EX-99.1 2 dex991.htm PRESS RELEASE Press Release

5

 

Exhibit 99.1

LOGO

KELLY SERVICES REPORTS 4th QUARTER AND FULL YEAR 2008 RESULTS

TROY, MI (January 22, 2009) – Kelly Services, Inc., a world leader in human resources solutions, today announced results for the fourth quarter and year ended December 28, 2008.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2008 totaled $1.3 billion, a 13% decrease compared to the corresponding quarter in 2007. Revenue for the full year totaled $5.5 billion, a 3% decrease compared to 2007.

Losses from operations for the fourth quarter of 2008 totaled $83.6 million, compared to earnings from operations of $26.5 million reported for the fourth quarter of 2007. Included in the results from operations for the fourth quarter 2008 are impairment charges totaling $80.5 million and $1.5 million of restructuring costs relating to the Company’s UK operations. Earnings from operations in the fourth quarter 2007 included $1.3 million of restructuring costs related primarily to our Americas Commercial operations. Excluding the impairment and restructuring charges, the loss from operations was $1.6 million for the fourth quarter of 2008, compared to earnings from operations of $27.9 million in the fourth quarter of 2007.

Losses from operations for the full year of 2008 totaled $70.3 million, compared to earnings from operations of $80.1 million in 2007. The results for the full year 2008 include the $80.5 million of impairment charges, the $1.5 million of restructuring in the UK as well as a $22.5 million third quarter charge related to several litigation matters. Included in earnings from operations for 2007 are $8.9 million of costs related to the restructuring of the Americas Commercial and UK operations.

Diluted losses per share from continuing operations in the fourth quarter of 2008 were $2.55, compared to fourth quarter 2007 earnings of $0.52 per share. The impairment charges totaled $2.22 per share and the UK restructuring charges totaled $0.04 per share in 2008. Fourth quarter 2007 diluted earnings include the $0.02 per share cost of the Americas Commercial restructuring.

Diluted losses per share from continuing operations for the full year of 2008 were $2.35, compared to 2007 earnings per share of $1.47. The impairment charges totaled $2.22, the UK restructuring charges totaled $0.04 and the litigation charges totaled $0.40 per diluted share from continuing operations in 2008. The Americas Commercial and UK restructuring costs totaled $0.21 per share in 2007.

The fourth quarter impairment charges include adjustments to the value of goodwill for the Company’s EMEA Commercial segment, the Company’s investment in Temp Holdings Co. Ltd. (formerly Tempstaff), a Japanese staffing company, and assets related to operations in the UK. The UK restructuring charge is part of a plan to further consolidate and close branches in the UK during 2009.

Commenting on the fourth quarter results, Camden called the Company’s loss disappointing, but not unexpected.

“This year, we’ve witnessed a widespread economic slowdown as anxiety over the global financial crisis intensified. With the loss of 2.6 million jobs in the U.S. alone, it comes as no surprise that demand for temporary staffing has declined dramatically – here, and throughout the world.”

Camden emphasized that Kelly is making prudent decisions to reduce costs and be responsive to the economic times. He added that the Company continues to execute a strategic plan aimed at building long-term value for its stakeholders.

“We remain focused on diversifying globally, expanding our professional and technical staffing, and growing our outsourcing and consulting services,” said Camden.

6

 

In conjunction with its fourth quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 22, 2009 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

 

U.S.    1 888 428-4480
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 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 more than 750,000 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:

James Polehna

(248) 244-4586

james_polehna@kellyservices.com

   

MEDIA CONTACT:

Judith Clark

(248) 244-5362

judith_clark@kellyservices.com

7

 

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED DECEMBER 28, 2008 AND DECEMBER 30, 2007

(UNAUDITED)

(In thousands of dollars except per share data)

 

     2008     2007     Change     % Change  

Revenue from services

    $ 1,279,091     $ 1,475,759     $ (196,668 )   (13.3 )%

Cost of services

      1,054,445       1,210,323       (155,878 )   (12.9 )
                              

Gross profit

      224,646       265,436       (40,790 )   (15.4 )

Selling, general and administrative expenses

      227,734       238,895       (11,161 )   (4.7 )

Asset impairments

      80,533       —         80,533     N/A  
                              

(Loss) earnings from operations

      (83,621 )     26,541       (110,162 )   (415.1 )

Other (expense) income, net

      (3,426 )     1,021       (4,447 )   (435.6 )
                              

(Loss) earnings from continuing operations before taxes

      (87,047 )     27,562       (114,609 )   (415.8 )

Income taxes

      1,536       9,089       (7,553 )   (83.1 )
                              

(Loss) earnings from continuing operations

      (88,583 )     18,473       (107,056 )   (579.5 )

(Loss) earnings from discontinued operations, net of tax

      (186 )     158       (344 )   (217.7 )
                              

Net (loss) earnings

    $ (88,769 )   $ 18,631     $ (107,400 )   (576.5 )%
                              

Basic (loss) earnings per share

         

(Loss) earnings from continuing operations

    $ (2.55 )   $ 0.52     $ (3.07 )   (590.4 )%

(Loss) earnings from discontinued operations

      (0.01 )     —         (0.01 )   N/A  
                              

Net (loss) earnings

    $ (2.55 )   $ 0.52     $ (3.07 )   (590.4 )%
                              

Diluted (loss) earnings per share

         

(Loss) earnings from continuing operations

    $ (2.55 )   $ 0.52     $ (3.07 )   (590.4 )%

(Loss) earnings from discontinued operations

      (0.01 )     —         (0.01 )   N/A  
                              

Net (loss) earnings

    $ (2.55 )   $ 0.52     $ (3.07 )   (590.4 )%
                              

 

STATISTICS:

 

         

Gross profit rate

      17.6 %     18.0 %     (0.4 ) pts.  

Selling, general and administrative expenses:

         

% of revenue

      17.8       16.2       1.6    

% of gross profit

      101.4       90.0       11.4    

% Return - (Loss) earnings from operations

      (6.5 )     1.8       (8.3 )  

(Loss) earnings from continuing operations before taxes

      (6.8 )     1.9       (8.7 )  

(Loss) earnings from continuing operations

      (6.9 )     1.3       (8.2 )  

Net (loss) earnings

      (6.9 )     1.3       (8.2 )  

Effective income tax rate

      (1.8 )%     33.0 %     (34.8 ) pts.  

Average number of shares outstanding (thousands):

         

Basic

      34,764       35,759      

Diluted

      34,764       35,858      

8

 

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE 52 WEEKS ENDED DECEMBER 28, 2008 AND DECEMBER 30, 2007

(In thousands of dollars except per share data)

 

     2008     2007     Change     % Change  

Revenue from services

    $ 5,517,290     $ 5,667,589     $ (150,299 )   (2.7 )%

Cost of services

      4,539,639       4,678,500       (138,861 )   (3.0 )
                              

Gross profit

      977,651       989,089       (11,438 )   (1.2 )

Selling, general and administrative expenses

      967,389       909,009       58,380     6.4  

Asset impairments

      80,533       —         80,533     N/A  
                              

(Loss) earnings from operations

      (70,271 )     80,080       (150,351 )   (187.8 )

Other (expense) income, net

      (3,452 )     3,211       (6,663 )   (207.5 )
                              

(Loss) earnings from continuing operations before taxes

      (73,723 )     83,291       (157,014 )   (188.5 )

Income taxes

      7,992       29,567       (21,575 )   (73.0 )
                              

(Loss) earnings from continuing operations

      (81,715 )     53,724       (135,439 )   (252.1 )

(Loss) earnings from discontinued operations, net of tax

      (524 )     7,292       (7,816 )   (107.2 )
                              

Net (loss) earnings

    $ (82,239 )   $ 61,016     $ (143,255 )   (234.8 )%
                              

Basic (loss) earnings per share

         

(Loss) earnings from continuing operations

    $ (2.35 )   $ 1.48     $ (3.83 )   (258.8 )%

(Loss) earnings from discontinued operations

      (0.02 )     0.20       (0.22 )   (110.0 )
                              

Net (loss) earnings

    $ (2.37 )   $ 1.68     $ (4.05 )   (241.1 )%
                              

Diluted (loss) earnings per share

         

(Loss) earnings from continuing operations

    $ (2.35 )   $ 1.47     $ (3.82 )   (259.9 )%

(Loss) earnings from discontinued operations

      (0.02 )     0.20       (0.22 )   (110.0 )
                              

Net (loss) earnings

    $ (2.37 )   $ 1.67     $ (4.04 )   (241.9 )%
                              
STATISTICS:         

Gross profit rate

      17.7 %     17.5 %     0.2  pts.  

Selling, general and administrative expenses:

         

% of revenue

      17.5       16.0       1.5    

% of gross profit

      99.0       91.9       7.1    

% Return - (Loss) earnings from operations

      (1.3 )     1.4       (2.7 )  

(Loss) earnings from continuing operations before taxes

      (1.3 )     1.5       (2.8 )  

(Loss) earnings from continuing operations

      (1.5 )     0.9       (2.4 )  

Net (loss) earnings

      (1.5 )     1.1       (2.6 )  

Effective income tax rate

      (10.8 )%     35.5 %     (46.3 ) pts.  

Average number of shares outstanding (thousands):

         

Basic

      34,760       36,357      

Diluted

      34,760       36,495      

9

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(UNAUDITED)

(In millions of dollars)

 

     Fourth Quarter  
     2008     2007     Change     Constant
Currency
Change		  

Americas Commercial

         

Revenue from services (including fee-based income)

    $ 591.9     $ 695.8     (14.9 )%   (12.9 )%

Fee-based income

      2.7       4.9     (42.2 )   (37.8 )

Earnings from operations

      16.3       26.5     (38.8 )  

Earnings from operations (excluding restructuring charges)

      16.3       27.9     (42.0 )  

Gross profit rate

      16.3 %     16.1 %   0.2  pts.  

Expense rates:

         

% of revenue

      13.5       12.3     1.2    

% of gross profit

      83.2       76.4     6.8    

Operating margin

      2.7       3.8     (1.1 )  

Americas PT

         

Revenue from services (including fee-based income)

    $ 212.8     $ 229.5     (7.3 ) %   (7.1 )%

Fee-based income

      3.6       5.0     (27.5 )   (27.1 )

Earnings from operations

      9.5       13.0     (26.6 )  

Gross profit rate

      17.5 %     18.1 %   (0.6 ) pts.  

Expense rates:

         

% of revenue

      13.0       12.5     0.5    

% of gross profit

      74.4       68.9     5.5    

Operating margin

      4.5       5.6     (1.1 )  

EMEA Commercial

         

Revenue from services (including fee-based income)

    $ 283.2     $ 340.8     (16.9 ) %   (5.0 )%

Fee-based income

      7.5       10.0     (25.0 )   (14.7 )

Earnings from operations

      (6.8 )     6.1     (210.4 )  

Earnings from operations (excluding restructuring charges)

      (5.3 )     6.0     (187.3 )  

Gross profit rate

      16.8 %     18.6 %   (1.8 ) pts.  

Expense rates:

         

% of revenue

      19.2       16.8     2.4    

% of gross profit

      114.2       90.4     23.8    

Operating margin

      (2.4 )     1.8     (4.2 )  

EMEA PT

         

Revenue from services (including fee-based income)

    $ 38.4     $ 43.1     (10.8 )%   1.6 %

Fee-based income

      5.5       6.4     (14.0 )   (3.7 )

Earnings from operations

      (0.5 )     0.6     (189.0 )  

Gross profit rate

      29.1 %     28.9 %   0.2  pts.  

Expense rates:

         

% of revenue

      30.5       27.6     2.9    

% of gross profit

      104.7       95.2     9.5    

Operating margin

      (1.4 )     1.4     (2.8 )  

10

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT (continued)

(UNAUDITED)

(In millions of dollars)

 

     Fourth Quarter  
     2008     2007     Change     Constant
Currency
Change		  

APAC Commercial

         

Revenue from services (including fee-based income)

    $ 73.5     $ 89.3     (17.7 )%   (5.5 )%

Fee-based income

      3.1       4.0     (23.4 )   (13.2 )

Earnings from operations

      (1.1 )     (0.1 )   (869.7 )  

Gross profit rate

      15.5 %     16.8 %   (1.3 ) pts.  

Expense rates:

         

% of revenue

      16.9       16.9     0.0    

% of gross profit

      109.3       100.7     8.6    

Operating margin

      (1.4 )     (0.1 )   (1.3 )  

APAC PT

         

Revenue from services (including fee-based income)

    $ 7.2     $ 8.2     (12.2 )%   (2.4 )%

Fee-based income

      0.8       1.3     (44.8 )   (37.7 )

Earnings from operations

      (0.3 )     0.4     (165.1 )  

Gross profit rate

      26.4 %     31.9 %   (5.5 ) pts.  

Expense rates:

         

% of revenue

      29.9       27.2     2.7    

% of gross profit

      113.1       85.3     27.8    

Operating margin

      (3.5 )     4.7     (8.2 )  

OCG

         

Revenue from services (including fee-based income)

    $ 72.1     $ 69.0     4.4 %   6.3 %

Fee-based income

      7.2       5.0     43.9     50.7  

Earnings from operations

      0.6       5.0     (86.7 )  

Gross profit rate

      26.6 %     26.2 %   0.4  pts.  

Expense rates:

         

% of revenue

      25.6       19.0     6.6    

% of gross profit

      96.5       72.4     24.1    

Operating margin

      0.9       7.2     (6.3 )  

Corporate Expense

    $ (20.9 )   $ (24.9 )   15.9 %  

11

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(UNAUDITED)

(In millions of dollars)

 

     December Year to Date  
     2008     2007     Change     Constant
Currency
Change		  

Americas Commercial

         

Revenue from services (including fee-based income)

    $ 2,504.3     $ 2,759.4     (9.2 )%   (9.3 )%

Fee-based income

      15.7       18.9     (16.5 )   (16.7 )

Earnings from operations

      70.0       95.6     (26.8 )  

Earnings from operations (excluding restructuring charges)

      70.0       98.5     (29.0 )  

Gross profit rate

      15.9 %     15.9 %   0.0  pts.  

Expense rates:

         

% of revenue

      13.1       12.4     0.7    

% of gross profit

      82.4       78.2     4.2    

Operating margin

      2.8       3.5     (0.7 )  

Americas PT

         

Revenue from services (including fee-based income)

    $ 911.6     $ 929.1     (1.9 )%   (1.9 )%

Fee-based income

      19.4       20.6     (5.8 )   (6.0 )

Earnings from operations

      47.7       53.5     (10.8 )  

Gross profit rate

      17.6 %     17.8 %   (0.2 ) pts.  

Expense rates:

         

% of revenue

      12.4       12.0     0.4    

% of gross profit

      70.3       67.6     2.7    

Operating margin

      5.2       5.8     (0.6 )  

EMEA Commercial

         

Revenue from services (including fee-based income)

    $ 1,310.4     $ 1,292.4     1.4 %   (1.6 )%

Fee-based income

      39.5       38.2     3.5     0.0  

Earnings from operations

      (3.0 )     8.9     (133.5 )  

Earnings from operations (excluding restructuring charges)

      (1.5 )     14.8     (109.9 )  

Gross profit rate

      17.4 %     17.7 %   (0.3 ) pts.  

Expense rates:

         

% of revenue

      17.6       17.0     0.6    

% of gross profit

      101.3       96.1     5.2    

Operating margin

      (0.2 )     0.7     (0.9 )  

EMEA PT

         

Revenue from services (including fee-based income)

    $ 172.5     $ 158.8     8.7 %   4.6 %

Fee-based income

      26.8       21.9     22.4     15.8  

Earnings from operations

      2.3       2.4     (5.7 )  

Gross profit rate

      29.7 %     28.2 %   1.5  pts.  

Expense rates:

         

% of revenue

      28.3       26.7     1.6    

% of gross profit

      95.5       94.6     0.9    

Operating margin

      1.3       1.5     (0.2 )  

12

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT (continued)

(UNAUDITED)

(In millions of dollars)

 

     December Year to Date  
     2008     2007     Change     Constant
Currency
Change		  

APAC Commercial

         

Revenue from services (including fee-based income)

    $ 336.0     $ 310.6     8.2 %   5.2 %

Fee-based income

      17.0       15.0     13.2     9.1  

Earnings from operations

      (0.3 )     3.2     (109.1 )  

Gross profit rate

      16.8 %     17.1 %   (0.3 ) pts.  

Expense rates:

         

% of revenue

      16.8       16.0     0.8    

% of gross profit

      100.5       93.9     6.6    

Operating margin

      (0.1 )     1.0     (1.1 )  

APAC PT

         

Revenue from services (including fee-based income)

    $ 34.3     $ 26.7     28.3 %   22.4 %

Fee-based income

      5.1       5.0     1.0     (4.3 )

Earnings from operations

      (0.5 )     0.1     (491.6 )  

Gross profit rate

      29.8 %     33.0 %   (3.2 ) pts.  

Expense rates:

         

% of revenue

      31.2       32.6     (1.4 )  

% of gross profit

      104.6       98.6     6.0    

Operating margin

      (1.4 )     0.4     (1.8 )  

OCG

         

Revenue from services (including fee-based income)

    $ 248.2     $ 190.6     30.2 %   29.3 %

Fee-based income

      27.8       16.7     66.6     65.1  

Earnings from operations

      3.4       8.0     (57.2 )  

Gross profit rate

      29.7 %     26.4 %   3.3  pts.  

Expense rates:

         

% of revenue

      28.3       22.2     6.1    

% of gross profit

      95.3       84.0     11.3    

Operating margin

      1.4       4.2     (2.8 )  

Corporate Expense

    $ (109.4 )   $ (91.7 )   (19.3 )%  

13

 

KELLY SERVICES, INC. AND SUBSIDIARIES

SUMMARY OF DISCONTINUED OPERATIONS

(UNAUDITED)

(In thousands of dollars)

 

     Fourth Quarter     December Year to Date
     2008     2007     2008     2007

Revenue from services

    $ —       $ —       $ —       $ 14,777

Operating (loss) income from discontinued operations

    $ (302 )   $ (119 )   $ (849 )   $ 1,454

Less: Income taxes

      (116 )     (277 )     (325 )     328
                              

(Loss) earnings from discontinued operations, net of tax

      (186 )     158       (524 )     1,126
                              

Gain on sale of discontinued operations

      —         —         —         10,153

Less: Income taxes

      —         —         —         3,987
                              

Gain on sale of discontinued operations, net of tax

      —         —         —         6,166
                              

Discontinued operations, net of tax

    $ (186 )   $ 158     $ (524 )   $ 7,292
                              

Effective March 31, 2007, the Company sold Kelly Home Care (“KHC”), a wholly owned subsidiary.

Effective December 31, 2006, the Company sold Kelly Staff Leasing (“KSL”), a wholly owned subsidiary.

The operating results for KHC and KSL, as well as the gain on the sale of KHC, have been excluded from earnings from continuing operations. This schedule provides information on KHC’s and KSL’s results from operations for the fourth quarter of 2008 and 2007 and December year to date 2008 and 2007, as well as the gain on the sale of KHC, all of which are included as discontinued operations on the face of the statements of earnings.

14

 

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

 

     December 28,
2008		     December 30,
2007		  

Current Assets

     

Cash and equivalents

    $ 118,277     $ 92,817  

Trade accounts receivable, less allowances of $17,003 and $18,172, respectively

      815,789       888,334  

Prepaid expenses and other current assets

      61,959       53,392  

Deferred taxes

      31,929       29,294  
                

Total current assets

      1,027,954       1,063,837  

Property and Equipment, Net

      151,292       178,019  

Noncurrent Deferred Taxes

      40,020       43,436  

Goodwill, Net

      117,824       147,168  

Other Assets

      120,165       141,537  
                

Total Assets

    $ 1,457,255     $ 1,573,997  
                

Current Liabilities

     

Short-term borrowings

    $ 35,197     $ 49,729  

Accounts payable and accrued liabilities

      244,119       171,471  

Accrued payroll and related taxes

      243,160       270,575  

Accrued insurance

      26,312       23,696  

Income and other taxes

      51,809       69,779  
                

Total current liabilities

      600,597       585,250  

Noncurrent Liabilities

     

Long-term debt

      80,040       48,394  

Accrued insurance

      46,901       60,404  

Accrued retirement benefits

      61,576       78,382  

Other long-term liabilities

      15,234       13,338  
                

Total noncurrent liabilities

      203,751       200,518  

Stockholders’ Equity

     

Common stock

      40,116       40,116  

Treasury stock

      (111,229 )     (106,312 )

Paid-in capital

      35,788       34,500  

Earnings invested in the business

      676,047       777,338  

Accumulated other comprehensive income

      12,185       42,587  
                

Total stockholders’ equity

      652,907       788,229  
                

Total Liabilities and Stockholders’ Equity

    $ 1,457,255     $ 1,573,997  
                

STATISTICS:

     

Working Capital

    $ 427,357     $ 478,587  

Current Ratio

      1.7       1.8  

Debt-to-capital %

      15.0 %     11.1 %

Global Days Sales Outstanding

      50       49  

15

 

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE 52 WEEKS ENDED DECEMBER 28, 2008 AND DECEMBER 30, 2007

(In thousands of dollars)

 

     2008     2007  

Cash flows from operating activities

     

Net (loss) earnings

    $ (82,239 )   $ 61,016  

Noncash adjustments:

     

Depreciation and amortization

      45,958       42,601  

Impairment of assets

      80,533       —    

Provision for bad debts

      6,712       6,654  

Stock-based compensation

      4,440       3,941  

Gain on sale of discontinued operations

      —         (6,166 )

Other, net

      3,721       (573 )

Changes in operating assets and liabilities

      42,472       (34,129 )
                

Net cash from operating activities

      101,597       73,344  
                

Cash flows from investing activities

     

Capital expenditures

      (31,136 )     (45,975 )

Acquisition of companies, net of cash received

      (32,712 )     (48,417 )

Proceeds from sale of discontinued operations

      —         12,500  

Other investing activities

      (236 )     (532 )
                

Net cash from investing activities

      (64,084 )     (82,424 )
                

Cash flows from financing activities

     

Net change in revolving line of credit

      (34,174 )     17,500  

Proceeds from debt

      42,450       57,277  

Repayment of debt

      —         (49,054 )

Dividend payments

      (19,052 )     (19,114 )

Purchase of treasury stock

      (7,975 )     (34,703 )

Stock options and other stock sales

      111       5,781  

Other financing activities

      9,874       (165 )
                

Net cash from financing activities

      (8,766 )     (22,478 )
                

Effect of exchange rates on cash and equivalents

      (3,287 )     5,947  
                

Net change in cash and equivalents

      25,460       (25,611 )

Cash and equivalents at beginning of period

      92,817       118,428  
                

Cash and equivalents at end of period

    $ 118,277     $ 92,817  
                

16

 

KELLY SERVICES, INC. AND SUBSIDIARIES

REVENUE FROM SERVICES

(UNAUDITED)

(In thousands of dollars)

 

     Fourth Quarter (Commercial, PT and OCG)  
               % Change  
     2008    2007    US$     Constant
Currency		  

Americas

           

United States

    $ 781,496    $ 881,640    (11.4 )%   (11.4 )%

Canada

      50,225      69,041    (27.3 )   (10.8 )

Puerto Rico

      18,606      19,431    (4.2 )   (4.2 )

Mexico

      18,060      18,557    (2.7 )   15.8  
                  

Total Americas

      868,387      988,669    (12.2 )   (10.7 )

EMEA

           

United Kingdom

      80,659      114,113    (29.3 )   (9.0 )

France

      75,121      87,084    (13.7 )   (5.4 )

Switzerland

      41,467      50,199    (17.4 )   (16.6 )

Italy

      25,209      31,893    (21.0 )   (13.1 )

Russia

      22,309      19,652    13.5     25.0  

Germany

      17,642      20,091    (12.2 )   (3.5 )

Norway

      16,995      21,527    (21.1 )   (2.4 )

Portugal

      15,604      —      N/A     N/A  

Other

      32,693      42,402    (22.9 )   (14.1 )
                  

Total EMEA

      327,699      386,961    (15.3 )   (3.3 )

APAC

           

Australia

      25,966      39,779    (34.7 )   (14.1 )

Singapore

      16,124      18,373    (12.2 )   (10.3 )

Other

      40,915      41,977    (2.5 )   5.8  
                  

Total APAC

      83,005      100,129    (17.1 )   (5.0 )

Total Kelly Services, Inc.

    $ 1,279,091    $ 1,475,759    (13.3 )%   (8.3 )%
                  

17

 

KELLY SERVICES, INC. AND SUBSIDIARIES

REVENUE FROM SERVICES

(UNAUDITED)

(In thousands of dollars)

 

     December Year to Date (Commercial, PT and OCG)  
               % Change  
     2008    2007    US$     Constant
Currency		  

Americas

           

United States

    $ 3,237,137    $ 3,454,922    (6.3 )%   (6.3 )%

Canada

      237,809      260,050    (8.6 )   (9.7 )

Puerto Rico

      77,406      76,772    0.8     0.8  

Mexico

      76,179      73,406    3.8     5.2  
                  

Total Americas

      3,628,531      3,865,150    (6.1 )   (6.2 )

EMEA

           

United Kingdom

      397,987      469,903    (15.3 )   (9.0 )

France

      350,848      315,008    11.4     3.4  

Switzerland

      184,930      180,951    2.2     (8.1 )

Italy

      131,863      124,674    5.8     (2.2 )

Russia

      90,893      68,528    32.6     29.0  

Norway

      86,138      78,050    10.4     4.6  

Germany

      82,951      65,593    26.5     17.5  

Portugal

      27,469      —      N/A     N/A  

Other

      154,427      153,209    0.8     (6.0 )
                  

Total EMEA

      1,507,506      1,455,916    3.5     0.3  

APAC

           

Australia

      133,599      135,886    (1.7 )   (3.7 )

Singapore

      71,285      62,447    14.2     7.0  

Other

      176,369      148,190    19.0     16.5  
                  

Total APAC

      381,253      346,523    10.0     6.9  

Total Kelly Services, Inc.

    $ 5,517,290    $ 5,667,589    (2.7 )%   (3.7 )%
                  

18

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In thousands of dollars except per share data)

 

     Fourth Quarter  
     2008     2007  
     Amount     Per Share     Amount     Per Share  

(Loss) earnings from continuing operations

    $ (88,583 )   $ (2.55 )   $ 18,473     $ 0.52  

Restructuring charges, net of taxes (Notes 1 and 2)

      1,500       0.04       802       0.02  

Asset impairments, net of taxes (Note 3)

      77,172       2.22       —         —    
                                

(Loss) earnings from continuing operations excluding restructuring and asset impairment charges, net of taxes

    $ (9,911 )   $ (0.29 )   $ 19,275     $ 0.54  
                                
     Fourth Quarter  
     2008           2007     % Change  

Selling, general and administrative expenses

    $ 227,734       $ 238,895    

Restructuring charges (Notes 1 and 2)

      (1,500 )       (1,343 )  
                    

Selling, general and administrative expenses excluding restructuring charges

    $ 226,234       $ 237,552       (4.8% )
                          

(Loss) earnings from operations

    $ (83,621 )     $ 26,541    

Restructuring charges (Notes 1 and 2)

      1,500         1,343    

Asset impairments (Note 3)

      80,533         —      
                    

(Loss) earnings from operations excluding restructuring and asset impairment charges

    $ (1,588 )     $ 27,884       (105.7% )
                          

Americas Commercial selling, general and administrative expenses

    $ 80,014       $ 85,696    

Americas restructuring charge (Note 1)

      —           (1,442 )  
                    

Americas Commercial selling, general and administrative expenses excluding the Americas restructuring charge

    $ 80,014       $ 84,254       (5.0% )
                          

Americas Commercial earnings from operations

    $ 16,207       $ 26,485    

Americas restructuring charge (Note 1)

      —           1,442    
                    

Americas Commercial earnings from operations excluding the Americas restructuring charge

    $ 16,207       $ 27,927       (42.0% )
                          

EMEA Commercial selling, general and administrative expenses

    $ 54,376       $ 57,377    

U.K. restructuring charge (Note 2)

      (1,500 )       99    
                    

EMEA Commercial selling, general and administrative expenses excluding the U.K. restructuring charge

    $ 52,876       $ 57,476       (8.0% )
                          

EMEA Commercial (loss) earnings from operations

    $ (6,741 )     $ 6,105    

U.K. restructuring charge (Note 2)

      1,500         (99 )  
                    

EMEA Commercial (loss) earnings from operations excluding the U.K. restructuring charge

    $ (5,241 )     $ 6,006       (187.3% )
                          

19

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In thousands of dollars except per share data)

 

     December Year to Date  
     2008     2007  
     Amount     Per Share     Amount     Per Share  

(Loss) earnings from continuing operations

    $ (81,715 )   $ (2.35 )   $ 53,724     $ 1.47  

Restructuring charges, net of taxes (Notes 1 and 2)

      1,500       0.04       7,766       0.21  

Asset impairments, net of taxes (Note 3)

      77,172       2.22       —         —    
                                

(Loss) earnings from continuing operations excluding restructuring and asset impairment charges, net of taxes

    $ (3,043 )   $ (0.09 )   $ 61,490     $ 1.68  
                                
     December Year to Date  
     2008           2007     % Change  

Selling, general and administrative expenses

    $ 967,389       $ 909,009    

Restructuring charges (Notes 1 and 2)

      (1,500 )       (8,889 )  
                    

Selling, general and administrative expenses excluding restructuring charges

    $ 965,889       $ 900,120       7.3 %
                          

(Loss) earnings from operations

    $ (70,271 )     $ 80,080    

Restructuring charges (Notes 1 and 2)

      1,500         8,889    

Asset impairments (Note 3)

      80,533         —      
                    

Earnings from operations excluding restructuring and asset impairment charges

    $ 11,762       $ 88,969       (86.8% )
                          

Americas Commercial selling, general and administrative expenses

    $ 328,435       $ 342,197    

Americas restructuring charge (Note 1)

      —           (2,953 )  
                    

Americas Commercial selling, general and administrative expenses excluding the Americas restructuring charge

    $ 328,435       $ 339,244       (3.2% )
                          

Americas Commercial earnings from operations

    $ 69,956       $ 95,566    

Americas restructuring charge (Note 1)

      —           2,953    
                    

Americas Commercial earnings from operations excluding the Americas restructuring charge

    $ 69,956       $ 98,519       (29.0% )
                          

EMEA Commercial selling, general and administrative expenses

    $ 230,364       $ 220,135    

U.K. restructuring charge (Note 2)

      (1,500 )       (5,936 )  
                    

EMEA Commercial selling, general and administrative expenses excluding the U.K. restructuring charge

    $ 228,864       $ 214,199       6.8 %
                          

EMEA Commercial (loss) earnings from operations

    $ (2,971 )     $ 8,871    

U.K. restructuring charge (Note 2)

      1,500         5,936    
                    

EMEA Commercial (loss) earnings from operations excluding the U.K. restructuring charge

    $ (1,471 )     $ 14,807       (109.9% )
                          

20

 

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In thousands of dollars except per share data)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the impairment and restructuring charges is useful to understand the Company’s fiscal 2008 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) The Americas restructuring charge is comprised of facility exit costs associated with the closure of 42 branch locations and the accelerated depreciation of the leasehold improvements and personal property at the impacted locations.

(2) The 2007 UK restructuring charge is comprised of facility exit costs associated with the closure of 22 branch locations and the accelerated depreciation of the leasehold improvements and personal property at the impacted locations. The 2008 U.K. restructuring charge represents severance costs related to 2009 planned branch consolidations and closures.

(3) The impairment charges include adjustments to the value of goodwill for the Company’s EMEA Commercial segment, the Company’s investment in Tempstaff, and assets related to operations in the U.K.