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Kelly revenues falls 13.3%, posts loss

January 22 2009

Fourth-quarter revenue fell 13.3% at Kelly Services Inc. (NASD: KELYA) to $1.28 billion from $1.48 billion in the same period last year. The Troy MI-based staffing firm also posted a fourth-quarter net loss of $88.8 million.

Revenue fell across much of the company's commercial and professional lines of business. Fourth-quarter U.S. revenue decreased by 11.4% year-over-year to $781.5 million.

"This year, we've witnessed a widespread economic slowdown as anxiety over the global financial crisis intensified," said President and CEO Carl Camden. "With the loss of 2.6 million jobs in the U.S. alone, it comes as no surprise that demand for temporary staffing has declined dramatically — here, and throughout the world."

Kelly Services posted a 2008 fourth-quarter net loss of $88.8 million, compared with profit of $18.6 million in the fourth quarter of 2007.

The company said its fourth quarter 2008 includes impairment charges totaling $80.5 million and U.K. restructuring costs amounting to $1.5 million. The impairment charges relate to goodwill for its European, Middle East and Africa commercial staffing segment, its investment in Japanese staffing firm Temp Holdings Co. Ltd and assets related to U.K. operations. The U.K. restructuring charge is part of a plan to close more branches in 2009.

Kelly's fourth-quarter gross margin fell to 17.6% from 18.0%.

Fourth-quarter Americas commercial staffing revenue fell 14.9% year-over-year to $591.9 million. Americas commercial gross margin, however, rose to 16.3% from 16.1%. The Americas category includes the U.S., Canada, Puerto Rico and Mexico.

Camden said in a conference call with analysts that the typical seasonal increases in Americas commercial staffing in the third and fourth quarters did not happen this year.

Americas professional and technical revenue fell 7.3% to $212.8 million. Its gross margin fell to 17.5% from 18.1%. Camden said in the conference call there were double-digit declines in its law and finance business.

Full-year 2008 revenue fell 2.7% to $5.52 billion. The full-year net loss was $82.2 million, compared with net income of $61.0 million in 2007. Gross margin, however, rose to 17.7% from 17.5%.

CFO Patricia Little said in the conference call with analysts that Kelly cut its headquarters' permanent staff by about 6% and headquarters' temporary staff by about 20%. The company has also put a salary freeze in place.

Kelly Services Inc. (NASD: KELYA)
For the fourth quarter ended Dec. 30, 2008, compared with the same period in 2007.
Revenue: $1.28 billion, -13.3%
Net loss: $88.8 million vs. net income of $18.6 million

For the 2008 fiscal year ended Dec. 30, 2008, compared with the previous year.
Revenue: $5.52 billion, -2.7%
Net loss: $82.2 million vs. net income of $61.0 million

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