,360 3,317 2,474 6,562 9,460
Net earnings 2,287 5,973 5,209 12,432 17,536
Diluted earnings per share $0.11 0.30 0.26 0.62 0.89
Diluted number of shares 19,975 19,749 20,099 20,004 19,681
September December June September
30, 31, 30, 30,
2004 2003 2004 2003
Selected Balance Sheet Data:
Cash, cash equivalents and short-term
investments $33,781 72,836 79,052 59,686
Accounts receivable, net $204,312 199,630 203,600 209,323
Current assets $250,986 289,694 299,711 291,257
Total assets $358,580 401,562 407,662 403,337
Current liabilities $82,517 95,266 92,540 106,361
Shareholders' equity $268,249 297,351 307,516 288,332
For the three months For the nine
ended months ended
September June September
30, 30, 30,
2004 2003 2004 2004 2003
Selected Cash Flow Data:
Depreciation expense $2,411 2,565 2,414 7,250 9,458
Capital expenditures $1,948 3,990 1,715 5,054 11,776
Dividends paid $41,567 40,660 1,767 45,099 40,660
For the three For the nine
months ended months ended
September 30, June 30, September 30,
2004 2003 2004 2004 2003
Selected Earnings and Other
Financial Data:
Revenues $263,249 264,355 264,839 784,075 803,875
Gross profit $62,433 63,467 63,033 186,714 197,013
Gross profit margin 23.7% 24.0% 23.8% 23.8% 24.5%
Operating and administrative
expenses as a percentage of
revenue 22.3% 20.5% 21.4% 21.6% 21.2%
Corporate expenses $4,655 2,872 3,672 11,455 9,991
Corporate expenses as a
percentage of revenue 1.8% 1.1% 1.4% 1.5% 1.2%
Operating profit margin 1.4% 3.4% 2.8% 2.4% 3.3%
Effective income tax rate 37.3% 35.7% 32.2% 34.5% 35.0%
Pre-tax return on
shareholders' equity - - last
twelve months (a) 9.4% 12.6% 10.1% N/A N/A
(a) Current quarter combined with the three preceding quarters' pre-tax
net earnings from continuing operations divided by the average
shareholders' equity.
For the three For the nine
months ended months ended
September 30, June 30, September 30,
2004 2003 2004 2004 2003
Selected Segment Data:
Business Solutions
Revenues $176,930 177,819 179,634 529,016 545,424
Gross profit 33,906 35,906 35,530 103,310 111,554
Gross profit margin 19.2% 20.2% 19.8% 19.5% 20.5%
Operating profit 4,417 6,430 5,741 16,382 20,710
Operating profit margin 2.5% 3.6% 3.2% 3.1% 3.8%
AndersElite
Revenues $43,052 39,422 40,387 122,954 108,547
Gross profit 10,635 10,016 9,926 30,398 27,512
Gross profit margin 24.7% 25.4% 24.6% 24.7% 25.3%
Operating profit 687 2,685 851 3,056 6,515
Operating profit margin 1.6% 6.8% 2.1% 2.5% 6.0%
Todays Staffing
Revenues $29,131 34,069 31,223 90,255 105,082
Gross profit 8,071 9,313 8,241 24,298 29,204
Gross profit margin 27.7% 27.3% 26.4% 26.9% 27.8%
Operating profit 440 1,972 834 1,730 5,509
Operating profit margin 1.5% 5.8% 2.7% 1.9% 5.2%
Management Recruiters
International
Revenues $14,136 13,045 13,595 41,850 44,822
Gross profit 9,821 8,232 9,336 28,708 28,743
Gross profit margin 69.5% 63.1% 68.7% 68.6% 64.1%
Operating profit 2,719 905 3,793 8,838 3,457
Operating profit margin 19.2% 6.9% 27.9% 21.1% 7.7%
SOURCE CDI Corp.
-0- 10/21/2004
/CONTACT: Vincent Webb, Vice President, Corporate Communications and
Marketing, +1-215-636-1240, Vince.Webb@cdicorp.com, Jay Stuart, Chief
Financial Officer, +1-215-636-1141, Jay.Stuart@cdicorp.com, both of CDI Corp./
/Web site: http://www.cdicorp.com/
(CDI)
CO: CDI Corp.
ST: Pennsylvania
IN: CPR
SU: ERN CCA DIV ERP