Philadelphia, Pa. (July 24, 2002) – CDI Corp. (NYSE: CDI) today reported earnings for the second quarter of 2002.
The company reported earnings per diluted share of $0.20 on an after-tax basis for the quarter, excluding pre-tax event-driven charges of $4.1 million, or $0.13 per share (after tax), and a net loss after tax from discontinued operations of $70,000. Including the event-driven items, the company reported net earnings from continuing operations of $0.07 per diluted share. The event-driven charges primarily reflect the accelerated depreciation of the company’s enterprise information system, which was fully decommissioned and written off as of June 30, 2002.
Consolidated revenues from continuing operations for the second quarter of 2002 were $298.4 million compared with $313.1 million in the first quarter of 2002. Excluding revenue related to exited accounts and the declining telecommunications business, consolidated revenues were essentially flat in comparison with the first quarter of 2002.
In accordance with new accounting rules that eliminate the amortization of goodwill and require that goodwill be tested for impairment, the company has recorded a pre-tax asset impairment charge of $21.4 million, or $0.73 per share on an after-tax basis. This charge represents a change in accounting and is presented as such in CDI’s financial results as of January 1, 2002.
“As we continue to exercise financial discipline and improve our business model, our earnings performance is becoming more consistent and predictable,” said President and Chief Executive Officer Roger H. Ballou. “We are approaching a stability point and are within a quarter of shifting our focus from restructuring and reducing costs to generating profitable growth.
“We’ve worked diligently to substantially lower our cost structure, reduce capital expenditures, and enhance our margins,” said Ballou. “Although we have identified additional restructuring opportunities that will bring significant incremental savings, we expect to be substantially finished with restructuring by the end of the third quarter.
“In terms of revenue, we have won some important new business. Given that economic visibility is cloudy at best, however, we’re maintaining our conservative outlook and expect our profit performance in the third quarter of 2002 to be consistent with the second quarter. When the economy rebounds, we expect an appreciable increase in profitability,” said Ballou.
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11:00 a.m. (Eastern time) 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.streetevents.com. An online replay will be available at www.streetevents.com for 14 days after the call.
Company Information
CDI Corp. (NYSE: CDI) helps clients in targeted vertical markets improve their profitability and efficiency by providing professional project outsourcing, specialized temporary staffing and permanent placement, allowing them to focus on their core competencies. With more than 50 years of experience and an extensive network of offices, technical professionals and recruiters, CDI Corporation is a preferred provider of engineering, information technology and workforce solutions for Fortune 1,000 companies. Subsidiaries include Todays Staffing and Management Recruiters International, the world’s largest executive search and recruitment organization. CDI and its franchisees operate more than 1,400 offices in 27 countries. Visit CDI on the web at 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," "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, changes in economic conditions, and delays or unexpected costs associated with implementation of the Company’s Plan of Restructure. 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.
For more information, contact:
Barbara Leary
Vice President, Corporate Communications
Tel: (215) 636-1133
E-mail: barbara.leary@cdicorp.com
Greg Cowan
Executive Vice President, Chief Financial Officer
Tel: (215) 636-1207
E-mail: greg.cowan@cdicorp.com
CDI CORP.
Financial Summary
($000s except per share)
|
Summary of Earnings | Three months ended June 30, | Six months ended June 30, | ||||
|
2002 |
2001 |
2002 |
2001 | |||
|
Revenues |
$298,415 |
$382,239 |
$611,549 |
$777,313 | ||
|
Gross profit |
77,926 |
96,875 |
157,250 |
202,229 | ||
|
Operating profit/(loss) |
2,357 |
2,248 |
(2,011) |
8,506 | ||
|
Interest expense |
43 |
924 |
128 |
1,862 | ||
|
Earnings/(loss) before income taxes and minority interests |
2,314 |
1,324 |
(2,139) |
6,644 | ||
|
Income tax (expense) benefit |
(802) |
(515) |
791 |
(2,553) | ||
|
Earnings/(loss) from continuing operations before minority interests |
1,512 |
809 |
(1,348) |
4,091 | ||
|
Minority interests |
69 |
139 |
135 |
244 | ||
|
Earnings/(loss) from continuing operations |
1,443 |
670 |
(1,483) |
3,847 | ||
|
Discontinued operations, net of tax |
(70) |
319 |
398 |
887 | ||
|
Change in accounting for goodwill, net of tax |
-- |
-- |
(13,968) |
-- | ||
|
Net earnings/(loss) |
$1,373 |
$989 |
$(15,053) |
$4,734 | ||
|
Per diluted share | ||||||
|
Earnings/(loss) from continuing operations |
$0.07 |
$0.03 |
$(0.08) |
$0.20 | ||
|
Discontinued operations, net of tax |
$0.00 |
$0.02 |
$0.02 |
$0.05 | ||
|
Change in accounting for goodwill, net of tax |
-- |
-- |
$(0.73) |
-- | ||
|
Net earnings/(loss) |
$0.07 |
$0.05 |
$(0.79) |
$0.25 | ||
|
Diluted shares (000) |
19,674 |
19,182 |
19,149 |
19,172 | ||
|
Segment Data | ||||||
|
Revenues | ||||||
|
Professional Services |
$158,304 |
$212,241 |
$327,854 |
$429,619 | ||
|
Project Management |
78,788 |
90,724 |
159,731 |
183,812 | ||
|
Todays Staffing |
38,880 |
51,946 |
78,812 |
106,012 | ||
|
Management Recruiters |
22,443 |
27,328 |
45,152 |
57,870 | ||
|
Operating profit/(loss) | ||||||
|
Professional Services |
$1,468 |
$2,336 |
$900 |
$5,630 | ||
|
Project Management |
2,149 |
(1,018) |
9 |
734 | ||
|
Todays Staffing |
1,170 |
1,448 |
2,219 |
3,374 | ||
|
Management Recruiters |
2,372 |
4,653 |
4,227 |
10,393 | ||
|
Corporate Expenses |
(4,802) |
(5,171) |
(9,366) |
(11,625) | ||
|
Operating profit/(loss) before restructuring and event-driven charges | ||||||
|
Professional Services |
$4,556 | $2,934 |
$7,266 | $6,858 | ||
|
Project Management |
2,936 | (899) |
4,993 | 853 | ||
|
Todays Staffing |
1,390 | 1,490 |
2,447 | 3,416 | ||
|
Management Recruiters |
2,372 | 4,703 |
4,227 | 10,443 | ||
|
Corporate Expenses |
(4,802) | (4,831) |
(9,337) | (9,700) | ||
Note: “Revenues” and “Cost of Services” have been restated to reflect the inclusion of certain reimbursable costs on a gross basis pursuant to Emerging Issues Task Force Consensus No. 01-14, which became effective in January 2002. In addition, goodwill amortization of approximately $1.5 million per quarter pre-tax is no longer being recorded in accordance with new accounting rules effective January 1, 2002.
CDI CORP.
Financial Summary
($000s)
|
Summary Balance Sheet |
June 30, 2002 |
June 30, 2001 | December 31, 2001 |
|
Assets | |||
|
Cash and cash equivalents |
$54,915 |
$6,890 |
$26,255 |
|
Receivables |
219,489 |
332,708 |
252,721 |
|
Short term investments |
15,033 |
-- |
-- |
|
Prepaid expenses |
6,907 |
7,715 |
6,577 |
|
Income taxes recoverable |
1,468 |
-- |
-- |
|
Deferred taxes |
16,848 |
10,008 |
16,786 |
|
Assets of discontinued operations |
-- |
20,207 |
14,840 |
|
Current assets |
314,660 |
377,528 |
317,179 |
|
Fixed assets, net |
35,877 |
63,794 |
49,989 |
|
Deferred taxes |
14,727 |
-- |
5,709 |
|
Goodwill, net |
66,280 |
88,497 |
87,469 |
|
Other assets |
11,152 |
11,959 |
12,226 |
|
$442,696 |
$541,778 |
$472,572 | |
|
Liabilities and Shareholders' Equity | |||
|
Outstanding checks |
$8,883 |
$18,334 |
$10,304 |
|
Accounts payable |
35,647 |
50,371 |
35,281 |
|
Accrued expenses |
79,475 |
82,549 |
88,628 |
|
Current taxes |
-- |
3,797 |
2,512 |
|
Current portion of long-term debt |
6,985 |
-- |
7,913 |
|
Liabilities of discontinued operations |
-- |
4,603 |
3,513 |
|
Current liabilities |
130,990 |
159,654 |
148,151 |
|
Long-term debt |
-- |
35,453 |
-- |
|
Deferred income taxes |
-- |
1,536 |
-- |
|
Deferred compensation |
10,855 |
12,295 |
12,396 |
|
Minority interests |
1,166 |
2,467 |
1,375 |
|
Shareholders' equity |
299,685 |
330,373 |
310,650 |
|
$442,696 |
$541,778 |
$472,572 |
