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Kelly Services Inc. Reports Operating Results (10-Q)

August 11, 2010 | About:
10qk

10qk

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Kelly Services Inc. (KELYA) filed Quarterly Report for the period ended 2010-07-04.

Kelly Services Inc. has a market cap of $493.3 million; its shares were traded at around $14.1 with and P/S ratio of 0.1. KELYA is in the portfolios of David Dreman of Dreman Value Management, Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates, Charles Brandes of Brandes Investment.

Highlight of Business Operations:

Revenue from services in the second quarter of 2010 totaled $1.2 billion, an increase of 17.5% from the same period in 2009. This was the result of an increase in hours worked of 20.0%, partially offset by a decrease in average hourly bill rates of 2.5% (2.7% on a constant currency basis). Fee-based income, which is included in revenue from services, totaled $24.4 million, or 2.0% of total revenue, for the second quarter of 2010, an increase of 18.9% (17.2% on a constant currency basis) as compared to $20.6 million in the second quarter of 2009. On a constant currency basis, revenue for the quarter increased in all business segments.

Selling, general and administrative (SG&A) expenses totaled $180.9 million, a year-over-year decrease of $12.7 million, or 6.5% (6.9% on a constant currency basis). Included in SG&A expenses for the second quarter of 2009 is $4.7 million for restructuring costs. These costs relate primarily to global severance, lease terminations, asset write-offs and other miscellaneous costs incurred in connection with the reduction in the number permanent employees and the consolidation, sale or closure of branch locations.

We recorded asset impairment charges of $1.5 million in the second quarter of 2010 and $52.6 million in the second quarter of 2009. In the second quarter of 2010, management assessed the viability of certain incomplete software projects in Europe. Based on the estimated costs to complete, management terminated the projects and recorded an asset impairment charge of $1.5 million. Due to significantly worse than anticipated economic conditions and the impacts to our business in the second quarter of 2009, we revised our internal forecasts for all of our segments, which we deemed to be a triggering event for purposes of assessing goodwill for impairment. Accordingly, goodwill at all of our reporting units was tested for impairment in the second quarter of 2009. This resulted in the recognition of a goodwill impairment loss of $50.5 million in total, of which $16.4 million related to the Americas Commercial segment, $12.1 million related to the APAC Commercial segment and $22.0 million related to the EMEA PT segment.

As a result of the above, we reported earnings from operations in the second quarter of 2010 totaling $8.5 million, compared to a loss of $74.5 million reported for the second quarter of 2009.

Earnings from continuing operations were $3.9 million in the second quarter of 2010, compared to a loss of $66.0 million in the second quarter of 2009. Included in earnings from continuing operations in the second quarter of 2010 were $1.2 million, net of tax, of asset impairment charges. Included in the loss from continuing operations in the second quarter of 2009 were $49.2 million, net of tax, related to asset impairments and $4.0 million, net of tax, of restructuring charges.

Diluted earnings from continuing operations per share for the second quarter of 2010 were $0.11, as compared to a diluted loss of $1.89 for the second quarter of 2009.

Read the The complete Report

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