U.S. 1-800-398-9397 International 1-612-332-0523The 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 projections contained herein. Kelly Services, Inc. (
KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS FOR THE 13 WEEKS ENDED MARCH 30, 2008 AND APRIL 1, 2007 (UNAUDITED) (In thousands of dollars except per share data) 2008 2007 Change % Change ----------- ----------- ---------- ---------- Revenue from services $ 1,388,444 $ 1,350,858 $ 37,586 2.8% Cost of services 1,138,557 1,121,650 16,907 1.5 ----------- ----------- ---------- ---------- Gross profit 249,887 229,208 20,679 9.0 Selling, general and administrative expenses 236,947 218,715 18,232 8.3 ----------- ----------- ---------- ---------- Earnings from operations 12,940 10,493 2,447 23.3 Other (expense) income, net (51) 673 (724) (107.6) ----------- ----------- ---------- ---------- Earnings from continuing operations before taxes 12,889 11,166 1,723 15.4 Income taxes 4,898 5,908 (1,010) (17.1) ----------- ----------- ---------- ---------- Earnings from continuing operations 7,991 5,258 2,733 52.0 Earnings from discontinued operations, net of tax 238 6,657 (6,419) (96.4) ----------- ----------- ---------- ---------- Net earnings $ 8,229 $ 11,915 $ (3,686) (30.9)% =========== =========== ========== ========== Basic earnings per share Earnings from continuing operations $ 0.23 $ 0.14 $ 0.09 64.3% Earnings from discontinued operations 0.01 0.18 (0.17) (94.4) ----------- ----------- ---------- ---------- Net earnings $ 0.24 $ 0.33 $ (0.09) (27.3)% =========== =========== ========== ========== Diluted earnings per share Earnings from continuing operations $ 0.23 $ 0.14 $ 0.09 64.3% Earnings from discontinued operations 0.01 0.18 (0.17) (94.4) ----------- ----------- ---------- ---------- Net earnings $ 0.24 $ 0.32 $ (0.08) (25.0)% =========== =========== ========== ========== STATISTICS: Gross profit rate 18.0% 17.0% 1.0 % Selling, general and administrative expenses: % of revenue 17.1 16.2 0.9 % of gross profit 94.8 95.4 (0.6) % Return - Earnings from operations 0.9 0.8 0.1 Earnings from continuing operations before taxes 0.9 0.8 0.1 Earnings from continuing operations 0.6 0.4 0.2 Net earnings 0.6 0.9 (0.3) Effective income tax rate 38.0% 52.9% (14.9)% Average number of shares outstanding (thousands): Basic 34,823 36,511 Diluted 34,955 36,898 KELLY SERVICES, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT (UNAUDITED) (In thousands of dollars) First Quarter 2008 2007 Change % Change ----------- ----------- ----------- ---------- Revenue from Services: Americas Commercial $ 639,939 $ 684,051 $ (44,112) (6.4)% Americas PT 232,177 227,629 4,548 2.0 ----------- ----------- ----------- ---------- Total Americas Commercial and PT 872,116 911,680 (39,564) (4.3) EMEA Commercial 321,909 297,439 24,470 8.2 EMEA PT 43,787 36,116 7,671 21.2 ----------- ----------- ----------- ---------- Total EMEA Commercial and PT 365,696 333,555 32,141 9.6 APAC Commercial 86,693 62,799 23,894 38.0 APAC PT 8,486 4,599 3,887 84.5 ----------- ----------- ----------- ---------- Total APAC Commercial and PT 95,179 67,398 27,781 41.2 OCG 55,453 38,225 17,228 45.1 ----------- ----------- ----------- ---------- Consolidated Total $ 1,388,444 $ 1,350,858 $ 37,586 2.8% =========== =========== =========== ========== Earnings from Operations: Americas Commercial $ 22,195 $ 23,107 $ (912) (3.9)% Americas PT 14,103 13,552 551 4.1 ----------- ----------- ----------- ---------- Total Americas Commercial and PT 36,298 36,659 (361) (1.0) EMEA Commercial (1,579) (4,468) 2,889 64.7 EMEA PT 1,024 316 708 224.1 ----------- ----------- ----------- ---------- Total EMEA Commercial and PT (555) (4,152) 3,597 86.6 APAC Commercial 65 676 (611) (90.4) APAC PT (210) (147) (63) (42.9) ----------- ----------- ----------- ---------- Total APAC Commercial and PT (145) 529 (674) (127.4) OCG 1,817 527 1,290 244.8 Corporate Expense (24,475) (23,070) (1,405) (6.1) ----------- ----------- ----------- ---------- Consolidated Total $ 12,940 $ 10,493 $ 2,447 23.3% =========== =========== =========== ========== Earnings from Operations (Excluding Restructuring Charges): Americas Commercial $ 22,195 $ 23,107 $ (912) (3.9)% Americas PT 14,103 13,552 551 4.1 ----------- ----------- ----------- ---------- Total Americas Commercial and PT 36,298 36,659 (361) (1.0) EMEA Commercial (1,579) (1,834) 255 13.9 EMEA PT 1,024 316 708 224.1 ----------- ----------- ----------- ---------- Total EMEA Commercial and PT (555) (1,518) 963 63.4 APAC Commercial 65 676 (611) (90.4) APAC PT (210) (147) (63) (42.9) ----------- ----------- ----------- ---------- Total APAC Commercial and PT (145) 529 (674) (127.4) OCG 1,817 527 1,290 244.8 Corporate Expense (24,475) (23,070) (1,405) (6.1) ----------- ----------- ----------- ---------- Consolidated Total $ 12,940 $ 13,127 $ (187) (1.4)% KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF CONSTANT CURRENCY REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES (UNAUDITED) (In thousands of dollars) First Quarter 2008 2007 Change % Change ------------ ------------ ----------- ---------- Revenue from services - constant currency*: Americas Commercial $ 631,311 $ 684,051 $ (52,740) (7.7)% Americas PT 231,742 227,629 4,113 1.8 ------------ ------------ ----------- ---------- Total Americas Commercial and PT - constant currency* 863,053 911,680 (48,627) (5.3) EMEA Commercial 292,664 297,439 (4,775) (1.6) EMEA PT 39,475 36,116 3,359 9.3 ------------ ------------ ----------- ---------- Total EMEA Commercial and PT - constant currency* 332,139 333,555 (1,416) (0.4) APAC Commercial 77,504 62,799 14,705 23.4 APAC PT 7,518 4,599 2,919 63.5 ------------ ------------ ----------- ---------- Total APAC Commercial and PT - constant currency* 85,022 67,398 17,624 26.1 OCG 54,339 38,225 16,114 42.2 ------------ ------------ ----------- ---------- Total revenue from services - constant currency* 1,334,553 1,350,858 (16,305) (1.2)% Foreign currency impact 53,891 53,891 ------------ ------------ ----------- ---------- Revenue from services $ 1,388,444 $ 1,350,858 $ 37,586 2.8% ============ ============ =========== ========== * Information on constant currencies is provided to allow investors to separate the impact of foreign currency translations on reported results. Constant currency results are calculated by translating the current year results at prior year average exchange rates. KELLY SERVICES, INC. AND SUBSIDIARIES SUMMARY OF DISCONTINUED OPERATIONS (UNAUDITED) (In thousands of dollars) First Quarter --------------------- 2008 2007 ---------- ---------- Revenue from services $ - $ 14,777 Operating income from discontinued operations $ 385 $ 798 Less: Income taxes 147 307 ---------- ---------- Earnings from discontinued operations, net of tax 238 491 ---------- ---------- Gain on sale of discontinued operations - 10,153 Less: Income taxes - 3,987 ---------- ---------- Gain on sale of discontinued operations, net of tax - 6,166 ---------- ---------- Discontinued operations, net of tax $ 238 $ 6,657 ========== ========== Effective March 31, 2007, the Company sold Kelly Home Care ("KHC"), a wholly owned subsidiary. Effective December 31, 2006, the Company sold Kelly Staff Leasing ("KSL"), a wholly owned subsidiary. The operating results for KHC and KSL, as well as the gain on the sale of KHC, have been excluded from earnings from continuing operations. This schedule provides information on KHC's and KSL's results from operations for the first quarter of 2008 and 2007, as well as the gain on the sale of KHC, all of which are included as discontinued operations on the face of the statements of earnings. KELLY SERVICES, INC. AND SUBSIDIARIES BALANCE SHEETS (UNAUDITED) (In thousands of dollars) March 30, December 30, April 1, 2008 2007 2007 ----------- ----------- ----------- Current Assets Cash and equivalents $ 87,933 $ 92,817 $ 120,829 Trade accounts receivable, less allowances of $18,393, $18,172 and $17,884, respectively 931,429 888,334 828,005 Prepaid expenses and other current assets 58,266 53,392 49,569 Deferred taxes 26,996 29,294 25,678 ----------- ----------- ----------- Total current assets 1,104,624 1,063,837 1,024,081 Property and Equipment, Net 175,587 178,019 168,230 Noncurrent Deferred Taxes 43,171 43,436 35,731 Goodwill, Net 145,134 147,168 121,207 Other Assets 154,310 141,537 135,570 ----------- ----------- ----------- Total Assets $ 1,622,826 $ 1,573,997 $ 1,484,819 =========== =========== =========== Current Liabilities Short-term borrowings $ 47,839 $ 49,729 $ 75,594 Accounts payable 218,296 171,471 135,382 Accrued payroll and related taxes 275,852 270,575 266,039 Accrued insurance 22,609 23,696 24,203 Income and other taxes 60,681 69,779 56,580 ----------- ----------- ----------- Total current liabilities 625,277 585,250 557,798 Noncurrent Liabilities Long-term debt 54,947 48,394 - Accrued insurance 57,703 60,404 57,219 Accrued retirement benefits 75,108 78,382 74,519 Other long-term liabilities 16,209 13,338 21,293 ----------- ----------- ----------- Total noncurrent liabilities 203,967 200,518 153,031 Stockholders' Equity Common stock 40,116 40,116 40,116 Treasury stock (113,454) (106,312) (74,231) Paid-in capital 34,488 34,500 33,205 Earnings invested in the business 780,824 777,338 742,718 Accumulated other comprehensive income 51,608 42,587 32,182 ----------- ----------- ----------- Total stockholders' equity 793,582 788,229 773,990 ----------- ----------- ----------- Total Liabilities and Stockholders' Equity $ 1,622,826 $ 1,573,997 $ 1,484,819 =========== =========== =========== ----------- ----------- ----------- STATISTICS: Working Capital $ 479,347 $ 478,587 $ 466,283 Current Ratio 1.8 1.8 1.8 Debt-to-capital % 11.5% 11.1% 8.9% Global Days Sales Outstanding 52 49 51 KELLY SERVICES, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE 13 WEEKS ENDED MARCH 30, 2008 AND APRIL 1, 2007 (UNAUDITED) (In thousands of dollars) 2008 2007 --------- --------- Cash flows from operating activities Net earnings $ 8,229 $ 11,915 Noncash adjustments: Depreciation and amortization 11,303 10,551 Provision for bad debts 1,451 1,961 Stock-based compensation 1,049 918 Gain on sale of discontinued operations - (6,166) Other, net 105 (262) Changes in operating assets and liabilities (2,860) (4,884) --------- --------- Net cash from operating activities 19,277 14,033 --------- --------- Cash flows from investing activities Capital expenditures (6,431) (8,544) Acquisition of companies, net of cash received (3,261) (16,869) Proceeds from sale of discontinued operations - 12,500 Other investing activities (308) 13 --------- --------- Net cash from investing activities (10,000) (12,900) --------- --------- Cash flows from financing activities Net decrease in revolving line of credit (4,263) (1,857) Proceeds from debt - 8,223 Dividend payments (4,743) (4,633) Purchase of treasury stock (7,975) - Stock options and other stock sales 32 4,895 Other financing activities (1,534) (6,565) --------- --------- Net cash from financing activities (18,483) 63 --------- --------- Effect of exchange rates on cash and equivalents 4,322 1,205 --------- --------- Net change in cash and equivalents (4,884) 2,401 Cash and equivalents at beginning of period 92,817 118,428 --------- --------- Cash and equivalents at end of period $ 87,933 $ 120,829 ========= ========= KELLY SERVICES, INC. AND SUBSIDIARIES REVENUE FROM SERVICES (UNAUDITED) (In thousands of dollars) First Quarter --------------------------------------------- % Change Constant 2008 2007 US$ Currency ----------- ----------- --------- --------- Americas United States $ 820,740 $ 852,272 (3.7)% (3.7)% Canada 61,839 59,444 4.0 (10.9) Puerto Rico 18,843 18,753 0.5 0.5 Mexico 17,670 17,015 3.8 1.8 ----------- ----------- --------- --------- Total Americas 919,092 947,484 (3.0) (4.0) EMEA United Kingdom 104,879 117,883 (11.0) (12.1) France 86,602 68,971 25.6 9.9 Switzerland 42,191 36,561 15.4 0.0 Italy 35,352 30,362 16.4 1.9 Germany 21,373 13,518 58.1 38.4 Russia 20,744 15,162 36.8 26.1 Norway 19,976 16,140 23.8 5.7 Other 40,458 35,339 14.5 0.4 ----------- ----------- --------- --------- Total EMEA 371,575 333,936 11.3 1.0 APAC Australia 35,700 29,301 21.8 5.9 Singapore 17,791 13,130 35.5 24.7 Other 44,286 27,007 64.0 48.0 ----------- ----------- --------- --------- Total APAC 97,777 69,438 40.8 25.8 Total Kelly Services, Inc. $ 1,388,444 $ 1,350,858 2.8 % (1.2)% =========== =========== ========= ========= KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (In thousands of dollars except per share data) First Quarter ------------------------------------------ 2008 2007 -------------------- -------------------- Amount Per Share Amount Per Share --------- ---------- --------- --------- Earnings from continuing operations $ 7,991 $ 0.23 $ 5,258 $ 0.14 U.K. restructuring charge (1) - - 2,634 0.07 --------- ---------- --------- --------- Earnings from continuing operations excluding the U.K. restructuring charge $ 7,991 $ 0.23 $ 7,892 $ 0.21 ========= ========== ========= ========= First Quarter ------------------------------------------ 2008 2007 % Change --------- --------- --------- Selling, general and administrative expenses $ 236,947 $ 218,715 U.K. restructuring charge (1) - (2,634) --------- --------- Selling, general and administrative expenses excluding the U.K. restructuring charge $ 236,947 $ 216,081 9.7% ========= ========= ========= Earnings from operations $ 12,940 $ 10,493 U.K. restructuring charge (1) - 2,634 --------- --------- Earnings from operations excluding the U.K. restructuring charge $ 12,940 $ 13,127 (1.4%) ========= ========= ========= EMEA Commercial selling, general and administrative expenses $ 57,191 $ 53,448 U.K. restructuring charge (1) - (2,634) --------- --------- EMEA Commercial selling, general and administrative expenses excluding the U.K. restructuring charge $ 57,191 $ 50,814 12.5% ========= ========= ========= EMEA Commercial earnings from operations $ (1,579) $ (4,468) U.K. restructuring charge (1) - 2,634 --------- --------- EMEA Commercial earnings from operations excluding the U.K. restructuring charge $ (1,579) $ (1,834) 13.9% ========= ========= ========= EMEA Commercial and PT earnings from operations $ (555) $ (4,152) U.K. restructuring charge (1) - 2,634 --------- --------- EMEA Commercial and PT earnings from operations excluding the U.K. restructuring charge $ (555) $ (1,518) 63.4% ========= ========= ========= KELLY SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (In thousands of dollars except per share data)Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charge from prior year results is useful to understand the Company's fiscal 2008 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 exit costs associated with the closure of 22 branch locations and the accelerated depreciation of the leasehold improvements and personal property at the impacted locations.
Contact Information: ANALYST CONTACT: James Polehna (248) 244-4586 MEDIA CONTACT: Renee Walker (248) 244-4305