5
Exhibit 99.1
| ANALYST CONTACT: | MEDIA CONTACT: | |
| James Polehna | Renee Walker | |
| (248) 244-4586 | (248) 244-5362 | |
| james_polehna@kellyservices.com | renee_walker@kellyservices.com |
KELLY SERVICES REPORTS 4% REVENUE INCREASE AND
19% OPERATING EARNINGS GROWTH FOR FOURTH QUARTER, 2007
TROY, MI (January 24, 2008) -— Kelly Services, Inc., a global provider of staffing services, today announced results for the fourth quarter and year ended December 30, 2007.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2007 totaled $1.5 billion, a 4% increase compared to the $1.4 billion for the corresponding quarter in 2006. Revenue for the full year totaled $5.7 billion, a 2% increase compared to the $5.5 billion for the full year of 2006.
Earnings from operations for the fourth quarter of 2007 totaled $26.5 million, a 19% increase compared to $22.3 million reported for the fourth quarter of 2006. Included in earnings from operations in the quarter are $1.4 million of restructuring costs related to our Americas Commercial operations.
Earnings from operations for the full year of 2007 totaled $80.1 million, a 3% increase compared to $78.0 million reported for 2006. Included in earnings from operations for the year are $8.9 million of costs related to the restructuring of our Americas Commercial and UK operations.
Diluted earnings per share from continuing operations in the fourth quarter of 2007 were $0.52, a decrease of 7% as compared to fourth quarter 2006 earnings of $0.56 per share. Included in fourth quarter diluted earnings is the $0.02 per share cost of the Americas Commercial restructuring. The effective tax rate for continuing operations in the fourth quarter was 33.0%, which is significantly higher than the 11.3% rate in the prior year. In 2006, Work Opportunity Credits in the U.S. were reinstated in the fourth quarter. As a result, we recognized the impact of an entire year’s worth of credits in the fourth quarter.
Diluted earnings per share from continuing operations for the full year of 2007 were $1.47, a decrease of 6% as compared to 2006 earnings of $1.56 per share. Included in 2007 diluted earnings per share from continuing operations is the $0.21 per share cost of the Americas Commercial and UK restructuring.
Commenting on the results, Camden said, “Despite continued weakness in the U.S. staffing market, we’re pleased that we delivered solid profitable results. We accomplished a number of key strategic objectives during the quarter as we continue to diversify geographically and move into higher margin fee based businesses.
“Revenue in our Americas Commercial segment, which accounted for 47% of total sales, decreased 6% year over year in the fourth quarter. Operating earnings totaled $25.0 million, and decreased 16% compared to last year. Included in the segment operating earnings are $1.4 million of restructuring costs. We have completed our America’s restructuring at a total cost of approximately $3.0 million, or $0.05 per share.
“Revenue in the Americas PTSA segment, which accounted for 20% of total sales, increased 6% year over year in the fourth quarter. Operating earnings totaled $17.4 million and increased 16% on a year over year basis.
6
“Revenue in our International Commercial segment, which accounted for 29% of total sales, increased 19% year over year in the fourth quarter. On a constant currency basis, revenue increased 8%. The segment operating earnings totaled $5.7 million, up significantly compared to $255 thousand the prior year.
“Revenue in our International PTSA segment, which accounted for 4% of total sales, increased 30% year over year in the fourth quarter. On a constant currency basis, revenue increased 17%. Operating earnings totaled $975 thousand, an increase of 288% compared to earnings of $251 thousand the prior year.
“Corporate expenses totaled $22.5 million, a decrease of 2% compared to the prior year.
Mr. Camden added, “We expect first quarter 2008 earnings to be in the range of $0.19 to $0.23 per share, compared to $0.14 per share from continuing operations in the first quarter of 2007. Included in the first quarter 2007 earnings from continuing operations are $.07 of UK restructuring costs.
In conjunction with its fourth quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 24, 2008 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
| U.S. | 1-800-230-1059 | |
| International | 1-612-332-0226 |
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 projections contained herein.
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. Kelly operates in 37 countries and territories. 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 2007 was $5.7 billion. Visitwww.kellyservices.com.
7
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED DECEMBER 30, 2007 AND DECEMBER 31, 2006
(UNAUDITED)
(In thousands of dollars except per share data)
| 2007 | 2006 | Change | % Change | ||||||||||||
Revenue from services | $ | 1,475,759 | $ | 1,421,376 | $ | 54,383 | 3.8 | % | |||||||
Cost of services | 1,210,323 | 1,181,884 | 28,439 | 2.4 | |||||||||||
Gross profit | 265,436 | 239,492 | 25,944 | 10.8 | |||||||||||
Selling, general and administrative expenses | 238,895 | 217,191 | 21,704 | 10.0 | |||||||||||
Earnings from operations | 26,541 | 22,301 | 4,240 | 19.0 | |||||||||||
Other income, net | 1,021 | 618 | 403 | 65.2 | |||||||||||
Earnings from continuing operations before taxes | 27,562 | 22,919 | 4,643 | 20.3 | |||||||||||
Income taxes | 9,089 | 2,591 | 6,498 | 250.8 | |||||||||||
Earnings from continuing operations | 18,473 | 20,328 | (1,855 | ) | (9.1 | ) | |||||||||
Earnings from discontinued operations, net of tax | 158 | 4,114 | (3,956 | ) | (96.2 | ) | |||||||||
Net earnings | $ | 18,631 | $ | 24,442 | $ | (5,811 | ) | (23.8 | ) % | ||||||
Basic earnings per share | |||||||||||||||
Earnings from continuing operations | $ | 0.52 | $ | 0.56 | $ | (0.04 | ) | (7.1 | ) % | ||||||
Earnings from discontinued operations | - | 0.11 | (0.11 | ) | (100.0 | ) | |||||||||
Net earnings | $ | 0.52 | $ | 0.68 | $ | (0.16 | ) | (23.5 | ) % | ||||||
Diluted earnings per share | |||||||||||||||
Earnings from continuing operations | $ | 0.52 | $ | 0.56 | $ | (0.04 | ) | (7.1 | ) % | ||||||
Earnings from discontinued operations | - | 0.11 | (0.11 | ) | (100.0 | ) | |||||||||
Net earnings | $ | 0.52 | $ | 0.67 | $ | (0.15 | ) | (22.4 | ) % | ||||||
| STATISTICS: | |||||||||||||||
Gross profit rate | 18.0 | % | 16.8 | % | 1.2 | % | |||||||||
Selling, general and administrative expenses: | |||||||||||||||
% of revenue | 16.2 | 15.3 | 0.9 | ||||||||||||
% of gross profit | 90.0 | 90.7 | (0.7 | ) | |||||||||||
% Return - Earnings from operations | 1.8 | 1.6 | 0.2 | ||||||||||||
| Earnings from continuing operations before taxes | 1.9 | 1.6 | 0.3 | ||||||||||||
| Earnings from continuing operations | 1.3 | 1.4 | (0.1 | ) | |||||||||||
| Net earnings | 1.3 | 1.7 | (0.4 | ) | |||||||||||
Effective income tax rate | 33.0 | % | 11.3 | % | 21.7 | % | |||||||||
Average number of shares outstanding (thousands): | |||||||||||||||
Basic | 35,759 | 36,182 | |||||||||||||
Diluted | 35,858 | 36,524 | |||||||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2007 AND DECEMBER 31, 2006
(In thousands of dollars except per share data)
| 2007 | 2006 | Change | % Change | ||||||||||||
Revenue from services | $ | 5,667,589 | $ | 5,546,778 | $ | 120,811 | 2.2 | % | |||||||
Cost of services | 4,678,500 | 4,640,052 | 38,448 | 0.8 | |||||||||||
Gross profit | 989,089 | 906,726 | 82,363 | 9.1 | |||||||||||
Selling, general and administrative expenses | 909,009 | 828,685 | 80,324 | 9.7 | |||||||||||
Earnings from operations | 80,080 | 78,041 | 2,039 | 2.6 | |||||||||||
Other income, net | 3,211 | 1,471 | 1,740 | 118.3 | |||||||||||
Earnings from continuing operations before taxes | 83,291 | 79,512 | 3,779 | 4.8 | |||||||||||
Income taxes | 29,567 | 22,727 | 6,840 | 30.1 | |||||||||||
Earnings from continuing operations | 53,724 | 56,785 | (3,061 | ) | (5.4 | ) | |||||||||
Earnings from discontinued operations, net of tax | 7,292 | 6,706 | 586 | 8.7 | |||||||||||
Net earnings | $ | 61,016 | $ | 63,491 | $ | (2,475 | ) | (3.9 | ) % | ||||||
Basic earnings per share | |||||||||||||||
Earnings from continuing operations | $ | 1.48 | $ | 1.58 | $ | (0.10 | ) | (6.3 | ) % | ||||||
Earnings from discontinued operations | 0.20 | 0.19 | 0.01 | 5.3 | |||||||||||
Net earnings | $ | 1.68 | $ | 1.76 | $ | (0.08 | ) | (4.5 | ) % | ||||||
Diluted earnings per share | |||||||||||||||
Earnings from continuing operations | $ | 1.47 | $ | 1.56 | $ | (0.09 | ) | (5.8 | ) % | ||||||
Earnings from discontinued operations | 0.20 | 0.18 | 0.02 | 11.1 | |||||||||||
Net earnings | $ | 1.67 | $ | 1.75 | $ | (0.08 | ) | (4.6 | ) % | ||||||
| STATISTICS: | |||||||||||||||
Gross profit rate | 17.5 | % | 16.3 | % | 1.2 | % | |||||||||
Selling, general and administrative expenses: | |||||||||||||||
% of revenue | 16.0 | 14.9 | 1.1 | ||||||||||||
% of gross profit | 91.9 | 91.4 | 0.5 | ||||||||||||
% Return - Earnings from operations | 1.4 | 1.4 | 0.0 | ||||||||||||
| Earnings from continuing operations before taxes | 1.5 | 1.4 | 0.1 | ||||||||||||
Earnings from continuing operations | 0.9 | 1.0 | (0.1 | ) | |||||||||||
Net earnings | 1.1 | 1.1 | 0.0 | ||||||||||||
Effective income tax rate | 35.5 | % | 28.6 | % | 6.9 | % | |||||||||
Average number of shares outstanding (thousands): | |||||||||||||||
Basic | 36,357 | 35,999 | |||||||||||||
Diluted | 36,495 | 36,314 | |||||||||||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In thousands of dollars)
| Fourth Quarter | |||||||||||||||
| 2007 | 2006 | Change | % Change | ||||||||||||
Revenue from Services: | |||||||||||||||
Americas - Commercial | $ | 695,839 | $ | 739,118 | $ | (43,279 | ) | (5.9 | ) % | ||||||
Americas - PTSA | 292,830 | 277,347 | 15,483 | 5.6 | |||||||||||
Total Americas | 988,669 | 1,016,465 | (27,796 | ) | (2.7 | ) | |||||||||
International - Commercial | 435,034 | 364,842 | 70,192 | 19.2 | |||||||||||
International - PTSA | 52,056 | 40,069 | 11,987 | 29.9 | |||||||||||
Total International | 487,090 | 404,911 | 82,179 | 20.3 | |||||||||||
| $ | 1,475,759 | $ | 1,421,376 | $ | 54,383 | 3.8 | % | ||||||||
Earnings from Operations (As Reported): | |||||||||||||||
Americas - Commercial | $ | 25,003 | $ | 29,614 | $ | (4,611 | ) | (15.6 | ) % | ||||||
Americas - PTSA | 17,416 | 15,085 | 2,331 | 15.5 | |||||||||||
Total Americas | 42,419 | 44,699 | (2,280 | ) | (5.1 | ) | |||||||||
International - Commercial | 5,658 | 255 | 5,403 | NM | |||||||||||
International - PTSA | 975 | 251 | 724 | 288.4 | |||||||||||
Total International | 6,633 | 506 | 6,127 | NM | |||||||||||
Corporate Expense | (22,511 | ) | (22,904 | ) | 393 | 1.7 | |||||||||
| $ | 26,541 | $ | 22,301 | $ | 4,240 | 19.0 | % | ||||||||
Earnings from Operations (Excluding Restructuring Charges): | |||||||||||||||
Americas - Commercial | $ | 26,445 | $ | 29,614 | $ | (3,169 | ) | (10.7 | ) % | ||||||
Americas - PTSA | 17,416 | 15,085 | 2,331 | 15.5 | |||||||||||
Total Americas | 43,861 | 44,699 | (838 | ) | (1.9 | ) | |||||||||
International - Commercial | 5,559 | 255 | 5,304 | NM | |||||||||||
International - PTSA | 975 | 251 | 724 | 288.4 | |||||||||||
Total International | 6,534 | 506 | 6,028 | NM | |||||||||||
Corporate Expense | (22,511 | ) | (22,904 | ) | 393 | 1.7 | |||||||||
| $ | 27,884 | $ | 22,301 | $ | 5,583 | 25.0 | % | ||||||||
10
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(In thousands of dollars)
| December Year to Date | |||||||||||||||
| 2007 | 2006 | Change | % Change | ||||||||||||
Revenue from Services: | |||||||||||||||
Americas - Commercial | $ | 2,759,398 | $ | 2,916,079 | $ | (156,681 | ) | (5.4 | ) % | ||||||
Americas - PTSA | 1,105,752 | 1,108,329 | (2,577 | ) | (0.2 | ) | |||||||||
Total Americas | 3,865,150 | 4,024,408 | (159,258 | ) | (4.0 | ) | |||||||||
International - Commercial | 1,603,958 | 1,378,540 | 225,418 | 16.4 | |||||||||||
International - PTSA | 198,481 | 143,830 | 54,651 | 38.0 | |||||||||||
Total International | 1,802,439 | 1,522,370 | 280,069 | 18.4 | |||||||||||
| $ | 5,667,589 | $ | 5,546,778 | $ | 120,811 | 2.2 | % | ||||||||
Earnings from Operations (As Reported): | |||||||||||||||
Americas - Commercial | $ | 88,054 | $ | 102,935 | $ | (14,881 | ) | (14.5 | ) % | ||||||
Americas - PTSA | 59,161 | 58,090 | 1,071 | 1.8 | |||||||||||
Total Americas | 147,215 | 161,025 | (13,810 | ) | (8.6 | ) | |||||||||
International - Commercial | 10,064 | 567 | 9,497 | NM | |||||||||||
International - PTSA | 2,717 | 641 | 2,076 | 323.9 | |||||||||||
Total International | 12,781 | 1,208 | 11,573 | NM | |||||||||||
Corporate Expense | (79,916 | ) | (84,192 | ) | 4,276 | 5.1 | |||||||||
| $ | 80,080 | $ | 78,041 | $ | 2,039 | 2.6 | % | ||||||||
Earnings from Operations (Excluding Restructuring Charges): | |||||||||||||||
Americas - Commercial | $ | 91,007 | $ | 102,935 | $ | (11,928 | ) | (11.6 | ) % | ||||||
Americas - PTSA | 59,161 | 58,090 | 1,071 | 1.8 | |||||||||||
Total Americas | 150,168 | 161,025 | (10,857 | ) | (6.7 | ) | |||||||||
International - Commercial | 16,000 | 567 | 15,433 | NM | |||||||||||
International - PTSA | 2,717 | 641 | 2,076 | 323.9 | |||||||||||
Total International | 18,717 | 1,208 | 17,509 | NM | |||||||||||
Corporate Expense | (79,916 | ) | (84,192 | ) | 4,276 | 5.1 | |||||||||
| $ | 88,969 | $ | 78,041 | $ | 10,928 | 14.0 | % | ||||||||
11
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
(UNAUDITED)
(In thousands of dollars)
| Fourth Quarter | |||||||||||||
| 2007 | 2006 | Change | % Change | ||||||||||
Revenue from services - constant currency*: | |||||||||||||
Americas - Commercial | $ | 686,725 | $ | 739,118 | $ | (52,393 | ) | (7.1 | ) % | ||||
Americas - PTSA | 292,241 | 277,347 | 14,894 | 5.4 | |||||||||
Total Americas - constant currency* | 978,966 | 1,016,465 | (37,499 | ) | (3.7 | ) | |||||||
International - Commercial | 393,868 | 364,842 | 29,026 | 8.0 | |||||||||
International - PTSA | 46,942 | 40,069 | 6,873 | 17.2 | |||||||||
Total International - constant currency* | 440,810 | 404,911 | 35,899 | 8.9 | |||||||||
Total revenue from services - constant currency* | 1,419,776 | 1,421,376 | (1,600 | ) | (0.1 | ) % | |||||||
Foreign currency impact | 55,983 | 55,983 | |||||||||||
Revenue from services | $ | 1,475,759 | $ | 1,421,376 | $ | 54,383 | 3.8 | % | |||||
| December Year to Date | |||||||||||||
| 2007 | 2006 | Change | % Change | ||||||||||
Revenue from services - constant currency*: | |||||||||||||
Americas - Commercial | $ | 2,745,728 | $ | 2,916,079 | $ | (170,351 | ) | (5.8 | ) % | ||||
Americas - PTSA | 1,104,880 | 1,108,329 | (3,449 | ) | (0.3 | ) | |||||||
Total Americas - constant currency* | 3,850,608 | 4,024,408 | (173,800 | ) | (4.3 | ) | |||||||
International - Commercial | 1,479,957 | 1,378,540 | 101,417 | 7.4 | |||||||||
International - PTSA | 182,763 | 143,830 | 38,933 | 27.1 | |||||||||
Total International - constant currency* | 1,662,720 | 1,522,370 | 140,350 | 9.2 | |||||||||
Total revenue from services - constant currency* | 5,513,328 | 5,546,778 | (33,450 | ) | (0.6 | ) % | |||||||
Foreign currency impact | 154,261 | 154,261 | |||||||||||
Revenue from services | $ | 5,667,589 | $ | 5,546,778 | $ | 120,811 | 2.2 | % | |||||
| * | Information on constant currencies is provided to allow investors to separate the impact of foreign currency translations on reported results. Constant currency results are calculated by translating the current year results at prior year average exchange rates. |
12
KELLY SERVICES, INC. AND SUBSIDIARIES
SUMMARY OF DISCONTINUED OPERATIONS
(UNAUDITED)
(In thousands of dollars)
| Fourth Quarter | December Year to Date | ||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||
Revenue from services | $ | - | $ | 22,347 | $ | 14,777 | $ | 92,247 | |||||
Operating (loss) income from discontinued operations | $ | (119 | ) | $ | 2,973 | $ | 1,454 | $ | 7,248 | ||||
Less: Income taxes | (277 | ) | 1,113 | 328 | 2,796 | ||||||||
Earnings from discontinued operations, net of tax | 158 | 1,860 | 1,126 | 4,452 | |||||||||
Gain on sale of discontinued operations | - | 3,731 | 10,153 | 3,731 | |||||||||
Less: Income taxes | - | 1,477 | 3,987 | 1,477 | |||||||||
Gain on sale of discontinued operations, net of tax | - | 2,254 | 6,166 | 2,254 | |||||||||
Discontinued operations, net of tax | $ | 158 | $ | 4,114 | $ | 7,292 | $ | 6,706 | |||||
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 gains on the sales of KHC and KSL, 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 2007 and 2006 and year to date 2007 and 2006, as well as the gains on the sales of KHC and KSL, all of which are included as discontinued operations on the face of the statements of earnings.
13
KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In thousands of dollars)
| December 30, 2007 | December 31, 2006 | |||||||
Current Assets | ||||||||
Cash and equivalents | $ | 92,817 | $ | 118,428 | ||||
Trade accounts receivable, less allowances of $18,172 and $16,818, respectively | 888,334 | 838,246 | ||||||
Prepaid expenses and other current assets | 53,392 | 45,316 | ||||||
Deferred taxes | 29,294 | 29,543 | ||||||
Total current assets | 1,063,837 | 1,031,533 | ||||||
Property and Equipment, Net | 178,019 | 170,288 | ||||||
Noncurrent Deferred Taxes | 43,436 | 35,437 | ||||||
Goodwill, Net | 147,168 | 96,504 | ||||||
Other Assets | 141,537 | 135,662 | ||||||
Total Assets | $ | 1,573,997 | $ | 1,469,424 | ||||
Current Liabilities | ||||||||
Short-term borrowings | $ | 49,729 | $ | 68,928 | ||||
Accounts payable | 171,471 | 132,819 | ||||||
Accrued payroll and related taxes | 270,575 | 274,284 | ||||||
Accrued insurance | 23,696 | 24,191 | ||||||
Income and other taxes | 69,779 | 68,055 | ||||||
Total current liabilities | 585,250 | 568,277 | ||||||
Noncurrent Liabilities | ||||||||
Long-term debt | 48,394 | - | ||||||
Accrued insurance | 60,404 | 57,277 | ||||||
Accrued retirement benefits | 78,382 | 71,990 | ||||||
Other long-term liabilities | 13,338 | 13,323 | ||||||
Total noncurrent liabilities | 200,518 | 142,590 | ||||||
Stockholders’ Equity | ||||||||
Common stock | 40,116 | 40,116 | ||||||
Treasury stock | (106,312 | ) | (78,841 | ) | ||||
Paid-in capital | 34,500 | 32,048 | ||||||
Earnings invested in the business | 777,338 | 735,104 | ||||||
Accumulated other comprehensive income | 42,587 | 30,130 | ||||||
Total stockholders’ equity | 788,229 | 758,557 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 1,573,997 | $ | 1,469,424 | ||||
STATISTICS: | ||||||||
Working Capital | $ | 478,587 | $ | 463,256 | ||||
Current Ratio | 1.8 | 1.8 | ||||||
Debt-to-capital % | 11.1 | % | 8.3 | % | ||||
Global Days Sales Outstanding | 55 | 54 | ||||||
14
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2007 AND DECEMBER 31, 2006
(In thousands of dollars)
| 2007 | 2006 | |||||||
| Cash flows from operating activities | ||||||||
Net earnings | $ | 61,016 | $ | 63,491 | ||||
Noncash adjustments: | ||||||||
Depreciation and amortization | 42,601 | 41,730 | ||||||
Provision for bad debts | 6,654 | 5,178 | ||||||
Stock-based compensation | 3,941 | 5,286 | ||||||
Gain on sale of discontinued operations | (6,166 | ) | (2,254 | ) | ||||
Other, net | (573 | ) | (405 | ) | ||||
Changes in operating assets and liabilities | (34,129 | ) | 3,239 | |||||
Net cash from operating activities | 73,344 | 116,265 | ||||||
| Cash flows from investing activities | ||||||||
Capital expenditures | (45,975 | ) | (45,526 | ) | ||||
Proceeds from sale of discontinued operations | 12,500 | 6,500 | ||||||
Acquisition of companies, net of cash received | (48,417 | ) | (4,663 | ) | ||||
Investment in unconsolidated affiliate | - | (20,729 | ) | |||||
Other investing activities | (532 | ) | (550 | ) | ||||
Net cash from investing activities | (82,424 | ) | (64,968 | ) | ||||
| Cash flows from financing activities | ||||||||
Net increase (decrease) in revolving line of credit | 17,500 | (11,022 | ) | |||||
Proceeds from debt | 57,277 | 20,729 | ||||||
Repayment of debt | (49,054 | ) | - | |||||
Dividend payments | (19,114 | ) | (16,420 | ) | ||||
Purchase of treasury stock | (34,703 | ) | - | |||||
Stock options and other stock sales | 5,781 | 10,973 | ||||||
Other financing activities | (165 | ) | (2,873 | ) | ||||
Net cash from financing activities | (22,478 | ) | 1,387 | |||||
| Effect of exchange rates on cash and equivalents | 5,947 | 2,045 | ||||||
| Net change in cash and equivalents | (25,611 | ) | 54,729 | |||||
| Cash and equivalents at beginning of period | 118,428 | 63,699 | ||||||
| Cash and equivalents at end of period | $ | 92,817 | $ | 118,428 | ||||
15
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In thousands of dollars)
| Fourth Quarter | ||||||||||||
| % Change | ||||||||||||
| 2007 | 2006 | US$ | Constant Currency | |||||||||
Americas | ||||||||||||
United States | $ | 881,640 | $ | 910,698 | (3.2 | ) % | (3.2 | ) % | ||||
Canada | 69,041 | 66,741 | 3.4 | (11.0 | ) | |||||||
Puerto Rico | 19,431 | 19,362 | 0.4 | 0.4 | ||||||||
Mexico | 18,557 | 19,664 | (5.6 | ) | (6.0 | ) | ||||||
Total Americas | 988,669 | 1,016,465 | (2.7 | ) | (3.7 | ) | ||||||
EMEA | ||||||||||||
United Kingdom | 114,113 | 110,608 | 3.2 | (3.5 | ) | |||||||
France | 87,084 | 72,703 | 19.8 | 6.7 | ||||||||
Switzerland | 50,199 | 45,960 | 9.2 | 1.3 | ||||||||
Italy | 31,893 | 30,744 | 3.7 | (7.6 | ) | |||||||
Norway | 21,527 | 15,631 | 37.7 | 16.5 | ||||||||
Russia | 19,652 | 14,384 | 36.6 | 23.0 | ||||||||
Germany | 20,091 | 12,504 | 60.7 | 43.3 | ||||||||
Other | 42,402 | 34,178 | 24.1 | 10.4 | ||||||||
Total EMEA | 386,961 | 336,712 | 14.9 | 4.2 | ||||||||
APAC | ||||||||||||
Australia | 39,779 | 30,350 | 31.1 | 13.4 | ||||||||
Singapore | 18,373 | 12,593 | 45.9 | 36.2 | ||||||||
Other | 41,977 | 25,256 | 66.2 | 52.0 | ||||||||
Total APAC | 100,129 | 68,199 | 46.8 | 31.9 | ||||||||
Total Kelly Services, Inc. | $ | 1,475,759 | $ | 1,421,376 | 3.8 | % | (0.1 | ) % | ||||
16
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In thousands of dollars)
| December Year to Date | ||||||||||||
| % Change | ||||||||||||
| 2007 | 2006 | US$ | Constant Currency | |||||||||
Americas | ||||||||||||
United States | $ | 3,454,922 | $ | 3,603,284 | (4.1 | ) % | (4.1 | ) % | ||||
Canada | 260,050 | 272,727 | (4.6 | ) | (10.0 | ) | ||||||
Puerto Rico | 76,772 | 76,939 | (0.2 | ) | (0.2 | ) | ||||||
Mexico | 73,406 | 71,458 | 2.7 | 2.9 | ||||||||
Total Americas | 3,865,150 | 4,024,408 | (4.0 | ) | (4.3 | ) | ||||||
EMEA | ||||||||||||
United Kingdom | 469,903 | 441,847 | 6.3 | (2.2 | ) | |||||||
France | 315,008 | 274,694 | 14.7 | 5.1 | ||||||||
Switzerland | 180,951 | 160,555 | 12.7 | 7.9 | ||||||||
Italy | 124,674 | 118,501 | 5.2 | (3.5 | ) | |||||||
Norway | 78,050 | 56,463 | 38.2 | 25.9 | ||||||||
Russia | 68,528 | 51,958 | 31.9 | 23.1 | ||||||||
Germany | 65,593 | 41,890 | 56.6 | 43.4 | ||||||||
Other | 153,209 | 120,012 | 27.7 | 16.8 | ||||||||
Total EMEA | 1,455,916 | 1,265,920 | 15.0 | 6.2 | ||||||||
APAC | ||||||||||||
Australia | 135,886 | 117,694 | 15.5 | 3.5 | ||||||||
Singapore | 62,447 | 50,527 | 23.6 | 17.2 | ||||||||
Other | 148,190 | 88,229 | 68.0 | 56.2 | ||||||||
Total APAC | 346,523 | 256,450 | 35.1 | 24.3 | ||||||||
Total Kelly Services, Inc. | $ | 5,667,589 | $ | 5,546,778 | 2.2 | % | (0.6 | ) % | ||||
17
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In thousands of dollars except per share data)
| Fourth Quarter | ||||||||||||||
| 2007 | 2006 | |||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||
Earnings from continuing operations | $ | 18,473 | $ | 0.52 | $ | 20,328 | $ | 0.56 | ||||||
Restructuring charges, net of taxes (Notes 1 & 2) | 802 | 0.02 | - | - | ||||||||||
Earnings from continuing operations excluding restructuring charges, net of taxes | $ | 19,275 | $ | 0.54 | $ | 20,328 | $ | 0.56 | ||||||
| Fourth Quarter | ||||||||||||||
| 2007 | 2006 | % Change | ||||||||||||
Selling, general and administrative expenses | $ | 238,895 | $ | 217,191 | ||||||||||
Restructuring charges (Notes 1 & 2) | (1,343 | ) | - | |||||||||||
Selling, general and administrative expenses excluding restructuring charges | $ | 237,552 | $ | 217,191 | 9.4 | % | ||||||||
Earnings from operations | $ | 26,541 | $ | 22,301 | ||||||||||
Restructuring charges (Notes 1 & 2) | 1,343 | - | ||||||||||||
Earnings from operations excluding restructuring charges | $ | 27,884 | $ | 22,301 | 25.0 | % | ||||||||
Americas Commercial selling, general and administrative expenses | $ | 87,179 | $ | 87,847 | ||||||||||
Americas restructuring charge (Note 1) | (1,442 | ) | - | |||||||||||
Americas Commercial selling, general and administrative expenses excluding the Americas restructuring charge | $ | 85,737 | $ | 87,847 | (2.4 | ) % | ||||||||
Americas Commercial Earnings from operations | $ | 25,003 | $ | 29,614 | ||||||||||
Americas restructuring charge (Note 1) | 1,442 | - | ||||||||||||
Americas Commercial earnings excluding the Americas restructuring charge | $ | 26,445 | $ | 29,614 | (10.7 | ) % | ||||||||
18
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES (continued)
(UNAUDITED)
(In thousands of dollars except per share data)
| Fourth Quarter | ||||||||||||
| 2007 | 2006 | % Change | ||||||||||
Americas Earnings from operations | $ | 42,419 | $ | 44,699 | ||||||||
Americas restructuring charge (Note 1) | 1,442 | - | ||||||||||
Americas earnings excluding the Americas restructuring charge | $ | 43,861 | $ | 44,699 | (1.9 | ) % | ||||||
International Commercial selling, general and administrative expenses | $ | 73,622 | $ | 61,875 | ||||||||
UK restructuring charge (Note 2) | 99 | - | ||||||||||
International Commercial selling, general and administrative expenses excluding the UK restructuring charge | $ | 73,721 | $ | 61,875 | 19.1 | % | ||||||
International Commercial Earnings from operations | $ | 5,658 | $ | 255 | ||||||||
UK restructuring charge (Note 2) | (99 | ) | - | |||||||||
International Commercial earnings excluding the UK restructuring charge | $ | 5,559 | $ | 255 | NM | |||||||
International Earnings from operations | $ | 6,633 | $ | 506 | ||||||||
UK restructuring charge (Note 2) | (99 | ) | - | |||||||||
International earnings excluding the UK restructuring charge | $ | 6,534 | $ | 506 | NM | |||||||
19
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES (continued)
(UNAUDITED)
(In thousands of dollars except per share data)
| First Quarter | ||||||||||||||
| 2007 | 2006 | |||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||
Earnings from continuing operations | $ | 5,258 | $ | 0.14 | $ | 8,172 | $ | 0.23 | ||||||
Restructuring charges, net of taxes (Note 2) | 2,634 | 0.07 | — | — | ||||||||||
Earnings from continuing operations excluding restructuring charges, net of taxes | $ | 7,892 | $ | 0.21 | $ | 8,172 | $ | 0.23 | ||||||
| Second Quarter | ||||||||||||||
| 2007 | 2006 | |||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||
Earnings from continuing operations | $ | 15,311 | $ | 0.41 | $ | 11,850 | $ | 0.33 | ||||||
Restructuring charges, net of taxes (Note 2) | 2,448 | 0.07 | — | — | ||||||||||
Earnings from continuing operations excluding restructuring charges, net of taxes | $ | 17,759 | $ | 0.48 | $ | 11,850 | $ | 0.33 | ||||||
| Third Quarter | ||||||||||||||
| 2007 | 2006 | |||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||
Earnings from continuing operations | $ | 14,682 | $ | 0.40 | $ | 16,435 | $ | 0.45 | ||||||
Restructuring charges, net of taxes (Notes 1 & 2) | 1,882 | 0.05 | — | — | ||||||||||
Earnings from continuing operations excluding restructuring charges, net of taxes | $ | 16,564 | $ | 0.45 | $ | 16,435 | $ | 0.45 | ||||||
20
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In thousands of dollars except per share data)
| December Year to Date | ||||||||||||||
| 2007 | 2006 | |||||||||||||
| Amount | Per Share | Amount | Per Share | |||||||||||
Earnings from continuing operations | $ | 53,724 | $ | 1.47 | $ | 56,785 | $ | 1.56 | ||||||
Restructuring charges, net of taxes (Notes 1 & 2) | 7,766 | 0.21 | - | - | ||||||||||
Earnings from continuing operations excluding restructuring charges, net of taxes | $ | 61,490 | $ | 1.68 | $ | 56,785 | $ | 1.56 | ||||||
| December Year to Date | ||||||||||||||
| 2007 | 2006 | % Change | ||||||||||||
Selling, general and administrative expenses | $ | 909,009 | $ | 828,685 | ||||||||||
Restructuring charges (Notes 1 & 2) | (8,889 | ) | - | |||||||||||
Selling, general and administrative expenses excluding restructuring charges | $ | 900,120 | $ | 828,685 | 8.6 | % | ||||||||
Earnings from operations | $ | 80,080 | $ | 78,041 | ||||||||||
Restructuring charges (Notes 1 & 2) | 8,889 | - | ||||||||||||
Earnings from operations excluding restructuring charges | $ | 88,969 | $ | 78,041 | 14.0 | % | ||||||||
Americas Commercial selling, general and administrative expenses | $ | 349,709 | $ | 344,883 | ||||||||||
Americas restructuring charge (Note 1) | (2,953 | ) | - | |||||||||||
Americas Commercial selling, general and administrative expenses excluding the Americas restructuring charge | $ | 346,756 | $ | 344,883 | 0.5 | % | ||||||||
Americas Commercial Earnings from operations | $ | 88,054 | $ | 102,935 | ||||||||||
Americas restructuring charge (Note 1) | 2,953 | - | ||||||||||||
Americas Commercial Earnings excluding the Americas restructuring charge | $ | 91,007 | $ | 102,935 | (11.6 | ) % | ||||||||
21
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES (continued)
(UNAUDITED)
(In thousands of dollars except per share data)
| December Year to Date | ||||||||||||
| 2007 | 2006 | % Change | ||||||||||
Americas Earnings from operations | $ | 147,215 | $ | 161,025 | ||||||||
Americas restructuring charge (Note 1) | 2,953 | - | ||||||||||
Americas Earnings excluding the Americas restructuring charge | $ | 150,168 | $ | 161,025 | (6.7 | ) % | ||||||
International Commercial selling, general and administrative expenses | $ | 272,733 | $ | 233,080 | ||||||||
UK restructuring charge (Note 2) | (5,936 | ) | - | |||||||||
International Commercial selling, general and administrative expenses excluding the UK restructuring charge | $ | 266,797 | $ | 233,080 | 14.5 | % | ||||||
International Commercial Earnings from operations | $ | 10,064 | $ | 567 | ||||||||
UK restructuring charge (Note 2) | 5,936 | - | ||||||||||
International Commercial Earnings excluding the UK restructuring charge | $ | 16,000 | $ | 567 | NM | |||||||
International Earnings from operations | $ | 12,781 | $ | 1,208 | ||||||||
UK restructuring charge (Note 2) | 5,936 | - | ||||||||||
International Earnings excluding the UK restructuring charge | $ | 18,717 | $ | 1,208 | NM | |||||||
22
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 restructuring charges is useful to understand the Company’s fiscal 2007 financial performance and increases comparability with prior year results. Specifically, Management believes that excluding this item allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company’s financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company’s financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
(1) The Americas restructuring charge is comprised of facility exit costs associated with the closure of 58 branch locations and the accelerated depreciation of the leasehold improvements and personal property at the impacted locations.
(2) The 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.