UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2009
KELLY SERVICES, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 0-1088 | 38-1510762 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
999 WEST BIG BEAVER ROAD, TROY, MICHIGAN |
48084 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (248) 362-4444
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
Kelly Services, Inc. (the “Company”) today released financial information containing highlighted
financial data for the three months and six months ended June 28, 2009. A copy of the press
release is attached as exhibit 99.1 herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press Release dated August 5, 2009. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| KELLY SERVICES, INC. | ||
Date: August 5, 2009 |
||
| /s/ Patricia Little | ||
| Patricia Little | ||
| Executive Vice President and | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
Date: August 5, 2009 |
||
| /s/ Michael E. Debs | ||
| Michael E. Debs | ||
| Senior Vice President and | ||
| Chief Accounting Officer | ||
| (Principal Accounting Officer) |
3
EXHIBIT INDEX
| Exhibit No. | Description | |||
| 99.1 | Press release dated August 5, 2009 |
|||
4
Exhibit 99.1
KELLY SERVICES REPORTS 2nd QUARTER 2009 RESULTS
TROY, MI (August 5, 2009) — Kelly Services, Inc., a world leader in workforce management
services and human resources solutions, today announced results for the second quarter of 2009.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the second
quarter of 2009 totaled $1.0 billion, a 29% decrease compared to the corresponding quarter in 2008.
On a constant currency basis, revenue decreased by 24%.
Losses from operations for the second quarter of 2009 totaled $74.5 million, compared to
earnings from operations of $15.0 million reported for the second quarter of 2008. Included in the
results from operations for the second quarter 2009 are impairment charges totaling $52.6 million
and $2.4 million of restructuring costs relating to the Company’s UK operations. Excluding the
impairment and restructuring charges, the loss from operations was $19.5 million for the second
quarter of 2009.
Diluted losses per share from continuing operations in the second quarter of 2009 were $1.89,
compared to second quarter 2008 earnings of $0.30 per share. The impairment charges totaled $1.41
per share and the UK restructuring charge totaled $0.07 per share in the second quarter of 2009.
The second quarter impairment charges include adjustments to the value of goodwill for the
Company’s Americas Commercial, EMEA PT and APAC Commercial segments and the long-lived assets
related to operations in Japan. The UK restructuring charge is part of a plan to further
consolidate and close branches in the UK during 2009.
Commenting on the second quarter results, Camden said the Company’s loss reflects the
continued weakened state of labor markets throughout the world.
“In this challenging environment, we remain focused on expense control, where our efforts have
had a significant impact on our overall performance. Going forward, we will seek out additional
opportunities to simplify our business structure and operate more efficiently.
“While having the potential to yield immediate results, these actions will also serve to
strengthen Kelly, provide impetus when the economy improves, and position us for long-term
success,” said Camden.
In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a
conference call at 9:00 a.m. (ET) on August 5, to review the results and answer questions. The
call may be accessed in one of the following ways:
Via the Telephone:
U.S.
|
1 800 553-0327 | ||
International
|
1 651 291-5254 |
The pass code is Kelly Services
Via the Internet:
The call is also available via the internet through the Kelly Services website:
www.kellyservices.com
This release contains statements that are forward looking in nature and accordingly, are
subject to risks and uncertainties. These factors include: competition, changing market and
economic conditions, currency fluctuations, changes in laws and regulations, including tax laws,
and other factors discussed in this release and in the Company’s filings with the Securities and
Exchange Commission. Actual results may differ materially from any forward looking statements
contained herein.
A reconciliation of certain non-GAAP financial measures discussed in this release is included
in the attached financial information schedules.
About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a world leader in workforce management services and
human resources solutions headquartered in Troy, Michigan, offering temporary staffing services,
outsourcing, vendor on-site and full-time placement to clients on a global basis. Kelly provides
employment to nearly 650,000 employees annually, with skills including office services, accounting,
engineering, information technology, law, science, marketing, creative services, light industrial,
education, and health care. Revenue in 2008 was $5.5 billion. Visit www.kellyservices.com.
| ANALYST CONTACT: | MEDIA CONTACT: | ||
James Polehna
|
Judith Clark | ||
(248) 244-4586
|
(248) 244-5362 | ||
james_polehna@kellyservices.com
|
judith_clark@kellyservices.com |
2
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars except per share data)
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars except per share data)
| 2009 | 2008 | Change | % Change | |||||||||||||
Revenue from services |
$ | 1,028.9 | $ | 1,452.0 | $ | (423.1 | ) | (29.1 | )% | |||||||
Cost of services |
857.2 | 1,194.6 | (337.4 | ) | (28.2 | ) | ||||||||||
Gross profit |
171.7 | 257.4 | (85.7 | ) | (33.3 | ) | ||||||||||
Selling, general and administrative
expenses |
193.6 | 242.4 | (48.8 | ) | (20.2 | ) | ||||||||||
Asset impairments |
52.6 | — | 52.6 | NM | ||||||||||||
(Loss) earnings from operations |
(74.5 | ) | 15.0 | (89.5 | ) | NM | ||||||||||
Other (expense) income, net |
(1.0 | ) | 0.1 | (1.1 | ) | NM | ||||||||||
(Loss) earnings from continuing
operations before taxes |
(75.5 | ) | 15.1 | (90.6 | ) | NM | ||||||||||
Income taxes |
(9.5 | ) | 4.7 | (14.2 | ) | (302.4 | ) | |||||||||
(Loss) earnings from continuing
operations |
(66.0 | ) | 10.4 | (76.4 | ) | NM | ||||||||||
Earnings from discontinued
operations, net of tax |
— | 0.1 | (0.1 | ) | (100.0 | ) | ||||||||||
Net (loss) earnings |
$ | (66.0 | ) | $ | 10.5 | $ | (76.5 | ) | NM | % | ||||||
Basic (loss) earnings per share on
common stock |
||||||||||||||||
(Loss) earnings from
continuing operations |
$ | (1.89 | ) | $ | 0.30 | $ | (2.19 | ) | NM | % | ||||||
Earnings from discontinued
operations |
— | — | — | NM | ||||||||||||
Net (loss) earnings |
(1.89 | ) | 0.30 | (2.19 | ) | NM | ||||||||||
Diluted (loss) earnings per share
on common stock |
||||||||||||||||
(Loss) earnings from
continuing operations |
$ | (1.89 | ) | $ | 0.30 | $ | (2.19 | ) | NM | % | ||||||
Earnings from
discontinued
operations |
— | — | — | NM | ||||||||||||
Net (loss) earnings |
(1.89 | ) | 0.30 | (2.19 | ) | NM | ||||||||||
STATISTICS: |
||||||||||||||||
Gross profit rate |
16.7 | % | 17.7 | % | (1.0 | ) pts. | ||||||||||
Selling, general and administrative
expenses: |
||||||||||||||||
% of revenue |
18.8 | 16.7 | 2.1 | |||||||||||||
% of gross profit |
112.7 | 94.2 | 18.5 | |||||||||||||
% Return — (Loss) earnings from
operations |
(7.2 | ) | 1.0 | (8.2 | ) | |||||||||||
(Loss) earnings
from continuing
operations
before taxes |
(7.3 | ) | 1.0 | (8.3 | ) | |||||||||||
(Loss) earnings
from continuing
operations |
(6.4 | ) | 0.7 | (7.1 | ) | |||||||||||
Net (loss) earnings |
(6.4 | ) | 0.7 | (7.1 | ) | |||||||||||
Effective income tax rate |
12.5 | % | 30.9 | % | (18.4 | ) pts. | ||||||||||
3
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars except per share data)
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars except per share data)
| 2009 | 2008 | Change | % Change | |||||||||||||
Revenue from services |
$ | 2,071.5 | $ | 2,840.4 | $ | (768.9 | ) | (27.1 | )% | |||||||
Cost of services |
1,724.3 | 2,333.1 | (608.8 | ) | (26.1 | ) | ||||||||||
Gross profit |
347.2 | 507.3 | (160.1 | ) | (31.6 | ) | ||||||||||
Selling, general and administrative
expenses |
399.7 | 479.4 | (79.7 | ) | (16.6 | ) | ||||||||||
Asset impairments |
52.6 | — | 52.6 | NM | ||||||||||||
(Loss) earnings from operations |
(105.1 | ) | 27.9 | (133.0 | ) | (476.6 | ) | |||||||||
Other income, net |
0.3 | 0.1 | 0.2 | 237.8 | ||||||||||||
(Loss) earnings from continuing operations before taxes |
(104.8 | ) | 28.0 | (132.8 | ) | (474.1 | ) | |||||||||
Income taxes |
(22.7 | ) | 9.6 | (32.3 | ) | (337.0 | ) | |||||||||
(Loss) earnings from continuing operations |
(82.1 | ) | 18.4 | (100.5 | ) | NM | ||||||||||
Earnings from discontinued operations, net of tax |
0.6 | 0.3 | 0.3 | 80.6 | ||||||||||||
Net (loss) earnings |
$ | (81.5 | ) | $ | 18.7 | $ | (100.2 | ) | NM | % | ||||||
Basic (loss) earnings per share on common stock |
||||||||||||||||
(Loss) earnings from continuing operations |
$ | (2.36 | ) | $ | 0.52 | $ | (2.88 | ) | NM | % | ||||||
Earnings from discontinued operations |
0.02 | 0.01 | 0.01 | 100.0 | ||||||||||||
Net (loss) earnings |
(2.34 | ) | 0.53 | (2.87 | ) | NM | ||||||||||
Diluted (loss) earnings per share on common stock |
||||||||||||||||
(Loss) earnings from continuing operations |
$ | (2.36 | ) | $ | 0.52 | $ | (2.88 | ) | NM | % | ||||||
Earnings from discontinued operations |
0.02 | 0.01 | 0.01 | 100.0 | ||||||||||||
Net (loss) earnings |
(2.34 | ) | 0.53 | (2.87 | ) | NM | ||||||||||
STATISTICS: |
||||||||||||||||
Gross profit rate |
16.8 | % | 17.9 | % | (1.1 | ) pts. | ||||||||||
Selling, general and administrative expenses: |
||||||||||||||||
% of revenue |
19.3 | 16.9 | 2.4 | |||||||||||||
% of gross profit |
115.1 | 94.5 | 20.6 | |||||||||||||
% Return — (Loss) earnings from operations |
(5.1 | ) | 1.0 | (6.1 | ) | |||||||||||
(Loss) earnings from continuing operations
before taxes |
(5.1 | ) | 1.0 | (6.1 | ) | |||||||||||
(Loss) earnings from continuing operations |
(4.0 | ) | 0.6 | (4.6 | ) | |||||||||||
Net (loss) earnings |
(3.9 | ) | 0.7 | (4.6 | ) | |||||||||||
Effective income tax rate |
21.7 | % | 34.2 | % | (12.5 | ) pts. | ||||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
| Second Quarter | ||||||||||||||||
| Constant | ||||||||||||||||
| Currency | ||||||||||||||||
| 2009 | 2008 | Change | Change | |||||||||||||
Americas Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 473.0 | $ | 656.8 | (28.0 | )% | (26.4 | )% | ||||||||
Fee-based income |
1.6 | 4.4 | (65.1 | ) | (63.7 | ) | ||||||||||
Gross profit |
70.6 | 102.5 | (31.1 | ) | (29.8 | ) | ||||||||||
SG&A expenses |
68.6 | 82.8 | (17.2 | ) | (15.6 | ) | ||||||||||
Earnings from operations |
2.0 | 19.7 | (89.8 | ) | ||||||||||||
Gross profit rate |
14.9 | % | 15.6 | % | (0.7 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
14.5 | 12.6 | 1.9 | |||||||||||||
% of gross profit |
97.1 | 80.8 | 16.3 | |||||||||||||
Operating margin |
0.4 | 3.0 | (2.6 | ) | ||||||||||||
Americas PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 194.8 | $ | 245.5 | (20.7 | )% | (20.5 | )% | ||||||||
Fee-based income |
2.3 | 5.4 | (57.7 | ) | (57.6 | ) | ||||||||||
Gross profit |
32.2 | 42.8 | (24.7 | ) | (24.5 | ) | ||||||||||
SG&A expenses |
25.6 | 28.4 | (10.1 | ) | (9.7 | ) | ||||||||||
Earnings from operations |
6.6 | 14.4 | (53.6 | ) | ||||||||||||
Gross profit rate |
16.5 | % | 17.4 | % | (0.9 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
13.1 | 11.6 | 1.5 | |||||||||||||
% of gross profit |
79.2 | 66.3 | 12.9 | |||||||||||||
Operating margin |
3.4 | 5.9 | (2.5 | ) | ||||||||||||
EMEA Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 211.7 | $ | 351.7 | (39.8 | )% | (28.4 | )% | ||||||||
Fee-based income |
3.9 | 11.1 | (65.2 | ) | (58.0 | ) | ||||||||||
Gross profit |
34.4 | 61.1 | (43.8 | ) | (33.4 | ) | ||||||||||
SG&A expenses |
39.7 | 59.8 | (33.6 | ) | (21.5 | ) | ||||||||||
Earnings from operations |
(5.3 | ) | 1.3 | NM | ||||||||||||
Earnings from operations (excluding restructuring charges) |
(2.9 | ) | 1.3 | (320.1 | ) | |||||||||||
Gross profit rate |
16.2 | % | 17.4 | % | (1.2 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
18.8 | 17.0 | 1.8 | |||||||||||||
% of gross profit |
115.6 | 97.8 | 17.8 | |||||||||||||
Operating margin |
(2.5 | ) | 0.4 | (2.9 | ) | |||||||||||
EMEA PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 33.1 | $ | 46.3 | (28.6 | )% | (15.6 | )% | ||||||||
Fee-based income |
3.8 | 7.7 | (50.8 | ) | (40.5 | ) | ||||||||||
Gross profit |
8.8 | 14.1 | (37.5 | ) | (25.8 | ) | ||||||||||
SG&A expenses |
10.1 | 12.7 | (20.3 | ) | (5.0 | ) | ||||||||||
Earnings from operations |
(1.3 | ) | 1.4 | (196.6 | ) | |||||||||||
Gross profit rate |
26.6 | % | 30.4 | % | (3.8 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
30.6 | 27.4 | 3.2 | |||||||||||||
% of gross profit |
115.1 | 90.3 | 24.8 | |||||||||||||
Operating margin |
(4.0 | ) | 3.0 | (7.0 | ) | |||||||||||
5
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
| Second Quarter | ||||||||||||||||
| Constant | ||||||||||||||||
| Currency | ||||||||||||||||
| 2009 | 2008 | Change | Change | |||||||||||||
APAC Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 66.3 | $ | 90.9 | (27.1 | )% | (16.4 | )% | ||||||||
Fee-based income |
2.3 | 5.2 | (55.5 | ) | (50.5 | ) | ||||||||||
Gross profit |
9.7 | 15.7 | (38.6 | ) | (29.8 | ) | ||||||||||
SG&A expenses |
10.9 | 15.2 | (28.7 | ) | (18.9 | ) | ||||||||||
Earnings from operations |
(1.2 | ) | 0.5 | (331.9 | ) | |||||||||||
Gross profit rate |
14.6 | % | 17.3 | % | (2.7 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
16.4 | 16.8 | (0.4 | ) | ||||||||||||
% of gross profit |
112.3 | 96.7 | 15.6 | |||||||||||||
Operating margin |
(1.8 | ) | 0.6 | (2.4 | ) | |||||||||||
APAC PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 5.5 | $ | 9.4 | (41.4 | )% | (33.9 | )% | ||||||||
Fee-based income |
0.8 | 1.4 | (39.9 | ) | (31.3 | ) | ||||||||||
Gross profit |
1.7 | 2.9 | (39.2 | ) | (31.4 | ) | ||||||||||
SG&A expenses |
2.1 | 3.0 | (29.2 | ) | (18.5 | ) | ||||||||||
Earnings from operations |
(0.4 | ) | (0.1 | ) | (160.3 | ) | ||||||||||
Gross profit rate |
31.5 | % | 30.3 | % | 1.2 | pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
38.6 | 31.9 | 6.7 | |||||||||||||
% of gross profit |
122.6 | 105.3 | 17.3 | |||||||||||||
Operating margin |
(7.1 | ) | (1.6 | ) | (5.5 | ) | ||||||||||
OCG |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 50.1 | $ | 57.2 | (12.3 | )% | (10.3 | )% | ||||||||
Fee-based income |
6.0 | 7.1 | (16.3 | ) | (10.8 | ) | ||||||||||
Gross profit |
14.6 | 18.5 | (21.3 | ) | (18.0 | ) | ||||||||||
SG&A expenses |
17.8 | 17.9 | (1.0 | ) | 3.7 | |||||||||||
Earnings from operations |
(3.2 | ) | 0.6 | NM | ||||||||||||
Gross profit rate |
29.0 | % | 32.3 | % | (3.3 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
35.5 | 31.4 | 4.1 | |||||||||||||
% of gross profit |
122.1 | 97.1 | 25.0 | |||||||||||||
Operating margin |
(6.4 | ) | 0.9 | (7.3 | ) | |||||||||||
Corporate Expense |
$ | (19.1 | ) | $ | (22.8 | ) | 16.4 | % | ||||||||
6
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
| June Year to Date | ||||||||||||||||
| Constant | ||||||||||||||||
| Currency | ||||||||||||||||
| 2009 | 2008 | Change | Change | |||||||||||||
Americas Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 955.4 | $ | 1,299.5 | (26.5 | )% | (24.6 | )% | ||||||||
Fee-based income |
3.4 | 8.6 | (61.2 | ) | (58.4 | ) | ||||||||||
Gross profit |
143.7 | 207.4 | (30.7 | ) | (29.1 | ) | ||||||||||
SG&A expenses |
141.2 | 165.5 | (14.7 | ) | (12.7 | ) | ||||||||||
Earnings from operations |
2.5 | 41.9 | (94.0 | ) | ||||||||||||
Gross profit rate |
15.0 | % | 16.0 | % | (1.0 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
14.8 | 12.7 | 2.1 | |||||||||||||
% of gross profit |
98.3 | 79.8 | 18.5 | |||||||||||||
Operating margin |
0.3 | 3.2 | (2.9 | ) | ||||||||||||
Americas PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 392.2 | $ | 484.1 | (19.0 | )% | (18.8 | )% | ||||||||
Fee-based income |
5.1 | 10.7 | (52.8 | ) | (52.7 | ) | ||||||||||
Gross profit |
63.7 | 85.1 | (25.2 | ) | (24.9 | ) | ||||||||||
SG&A expenses |
51.8 | 56.6 | (8.6 | ) | (8.2 | ) | ||||||||||
Earnings from operations |
11.9 | 28.5 | (58.1 | ) | ||||||||||||
Gross profit rate |
16.2 | % | 17.6 | % | (1.4 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
13.2 | 11.7 | 1.5 | |||||||||||||
% of gross profit |
81.2 | 66.5 | 14.7 | |||||||||||||
Operating margin |
3.0 | 5.9 | (2.9 | ) | ||||||||||||
EMEA Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 428.3 | $ | 673.6 | (36.4 | )% | (23.4 | )% | ||||||||
Fee-based income |
8.6 | 21.8 | (60.3 | ) | (51.6 | ) | ||||||||||
Gross profit |
68.9 | 116.7 | (41.0 | ) | (29.5 | ) | ||||||||||
SG&A expenses |
86.3 | 117.0 | (26.2 | ) | (10.7 | ) | ||||||||||
Earnings from operations |
(17.4 | ) | (0.3 | ) | NM | |||||||||||
Earnings from operations (excluding restructuring charges) |
(9.6 | ) | (0.3 | ) | NM | |||||||||||
Gross profit rate |
16.1 | % | 17.3 | % | (1.2 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
20.2 | 17.4 | 2.8 | |||||||||||||
% of gross profit |
125.3 | 100.2 | 25.1 | |||||||||||||
Operating margin |
(4.1 | ) | 0.0 | (4.1 | ) | |||||||||||
EMEA PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 65.9 | $ | 90.1 | (26.9 | )% | (12.7 | )% | ||||||||
Fee-based income |
8.2 | 14.6 | (44.1 | ) | (31.4 | ) | ||||||||||
Gross profit |
18.2 | 27.1 | (32.9 | ) | (19.5 | ) | ||||||||||
SG&A expenses |
20.1 | 24.7 | (18.7 | ) | (2.2 | ) | ||||||||||
Earnings from operations |
(1.9 | ) | 2.4 | (179.0 | ) | |||||||||||
Gross profit rate |
27.6 | % | 30.1 | % | (2.5 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
30.5 | 27.4 | 3.1 | |||||||||||||
% of gross profit |
110.4 | 91.2 | 19.2 | |||||||||||||
Operating margin |
(2.9 | ) | 2.7 | (5.6 | ) | |||||||||||
7
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
| June Year to Date | ||||||||||||||||
| Constant | ||||||||||||||||
| Currency | ||||||||||||||||
| 2009 | 2008 | Change | Change | |||||||||||||
APAC Commercial |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 130.7 | $ | 177.6 | (26.4 | )% | (14.1 | )% | ||||||||
Fee-based income |
4.5 | 9.5 | (52.2 | ) | (46.0 | ) | ||||||||||
Gross profit |
19.2 | 30.2 | (36.8 | ) | (26.2 | ) | ||||||||||
SG&A expenses |
21.7 | 29.7 | (27.0 | ) | (15.6 | ) | ||||||||||
Earnings from operations |
(2.5 | ) | 0.5 | NM | ||||||||||||
Gross profit rate |
14.6 | % | 17.0 | % | (2.4 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
16.6 | 16.7 | (0.1 | ) | ||||||||||||
% of gross profit |
113.3 | 98.1 | 15.2 | |||||||||||||
Operating margin |
(1.9 | ) | 0.3 | (2.2 | ) | |||||||||||
APAC PT |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 11.7 | $ | 17.9 | (34.5 | )% | (25.7 | )% | ||||||||
Fee-based income |
1.8 | 2.8 | (35.7 | ) | (26.5 | ) | ||||||||||
Gross profit |
3.6 | 5.5 | (33.2 | ) | (24.3 | ) | ||||||||||
SG&A expenses |
4.3 | 5.8 | (26.4 | ) | (14.1 | ) | ||||||||||
Earnings from operations |
(0.7 | ) | (0.3 | ) | (77.0 | ) | ||||||||||
Gross profit rate |
31.1 | % | 30.5 | % | 0.6 | pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
36.6 | 32.5 | 4.1 | |||||||||||||
% of gross profit |
117.5 | 106.6 | 10.9 | |||||||||||||
Operating margin |
(5.4 | ) | (2.0 | ) | (3.4 | ) | ||||||||||
OCG |
||||||||||||||||
Revenue from services (including fee-based income) |
$ | 98.8 | $ | 109.0 | (9.3 | )% | (6.9 | )% | ||||||||
Fee-based income |
12.6 | 13.2 | (4.9 | ) | 1.8 | |||||||||||
Gross profit |
30.5 | 35.7 | (14.5 | ) | (10.6 | ) | ||||||||||
SG&A expenses |
34.9 | 33.2 | 4.9 | 10.3 | ||||||||||||
Earnings from operations |
(4.4 | ) | 2.5 | (285.1 | ) | |||||||||||
Gross profit rate |
30.8 | % | 32.7 | % | (1.9 | ) pts. | ||||||||||
Expense rates: |
||||||||||||||||
% of revenue |
35.3 | 30.5 | 4.8 | |||||||||||||
% of gross profit |
114.5 | 93.3 | 21.2 | |||||||||||||
Operating margin |
(4.5 | ) | 2.2 | (6.7 | ) | |||||||||||
Corporate Expense |
$ | (40.0 | ) | $ | (47.3 | ) | 15.4 | % | ||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
| June 28, | December 28, | June 29, | ||||||||||
| 2009 | 2008 | 2008 | ||||||||||
Current Assets |
||||||||||||
Cash and equivalents |
$ | 115.2 | $ | 118.3 | $ | 85.4 | ||||||
Trade accounts receivable, less allowances of
$15.4, $17.0 and $17.0, respectively |
681.0 | 815.8 | 952.5 | |||||||||
Prepaid expenses and other current assets |
57.2 | 62.0 | 55.9 | |||||||||
Deferred taxes |
29.7 | 31.9 | 28.2 | |||||||||
Total current assets |
883.1 | 1,028.0 | 1,122.0 | |||||||||
Property and Equipment, Net |
137.7 | 151.3 | 172.5 | |||||||||
Noncurrent Deferred Taxes |
40.2 | 40.0 | 48.0 | |||||||||
Goodwill, Net |
67.3 | 117.8 | 145.2 | |||||||||
Other Assets |
125.3 | 120.2 | 141.8 | |||||||||
Total Assets |
$ | 1,253.6 | $ | 1,457.3 | $ | 1,629.5 | ||||||
Current Liabilities |
||||||||||||
Short-term borrowings |
$ | — | $ | 35.2 | $ | 44.9 | ||||||
Accounts payable and accrued liabilities |
205.2 | 244.1 | 209.9 | |||||||||
Accrued payroll and related taxes |
217.4 | 243.2 | 290.8 | |||||||||
Accrued insurance |
25.2 | 26.3 | 23.0 | |||||||||
Income and other taxes |
18.1 | 51.8 | 65.1 | |||||||||
Current portion of long-term debt |
77.6 | — | — | |||||||||
Total current liabilities |
543.5 | 600.6 | 633.7 | |||||||||
Noncurrent Liabilities |
||||||||||||
Long-term debt |
— | 80.0 | 51.4 | |||||||||
Accrued insurance |
44.6 | 46.9 | 58.8 | |||||||||
Accrued retirement benefits |
66.4 | 61.6 | 76.2 | |||||||||
Other long-term liabilities |
14.9 | 15.3 | 15.4 | |||||||||
Total noncurrent liabilities |
125.9 | 203.8 | 201.8 | |||||||||
Stockholders’ Equity |
||||||||||||
Common stock |
40.1 | 40.1 | 40.1 | |||||||||
Treasury stock |
(107.8 | ) | (111.2 | ) | (111.4 | ) | ||||||
Paid-in capital |
34.7 | 35.8 | 33.3 | |||||||||
Earnings invested in the business |
594.5 | 676.0 | 786.6 | |||||||||
Accumulated other comprehensive income |
22.7 | 12.2 | 45.4 | |||||||||
Total stockholders’ equity |
584.2 | 652.9 | 794.0 | |||||||||
Total Liabilities and Stockholders’ Equity |
$ | 1,253.6 | $ | 1,457.3 | $ | 1,629.5 | ||||||
STATISTICS: |
||||||||||||
Working Capital |
$ | 339.6 | $ | 427.4 | $ | 488.3 | ||||||
Current Ratio |
1.6 | 1.7 | 1.8 | |||||||||
Debt-to-capital % |
11.7 | % | 15.0 | % | 10.8 | % | ||||||
Global Days Sales Outstanding |
51 | 50 | 51 | |||||||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JUNE 28, 2009 AND JUNE 29, 2008
(UNAUDITED)
(In millions of dollars)
| 2009 | 2008 | |||||||
Cash flows from operating activities |
||||||||
Net (loss) earnings |
$ | (81.5 | ) | $ | 18.7 | |||
Noncash adjustments: |
||||||||
Impairment of assets |
52.6 | — | ||||||
Depreciation and amortization |
21.0 | 22.5 | ||||||
Provision for bad debts |
1.3 | 2.0 | ||||||
Stock-based compensation |
2.2 | 1.6 | ||||||
Other, net |
(1.5 | ) | 1.8 | |||||
Changes in operating assets and liabilities |
75.8 | (5.3 | ) | |||||
Net cash from operating activities |
69.9 | 41.3 | ||||||
Cash flows from investing activities |
||||||||
Capital expenditures |
(5.0 | ) | (15.6 | ) | ||||
Acquisition of companies, net of cash received |
(7.5 | ) | (10.6 | ) | ||||
Other investing activities |
(3.0 | ) | (0.4 | ) | ||||
Net cash from investing activities |
(15.5 | ) | (26.6 | ) | ||||
Cash flows from financing activities |
||||||||
Net change in revolving line of credit |
(13.1 | ) | (7.4 | ) | ||||
Repayment of debt |
(22.9 | ) | — | |||||
Dividend payments |
— | (9.5 | ) | |||||
Purchase of treasury stock |
— | (8.0 | ) | |||||
Stock options and other stock sales |
— | 0.1 | ||||||
Other financing activities |
(23.6 | ) | (0.7 | ) | ||||
Net cash from financing activities |
(59.6 | ) | (25.5 | ) | ||||
Effect of exchange rates on cash and equivalents |
2.1 | 3.4 | ||||||
Net change in cash and equivalents |
(3.1 | ) | (7.4 | ) | ||||
Cash and equivalents at beginning of period |
118.3 | 92.8 | ||||||
Cash and equivalents at end of period |
$ | 115.2 | $ | 85.4 | ||||
10
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
| Second Quarter (Commercial, PT and OCG) | ||||||||||||||||
| % Change | ||||||||||||||||
| Constant | ||||||||||||||||
| 2009 | 2008 | US$ | Currency | |||||||||||||
Americas |
||||||||||||||||
United States |
$ | 633.3 | $ | 839.1 | (24.5 | )% | (24.5 | )% | ||||||||
Canada |
42.6 | 63.7 | (33.1 | ) | (22.6 | ) | ||||||||||
Mexico |
16.1 | 19.6 | (18.0 | ) | 4.9 | |||||||||||
Puerto Rico |
14.6 | 20.6 | (29.2 | ) | (29.2 | ) | ||||||||||
Total Americas |
706.6 | 943.0 | (25.1 | ) | (23.9 | ) | ||||||||||
EMEA |
||||||||||||||||
France |
62.9 | 95.4 | (34.0 | ) | (24.2 | ) | ||||||||||
United Kingdom |
50.2 | 109.9 | (54.3 | ) | (41.6 | ) | ||||||||||
Switzerland |
32.5 | 52.3 | (37.8 | ) | (33.0 | ) | ||||||||||
Italy |
17.6 | 37.4 | (52.9 | ) | (46.1 | ) | ||||||||||
Germany |
15.5 | 22.8 | (32.2 | ) | (22.2 | ) | ||||||||||
Norway |
15.1 | 24.3 | (37.8 | ) | (20.7 | ) | ||||||||||
Russia |
15.1 | 22.5 | (32.9 | ) | (8.8 | ) | ||||||||||
Portugal |
12.6 | — | NM | NM | ||||||||||||
Other |
27.1 | 40.9 | (33.9 | ) | (22.1 | ) | ||||||||||
Total EMEA |
248.6 | 405.5 | (38.7 | ) | (27.1 | ) | ||||||||||
APAC |
||||||||||||||||
Australia |
22.5 | 38.1 | (40.8 | ) | (26.3 | ) | ||||||||||
Singapore |
15.2 | 18.7 | (18.9 | ) | (12.6 | ) | ||||||||||
Malaysia |
12.0 | 14.7 | (18.6 | ) | (10.1 | ) | ||||||||||
Other |
24.0 | 32.0 | (24.8 | ) | (16.0 | ) | ||||||||||
Total APAC |
73.7 | 103.5 | (28.7 | ) | (18.3 | ) | ||||||||||
Total Kelly Services, Inc. |
$ | 1,028.9 | $ | 1,452.0 | (29.1 | )% | (24.4 | )% | ||||||||
11
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
| June Year to Date (Commercial, PT and OCG) | ||||||||||||||||
| % Change | ||||||||||||||||
| Constant | ||||||||||||||||
| 2009 | 2008 | US$ | Currency | |||||||||||||
Americas |
||||||||||||||||
United States |
$ | 1,278.1 | $ | 1,659.8 | (23.0 | )% | (23.0 | )% | ||||||||
Canada |
83.5 | 125.5 | (33.5 | ) | (20.4 | ) | ||||||||||
Mexico |
30.8 | 37.3 | (17.4 | ) | 7.7 | |||||||||||
Puerto Rico |
30.3 | 39.4 | (23.3 | ) | (23.3 | ) | ||||||||||
Total Americas |
1,422.7 | 1,862.0 | (23.6 | ) | (22.2 | ) | ||||||||||
EMEA |
||||||||||||||||
France |
124.6 | 182.0 | (31.5 | ) | (21.6 | ) | ||||||||||
United Kingdom |
112.8 | 214.8 | (47.5 | ) | (30.1 | ) | ||||||||||
Switzerland |
61.0 | 94.5 | (35.4 | ) | (30.6 | ) | ||||||||||
Italy |
36.5 | 72.8 | (49.8 | ) | (42.5 | ) | ||||||||||
Germany |
30.9 | 44.2 | (30.1 | ) | (19.8 | ) | ||||||||||
Russia |
29.0 | 43.2 | (32.9 | ) | (7.6 | ) | ||||||||||
Norway |
28.2 | 44.3 | (36.3 | ) | (18.3 | ) | ||||||||||
Portugal |
24.3 | — | NM | NM | ||||||||||||
Other |
55.3 | 81.3 | (32.1 | ) | (20.1 | ) | ||||||||||
Total EMEA |
502.6 | 777.1 | (35.3 | ) | (22.2 | ) | ||||||||||
APAC |
||||||||||||||||
Australia |
42.9 | 73.8 | (41.8 | ) | (24.4 | ) | ||||||||||
Singapore |
30.1 | 36.5 | (17.6 | ) | (11.4 | ) | ||||||||||
Malaysia |
24.1 | 29.5 | (18.3 | ) | (9.0 | ) | ||||||||||
Other |
49.1 | 61.5 | (20.1 | ) | (9.7 | ) | ||||||||||
Total APAC |
146.2 | 201.3 | (27.3 | ) | (15.3 | ) | ||||||||||
Total Kelly Services, Inc. |
$ | 2,071.5 | $ | 2,840.4 | (27.1 | )% | (21.7 | )% | ||||||||
12
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
| Second Quarter | ||||||||||||||||
| 2009 | 2008 | |||||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||||
(Loss) earnings from continuing operations |
$ | (66.0 | ) | $ | (1.89 | ) | $ | 10.4 | $ | 0.30 | ||||||
U.K. restructuring charge, net of taxes (Note 1) |
2.4 | 0.07 | — | — | ||||||||||||
Asset impairments, net of taxes (Note 2) |
49.2 | 1.41 | — | |||||||||||||
(Loss) earnings from continuing operations excluding
restructuring and asset impairment charges,
net of taxes |
$ | (14.4 | ) | $ | (0.41 | ) | $ | 10.4 | $ | 0.30 | ||||||
| Second Quarter | ||||||||||||
| 2009 | 2008 | % Change | ||||||||||
Selling, general and administrative expenses |
$ | 193.6 | $ | 242.4 | ||||||||
U.K. restructuring charge (Note 1) |
(2.4 | ) | — | |||||||||
Selling, general and administrative expenses
excluding the U.K. restructuring charge |
$ | 191.2 | $ | 242.4 | (21.2 | %) | ||||||
(Loss) earnings from operations |
$ | (74.5 | ) | $ | 15.0 | |||||||
U.K. restructuring charge (Note 1) |
2.4 | — | ||||||||||
Asset impairments (Note 2) |
52.6 | — | ||||||||||
(Loss) earnings from operations excluding
restructuring and asset impairment charges |
$ | (19.5 | ) | $ | 15.0 | (229.9 | %) | |||||
EMEA Commercial selling, general
and administrative expenses |
$ | 39.7 | $ | 59.8 | ||||||||
U.K. restructuring charge (Note 1) |
(2.4 | ) | — | |||||||||
EMEA Commercial selling, general
and administrative expenses
excluding the U.K. restructuring charge |
$ | 37.3 | $ | 59.8 | (37.6 | %) | ||||||
EMEA Commercial (loss) earnings
from operations |
$ | (5.3 | ) | $ | 1.3 | |||||||
U.K. restructuring charge (Note 1) |
2.4 | — | ||||||||||
EMEA Commercial (loss) earnings from operations
excluding the U.K. restructuring charge |
$ | (2.9 | ) | $ | 1.3 | (320.1 | %) | |||||
13
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
| June Year to Date | ||||||||||||||||
| 2009 | 2008 | |||||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||||
(Loss) earnings from continuing operations |
$ | (82.1 | ) | $ | (2.36 | ) | $ | 18.4 | $ | 0.52 | ||||||
U.K. restructuring charge, net of taxes (Note 1) |
7.8 | 0.22 | — | — | ||||||||||||
Asset impairments, net of taxes (Note 2) |
49.2 | 1.41 | — | — | ||||||||||||
(Loss) earnings from continuing operations excluding
restructuring and asset impairment charges,
net of tax |
$ | (25.1 | ) | $ | (0.72 | ) | $ | 18.4 | $ | 0.52 | ||||||
| June Year to Date | ||||||||||||
| 2009 | 2008 | % Change | ||||||||||
Selling, general and administrative expenses |
$ | 399.7 | $ | 479.4 | ||||||||
U.K. restructuring charge (Note 1) |
(7.8 | ) | — | |||||||||
Selling, general and administrative expenses
excluding the U.K. restructuring charge |
$ | 391.9 | $ | 479.4 | (18.3 | %) | ||||||
(Loss) earnings from operations |
$ | (105.1 | ) | $ | 27.9 | |||||||
U.K. restructuring charge (Note 1) |
7.8 | — | ||||||||||
Asset impairments (Note 2) |
52.6 | — | ||||||||||
(Loss) earnings from operations excluding
restructuring and asset impairment charges |
$ | (44.7 | ) | $ | 27.9 | (260.2 | %) | |||||
EMEA Commercial selling, general
and administrative expenses |
$ | 86.3 | $ | 117.0 | ||||||||
U.K. restructuring charge (Note 1) |
(7.8 | ) | — | |||||||||
EMEA Commercial selling, general
and administrative expenses
excluding the U.K. restructuring charge |
$ | 78.5 | $ | 117.0 | (32.9 | %) | ||||||
EMEA Commercial (loss) earnings
from operations |
$ | (17.4 | ) | $ | (0.3 | ) | ||||||
U.K. restructuring charge (Note 1) |
7.8 | — | ||||||||||
EMEA Commercial (loss) earnings from operations
excluding the U.K. restructuring charge |
$ | (9.6 | ) | $ | (0.3 | ) | NM | |||||
14
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles)
information excluding the U.K. restructuring and asset impairment charges are useful to
understand the Company’s fiscal 2009 financial performance and increases comparability.
Specifically, Management believes that excluding this item allows for a more
meaningful comparison of current period operating performance
with the operating results of prior periods. These non-GAAP measures may have
limitations as analytical tools because they exclude items which can have a
material impact on cash flow and earnings per share. As a result, Management
considers these measures, along with reported results, when it reviews and
evaluates the Company’s financial performance. Management believes that
these measures provide greater transparency to investors and provide insight
into how Management is evaluating the Company’s financial performance.
Non-GAAP measures should not be considered a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
| (1) | The U.K. restructuring charge is comprised of facility and other exit costs associated
with the disposal or closure of 41 branch locations related to the restructuring program.
|
|
| (2) | The impairment charges include adjustments to the value of goodwill for the
Company’s Americas Commercial, APAC Commercial and EMEA PT segments, as well
as long-lived assets and intangibles related to operations in Japan.
|
15