EXHIBIT 99.1
| | | | | |
| | | Investor Contact: | | Teri Miller
(954) 308-8216
terilmiller@spherion.com
|
| | | Media Contact: | | Kip Havel |
FOR IMMEDIATE RELEASE | | | | (800) 422-3819
kiphavel@spherion.com |
SPHERION ANNOUNCES FOURTH QUARTER 2006 FINANCIAL RESULTS
FORT LAUDERDALE, Fla., January 31, 2007 — Spherion Corporation (NYSE: SFN) today announced financial results for the fourth quarter ended December 31, 2006.
Spherion President and Chief Executive Officer Roy Krause commented, “I am pleased with our strong finish in 2006 and our accomplishments during the year. In 2006, we grew gross profit by over 4%, expanded our gross profit margins by 150 basis points and accelerated the growth to our targeted customer base throughout the year. Small and mid-sized customer growth rates remained in the mid-teens again in the fourth quarter and have increased this customer segment to 55% of total revenue. Continuing momentum in this area along with realignment of the organization to further support strategic objectives, positions us well as we move into 2007.”
FINANCIAL HIGHLIGHTS
| | • | | Fourth quarter 2006 revenues were $500.6 million compared with $499.3 million in the fourth quarter of 2005. |
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| | • | | Earnings from continuing operations were $10.3 million or $0.18 per share in the fourth quarter of 2006, compared with $9.5 million or $0.16 per share in the fourth quarter of 2005. |
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| | • | | Net earnings, which include discontinued operations, for the fourth quarter of 2006 were $39.8 million or $0.70 per share, compared with $6.3 million or $0.10 per diluted share in the fourth quarter of 2005. |
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| | • | | Revenues for the year were $1.9 billion in 2006 compared with $2.0 billion in 2005. Earnings from continuing operations were $22.6 million in 2006 or $0.39 per share, including stock option expense of $0.05 per share, compared with $20.2 million or $0.33 per share for the same period in 2005. Net earnings were $54.7 million or $0.95 per diluted share in 2006, compared with $12.0 million or $0.20 per share in 2005. |
Krause continued, “Through active working capital management, DSO was reduced by another four days in 2006, further strengthening the company’s cash and overall financial position. Our strong balance sheet and significant capital resources give us financial flexibility as we execute our growth strategy.”
OPERATING PERFORMANCE
Growth within our targeted small and mid-sized staffing customers and recruitment outsourcing services continued to grow this quarter, but has not yet fully offset declines among our largest staffing customers. As a result, Staffing Services fourth quarter revenues decreased 2.1% year over year. Total Staffing Services gross profit margins increased to 20.9% in the fourth quarter of 2006 compared with 20.2% in the fourth quarter of 2005. Temporary staffing gross profit margins increased by 90 basis points year over year due primarily to lower workers’ compensation and benefits expenses. Selling, general and administrative costs were $67.3 million or 17.9% of revenue in the fourth quarter of 2006, compared with $65.8 million or 17.2% of revenue last year. S,G&A decreased by approximately $2 million compared with the third quarter 2006 due to increased focus on productivity and expense management. Segment operating profit was $11.2 million or 3.0% of revenue in the fourth quarter of 2006, compared with $11.7 million and 3.1% of revenue in the fourth quarter of 2005.
Professional Services revenue growth was 8.0% on a year over year basis in the fourth quarter of 2006. Revenue growth was strongest in information technology, both in temporary staffing and permanent placement. Gross profit margins in the fourth quarter of 2006 were 33.3%, an increase of 140 basis points from last year, due to improved pay/bill spreads, growth of permanent placement revenues and lower employee benefit and insurance costs. Selling, general and administrative expenses were $35.7 million or 28.5% of revenue in the fourth quarter of 2006, compared with $31.3 million or 26.9% of revenue in the fourth quarter last year, reflecting investments in sales and recruiting staff and higher variable compensation. Segment operating profit increased to $6.0 million or approximately 4.8% of revenue in the fourth quarter of 2006, compared with $5.7 million or approximately 4.9% of revenue in the same period last year.
OTHER ITEMS
As previously announced, the Company’s fourth quarter results included approximately $0.03 per share for prior quarters’ benefit from the retroactive approval of the Work Opportunity Tax Credit program and Gulf Opportunity Tax Credits.
Additionally, the Company recorded a tax benefit of $29.7 million or $0.52 per share related to the resolution of certain international tax matters. This item is included in the results of the Company’s discontinued operations.
OUTLOOK
Krause commented, “Based on sales trends in January, the Company anticipates revenue for the first quarter will be between $460 and $475 million, reflecting a normal seasonal decline in the first quarter compared with the fourth quarter. Earnings from continuing operations are expected to be between $0.04 and $0.08 per share, assuming a 41% effective tax rate.”
The Company will adopt FIN 48, “Accounting for Uncertain Tax Positions,” in the first quarter of 2007, but it is not expected to have a material impact on the financial statements of the Company.
ABOUT SPHERION
Spherion Corporation (NYSE:SFN) is a leading recruiting and staffing company that provides integrated solutions to meet the evolving needs of companies and job candidates. As an industry pioneer for 60 years, Spherion has screened and placed millions of individuals in temporary, temp-to-hire and full-
2
time jobs. Positions range from administrative and light industrial to a host of professions that include accounting/finance, information technology, engineering, manufacturing, legal, human resources and sales/marketing.
With approximately 650 locations in the United States and Canada, Spherion delivers innovative workforce solutions that improve business performance. Spherion provides its services to more than 8,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing 375,000 people annually through its network, Spherion is one of North America’s largest employers. To learn more, visit www.spherion.com.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. Factors that could cause future results to differ from current expectations include risks associated with: Competition — our business operates in highly competitive markets with low barriers to entry; Economic conditions — any significant economic downturn could result in lower revenues or a significant reduction in demand from our customers may result in a material impact on the results of our operations; Corporate strategy — we may not achieve the intended effects of our business strategy; Termination provisions — certain contracts contain termination provisions and pricing risks; Failure to perform — our failure or inability to perform under customer contracts could result in damage to our reputation and give rise to legal claims; Disposition of businesses — the disposition of businesses previously sold, may create contractual liabilities associated with indemnifications provided; Tax filings — regulatory challenges to our tax filing positions could result in additional taxes; Government Regulation - government regulation may increase our costs; International operations — we are subject to business risks associated with our international operations in Canada which could make those operations more costly; Litigation — we may be exposed to employment—related claims and costs and we are a defendant in a variety of litigation and other actions from time to time; Personnel — our business is dependent upon the availability of qualified personnel and we may lose key personnel which could cause our business to suffer; Integrating acquisitions — managing or integrating any future acquisitions may strain our resources; Debt compliance — failure to meet certain covenant requirements under our credit facility could impact part or all of our availability to borrow; and Common stock — the price of our common stock may fluctuate significantly, which may result in losses for our investors. These and additional factors discussed in this release and in Spherion’s filings with the Securities and Exchange Commission could cause the Company’s actual results to differ materially from any projections contained in this release.
Spherion Corporation prepares its financial statements in accordance with generally accepted accounting principles (GAAP). Adjusted earnings from continuing operations is a non-GAAP financial measure, which excludes certain non-operating related charges and gains. Items excluded from the calculation of adjusted earnings from continuing operations include restructuring and other charges and stock option expense under FAS No. 123R, and work opportunity tax credit and other credits, net of taxes. Adjusted earnings from continuing operations is a key measure used by management to evaluate its operations. Management does not consider the items excluded to be operating costs/gains and therefore, excludes them from the evaluation of the Company’s operating performance. Adjusted earnings from continuing operations should not be considered measures of financial performance in isolation or as an alternative to earnings from continuing operations or net earnings (loss) as determined in the Statement of Earnings in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies, and therefore this measure has material limitations. Items excluded from adjusted earnings from continuing operations are significant components in understanding and assessing financial performance.
3
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in thousands, except per share amounts)
| | | | | | | | | |
| | | Three Months Ended |
| | | December 31, | | January 1, |
| | | 2006 | | 2006 |
| Revenues (1) | | $ | 500,623 | | | $ | 499,279 | |
| Cost of services (2) | | | 380,357 | | | | 384,756 | |
| | | | | | | | | |
| Gross profit | | | 120,266 | | | | 114,523 | |
| | | | | | | | | |
| Selling, general and administrative expenses | | | 107,428 | | | | 100,539 | |
| Interest expense | | | 494 | | | | 677 | |
| Interest income | | | (989 | ) | | | (1,044 | ) |
| Restructuring and other charges (3) | | | 126 | | | | — | |
| | | | | | | | | |
| | | | 107,059 | | | | 100,172 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations before income taxes and discontinued operations | | | 13,207 | | | | 14,351 | |
| Income tax expense | | | (2,900 | ) | | | (4,870 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | | 10,307 | | | | 9,481 | |
| Earnings (loss) from discontinued operations, net of tax (4) | | | 29,502 | | | | (3,139 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Net earnings | | $ | 39,809 | | | $ | 6,342 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings per share-Basic: | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | $ | 0.18 | | | $ | 0.16 | |
| Earnings (loss) from discontinued operations | | | 0.52 | | | | (0.05 | ) |
| | | | | | | | | |
| | | $ | 0.70 | | | $ | 0.11 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings per share-Diluted*: | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | $ | 0.18 | | | $ | 0.16 | |
| Earnings (loss) from discontinued operations | | | 0.52 | | | | (0.05 | ) |
| | | | | | | | | |
| | | $ | 0.70 | | | $ | 0.10 | |
| | | | | | | | | |
| | | | | | | | | |
| Weighted-average shares used in computation of earnings per share: | | | | | | | | |
| Basic | | | 56,557 | | | | 59,689 | |
| Diluted | | | 56,936 | | | | 60,459 | |
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| (1) | | Includes sales of all company-owned and licensed offices and royalties on sales of franchised offices. |
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| (2) | | Gross profit is revenues less temporary employee wages, employment related taxes such as FICA, federal and state unemployment taxes, medical and other insurance for temporary employees, workers’ compensation, benefits, billable expenses and other direct costs. |
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| (3) | | Restructuring and other charges primarily includes severance charges of approximately $1.1 million and a credit of $(1.0) million from a favorable settlement related to an investment that was previously written-off. |
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| (4) | | Includes a tax benefit of $29,702 in 2006, related to the resolution of certain international tax matters. |
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| * | | Earnings per share amounts are calculated independently for each component and may not add due to rounding. |
4
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in thousands, except per share amounts)
| | | | | | | | | |
| | | Twelve Months Ended |
| | | December 31, | | January 1, |
| | | 2006 | | 2006 |
| Revenues (1) | | $ | 1,933,059 | | | $ | 1,980,574 | |
| Cost of services (2) | | | 1,478,151 | | | | 1,544,790 | |
| | | | | | | | | |
| Gross profit | | | 454,908 | | | | 435,784 | |
| | | | | | | | | |
| Selling, general and administrative expenses | | | 422,806 | | | | 404,454 | |
| Interest expense | | | 1,965 | | | | 3,205 | |
| Interest income | | | (4,055 | ) | | | (4,072 | ) |
| Restructuring and other charges (3) | | | (177 | ) | | | 1,763 | |
| | | | | | | | | |
| | | | 420,539 | | | | 405,350 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations before income taxes and discontinued operations | | | 34,369 | | | | 30,434 | |
| Income tax expense | | | (11,780 | ) | | | (10,221 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | | 22,589 | | | | 20,213 | |
| Earnings (loss) from discontinued operations, net of tax (4) | | | 32,093 | | | | (8,184 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Net earnings | | $ | 54,682 | | | $ | 12,029 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings per share-Basic*: | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | $ | 0.39 | | | $ | 0.33 | |
| Earnings (loss) from discontinued operations | | | 0.56 | | | | (0.13 | ) |
| | | | | | | | | |
| | | $ | 0.96 | | | $ | 0.20 | |
| | | | | | | | | |
| | | | | | | | | |
| Earnings per share-Diluted: | | | | | | | | |
| Earnings from continuing operations before discontinued operations | | $ | 0.39 | | | $ | 0.33 | |
| Earnings (loss) from discontinued operations | | | 0.56 | | | | (0.13 | ) |
| | | | | | | | | |
| | | $ | 0.95 | | | $ | 0.20 | |
| | | | | | | | | |
| | | | | | | | | |
| Weighted-average shares used in computation of earnings per share: | | | | | | | | |
| Basic | | | 57,212 | | | | 60,938 | |
| Diluted | | | 57,784 | | | | 61,430 | |
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| (1) | | Includes sales of all company-owned and licensed offices and royalties on sales of franchised offices. |
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| (2) | | Gross profit is revenues less temporary employee wages, employment related taxes such as FICA, federal and state unemployment taxes, medical and other insurance for temporary employees, workers’ compensation, benefits, billable expenses and other direct costs. |
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| (3) | | Restructuring and other charges primarily includes severance charges of approximately $0.8 million and a credit of $(1.0) million from a favorable settlement related to an investment that was previously written-off. |
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| (4) | | Includes a tax benefit of $30,943 in 2006, related to the resolution of certain international tax matters. |
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| * | | Earnings per share amounts are calculated independently for each component and may not add due to rounding. |
5
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share data)
| | | | | | | | | |
| | | December 31, | | January 1, |
| | | 2006 | | 2006 |
Assets | | | | | | | | |
| | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 54,640 | | | $ | 30,163 | |
| Receivables, less allowance for doubtful accounts of $3,354 and $4,708 | | | 274,185 | | | | 294,330 | |
| Deferred tax asset | | | 11,462 | | | | 9,155 | |
| Insurance deposit | | | 24,501 | | | | 24,914 | |
| Other current assets | | | 16,414 | | | | 18,906 | |
| | | | | | | | | |
| Total current assets | | | 381,202 | | | | 377,468 | |
| Goodwill | | | 49,703 | | | | 48,861 | |
| Property and equipment, net of accumulated depreciation of $93,723 and $114,038 | | | 87,291 | | | | 88,562 | |
| Deferred tax asset | | | 122,867 | | | | 152,084 | |
| Insurance deposit | | | 25,177 | | | | 53,115 | |
| Other assets | | | 27,147 | | | | 22,554 | |
| | | | | | | | | |
| | | $ | 693,387 | | | $ | 742,644 | |
| | | | | | | | | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable and other accrued expenses | | $ | 78,368 | | | $ | 93,570 | |
| Accrued salaries, wages and payroll taxes | | | 59,062 | | | | 62,619 | |
| Accrued insurance reserves | | | 22,368 | | | | 27,503 | |
| Accrued income tax payable | | | 3,512 | | | | 51,792 | |
| Current portion of long-term debt and other short-term borrowings | | | 2,068 | | | | 3,141 | |
| Other current liabilities | | | 8,555 | | | | 8,950 | |
| | | | | | | | | |
| Total current liabilities | | | 173,933 | | | | 247,575 | |
| Long-term debt, net of current portion | | | 2,377 | | | | 3,735 | |
| Accrued insurance reserves | | | 20,292 | | | | 28,119 | |
| Deferred compensation | | | 18,984 | | | | 16,818 | |
| Other long-term liabilities | | | 6,659 | | | | 7,892 | |
| | | | | | | | | |
| Total liabilities | | | 222,245 | | | | 304,139 | |
| | | | | | | | | |
| Stockholders’ Equity: | | | | | | | | |
| Preferred stock, par value $0.01 per share; authorized, 2,500,000 shares; none issued or outstanding | | | — | | | | — | |
| Common stock, par value $0.01 per share; authorized, 200,000,000; issued 65,341,609 shares | | | 653 | | | | 653 | |
| Treasury stock, at cost, 8,777,220 and 6,510,739 shares, respectively | | | (77,856 | ) | | | (56,299 | ) |
| Additional paid-in capital | | | 844,735 | | | | 845,056 | |
| Accumulated deficit | | | (300,060 | ) | | | (354,742 | ) |
| Accumulated other comprehensive income | | | 3,670 | | | | 3,837 | |
| | | | | | | | | |
| Total stockholders’ equity | | | 471,142 | | | | 438,505 | |
| | | | | | | | | |
| | | $ | 693,387 | | | $ | 742,644 | |
| | | | | | | | | |
6
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | |
| | | Management | | | | |
| | | Guidance | | Three Months Ended | | Twelve Months Ended |
| | | Three Months Ended | | | | | | | | |
| | | April 1, | | December 31, | | January 1, | | December 31, | | January 1, |
| | | 2007 | | 2006 | | 2006 | | 2006 | | 2006 |
| Adjusted earnings from continuing operations | | | | | | $ | 9,341 | | | $ | 9,481 | | | $ | 25,189 | | | $ | 21,341 | |
| | | | | | | | | | | | | | | | | | | | | |
| Restructuring and other charges, net of tax benefit (expense) (1) | | | | | | | 249 | | | | — | | | | 447 | | | | (1,128 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Stock option expense under FAS No. 123R, net of tax benefit | | | | | | | (764 | ) | | | — | | | | (3,047 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Work Opportunity Tax Credit and other credits | | | | | | | 1,481 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings from continuing operations | | | | | | | 10,307 | | | | 9,481 | | | | 22,589 | | | | 20,213 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) from discontinued operations | | | | | | | 29,502 | | | | (3,139 | ) | | | 32,093 | | | | (8,184 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net earnings | | | | | | $ | 39,809 | | | $ | 6,342 | | | $ | 54,682 | | | $ | 12,029 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Per share-Diluted amounts: | | | | | | | | | | | | | | | | | | | | |
| Adjusted earnings from continuing operations | | | | | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.44 | | | $ | 0.35 | |
| | | | | | | | | | | | | | | | | | | | | |
| Restructuring and other charges, net of tax | | | | | | | — | | | | — | | | | 0.01 | | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Stock option expense under FAS No. 123R, net of tax | | | | | | | (0.01 | ) | | | — | | | | (0.05 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Work Opportunity Tax Credit and other credits | | | | | | | 0.03 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings from continuing operations | | $ | 0.04 to $0.08 | | | | 0.18 | | | | 0.16 | | | | 0.39 | | | | 0.33 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) from discontinued operations | | | | | | | 0.52 | | | | (0.05 | ) | | | 0.56 | | | | (0.13 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net earnings * | | | | | | $ | 0.70 | | | $ | 0.10 | | | $ | 0.95 | | | $ | 0.20 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted weighted-average shares used in computation of earnings per share | | | | | | | 56,936 | | | | 60,459 | | | | 57,784 | | | | 61,430 | |
| | |
| * | | Earnings per share amounts are calculated independently for each component and may not add due to rounding |
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| (1) | | Restructuring and other charges, net of tax benefit (expense), for the three and twelve months ended December 31, 2006, primarily includes severance charges of approximately $(0.7) million and $(0.5) million, respectively, and a credit of approximately $1.0 million from a favorable settlement related to an investment that was previously written-off. |
7
SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | January 1, | | October 1, | | December 31, | | January 1, |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2006 |
Revenues: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 375,185 | | | $ | 383,094 | | | $ | 371,074 | | | $ | 1,440,386 | | | $ | 1,530,395 | |
| Professional Services | | | 125,438 | | | | 116,185 | | | | 124,399 | | | | 492,673 | | | | 450,179 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment revenue | | $ | 500,623 | | | $ | 499,279 | | | $ | 495,473 | | | $ | 1,933,059 | | | $ | 1,980,574 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Gross profit: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 78,489 | | | $ | 77,511 | | | $ | 77,196 | | | $ | 293,366 | | | $ | 292,641 | |
| Professional Services | | | 41,777 | | | | 37,012 | | | | 40,077 | | | | 161,542 | | | | 143,143 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment gross profit | | $ | 120,266 | | | $ | 114,523 | | | $ | 117,273 | | | $ | 454,908 | | | $ | 435,784 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Segment operating profit: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 11,170 | | | $ | 11,748 | | | $ | 7,745 | | | $ | 24,565 | | | $ | 26,342 | |
| Professional Services | | | 6,029 | | | | 5,719 | | | | 4,950 | | | | 23,279 | | | | 19,236 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment operating profit | | | 17,199 | | | | 17,467 | | | | 12,695 | | | | 47,844 | | | | 45,578 | |
| | | | | | | | | | | | | | | | | | | | | |
| Unallocated corporate costs | | | (4,315 | ) | | | (3,393 | ) | | | (3,686 | ) | | | (15,541 | ) | | | (13,832 | ) |
| Amortization of intangibles | | | (46 | ) | | | (90 | ) | | | (39 | ) | | | (201 | ) | | | (416 | ) |
| Interest expense | | | (494 | ) | | | (677 | ) | | | (481 | ) | | | (1,965 | ) | | | (3,205 | ) |
| Interest income | | | 989 | | | | 1,044 | | | | 940 | | | | 4,055 | | | | 4,072 | |
| Restructuring and other charges | | | (126 | ) | | | | | | | — | | | | (786 | ) | | | (1,763 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings from continuing operations before income taxes and discontinued operations | | $ | 13,207 | | | $ | 14,351 | | | $ | 9,429 | | | $ | 34,369 | | | $ | 30,434 | |
| | | | | | | | | | | | | | | | | | | | | |
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| MEMO: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross profit margin: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | | 20.9 | % | | | 20.2 | % | | | 20.8 | % | | | 20.4 | % | | | 19.1 | % |
| Professional Services | | | 33.3 | % | | | 31.9 | % | | | 32.2 | % | | | 32.8 | % | | | 31.8 | % |
| Total Spherion | | | 24.0 | % | | | 22.9 | % | | | 23.7 | % | | | 23.5 | % | | | 22.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Segment operating profit margin: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | | 3.0 | % | | | 3.1 | % | | | 2.1 | % | | | 1.7 | % | | | 1.7 | % |
| Professional Services | | | 4.8 | % | | | 4.9 | % | | | 4.0 | % | | | 4.7 | % | | | 4.3 | % |
| Total Spherion | | | 3.4 | % | | | 3.5 | % | | | 2.6 | % | | | 2.5 | % | | | 2.3 | % |
| | | | | | | | | | | | | | | | | | | | | |
Supplemental Cash Flow Information: | | | | | | | | | | | | | | | | | | | | |
| Operating cash flow | | $ | 26,121 | | | $ | 13,307 | | | $ | (2,127 | ) | | $ | 46,085 | | | $ | 72,285 | |
| Capital expenditures | | $ | 5,782 | | | $ | 3,227 | | | $ | 4,923 | | | $ | 22,677 | | | $ | 9,651 | |
| Depreciation and amortization | | $ | 5,714 | | | $ | 5,298 | | | $ | 5,627 | | | $ | 22,198 | | | $ | 21,906 | |
| DSO | | | 50 | | | | 54 | | | | 52 | | | | 50 | | | | 54 | |
8
SPHERION CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited, dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | January 1, | | October 1, | | December 31, | | January 1, |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2006 |
Staffing Services | | | | | | | | | | | | | | | | | | | | |
Revenue by Skill: | | | | | | | | | | | | | | | | | | | | |
| Clerical | | $ | 232,882 | | | $ | 233,934 | | | $ | 233,289 | | | $ | 908,070 | | | $ | 944,432 | |
| Light Industrial | | | 142,303 | | | | 149,160 | | | | 137,785 | | | | 532,316 | | | | 585,963 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 375,185 | | | $ | 383,094 | | | $ | 371,074 | | | $ | 1,440,386 | | | $ | 1,530,395 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue by Service: | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | $ | 323,000 | | | $ | 332,942 | | | $ | 316,435 | | | $ | 1,231,301 | | | $ | 1,312,515 | |
| Managed Services | | | 47,291 | | | | 45,005 | | | | 47,958 | | | | 187,268 | | | | 200,141 | |
| Permanent Placement | | | 4,894 | | | | 5,147 | | | | 6,681 | | | | 21,817 | | | | 17,739 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 375,185 | | | $ | 383,094 | | | $ | 371,074 | | | $ | 1,440,386 | | | $ | 1,530,395 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Gross Profit Margin by Service: | | | | | | | | | | | | | | | | | | | | |
| (As % of Applicable Revenue) | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | | 18.3 | % | | | 17.4 | % | | | 17.4 | % | | | 17.3 | % | | | 16.8 | % |
| Managed Services | | | 30.9 | % | | | 32.4 | % | | | 32.1 | % | | | 31.5 | % | | | 27.3 | % |
| Permanent Placement | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Total Staffing Services | | | 20.9 | % | | | 20.2 | % | | | 20.8 | % | | | 20.4 | % | | | 19.1 | % |
| | | | | | | | | | | | | | | | | | | | | |
Professional Services | | | | | | | | | | | | | | | | | | | | |
Revenue by Skill: | | | | | | | | | | | | | | | | | | | | |
| Information Technology | | $ | 82,413 | | | $ | 74,358 | | | $ | 81,817 | | | $ | 320,389 | | | $ | 288,309 | |
| Finance & Accounting | | | 25,840 | | | | 27,304 | | | | 25,353 | | | | 104,225 | | | | 105,001 | |
| Other | | | 17,185 | | | | 14,523 | | | | 17,229 | | | | 68,059 | | | | 56,869 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 125,438 | | | $ | 116,185 | | | $ | 124,399 | | | $ | 492,673 | | | $ | 450,179 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue by Service: | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | $ | 112,710 | | | $ | 104,643 | | | $ | 111,247 | | | $ | 440,170 | | | $ | 402,286 | |
| Permanent Placement | | | 12,728 | | | | 11,542 | | | | 13,152 | | | | 52,503 | | | | 47,893 | |
| | | | | | | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 125,438 | | | $ | 116,185 | | | $ | 124,399 | | | $ | 492,673 | | | $ | 450,179 | |
| | | | | | | | | | | | | | | | | | | | | |
Gross Profit Margin by Service: | | | | | | | | | | | | | | | | | | | | |
| (As % of Applicable Revenue) | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | | 25.8 | % | | | 24.3 | % | | | 24.2 | % | | | 24.8 | % | | | 23.7 | % |
| Permanent Placement | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Total Professional Services | | | 33.3 | % | | | 31.9 | % | | | 32.2 | % | | | 32.8 | % | | | 31.8 | % |
9
