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8-K - FORM 8-K - KELLY SERVICES INC | c24018e8vk.htm |
Exhibit 99.1
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 Kellys third quarter performance solid and
particularly encouraging. We are seeing continued demand for temporary staffing services ahead of
last year. Todays 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
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 Companys 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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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 | ||||||||
15
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
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 Companys 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 Companys financial performance. Management believes
that these measures provide greater transparency to investors and provide insight into how
Management is evaluating the Companys 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.
16