-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Igi3ofGqqOoNVz5w3SCKaCUfEfqdixX7THpDx/nRWpw1iqvRcPnLLotlCna1zMQo udrtQXNqsz7quTZ+eq9Izg== 0000950123-09-029976.txt : 20090805 0000950123-09-029976.hdr.sgml : 20090805 20090805074847 ACCESSION NUMBER: 0000950123-09-029976 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090805 DATE AS OF CHANGE: 20090805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KELLY SERVICES INC CENTRAL INDEX KEY: 0000055135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 381510762 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01088 FILM NUMBER: 09985599 BUSINESS ADDRESS: STREET 1: 999 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 2483624444 MAIL ADDRESS: STREET 1: 999 WEST BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 8-K 1 c88660e8vk.htm FORM 8-K Form 8-K
 
 
UNITED STATES
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
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

EX-99.1 2 c88660exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(KELLY SERVICES LOGO)
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)
                                 
    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)
                                 
    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)
                                 
    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)
                                 
    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)
                                 
    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)
                                 
    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)
                         
    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)
                 
    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)
                                 
    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)
                                 
    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)
                                 
    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)
                                 
    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)
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

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