Exhibit 99
CDI CORP. REPORTS FOURTH QUARTER, FULL YEAR 2004 FINANCIAL RESULTS AND
ANNOUNCES DIVIDEND
PR Newswire -- March 2, 2005
PHILADELPHIA, March 2 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today
reported its financial results for the fourth quarter and for the full year
ended December 31, 2004, announced a quarterly cash dividend and reported that
the company anticipates a restatement of prior financial results. In addition,
the company expects to report a material weakness in internal control over
financial reporting.
In compiling its financial results for the quarter ended December 31, 2004, the
company identified approximately $4.8 million of pre-tax adjustments of which
management believes $3.8 million pertains to earlier 2004 quarters or prior
years. This total includes $1.6 million of adjustments incremental to the
previously disclosed $3.2 million. The company expects that its financial
results for previous periods will be restated to correct these items. Based on
its analysis to date of these adjustments, management currently estimates that
$1.9 million pertains to the first three quarters of 2004 and that the remaining
$1.9 million pertains to 2003 or prior periods. Management's assessment of the
periods to which these charges relate is ongoing and subject to change.
These prior-period adjustments resulted from inadequate review and
reconciliation procedures and controls over significant balance sheet accounts.
As a result, management expects to report a material weakness in internal
control over financial reporting as of December 31, 2004, when it completes the
assessment required by Section 404 of the Sarbanes-Oxley Act. The company is
currently working with its independent auditors to complete the external audit
for the year ended December 31, 2004. The results disclosed below are unaudited,
but do reflect the adjustments referred to above.
For the quarter ended December 31, 2004, the company expects to report a net
loss of $3.5 million, or $0.18 per diluted share, on revenues of $261.2 million.
This net loss includes $1.0 million of fourth quarter pre-tax adjustments
resulting from the write-down of certain receivables and unfavorable adjustments
to other balance sheet accounts. In addition, the fourth quarter 2004 net loss
also includes previously disclosed pre-tax charges associated with vacated real
estate of $1.9 million, and expenses and legal fees incurred associated with the
resolution of litigation, claims and disputes totaling $4.8 million, an
incremental $0.7 million over the previously disclosed total. Partially
offsetting these charges during the fourth quarter, the company recognized
approximately $1.0 million of tax credits related to the company's ongoing tax
planning activities.
The company also announced a quarterly dividend of $0.11 per share to be paid to
all shareholders of record as of March 16, 2005. This dividend will be paid on
March 30, 2005.
For the year ended December 31, 2004, the company expects to report net earnings
of $7.8 million or $0.39 per diluted share on revenues of $1.05 billion.
"While year-over-year revenue performance for the fourth quarter was
encouraging, revenue performance for the year was disappointing," said President
and Chief Executive Officer Roger H. Ballou. "Our results were affected by a
number of external factors including slower than anticipated ramp-up on
significant new contracts, continued weak capital spending by clients in key
business verticals and the loss of a billable day with the New Year's holiday
falling on December 31.
"Most disappointing, however, was our profit performance during the fourth
quarter. As previously announced, we had significant charges associated with
certain balance sheet adjustments, real estate costs associated with
restructuring and the concurrent resolution of several items of litigation,
claims and disputes. However, even excluding these items, our pre-tax operating
profit for the fourth quarter would only have been $0.8 million which was below
our expectations.
"In addition, during the quarter we experienced margin deterioration in our
Business Solutions segment and a significant drop-off in permanent placement
revenues during the month of December in our AndersElite segment. Also affecting
fourth quarter profitability was continued investment in sales-building
capabilities through the hiring and training of revenue-producing personnel
which should produce benefits in 2005."
BUSINESS SEGMENT DISCUSSION
Business Solutions fourth quarter revenues were down 2.8% from $176.8 million in
the third quarter of 2004 due to normal seasonal patterns and the previously
mentioned loss of a billing day. Pre-tax operating profit was down due primarily
to the effect of the previously noted balance sheet adjustments and the costs
associated with the resolution of litigation, claims and disputes which totaled
approximately $4.3 million and the loss of the billable day. At an operating
level, Business Solutions saw sequential margin deterioration primarily due to
competitive pressure in the IT Services vertical. Indirect costs increased due
to continued hiring of new sales personnel.
AndersElite fourth quarter revenues were flat to the third quarter 2004 revenue
of $43.1 million. Operating profits declined due to a steeper than normal
decline in permanent placement revenues in December and the effect of the
aforementioned balance sheet adjustments and the costs associated with the
resolution of litigation, claims and disputes totaling $0.4 million.
Todays Staffing fourth quarter revenues were up 9.9% from $29.1 million in the
third quarter of 2004 reflecting new national account wins. Operating profits
remained essentially flat due to continued investment in sales staff hiring and
training.
Management Recruiters International (MRI) fourth quarter revenues were
essentially flat to the third quarter 2004 revenue of $14.1 million. Franchise
royalties were also essentially flat sequentially but were up 28% on a
year-over-year basis. Operating profits declined due to the aforementioned $1.9
million charge associated with vacated real estate.
CORPORATE SUMMARY
Corporate overhead costs were up sequentially driven by the aforementioned costs
associated with the resolution of litigation, claims and disputes and balance
sheet adjustments totaling approximately $1.1 million on a pre-tax basis and
continued higher-than-anticipated costs related to Sarbanes-Oxley compliance.
"CDI ended the year with approximately $32.9 million in cash and short- term
investments leaving us sufficient resources to support organic growth, capital
spending and potential acquisitions," said Ballou. "During the year, CDI paid
shareholders a special dividend of $2.00 per share and four quarterly dividends
aggregating $0.42 per share.
"As indicated above, management is still in the process of completing its
assessment of the effectiveness of internal control over financial reporting,
but does expect to report a material weakness in such control. The identified
material weakness relates specifically to inadequate account reconciliation and
review procedures which permitted errors in the company's financial statements
to occur and not be detected on a timely basis. We have identified steps
required to remediate the material weakness and have begun to implement those
steps, which include enhanced reconciliation and review procedures, hiring of
additional personnel and additional training for accounting personnel. In
addition, due to the restatement, the company will be filing a form 12b-25 to
delay the filing of its form 10-K report to March 31, 2005."
BUSINESS OUTLOOK
"Looking ahead, we anticipate sequential revenue growth in the first quarter,"
continued Ballou. "We believe that this revenue momentum, combined with
anticipated revenue from our pipeline of new account wins could translate into 5
to 7% annualized revenue growth in 2005. In addition, we expect that a
significant portion of fourth quarter expenses and balance sheet adjustments
noted previously in this press release will not reoccur in 2005. We should be
able to generate low to mid-teen variable contribution margins on these
incremental sales. Our business model is sound and as a single source provider
of professional talent, outsourced engineering and project management solutions
we expect to participate in a broad recovery in capital spending by key clients
in critical vertical markets."
CONFERENCE CALL/WEBCAST
CDI Corp. will conduct a conference call at 11 a.m. (EST) today to discuss this
announcement. The conference call will be broadcast live over the Internet and
can be accessed by any interested party at http://www.cdicorp.com . An online
replay will be available at http://www.cdicorp.com for 14 days after the call.
COMPANY INFORMATION
CDI Corp. (NYSE: CDI) is a leading provider of engineering and
information technology outsourcing solutions and professional staffing.
Its operating divisions include CDI Business Solutions, CDI AndersElite
Limited, Todays Staffing, Inc. and Management Recruiters International,
Inc. 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. In addition to those risks and uncertainties
referred to in our public filings, 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 For the
three months ended twelve months ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Restated Restated
Revenues $ 261,229 256,401 1,045,207 1,060,181
Cost of services 202,150 196,613 799,813 803,188
Gross profit 59,079 59,788 245,394 256,993
Operating and administrative
expenses 66,214 53,994 237,143 225,856
Provision for restructure (200) (212) (200) (143)
Gain on sale of assets - - (1,295) -
Operating (loss) profit (6,935) 6,006 9,746 31,280
Interest income, net and other 85 257 528 1,053
(Loss) earnings before income
taxes (6,850) 6,263 10,274 32,333
Income tax (benefit) expense (3,346) 1,946 2,517 11,053
Net (loss) earnings $ (3,504) 4,317 7,757 21,280
Diluted (loss) earnings per
share $ (0.18) 0.22 0.39 1.08
Diluted number of shares 19,681 20,043 19,966 19,771
December 31, December 31,
2004 2003
------------ ------------
Restated
Selected Balance Sheet Data:
Cash, cash equivalents
and short-term
investments $ 32,939 73,118
Accounts receivable, net $ 192,145 198,892
Current assets $ 244,034 289,569
Total assets $ 353,150 401,437
Current liabilities $ 83,117 96,407
Shareholders' equity $ 261,827 296,085
For the For the
three months ended twelve months ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Selected Cash Flow Data:
Depreciation expense $ 2,368 2,405 9,618 11,863
Capital expenditures $ 2,744 2,981 7,798 14,757
Dividends paid $ 2,168 1,759 47,267 42,419
For the For the
three months ended twelve months ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Restated Restated
Selected Earnings and
Other Financial Data:
Revenues $ 261,229 256,401 1,045,207 1,060,181
Gross profit 59,079 59,788 245,394 256,993
Gross profit margin 22.6% 23.3% 23.5% 24.2%
Operating and administrative
expenses as a percentage of
revenue 25.3% 21.1% 22.7% 21.3%
Corporate expenses 5,572 2,976 17,027 12,687
Corporate expenses as a
percentage of revenue 2.1% 1.2% 1.6% 1.2%
Operating (loss) profit margin (2.7)% 2.3% 0.9% 3.0%
Effective income tax rate 48.8% 31.1% 24.5% 34.2%
For the For the
three months ended twelve months ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Restated Restated
Selected Segment Data:
Business Solutions
Revenues $ 171,912 171,896 700,831 717,225
Gross profit 30,940 34,469 133,851 146,215
Gross profit margin 18.0% 20.1% 19.1% 20.4%
Operating (loss) profit (2,222) 5,997 12,229 25,453
Operating (loss) profit margin (1.3)% 3.5% 1.7% 3.5%
AndersElite
Revenues $ 43,108 41,787 166,062 150,334
Gross profit 9,642 9,486 40,040 36,998
Gross profit margin 22.4% 22.7% 24.1% 24.6%
Operating (loss) profit (495) 2,084 2,516 8,554
Operating (loss) profit margin (1.1)% 5.0% 1.5% 5.7%
Todays Staffing
Revenues $ 32,007 30,664 122,262 135,746
Gross profit 8,415 8,135 32,713 37,339
Gross profit margin 26.3% 26.5% 26.8% 27.5%
Operating profit 322 776 2,158 6,378
Operating profit margin 1.0% 2.5% 1.8% 4.7%
Management Recruiters
International
Revenues $ 14,202 12,054 56,052 56,876
Gross profit 10,082 7,698 38,790 36,441
Gross profit margin 71.0% 63.9% 69.2% 64.1%
Operating profit 1,032 125 9,870 3,582
Operating profit margin 7.3% 1.0% 17.6% 6.3%
SOURCE CDI Corp.
-0- 03/02/2005
/CONTACT: Vincent Webb, Vice President, Corporate Communications &
Marketing, 215-636-1240, or Vince.Webb@cdicorp.com, or Jay Stuart, Chief
Financial Officer, +1-215-636-1141, Jay.Stuart@cdicorp.com /
/Web site: http://www.cdicorp.com /