Press Release Archive
FORT LAUDERDALE, Fla., Jan. 31, 2007 -- Spherion Corporation (NYSE: SFN) today announced financial results for the fourth quarter ended December 31, 2006.
Spherion President and Chief Executive Officer Roy Krause commented, "I am pleased with our strong finish in 2006 and our accomplishments during the year. In 2006, we grew gross profit by over 4%, expanded our gross profit margins by 150 basis points and accelerated the growth to our targeted customer base throughout the year. Small and mid-sized customer growth rates remained in the mid-teens again in the fourth quarter and have increased this customer segment to 55% of total revenue. Continuing momentum in this area along with realignment of the organization to further support strategic objectives, positions us well as we move into 2007."
Fourth quarter 2006 revenues were $500.6 million compared with $499.3 million in the fourth quarter of 2005.
Earnings from continuing operations were $10.3 million or $0.18 per share in the fourth quarter of 2006, compared with $9.5 million or $0.16 per share in the fourth quarter of 2005.
Net earnings, which include discontinued operations, for the fourth quarter of 2006 were $39.8 million or $0.70 per share, compared with $6.3 million or $0.10 per diluted share in the fourth quarter of 2005.
Revenues for the year were $1.9 billion in 2006 compared with $2.0 billion in 2005. Earnings from continuing operations were $22.6 million in 2006 or $0.39 per share, including stock option expense of $0.05 per share, compared with $20.2 million or $0.33 per share for the same period in 2005. Net earnings were $54.7 million or $0.95 per diluted share in 2006, compared with $12.0 million or $0.20 per share in 2005.
Krause continued, "Through active working capital management, DSO was reduced by another four days in 2006, further strengthening the company's cash and overall financial position. Our strong balance sheet and significant capital resources give us financial flexibility as we execute our growth strategy."
Growth within our targeted small and mid-sized staffing customers and recruitment outsourcing services continued to grow this quarter, but has not yet fully offset declines among our largest staffing customers. As a result, Staffing Services fourth quarter revenues decreased 2.1% year over year. Total Staffing Services gross profit margins increased to 20.9% in the fourth quarter of 2006 compared with 20.2% in the fourth quarter of 2005. Temporary staffing gross profit margins increased by 90 basis points year over year due primarily to lower workers' compensation and benefits expenses. Selling, general and administrative costs were $67.3 million or 17.9% of revenue in the fourth quarter of 2006, compared with $65.8 million or 17.2% of revenue last year. S,G&A decreased by approximately $2 million compared with the third quarter 2006 due to increased focus on productivity and expense management. Segment operating profit was $11.2 million or 3.0% of revenue in the fourth quarter of 2006, compared with $11.7 million and 3.1% of revenue in the fourth quarter of 2005.
Professional Services revenue growth was 8.0% on a year over year basis in the fourth quarter of 2006. Revenue growth was strongest in information technology, both in temporary staffing and permanent placement. Gross profit margins in the fourth quarter of 2006 were 33.3%, an increase of 140 basis points from last year, due to improved pay/bill spreads, growth of permanent placement revenues and lower employee benefit and insurance costs. Selling, general and administrative expenses were $35.7 million or 28.5% of revenue in the fourth quarter of 2006, compared with $31.3 million or 26.9% of revenue in the fourth quarter last year, reflecting investments in sales and recruiting staff and higher variable compensation. Segment operating profit increased to $6.0 million or approximately 4.8% of revenue in the fourth quarter of 2006, compared with $5.7 million or approximately 4.9% of revenue in the same period last year.
As previously announced, the Company's fourth quarter results included approximately $0.03 per share for prior quarters' benefit from the retroactive approval of the Work Opportunity Tax Credit program and Gulf Opportunity Tax Credits.
Additionally, the Company recorded a tax benefit of $29.7 million or $0.52 per share related to the resolution of certain international tax matters. This item is included in the results of the Company's discontinued operations.
Krause commented, "Based on sales trends in January, the Company anticipates revenue for the first quarter will be between $460 and $475 million, reflecting a normal seasonal decline in the first quarter compared with the fourth quarter. Earnings from continuing operations are expected to be between $0.04 and $0.08 per share, assuming a 41% effective tax rate."
The Company will adopt FIN 48, "Accounting for Uncertain Tax Positions," in the first quarter of 2007, but it is not expected to have a material impact on the financial statements of the Company.
Spherion Corporation (NYSE: SFN) is a leading recruiting and staffing company that provides integrated solutions to meet the evolving needs of companies and job candidates. As an industry pioneer for 60 years, Spherion has screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs. Positions range from administrative and light industrial to a host of professions that include accounting/finance, information technology, engineering, manufacturing, legal, human resources and sales/marketing.
With approximately 650 locations in the United States and Canada, Spherion delivers innovative workforce solutions that improve business performance. Spherion provides its services to more than 8,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing 375,000 people annually through its network, Spherion is one of North America's largest employers. To learn more, visit http://www.spherion.com/.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. Factors that could cause future results to differ from current expectations include risks associated with: Competition - our business operates in highly competitive markets with low barriers to entry; Economic conditions - any significant economic downturn could result in lower revenues or a significant reduction in demand from our customers may result in a material impact on the results of our operations; Corporate strategy - we may not achieve the intended effects of our business strategy; Termination provisions - certain contracts contain termination provisions and pricing risks; Failure to perform - our failure or inability to perform under customer contracts could result in damage to our reputation and give rise to legal claims; Disposition of businesses - the disposition of businesses previously sold, may create contractual liabilities associated with indemnifications provided; Tax filings - regulatory challenges to our tax filing positions could result in additional taxes; Government Regulation - government regulation may increase our costs; International operations - we are subject to business risks associated with our international operations in Canada which could make those operations more costly; Litigation - we may be exposed to employment-related claims and costs and we are a defendant in a variety of litigation and other actions from time to time; Personnel - our business is dependent upon the availability of qualified personnel and we may lose key personnel which could cause our business to suffer; Integrating acquisitions - managing or integrating any future acquisitions may strain our resources; Debt compliance - failure to meet certain covenant requirements under our credit facility could impact part or all of our availability to borrow; and Common stock - the price of our common stock may fluctuate significantly, which may result in losses for our investors. These and additional factors discussed in this release and in Spherion's filings with the Securities and Exchange Commission could cause the Company's actual results to differ materially from any projections contained in this release.
Spherion Corporation prepares its financial statements in accordance with generally accepted accounting principles (GAAP). Adjusted earnings from continuing operations is a non-GAAP financial measure, which excludes certain non-operating related charges and gains. Items excluded from the calculation of adjusted earnings from continuing operations include restructuring and other charges and stock option expense under FAS No. 123R, net of taxes. Adjusted earnings from continuing operations is a key measure used by management to evaluate its operations. Management does not consider the items excluded to be operating costs/gains and therefore, excludes them from the evaluation of the Company's operating performance. Adjusted earnings from continuing operations should not be considered measures of financial performance in isolation or as an alternative to earnings from continuing operations or net earnings (loss) as determined in the Statement of Earnings in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies, and therefore this measure has material limitations. Items excluded from adjusted earnings from continuing operations are significant components in understanding and assessing financial performance.
SOURCE: Spherion Corporation
CONTACT: Investors, Teri Miller, +1-954-308-8216, or
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Web site: http://www.spherion.com/