U.S. 1-800-230-1085 International 1-612-332-0107The 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 JULY 1, 2007 AND JULY 2, 2006
(UNAUDITED)
(In thousands of dollars except per share data)
2007 2006 Change % Change
----------- ----------- ---------- -----------
Revenue from services $ 1,415,674 $ 1,392,886 $ 22,788 1.6%
Cost of services 1,168,108 1,169,538 (1,430) (0.1)
----------- ----------- ---------- -----------
Gross profit 247,566 223,348 24,218 10.8
Selling, general and
administrative expenses 225,300 203,384 21,916 10.8
----------- ----------- ---------- -----------
Earnings from operations 22,266 19,964 2,302 11.5
Other income, net 930 465 465 100.0
----------- ----------- ---------- -----------
Earnings from continuing
operations before taxes 23,196 20,429 2,767 13.5
Income taxes 7,885 8,579 (694) (8.1)
----------- ----------- ---------- -----------
Earnings from
continuing operations 15,311 11,850 3,461 29.2
Earnings from
discontinued
operations, net of tax 18 823 (805) (97.8)
----------- ----------- ---------- -----------
Net earnings $ 15,329 $ 12,673 $ 2,656 21.0%
=========== =========== ========== ===========
Basic earnings per share
Earnings from
continuing operations $ 0.42 $ 0.33 $ 0.09 27.3%
Earnings from
discontinued operations - 0.02 (0.02) NM
----------- ----------- ---------- -----------
Net earnings $ 0.42 $ 0.35 $ 0.07 20.0%
=========== =========== ========== ===========
Diluted earnings per share
Earnings from
continuing operations $ 0.41 $ 0.33 $ 0.08 24.2%
Earnings from
discontinued
operations - 0.02 (0.02) NM
----------- ----------- ---------- -----------
Net earnings $ 0.41 $ 0.35 $ 0.06 17.1%
=========== =========== ========== ===========
STATISTICS:
Gross profit rate 17.5% 16.0% 1.5%
Expenses as a % of
revenue 15.9 14.6 1.3
% Return - Earnings
from operations 1.6 1.4 0.2
Earnings from
continuing operations
before taxes 1.6 1.5 0.1
Earnings from continuing
operations 1.1 0.9 0.2
Net earnings 1.1 0.9 0.2
Effective income tax rate 34.0% 42.0% (8.0)%
Average number of shares
outstanding
(thousands):
Basic 36,658 35,943
Diluted 36,962 36,198
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JULY 1, 2007 AND JULY 2, 2006
(UNAUDITED)
(In thousands of dollars except per share data)
2007 2006 Change % Change
----------- ----------- ----------- -----------
Revenue from services $ 2,766,532 $ 2,728,491 $ 38,041 1.4%
Cost of services 2,289,758 2,292,107 (2,349) (0.1)
----------- ----------- ----------- -----------
Gross profit 476,774 436,384 40,390 9.3
Selling, general and
administrative expenses 444,015 403,624 40,391 10.0
----------- ----------- ----------- -----------
Earnings from operations 32,759 32,760 (1) 0.0
Other income, net 1,603 505 1,098 NM
----------- ----------- ----------- -----------
Earnings from continuing
operations before taxes 34,362 33,265 1,097 3.3
Income taxes 13,793 13,243 550 4.2
----------- ----------- ----------- -----------
Earnings from continuing
operations 20,569 20,022 547 2.7
Earnings from
discontinued
operations, net of tax 6,675 1,209 5,466 NM
----------- ----------- ----------- -----------
Net earnings $ 27,244 $ 21,231 $ 6,013 28.3%
=========== =========== =========== ===========
Basic earnings per share
Earnings from
continuing operations $ 0.56 $ 0.56 $ - 0.0%
Earnings from
discontinued
operations 0.18 0.03 0.15 NM
----------- ----------- ----------- -----------
Net earnings $ 0.74 $ 0.59 $ 0.15 25.4%
=========== =========== =========== ===========
Diluted earnings per share
Earnings from
continuing operations $ 0.56 $ 0.55 $ 0.01 1.8%
Earnings from
discontinued
operations 0.18 0.03 0.15 NM
----------- ----------- ----------- -----------
Net earnings $ 0.74 $ 0.59 $ 0.15 25.4%
=========== =========== =========== ===========
STATISTICS:
Gross profit rate 17.2% 16.0% 1.2%
Expenses as a % of
revenue 16.0 14.8 1.2
% Return - Earnings
from operations 1.2 1.2 0.0
Earnings from
continuing operations
before taxes 1.2 1.2 0.0
Earnings from
continuing operations 0.7 0.7 0.0
Net earnings 1.0 0.8 0.2
Effective income tax rate 40.1% 39.8% 0.3%
Average number of shares
outstanding
(thousands):
Basic 36,585 35,907
Diluted 36,948 36,187
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In thousands of dollars)
Second Quarter
2007 2006 Change % Change
----------- ----------- ----------- ----------
Revenue from Services:
Americas - Commercial $ 696,974 $ 738,734 $ (41,760) (5.7)%
Americas - PTSA 271,630 276,764 (5,134) (1.9)
----------- ----------- ----------- ----------
Total Americas 968,604 1,015,498 (46,894) (4.6)
International -
Commercial 397,682 342,832 54,850 16.0
International - PTSA 49,388 34,556 14,832 42.9
----------- ----------- ----------- ----------
Total International 447,070 377,388 69,682 18.5
$ 1,415,674 $ 1,392,886 $ 22,788 1.6 %
=========== =========== =========== ==========
Earnings from Operations
(As Reported):
Americas - Commercial $ 22,988 $ 26,381 $ (3,393) (12.9)%
Americas - PTSA 13,633 13,454 179 1.3
----------- ----------- ----------- ----------
Total Americas 36,621 39,835 (3,214) (8.1)
International -
Commercial 4,294 (558) 4,852 NM
International - PTSA 544 (78) 622 NM
----------- ----------- ----------- ----------
Total International 4,838 (636) 5,474 NM
Corporate Expense (19,193) (19,235) 42 0.2
----------- ----------- ----------- ----------
$ 22,266 $ 19,964 $ 2,302 11.5 %
=========== =========== =========== ==========
Earnings from Operations
(Excluding the UK
Restructuring Charge):
Americas - Commercial $ 22,988 $ 26,381 $ (3,393) (12.9)%
Americas - PTSA 13,633 13,454 179 1.3
----------- ----------- ----------- ----------
Total Americas 36,621 39,835 (3,214) (8.1)
International -
Commercial 6,742 (558) 7,300 NM
International - PTSA 544 (78) 622 NM
----------- ----------- ----------- ----------
Total International 7,286 (636) 7,922 NM
Corporate Expense (19,193) (19,235) 42 0.2
----------- ----------- ----------- ----------
$ 24,714 $ 19,964 $ 4,750 23.8 %
=========== =========== =========== ==========
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In thousands of dollars)
June Year to Date
2007 2006 Change % Change
----------- ----------- ----------- ----------
Revenue from Services:
Americas - Commercial $ 1,381,025 $ 1,453,199 $ (72,174) (5.0)%
Americas - PTSA 535,063 557,500 (22,437) (4.0)
----------- ----------- ----------- ----------
Total Americas 1,916,088 2,010,699 (94,611) (4.7)
International -
Commercial 756,632 651,511 105,121 16.1
International - PTSA 93,812 66,281 27,531 41.5
----------- ----------- ----------- ----------
Total International 850,444 717,792 132,652 18.5
$ 2,766,532 $ 2,728,491 $ 38,041 1.4 %
=========== =========== =========== ==========
Earnings from Operations
(As Reported):
Americas - Commercial $ 44,047 $ 47,514 $ (3,467) (7.3)%
Americas - PTSA 27,248 28,016 (768) (2.7)
----------- ----------- ----------- ----------
Total Americas 71,295 75,530 (4,235) (5.6)
International -
Commercial (199) (2,897) 2,698 93.1
International - PTSA 792 102 690 NM
----------- ----------- ----------- ----------
Total International 593 (2,795) 3,388 121.2
Corporate Expense (39,129) (39,975) 846 2.1
----------- ----------- ----------- ----------
$ 32,759 $ 32,760 $ (1) (0.0)%
=========== =========== =========== ==========
Earnings from Operations
(Excluding the UK Restructuring Charge):
Americas - Commercial $ 44,047 $ 47,514 $ (3,467) (7.3)%
Americas - PTSA 27,248 28,016 (768) (2.7)
----------- ----------- ----------- ----------
Total Americas 71,295 75,530 (4,235) (5.6)
International -
Commercial 4,883 (2,897) 7,780 NM
International - PTSA 792 102 690 NM
----------- ----------- ----------- ----------
Total International 5,675 (2,795) 8,470 NM
Corporate Expense (39,129) (39,975) 846 2.1
----------- ----------- ----------- ----------
$ 37,841 $ 32,760 $ 5,081 15.5%
=========== =========== =========== ==========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
(UNAUDITED)
(In thousands of dollars)
Second Quarter
2007 2006 Change % Change
----------- ----------- ---------- ---------
Revenue from services -
constant currency*:
Americas - Commercial $ 695,179 $ 738,734 $ (43,555) (5.9)%
Americas - PTSA 271,543 276,764 (5,221) (1.9)
----------- ----------- ---------- ---------
Total Americas - constant
currency* 966,722 1,015,498 (48,776) (4.8)
International - Commercial 373,060 342,832 30,228 8.8
International - PTSA 46,233 34,556 11,677 33.8
----------- ----------- ---------- ---------
Total International -
constant currency* 419,293 377,388 41,905 11.1
Total revenue from
services - constant
currency* 1,386,015 1,392,886 (6,871) (0.5)%
Foreign currency impact 29,659 29,659
----------- ----------- ---------- ---------
Revenue from services $ 1,415,674 $ 1,392,886 $ 22,788 1.6%
=========== =========== ========== =========
June Year to Date
2007 2006 Change % Change
----------- ----------- ---------- ---------
Revenue from services -
constant currency*:
Americas - Commercial $ 1,380,738 $ 1,453,199 $ (72,461) (5.0)%
Americas - PTSA 535,028 557,500 (22,472) (4.0)
----------- ----------- ---------- ---------
Total Americas - constant
currency* 1,915,766 2,010,699 (94,933) (4.7)
International - Commercial 704,135 651,511 52,624 8.1
International - PTSA 87,332 66,281 21,051 31.8
----------- ----------- ---------- ---------
Total International -
constant currency* 791,467 717,792 73,675 10.3
Total revenue from
services - constant
currency* 2,707,233 2,728,491 (21,258) (0.8)%
Foreign currency impact 59,299 59,299
----------- ----------- ---------- ---------
Revenue from services $ 2,766,532 $ 2,728,491 $ 38,041 1.4%
=========== =========== ========== =========
* 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)
Second Quarter June Year to Date
----------------- -----------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue from services $ - $ 23,523 $ 14,777 $ 48,007
Operating income from discontinued
operations $ 29 $ 1,362 $ 827 $ 2,003
Less: Income taxes 11 539 318 794
-------- -------- -------- --------
Earnings from discontinued operations,
net of tax 18 823 509 1,209
-------- -------- -------- --------
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 $ 18 $ 823 $ 6,675 $ 1,209
======== ======== ======== ========
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 second
quarter of 2007 and 2006 and June year to date 2007 and 2006 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
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In thousands of dollars except per share data)
Second Quarter
------------------------------------------
2007 2006
-------------------- --------------------
Amount Per Share Amount Per Share
--------- ---------- --------- ---------
Earnings from continuing
operations $ 15,311 $ 0.41 $ 11,850 $ 0.33
UK restructuring charge (1) 2,448 0.07 - -
--------- ---------- --------- ---------
Earnings from continuing
operations excluding the UK
restructuring charge $ 17,759 $ 0.48 $ 11,850 $ 0.33
========= ========== ========= =========
Second Quarter
------------------------------------------
2007 2006 % change
--------- --------- ---------
Selling, general and
administrative expenses $ 225,300 $ 203,384
UK restructuring charge (1) (2,448) -
--------- ---------
Selling, general and
administrative expenses
excluding the UK
restructuring charge $ 222,852 $ 203,384 9.6%
========= ========= =========
Earnings from operations $ 22,266 $ 19,964
UK restructuring charge (1) 2,448 -
--------- ---------
Earnings from operations
excluding the UK
restructuring charge $ 24,714 $ 19,964 23.8%
========= ========= =========
International Commercial
selling, general and
administrative expenses $ 68,338 $ 58,333
UK restructuring charge (1) (2,448) -
--------- ---------
International Commercial
selling, general and
administrative expenses
excluding the UK
restructuring charge $ 65,890 $ 58,333 13.0%
========= ========= =========
International Commercial
Earnings from operations $ 4,294 $ (558)
UK restructuring charge (1) 2,448 -
--------- ---------
International Commercial
Earnings excluding the
UK restructuring charge $ 6,742 $ (558) NM
========= ========= =========
International Earnings from
operations $ 4,838 $ (636)
UK restructuring charge (1) 2,448 -
--------- ---------
International Commercial
Earnings excluding the UK
restructuring charge $ 7,286 $ (636) NM
========= ========= =========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In thousands of dollars except per share data)
June Year to Date
------------------------------------------
2007 2006
-------------------- --------------------
Amount Per Share Amount Per Share
--------- ---------- --------- ---------
Earnings from continuing
operations $ 20,569 $ 0.56 $ 20,022 $ 0.55
UK restructuring charge (1) 5,082 0.14 - -
--------- ---------- --------- ---------
Earnings from continuing
operations excluding the
UK restructuring charge $ 25,651 $ 0.69 $ 20,022 $ 0.55
========= ========== ========= =========
June Year to Date
------------------------------------------
2007 2006 % change
--------- --------- ---------
Selling, general and
administrative expenses $ 444,015 $ 403,624
UK restructuring charge (1) (5,082) -
--------- ---------
Selling, general and
administrative expenses
excluding the UK
restructuring charge $ 438,933 $ 403,624 8.7%
========= ========= =========
Earnings from operations $ 32,759 $ 32,760
UK restructuring charge (1) 5,082 -
--------- ---------
Earnings from operations
excluding the UK
restructuring charge $ 37,841 $ 32,760 15.5%
========= ========= =========
International Commercial
selling, general and
administrative expenses $ 132,289 $ 112,607
UK restructuring charge (1) (5,082) -
--------- ---------
International Commercial
selling, general and
administrative expenses
excluding the UK
restructuring charge $ 127,207 $ 112,607 13.0%
========= ========= =========
International Commercial
Earnings from operations $ (199) $ (2,897)
UK restructuring charge (1) 5,082 -
--------- ---------
International Commercial
Earnings excluding the
UK restructuring charge $ 4,883 $ (2,897) NM
========= ========= =========
International Earnings from
operations $ 593 $ (2,795)
UK restructuring charge (1) 5,082 -
--------- ---------
International Commercial
Earnings excluding the
UK restructuring charge $ 5,675 $ (2,795) NM
========= ========= =========
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 UK restructuring charge is useful to
understand the Company's fiscal 2007 financial performance and increases
comparability with prior year results. 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 UK 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.
KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
(In thousands of dollars)
July 1, December 31, July 2,
2007 2006 2006
----------- ------------ -----------
Current Assets
Cash and equivalents $ 112,463 $ 118,428 $ 72,309
Trade accounts receivable, less
allowances of $17,348, $16,818
and $17,709, respectively 869,256 838,246 844,175
Prepaid expenses and other
current assets 49,293 45,316 44,450
Deferred taxes 27,960 29,543 31,227
----------- ------------ -----------
Total current assets 1,058,972 1,031,533 992,161
Property and Equipment, Net 171,675 170,288 161,437
Noncurrent Deferred Taxes 37,231 35,437 20,819
Goodwill, Net 122,282 96,504 96,043
Other Assets 143,815 135,662 107,070
----------- ------------ -----------
Total Assets $ 1,533,975 $ 1,469,424 $ 1,377,530
=========== ============ ===========
Current Liabilities
Short-term borrowings $ 77,165 $ 68,928 $ 54,789
Accounts payable 153,373 132,819 114,298
Accrued payroll and related taxes 265,065 274,284 277,379
Accrued insurance 25,601 24,191 33,793
Income and other taxes 63,379 68,055 59,572
----------- ------------ -----------
Total current
liabilities 584,583 568,277 539,831
Noncurrent Liabilities
Accrued insurance 60,413 57,277 54,350
Accrued retirement benefits 78,861 71,990 61,008
Other long-term liabilities 19,802 13,323 14,130
----------- ------------ -----------
Total noncurrent
liabilities 159,076 142,590 129,488
Stockholders' Equity
Common stock 40,116 40,116 40,116
Treasury stock (72,054) (78,841) (87,335)
Paid-in capital 32,112 32,048 27,250
Earnings invested in the business 753,409 735,104 701,997
Accumulated other comprehensive
income 36,733 30,130 26,183
----------- ------------ -----------
Total stockholders'
equity 790,316 758,557 708,211
----------- ------------ -----------
Total Liabilities and Stockholders'
Equity $ 1,533,975 $ 1,469,424 $ 1,377,530
=========== ============ ===========
STATISTICS:
Working Capital $ 474,389 $ 463,256 $ 452,330
Current Ratio 1.8 1.8 1.8
Debt-to-capital % 8.9% 8.3% 7.2%
Global Days Sales Outstanding
Quarter 56 54 55
Year-to-date 57 55 56
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JULY 1, 2007 AND JULY 2, 2006
(In thousands of dollars)
2007 2006
--------- ---------
Cash flows from operating activities
Net earnings $ 27,244 $ 21,231
Noncash adjustments:
Depreciation and amortization 20,868 20,610
Provision for bad debts 2,346 2,947
Stock-based compensation 1,361 2,246
Gain on sale of discontinued operations (6,166) -
Other, net (371) (72)
Changes in other operating assets and liabilities (15,608) (7,001)
--------- ---------
Net cash from operating activities 29,674 39,961
--------- ---------
Cash flows from investing activities
Capital expenditures (21,295) (14,563)
Proceeds from sale of discontinued operations 12,500 -
Acquisition of companies, net of cash received (24,733) (4,469)
Other investing activities (754) (461)
--------- ---------
Net cash from investing activities (34,282) (19,493)
--------- ---------
Cash flows from financing activities
Net decrease in revolving line of credit (720) (4,016)
Proceeds from short-term debt 8,223 -
Dividend payments (9,271) (7,267)
Stock options and other stock sales 5,649 1,526
Other financing activities (6,509) (2,692)
--------- ---------
Net cash from financing activities (2,628) (12,449)
--------- ---------
Effect of exchange rates on cash and equivalents 1,271 591
--------- ---------
Net change in cash and equivalents (5,965) 8,610
Cash and equivalents at beginning of period 118,428 63,699
--------- ---------
Cash and equivalents at end of period $ 112,463 $ 72,309
========= =========
Contact Information: ANALYST CONTACT: James Polehna (248) 244-4586 MEDIA CONTACT: Renee Walker (248) 244-5362