Kelly Services (KELYA) Reports 4th Quarter 2009 and Year-End Results
TROY, MI, Feb. 5, 2010 (Marketwire) —
TROY, MI — (Marketwire) — 02/05/10 — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a world leader in workforce solutions, today announced results for the fourth quarter and year ended January 3, 2010.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2009 totaled $1.2 billion, a 7% decrease compared to the corresponding quarter in 2008. On a sequential basis, fourth quarter revenue increased 14%, compared to the third quarter in 2009. Revenue for the full year totaled $4.3 billion, a 22% decrease compared to the prior year. The fourth quarter included an extra week which adds approximately 4-5% to our quarterly comparisons and 1% to annual comparisons.
Losses from operations for the fourth quarter of 2009 totaled $13.0 million, compared to losses from operations of $83.7 million reported for the fourth quarter of 2008. Included in the results from operations for the fourth quarter of 2009 are restructuring charges of $13.4 million. The loss from operations in the fourth quarter of 2008 included impairment charges of $80.5 million and restructuring charges of $4.3 million. Excluding the impairment and restructuring charges, earnings from operations were $0.4 million in the fourth quarter of 2009 compared to $1.1 million in 2008.
Losses from operations for the full year of 2009 totaled $146.1 million compared to a loss of $70.3 million in 2008. The results for the full year 2009 include $53.1 million of impairment charges, $5.3 million of legal charges and $29.9 million of restructuring charges. The results for 2008 included $80.5 million of impairment charges, $22.5 million of legal charges and $6.5 million of restructuring charges.
Diluted losses per share from continuing operations in the fourth quarter of 2009 were $0.23 compared to fourth quarter 2008 losses of $2.55 per share. The restructuring charges totaled $0.29 per share in the fourth quarter of 2009. The impairment charges were $2.22 per share and the restructuring charges were $0.11 per share in the fourth quarter of 2008.
Diluted losses per share from continuing operations for the full year of 2009 were $3.01 compared to 2008 losses of $2.35 per share. The impairment charges totaled $1.43 per share, legal charges totaled $0.09 per share and restructuring charges totaled $0.69 per share in 2009. The impairment charges were $2.22 per share, legal charges were $0.40 per share and the restructuring charges were $0.15 per share in 2008.
Commenting on the fourth quarter results, Camden was optimistic. “We are very pleased that the improved revenue trends in our business, combined with our significant cost reduction initiatives allowed us to realize a small operating profit for the fourth quarter, excluding restructuring charges.”
Camden added that while 2009 has been a challenging year for the staffing industry, “Kelly has done an excellent job of re-shaping and strategically positioning the company to seize future growth opportunities and create value for our shareholders.
“We look forward to 2010, and will focus on maximizing profitability across all operations; accelerating growth of higher-margin Professional & Technical disciplines and outsourcing and consulting services; winning new business; and helping our customers manage their ever-changing workforce needs.”
In conjunction with its fourth quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on February 5, to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
U.S. 1 800 288-9626International 1 612 332-0107
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 permanent placement 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.
KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGSFOR THE 14 WEEKS ENDED JANUARY 3, 2010 AND 13 WEEKS ENDED DECEMBER 28, 2008 (UNAUDITED) (In millions of dollars except per share data) 2009 2008 Change % Change ——— ——— ——— ——–Revenue from services $ 1,194.1 $ 1,279.1 $ (85.0) (6.6)%Cost of services 1,005.8 1,054.5 (48.7) (4.6) ——— ——— ——— ——–Gross profit 188.3 224.6 (36.3) (16.2)Selling, general and administrative expenses 201.3 227.8 (26.5) (11.7)Asset impairments – 80.5 (80.5) (100.0) ——— ——— ——— ——–Loss from operations (13.0) (83.7) 70.7 84.5Other expense, net (0.9) (3.4) 2.5 73.8 ——— ——— ——— ——–Loss from continuing operations before taxes (13.9) (87.1) 73.2 84.1Income taxes (5.7) 1.5 (7.2) (469.5) ——— ——— ——— ——–Loss from continuing operations (8.2) (88.6) 80.4 90.8Loss from discontinued operations, net of tax – (0.1) 0.1 100.0 ——— ——— ——— ——–Net loss $ (8.2) $ (88.7) $ 80.5 90.8 % ========= ========= ========= ========Basic loss per share on common stock Loss from continuing operations $ (0.23) $ (2.55) $ 2.32 91.0 % Loss from discontinued operations – (0.01) 0.01 100.0 Net loss (0.23) (2.55) 2.32 91.0Diluted loss per share on common stock Loss from continuing operations $ (0.23) $ (2.55) $ 2.32 91.0 % Loss from discontinued operations – (0.01) 0.01 100.0 Net loss (0.23) (2.55) 2.32 91.0 ——— ——— ——— ——–STATISTICS:Gross profit rate 15.8 % 17.6 % (1.8)pts.Selling, general and administrative expenses: % of revenue 16.8 17.8 (1.0) % of gross profit 106.9 101.4 5.5% Return – Loss from operations (1.1) (6.5) 5.4 Loss from continuing operations before taxes (1.2) (6.8) 5.6 Loss from continuing operations (0.7) (6.9) 6.2 Net loss (0.7) (6.9) 6.2Effective income tax rate 41.0 % (1.8) % 42.8 pts. KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGSFOR THE 53 WEEKS ENDED JANUARY 3, 2010 AND 52 WEEKS ENDED DECEMBER 28, 2008 (In millions of dollars except per share data) 2009 2008 Change % Change ———- ———- ———- ———Revenue from services $ 4,314.8 $ 5,517.3 $ (1,202.5) (21.8)%Cost of services 3,613.1 4,539.7 (926.6) (20.4) ———- ———- ———- ———Gross profit 701.7 977.6 (275.9) (28.2)Selling, general and administrative expenses 794.7 967.4 (172.7) (17.9)Asset impairments 53.1 80.5 (27.4) (34.1) ———- ———- ———- ———Loss from operations (146.1) (70.3) (75.8) (107.8)Other expense, net (2.2) (3.4) 1.2 35.8 ———- ———- ———- ———Loss from continuing operations before taxes (148.3) (73.7) (74.6) (101.1)Income taxes (43.2) 8.0 (51.2) NM ———- ———- ———- ———Loss from continuing operations (105.1) (81.7) (23.4) (28.6)Earnings (loss) from discontinued operations, net of tax 0.6 (0.5) 1.1 212.0 ———- ———- ———- ———Net loss $ (104.5) $ (82.2) $ (22.3) (27.0)% ========== ========== ========== =========Basic loss per share on common stock Loss from continuing operations $ (3.01) $ (2.35) $ (0.66) (28.1)% Earnings (loss) from discontinued operations 0.02 (0.02) 0.04 200.0 Net loss (3.00) (2.37) (0.63) (26.6)Diluted loss per share on common stock Loss from continuing operations $ (3.01) $ (2.35) $ (0.66) (28.1)% Earnings (loss) from discontinued operations 0.02 (0.02) 0.04 200.0 Net loss (3.00) (2.37) (0.63) (26.6) ———- ———- ———- ———STATISTICS:Gross profit rate 16.3 % 17.7 % (1.4)pts.Selling, general and administrative expenses: % of revenue 18.4 17.5 0.9 % of gross profit 113.2 99.0 14.2% Return – Loss from operations (3.4) (1.3) (2.1) Loss from continuing operations before taxes (3.4) (1.3) (2.1) Loss from continuing operations (2.4) (1.5) (0.9) Net loss (2.4) (1.5) (0.9)Effective income tax rate 29.1 % (10.8) % 39.9 pts. KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In millions of dollars) Fourth Quarter —————————————- Constant 2009 2008 Currency (14 Weeks)(13 Weeks) Change Change ——– ——– ———- ——-Americas Commercial Revenue from services (including fee-based income) $ 557.4 $ 595.6 (6.4)% (7.3)% Fee-based income 1.5 2.8 (46.7) (48.3) Gross profit 79.8 96.4 (17.2) (18.0) SG&A expenses excluding restructuring charges 67.9 79.7 (14.8) Restructuring charges 3.5 0.6 450.2 Total SG&A expenses 71.4 80.3 (11.1) (11.9) Earnings from operations 8.4 16.1 (47.7) Earnings from operations excluding restructuring charges 11.9 16.7 (28.9) Gross profit rate 14.3% 16.2% (1.9)pts. Expense rates (excluding restructuring charges): % of revenue 12.2 13.4 (1.2) % of gross profit 85.0 82.5 2.5 Operating margin (excluding restructuring charges) 2.2 2.8 (0.6)Americas PT Revenue from services (including fee-based income) $ 208.3 $ 219.3 (5.0)% (5.3)% Fee-based income 2.2 3.7 (39.8) (40.0) Gross profit 31.9 37.5 (14.9) (15.1) SG&A expenses excluding restructuring charges 24.7 27.8 (11.0) Restructuring charges 0.8 – NM Total SG&A expenses 25.5 27.8 (8.1) (8.3) Earnings from operations 6.4 9.7 (34.4) Earnings from operations excluding restructuring charges 7.2 9.7 (26.2) Gross profit rate 15.3% 17.1% (1.8)pts. Expense rates (excluding restructuring charges): % of revenue 11.9 12.7 (0.8) % of gross profit 77.5 74.1 3.4 Operating margin (excluding restructuring charges) 3.4 4.4 (1.0)EMEA Commercial Revenue from services (including fee-based income) $ 238.9 $ 283.3 (15.7)% (22.8)% Fee-based income 4.3 7.5 (42.6) (45.6) Gross profit 37.4 47.6 (21.5) (28.3) SG&A expenses excluding restructuring charges 35.2 51.4 (31.4) Restructuring charges 4.9 3.0 60.0 Total SG&A expenses 40.1 54.4 (26.3) (32.5) Earnings from operations (2.7) (6.8) 59.9 Earnings from operations excluding restructuring charges 2.2 (3.8) NM Gross profit rate 15.7% 16.8% (1.1)pts. Expense rates (excluding restructuring charges): % of revenue 14.8 18.1 (3.3) % of gross profit 94.2 107.8 (13.6) Operating margin (excluding restructuring charges) 0.9 (1.3) 2.2 KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (continued) (UNAUDITED) (In millions of dollars) Fourth Quarter —————————————– Constant 2009 2008 Currency (14 Weeks)(13 Weeks) Change Change ——– ——– ——– ——-EMEA PT Revenue from services (including fee-based income) $ 39.6 $ 38.4 3.0 % (6.1)% Fee-based income 3.6 5.5 (34.4) (37.4) Gross profit 9.8 11.2 (12.7) (19.4) Total SG&A expenses 10.6 11.7 (9.5) (17.1) Earnings from operations (0.8) (0.5) (58.0) Gross profit rate 24.7% 29.1% (4.4)pts. Expense rates: % of revenue 26.8 30.5 (3.7) % of gross profit 108.5 104.7 3.8 Operating margin (2.1) (1.4) (0.7)APAC Commercial Revenue from services (including fee-based income) $ 83.0 $ 73.5 12.9 % (2.2)% Fee-based income 2.9 3.0 (6.2) (15.2) Gross profit 12.1 11.4 6.8 (7.8) SG&A expenses excluding restructuring charges 11.6 12.4 (7.2) Restructuring charges 1.4 – NM Total SG&A expenses 13.0 12.4 4.6 (9.8) Earnings from operations (0.9) (1.0) 19.7 Earnings from operations excluding restructuring charges 0.5 (1.0) NM Gross profit rate 14.6% 15.5% (0.9)pts. Expense rates (excluding restructuring charges): % of revenue 13.9 16.9 (3.0) % of gross profit 95.0 109.3 (14.3) Operating margin (excluding restructuring charges) 0.7 (1.4) 2.1APAC PT Revenue from services (including fee-based income) $ 7.2 $ 7.2 (0.4)% (15.9)% Fee-based income 1.0 0.8 29.9 17.7 Gross profit 2.1 1.9 7.8 (7.0) Total SG&A expenses 2.6 2.2 19.3 2.4 Earnings from operations (0.5) (0.3) (106.4) Gross profit rate 28.6% 26.4% 2.2 pts. Expense rates: % of revenue 35.8 29.9 5.9 % of gross profit 125.2 113.1 12.1 Operating margin (7.2) (3.5) (3.7) KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (continued) (UNAUDITED) (In millions of dollars) Fourth Quarter ——————————————- Constant 2009 2008 Currency (14 Weeks) (13 Weeks) Change Change ——— ——— ——- ——–OCG Revenue from services (including fee-based income) $ 68.2 $ 68.4 (0.3)% (1.3)% Fee-based income 6.0 7.2 (16.2) (19.6) Gross profit 15.5 18.9 (18.0) (19.6) SG&A expenses excluding restructuring charges 17.9 18.0 (0.8) Restructuring charges 1.3 0.4 239.5 Total SG&A expenses 19.2 18.4 4.1 1.1 Earnings from operations (3.7) 0.5 NM Earnings from operations excluding restructuring charges (2.4) 0.9 NM Gross profit rate 22.7% 27.6% (4.9)pts. Expense rates (excluding restructuring charges): % of revenue 26.2 26.4 (0.2) % of gross profit 115.7 95.6 20.1 Operating margin (excluding restructuring charges) (3.6) 1.2 (4.8)Corporate Expense SG&A expenses excluding restructuring charges $ 17.7 $ 20.6 (14.2)% Restructuring charges 1.5 0.3 418.1 Total SG&A expenses 19.2 20.9 (8.1) (8.1)Asset Impairments $ – $ 80.5 (100.0)%Consolidated Total (excluding intersegment activity) Revenue from services (including fee-based income) $ 1,194.1 $ 1,279.1 (6.6)% (10.0)% Fee-based income 21.5 30.5 (29.5) (33.0) Gross profit 188.3 224.6 (16.2) (19.4) SG&A expenses excluding restructuring charges 187.9 223.5 (16.0) Restructuring charges 13.4 4.3 209.0 Total SG&A expenses 201.3 227.8 (11.7) (15.1) Earnings from operations (13.0) (83.7) 84.5 Earnings from operations excluding restructuring charges 0.4 (79.4) NM Gross profit rate 15.8% 17.6% (1.8)pts. Expense rates (excluding restructuring charges): % of revenue 15.7 17.5 (1.8) % of gross profit 99.8 99.4 0.4 Operating margin (excluding restructuring charges) 0.0 (6.2) 6.2 KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In millions of dollars) December Year to Date ——————————————– Constant 2009 2008 Currency (53 Weeks) (52 Weeks) Change Change ——— ——— ——— ——–Americas Commercial Revenue from services (including fee-based income) $ 1,980.3 $ 2,516.7 (21.3) % (20.3)% Fee-based income 6.6 15.7 (58.4) (56.8) Gross profit 290.7 399.0 (27.1) (26.3) SG&A expenses excluding restructuring charges 273.2 328.2 (16.7) Restructuring charges 7.2 0.9 NM Total SG&A expenses 280.4 329.1 (14.8) (13.8) Earnings from operations 10.3 69.9 (85.1) Earnings from operations excluding restructuring charges 17.5 70.8 (75.2) Gross profit rate 14.7% 15.9% (1.2)pts. Expense rates (excluding restructuring charges): % of revenue 13.8 13.0 0.8 % of gross profit 93.9 82.2 11.7 Operating margin (excluding restructuring charges) 0.9 2.8 (1.9)Americas PT Revenue from services (including fee-based income) $ 792.6 $ 938.2 (15.5)% (15.4)% Fee-based income 9.4 19.4 (51.5) (51.4) Gross profit 125.1 161.7 (22.6) (22.5) SG&A expenses excluding restructuring charges 100.9 113.3 (10.9) Restructuring charges 1.0 – NM Total SG&A expenses 101.9 113.3 (10.0) (9.8) Earnings from operations 23.2 48.4 (52.2) Earnings from operations excluding restructuring charges 24.2 48.4 (50.0) Gross profit rate 15.8% 17.2% (1.4)pts. Expense rates (excluding restructuring charges): % of revenue 12.7 12.1 0.6 % of gross profit 80.7 70.1 10.6 Operating margin (excluding restructuring charges) 3.0 5.2 (2.2)EMEA Commercial Revenue from services (including fee-based income) $ 895.2 $ 1,310.5 (31.7)% (24.9)% Fee-based income 16.6 39.5 (58.0) (52.6) Gross profit 140.2 227.3 (38.4) (32.5) SG&A expenses excluding restructuring charges 150.3 226.5 (33.7) Restructuring charges 15.6 3.9 301.4 Total SG&A expenses 165.9 230.4 (28.0) (20.2) Earnings from operations (25.7) (3.1) NM Earnings from operations excluding restructuring charges (10.1) 0.8 NM Gross profit rate 15.7% 17.4% (1.7)pts. Expense rates (excluding restructuring charges): % of revenue 16.8 17.3 (0.5) % of gross profit 107.2 99.6 7.6 Operating margin (excluding restructuring charges) (1.1) 0.1 (1.2) KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (continued) (UNAUDITED) (In millions of dollars) December Year to Date —————————————- Constant 2009 2008 Currency (53 Weeks)(52 Weeks) Change Change ——– ——– ——– ——-EMEA PT Revenue from services (including fee-based income) $ 141.9 $ 172.5 (17.8)% (10.7)% Fee-based income 15.7 26.8 (41.2) (33.2) Gross profit 37.8 51.2 (26.2) (18.8) Total SG&A expenses 40.6 48.9 (16.9) (8.5) Earnings from operations (2.8) 2.3 NM Gross profit rate 26.6% 29.7% (3.1)pts. Expense rates: % of revenue 28.6 28.3 0.3 % of gross profit 107.6 95.5 12.1 Operating margin (2.0) 1.3 (3.3)APAC Commercial Revenue from services (including fee-based income) $ 284.9 $ 336.0 (15.2)% (11.0)% Fee-based income 9.7 17.0 (43.0) (40.6) Gross profit 41.6 56.3 (26.1) (22.6) SG&A expenses excluding restructuring charges 44.6 56.6 (21.3) Restructuring charges 1.6 – NM Total SG&A expenses 46.2 56.6 (18.5) (14.8) Earnings from operations (4.6) (0.3) NM Earnings from operations excluding restructuring charges (3.0) (0.3) NM Gross profit rate 14.6% 16.8% (2.2)pts. Expense rates (excluding restructuring charges): % of revenue 15.6 16.8 (1.2) % of gross profit 107.0 100.5 6.5 Operating margin (excluding restructuring charges) (1.0) (0.1) (0.9)APAC PT Revenue from services (including fee-based income) $ 25.4 $ 34.3 (26.0)% (24.3)% Fee-based income 3.8 5.1 (25.0) (21.0) Gross profit 7.7 10.2 (25.1) (22.6) Total SG&A expenses 9.2 10.7 (14.2) (9.9) Earnings from operations (1.5) (0.5) (224.9) Gross profit rate 30.2% 29.8% 0.4 pts. Expense rates: % of revenue 36.2 31.2 5.0 % of gross profit 119.8 104.6 15.2 Operating margin (6.0) (1.4) (4.6) KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (continued) (UNAUDITED) (In millions of dollars) December Year to Date —————————————— Constant 2009 2008 Currency (53 Weeks) (52 Weeks) Change Change ——— ——— ——– ——–OCG Revenue from services (including fee-based income) $ 219.9 $ 233.3 (5.7)% (4.7)% Fee-based income 24.4 27.8 (12.3) (9.4) Gross profit 59.7 72.9 (18.0) (16.1) SG&A expenses excluding restructuring charges 69.6 69.5 0.0 Restructuring charges 1.9 0.5 328.4 Total SG&A expenses 71.5 70.0 2.0 4.3 Earnings from operations (11.8) 2.9 NM Earnings from operations excluding restructuring charges (9.9) 3.4 NM Gross profit rate 27.2% 31.2% (4.0)pts. Expense rates (excluding restructuring charges): % of revenue 31.7 29.8 1.9 % of gross profit 116.6 95.6 21.0 Operating margin (excluding restructuring charges) (4.5) 1.4 (5.9)Corporate Expense SG&A expenses excluding restructuring charges $ 77.5 $ 108.2 (28.4)% Restructuring charges 2.6 1.2 116.3 Total SG&A expenses 80.1 109.4 (26.8) (26.8)Asset Impairments $ 53.1 $ 80.5 (34.1)%Consolidated Total (excluding intersegment activity) Revenue from services (including fee-based income) $ 4,314.8 $ 5,517.3 (21.8)% (19.2)% Fee-based income 86.1 151.3 (43.1) (39.2) Gross profit 701.7 977.6 (28.2) (25.7) SG&A expenses excluding restructuring charges 764.8 960.9 (20.4) Restructuring charges 29.9 6.5 360.9 Total SG&A expenses 794.7 967.4 (17.9) (14.8) Earnings from operations (146.1) (70.3) (107.8) Earnings from operations excluding restructuring charges (116.2) (63.8) (82.0) Gross profit rate 16.3% 17.7% (1.4)pts. Expense rates (excluding restructuring charges): % of revenue 17.7 17.4 0.3 % of gross profit 109.0 98.3 10.7 Operating margin (excluding restructuring charges) (2.7) (1.2) (1.5) KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions of dollars) January 3, December 28, 2010 2008 ———— ————Current Assets Cash and equivalents $ 88.9 $ 118.3 Trade accounts receivable, less allowances of $15.0 and $17.0, respectively 717.9 815.8 Prepaid expenses and other current assets 70.6 62.0 Deferred taxes 21.0 31.9 ———— ———— Total current assets 898.4 1,028.0Property and Equipment, Net 127.1 151.3Noncurrent Deferred Taxes 77.5 40.0Goodwill, Net 67.3 117.8Other Assets 131.4 120.2 ———— ————Total Assets $ 1,301.7 $ 1,457.3 ============ ============Current Liabilities Short-term borrowings and current portion of long-term debt $ 79.6 $ 35.2 Accounts payable and accrued liabilities 182.6 244.1 Accrued payroll and related taxes 208.3 243.2 Accrued insurance 19.7 26.3 Income and other taxes 47.4 51.8 ———— ———— Total current liabilities 537.6 600.6Noncurrent Liabilities Long-term debt 57.5 80.0 Accrued insurance 47.3 46.9 Accrued retirement benefits 76.9 61.6 Other long-term liabilities 16.0 15.3 ———— ———— Total noncurrent liabilities 197.7 203.8Stockholders’ Equity Common stock 40.1 40.1 Treasury stock (107.2) (111.2) Paid-in capital 36.9 35.8 Earnings invested in the business 571.5 676.0 Accumulated other comprehensive income 25.1 12.2 ———— ———— Total stockholders’ equity 566.4 652.9 ———— ————Total Liabilities and Stockholders’ Equity $ 1,301.7 $ 1,457.3 ============ ============ ———— ————STATISTICS: Working Capital $ 360.8 $ 427.4 Current Ratio 1.7 1.7 Debt-to-capital % 19.5% 15.0% Global Days Sales Outstanding 51 50 KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE 53 WEEKS ENDED JANUARY 3, 2010 AND 52 WEEKS ENDED DECEMBER 28, 2008 (In millions of dollars) 2009 2008 ——— ———Cash flows from operating activities Net loss $ (104.5) $ (82.2) Noncash adjustments: Impairment of assets 53.1 80.5 Depreciation and amortization 40.9 46.0 Provision for bad debts 2.2 6.7 Stock-based compensation 5.1 4.4 Other, net (2.2) 3.7 Changes in operating assets and liabilities (11.8) 42.5 ——— ——— Net cash from operating activities (17.2) 101.6 ——— ———Cash flows from investing activities Capital expenditures (13.1) (31.1) Acquisition of companies, net of cash received (7.5) (32.7) Other investing activities (2.8) (0.2) ——— ——— Net cash from investing activities (23.4) (64.0) ——— ———Cash flows from financing activities Net change in revolving line of credit 52.7 (34.2) Repayment of debt (30.5) – Proceeds from debt – 42.5 Dividend payments – (19.1) Purchase of treasury stock – (8.0) Other financing activities (12.8) 10.0 ——— ——— Net cash from financing activities 9.4 (8.8) ——— ———Effect of exchange rates on cash and equivalents 1.8 (3.3) ——— ———Net change in cash and equivalents (29.4) 25.5Cash and equivalents at beginning of period 118.3 92.8 ——— ———Cash and equivalents at end of period $ 88.9 $ 118.3 ========= ========= KELLY SERVICES, INC. AND SUBSIDIARIES REVENUE FROM SERVICES (UNAUDITED) (In millions of dollars) Fourth Quarter (Commercial, PT and OCG) ——————————————— % Change 2009 2008 Constant (14 Weeks) (13 Weeks) US$ Currency ———– ———– ——— ———Americas United States $ 733.1 $ 781.5 (6.2)% (6.2)% Canada 51.5 50.2 2.7 (9.9) Mexico 19.0 18.1 5.3 6.6 Puerto Rico 15.0 18.7 (19.7) (19.7) ———– ———–Total Americas 818.6 868.5 (5.7) (6.4)EMEA France 78.7 75.1 4.7 (6.2) United Kingdom 43.1 80.7 (46.5) (48.1) Switzerland 38.8 41.4 (6.4) (17.5) Russia 19.9 22.3 (10.8) (3.3) Portugal 19.4 15.6 24.4 11.3 Italy 19.0 25.2 (24.8) (32.9) Germany 17.6 17.7 0.3 (10.5) Norway 17.3 16.9 1.7 (14.2) Other 29.0 32.7 (11.4) (20.1) ———– ———–Total EMEA 282.8 327.6 (13.7) (21.0)APAC Australia 30.4 26.0 16.9 (13.1) Singapore 17.9 16.1 10.9 4.1 Malaysia 13.7 12.3 12.3 7.7 Other 30.7 28.6 7.0 (3.8) ———– ———–Total APAC 92.7 83.0 11.6 (3.5)Total Kelly Services, Inc. $ 1,194.1 $ 1,279.1 (6.6)% (10.0)% =========== =========== KELLY SERVICES, INC. AND SUBSIDIARIES REVENUE FROM SERVICES (UNAUDITED) (In millions of dollars) December Year to Date (Commercial, PT and OCG) ———————————————- % Change 2009 2008 Constant (53 Weeks) (52 Weeks) US$ Currency ———– ———– ——— ———Americas United States $ 2,634.3 $ 3,237.1 (18.6)% (18.6)% Canada 183.4 237.8 (22.9) (17.5) Mexico 66.5 76.2 (12.7) 6.2 Puerto Rico 57.9 77.4 (25.2) (25.2) ———– ———–Total Americas 2,942.1 3,628.5 (18.9) (18.2)EMEA France 272.7 350.8 (22.3) (18.3) United Kingdom 206.7 398.0 (48.1) (37.0) Switzerland 138.6 184.9 (25.1) (25.2) Italy 72.9 131.9 (44.7) (41.5) Russia 65.4 90.9 (28.0) (8.9) Germany 65.1 83.0 (21.5) (17.2) Norway 61.7 86.1 (28.4) (18.9) Portugal 59.5 27.5 116.5 124.9 Other 111.2 154.4 (28.0) (22.1) ———– ———–Total EMEA 1,053.8 1,507.5 (30.1) (23.3)APAC Australia 98.3 133.7 (26.4) (21.3) Singapore 64.4 71.3 (9.6) (7.3) Malaysia 50.1 55.2 (9.2) (4.1) Other 106.1 121.1 (12.5) (9.0) ———– ———–Total APAC 318.9 381.3 (16.4) (12.3)Total Kelly Services, Inc. $ 4,314.8 $ 5,517.3 (21.8)% (19.2)% =========== =========== KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (In millions of dollars except per share data) December Fourth Quarter Year to Date —————— —————— 2009 2008 2009 2008 ——– ——– ——– ——–Pretax loss from operations $ (13.0) $ (83.7) $ (146.1) $ (70.3)Restructuring charges (Note 1) 13.4 4.3 29.9 6.5Asset impairments (Note 2) – 80.5 53.1 80.5Litigation charges – – 5.3 22.5 ——– ——– ——– ——–Earnings (loss) from operations excluding restructuring, asset impairment and litigation charges $ 0.4 $ 1.1 $ (57.8) $ 39.2 ======== ======== ======== ======== Fourth Quarter ————————————– 2009 2008 —————— —————— Per Per Amount Share Amount Share ——– ——– ——– ——–Loss from continuing operations, net of tax $ (8.2) $ (0.23) $ (88.6) $ (2.55)Restructuring charges, net of taxes (Note 1) 10.1 0.29 3.7 0.11Asset impairments, net of taxes (Note 2) – – 77.2 2.22 ——– ——–Earnings (loss) from continuing operations excluding restructuring and asset impairment charges, net of taxes $ 1.9 $ 0.05 $ (7.7) $ (0.22) ======== ======== ======== ======== December Year to Date ————————————– 2009 2008 —————— —————— Per Per Amount Share Amount Share ——– ——– ——– ——–Loss from continuing operations, net of tax $ (105.1) $ (3.01) $ (81.7) $ (2.35)Restructuring charges, net of taxes (Note 1) 24.0 0.69 5.3 0.15Asset impairments, net of taxes (Note 2) 50.0 1.43 77.2 2.22Litigation charges, net of taxes 3.3 0.09 13.9 0.40 ——– ——–(Loss) earnings from continuing operations excluding restructuring, asset impairment and litigation charges, net of taxes $ (27.8) $ (0.80) $ 14.7 $ 0.42 ======== ======== ======== ======== KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)Management believes that the non-GAAP (Generally Accepted AccountingPrinciples) information excluding the impairment, restructuring andlitigation charges is useful to understand the Company’s fiscal 2009financial performance and increases comparability. Specifically,Management believes that excluding these items allows for a more meaningfulcomparison of current period operating performance with the operatingresults of prior periods. These non-GAAP measures may have limitations asanalytical tools because they exclude items which can have a materialimpact on cash flow and earnings per share. As a result, Managementconsiders these measures, along with reported results, when it reviews andevaluates the Company’s financial performance. Management believes thatthese measures provide greater transparency to investors and provideinsight into how Management is evaluating the Company’s financialperformance. Non-GAAP measures should not be considered a substitute for,or superior to, measures of financial performance prepared in accordancewith 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) For 2009, asset impairment charges include adjustments to the value of goodwill for the Company’s Americas Commercial, EMEA PT and APAC Commercial reporting segments, and long-lived assets and intangible assets related to Japan and Europe. For 2008, asset 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.
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