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8-K - FORM 8-K - KELLY SERVICES INCc04579e8vk.htm
Exhibit 99.1
(KELLY LOGO)
KELLY SERVICES REPORTS 2nd QUARTER 2010 RESULTS
TROY, MI (August 11, 2010) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2010.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2010 totaled $1.2 billion, an 18% increase compared to the corresponding quarter in 2009. On a constant currency basis, revenue increased by 17%.
Earnings from operations for the second quarter of 2010 totaled $8.5 million, compared to losses from operations of $74.5 million reported for the second quarter of 2009. Included in the results from operations for the second quarter of 2010 are impairment charges of $1.5 million. The loss from operations in the second quarter of 2009 included impairment charges of $52.6 million and restructuring charges of $4.7 million. Excluding the impairment and restructuring charges, earnings from operations were $10.0 million in the second quarter of 2010 compared to a loss from operations of $17.2 million in 2009.
Diluted earnings per share from continuing operations in the second quarter of 2010 were $0.11 compared to second quarter 2009 losses of $1.89 per share. The impairment charges were $0.03 per share in the second quarter of 2010 and the impairment and restructuring charges totaled $1.52 per share in the second quarter of 2009.
Commenting on the second quarter results, Camden stated, “We’re pleased that global economic expansion continues and labor markets are slowly strengthening around the world. These trends had a positive impact on our second quarter earnings as demand for temporary staffing improved.
“Our efforts and discipline are clearly gaining traction. We’re confident that we have realigned our strategy to take advantage of future opportunities within our industry and we’ll continue to focus on improving profitability while holding expenses down, maintaining our commercial staffing stronghold, accelerating our PT and OCG growth, and winning new customers.”
In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 11, to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
     
U.S.
  1 800 288-9626 
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.

 

 


 

About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: 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, temp-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.
     
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 JULY 4, 2010 AND JUNE 28, 2009
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    2010     2009     Change     % Change  
 
                               
Revenue from services
  $ 1,209.4     $ 1,028.9     $ 180.5       17.5 %
 
                               
Cost of services
    1,018.5       857.2       161.3       18.8  
 
                       
 
                               
Gross profit
    190.9       171.7       19.2       11.2  
 
                               
Selling, general and administrative expenses
    180.9       193.6       (12.7 )     (6.5 )
 
                               
Asset impairments
    1.5       52.6       (51.1 )     (97.1 )
 
                       
 
                               
Earnings (loss) from operations
    8.5       (74.5 )     83.0     NM  
 
                               
Other expense, net
    (2.1 )     (1.0 )     (1.1 )     (108.1 )
 
                       
 
                               
Earnings (loss) from continuing operations before taxes
    6.4       (75.5 )     81.9     NM  
 
                               
Income taxes
    2.5       (9.5 )     12.0       126.9  
 
                       
 
                               
Earnings (loss) from continuing operations
    3.9       (66.0 )     69.9     NM  
 
                               
Earnings from discontinued operations, net of tax
                       
 
                       
 
                               
Net earnings (loss)
  $ 3.9     $ (66.0 )   $ 69.9     NM %
 
                       
 
                               
Basic earnings (loss) per share on common stock
                               
Earnings (loss) from continuing operations
  $ 0.11     $ (1.89 )   $ 2.00     NM %
Earnings from discontinued operations
                       
Net earnings (loss)
    0.11       (1.89 )     2.00     NM  
 
                               
Diluted earnings (loss) per share on common stock
                               
Earnings (loss) from continuing operations
  $ 0.11     $ (1.89 )   $ 2.00     NM %
Earnings from discontinued operations
                       
Net earnings (loss)
    0.11       (1.89 )     2.00     NM  
 
                               
STATISTICS:
                               
 
                               
Gross profit rate
    15.8 %     16.7 %   (0.9 ) pts.        
 
                               
Selling, general and administrative expenses:
                               
% of revenue
    15.0       18.8       (3.8 )        
% of gross profit
    94.8       112.7       (17.9 )        
 
                               
% Return — Earnings (loss) from operations
    0.7       (7.2 )     7.9          
Earnings (loss) from continuing operations before taxes
    0.5       (7.3 )     7.8          
Earnings (loss) from continuing operations
    0.3       (6.4 )     6.7          
Net earnings (loss)
    0.3       (6.4 )     6.7          
 
                               
Effective income tax rate
    39.8 %     12.5 %   27.3  pts.        
 
                               
Average number of shares outstanding (millions):
                               
Basic
    36.0       34.8                  
Diluted
    36.0       34.8                  

 

3


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JULY 4, 2010 AND JUNE 28, 2009
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    2010     2009     Change     % Change  
 
                               
Revenue from services
  $ 2,339.8     $ 2,071.5     $ 268.3       13.0 %
 
                               
Cost of services
    1,968.9       1,724.3       244.6       14.2  
 
                       
 
                               
Gross profit
    370.9       347.2       23.7       6.8  
 
                               
Selling, general and administrative expenses
    362.5       399.7       (37.2 )     (9.3 )
 
                               
Asset impairments
    1.5       52.6       (51.1 )     (97.1 )
 
                       
 
                               
Earnings (loss) from operations
    6.9       (105.1 )     112.0     NM  
 
                               
Other (expense) income, net
    (3.2 )     0.3       (3.5 )   NM  
 
                       
 
                               
Earnings (loss) from continuing operations before taxes
    3.7       (104.8 )     108.5     NM  
 
                               
Income taxes
    1.8       (22.7 )     24.5       108.1  
 
                       
 
                               
Earnings (loss) from continuing operations
    1.9       (82.1 )     84.0     NM  
 
                               
Earnings from discontinued operations, net of tax
          0.6       (0.6 )     (100.0 )
 
                       
 
                               
Net earnings (loss)
  $ 1.9     $ (81.5 )   $ 83.4     NM %
 
                       
 
                               
Basic earnings (loss) per share on common stock
                               
Earnings (loss) from continuing operations
  $ 0.05     $ (2.36 )   $ 2.41     NM %
Earnings from discontinued operations
          0.02       (0.02 )     (100.0 )
Net earnings (loss)
    0.05       (2.34 )     2.39     NM  
 
                               
Diluted earnings (loss) per share on common stock
                               
Earnings (loss) from continuing operations
  $ 0.05     $ (2.36 )   $ 2.41     NM %
Earnings from discontinued operations
          0.02       (0.02 )     (100.0 )
Net earnings (loss)
    0.05       (2.34 )     2.39     NM  
 
                               
STATISTICS:
                               
 
                               
Gross profit rate
    15.9 %     16.8 %   (0.9 ) pts.        
 
                               
Selling, general and administrative expenses:
                               
% of revenue
    15.5       19.3       (3.8 )        
% of gross profit
    97.7       115.1       (17.4 )        
 
                               
% Return — Earnings (loss) from operations
    0.3       (5.1 )     5.4          
Earnings (loss) from continuing operations before taxes
    0.2       (5.1 )     5.3          
Earnings (loss) from continuing operations
    0.1       (4.0 )     4.1          
Net earnings (loss)
    0.1       (3.9 )     4.0          
 
                               
Effective income tax rate
    49.3 %     21.7 %   27.6  pts.        
 
                               
Average number of shares outstanding (millions):
                               
Basic
    35.5       34.8                  
Diluted
    35.5       34.8                  

 

4


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)

(In millions of dollars)
                                 
    Second Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
Americas Commercial
                               
Revenue from services (including fee-based income)
  $ 600.9     $ 473.0       27.0 %     25.5 %
Fee-based income
    2.2       1.6       41.8       38.3  
Gross profit
    85.7       70.6       21.2       20.0  
SG&A expenses excluding restructuring charges
    67.7       67.5       0.3          
Restructuring charges
          1.1       (100.0 )        
Total SG&A expenses
    67.7       68.6       (1.4 )     (2.5 )
Earnings from operations
    18.0       2.0     NM          
Earnings from operations excluding restructuring charges
    18.0       3.1       469.3          
 
                               
Gross profit rate
    14.3 %     14.9 %   (0.6 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    11.3       14.3       (3.0 )        
% of gross profit
    79.0       95.5       (16.5 )        
Operating margin (excluding restructuring charges)
    3.0       0.7       2.3          
 
                               
Americas PT
                               
Revenue from services (including fee-based income)
  $ 219.9     $ 194.8       12.9 %     12.6 %
Fee-based income
    2.2       2.3       (2.7 )     (3.1 )
Gross profit
    34.5       32.2       7.3       7.0  
SG&A expenses excluding restructuring charges
    22.7       25.5       (10.5 )        
Restructuring charges
          0.1       (100.0 )        
Total SG&A expenses
    22.7       25.6       (10.9 )     (11.1 )
Earnings from operations
    11.8       6.6       76.4          
Earnings from operations excluding restructuring charges
    11.8       6.7       73.3          
 
                               
Gross profit rate
    15.7 %     16.5 %   (0.8 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    10.3       13.0       (2.7 )        
% of gross profit
    65.8       78.8       (13.0 )        
Operating margin (excluding restructuring charges)
    5.4       3.5       1.9          
 
                               
EMEA Commercial
                               
Revenue from services (including fee-based income)
  $ 209.8     $ 211.7       (0.9 )%     2.4 %
Fee-based income
    5.1       3.9       33.2       35.5  
Gross profit
    33.8       34.4       (1.6 )     2.0  
SG&A expenses excluding restructuring charges
    30.9       36.6       (15.5 )        
Restructuring charges
          3.1       (100.0 )        
Total SG&A expenses
    30.9       39.7       (22.2 )     (19.6 )
Asset impairments
    1.5           NM          
Earnings from operations
    1.4       (5.3 )   NM          
Earnings from operations excluding restructuring charges
    1.4       (2.2 )   NM          
 
                               
Gross profit rate
    16.1 %     16.2 %   (0.1 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    14.7       17.3       (2.6 )        
% of gross profit
    91.5       106.5       (15.0 )        
Operating margin (excluding restructuring charges)
    0.6       (1.1 )     1.7          

 

5


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    Second Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
EMEA PT
                               
Revenue from services (including fee-based income)
  $ 34.4     $ 33.1       4.1 %     8.6 %
Fee-based income
    3.9       3.8       3.6       5.2  
Gross profit
    9.3       8.8       6.2       9.8  
Total SG&A expenses
    8.8       10.1       (13.1 )     (10.0 )
Earnings from operations
    0.5       (1.3 )   NM          
 
                               
Gross profit rate
    27.1 %     26.6 %   0.5  pts.        
Expense rates:
                               
% of revenue
    25.5       30.6       (5.1 )        
% of gross profit
    94.1       115.1       (21.0 )        
Operating margin
    1.6       (4.0 )     5.6          
 
                               
APAC Commercial
                               
Revenue from services (including fee-based income)
  $ 83.7     $ 66.3       26.2 %     13.8 %
Fee-based income
    2.7       2.3       15.1       3.6  
Gross profit
    11.7       9.7       20.9       8.5  
SG&A expenses excluding restructuring charges
    10.7       10.8       (0.8 )        
Restructuring charges
          0.1       (100.0 )        
Total SG&A expenses
    10.7       10.9       (1.2 )     (11.3 )
Earnings from operations
    1.0       (1.2 )   NM          
Earnings from operations excluding restructuring charges
    1.0       (1.1 )   NM          
 
                               
Gross profit rate
    14.0 %     14.6 %   (0.6 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    12.8       16.3       (3.5 )        
% of gross profit
    91.8       111.8       (20.0 )        
Operating margin (excluding restructuring charges)
    1.2       (1.7 )     2.9          
 
                               
APAC PT
                               
Revenue from services (including fee-based income)
  $ 7.8     $ 5.5       41.1 %     28.8 %
Fee-based income
    2.8       0.8       227.9       211.0  
Gross profit
    3.5       1.7       103.8       90.4  
Total SG&A expenses
    3.9       2.1       84.2       70.7  
Earnings from operations
    (0.4 )     (0.4 )     2.5          
 
                               
Gross profit rate
    45.5 %     31.5 %   14.0  pts.        
Expense rates:
                               
% of revenue
    50.4       38.6       11.8          
% of gross profit
    110.8       122.6       (11.8 )        
Operating margin
    (4.9 )     (7.1 )     2.2          

 

6


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    Second Quarter  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
OCG
                               
Revenue from services (including fee-based income)
  $ 60.4     $ 50.1       20.5 %     20.3 %
Fee-based income
    5.6       6.0       (6.1 )     (6.4 )
Gross profit
    13.0       14.6       (11.0 )     (10.9 )
SG&A expenses excluding restructuring charges
    18.8       17.4       7.9          
Restructuring charges
          0.4       (100.0 )        
Total SG&A expenses
    18.8       17.8       5.6       5.7  
Earnings from operations
    (5.8 )     (3.2 )     (80.8 )        
Earnings from operations excluding restructuring charges
    (5.8 )     (2.8 )     (104.8 )        
 
                               
Gross profit rate
    21.4 %     29.0 %   (7.6 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    31.1       34.7       (3.6 )        
% of gross profit
    144.9       119.5       25.4          
Operating margin (excluding restructuring charges)
    (9.6 )     (5.7 )     (3.9 )        
 
                               
Corporate Expense
                               
SG&A expenses excluding restructuring charges
  $ 18.0     $ 19.2       (5.8 )%        
Restructuring charges
          (0.1 )     (100.0 )        
Total SG&A expenses
    18.0       19.1       (5.4 )        
Asset impairments
          52.6       (100.0 )        
 
                               
Consolidated Total (net of intersegment activity)
                               
Revenue from services (including fee-based income)
  $ 1,209.4     $ 1,028.9       17.5 %     16.8 %
Fee-based income
    24.4       20.6       18.9       17.2  
Gross profit
    190.9       171.7       11.2       10.7  
SG&A expenses excluding restructuring charges
    180.9       188.9       (4.2 )        
Restructuring charges
          4.7       (100.0 )        
Total SG&A expenses
    180.9       193.6       (6.5 )     (6.9 )
Asset impairments
    1.5       52.6       (97.1 )        
Earnings from operations
    8.5       (74.5 )   NM          
Earnings from operations excluding restructuring charges
    8.5       (69.8 )   NM          
 
                               
Gross profit rate
    15.8 %     16.7 %   (0.9 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    15.0       18.4       (3.4 )        
% of gross profit
    94.8       110.0       (15.2 )        
Operating margin (excluding restructuring charges)
    0.7       (6.8 )     7.5          

 

7


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)

(In millions of dollars)
                                 
    June Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
Americas Commercial
                               
Revenue from services (including fee-based income)
  $ 1,148.6     $ 955.4       20.2 %     18.4 %
Fee-based income
    4.3       3.4       27.7       23.5  
Gross profit
    164.2       143.7       14.2       12.7  
SG&A expenses excluding restructuring charges
    132.8       139.3       (4.8 )        
Restructuring charges
    0.3       1.9       (81.5 )        
Total SG&A expenses
    133.1       141.2       (5.8 )     (7.1 )
Earnings from operations
    31.1       2.5     NM          
Earnings from operations excluding restructuring charges
    31.4       4.4     NM          
 
                               
Gross profit rate
    14.3 %     15.0 %   (0.7 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    11.6       14.6       (3.0 )        
% of gross profit
    80.8       96.9       (16.1 )        
Operating margin (excluding restructuring charges)
    2.7       0.5       2.2          
 
                               
Americas PT
                               
Revenue from services (including fee-based income)
  $ 425.5     $ 392.2       8.5 %     8.2 %
Fee-based income
    4.5       5.1       (11.2 )     (11.8 )
Gross profit
    66.0       63.7       3.8       3.5  
SG&A expenses excluding restructuring charges
    45.7       51.7       (11.3 )        
Restructuring charges
          0.1       (100.0 )        
Total SG&A expenses
    45.7       51.8       (11.5 )     (11.8 )
Earnings from operations
    20.3       11.9       70.2          
Earnings from operations excluding restructuring charges
    20.3       12.0       68.3          
 
                               
Gross profit rate
    15.5 %     16.2 %   (0.7 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    10.8       13.2       (2.4 )        
% of gross profit
    69.2       81.0       (11.8 )        
Operating margin (excluding restructuring charges)
    4.8       3.1       1.7          
 
                               
EMEA Commercial
                               
Revenue from services (including fee-based income)
  $ 414.7     $ 428.3       (3.2 )%     (5.1 )%
Fee-based income
    9.9       8.6       15.5       11.6  
Gross profit
    66.6       68.9       (3.3 )     (5.2 )
SG&A expenses excluding restructuring charges
    63.3       77.4       (18.3 )        
Restructuring charges
    2.7       8.9       (69.9 )        
Total SG&A expenses
    66.0       86.3       (23.6 )     (25.4 )
Asset impairments
    1.5           NM          
Earnings from operations
    (0.9 )     (17.4 )     94.8          
Earnings from operations excluding restructuring charges
    1.8       (8.5 )   NM          
 
                               
Gross profit rate
    16.1 %     16.1 %   0.0  pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    15.3       18.1       (2.8 )        
% of gross profit
    95.0       112.4       (17.4 )        
Operating margin (excluding restructuring charges)
    0.4       (2.0 )     2.4          

 

8


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    June Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
EMEA PT
                               
Revenue from services (including fee-based income)
  $ 69.3     $ 65.9       5.2 %     3.8 %
Fee-based income
    7.6       8.2       (6.2 )     (9.5 )
Gross profit
    18.7       18.2       3.3       1.1  
Total SG&A expenses
    18.3       20.1       (8.7 )     (10.7 )
Earnings from operations
    0.4       (1.9 )   NM          
 
                               
Gross profit rate
    27.1 %     27.6 %   (0.5 ) pts.        
Expense rates:
                               
% of revenue
    26.4       30.5       (4.1 )        
% of gross profit
    97.6       110.4       (12.8 )        
Operating margin
    0.7       (2.9 )     3.6          
 
                               
APAC Commercial
                               
Revenue from services (including fee-based income)
  $ 164.6     $ 130.7       25.9 %     10.4 %
Fee-based income
    5.5       4.5       20.3       5.7  
Gross profit
    23.1       19.2       20.7       4.8  
SG&A expenses excluding restructuring charges
    20.6       21.6       (4.6 )        
Restructuring charges
    0.5       0.1     NM          
Total SG&A expenses
    21.1       21.7       (2.4 )     (15.3 )
Earnings from operations
    2.0       (2.5 )   NM          
Earnings from operations excluding restructuring charges
    2.5       (2.4 )   NM          
 
                               
Gross profit rate
    14.0 %     14.6 %   (0.6 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    12.5       16.5       (4.0 )        
% of gross profit
    89.3       113.0       (23.7 )        
Operating margin (excluding restructuring charges)
    1.5       (1.9 )     3.4          
 
                               
APAC PT
                               
Revenue from services (including fee-based income)
  $ 15.4     $ 11.7       31.4 %     16.2 %
Fee-based income
    4.7       1.8       158.3       142.1  
Gross profit
    6.3       3.6       73.6       58.4  
Total SG&A expenses
    7.7       4.3       78.7       62.5  
Earnings from operations
    (1.4 )     (0.7 )     (107.8 )        
 
                               
Gross profit rate
    41.1 %     31.1 %   10.0  pts.        
Expense rates:
                               
% of revenue
    49.7       36.6       13.1          
% of gross profit
    121.0       117.5       3.5          
Operating margin
    (8.6 )     (5.4 )     (3.2 )        

 

9


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    June Year to Date  
                            Constant  
                            Currency  
    2010     2009     Change     Change  
OCG
                               
Revenue from services (including fee-based income)
  $ 115.7     $ 98.8       17.1 %     16.3 %
Fee-based income
    11.7       12.6       (7.0 )     (9.0 )
Gross profit
    27.0       30.5       (11.7 )     (12.8 )
SG&A expenses excluding restructuring charges
    37.2       34.4       8.2          
Restructuring charges
    0.1       0.5       (85.0 )        
Total SG&A expenses
    37.3       34.9       6.9       5.5  
Earnings from operations
    (10.3 )     (4.4 )     (134.9 )        
Earnings from operations excluding restructuring charges
    (10.2 )     (3.9 )     (162.6 )        
 
                               
Gross profit rate
    23.3 %     30.8 %   (7.5 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    32.2       34.8       (2.6 )        
% of gross profit
    138.3       112.9       25.4          
Operating margin (excluding restructuring charges)
    (8.9 )     (4.0 )     (4.9 )        
 
                               
Corporate Expense
                               
SG&A expenses excluding restructuring charges
  $ 33.5     $ 39.6       (15.1) %        
Restructuring charges
    0.8       0.4       90.8          
Total SG&A expenses
    34.3       40.0       (14.0 )        
Asset impairments
          52.6       (100.0 )        
 
                               
Consolidated Total (net of intersegment activity)
                               
Revenue from services (including fee-based income)
  $ 2,339.8     $ 2,071.5       13.0 %     10.5 %
Fee-based income
    48.1       44.1       9.2       4.7  
Gross profit
    370.9       347.2       6.8       4.5  
SG&A expenses excluding restructuring charges
    358.1       387.8       (7.6 )        
Restructuring charges
    4.4       11.9       (63.0 )        
Total SG&A expenses
    362.5       399.7       (9.3 )     (11.3 )
Asset impairments
    1.5       52.6       (97.1 )        
Earnings from operations
    6.9       (105.1 )   NM          
Earnings from operations excluding restructuring charges
    11.3       (93.2 )   NM          
 
                               
Gross profit rate
    15.9 %     16.8 %   (0.9 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    15.3       18.7       (3.4 )        
% of gross profit
    96.5       111.7       (15.2 )        
Operating margin (excluding restructuring charges)
    0.5       (4.5 )     5.0          

 

10


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JULY 4, 2010 AND JUNE 28, 2009
(UNAUDITED)

(In millions of dollars)
                 
    2010     2009  
Cash flows from operating activities
               
Net earnings (loss)
  $ 1.9     $ (81.5 )
Noncash adjustments:
               
Impairment of assets
    1.5       52.6  
Depreciation and amortization
    17.8       21.0  
Provision for bad debts
    0.5       1.3  
Stock-based compensation
    1.4       2.2  
Other, net
    0.8       (1.5 )
Changes in operating assets and liabilities
    (44.2 )     53.0  
 
           
 
               
Net cash from operating activities
    (20.3 )     47.1  
 
           
 
               
Cash flows from investing activities
               
Capital expenditures
    (3.8 )     (5.0 )
Acquisition of companies, net of cash received
          (7.5 )
Other investing activities
    0.9       (3.0 )
 
           
 
               
Net cash from investing activities
    (2.9 )     (15.5 )
 
           
 
               
Cash flows from financing activities
               
Net change in revolving line of credit
    (11.8 )     (13.1 )
Repayment of debt
    (7.3 )     (22.9 )
Sale of stock and other financing activities
    24.2       (0.8 )
 
           
 
               
Net cash from financing activities
    5.1       (36.8 )
 
           
 
               
Effect of exchange rates on cash and equivalents
    (5.5 )     2.1  
 
           
 
               
Net change in cash and equivalents
    (23.6 )     (3.1 )
Cash and equivalents at beginning of period
    88.9       118.3  
 
           
 
               
Cash and equivalents at end of period
  $ 65.3     $ 115.2  
 
           

 

11


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(In millions of dollars)
                         
    July 4,     January 3,     June 28,  
    2010     2010     2009  
Current Assets
                       
Cash and equivalents
  $ 65.3     $ 88.9     $ 115.2  
Trade accounts receivable, less allowances of $13.0, $15.0 and $15.4, respectively
    751.8       717.9       681.0  
Prepaid expenses and other current assets
    60.7       70.6       57.2  
Deferred taxes
    21.2       21.0       29.7  
 
                 
 
                       
Total current assets
    899.0       898.4       883.1  
 
                       
Property and Equipment, Net
    112.1       127.1       137.7  
 
                       
Noncurrent Deferred Taxes
    74.2       77.5       40.2  
 
                       
Goodwill, Net
    67.3       67.3       67.3  
 
                       
Other Assets
    127.5       131.4       125.3  
 
                 
 
                       
Total Assets
  $ 1,280.1     $ 1,301.7     $ 1,253.6  
 
                 
 
                       
Current Liabilities
                       
Short-term borrowings and current portion of long-term debt
  $ 68.4     $ 79.6     $ 77.6  
Accounts payable and accrued liabilities
    144.8       182.6       205.2  
Accrued payroll and related taxes
    228.3       208.3       217.4  
Accrued insurance
    19.8       19.7       25.2  
Income and other taxes
    47.3       47.4       18.1  
 
                 
 
                       
Total current liabilities
    508.6       537.6       543.5  
 
                       
Noncurrent Liabilities
                       
Long-term debt
    49.9       57.5        
Accrued insurance
    47.1       47.3       44.6  
Accrued retirement benefits
    72.4       76.9       66.4  
Other long-term liabilities
    15.4       16.0       14.9  
 
                 
 
                       
Total noncurrent liabilities
    184.8       197.7       125.9  
 
                       
Stockholders’ Equity
                       
Common stock
    40.1       40.1       40.1  
Treasury stock
    (71.3 )     (107.2 )     (107.8 )
Paid-in capital
    26.8       36.9       34.7  
Earnings invested in the business
    573.4       571.5       594.5  
Accumulated other comprehensive income
    17.7       25.1       22.7  
 
                 
 
                       
Total stockholders’ equity
    586.7       566.4       584.2  
 
                 
 
                       
Total Liabilities and Stockholders’ Equity
  $ 1,280.1     $ 1,301.7     $ 1,253.6  
 
                 
 
                       
STATISTICS:
                       
Working Capital
  $ 390.4     $ 360.8     $ 339.6  
Current Ratio
    1.8       1.7       1.6  
Debt-to-capital %
    16.8 %     19.5 %     11.7 %
Global Days Sales Outstanding
    50       51       51  

 

12


 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                                 
    Second Quarter (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2010     2009     US$     Currency  
Americas
                               
United States
  $ 770.8     $ 633.3       21.7 %     21.7 %
Canada
    54.5       42.6       28.1       12.7  
Mexico
    21.9       16.1       36.5       28.9  
Puerto Rico
    19.2       14.6       31.2       31.2  
 
                           
Total Americas
    866.4       706.6       22.6       21.5  
 
                               
EMEA
                               
France
    67.6       62.9       7.4       15.1  
Switzerland
    40.7       32.5       25.4       25.0  
United Kingdom
    34.2       50.2       (32.0 )     (29.6 )
Russia
    25.4       15.1       68.5       59.6  
Portugal
    19.1       12.6       51.9       63.7  
Germany
    16.2       15.5       5.1       12.7  
Italy
    14.7       17.6       (16.5 )     (10.1 )
Norway
    14.1       15.1       (6.9 )     (10.4 )
Other
    16.9       27.1       (37.7 )     (34.5 )
 
                           
Total EMEA
    248.9       248.6       0.1       3.7  
 
                               
APAC
                               
Australia
    28.7       22.5       27.0       9.3  
Singapore
    19.6       15.2       29.6       22.6  
Malaysia
    16.3       12.0       35.8       24.0  
India
    15.2       7.8       93.9       82.3  
Other
    14.3       16.2       (12.0 )     (22.4 )
 
                           
Total APAC
    94.1       73.7       27.5       15.2  
 
                               
Total Kelly Services, Inc.
  $ 1,209.4     $ 1,028.9       17.5 %     16.8 %
 
                           

 

13


 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)

(In millions of dollars)
                                 
    June Year to Date (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2010     2009     US$     Currency  
Americas
                               
United States
  $ 1,481.0     $ 1,278.1       15.9 %     15.9 %
Canada
    106.1       83.5       27.1       9.2  
Mexico
    40.9       30.8       32.8       21.9  
Puerto Rico
    33.9       30.3       12.0       12.0  
 
                           
Total Americas
    1,661.9       1,422.7       16.8       15.5  
 
                               
EMEA
                               
France
    134.9       124.6       8.2       9.3  
Switzerland
    72.1       61.0       18.2       14.1  
United Kingdom
    71.8       112.8       (36.3 )     (37.8 )
Russia
    48.7       29.0       68.1       54.0  
Portugal
    37.5       24.3       54.7       56.9  
Germany
    32.5       30.9       5.4       6.4  
Italy
    31.4       36.5       (14.0 )     (13.2 )
Norway
    28.0       28.2       (0.8 )     (9.9 )
Other
    36.1       55.3       (34.8 )     (35.9 )
 
                           
Total EMEA
    493.0       502.6       (1.9 )     (3.7 )
 
                               
APAC
                               
Australia
    56.3       42.9       31.1       4.8  
Singapore
    38.5       30.1       28.0       20.0  
Malaysia
    30.9       24.1       28.0       17.8  
India
    28.9       14.8       95.2       82.0  
Other
    30.3       34.3       (11.7 )     (24.9 )
 
                           
Total APAC
    184.9       146.2       26.4       10.9  
 
                               
Total Kelly Services, Inc.
  $ 2,339.8     $ 2,071.5       13.0 %     10.5 %
 
                           

 

14


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    Second Quarter     June Year to Date  
    2010     2009     2010     2009  
Pretax earnings (loss) from operations
  $ 8.5     $ (74.5 )   $ 6.9     $ (105.1 )
 
                               
Restructuring charges (Note 1)
          4.7       4.4       11.9  
Asset impairments (Note 2)
    1.5       52.6       1.5       52.6  
Litigation charges
                      0.9  
 
                       
 
                               
Earnings (loss) from operations excluding restructuring, asset impairment and litigation charges
  $ 10.0     $ (17.2 )   $ 12.8     $ (39.7 )
 
                       
                                 
    Second Quarter  
    2010     2009  
    Amount     Per Share     Amount     Per Share  
 
                               
Earnings (loss) from continuing operations, net of taxes
  $ 3.9     $ 0.11     $ (66.0 )   $ (1.89 )
 
                               
Restructuring charges, net of taxes (Note 1)
                4.0       0.11  
Asset impairments, net of taxes (Note 2)
    1.2       0.03       49.2       1.41  
 
                           
 
                               
Earnings (loss) from continuing operations excluding restructuring and asset impairment charges, net of taxes
  $ 5.1     $ 0.14     $ (12.8 )   $ (0.37 )
 
                       
                                 
    June Year to Date  
    2010     2009  
    Amount     Per Share     Amount     Per Share  
 
                               
Earnings (loss) from continuing operations, net of taxes
  $ 1.9     $ 0.05     $ (82.1 )   $ (2.36 )
 
                               
Restructuring charges, net of taxes (Note 1)
    3.6       0.10       10.4       0.30  
Asset impairments, net of taxes (Note 2)
    1.2       0.03       49.2       1.41  
Litigation charges
                0.6       0.02  
 
                           
 
                               
Earnings (loss) from continuing operations excluding restructuring, asset impairment and litigation charges, net of taxes
  $ 6.7     $ 0.19     $ (21.9 )   $ (0.63 )
 
                       

 

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, asset impairment and litigation 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)   Restructuring charges represent global costs incurred in connection with the reduction in the number of permanent employees and the consolidation, sale or closure of branch locations. These costs include severance, lease terminations, asset write-offs and other miscellaneous costs.
 
(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.

 

16