EX-99.1 3 c84255exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(KELLY SERVICES LOGO)
KELLY SERVICES REPORTS 1st QUARTER 2009 RESULTS
TROY, MI (April 28, 2009) — Kelly Services, Inc., a world leader in human resources solutions, today announced results for the first quarter of 2009.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2009 totaled $1.0 billion, a 25% decrease compared to the corresponding quarter in 2008. On a constant currency basis, revenue decreased by 19%.
Losses from operations for the first quarter of 2009 totaled $30.6 million, compared to earnings from operations of $12.9 million reported for the first quarter of 2008. Included in the results from operations for the first quarter 2009 are $5.4 million of restructuring costs relating to the Company’s UK operations. The UK restructuring charge is part of a plan to further consolidate and close branches in the UK during 2009.
Diluted losses per share from continuing operations in the first quarter of 2009 were $0.46, compared to first quarter 2008 earnings of $0.23 per share. The UK restructuring charge totaled $0.15 per share in 2009.
Commenting on the first quarter results, Camden called the Company’s loss disappointing, but not unexpected given the condition of the global labor market and widespread economic slowdown.
“In spite of the challenges we’re facing, we’ve made significant progress in reducing operating costs by 13%, while pursuing our strategic plan aimed at building long-term value for our stakeholders.
“Our ability to remain focused on diversifying globally, expanding our professional and technical staffing, and growing our outsourcing and consulting services, in this bad economy, is critical to our future success,” said Camden.
In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on April 28, 2009 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
     
U.S.
  1 800 288-9626
International
  1 651 291-5254
The pass code is Kelly Services
Via the Internet:
The call is also available via the internet through the Kelly Services website: www.kellyservices.com

 

 

 

This release contains statements that are forward looking in nature and accordingly, are subject to risks and uncertainties. These factors include: competition, changing market and economic conditions, currency fluctuations, changes in laws and regulations, including tax laws, and other factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein.
A reconciliation of certain non-GAAP financial measures discussed in this release is included in the attached financial information schedules.
About Kelly Services
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 to clients on a global basis. Kelly provides employment to nearly 650,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, creative services, light industrial, education, and health care. Revenue in 2008 was $5.5 billion. Visit www.kellyservices.com.
     
ANALYST CONTACT:
  MEDIA CONTACT:
James Polehna
  Judith Clark
(248) 244-4586
  (248) 244-5362
james_polehna@kellyservices.com
  judith_clark@kellyservices.com

 

2

 

KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
(UNAUDITED)
(In millions of dollars except per share data)
                                 
    2009     2008     Change     % Change  
 
                                
Revenue from services
   $ 1,042.6     $ 1,388.4     $ (345.8 )     (24.9 )%
 
                                
Cost of services
     867.1       1,138.5       (271.4 )     (23.8 )
 
                        
 
                                
Gross profit
     175.5       249.9       (74.4 )     (29.8 )
 
                                
Selling, general and administrative expenses
     206.1       237.0       (30.9 )     (13.0 )
 
                                
 
                        
(Loss) earnings from operations
     (30.6 )     12.9       (43.5 )     (336.7 )
 
                                
Other income, net
     1.3       —       1.3     NM  
 
                        
 
                                
(Loss) earnings from continuing operations before taxes
     (29.3 )     12.9       (42.2 )     (327.5 )
 
                                
Income taxes
     (13.2 )     4.9       (18.1 )     (370.1 )
 
                        
 
                                
(Loss) earnings from continuing operations
     (16.1 )     8.0       (24.1 )     (301.4 )
 
                                
Earnings from discontinued operations, net of tax
     0.6       0.2       0.4       146.6  
 
                        
 
                                
Net (loss) earnings
   $ (15.5 )   $ 8.2     $ (23.7 )     (288.4 )%
 
                        
 
                                
Basic (loss) earnings per share on common stock
                                
(Loss) earnings from continuing operations
   $ (0.46 )   $ 0.23     $ (0.69 )     (300.0 )%
Earnings from discontinued operations
     0.02       0.01       0.01       100.0  
Net (loss) earnings
     (0.45 )     0.23       (0.68 )     (295.7 )
 
                                
Diluted (loss) earnings per share on common stock
                                
(Loss) earnings from continuing operations
   $ (0.46 )   $ 0.23     $ (0.69 )     (300.0 )%
Earnings from discontinued operations
     0.02       0.01       0.01       100.0  
Net (loss) earnings
     (0.45 )     0.23       (0.68 )     (295.7 )
 
                                
STATISTICS:
                                
 
                                
Gross profit rate
     16.8 %     18.0 %   (1.2 ) pts.        
 
                                
Selling, general and administrative expenses:
                                
% of revenue
     19.8       17.1       2.7          
% of gross profit
     117.5       94.8       22.7          
 
                                
% Return — (Loss) earnings from operations
     (2.9 )     0.9       (3.8 )        
(Loss) earnings from continuing operations before taxes
     (2.8 )     0.9       (3.7 )        
(Loss) earnings from continuing operations
     (1.5 )     0.6       (2.1 )        
Net (loss) earnings
     (1.5 )     0.6       (2.1 )        
 
                                
Effective income tax rate
     45.1 %     38.0 %   7.1  pts.        

 

3

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                                 
    First Quarter  
                            Constant  
                            Currency  
    2009     2008     Change     Change  
Americas Commercial
                                
Revenue from services (including fee-based income)
   $ 482.4     $ 642.7       (24.9 ) %     (22.8 ) %
Fee-based income
     1.8       4.2       (57.0 )     (52.7 )
 
                                
Earnings from operations
     0.5       22.2       (97.8 )        
 
Gross profit rate
     15.2 %     16.3 %   (1.1 ) pts.        
Expense rates:
                                
% of revenue
     15.1       12.9       2.2          
% of gross profit
     99.3       78.8       20.5          
Operating margin
     0.1       3.5       (3.4 )        
 
                                
Americas PT
                                
Revenue from services (including fee-based income)
   $ 197.4     $ 238.6       (17.3 ) %     (17.0 ) %
Fee-based income
     2.8       5.3       (47.8 )     (47.7 )
 
                                
Earnings from operations
     5.3       14.1       (62.7 )        
 
Gross profit rate
     15.9 %     17.7 %   (1.8 ) pts.        
Expense rates:
                                
% of revenue
     13.3       11.8       1.5          
% of gross profit
     83.3       66.7       16.6          
Operating margin
     2.7       5.9       (3.2 )        
 
                                
EMEA Commercial
                                
Revenue from services (including fee-based income)
   $ 216.6     $ 321.9       (32.7 ) %     (17.9 ) %
Fee-based income
     4.7       10.7       (55.2 )     (44.9 )
 
                                
Earnings from operations
     (12.1 )     (1.6 )   NM          
Earnings from operations (excluding restructuring charges)
     (6.7 )     (1.6 )     (325.0 )        
 
Gross profit rate
     15.9 %     17.3 %   (1.4 ) pts.        
Expense rates:
                                
% of revenue
     21.5       17.8       3.7          
% of gross profit
     135.0       102.8       32.2          
Operating margin
     (5.6 )     (0.5 )     (5.1 )        
 
                                
EMEA PT
                                
Revenue from services (including fee-based income)
   $ 32.8     $ 43.8       (25.0 ) %     (9.7 ) %
Fee-based income
     4.4       6.9       (36.6 )     (21.2 )
 
                                
Earnings from operations
     (0.6 )     1.0       (155.6 )        
 
                                
 
Gross profit rate
     28.6 %     29.8 %   (1.2 ) pts.        
Expense rates:
                                
% of revenue
     30.4       27.4       3.0          
% of gross profit
     106.1       92.1       14.0          
Operating margin
     (1.7 )     2.3       (4.0 )        

 

4

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
                                 
    First Quarter  
                            Constant  
                            Currency  
    2009     2008     Change     Change  
APAC Commercial
                                
Revenue from services (including fee-based income)
   $ 64.4     $ 86.7       (25.7 ) %     (11.6 ) %
Fee-based income
     2.2       4.3       (48.2 )     (40.5 )
 
                                
Earnings from operations
     (1.3 )     —     NM          
 
                                
Gross profit rate
     14.7 %     16.7 %   (2.0 ) pts.        
Expense rates:
                                
% of revenue
     16.8       16.7       0.1          
% of gross profit
     114.2       99.6       14.6          
Operating margin
     (2.1 )     0.1       (2.2 )        
 
                                
APAC PT
                                
Revenue from services (including fee-based income)
   $ 6.2     $ 8.5       (26.8 ) %     (16.7 ) %
Fee-based income
     1.0       1.4       (31.5 )     (21.7 )
 
                                
Earnings from operations
     (0.3 )     (0.2 )     (17.1 )        
 
                                
Gross profit rate
     30.8 %     30.7 %   0.1  pts.      
Expense rates:
                                
% of revenue
     34.7       33.2       1.5          
% of gross profit
     112.9       108.1       4.8          
Operating margin
     (4.0 )     (2.5 )     (1.5 )        
 
                                
OCG
                                
Revenue from services (including fee-based income)
   $ 48.7     $ 51.8       (6.1 ) %     (3.2 ) %
Fee-based income
     6.6       6.1       8.4       16.5  
 
                                
Earnings from operations
     (1.2 )     1.9       (164.6 )        
 
                                
Gross profit rate
     32.7 %     33.1 %   (0.4 ) pts.      
Expense rates:
                                
% of revenue
     35.2       29.5       5.7          
% of gross profit
     107.5       89.2       18.3          
Operating margin
     (2.5 )     3.6       (6.1 )        
 
                                
Corporate Expense
   $ (20.9 )   $ (24.5 )     14.5 %        

 

5

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
                         
    March 29,     December 28,     March 30,  
    2009     2008     2008  
Current Assets
                        
Cash and equivalents
   $ 115.4     $ 118.3     $ 87.9  
Trade accounts receivable, less allowances of $17.2, $17.0 and $18.4, respectively
     706.3       815.8       931.4  
Prepaid expenses and other current assets
     55.8       62.0       58.3  
Deferred taxes
     29.2       31.9       27.0  
 
                  
 
                        
Total current assets
     906.7       1,028.0       1,104.6  
 
                        
Property and Equipment, Net
     143.1       151.3       175.6  
 
                        
Noncurrent Deferred Taxes
     39.8       40.0       43.2  
 
                        
Goodwill, Net
     117.8       117.8       145.1  
 
                        
Other Assets
     107.5       120.2       154.3  
 
                  
 
                        
Total Assets
   $ 1,314.9     $ 1,457.3     $ 1,622.8  
 
                  
 
                        
Current Liabilities
                        
Short-term borrowings
   $ 16.9     $ 35.2     $ 47.8  
Accounts payable and accrued liabilities
     220.7       244.1       218.3  
Accrued payroll and related taxes
     209.5       243.2       275.9  
Accrued insurance
     25.5       26.3       22.6  
Income and other taxes
     26.3       51.8       60.7  
 
                  
 
                        
Total current liabilities
     498.9       600.6       625.3  
 
                        
Noncurrent Liabilities
                        
Long-term debt
     67.6       80.0       54.9  
Accrued insurance
     45.4       46.9       57.7  
Accrued retirement benefits
     59.2       61.6       75.1  
Other long-term liabilities
     15.2       15.3       16.2  
 
                  
 
                        
Total noncurrent liabilities
     187.4       203.8       203.9  
 
                        
Stockholders’ Equity
                        
Common stock
     40.1       40.1       40.1  
Treasury stock
     (110.5 )     (111.2 )     (113.4 )
Paid-in capital
     36.3       35.8       34.5  
Earnings invested in the business
     660.5       676.0       780.8  
Accumulated other comprehensive income
     2.2       12.2       51.6  
 
                  
 
                        
Total stockholders’ equity
     628.6       652.9       793.6  
 
                  
 
                        
Total Liabilities and Stockholders’ Equity
   $ 1,314.9     $ 1,457.3     $ 1,622.8  
 
                  
 
                        
STATISTICS:
                        
Working Capital
   $ 407.8     $ 427.4     $ 479.3  
Current Ratio
     1.8       1.7       1.8  
Debt-to-capital %
     11.9 %     15.0 %     11.5  
Global Days Sales Outstanding
     51       50       52  

 

6

 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
(UNAUDITED)
(In millions of dollars)
                 
    2009     2008  
Cash flows from operating activities
                
Net (loss) earnings
   $ (15.5 )   $ 8.2  
Noncash adjustments:
                
Depreciation and amortization
     10.6       11.3  
Provision for bad debts
     1.5       1.5  
Stock-based compensation
     1.3       1.0  
Other, net
     (1.9 )     1.0  
Changes in operating assets and liabilities
     47.8       1.4  
 
            
 
                
Net cash from operating activities
     43.8       24.4  
 
            
 
                
Cash flows from investing activities
                
Capital expenditures
     (2.0 )     (7.3 )
Acquisition of companies, net of cash received
     (0.2 )     (7.5 )
Other investing activities
     —       (0.3 )
 
            
 
                
Net cash from investing activities
     (2.2 )     (15.1 )
 
            
 
                
Cash flows from financing activities
                
Net change in revolving line of credit
     (1.0 )     (4.3 )
Repayment of debt
     (22.9 )     —  
Dividend payments
     —       (4.7 )
Purchase of treasury stock
     —       (8.0 )
Stock options and other stock sales
     —       —  
Other financing activities
     (18.7 )     (1.5 )
 
            
 
                
Net cash from financing activities
     (42.6 )     (18.5 )
 
            
 
                
Effect of exchange rates on cash and equivalents
     (1.9 )     4.3  
 
            
 
                
Net change in cash and equivalents
     (2.9 )     (4.9 )
Cash and equivalents at beginning of period
     118.3       92.8  
 
            
 
                
Cash and equivalents at end of period
   $ 115.4     $ 87.9  
 
            

 

7

 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                                 
    First Quarter (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2009     2008     US$     Currency  
 
                                
Americas
                                
United States
   $ 644.8     $ 820.7       (21.4 )%     (21.4 )%
Canada
     40.9       61.8       (33.8 )     (18.2 )
Puerto Rico
     15.7       18.8       (16.8 )     (16.8 )
Mexico
     14.7       17.7       (16.6 )     10.8  
 
                            
Total Americas
     716.1       919.0       (22.1 )     (20.5 )
 
                                
EMEA
                                
United Kingdom
     62.6       104.9       (40.4 )     (17.9 )
France
     61.7       86.6       (28.8 )     (18.7 )
Switzerland
     28.5       42.2       (32.4 )     (27.6 )
Italy
     18.9       35.4       (46.5 )     (38.7 )
Germany
     15.4       21.4       (27.8 )     (17.3 )
Russia
     13.9       20.7       (33.0 )     (6.3 )
Norway
     13.1       20.0       (34.6 )     (15.4 )
Portugal
     11.7       —     NM     NM  
Other
     28.2       40.4       (30.2 )     (18.1 )
 
                            
Total EMEA
     254.0       371.6       (31.6 )     (16.8 )
 
                                
APAC
                                
Australia
     20.4       35.7       (42.9 )     (22.3 )
Singapore
     14.9       17.8       (16.1 )     (10.1 )
Malaysia
     12.1       14.8       (18.0 )     (7.9 )
Other
     25.1       29.5       (15.1 )     (2.9 )
 
                            
Total APAC
     72.5       97.8       (25.9 )     (12.1 )
 
                                
Total Kelly Services, Inc.
   $ 1,042.6     $ 1,388.4       (24.9 )%     (18.9 )%
 
                            

 

8

 

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
                                 
    First Quarter  
    2009     2008  
    Amount     Per Share     Amount     Per Share  
 
                                
(Loss) earnings from continuing operations
   $ (16.1 )   $ (0.46 )   $ 8.0     $ 0.23  
 
                                
U.K. restructuring charge (Note 1)
     5.4       (0.15 )     —       —  
 
                            
 
                                
(Loss) earnings from continuing operations excluding the U.K. restructuring charge, net of taxes
   $ (10.7 )   $ (0.31 )   $ 8.0     $ 0.23  
 
                            
                         
    First Quarter  
    2009     2008     % Change  
 
                        
Selling, general and administrative expenses
   $ 206.1     $ 237.0          
U.K. restructuring charge (Note 1)
     (5.4 )     —          
 
                    
Selling, general and administrative expenses excluding the U.K. restructuring charge
   $ 200.7     $ 237.0       (15.3 %)
 
                  
 
                        
(Loss) earnings from operations
   $ (30.6 )   $ 12.9          
U.K. restructuring charge (Note 1)
     5.4       —          
 
                    
(Loss) earnings from operations excluding the U.K. restructuring charge
   $ (25.2 )   $ 12.9       (295.2 %)
 
                  
 
                        
EMEA Commercial selling, general and administrative expenses
   $ 46.6     $ 57.2          
U.K. restructuring charge (Note 1)
     (5.4 )     —          
 
                    
EMEA Commercial selling, general and administrative expenses excluding the U.K. restructuring charge
   $ 41.2     $ 57.2       (27.9 %)
 
                  
 
                        
EMEA Commercial (loss) earnings from operations
   $ (12.1 )   $ (1.6 )        
U.K. restructuring charge (Note 1)
     5.4       —          
 
                    
EMEA Commercial (loss) earnings from operations excluding the U.K. restructuring charge
   $ (6.7 )   $ (1.6 )     (325.0 %)
 
                  

 

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KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the U.K. restructuring charge is useful to understand the Company’s fiscal 2009 financial performance and increases comparability. 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 U.K. restructuring charge is comprised of facility and other exit costs associated with the disposal or closure of 37 branch locations related to the restructuring program.

 

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