Press Release Archive
Revenues for the fourth quarter were $590.7 million. Excluding prior period results from Michael Page, which was sold in the second quarter of 2001, fourth quarter 2001 revenue declined 19.7% compared with the same period last year and 5.0% compared with the third quarter of 2001. Earnings (loss) for the fourth quarter, excluding the restructuring charge and gain on the sale of Michael Page, were ($2.2) million and related earnings per share (EPS) were ($0.04). During the same period in 2000, excluding special items, the Company generated earnings per share from operations of $0.21, including $0.10 from Michael Page. Comparable Cash EPS (EPS plus after-tax intangible amortization) for the fourth quarter of 2001 were $0.08 versus $0.36 in 2000, including $0.14 from Michael Page.
Spherion President and CEO Cinda A. Hallman commented, “The year 2001 was a year of significant change for our Company and our country. Our nation experienced some of the toughest business conditions in over a decade, further compounded by the tragic events of September 11th. Similarly, our fourth quarter and 2001 financial results reflect a difficult operating environment and the need for continued focus on our business transformation efforts. In the face of these challenges, Spherion developed a sound business transformation strategy, one that has already yielded improvements in certain areas of our business and has allowed us to maintain our strong balance sheet position. While we still have a lot of work ahead of us, I am pleased that the management team and employees have embraced the changes within our organization and have persevered in a very difficult 2001. Their drive and focus is even more critical as 2002 begins what we expect to be another challenging year.”
Revenues for 2001 were $2.7 billion, including $0.2 billion from Michael Page. Excluding Michael Page, full year revenues declined 18.1% compared with the same period last year. For the full year 2001, earnings, excluding special items, were $14.2 million and related EPS were $0.24, including $0.18 from Michael Page in the first quarter, as compared with $89.9 million or $1.38 per share in 2000, including $0.50 from Michael Page. Cash EPS, excluding special items, were $0.76 and $1.95 for the full years 2001 and 2000, respectively, including $0.23 and $0.67 from Michael Page in the respective periods.
On a GAAP basis, revenues for the fourth quarter and full year 2001 were $590.7 million and $2.7 billion, respectively, compared with $898.8 million and $3.7 billion for the same periods in 2000. Net earnings (loss) for the fourth quarters of 2001 and 2000 were ($5.4 million) and ($2.3 million), respectively. For the full year 2001 net earnings were $107.0 million, compared with $74.5 million in the prior year. Earnings (loss) per share for the fourth quarter were ($0.09) and ($0.04) in 2001 and 2000, respectively. For the full year 2001, earnings per share were $1.72, compared with $1.16 for the full year 2000.
Hallman continued, “I am extremely pleased with the improvement this quarter in segment contribution margin within Commercial Staffing, which reflects our strong emphasis on our business transformation efforts. However, for the first time in our history, the Technology business had a negative segment contribution, which underscores my commitment to transform the business model in our technology consulting operations. While the growth of Outsourcing is a critical component to our long-term success, management’s attention is squarely focused on continuing improvements in Recruitment and returning the Technology business to profitability and growth.”
Segment Review - Fourth Quarter 2001
Commercial Staffing reported revenues of $325.6 million for the fourth quarter of 2001, a decline of 18.1% compared with the same period in 2000. On a sequential quarter basis, revenues declined 3.2%. Segment gross profit and segment operating margins were 20.2% and 2.5%, respectively, compared with gross profit and operating margins of 20.3% and 2.0% reported in the third quarter of 2001. Gross profit margin declined due to additional pricing pressure during the quarter, but expense controls and office consolidations served to improve segment operating margins, sequentially.
Information Technology revenues were $128.4 million in the fourth quarter of 2001, a decline of 26.9% and 9.7% compared with the fourth quarter of 2000 and third quarter of 2001, respectively. Gross profit margin for the fourth quarter 2001 was 28.2%, compared with the 29.7% reported during the third quarter of 2001. Fourth quarter segment operating margin decreased to (2.4)% from 1.9% in the third quarter of 2001. The decline in fourth quarter gross profit and operating margins are primarily attributable to increased paid time off for consultants during the holiday season and continued pricing pressure. While the information technology business reduced operating expenses again this quarter, the decline in revenue and related gross profit were far more significant and reflect continued weakness in this industry.
Professional Services reported revenue for the quarter of $136.6 million, a decrease of 15.7% from the fourth quarter of 2000 and 4.5% on a sequential quarter basis. Gross profit margin declined to 34.6% from 36.2% when compared with the third quarter 2001 and segment operating margins were 3.5% during the fourth quarter of 2001 versus 4.3% in the third quarter 2001 and 3.5% a year ago. The decline in the segment operating margins is primarily attributable to the decline in permanent placement revenue and planned expenses in the Company’s outsourcing business.
Please note: Effective
Restructuring and Other Items
During the fourth quarter, the Company recorded the remainder of its previously announced restructuring charge of $5.5 million, on a pre-tax basis. The charge relates to facility closures and severance costs incurred as a result of market reviews completed during the fourth quarter.
Business Transformation Update
During the fourth quarter, the Company continued its efforts in implementing its business transformation initiatives across all of its business operations.
Within the Recruitment business, the Company completed the review of all markets, successfully consolidated or sold the operations of approximately 110 staffing branch offices and increased dedicated sales professionals by 78 individuals. As part of its effort to reduce workers’ compensation risk and exposure to smaller staffing markets, the Company has outlined the structure and support to be provided for existing licensed markets that are appropriate for conversion to a franchise model. The Company is currently engaged with its owner community to identify those owners that are prepared to convert their business model during 2002.
The Company continues to recruit heavily for the talent required to dramatically expand its outsourcing business. During the fourth quarter, we added a new Senior Vice President of Sales to the organization and seven experienced outsourcing sales, marketing and delivery executives. The Outsourcing Group continues to work with existing Spherion clients as its primary source of sales prospects.
The technology industry continues to face deferrals of spending by customers due to weak economic conditions. Demand for information technology consulting services continues to be low and operating expense controls cannot keep pace with the declines in revenue. Therefore, during the first quarter of 2002, the Company will implement significant changes to the compensation model for billable consultants, branch administration and management staff to reflect changes in the information technology marketplace.
During the first quarter of 2002, the Company will adopt FAS 142, Goodwill and Other Intangible Assets, and expects to record a charge for the impairment in value of goodwill. The new standard also calls for the elimination of goodwill amortization charges. For the fourth quarter and full-year 2001 these charges totaled $7.8 million or $0.12 per share and $32.2 million or $0.48 per share, excluding Michael Page, respectively.
Early trends in 2002 continue to indicate that revenues will decline sequentially for the first quarter, with limited visibility beyond that time. Based on current information, management expects revenue for the first quarter to be between $545-565 million and related earnings (loss) per share of ($0.03) to $0.03, excluding all goodwill amortization charges resulting from the adoption of FAS 142, noted above. The Company expects its effective tax rate to return to approximately 40% for 2002.
In addition, assuming that financial results do not materially decline from first quarter expectations noted above, management expects that free cash flow from the business will be sufficient to support planned capital investments. In 2002, the Company anticipates $25 million – $50 million capital spending on corporate information technology initiatives to support continued productivity improvements and the outsourcing infrastructure. Final investment decisions will be based on business conditions and financial performance.
Spherion Corporation provides Recruitment, Outsourcing and Technology services. Founded in 1946, with operations in
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 the Company’s ability to implement its new corporate strategy, acquisitions, competition, changing market and economic conditions, currency fluctuations and additional factors discussed in this release and in Spherion’s filings with the Securities and Exchange Commission. The Company’s actual results may differ materially from any projections contained in this release.