| | | | | |
| | | Investor Contact: | | Randy Atkinson |
| | | | | (954) 308-7639 |
| | | | | randalatkinson@spherion.com |
| | | | | |
| | | Media Contact: | | Kip Havel |
FOR IMMEDIATE RELEASE | | | | (800) 422-3819 |
| | | | | kiphavel@spherion.com |
SPHERION ANNOUNCES FOURTH QUARTER AND FULL YEAR 2007 FINANCIAL RESULTS
FORT LAUDERDALE, Fla., February 11, 2008 — Spherion Corporation (NYSE: SFN) today announced financial results for the fourth quarter ended December 30, 2007.
Spherion President and Chief Executive Officer Roy Krause commented, “2007 was a pivotal year for Spherion. The Company successfully grew both revenues and earnings in a staffing and recruiting market that was generally difficult. The performance reflects our focused business strategy and operational execution. Fourth quarter revenues grew on an organic basis 3.1% and adjusted earnings per share from continuing operations grew 33%. Additionally, as recently announced, we have completed the integration of Todays Staffing and a significant portion of the Technisource integration and are excited about the contributions that both of these businesses will make to our 2008 performance.”
FINANCIAL HIGHLIGHTS
| | • | | Fourth quarter 2007 revenues were 17% higher year over year, $582 million compared with $498 million last year. |
| |
| | • | | Earnings from continuing operations in the fourth quarter were $10.0 million, or $0.18 per share, compared with $10.3 million, or $0.18 per share, in the prior year. |
1
| | • | | Adjusted earnings from continuing operations in the fourth quarter of 2007 were $11.1 million, or $0.20 per share compared with adjusted earnings in the same prior year period of $8.5 million, or $0.15 per share. Adjusted earnings from continuing operations exclude acquisition integration costs, a charge related to the bankruptcy of a vendor manager, and in the prior year certain tax credits and other items. |
| |
| | • | | Earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter reached $20.8 million, or 3.6% of revenue, compared with $18.3 million or 3.7% of revenue in the fourth quarter last year. |
| |
| | • | | Revenues for the 2007 full year were $2.0 billion, up from revenues for the same period in 2006 of $1.9 billion. Earnings from continuing operations for the 2007 full year were up 31% to $29.1 million, or $0.51 per share, compared with $22.3 million, or $0.39 per share, for the same period in 2006. Net earnings were $25.3 million, or $0.44 per share, for full year 2007, compared with $54.7 million, or $0.95 per share, in 2006. |
Krause continued, “In 2007 we made significant progress growing the higher margin areas of our business including specialty administrative services, professional services and recruitment process outsourcing. The fourth quarter addition of Todays Staffing and Technisource continues our strategy of expanding margins and increasing market share in targeted markets. We are excited about the prospects of this strategy and believe it will be successful even as we proceed through this period of economic uncertainty.”
OPERATING PERFORMANCE
Within Staffing Services, revenues were up 14.6%; 3.2% on an organic basis. Targeted small and mid-sized accounts increased 20.4%; 2.7% on an organic basis. Gross profit margins were 19.9% in the fourth quarter of 2007 compared with 20.6% in the fourth quarter of 2006 and were down primarily due to less improvement in prior year workers’ compensation trends and a higher seasonal ramp in large account business.
2
These margin impacts were partially offset by improvements in managed services due to recruitment process outsourcing expansion and higher permanent placement. Selling, general and administrative expenses were $73.1 million and decreased to 17.1% of revenue in the fourth quarter of 2007 compared with $65.7 million or 17.6% of revenue last year. Segment operating profit was $12.1 million, $12.7 million excluding the impact of the vendor manager bankruptcy or 3.0% of revenue in the fourth quarter of 2007, compared with $11.1 million or 3.0% of revenue in the fourth quarter of 2006.
Within Professional Services, revenues were up 23.2%; 2.7% on an organic basis. Gross profit margins in the fourth quarter of 2007 were 32.0%, compared with 33.3% in the prior year reflecting a lower mix of permanent placement revenues partially offset by improvement in pricing. Selling, general and administrative expenses of $41.3 million decreased to 26.7% of revenue in the fourth quarter of 2007 compared with $35.7 million or 28.5% of revenue in the fourth quarter last year. Segment operating profit was $8.1 million, $8.6 million excluding the impact of the vendor manager bankruptcy or approximately 5.6% of revenue in the fourth quarter of 2007, compared with $6.0 million or approximately 4.8% of revenue in the same period last year.
OTHER ITEMS
During 2007, the Company generated EBITDA of $69.0 million, a 27.7% increase over 2006. The Company had net debt of $92.9 million and availability on its credit facilities of $105 million at the end of the year. Capital expenditures during the fourth quarter were $2.3 million, and full year capital expenditures were $8.3 million.
The Company purchased 100,000 shares of its common stock during the fourth quarter of 2007 at an average price of $7.49 per share. For the full year, the Company purchased a total of 1,177,200 shares at an average price of $8.69 per share. The Company also recently announced that its Board of Directors authorized the repurchase of up to $25 million of the Company’s outstanding common stock.
3
OUTLOOK
Krause commented, “We are focused on growing our Company as we continue to change the customer and business mix toward higher margin services across the business. Based on recent trends, the Company anticipates revenue for the first quarter will be between $585 and $600 million, reflecting organic growth of about 1% to 3% over the prior year. Adjusted earnings from continuing operations are expected to be between $0.07 and $0.11 per share, assuming a 40% effective tax rate, and excluding one time costs of $1.0 million related to the recent acquisitions. Earnings from continuing operations inclusive of the one time costs are expected to be between $0.06 and $0.10 per share.”
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 more than 60 years, Spherion has sourced, screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs.
With approximately 700 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 more than 300,000 people annually through its network, Spherion is one of North America’s largest employers. Spherion operates under the following brands: Spherion Staffing Services Group for administrative, clerical and light industrial workers; Technisource for technology professionals and solutions; The Mergis Group for accounting and finance
4
and other professional positions; Todays Staffing for specialty administrative personnel and Spherion Recruitment Process Outsourcing. To learn more, visitwww.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; Business interruptions — natural disasters or failures with hardware, software or utilities could adversely affect our ability to complete normal business processes; Tax filings — regulatory challenges to our tax filing positions could result in additional taxes; Personnel — our business is dependent upon the availability of qualified personnel and we may lose key personnel which could cause our business to suffer; 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; Common stock — the price of our common stock may fluctuate significantly, which may result in losses for our investors; Government Regulation — government regulation may increase our costs; International operations — we are subject to business risks associated with our operations in Canada which could make those operations more costly; Integrating acquisitions — managing or integrating any future acquisitions may strain our resources; and Debt compliance — failure to meet certain covenant requirements under our credit facility could impact part or all of our availability to borrow. 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). Organic revenue growth is a non-GAAP financial measure, which includes pro-forma revenues impacted by acquired companies. 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 certain 2006 work opportunity tax credits due to a late year retroactive law change , interest expense related to adjustment of the Canadian purchase liability, a vendor manager bankruptcy charge, and restructuring and other charges related to acquisitions. EBITDA from continuing operations is a non-GAAP financial measure which excludes interest, taxes, depreciation and amortization from earnings from continuing operations. Organic growth, adjusted earnings and EBITDA from continuing operations
5
are key measures used by management to evaluate its operations. Management includes revenues prior to acquisition date for acquired companies in the organic revenue growth calculation in order to evaluate the Company’s operating performance. Organic growth, adjusted earnings and EBITDA from continuing operations should not be considered measures of financial performance in isolation or as an alternative to revenue growth or 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.
6
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in thousands, except per share amounts)
| | | | | | | | | |
| | | Three Months Ended | |
| | | December 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
| Revenues (1) | | $ | 581,600 | | | $ | 498,270 | |
| Cost of services (2) | | | 446,999 | | | | 379,729 | |
| | | | | | | |
| Gross profit | | | 134,601 | | | | 118,541 | |
| | | | | | | |
| Selling, general and administrative expenses | | | 119,328 | | | | 105,781 | |
| Interest expense | | | 1,155 | | | | 494 | |
| Interest income | | | (869 | ) | | | (989 | ) |
| Restructuring and other charges | | | 700 | | | | 126 | |
| | | | | | | |
| | | | 120,314 | | | | 105,412 | |
| | | | | | | |
| Earnings from continuing operations before income taxes | | | 14,287 | | | | 13,129 | |
| Income tax expense | | | (4,270 | ) | | | (2,869 | ) |
| | | | | | | |
| Earnings from continuing operations | | | 10,017 | | | | 10,260 | |
| (Loss) earnings from discontinued operations, net of tax | | | (250 | ) | | | 29,549 | |
| | | | | | | |
| Net earnings | | $ | 9,767 | | | $ | 39,809 | |
| | | | | | | |
| | | | | | | | | |
| Earnings per share, Basic and Diluted *: | | | | | | | | |
| Earnings from continuing operations | | $ | 0.18 | | | $ | 0.18 | |
| Earnings from discontinued operations | | | — | | | | 0.52 | |
| | | | | | | |
| | | $ | 0.17 | | | $ | 0.70 | |
| | | | | | | |
| | | | | | | | | |
| Weighted-average shares used in computation of earnings per share: | | | | | | | | |
| Basic | | | 55,972 | | | | 56,557 | |
| Diluted | | | 56,633 | | | | 56,936 | |
| | |
| (1) | | Includes sales of all company-owned and licensed offices and royalties on sales of franchised offices. |
| |
| (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. |
| |
| * | | Earnings per share amounts are calculated independently for each component and may not add due to rounding. |
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in thousands, except per share amounts)
| | | | | | | | | |
| | | Twelve Months Ended | |
| | | December 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
| Revenues (1) | | $ | 2,017,114 | | | $ | 1,922,735 | |
| Cost of services (2) | | | 1,539,128 | | | | 1,475,656 | |
| | | | | | | |
| Gross profit | | | 477,986 | | | | 447,079 | |
| | | | | | | |
| Selling, general and administrative expenses | | | 431,695 | | | | 415,415 | |
| Interest expense | | | 3,746 | | | | 1,965 | |
| Interest income | | | (4,631 | ) | | | (4,055 | ) |
| Restructuring and other charges (credits) | | | 700 | | | | (177 | ) |
| | | | | | | |
| | | | 431,510 | | | | 413,148 | |
| | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations before income taxes | | | 46,476 | | | | 33,931 | |
| Income tax expense | | | (17,339 | ) | | | (11,608 | ) |
| | | | | | | |
| | | | | | | | | |
| Earnings from continuing operations | | | 29,137 | | | | 22,323 | |
| (Loss) earnings from discontinued operations, net of tax | | | (3,871 | ) | | | 32,359 | |
| | | | | | | |
| Net earnings | | $ | 25,266 | | | $ | 54,682 | |
| | | | | | | |
| | | | | | | | | |
| Earnings per share-Basic: | | | | | | | | |
| Earnings from continuing operations | | $ | 0.52 | | | $ | 0.39 | |
| (Loss) earnings from discontinued operations | | | (0.07 | ) | | | 0.57 | |
| | | | | | | |
| | | $ | 0.45 | | | $ | 0.96 | |
| | | | | | | |
| | | | | | | | | |
| Earnings per share-Diluted: | | | | | | | | |
| Earnings from continuing operations | | $ | 0.51 | | | $ | 0.39 | |
| (Loss) earnings from discontinued operations | | | (0.07 | ) | | | 0.56 | |
| | | | | | | |
| | | $ | 0.44 | | | $ | 0.95 | |
| | | | | | | |
| | | | | | | | | |
| Weighted-average shares used in computation of earnings per share: | | | | | | | | |
| Basic | | | 56,234 | | | | 57,212 | |
| Diluted | | | 56,893 | | | | 57,784 | |
| | |
| (1) | | Includes sales of all company-owned and licensed offices and royalties on sales of franchised offices. |
| |
| (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. |
SPHERION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share data)
| | | | | | | | | |
| | | December 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
Assets | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 15,324 | | | $ | 54,640 | |
| Receivables, less allowance for doubtful accounts of $6,523 and $3,354, respectively | | | 347,908 | | | | 274,185 | |
| Deferred tax asset | | | 13,413 | | | | 11,462 | |
| Insurance deposit | | | 6,986 | | | | 24,501 | |
| Other current assets | | | 22,606 | | | | 16,414 | |
| | | | | | | |
| Total current assets | | | 406,237 | | | | 381,202 | |
| Goodwill | | | 146,584 | | | | 49,703 | |
| Property and equipment, net of accumulated depreciation of $118,820 and $93,723, respectively | | | 79,354 | | | | 87,291 | |
| Deferred tax asset | | | 102,024 | | | | 122,867 | |
| Trade names and other intangibles, net | | | 76,776 | | | | 271 | |
| Insurance deposit | | | 11,259 | | | | 25,177 | |
| Other assets | | | 22,584 | | | | 26,876 | |
| | | | | | | |
| | | $ | 844,818 | | | $ | 693,387 | |
| | | | | | | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable and other accrued expenses | | $ | 79,779 | | | $ | 78,368 | |
| Accrued salaries, wages and payroll taxes | | | 78,850 | | | | 59,062 | |
| Revolving lines of credit | | | 84,971 | | | | — | |
| Accrued insurance reserves | | | 19,174 | | | | 22,368 | |
| Accrued income tax payable | | | 1,042 | | | | 3,512 | |
| Current portion of long-term debt and other short-term borrowings | | | 1,064 | | | | 2,068 | |
| Other current liabilities | | | 16,419 | | | | 8,555 | |
| | | | | | | |
| Total current liabilities | | | 281,299 | | | | 173,933 | |
| Long-term debt, net of current portion | | | 22,148 | | | | 2,377 | |
| Accrued insurance reserves | | | 20,501 | | | | 20,292 | |
| Deferred compensation | | | 17,287 | | | | 18,984 | |
| Other long-term liabilities | | | 2,923 | | | | 6,659 | |
| | | | | | | |
| Total liabilities | | | 344,158 | | | | 222,245 | |
| | | | | | | |
| 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, 9,443,034 and 8,777,220 shares, respectively | | | (83,681 | ) | | | (77,856 | ) |
| Additional paid-in capital | | | 848,628 | | | | 844,735 | |
| Accumulated deficit | | | (273,393 | ) | | | (300,060 | ) |
| Accumulated other comprehensive income | | | 8,453 | | | | 3,670 | |
| | | | | | | |
| Total stockholders’ equity | | | 500,660 | | | | 471,142 | |
| | | | | | | |
| | | $ | 844,818 | | | $ | 693,387 | |
| | | | | | | |
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | |
| | | Management | | | | | | | |
| | | Guidance | | | | | | | |
| | | Three Months Ended | | | Three Months Ended | | | Twelve Months Ended | |
| | | March 30, | | | December 30, | | | December 31, | | | December 30, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Adjusted earnings from continuing operations | | | | | | $ | 11,146 | | | $ | 8,530 | | | $ | 32,612 | | | $ | 21,876 | |
| Work Opportunity Tax Credit and other credits | | | | | | | — | | | | 1,481 | | | | — | | | | — | |
| Adjustment of Canadian Purchase Liability | | | | | | | — | | | | — | | | | (2,346 | ) | | | — | |
| Vendor management bankruptcy charge, net of tax | | | | | | | (703 | ) | | | — | | | | (703 | ) | | | — | |
| Restructuring and other charges, net of tax benefit (expense) | | | | | | | (426 | ) | | | 249 | | | | (426 | ) | | | 447 | |
| | | | | | | | | | | | | | | | | |
| Earnings from continuing operations | | | | | | | 10,017 | | | | 10,260 | | | | 29,137 | | | | 22,323 | |
| | | | | | | | | | | | | | | | | |
| (Loss) earnings from discontinued operations, net of tax | | | | | | | (250 | ) | | | 29,549 | | | | (3,871 | ) | | | 32,359 | |
| | | | | | | | | | | | | | | | | |
| Net earnings | | | | | | $ | 9,767 | | | $ | 39,809 | | | $ | 25,266 | | | $ | 54,682 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Per share-Diluted amounts: | | | | | | | | | | | | | | | | | | | | |
| Adjusted earnings from continuing operations | | $0.07 to $0.11 | | | $ | 0.20 | | | $ | 0.15 | | | $ | 0.57 | | | $ | 0.38 | |
| Work Opportunity Tax Credit and other credits | | | — | | | | — | | | | 0.03 | | | | — | | | | — | |
| Adjustment of Canadian Purchase Liability | | | — | | | | — | | | | — | | | | (0.04 | ) | | | — | |
| Vendor management bankruptcy charge, net of tax | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | — | |
| Restructuring and other charges, net of tax benefit (expense) | | | (0.01 | ) | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | 0.01 | |
| | | | | | | | | | | | | | | | |
| Earnings from continuing operations | | $0.06 to $0.10 | | | | 0.18 | | | | 0.18 | | | | 0.51 | | | | 0.39 | |
| | | | | | | | | | | | | | | | |
| (Loss) earnings from discontinued operations, net of tax | | | | | | | — | | | | 0.52 | | | | (0.07 | ) | | | 0.56 | |
| | | | | | | | | | | | | | | | | |
| Net earnings * | | | | | | $ | 0.17 | | | $ | 0.70 | | | $ | 0.44 | | | $ | 0.95 | |
| | | | | | | | | | | | | | | | | |
| Diluted weighted-average shares used in computation of earnings per share | | | | | | | 56,633 | | | | 56,936 | | | | 56,893 | | | | 57,784 | |
| | |
| * | | Earnings per share amounts are calculated independently for each component and may not add due to rounding. |
RECONCILIATION OF EBITDA TO EARNINGS FROM CONTINUING OPERATIONS
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 30, | | | December 31, | | | December 30, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| EBITDA from continuing operations | | $ | 20,798 | | | $ | 18,348 | | | $ | 69,000 | | | $ | 54,039 | |
| Interest income | | | 869 | | | | 989 | | | | 4,631 | | | | 4,055 | |
| Interest expense | | | (1,155 | ) | | | (494 | ) | | | (3,746 | ) | | | (1,965 | ) |
| Depreciation and amortization | | | (6,225 | ) | | | (5,714 | ) | | | (23,409 | ) | | | (22,198 | ) |
| | | | | | | | | | | | | |
| Earnings from continuing operations before income taxes | | | 14,287 | | | | 13,129 | | | | 46,476 | | | | 33,931 | |
| | | | | | | | | | | | | |
| Income tax expense | | | (4,270 | ) | | | (2,869 | ) | | | (17,339 | ) | | | (11,608 | ) |
| | | | | | | | | | | | | |
| Earnings from continuing operations | | $ | 10,017 | | | $ | 10,260 | | | $ | 29,137 | | | $ | 22,323 | |
| | | | | | | | | | | | | |
| EBITDA as a percentage of revenue | | | 3.6 | % | | | 3.7 | % | | | 3.4 | % | | | 2.8 | % |
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited)
RECONCILIATION OF YEAR-OVER-YEAR REVENUE GROWTH RATE
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 30, 2007 | | | December 30, 2007 | |
| | | Total
Company | | | Staffing
Services | | | Professional
Services | | | Total
Company | | | Staffing
Services | | | Professional
Services | |
| Organic revenue growth rate | | | 3.1 | % | | | 3.2 | % | | | 2.7 | % | | | 0.4 | % | | | 0.1 | % | | | 0.9 | % |
| Revenue growth rate contributed from acquisitions | | | 13.6 | % | | | 11.4 | % | | | 20.5 | % | | | 4.5 | % | | | 2.8 | % | | | 9.7 | % |
| | | | | | | | | | | | | | | | | | | |
| GAAP revenue growth rate | | | 16.7 | % | | | 14.6 | % | | | 23.2 | % | | | 4.9 | % | | | 2.9 | % | | | 10.6 | % |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 30, 2007 | |
| | | Revenue Growth Rate by Skill | | | Revenue Growth Rate by Service | |
| Staffing Services | | Total
Staffing | | | Clerical | | | Light
Industrial | | | Total
Staffing | | | Permanent
Placment | | | Temporary
Staffing | | | Managed
Services | |
| Organic revenue growth rate | | | 3.2 | % | | | (1.5 | )% | | | 11.9 | % | | | 3.2 | % | | | 3.7 | % | | | 2.2 | % | | | 11.8 | % |
| Revenue growth rate contributed from acquisitions | | | 11.4 | % | | | 16.3 | % | | | 2.2 | % | | | 11.4 | % | | | 15.3 | % | | | 12.7 | % | | | 0.0 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| GAAP revenue growth rate | | | 14.6 | % | | | 14.8 | % | | | 14.1 | % | | | 14.6 | % | | | 19.0 | % | | | 14.9 | % | | | 11.8 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 30, 2007 | |
| | | Revenue Growth Rate by Skill | | | Revenue Growth Rate by Service | |
| Staffing Services | | Total
Staffing | | | Clerical | | | Light
Industrial | | | Total
Staffing | | | Permanent
Placment | | | Temporary
Staffing | | | Managed
Services | |
| Organic revenue growth rate | | | 0.1 | % | | | (1.3 | )% | | | 3.0 | % | | | 0.1 | % | | | 4.8 | % | | | (0.8 | )% | | | 7.1 | % |
| Revenue growth rate contributed from acquisitions | | | 2.8 | % | | | 3.8 | % | | | 0.6 | % | | | 2.8 | % | | | 1.8 | % | | | 3.1 | % | | | 0.0 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| GAAP revenue growth rate | | | 2.9 | % | | | 2.5 | % | | | 3.6 | % | | | 2.9 | % | | | 6.6 | % | | | 2.3 | % | | | 7.1 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 30, 2007 | |
| | | Revenue Growth Rate by Skill | | | Revenue Growth Rate by Service | |
| Professional Services | | Total
Professional | | | Information
Technology | | | Finance &
Accounting | | | Other | | | Total
Professional | | | Permanent
Placment | | | Temporary
Staffing | |
| Organic revenue growth rate | | | 2.7 | % | | | 1.8 | % | | | 2.2 | % | | | 11.5 | % | | | 2.7 | % | | | (8.7 | )% | | | 3.6 | % |
| Revenue growth rate contributed from acquisitions | | | 20.5 | % | | | 29.1 | % | | | 4.2 | % | | | 0.0 | % | | | 20.5 | % | | | 7.2 | % | | | 22.4 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| GAAP revenue growth rate | | | 23.2 | % | | | 30.9 | % | | | 6.4 | % | | | 11.5 | % | | | 23.2 | % | | | (1.5 | )% | | | 26.0 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 30, 2007 | |
| | | Revenue Growth Rate by Skill | | | Revenue Growth Rate by Service | |
| Professional Services | | Total
Professional | | | Information
Technology | | | Finance &
Accounting | | | Other | | | Total
Professional | | | Permanent
Placment | | | Temporary
Staffing | |
| Organic revenue growth rate | | | 0.9 | % | | | (0.4 | )% | | | 4.7 | % | | | 6.7 | % | | | 0.9 | % | | | 1.5 | % | | | 0.9 | % |
| Revenue growth rate contributed from acquisitions | | | 9.7 | % | | | 13.6 | % | | | 0.6 | % | | | 0.0 | % | | | 9.7 | % | | | 3.6 | % | | | 10.4 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| GAAP revenue growth rate | | | 10.6 | % | | | 13.2 | % | | | 5.3 | % | | | 6.7 | % | | | 10.6 | % | | | 5.1 | % | | | 11.3 | % |
| | | | | | | | | | | | | | | | | | | | | | |
SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 30, | | | December 31, | | | September 30, | | | December 30, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 427,091 | | | $ | 372,832 | | | $ | 362,262 | | | $ | 1,472,236 | | | $ | 1,430,062 | |
| Professional Services | | | 154,509 | | | | 125,438 | | | | 132,906 | | | | 544,878 | | | | 492,673 | |
| | | | | | | | | | | | | | | | |
| Segment revenue | | $ | 581,600 | | | $ | 498,270 | | | $ | 495,168 | | | $ | 2,017,114 | | | $ | 1,922,735 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Gross profit: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 85,202 | | | $ | 76,764 | | | $ | 73,855 | | | $ | 296,303 | | | $ | 285,537 | |
| Professional Services | | | 49,399 | | | | 41,777 | | | | 45,149 | | | | 181,683 | | | | 161,542 | |
| | | | | | | | | | | | | | | | |
| Segment gross profit | | $ | 134,601 | | | $ | 118,541 | | | $ | 119,004 | | | $ | 477,986 | | | $ | 447,079 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Segment SG&A | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | (73,120 | ) | | $ | (65,672 | ) | | $ | (61,933 | ) | | $ | (260,844 | ) | | $ | (261,410 | ) |
| Professional Services | | | (41,324 | ) | | | (35,748 | ) | | | (38,958 | ) | | | (153,452 | ) | | | (138,263 | ) |
| | | | | | | | | | | | | | | | |
| Segment SG&A | | $ | (114,444 | ) | | $ | (101,420 | ) | | $ | (100,891 | ) | | $ | (414,296 | ) | | $ | (399,673 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Segment operating profit: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | $ | 12,082 | | | $ | 11,092 | | | $ | 11,922 | | | $ | 35,459 | | | $ | 24,127 | |
| Professional Services | | | 8,075 | | | | 6,029 | | | | 6,191 | | | | 28,231 | | | | 23,279 | |
| | | | | | | | | | | | | | | | |
| Segment operating profit | | | 20,157 | | | | 17,121 | | | | 18,113 | | | | 63,690 | | | | 47,406 | |
| | | | | | | | | | | | | | | | | | | | | |
| Unallocated corporate costs | | | (4,016 | ) | | | (4,315 | ) | | | (3,876 | ) | | | (15,993 | ) | | | (15,541 | ) |
| Amortization of intangibles | | | (868 | ) | | | (46 | ) | | | (290 | ) | | | (1,406 | ) | | | (201 | ) |
| Interest expense | | | (1,155 | ) | | | (494 | ) | | | (259 | ) | | | (3,746 | ) | | | (1,965 | ) |
| Interest income | | | 869 | | | | 989 | | | | 1,285 | | | | 4,631 | | | | 4,055 | |
| Restructuring and other charges | | | (700 | ) | | | (126 | ) | | | — | | | | (700 | ) | | | 177 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings from continuing operations before income taxes | | $ | 14,287 | | | $ | 13,129 | | | $ | 14,973 | | | $ | 46,476 | | | $ | 33,931 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| MEMO: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross profit margin: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | | 19.9 | % | | | 20.6 | % | | | 20.4 | % | | | 20.1 | % | | | 20.0 | % |
| Professional Services | | | 32.0 | % | | | 33.3 | % | | | 34.0 | % | | | 33.3 | % | | | 32.8 | % |
| Total Spherion | | | 23.1 | % | | | 23.8 | % | | | 24.0 | % | | | 23.7 | % | | | 23.3 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Segment SG&A: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | | 17.1 | % | | | 17.6 | % | | | 17.1 | % | | | 17.7 | % | | | 18.3 | % |
| Professional Services | | | 26.7 | % | | | 28.5 | % | | | 29.3 | % | | | 28.2 | % | | | 28.1 | % |
| Total Spherion | | | 19.7 | % | | | 20.4 | % | | | 20.4 | % | | | 20.5 | % | | | 20.8 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Segment operating profit margin: | | | | | | | | | | | | | | | | | | | | |
| Staffing Services | | | 2.8 | % | | | 3.0 | % | | | 3.3 | % | | | 2.4 | % | | | 1.7 | % |
| Professional Services | | | 5.2 | % | | | 4.8 | % | | | 4.7 | % | | | 5.2 | % | | | 4.7 | % |
| Total Spherion | | | 3.5 | % | | | 3.4 | % | | | 3.7 | % | | | 3.2 | % | | | 2.5 | % |
| | | | | | | | | | | | | | | | | | | | | |
Supplemental Cash Flow Information: | | | | | | | | | | | | | | | | | | | | |
| Operating cash flow | | $ | 19,881 | | | $ | 26,121 | | | $ | 11,232 | | | $ | 56,144 | | | $ | 46,085 | |
| Capital expenditures | | $ | 2,292 | | | $ | 5,782 | | | $ | 2,051 | | | $ | 8,298 | | | $ | 22,677 | |
| Depreciation and amortization | | $ | 6,225 | | | $ | 5,714 | | | $ | 5,637 | | | $ | 23,409 | | | $ | 22,198 | |
| DSO | | | 50 | | | | 50 | | | | 53 | | | | 50 | | | | 50 | |
SPHERION CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited, dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 30,
2007 | | | December 31,
2006 | | | September 30,
2007 | | | December 30,
2007 | | | December 31,
2006 | |
Staffing Services | | | | | | | | | | | | | | | | | | | | |
Revenue by Skill: | | | | | | | | | | | | | | | | | | | | |
| Clerical | | $ | 264,668 | | | $ | 230,530 | | | $ | 219,546 | | | $ | 920,558 | | | $ | 897,746 | |
| Light Industrial | | | 162,423 | | | | 142,302 | | | | 142,716 | | | | 551,678 | | | | 532,316 | |
| | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 427,091 | | | $ | 372,832 | | | $ | 362,262 | | | $ | 1,472,236 | | | $ | 1,430,062 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue by Service: | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | $ | 371,012 | | | $ | 323,000 | | | $ | 309,739 | | | $ | 1,259,411 | | | $ | 1,231,301 | |
| Managed Services | | | 50,254 | | | | 44,938 | | | | 46,480 | | | | 189,574 | | | | 176,944 | |
| Permanent Placement | | | 5,825 | | | | 4,894 | | | | 6,043 | | | | 23,251 | | | | 21,817 | |
| | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 427,091 | | | $ | 372,832 | | | $ | 362,262 | | | $ | 1,472,236 | | | $ | 1,430,062 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Gross Profit Margin by Service: | | | | | | | | | | | | | | | | | | | | |
| (As % of Applicable Revenue) | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | | 17.1 | % | | | 18.3 | % | | | 17.3 | % | | | 17.0 | % | | | 17.3 | % |
| Managed Services | | | 31.9 | % | | | 28.7 | % | | | 30.4 | % | | | 30.9 | % | | | 29.0 | % |
| Permanent Placement | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Total Staffing Services | | | 19.9 | % | | | 20.6 | % | | | 20.4 | % | | | 20.1 | % | | | 20.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
Professional Services | | | | | | | | | | | | | | | | | | | | |
Revenue by Skill: | | | | | | | | | | | | | | | | | | | | |
| Information Technology | | $ | 107,847 | | | $ | 82,413 | | | $ | 87,053 | | | $ | 362,569 | | | $ | 320,389 | |
| Finance & Accounting | | | 27,503 | | | | 25,840 | | | | 26,980 | | | | 109,712 | | | | 104,225 | |
| Other | | | 19,159 | | | | 17,185 | | | | 18,873 | | | | 72,597 | | | | 68,059 | |
| | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 154,509 | | | $ | 125,438 | | | $ | 132,906 | | | $ | 544,878 | | | $ | 492,673 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Revenue by Service: | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | $ | 141,966 | | | $ | 112,710 | | | $ | 119,071 | | | $ | 489,713 | | | $ | 440,170 | |
| Permanent Placement | | | 12,543 | | | | 12,728 | | | | 13,835 | | | | 55,165 | | | | 52,503 | |
| | | | | | | | | | | | | | | | |
| Segment Revenue | | $ | 154,509 | | | $ | 125,438 | | | $ | 132,906 | | | $ | 544,878 | | | $ | 492,673 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Gross Profit Margin by Service: | | | | | | | | | | | | | | | | | | | | |
| (As % of Applicable Revenue) | | | | | | | | | | | | | | | | | | | | |
| Temporary Staffing | | | 26.0 | % | | | 25.8 | % | | | 26.3 | % | | | 25.8 | % | | | 24.8 | % |
| Permanent Placement | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Total Professional Services | | | 32.0 | % | | | 33.3 | % | | | 34.0 | % | | | 33.3 | % | | | 32.8 | % |
