PHILADELPHIA, July 29 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today reported financial results for the second quarter ended June 30, 2010 and announced a quarterly cash dividend.

For the quarter ended June 30, 2010, the company reported net earnings of $2.6 million, or $0.13 per diluted share, on revenue of $219.0 million versus $0.1 million in net earnings, or $0.00 per diluted share, on revenue of $215.4 million in the year-ago second quarter.

Second quarter results include a benefit of $1.8 million related to lower estimated penalties and legal fees associated with a previously-disclosed claim made under the Federal False Claims Act that the company received from the Civil Division of the US Department of Justice (DOJ). This benefit was reduced in part by second quarter pre-tax charges of $0.4 million for severance and real estate exit costs and $0.3 million in costs associated with the previously-announced June 28, 2010 purchase of the business of L. Robert Kimball & Associates, Inc. (L.R. Kimball).

Excluding these items, pre-tax earnings for the quarter were $1.9 million. Second quarter 2009 pre-tax earnings, excluding severance charges totaling $0.7 million, were approximately $0.8 million.

Second quarter 2010 revenue increased 1.7% (0.9% in constant currency) to $219.0 million compared to revenue of $215.4 million in the prior-year second quarter.

A quarterly cash dividend of $0.13 per share will be paid on August 26, 2010 to all shareholders of record as of August 12, 2010.

"We continued to see signs of a modest recovery consistent with patterns observed since the fourth quarter of 2009," said President and Chief Executive Officer, Roger H. Ballou. "We are particularly pleased by signs of above-market growth in our IT Solutions segment which achieved year-over-year revenue growth of over 31%. Additionally, we were pleased with continued improvement in our Management Recruiters International segment which achieved year-over-year revenue growth of over 14%. We continued to see softness in areas of our Engineering Solutions segment but we also see signs through awards and bid activity that could indicate a modest rebound in the second half of the year."

Business Segment Discussion

CDI Engineering Solutions (ES) revenue declined 7.0% (8.8% in constant currency) versus the year-ago second quarter driven by a decrease in spending by customers in the Aerospace, Government Services and Process & Industrial verticals. ES second quarter 2010 revenue includes $0.7 million from the new CDI-Infrastructure vertical which includes three days of results from the aforementioned L.R. Kimball purchase. Operating profit decreased 11.5% versus the prior-year quarter driven primarily by the decline in higher-margin project engineering and permanent placement revenue as well as by $0.3 million in severance and real estate exit costs, partially offset by the $1.8 million benefit related to the aforementioned DOJ matter. Second quarter 2009 operating profit also included $0.3 million in severance charges.

Management Recruiters International, Inc. (MRI) revenue increased 14.2% versus the prior-year quarter driven by increases in royalty revenue, contract staffing revenue and franchise sales revenue. Operating profit increased $1.3 million on a year-over-year basis driven primarily by the increase in higher-margin royalty revenues and by ongoing expense controls. Second quarter 2009 MRI operating profit included severance charges of $0.1 million.

UK-based CDI AndersElite (Anders) revenue declined 33.7% (31.6% in constant currency) compared to the prior-year second quarter reflecting continued weak conditions in the UK construction industry. Anders operating loss was reduced by $1.0 million versus the prior-year quarter reflecting expense control efforts and increases in higher-margin permanent placement revenue offset by a decline in staffing services revenue. Operating loss in the year-ago quarter included $0.2 million in severance costs.

CDI IT Solutions (ITS) revenue increased 31.8% versus the prior-year quarter. These gains were driven by successful business development efforts across both retail and national accounts and new account wins. Operating profit increased 52.5% to $2.9 million driven by the aforementioned revenue growth and operating leverage. Operating profit in both the current and year-ago quarter included $0.1 million in severance charges.

Corporate Summary

Corporate overhead remained virtually flat versus the prior-year quarter reflecting continuing cost control efforts.

"CDI ended the quarter with $27.4 million in cash and cash equivalents," said Ballou. "Primary uses of cash during the quarter included the purchase of L.R. Kimball and funding of organic growth primarily in our ITS segment. With our existing cash and cash equivalents and borrowing capacity, we should have sufficient resources to support company growth and ongoing capital needs."

Business Outlook

"If the current business momentum continues in both our ITS segment and in permanent placement demand, particularly in MRI, and if we see an anticipated rebound in capital spending by our ES customers, we would expect significant improvements in operating leverage in the second half of 2010," said Ballou. "We expect that overall third quarter 2010 organic revenue increases could range from 1% to 4% on a year-over-year basis and 8% to 11% when including revenue from the L.R. Kimball acquisition."

Financial Tables Follow

Conference Call/Webcast

CDI Corp. will conduct a conference call at 11 a.m. (ET) 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

Headquartered in Philadelphia, CDI Corp. (NYSE: CDI) is a leading provider of engineering & information technology outsourcing solutions and professional staffing. Its operating units include CDI Engineering Solutions, CDI IT Solutions, CDI AndersElite Limited, and Management Recruiters International, Inc. Visit CDI at www.cdicorp.com.

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that address expectations or projections about the future, including, but not limited to, statements about the Company's strategies for growth and future financial results (such as revenues, pre-tax profit and tax rates), are forward-looking statements. Some of the forward-looking statements can be identified by words like "anticipates," "believes," "expects," "may," "will," "could," "should," "intends," "plans," "estimates" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company's control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: weakness in general economic conditions and levels of capital spending by customers in the industries the Company serves; weakness in the financial and capital markets, which may result in the postponement or cancellation of the CDI customers' capital projects or the inability of CDI's customers to pay the Company's fees; loss of business and other adverse customer consequences as a result of the UK Office of Fair Trading decision or the Department of Justice investigation; difficulties in integrating the recently-acquired L.R. Kimball business with the Company; credit risks associated with the Company's customers; competitive market pressures; the availability and cost of qualified labor; the Company's level of success in attracting, training, and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations; the possibility of incurring liability for the Company's activities, including the activities of the Company's temporary employees; the Company's performance on customer contracts; negative outcome of pending and future claims and litigation; and government policies or judicial decisions adverse to the Company's businesses. More detailed information about some of these risks and uncertainties may be found in our filings with the SEC, particularly in the "Risk Factors" section of our Form 10-K's and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-K's and Form 10-Q's. 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 statements, whether as a result of new information, future events or otherwise, except as required by law.

Note on Constant Currency Calculations

Constant currency year-over-year changes should be considered in addition to, and not as a substitute for or superior to, changes in revenue prepared on a US dollar reported basis. Constant currency year-over-year changes in revenue are calculated by translating the prior period's revenue in local currencies into US dollars using the average exchange rates of the current period.

                                 CDI Corp. and Subsidiaries
                            Consolidated Earnings Release Tables
                                        (Unaudited)
                           (in thousands, except per share data)

                                          For the three months ended
                                          --------------------------
                                             June 30,            March 31,
                                             --------
                                       2010          2009            2010
                                       ----          ----            ----

    Revenue                        $218,982      $215,426        $209,940

    Cost of services                174,279       171,147         168,433
                                    -------       -------         -------

    Gross profit                     44,703        44,279          41,507

    Operating and administrative
     expenses                        41,135        43,751          40,892
                                     ------        ------          ------

    Operating profit (loss)           3,568           528             615

    Other income (expense), net        (130)         (143)             52

    Equity in losses from
     affiliated companies              (417)         (279)           (351)
                                       ----          ----            ----

    Earnings (loss) before
     income taxes                     3,021           106             316

    Income tax expense                  423            50             500
                                        ---           ---             ---

    Net income (loss)                 2,598            56            (184)

    Less: gain (loss)
     attributable to the
     noncontrolling interest              8            (3)              7
                                        ---           ---             ---

    Net income (loss)
     attributable to CDI             $2,590           $59           $(191)
                                     ======           ===           =====


    Diluted net income (loss)
     attributable to CDI per
     share                            $0.13         $0.00          $(0.01)

    Average diluted number of
     shares                          19,241        19,062          18,979

                                   For the six months
                                       ended
                                   ------------------
                                     June 30,
                                     --------
                                      2010          2009
                                      ----          ----

    Revenue                       $428,922      $444,078

    Cost of services               342,712       352,372
                                   -------       -------

    Gross profit                    86,210        91,706

    Operating and administrative
     expenses                       82,027        91,829
                                    ------        ------

    Operating profit (loss)          4,183          (123)

    Other income (expense), net        (78)          116

    Equity in losses from
     affiliated companies             (768)         (581)
                                      ----          ----

    Earnings (loss) before
     income taxes                    3,337          (588)

    Income tax expense                 923           276
                                       ---           ---

    Net income (loss)                2,414          (864)

    Less: gain (loss)
     attributable to the
     noncontrolling interest            15            (3)
                                       ---           ---

    Net income (loss)
     attributable to CDI            $2,399         $(861)
                                    ======         =====


    Diluted net income (loss)
     attributable to CDI per
     share                           $0.12        $(0.05)

    Average diluted number of
     shares                         19,195        18,919

                                         March  December
                             June 30,     31,      31,    June 30,
    Selected Balance Sheet
     Data:                        2010     2010      2009     2009
    ----------------------        ----     ----      ----     ----

    Cash and cash
     equivalents               $27,437  $76,258   $73,528  $77,932

    Accounts receivable, net  $213,059 $180,757  $176,677 $182,277

    Current assets            $254,718 $271,999  $264,697 $277,903

    Total assets              $387,400 $379,407  $375,034 $388,530

    Current liabilities       $102,500  $95,672   $87,193  $81,014

    CDI shareholders' equity  $271,955 $271,035  $274,755 $295,765

    Noncontrolling interest       $235     $224      $141     $152

                                   For the three months ended
                                   --------------------------
                                            June 30,          March 31,
                                            --------
    Selected Cash Flow Data:           2010            2009       2010
    ------------------------           ----            ----       ----

    Depreciation and
     amortization expense            $2,533          $2,844     $2,554

    Capital expenditures               $908          $2,225     $2,023

    Dividends paid                   $2,471          $2,463     $2,480

    Free cash flow for the
     quarter ended June 30,
     2010 is shown below:

        Net cash provided by (used
         in) operating activities  $(11,258)
        Less: capital expenditures     (908)
        Less: dividends paid         (2,471)
        Free cash flow             $(14,637)
                                   ========

                                        For the six months
                                              ended
                                        ------------------
                                            June 30,
                                            --------
    Selected Cash Flow Data:            2010          2009
    ------------------------            ----          ----

    Depreciation and
     amortization expense             $5,087        $5,738

    Capital expenditures              $2,931        $3,946

    Dividends paid                    $4,951        $4,928

    Free cash flow for the
     quarter ended June 30,
     2010 is shown below:

        Net cash provided by (used
         in) operating activities
        Less: capital expenditures
        Less: dividends paid
        Free cash flow

                                        For the three months ended
                                        --------------------------
                                       June 30,                    March 31,
                                       --------
    Selected Earnings and
     Other Financial Data:        2010              2009               2010
    ----------------------        ----              ----               ----

    Revenue                   $218,982          $215,426           $209,940

    Gross profit               $44,703           $44,279            $41,507

    Gross profit margin           20.4%             20.6%              19.8%

    Operating and
     administrative expenses
     as a percentage of
     revenue                      18.8%             20.3%              19.5%

    Corporate expenses          $3,685            $3,667             $3,978

    Corporate expenses as a
     percentage of revenue         1.7%              1.7%               1.9%

    Operating profit margin        1.6%              0.3%               0.3%

    Effective income tax rate     14.0%             47.2%             158.2%

    After-tax return on CDI
     shareholders' equity (a)   (5.9) %              1.1%            (6.9) %

    Pre-tax return on net
     assets (b)                 (7.1) %              2.2%            (9.6) %

                                    For the six months
                                          ended
                                    ------------------
                                        June 30,
                                        --------
    Selected Earnings and
     Other Financial Data:          2010          2009
    ----------------------          ----          ----

    Revenue                     $428,922      $444,078

    Gross profit                 $86,210       $91,706

    Gross profit margin             20.1%         20.7%

    Operating and
     administrative expenses
     as a percentage of
     revenue                        19.1%         20.7%

    Corporate expenses            $7,663        $8,102

    Corporate expenses as a
     percentage of revenue           1.8%          1.8%

    Operating profit margin          1.0%          0.0%

    Effective income tax rate       27.7%      (46.9) %

    After-tax return on CDI
     shareholders' equity (a)

    Pre-tax return on net
     assets (b)

                                         For the three months ended
                                         --------------------------
                                        June 30,                     March 31,
                                        --------
    Selected Segment Data:        2010               2009                2010
    ----------------------        ----               ----                ----

    Engineering Solutions
    Revenue                   $110,197           $118,456            $109,704
    Gross profit                20,375             23,265              19,427
    Gross profit margin           18.5%              19.6%               17.7%

    Operating profit (c)         3,094              3,497               1,470
    Operating profit margin        2.8%               3.0%                1.3%

    Management Recruiters
     International
    Revenue                    $15,108            $13,233             $14,362
    Gross profit                 8,017              6,498               7,250
    Gross profit margin           53.1%              49.1%               50.5%

    Operating profit             1,755                470               1,431
    Operating profit margin       11.6%               3.6%               10.0%

    AndersElite
    Revenue                    $16,930            $25,517             $21,552
    Gross profit                 3,142              3,954               3,721
    Gross profit margin           18.6%              15.5%               17.3%

    Operating loss                (879)            (1,930)               (455)
    Operating loss margin       (5.2) %            (7.6) %             (2.1) %

    IT Solutions
    Revenue                    $76,747            $58,220             $64,322
    Gross profit                13,169             10,562              11,109
    Gross profit margin           17.2%              18.1%               17.3%

    Operating profit             2,866              1,879               1,796
    Operating profit margin        3.7%               3.2%                2.8%



                                     For the three months ended
                                     --------------------------
                                      June 30,                  March 31,
                                      --------
    Engineering Solutions
     Revenue by Vertical:         2010               2009                2010
    ---------------------         ----               ----                ----

    CDI Process and
     Industrial (d)            $77,476            $81,963             $77,622
    CDI Government Services     19,801             22,163              20,058
    CDI Aerospace (d)           12,227             14,330              12,024
    CDI Infrastructure (e)         693                  -                   -
                                   ---                ---                 ---

    Total Engineering
     Solutions Revenue        $110,197           $118,456            $109,704
                              ========           ========            ========

                                      For the six months
                                            ended
                                      ------------------
                                          June 30,
                                          --------
    Selected Segment Data:            2010           2009
    ----------------------            ----           ----

    Engineering Solutions
    Revenue                       $219,901       $247,011
    Gross profit                    39,802         48,432
    Gross profit margin               18.1%          19.6%

    Operating profit (c)             4,564          6,946
    Operating profit margin            2.1%           2.8%

    Management Recruiters
     International
    Revenue                        $29,470        $27,854
    Gross profit                    15,267         13,553
    Gross profit margin               51.8%          48.7%

    Operating profit                 3,186            474
    Operating profit margin           10.8%           1.7%

    AndersElite
    Revenue                        $38,482        $53,551
    Gross profit                     6,863          8,853
    Gross profit margin               17.8%          16.5%

    Operating loss                  (1,334)        (3,129)
    Operating loss margin           (3.5) %        (5.8) %

    IT Solutions
    Revenue                       $141,069       $115,662
    Gross profit                    24,278         20,868
    Gross profit margin               17.2%          18.0%

    Operating profit                 4,662          3,107
    Operating profit margin            3.3%           2.7%



                                   For the six months
                                          ended
                                  -------------------
                                        June 30,
                                        --------
    Engineering Solutions
     Revenue by Vertical:             2010           2009
    ---------------------             ----           ----

    CDI Process and
     Industrial (d)               $155,098       $173,642
    CDI Government Services         39,859         44,057
    CDI Aerospace (d)               24,251         29,312
    CDI Infrastructure (e)             693              -
                                       ---            ---

    Total Engineering
     Solutions Revenue            $219,901       $247,011
                                  ========       ========

     (a) Net income attributable to CDI for the current quarter combined
     with the income (loss) attributable to
    CDI from the three preceding quarters, divided by the average CDI
    shareholders' equity at the
    beginning and end of that four quarter period.

     (b) Earnings before income taxes for the current quarter combined
     with the earnings (loss) before income
    taxes from the three preceding quarters, divided by the average net
    assets at the beginning and end of
    that four quarter period. Net assets include total assets minus total
    liabilities excluding cash and cash
    equivalents and income tax accounts.

    (c) Includes $417, $279, $351, $768 and $581 of equity in losses
    associated with the Company's
    non-consolidated joint ventures for the three months ended June 30,
    2010 and 2009, the three months
    ended March 31, 2010 and the six months ended June 30, 2010 and 2009,
    respectively.

    (d) Revenue for 2009 has been reclassified to conform to the 2010
    presentation.

    (e) During the second quarter of 2010, Engineering Solutions began
    reporting a new vertical -CDI
    Infrastructure, which includes results from the purchase of the
    business of L. Robert Kimball &
    Associates, Inc. on June 28, 2010.

SOURCE CDI Corp.