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8-K - FORM 8-K - KELLY SERVICES INCc24018e8vk.htm
Exhibit 99.1
(KELLY LOGO)
KELLY SERVICES REPORTS 3rd QUARTER 2011 RESULTS
TROY, MI (November 9, 2011) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2011 totaled $1.4 billion, a 10% increase compared to the corresponding quarter in 2010.
Earnings from operations for the third quarter of 2011 totaled $22 million, compared to earnings from operations of $14 million reported for the third quarter of 2010.
Diluted earnings per share from continuing operations in the third quarter of 2011 were $0.52 compared to third quarter 2010 earnings of $0.26 per share.
In view of the economic challenges, Camden called Kelly’s third quarter performance solid and particularly encouraging. “We are seeing continued demand for temporary staffing services ahead of last year. Today’s employers are seeking greater workforce flexibility as they adapt to new market realities, and Kelly is in an excellent position to provide customized solutions – particularly through outsourcing and consulting, and highly skilled professional and technical services. When coupled with our leaner cost structure, that business mix has the potential to accelerate profit growth going forward.”
In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 9, 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, but are not limited to, competitive market pressures including pricing, changing market and economic conditions, our ability to achieve our business strategy, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges initiated by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers’ compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws and the upcoming expiration of the U.S. work opportunity credit program), the net financial impact of recent U.S. healthcare legislation on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, and other risks, uncertainties and 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, and we have no intention to update these statements.
About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provides employment to more than 530,000 employees annually. Revenue in 2010 was $5.0 billion. Visit www.kellyservices.com and connect with us on facebook.com/kellyservices, linkedin.com/companies/kelly-services and twitter.com/kellyservices.
#
     
ANALYST CONTACT:
  MEDIA CONTACT:
James Polehna
  Jane Stehney
(248) 244-4586
  (248) 244-5630
james_polehna@kellyservices.com
  jane_stehney@kellyservices.com

 

2


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED OCTOBER 2, 2011 AND OCTOBER 3, 2010
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    2011     2010     Change     % Change  
 
                               
Revenue from services
  $ 1,409.8     $ 1,284.7     $ 125.1       9.7 %
 
                               
Cost of services
    1,181.2       1,077.5       103.7       9.6  
 
                       
 
                               
Gross profit
    228.6       207.2       21.4       10.4  
 
                               
Selling, general and administrative expenses
    206.5       192.9       13.6       7.1  
 
                       
 
                               
Earnings from operations
    22.1       14.3       7.8       54.7  
 
                               
Other income (expense), net
    1.0       (1.5 )     2.5       161.7  
 
                       
 
                               
Earnings from continuing operations before taxes
    23.1       12.8       10.3       80.2  
 
                               
Income taxes
    3.4       3.2       0.2       4.6  
 
                       
 
                               
Earnings from continuing operations
    19.7       9.6       10.1       105.6  
 
                               
Loss from discontinued operations, net of tax
                    NM  
 
                       
 
                               
Net earnings
  $ 19.7     $ 9.6     $ 10.1       105.6 %
 
                       
 
                               
Basic earnings per share on common stock
                               
Earnings from continuing operations
  $ 0.52     $ 0.26     $ 0.26       100.0 %
Loss from discontinued operations
                    NM  
Net earnings
    0.52       0.26       0.26       100.0  
 
                               
Diluted earnings per share on common stock
                               
Earnings from continuing operations
  $ 0.52     $ 0.26     $ 0.26       100.0 %
Loss from discontinued operations
                    NM  
Net earnings
    0.52       0.26       0.26       100.0  
 
                               
STATISTICS:
                               
 
                               
Gross profit rate
    16.2 %     16.1 %   0.1  pts.      
 
                               
Selling, general and administrative expenses:
                               
% of revenue
    14.6       15.0       (0.4 )        
% of gross profit
    90.3       93.1       (2.8 )        
 
                               
% Return — Earnings from operations
    1.6       1.1       0.5          
Earnings from continuing operations before taxes
    1.6       1.0       0.6          
Earnings from continuing operations
    1.4       0.7       0.7          
Net earnings
    1.4       0.7       0.7          
 
                               
Effective income tax rate
    14.6 %     25.1 %   (10.5 ) pts.      
 
                               
Average number of shares outstanding (millions):
                               
Basic
    36.8       36.7                  
Diluted
    36.8       36.7                  
 
                               
Shares adjusted for nonvested restricted awards (millions):
                               
Basic
    37.8       37.0                  
Diluted
    37.8       37.0                  

 

3


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED OCTOBER 2, 2011 AND OCTOBER 3, 2010
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    2011     2010     Change     % Change  
 
                               
Revenue from services
  $ 4,154.7     $ 3,624.5     $ 530.2       14.6 %
 
                               
Cost of services
    3,487.8       3,046.4       441.4       14.5  
 
                       
 
                               
Gross profit
    666.9       578.1       88.8       15.4  
 
                               
Selling, general and administrative expenses
    621.9       555.4       66.5       12.0  
 
                               
Asset impairments
          1.5       (1.5 )     (100.0 )
 
                       
 
                               
Earnings from operations
    45.0       21.2       23.8       112.3  
 
                               
Other expense, net
    (0.1 )     (4.7 )     4.6       97.3  
 
                       
 
                               
Earnings from continuing operations before taxes
    44.9       16.5       28.4       171.3  
 
                               
Income taxes
    4.1       5.0       (0.9 )     (18.9 )
 
                       
 
                               
Earnings from continuing operations
    40.8       11.5       29.3       254.9  
 
                               
Loss from discontinued operations, net of tax
    (1.2 )           (1.2 )   NM  
 
                       
 
                               
Net earnings
  $ 39.6     $ 11.5     $ 28.1       244.7 %
 
                       
 
                               
Basic earnings per share on common stock
                               
Earnings from continuing operations
  $ 1.09     $ 0.32     $ 0.77       240.6 %
Loss from discontinued operations
    (0.03 )           (0.03 )   NM  
Net earnings
    1.05       0.32       0.73       228.1  
 
                               
Diluted earnings per share on common stock
                               
Earnings from continuing operations
  $ 1.09     $ 0.32     $ 0.77       240.6 %
Loss from discontinued operations
    (0.03 )           (0.03 )   NM  
Net earnings
    1.05       0.32       0.73       228.1  
 
                               
STATISTICS:
                               
 
                               
Gross profit rate
    16.1 %     16.0 %   0.1  pts.      
 
                               
Selling, general and administrative expenses:
                               
% of revenue
    15.0       15.3       (0.3 )        
% of gross profit
    93.3       96.1       (2.8 )        
 
                               
% Return — Earnings from operations
    1.1       0.6       0.5          
Earnings from continuing operations before taxes
    1.1       0.5       0.6          
Earnings from continuing operations
    1.0       0.3       0.7          
Net earnings
    1.0       0.3       0.7          
 
                               
Effective income tax rate
    9.1 %     30.6 %   (21.5 ) pts.      
 
                               
Average number of shares outstanding (millions):
                               
Basic
    36.8       35.9                  
Diluted
    36.8       35.9                  
 
                               
Shares adjusted for nonvested restricted awards (millions):
                               
Basic
    37.6       36.3                  
Diluted
    37.6       36.3                  

 

4


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)

(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
Americas Commercial
                               
Revenue from services (including fee-based income)
  $ 661.7     $ 633.3       4.5 %     3.8 %
Fee-based income
    3.2       2.2       47.7       46.3  
Gross profit
    93.9       92.3       1.7       1.1  
Total SG&A expenses
    72.1       69.1       4.3       3.7  
Earnings from operations
    21.8       23.2       (5.9 )        
 
                               
Gross profit rate
    14.2 %     14.6 %   (0.4 ) pts.      
Expense rates:
                               
% of revenue
    10.9       10.9                
% of gross profit
    76.7       74.8       1.9          
Operating margin
    3.3       3.7       (0.4 )        
 
                               
Americas PT
                               
Revenue from services (including fee-based income)
  $ 250.8     $ 233.6       7.4 %     7.3 %
Fee-based income
    3.2       2.2       48.1       47.7  
Gross profit
    38.0       37.2       2.0       1.9  
Total SG&A expenses
    26.0       23.5       10.6       10.4  
Earnings from operations
    12.0       13.7       (12.6 )        
 
                               
Gross profit rate
    15.1 %     15.9 %   (0.8 ) pts.      
Expense rates:
                               
% of revenue
    10.4       10.1       0.3          
% of gross profit
    68.4       63.1       5.3          
Operating margin
    4.8       5.9       (1.1 )        
 
                               
EMEA Commercial
                               
Revenue from services (including fee-based income)
  $ 261.0     $ 228.1       14.4 %     2.8 %
Fee-based income
    6.5       4.5       45.2       33.1  
Gross profit
    42.2       37.2       13.4       1.7  
SG&A expenses excluding restructuring charges
    36.3       32.4       11.8          
Restructuring charges
    (0.6 )         NM          
Total SG&A expenses
    35.7       32.4       10.0       (1.7 )
Earnings from operations
    6.5       4.8       36.7          
Earnings from operations excluding restructuring charges
    5.9       4.8       24.3          
 
                               
Gross profit rate
    16.2 %     16.3 %   (0.1 ) pts.      
Expense rates (excluding restructuring charges):
                               
% of revenue
    13.9       14.2       (0.3 )        
% of gross profit
    86.0       87.2       (1.2 )        
Operating margin (excluding restructuring charges)
    2.3       2.1       0.2          

 

5


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
EMEA PT
                               
Revenue from services (including fee-based income)
  $ 46.8     $ 37.1       26.3 %     14.1 %
Fee-based income
    5.3       3.6       45.9       34.5  
Gross profit
    12.7       9.6       31.6       19.9  
Total SG&A expenses
    11.1       9.3       20.2       8.3  
Earnings from operations
    1.6       0.3       312.1          
 
                               
Gross profit rate
    27.1 %     26.0 %   1.1  pts.      
Expense rates:
                               
% of revenue
    23.8       25.0       (1.2 )        
% of gross profit
    87.7       96.1       (8.4 )        
Operating margin
    3.3       1.0       2.3          
 
                               
APAC Commercial
                               
Revenue from services (including fee-based income)
  $ 101.8     $ 88.7       14.7 %     4.5 %
Fee-based income
    3.8       3.0       28.3       17.2  
Gross profit
    14.7       12.4       18.8       7.6  
Total SG&A expenses
    14.1       11.4       23.5       11.4  
Earnings from operations
    0.6       1.0       (35.5 )        
 
                               
Gross profit rate
    14.5 %     14.0 %   0.5  pts.      
Expense rates:
                               
% of revenue
    13.8       12.8       1.0          
% of gross profit
    95.7       92.0       3.7          
Operating margin
    0.6       1.1       (0.5 )        
 
                               
APAC PT
                               
Revenue from services (including fee-based income)
  $ 14.1     $ 8.2       72.3 %     58.8 %
Fee-based income
    4.2       2.9       47.1       36.2  
Gross profit
    5.6       3.8       52.2       40.0  
Total SG&A expenses
    5.7       4.3       31.5       20.3  
Earnings from operations
    (0.1 )     (0.5 )     89.3          
 
                               
Gross profit rate
    39.9 %     45.2 %   (5.3 ) pts.      
Expense rates:
                               
% of revenue
    40.4       53.0       (12.6 )        
% of gross profit
    101.2       117.1       (15.9 )        
Operating margin
    (0.5 )     (7.7 )     7.2          

 

6


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    Third Quarter  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
OCG
                               
Revenue from services (including fee-based income)
  $ 80.7     $ 64.1       25.9 %     24.4 %
Fee-based income
    10.5       6.6       60.3       53.6  
Gross profit
    22.2       15.4       44.1       40.4  
Total SG&A expenses
    22.4       19.6       14.5       10.8  
Earnings from operations
    (0.2 )     (4.2 )     94.0          
 
                               
Gross profit rate
    27.5 %     24.0 %   3.5  pts.      
Expense rates:
                               
% of revenue
    27.8       30.5       (2.7 )        
% of gross profit
    101.1       127.2       (26.1 )        
Operating margin
    (0.3 )     (6.5 )     6.2          
 
                               
Corporate Expense
                               
SG&A expenses excluding restructuring charges
  $ 20.1     $ 21.2       (4.8 )%        
Restructuring charges
          2.8       (100.0 )        
Total SG&A expenses
    20.1       24.0       (16.1 )        
 
                               
Consolidated Total (net of intersegment activity)
                               
Revenue from services (including fee-based income)
  $ 1,409.8     $ 1,284.7       9.7 %     6.1 %
Fee-based income
    36.7       24.9       48.5       40.1  
Gross profit
    228.6       207.2       10.4       6.3  
SG&A expenses excluding restructuring charges
    207.1       190.1       9.0          
Restructuring charges
    (0.6 )     2.8       (120.7 )        
Total SG&A expenses
    206.5       192.9       7.1       3.0  
Earnings from operations
    22.1       14.3       54.7          
Earnings from operations excluding restructuring charges
    21.5       17.1       25.6          
 
                               
Gross profit rate
    16.2 %     16.1 %   0.1  pts.      
Expense rates (excluding restructuring charges):
                               
% of revenue
    14.7       14.8       (0.1 )        
% of gross profit
    90.6       91.7       (1.1 )        
Operating margin (excluding restructuring charges)
    1.5       1.3       0.2          

 

7


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)

(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
Americas Commercial
                               
Revenue from services (including fee-based income)
  $ 1,985.3     $ 1,781.9       11.4 %     10.7 %
Fee-based income
    8.8       6.5       36.9       35.3  
Gross profit
    280.1       256.5       9.2       8.5  
SG&A expenses excluding restructuring charges
    218.6       201.9       8.3          
Restructuring charges
          0.3       (100.0 )        
Total SG&A expenses
    218.6       202.2       8.1       7.5  
Earnings from operations
    61.5       54.3       13.3          
Earnings from operations excluding restructuring charges
    61.5       54.6       12.6          
 
                               
Gross profit rate
    14.1 %     14.4 %   (0.3 ) pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    11.0       11.3       (0.3 )        
% of gross profit
    78.0       78.7       (0.7 )        
Operating margin (excluding restructuring charges)
    3.1       3.1                
 
                               
Americas PT
                               
Revenue from services (including fee-based income)
  $ 739.1     $ 659.1       12.1 %     12.0 %
Fee-based income
    9.7       6.7       45.2       44.9  
Gross profit
    110.1       103.2       6.6       6.5  
Total SG&A expenses
    79.2       69.2       14.4       14.2  
Earnings from operations
    30.9       34.0       (9.1 )        
 
                               
Gross profit rate
    14.9 %     15.7 %   (0.8 ) pts.        
Expense rates:
                               
% of revenue
    10.7       10.5       0.2          
% of gross profit
    71.9       67.0       4.9          
Operating margin
    4.2       5.2       (1.0 )        
 
                               
EMEA Commercial
                               
Revenue from services (including fee-based income)
  $ 751.3     $ 642.8       16.9 %     6.5 %
Fee-based income
    18.9       14.4       30.9       20.0  
Gross profit
    121.8       103.8       17.3       6.6  
SG&A expenses excluding restructuring charges
    107.9       95.7       12.7          
Restructuring charges
    2.8       2.7       4.0          
Total SG&A expenses
    110.7       98.4       12.5       2.2  
Asset impairments
          1.5       (100.0 )        
Earnings from operations
    11.1       3.9       187.7          
Earnings from operations excluding restructuring charges
    13.9       6.6       112.3          
 
                               
Gross profit rate
    16.2 %     16.1 %   0.1  pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    14.4       14.9       (0.5 )        
% of gross profit
    88.6       92.2       (3.6 )        
Operating margin (excluding restructuring charges)
    1.8       1.0       0.8          

 

8


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
EMEA PT
                               
Revenue from services (including fee-based income)
  $ 134.0     $ 106.4       26.0 %     15.4 %
Fee-based income
    15.0       11.2       32.8       22.5  
Gross profit
    36.1       28.3       26.9       16.7  
Total SG&A expenses
    32.8       27.6       19.0       8.5  
Earnings from operations
    3.3       0.7       289.0          
 
                               
Gross profit rate
    26.9 %     26.7 %   0.2  pts.        
Expense rates:
                               
% of revenue
    24.5       25.9       (1.4 )        
% of gross profit
    91.0       97.1       (6.1 )        
Operating margin
    2.4       0.8       1.6          
 
                               
APAC Commercial
                               
Revenue from services (including fee-based income)
  $ 303.8     $ 253.3       19.9 %     8.9 %
Fee-based income
    11.0       8.5       30.4       18.4  
Gross profit
    42.5       35.5       19.9       8.1  
SG&A expenses excluding restructuring charges
    41.3       32.0       29.1          
Restructuring charges
          0.5       (100.0 )        
Total SG&A expenses
    41.3       32.5       26.9       14.2  
Earnings from operations
    1.2       3.0       (58.8 )        
Earnings from operations excluding restructuring charges
    1.2       3.5       (65.2 )        
 
                               
Gross profit rate
    14.0 %     14.0 %    pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    13.6       12.6       1.0          
% of gross profit
    97.2       90.3       6.9          
Operating margin (excluding restructuring charges)
    0.4       1.4       (1.0 )        
 
                               
APAC PT
                               
Revenue from services (including fee-based income)
  $ 39.1     $ 23.6       65.5 %     52.1 %
Fee-based income
    12.2       7.6       63.1       50.3  
Gross profit
    16.2       10.1       61.5       48.1  
Total SG&A expenses
    17.8       12.0       48.9       36.1  
Earnings from operations
    (1.6 )     (1.9 )     15.7          
 
                               
Gross profit rate
    41.5 %     42.5 %   (1.0 ) pts.        
Expense rates:
                               
% of revenue
    45.7       50.8       (5.1 )        
% of gross profit
    110.2       119.6       (9.4 )        
Operating margin
    (4.2 )     (8.3 )     4.1          

 

9


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)

(In millions of dollars)
                                 
    September Year to Date  
                            Constant  
                            Currency  
    2011     2010     Change     Change  
OCG
                               
Revenue from services (including fee-based income)
  $ 222.9     $ 179.8       24.0 %     22.6 %
Fee-based income
    28.7       18.3       57.0       50.8  
Gross profit
    62.1       42.4       46.7       43.3  
SG&A expenses excluding restructuring charges
    65.5       56.8       15.4          
Restructuring charges
          0.1       (100.0 )        
Total SG&A expenses
    65.5       56.9       15.3       11.7  
Earnings from operations
    (3.4 )     (14.5 )     76.1          
Earnings from operations excluding restructuring charges
    (3.4 )     (14.4 )     76.0          
 
                               
Gross profit rate
    27.8 %     23.5 %   4.3  pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    29.4       31.6       (2.2 )        
% of gross profit
    105.6       134.3       (28.7 )        
Operating margin (excluding restructuring charges)
    (1.6 )     (8.1 )     6.5          
 
                               
Corporate Expense
                               
SG&A expenses excluding restructuring charges
  $ 58.0     $ 54.7       5.9 %        
Restructuring charges
          3.6       (100.0 )        
Total SG&A expenses
    58.0       58.3       (0.6 )        
 
                               
Consolidated Total (net of intersegment activity)
                               
Revenue from services (including fee-based income)
  $ 4,154.7     $ 3,624.5       14.6 %     11.2 %
Fee-based income
    104.2       73.0       43.1       34.9  
Gross profit
    666.9       578.1       15.4       11.4  
SG&A expenses excluding restructuring charges
    619.1       548.2       12.9          
Restructuring charges
    2.8       7.2       (61.7 )        
Total SG&A expenses
    621.9       555.4       12.0       8.0  
Asset impairments
          1.5       (100.0 )        
Earnings from operations
    45.0       21.2       112.3          
Earnings from operations excluding restructuring charges
    47.8       28.4       67.9          
 
                               
Gross profit rate
    16.1 %     16.0 %   0.1  pts.        
Expense rates (excluding restructuring charges):
                               
% of revenue
    14.9       15.1       (0.2 )        
% of gross profit
    92.8       94.8       (2.0 )        
Operating margin (excluding restructuring charges)
    1.2       0.8       0.4          

 

10


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(In millions of dollars)
                         
    October 2,     January 2,     October 3,  
    2011     2011     2010  
Current Assets
                       
Cash and equivalents
  $ 73.5     $ 80.5     $ 87.2  
Trade accounts receivable, less allowances of $13.7, $12.3 and $13.0, respectively
    939.9       810.9       831.3  
Prepaid expenses and other current assets
    53.7       44.8       54.7  
Deferred taxes
    27.0       22.4       25.5  
 
                 
 
                       
Total current assets
    1,094.1       958.6       998.7  
 
                       
Property and Equipment, Net
    91.6       104.0       107.2  
 
                       
Noncurrent Deferred Taxes
    89.6       84.0       80.4  
 
                       
Goodwill, Net
    67.3       67.3       67.3  
 
                       
Other Assets
    145.6       154.5       147.3  
 
                 
 
                       
Total Assets
  $ 1,488.2     $ 1,368.4     $ 1,400.9  
 
                 
 
                       
Current Liabilities
                       
Short-term borrowings and current portion of long-term debt
  $ 79.0     $ 78.8     $ 68.3  
Accounts payable and accrued liabilities
    227.7       181.6       167.6  
Accrued payroll and related taxes
    283.0       243.3       273.0  
Accrued insurance
    31.4       31.3       23.8  
Income and other taxes
    60.0       56.0       56.6  
 
                 
 
                       
Total current liabilities
    681.1       591.0       589.3  
 
                       
Noncurrent Liabilities
                       
Long-term debt
                52.7  
Accrued insurance
    53.7       53.6       56.3  
Accrued retirement benefits
    82.8       85.4       79.0  
Other long-term liabilities
    13.6       14.6       15.3  
 
                 
 
                       
Total noncurrent liabilities
    150.1       153.6       203.3  
 
                       
Stockholders’ Equity
                       
Common stock
    40.1       40.1       40.1  
Treasury stock
    (68.6 )     (70.9 )     (71.2 )
Paid-in capital
    29.3       28.0       27.5  
Earnings invested in the business
    635.3       597.6       583.0  
Accumulated other comprehensive income
    20.9       29.0       28.9  
 
                 
 
                       
Total stockholders’ equity
    657.0       623.8       608.3  
 
                 
 
                       
Total Liabilities and Stockholders’ Equity
  $ 1,488.2     $ 1,368.4     $ 1,400.9  
 
                 
 
                       
STATISTICS:
                       
Working Capital
  $ 413.0     $ 367.6     $ 409.4  
Current Ratio
    1.6       1.6       1.7  
Debt-to-capital %
    10.7 %     11.2 %     16.6 %
Global Days Sales Outstanding
    52       49       52  

 

11


 

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED OCTOBER 2, 2011 AND OCTOBER 3, 2010
(UNAUDITED)

(In millions of dollars)
                 
    2011     2010  
 
Cash flows from operating activities
               
Net earnings
  $ 39.6     $ 11.5  
Noncash adjustments:
               
Impairment of assets
          1.5  
Depreciation and amortization
    23.9       26.5  
Provision for bad debts
    3.5       1.0  
Stock-based compensation
    3.5       2.2  
Other, net
    (1.5 )     1.0  
Changes in operating assets and liabilities
    (63.4 )     (43.6 )
 
           
 
               
Net cash from operating activities
    5.6       0.1  
 
           
 
               
Cash flows from investing activities
               
Capital expenditures
    (10.0 )     (5.9 )
Settlement of forward exchange contracts
    0.7        
Other investing activities
    0.3       0.5  
 
           
 
               
Net cash from investing activities
    (9.0 )     (5.4 )
 
           
 
               
Cash flows from financing activities
               
Net change in short-term borrowings
    61.9       (12.8 )
Repayment of debt
    (62.9 )     (7.3 )
Dividend payments
    (1.9 )      
Sale of stock and other financing activities
    (1.0 )     24.3  
 
           
 
               
Net cash from financing activities
    (3.9 )     4.2  
 
           
 
               
Effect of exchange rates on cash and equivalents
    0.3       (0.6 )
 
           
 
               
Net change in cash and equivalents
    (7.0 )     (1.7 )
Cash and equivalents at beginning of period
    80.5       88.9  
 
           
 
               
Cash and equivalents at end of period
  $ 73.5     $ 87.2  
 
           

 

12


 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)

(In millions of dollars)
                                 
    Third Quarter (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2011     2010     US$     Currency  
 
Americas
                               
United States
  $ 858.6     $ 811.3       5.8 %     5.8 %
Canada
    66.0       56.7       16.3       9.8  
Mexico
    27.1       25.2       7.7       4.0  
Puerto Rico
    24.5       21.7       13.3       13.3  
 
                           
Total Americas
    976.2       914.9       6.7       6.2  
 
                               
EMEA
                               
France
    76.6       71.3       7.5       (1.4 )
Switzerland
    68.3       47.9       42.4       13.9  
Russia
    36.4       26.8       36.4       30.4  
United Kingdom
    30.9       33.8       (8.3 )     (11.5 )
Portugal
    22.8       21.3       6.9       (1.9 )
Germany
    21.4       18.1       18.3       8.5  
Norway
    18.3       15.1       21.2       8.5  
Italy
    18.2       14.7       23.2       13.4  
Other
    21.7       20.8       4.5       (4.5 )
 
                           
Total EMEA
    314.6       269.8       16.6       4.9  
 
                               
APAC
                               
Australia
    36.8       31.9       15.3       (0.1 )
Singapore
    26.2       21.7       20.8       9.6  
Malaysia
    18.1       16.5       9.5       5.1  
India
    18.0       15.5       15.6       14.2  
Other
    19.9       14.4       38.2       23.9  
 
                           
Total APAC
    119.0       100.0       18.9       8.5  
 
                               
Total Kelly Services, Inc.
  $ 1,409.8     $ 1,284.7       9.7 %     6.1 %
 
                           

 

13


 

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)

(In millions of dollars)
                                 
    September Year to Date (Commercial, PT and OCG)  
                    % Change  
                            Constant  
    2011     2010     US$     Currency  
 
Americas
                               
United States
  $ 2,561.6     $ 2,292.3       11.7 %     11.7 %
Canada
    186.8       162.8       14.7       8.3  
Mexico
    79.8       66.1       20.8       14.4  
Puerto Rico
    70.7       55.6       27.2       27.2  
 
                           
Total Americas
    2,898.9       2,576.8       12.5       11.9  
 
                               
EMEA
                               
France
    224.7       206.2       9.0       1.7  
Switzerland
    177.8       120.0       48.1       20.9  
Russia
    108.4       75.5       43.7       36.5  
United Kingdom
    92.5       105.6       (12.4 )     (16.8 )
Portugal
    66.1       58.8       12.5       4.8  
Germany
    62.7       50.6       23.8       15.6  
Italy
    53.3       46.1       15.5       7.6  
Norway
    50.9       43.1       18.1       7.4  
Other
    67.4       56.9       18.6       10.0  
 
                           
Total EMEA
    903.8       762.8       18.5       8.1  
 
                               
APAC
                               
Australia
    110.3       88.2       25.1       8.3  
Singapore
    78.6       60.2       30.6       17.8  
Malaysia
    54.5       47.4       15.0       7.2  
India
    53.1       44.4       19.6       17.7  
Other
    55.5       44.7       24.0       13.1  
 
                           
Total APAC
    352.0       284.9       23.5       12.3  
 
                               
Total Kelly Services, Inc.
  $ 4,154.7     $ 3,624.5       14.6 %     11.2 %
 
                           

 

14


 

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

(In millions of dollars except per share data)
                                 
    Third Quarter     September Year to Date  
    2011     2010     2011     2010  
 
Pretax earnings from operations
  $ 22.1     $ 14.3     $ 45.0     $ 21.2  
 
                               
Restructuring charges (Note 1)
    (0.6 )     2.8       2.8       7.2  
Asset impairments (Note 2)
                      1.5  
 
                       
 
                               
Earnings from operations excluding restructuring and asset impairment charges
  $ 21.5     $ 17.1     $ 47.8     $ 29.9  
 
                       
                                 
    Third Quarter  
    2011     2010  
    Amount     Per Share     Amount     Per Share  
 
                               
Earnings from continuing operations, net of taxes
  $ 19.7     $ 0.52     $ 9.6     $ 0.26  
 
                               
Restructuring charges, net of taxes (Note 1)
    (0.6 )     (0.02 )     1.8       0.05  
 
                           
 
                               
Earnings from continuing operations excluding restructuring charges, net of taxes
  $ 19.1     $ 0.51     $ 11.4     $ 0.31  
 
                       
 
                               
                                 
    September Year to Date  
    2011     2010  
    Amount     Per Share     Amount     Per Share  
 
                               
Earnings from continuing operations, net of taxes
  $ 40.8     $ 1.09     $ 11.5     $ 0.32  
 
                               
Restructuring charges, net of taxes (Note 1)
    2.8       0.07       5.4       0.15  
Asset impairments, net of taxes (Note 2)
                1.2       0.03  
 
                           
 
                               
Earnings from continuing operations excluding restructuring and asset impairment charges, net of taxes
  $ 43.6     $ 1.16     $ 18.1     $ 0.50  
 
                       

 

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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 restructuring and impairment charges is useful to understand the Company’s fiscal 2011 financial performance and increases comparability. Specifically, Management believes that excluding these items 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) In 2010, restructuring costs related primarily to severance and lease termination costs for branches in the EMEA and APAC Commercial segments that were in the process of closure at the end of 2009, as well as severance costs related to the corporate headquarters. In 2011, restructuring costs relate primarily to revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.
(2) Asset impairment charges relate to the write-off of incomplete software projects in Europe.

 

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