EX-99.1 2 c08012exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(LOGO)
KELLY SERVICES REPORTS 3rd QUARTER 2010 RESULTS
TROY, MI (November 10, 2010) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2010.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2010 totaled $1.3 billion, a 22% increase compared to the corresponding quarter in 2009. On a constant currency basis, revenue increased by 23%.
Earnings from operations for the third quarter of 2010 totaled $14.3 million, compared to losses from operations of $28.0 million reported for the third quarter of 2009. Included in the results from operations for the third quarter of 2010 are restructuring charges of $2.8 million. The loss from operations in the third quarter of 2009 included restructuring charges of $4.6 million and impairment charges of $0.5 million. Excluding the restructuring and impairment charges, earnings from operations were $17.1 million in the third quarter of 2010 compared to a loss from operations of $22.9 million in 2009.
Diluted earnings per share from continuing operations in the third quarter of 2010 were $0.26 compared to third quarter 2009 losses of $0.43 per share. The restructuring charges were $0.05 per share in the third quarter of 2010 and the restructuring and impairment charges totaled $0.12 per share in the third quarter of 2009.
Commenting on the third quarter results, Camden stated, “We’re very pleased that demand for temporary staffing accelerated as global economic expansion persisted and labor markets continued to slowly strengthen. These trends, along with our ability to maintain a leaner cost structure, translated into solid third quarter earnings.
“Our efforts and discipline are clearly yielding results. We’re confident that our realigned strategy enables us to take advantage of growth areas in our industry, particularly professional/technical staffing and supply chain management. We will continue to focus on improving profitability through client-focused solutions that connect the world’s top companies with the world’s best talent.”
In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 10, to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
     
U.S.
International
  1 800 288-9626
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, but are not limited to, competitive market pressures including pricing, changing market and economic conditions, material changes in demand from large corporate customers, availability of temporary workers with appropriate skills required by customers, increases in wages paid to temporary workers, liabilities for client and employee actions, foreign currency fluctuations, changes in laws and regulations (including federal, state and international tax laws), continued availability of financing for funding working capital and acquisitions and for general corporate purposes, the Company’s ability to effectively implement and manage its information technology programs, the ability of the Company to successfully expand into new markets and service lines, and other risks, uncertainties and factors discussed in this release and in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2010 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2010 filed with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein.

 

 

About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provides employment to 480,000 employees annually. Revenue in 2009 was $4.3 billion. Visit www.kellyservices.com and connect with us on facebook.com/kellyservices, linkedin.com/companies/kelly-services and twitter.com/kellyservices.
#
     
ANALYST CONTACT:
  MEDIA CONTACT:
James Polehna
  Jane Stehney
(248) 244-4586
  (248) 244-5630
james_polehna@kellyservices.com
  jane_stehney@kellyservices.com

 

2

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
(UNAUDITED)
(In millions of dollars except per share data)
                                 
    2010     2009     Change     % Change  
 
                                
Revenue from services
   $ 1,284.7     $ 1,049.2     $ 235.5       22.4 %
 
                                
Cost of services
     1,077.5       883.0       194.5       22.0  
 
                        
 
                                
Gross profit
     207.2       166.2       41.0       24.7  
 
                                
Selling, general and administrative expenses
     192.9       193.7       (0.8 )     (0.4 )
 
                                
Asset impairments
     —       0.5       (0.5 )     (100.0 )
 
                        
 
                                
Earnings (loss) from operations
     14.3       (28.0 )     42.3     NM  
 
                                
Other expense, net
     (1.5 )     (1.6 )     0.1       8.1  
 
                        
 
                                
Earnings (loss) from continuing operations before taxes
     12.8       (29.6 )     42.4     NM  
 
                                
Income taxes
     3.2       (14.8 )     18.0       121.7  
 
                        
 
                                
Earnings (loss) from continuing operations
     9.6       (14.8 )     24.4     NM  
 
                                
Earnings from discontinued operations, net of tax
     —       —       —     NM  
 
                        
 
                                
Net earnings (loss)
   $ 9.6     $ (14.8 )   $ 24.4     NM%
 
                        
 
                                
Basic earnings (loss) per share on common stock
                                
Earnings (loss) from continuing operations
   $ 0.26     $ (0.43 )   $ 0.69     NM%
Earnings from discontinued operations
     —       —       —     NM  
Net earnings (loss)
     0.26       (0.43 )     0.69     NM  
 
                                
Diluted earnings (loss) per share on common stock
                                
Earnings (loss) from continuing operations
   $ 0.26     $ (0.43 )   $ 0.69     NM%
Earnings from discontinued operations
     —       —       —     NM  
Net earnings (loss)
     0.26       (0.43 )     0.69     NM  
 
                                
 
                                
STATISTICS:
                                
 
                                
Gross profit rate
     16.1 %     15.8 %     0.3  pts.        
 
                                
Selling, general and administrative expenses:
                                
% of revenue
     15.0       18.5       (3.5 )        
% of gross profit
     93.1       116.5       (23.4 )        
 
                                
% Return — Earnings (loss) from operations
     1.1       (2.7 )     3.8          
Earnings (loss) from continuing operations before taxes
     1.0       (2.8 )     3.8          
Earnings (loss) from continuing operations
     0.7       (1.4 )     2.1          
Net earnings (loss)
     0.7       (1.4 )     2.1          
 
                                
Effective income tax rate
     25.1 %     49.9 %     (24.8 ) pts.        
 
                                
Average number of shares outstanding (millions):
                                
Basic
     36.7       34.9                  
Diluted
     36.7       34.9                  

 

3

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
(UNAUDITED)
(In millions of dollars except per share data)
                                 
    2010     2009     Change     % Change  
 
                                
Revenue from services
   $ 3,624.5     $ 3,120.7     $ 503.8       16.1 %
 
                                
Cost of services
     3,046.4       2,607.3       439.1       16.8  
 
                        
 
                                
Gross profit
     578.1       513.4       64.7       12.6  
 
                                
Selling, general and administrative expenses
     555.4       593.4       (38.0 )     (6.4 )
 
                                
Asset impairments
     1.5       53.1       (51.6 )     (97.1 )
 
                        
 
                                
Earnings (loss) from operations
     21.2       (133.1 )     154.3     NM  
 
                                
Other expense, net
     (4.7 )     (1.3 )     (3.4 )     (253.3 )
 
                        
 
                                
Earnings (loss) from continuing operations before taxes
     16.5       (134.4 )     150.9     NM  
 
                                
Income taxes
     5.0       (37.5 )     42.5       113.5  
 
                        
 
                                
Earnings (loss) from continuing operations
     11.5       (96.9 )     108.4     NM  
 
                                
Earnings from discontinued operations, net of tax
     —       0.6       (0.6 )     (100.0 )
 
                        
 
                                
Net earnings (loss)
   $ 11.5     $ (96.3 )   $ 107.8     NM%
 
                        
 
                                
Basic earnings (loss) per share on common stock
                                
Earnings (loss) from continuing operations
   $ 0.32     $ (2.78 )   $ 3.10     NM%
Earnings from discontinued operations
     —       0.02       (0.02 )     (100.0 )
Net earnings (loss)
     0.32       (2.76 )     3.08     NM  
 
                                
Diluted earnings (loss) per share on common stock
                                
Earnings (loss) from continuing operations
   $ 0.32     $ (2.78 )   $ 3.10     NM%
Earnings from discontinued operations
     —       0.02       (0.02 )     (100.0 )
Net earnings (loss)
     0.32       (2.76 )     3.08     NM  
 
                                
 
                                
STATISTICS:
                                
 
                                
Gross profit rate
     16.0 %     16.5 %     (0.5 ) pts.        
 
                                
Selling, general and administrative expenses:
                                
% of revenue
     15.3       19.0       (3.7 )        
% of gross profit
     96.1       115.6       (19.5 )        
 
                                
% Return — Earnings (loss) from operations
     0.6       (4.3 )     4.9          
Earnings (loss) from continuing operations before taxes
     0.5       (4.3 )     4.8          
Earnings (loss) from continuing operations
     0.3       (3.1 )     3.4          
Net earnings (loss)
     0.3       (3.1 )     3.4          
 
                                
Effective income tax rate
     30.6 %     27.9 %     2.7  pts.        
 
                                
Average number of shares outstanding (millions):
                                
Basic
     35.9       34.9                  
Diluted
     35.9       34.9                  

 

4

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
Americas Commercial
                                
Revenue from services (including fee-based income)
   $ 633.3     $ 467.5       35.5 %     34.7 %
Fee-based income
     2.2       1.7       23.8       22.5  
Gross profit
     92.3       67.2       37.4       36.7  
SG&A expenses excluding restructuring charges
     69.1       66.0       4.7          
Restructuring charges
     —       1.8       (100.0 )        
Total SG&A expenses
     69.1       67.8       2.0       1.4  
Earnings from operations
     23.2       (0.6 )   NM          
Earnings from operations excluding restructuring charges
     23.2       1.2     NM          
 
                                
Gross profit rate
     14.6 %     14.4 %     0.2  pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     10.9       14.1       (3.2 )        
% of gross profit
     74.8       98.2       (23.4 )        
Operating margin (excluding restructuring charges)
     3.7       0.3       3.4          
 
                                
Americas PT
                                
Revenue from services (including fee-based income)
   $ 233.6     $ 192.1       21.6 %     21.5 %
Fee-based income
     2.2       2.1       1.9       1.8  
Gross profit
     37.2       29.5       26.2       26.0  
SG&A expenses excluding restructuring charges
     23.5       24.5       (4.4 )        
Restructuring charges
     —       0.1       (100.0 )        
Total SG&A expenses
     23.5       24.6       (4.8 )     (5.0 )
Earnings from operations
     13.7       4.9       185.1          
Earnings from operations excluding restructuring charges
     13.7       5.0       178.3          
 
                                
Gross profit rate
     15.9 %     15.4 %     0.5  pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     10.1       12.8       (2.7 )        
% of gross profit
     63.1       83.3       (20.2 )        
Operating margin (excluding restructuring charges)
     5.9       2.6       3.3          
 
                                
EMEA Commercial
                                
Revenue from services (including fee-based income)
   $ 228.1     $ 228.0       0.0 %     5.2 %
Fee-based income
     4.5       3.7       23.9       27.8  
Gross profit
     37.2       33.9       9.7       15.3  
SG&A expenses excluding restructuring charges
     32.4       37.7       (13.7 )        
Restructuring charges
     —       1.8       (100.0 )        
Total SG&A expenses
     32.4       39.5       (17.7 )     (13.8 )
Earnings from operations
     4.8       (5.6 )   NM          
Earnings from operations excluding restructuring charges
     4.8       (3.8 )   NM          
 
                                
Gross profit rate
     16.3 %     14.9 %     1.4  pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     14.2       16.5       (2.3 )        
% of gross profit
     87.2       110.9       (23.7 )        
Operating margin (excluding restructuring charges)
     2.1       (1.6 )     3.7          

 

5

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
EMEA PT
                                
Revenue from services (including fee-based income)
   $ 37.1     $ 36.4       1.9 %     8.5 %
Fee-based income
     3.6       3.9       (8.9 )     (5.7 )
Gross profit
     9.6       9.8       (1.8 )     3.7  
Total SG&A expenses
     9.3       9.9       (6.9 )     (2.5 )
Earnings from operations
     0.3       (0.1 )   NM          
 
                                
Gross profit rate
     26.0 %     27.0 %     (1.0 ) pts.        
Expense rates:
                                
% of revenue
     25.0       27.3       (2.3 )        
% of gross profit
     96.1       101.3       (5.2 )        
Operating margin
     1.0       (0.4 )     1.4          
 
                                
APAC Commercial
                                
Revenue from services (including fee-based income)
   $ 88.7     $ 71.2       24.6 %     15.4 %
Fee-based income
     3.0       2.3       29.0       19.7  
Gross profit
     12.4       10.3       19.9       10.9  
SG&A expenses excluding restructuring charges
     11.4       11.4       0.1          
Restructuring charges
     —       0.1       (100.0 )        
Total SG&A expenses
     11.4       11.5       (0.7 )     (7.8 )
Earnings from operations
     1.0       (1.2 )   NM          
Earnings from operations excluding restructuring charges
     1.0       (1.1 )   NM          
 
                                
Gross profit rate
     14.0 %     14.5 %     (0.5 ) pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     12.8       16.0       (3.2 )        
% of gross profit
     92.0       110.3       (18.3 )        
Operating margin (excluding restructuring charges)
     1.1       (1.5 )     2.6          
 
                                
APAC PT
                                
Revenue from services (including fee-based income)
   $ 8.2     $ 6.5       27.3 %     18.8 %
Fee-based income
     2.9       1.0       179.5       164.0  
Gross profit
     3.8       2.0       89.9       78.6  
Total SG&A expenses
     4.3       2.3       87.9       77.6  
Earnings from operations
     (0.5 )     (0.3 )     (77.2 )        
 
                                
Gross profit rate
     45.2 %     30.3 %     14.9   pts.        
Expense rates:
                                
% of revenue
     53.0       35.9       17.1          
% of gross profit
     117.1       118.4       (1.3 )        
Operating margin
     (7.7 )     (5.6 )     (2.1 )        

 

6

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
OCG
                                
Revenue from services (including fee-based income)
   $ 64.1     $ 52.9       21.2 %     21.3 %
Fee-based income
     6.6       5.8       13.6       13.5  
Gross profit
     15.4       13.7       11.7       12.0  
SG&A expenses excluding restructuring charges
     19.6       17.3       12.9          
Restructuring charges
     —       0.1       (100.0 )        
Total SG&A expenses
     19.6       17.4       12.2       13.0  
Earnings from operations
     (4.2 )     (3.7 )     (14.4 )        
Earnings from operations excluding restructuring charges
     (4.2 )     (3.6 )     (17.8 )        
 
                                
Gross profit rate
     24.0 %     26.1 %     (2.1 ) pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     30.5       32.8       (2.3 )        
% of gross profit
     127.2       125.8       1.4          
Operating margin (excluding restructuring charges)
     (6.5 )     (6.7 )     0.2          
 
                                
Corporate Expense
                                
SG&A expenses excluding restructuring charges
   $ 21.2     $ 20.2       4.4 %        
Restructuring charges
     2.8       0.7       301.3          
Total SG&A expenses
     24.0       20.9       14.4          
Asset impairments
     —       0.5       (100.0 )        
 
                                
Consolidated Total (net of intersegment activity)
                                
Revenue from services (including fee-based income)
   $ 1,284.7     $ 1,049.2       22.4 %     22.7 %
Fee-based income
     24.9       20.5       20.6       19.9  
Gross profit
     207.2       166.2       24.7       25.1  
SG&A expenses excluding restructuring charges
     190.1       189.1       0.5          
Restructuring charges
     2.8       4.6       (38.2 )        
Total SG&A expenses
     192.9       193.7       (0.4 )     (0.1 )
Asset impairments
     —       0.5       (100.0 )        
Earnings from operations
     14.3       (28.0 )   NM          
Earnings from operations excluding restructuring charges
     17.1       (23.4 )   NM          
 
                                
Gross profit rate
     16.1 %     15.8 %     0.3   pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     14.8       18.0       (3.2 )        
% of gross profit
     91.7       113.8       (22.1 )        
Operating margin (excluding restructuring charges)
     1.3       (2.2 )     3.5          

 

7

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
Americas Commercial
                                
Revenue from services (including fee-based income)
   $ 1,781.9     $ 1,422.9       25.2 %     23.8 %
Fee-based income
     6.5       5.1       26.4       23.2  
Gross profit
     256.5       210.9       21.6       20.3  
SG&A expenses excluding restructuring charges
     201.9       205.3       (1.7 )        
Restructuring charges
     0.3       3.7       (90.3 )        
Total SG&A expenses
     202.2       209.0       (3.3 )     (4.3 )
Earnings from operations
     54.3       1.9     NM          
Earnings from operations excluding restructuring charges
     54.6       5.6     NM          
 
                                
Gross profit rate
     14.4 %     14.8 %     (0.4 ) pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     11.3       14.4       (3.1 )        
% of gross profit
     78.7       97.3       (18.6 )        
Operating margin (excluding restructuring charges)
     3.1       0.4       2.7          
 
                                
Americas PT
                                
Revenue from services (including fee-based income)
   $ 659.1     $ 584.3       12.8 %     12.6 %
Fee-based income
     6.7       7.2       (7.3 )     (7.7 )
Gross profit
     103.2       93.2       10.9       10.6  
SG&A expenses excluding restructuring charges
     69.2       76.2       (9.1 )        
Restructuring charges
     —       0.2       (100.0 )        
Total SG&A expenses
     69.2       76.4       (9.4 )     (9.6 )
Earnings from operations
     34.0       16.8       103.2          
Earnings from operations excluding restructuring charges
     34.0       17.0       100.3          
 
                                
Gross profit rate
     15.7 %     15.9 %     (0.2 ) pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     10.5       13.0       (2.5 )        
% of gross profit
     67.0       81.7       (14.7 )        
Operating margin (excluding restructuring charges)
     5.2       2.9       2.3          
 
                                
EMEA Commercial
                                
Revenue from services (including fee-based income)
   $ 642.8     $ 656.3       (2.1 )%     (1.5) %
Fee-based income
     14.4       12.3       18.0       16.4  
Gross profit
     103.8       102.8       1.0       1.6  
SG&A expenses excluding restructuring charges
     95.7       115.1       (16.8 )        
Restructuring charges
     2.7       10.7       (75.1 )        
Total SG&A expenses
     98.4       125.8       (21.8 )     (21.8 )
Asset impairments
     1.5       —     NM          
Earnings from operations
     3.9       (23.0 )   NM          
Earnings from operations excluding restructuring charges
     6.6       (12.3 )   NM          
 
                                
Gross profit rate
     16.1 %     15.7 %     0.4   pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     14.9       17.5       (2.6 )        
% of gross profit
     92.2       111.9       (19.7 )        
Operating margin (excluding restructuring charges)
     1.0       (1.9 )     2.9          
 
                                

 

8

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
EMEA PT
                                
Revenue from services (including fee-based income)
   $ 106.4     $ 102.3       4.0 %     5.5 %
Fee-based income
     11.2       12.1       (7.1 )     (8.3 )
Gross profit
     28.3       28.0       1.5       2.0  
Total SG&A expenses
     27.6       30.0       (8.1 )     (8.0 )
Earnings from operations
     0.7       (2.0 )   NM          
 
                                
Gross profit rate
     26.7 %     27.4 %   (0.7 ) pts.        
Expense rates:
                                
% of revenue
     25.9       29.4       (3.5 )        
% of gross profit
     97.1       107.2       (10.1 )        
Operating margin
     0.8       (2.0 )     2.8          
 
                                
APAC Commercial
                                
Revenue from services (including fee-based income)
   $ 253.3     $ 201.9       25.4 %     12.1 %
Fee-based income
     8.5       6.8       23.2       10.4  
Gross profit
     35.5       29.5       20.4       7.0  
SG&A expenses excluding restructuring charges
     32.0       33.0       (3.0 )        
Restructuring charges
     0.5       0.2       283.6          
Total SG&A expenses
     32.5       33.2       (1.8 )     (12.7 )
Earnings from operations
     3.0       (3.7 )   NM          
Earnings from operations excluding restructuring charges
     3.5       (3.5 )   NM          
 
                                
Gross profit rate
     14.0 %     14.6 %   (0.6 ) pts.      
Expense rates (excluding restructuring charges):
                                
% of revenue
     12.6       16.3       (3.7 )        
% of gross profit
     90.3       112.0       (21.7 )        
Operating margin (excluding restructuring charges)
     1.4       (1.8 )     3.2          
 
                                
APAC PT
                                
Revenue from services (including fee-based income)
   $ 23.6     $ 18.2       29.9 %     17.1 %
Fee-based income
     7.6       2.8       166.0       150.1  
Gross profit
     10.1       5.6       79.3       65.5  
Total SG&A expenses
     12.0       6.6       81.9       67.7  
Earnings from operations
     (1.9 )     (1.0 )     (96.8 )        
 
                                
Gross profit rate
     42.5 %     30.8 %   11.7  pts.        
Expense rates:
                                
% of revenue
     50.8       36.3       14.5          
% of gross profit
     119.6       117.8       1.8          
Operating margin
     (8.3 )     (5.5 )     (2.8 )        

 

9

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
OCG
                                
Revenue from services (including fee-based income)
   $ 179.8     $ 151.7       18.5 %     18.1 %
Fee-based income
     18.3       18.4       (0.5 )     (2.0 )
Gross profit
     42.4       44.2       (4.4 )     (5.1 )
SG&A expenses excluding restructuring charges
     56.8       51.7       9.8          
Restructuring charges
     0.1       0.6       (87.6 )        
Total SG&A expenses
     56.9       52.3       8.7       8.0  
Earnings from operations
     (14.5 )     (8.1 )     (80.3 )        
Earnings from operations excluding restructuring charges
     (14.4 )     (7.5 )     (93.7 )        
 
                                
Gross profit rate
     23.5 %     29.2 %   (5.7 ) pts.      
Expense rates (excluding restructuring charges):
                                
% of revenue
     31.6       34.1       (2.5 )        
% of gross profit
     134.3       116.9       17.4          
Operating margin (excluding restructuring charges)
     (8.1 )     (4.9 )     (3.2 )        
 
                                
Corporate Expense
                                
SG&A expenses excluding restructuring charges
   $ 54.7     $ 59.8       (8.5 )%        
Restructuring charges
     3.6       1.1       225.2          
Total SG&A expenses
     58.3       60.9       (4.3 )        
Asset impairments
     —       53.1       (100.0 )        
 
                                
Consolidated Total (excluding intersegment activity)
                                
Revenue from services (including fee-based income)
   $ 3,624.5     $ 3,120.7       16.1 %     14.6 %
Fee-based income
     73.0       64.6       12.8       9.5  
Gross profit
     578.1       513.4       12.6       11.2  
SG&A expenses excluding restructuring charges
     548.2       576.9       (5.0 )        
Restructuring charges
     7.2       16.5       (56.1 )        
Total SG&A expenses
     555.4       593.4       (6.4 )     (7.6 )
Asset impairments
     1.5       53.1       (97.1 )        
Earnings from operations
     21.2       (133.1 )   NM          
Earnings from operations excluding restructuring charges
     28.4       (116.6 )   NM          
 
                                
Gross profit rate
     16.0 %     16.5 %   (0.5 ) pts.        
Expense rates (excluding restructuring charges):
                                
% of revenue
     15.1       18.5       (3.4 )        
% of gross profit
     94.8       112.4       (17.6 )        
Operating margin (excluding restructuring charges)
     0.8       (3.7 )     4.5          

 

10

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
(UNAUDITED)
(In millions of dollars)
                 
    2010     2009  
Cash flows from operating activities
                
Net earnings (loss)
   $ 11.5     $ (96.3 )
Noncash adjustments:
                
Impairment of assets
     1.5       53.1  
Depreciation and amortization
     26.5       30.9  
Provision for bad debts
     1.0       2.7  
Stock-based compensation
     2.2       3.6  
Other, net
     1.0       (4.0 )
Changes in operating assets and liabilities
     (43.6 )     32.9  
 
            
 
                
Net cash from operating activities
     0.1       22.9  
 
            
 
                
Cash flows from investing activities
                
Capital expenditures
     (5.9 )     (7.9 )
Acquisition of companies, net of cash received
     —       (7.5 )
Other investing activities
     0.5       (2.9 )
 
            
 
                
Net cash from investing activities
     (5.4 )     (18.3 )
 
            
 
                
Cash flows from financing activities
                
Net change in revolving line of credit
     (12.8 )     (11.9 )
Repayment of debt
     (7.3 )     (22.9 )
Sale of stock and other financing activities
     24.3       (0.7 )
 
            
 
                
Net cash from financing activities
     4.2       (35.5 )
 
            
 
                
Effect of exchange rates on cash and equivalents
     (0.6 )     3.6  
 
            
 
                
Net change in cash and equivalents
     (1.7 )     (27.3 )
Cash and equivalents at beginning of period
     88.9       118.3  
 
            
 
                
Cash and equivalents at end of period
   $ 87.2     $ 91.0  
 
            

 

11

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
                         
    October 3,     January 3,     September 27,  
    2010     2010     2009  
Current Assets
                        
Cash and equivalents
   $ 87.2     $ 88.9     $ 91.0  
Trade accounts receivable, less allowances of $13.0, $15.0 and $15.7, respectively
     831.3       717.9       707.3  
Prepaid expenses and other current assets
     54.7       70.6       54.3  
Deferred taxes
     25.5       21.0       25.7  
 
                  
 
                        
Total current assets
     998.7       898.4       878.3  
 
                        
Property and Equipment, Net
     107.2       127.1       132.5  
 
                        
Noncurrent Deferred Taxes
     80.4       77.5       66.0  
 
                        
Goodwill, Net
     67.3       67.3       67.3  
 
                        
Other Assets
     135.7       131.4       134.6  
 
                        
 
                  
Total Assets
   $ 1,389.3     $ 1,301.7     $ 1,278.7  
 
                  
 
                        
Current Liabilities
                        
Short-term borrowings and current portion of long-term debt
   $ 68.3     $ 79.6     $ 15.3  
Accounts payable and accrued liabilities
     167.6       182.6       201.9  
Accrued payroll and related taxes
     273.0       208.3       229.6  
Accrued insurance
     20.3       19.7       25.0  
Income and other taxes
     56.6       47.4       29.8  
 
                  
 
                        
Total current liabilities
     585.8       537.6       501.6  
 
                        
Noncurrent Liabilities
                        
Long-term debt
     52.7       57.5       66.0  
Accrued insurance
     48.2       47.3       43.9  
Accrued retirement benefits
     79.0       76.9       74.0  
Other long-term liabilities
     15.3       16.0       14.2  
 
                  
 
                        
Total noncurrent liabilities
     195.2       197.7       198.1  
 
                        
Stockholders’ Equity
                        
Common stock
     40.1       40.1       40.1  
Treasury stock
     (71.2 )     (107.2 )     (107.6 )
Paid-in capital
     27.5       36.9       35.9  
Earnings invested in the business
     583.0       571.5       579.7  
Accumulated other comprehensive income
     28.9       25.1       30.9  
 
                  
 
                        
Total stockholders’ equity
     608.3       566.4       579.0  
 
                  
 
                        
Total Liabilities and Stockholders’ Equity
   $ 1,389.3     $ 1,301.7     $ 1,278.7  
 
                  
 
                        
STATISTICS:
                        
Working Capital
   $ 412.9     $ 360.8     $ 376.7  
Current Ratio
     1.7       1.7       1.8  
Debt-to-capital %
     16.6 %     19.5 %     12.3 %
Global Days Sales Outstanding
     52       51       52  

 

12

 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                                 
    Third Quarter (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2010     2009     US$     Currency  
Americas
                                
United States
   $ 811.3     $ 623.1       30.2 %     30.2 %
Canada
     56.7       48.4       17.3       10.8  
Mexico
     25.2       16.7       50.7       45.4  
Puerto Rico
     21.7       12.6       71.1       71.1  
 
                            
Total Americas
     914.9       700.8       30.5       30.0  
 
                                
EMEA
                                
France
     71.3       69.4       2.8       13.3  
Switzerland
     47.9       38.8       23.8       19.7  
United Kingdom
     33.8       50.8       (33.6 )     (29.7 )
Russia
     26.8       16.5       61.8       58.0  
Portugal
     21.3       15.8       34.5       48.4  
Germany
     18.1       16.6       9.1       20.3  
Norway
     15.1       16.2       (6.8 )     (6.9 )
Italy
     14.7       17.4       (15.5 )     (6.9 )
Other
     20.8       26.9       (22.7 )     (15.6 )
 
                            
Total EMEA
     269.8       268.4       0.5       5.9  
 
                                
APAC
                                
Australia
     31.9       25.0       27.7       16.7  
Singapore
     21.7       16.4       31.7       23.7  
Malaysia
     16.5       12.3       34.5       20.3  
India
     15.5       9.9       56.6       50.2  
Other
     14.4       16.4       (11.6 )     (17.1 )
 
                            
Total APAC
     100.0       80.0       25.1       15.9  
 
                                
Total Kelly Services, Inc.
   $ 1,284.7     $ 1,049.2       22.4 %     22.7 %
 
                            

 

13

 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                                 
    September Year to Date (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2010     2009     US$     Currency  
Americas
                                
United States
   $ 2,292.3     $ 1,901.2       20.6 %     20.6 %
Canada
     162.8       131.9       23.5       9.8  
Mexico
     66.1       47.5       39.1       30.2  
Puerto Rico
     55.6       42.9       29.4       29.4  
 
                            
Total Americas
     2,576.8       2,123.5       21.3       20.3  
 
                                
EMEA
                                
France
     206.2       194.0       6.3       10.7  
Switzerland
     120.0       99.8       20.4       16.3  
United Kingdom
     105.6       163.6       (35.5 )     (35.3 )
Russia
     75.5       45.5       65.8       55.4  
Portugal
     58.8       40.1       46.7       53.5  
Germany
     50.6       47.5       6.7       11.3  
Italy
     46.1       53.9       (14.5 )     (11.2 )
Norway
     43.1       44.4       (3.0 )     (8.8 )
Other
     56.9       82.2       (30.8 )     (29.3 )
 
                            
Total EMEA
     762.8       771.0       (1.1 )     (0.3 )
 
                                
APAC
                                
Australia
     88.2       67.9       29.9       9.2  
Singapore
     60.2       46.5       29.3       21.3  
Malaysia
     47.4       36.4       30.2       18.6  
India
     44.4       24.7       79.7       69.2  
Other
     44.7       50.7       (11.7 )     (22.4 )
 
                            
Total APAC
     284.9       226.2       25.9       12.7  
 
                                
Total Kelly Services, Inc.
   $ 3,624.5     $ 3,120.7       16.1 %     14.6 %
 
                            

 

14

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
                                 
    Third Quarter     September Year to Date  
    2010     2009     2010     2009  
 
                                
Pretax earnings (loss) from operations
   $ 14.3     $ (28.0 )   $ 21.2     $ (133.1 )
 
                                
Restructuring charges (Note 1)
     2.8       4.6       7.2       16.5  
Asset impairments (Note 2)
     —       0.5       1.5       53.1  
 
                        
 
                                
Earnings (loss) from operations excluding restructuring and asset impairment charges
   $ 17.1     $ (22.9 )   $ 29.9     $ (63.5 )
 
                        
                                 
    Third Quarter  
    2010     2009  
    Amount     Per Share     Amount     Per Share  
 
                                
Earnings (loss) from continuing operations, net of taxes
   $ 9.6     $ 0.26     $ (14.8 )   $ (0.43 )
 
                                
Restructuring charges, net of taxes (Note 1)
     1.8       0.05       3.5       0.10  
Asset impairments, net of taxes (Note 2)
     —       —       0.8       0.02  
 
                            
 
                                
Earnings (loss) from continuing operations excluding restructuring and asset impairment charges, net of taxes
   $ 11.4     $ 0.31     $ (10.5 )   $ (0.30 )
 
                        
                                 
    September Year to Date  
    2010     2009  
    Amount     Per Share     Amount     Per Share  
 
                                
Earnings (loss) from continuing operations, net of taxes
   $ 11.5     $ 0.32     $ (96.9 )   $ (2.78 )
 
                                
Restructuring charges, net of taxes (Note 1)
     5.4       0.15       13.9       0.40  
Asset impairments, net of taxes (Note 2)
     1.2       0.03       50.0       1.43  
 
                            
 
                                
Earnings (loss) from continuing operations excluding restructuring and asset impairment charges, net of taxes
   $ 18.1     $ 0.50     $ (33.0 )   $ (0.95 )
 
                        

 

15

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring and impairment charges is useful to understand the Company’s fiscal 2010 financial performance and increases comparability. Specifically, Management believes that excluding these items 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) In 2010, restructuring costs relate primarily to severance and lease termination costs for branches in the EMEA and APAC Commercial segments that were in the process of closure at the end of 2009, as well as severance costs related to the corporate headquarters. In 2009, restructuring costs relate primarily to global severance, lease terminations, asset write-offs and other miscellaneous costs incurred in connection with the reduction in the number of permanent employees and the consolidation, sale or closure of branch locations.
(2) In 2010, the asset impairment charges relate to the write-off of incomplete software projects in Europe. In 2009, the asset impairment charges included 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 and Europe.

 

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