Spherion Announces Fourth Quarter 2008 Financial Results

Fort Lauderdale, Fla.,// PRNewswire-FirstCall // -- Spherion Corporation today announced financial results for the fourth quarter and fiscal year ended December 28, 2008.

Spherion President and Chief Executive Officer Roy Krause commented, "Challenging economic conditions adversely impacted our Company's performance during the fourth quarter. However, cash flow was strong enabling us to reduce our net debt by nearly $40 million during the quarter. Results include a non-cash goodwill and intangible impairment charge required under accounting rules as a result of the adverse market conditions and the continued decline of our stock price. Our focus on cash flow and containment of operating costs continues to improve our financial stability and flexibility during these challenging economic times."

Financial Highlights

  • Fourth quarter 2008 revenues were $508 million, compared with $582 million last year.
  • Loss from continuing operations in the fourth quarter was $126.2 million, or $2.45 per share, including $2.36 per share after tax non-cash goodwill and intangible impairment charges and $0.11 per share in restructuring and other costs, compared with earnings of $10.0 million, or $0.18 per share, in the prior year.
  • Adjusted earnings from continuing operations in fourth quarter 2008 were $0.8 million, or $0.02 per share compared with adjusted earnings in the same prior period of $11.1 million, or $0.20 per share. Adjusted earnings from continuing operations exclude restructuring and other charges and non- cash impairment charges in the current year, and restructuring and other charges in the prior year.
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter were $9.0 million compared with $20.8 million in the fourth quarter last year.
  • Revenues for the full year 2008 were $2,189 million compared with $2,017 million for 2007. Adjusted earnings from continuing operations for 2008 were $12.6 million or $0.24 per share compared with $32.6 million or $0.57 per share for 2007. Adjusted EBITDA for 2008 was $54.6 million compared with $69.0 million for 2007.
  • Net debt was $31.7 million at the end of 2008, compared with net debt of $92.9 million at the end of 2007. The Company had unused availability on its credit facilities of approximately $65 million at the end of 2008.


Krause continued, "We reduced SG&A by about $7 million in the fourth quarter compared with the third quarter and took additional actions at the end of the fourth quarter to reduce our first quarter 2009 SG&A in response to economic conditions. We continue to carefully watch gross profit trends and adjust operating costs to maintain appropriate cash flow levels while keeping Spherion positioned to respond positively when the economy improves. We will continue to pay down our debt, and we have ample availability under our credit facility to enable us to grow the business when the economy again begins to create jobs."

Operating Performance

Within Professional Services, fourth quarter revenues were up 6.6% due to the December, 2007 acquisition of Technisource. On an acquisition adjusted comparable basis (i.e., including the acquisitions in the prior year on a pro forma basis) revenues were down 22.8% in the quarter. Professional Services now represents 32.4% of total revenues, up from 26.6% in the fourth quarter of last year. Gross profit margins in fourth quarter 2008 were 27.0% compared with 32.0% in the prior year, reflecting the change in mix resulting from the acquisition of Technisource and a much greater relative decline of permanent placement revenue. Permanent placement revenue made up 3.9% of total Professional Services revenue in the fourth quarter compared with 8.1% in fourth quarter 2007. Selling, general and administrative expenses decreased to 23.4% of revenue in fourth quarter 2008 compared with 26.7% of revenue in the fourth quarter last year. Segment operating profit was $5.9 million or 3.6% of revenue compared with $8.1 million last year or 5.2% of revenue.

Within Staffing Services, year over year revenues in the quarter were down 19.7%. Gross profit margins were 17.7% in fourth quarter 2008 compared with 19.9% in fourth quarter 2007. Selling, general and administrative expenses were unchanged as a percentage of revenues, 17.1% in both the fourth quarter of 2008 and 2007. Segment operating profit was $2.0 million or 0.6% of revenue compared with $12.1 million or 2.8% in fourth quarter 2007.

Other Items

The Company conducted its annual impairment testing of goodwill and other intangible assets in fourth quarter 2008. The impairment testing was required under generally accepted accounting principles, and was not performed due to a change in the Company's business strategy. As a result of the testing, the Company was required to record a non-cash goodwill and intangible impairment charge of $149.8 million ($121.2 million after tax or $2.36 per share) due to continuing adverse market conditions, including accelerating U.S. temporary job losses in the fourth quarter and further declines in our stock price. This non-cash charge does not affect the Company's availability under its credit facility.

The Company also recorded restructuring and other charges during the quarter in conjunction with its ongoing plans to adjust operating expenses to anticipated gross profit levels. The $9.5 million charge ($5.8 million after tax, or $0.11 per share) was associated with actions undertaken to reduce annualized operating expenses going into 2009 by approximately $25 million compared with the fourth quarter 2008 run rate. The Company continues to adjust operating expenses based upon customer demand and may incur further restructuring and other charges in 2009.

Outlook

The continuing economic volatility makes it difficult to predict with any certainty the amount of demand that will be seen in the market, and therefore management has elected not to provide revenue and earnings guidance for the first quarter of 2009. The Company believes that a combination of existing cash balances, operating cash flows and existing revolving lines of credit, taken together, provide adequate resources to fund ongoing operations.

About Spherion

Spherion Corporation is a leading recruiting and staffing company that provides integrated solutions and breakout specialties to meet the evolving needs of companies and job candidates. As an industry pioneer for more than 60 years, Spherion has sourced, screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs.

With approximately 650 locations in the United States and Canada, Spherion delivers innovative workforce solutions that improve business performance. Spherion provides its services to approximately 10,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing more than 230,000 people annually through its network, Spherion is one of North America's largest employers. Spherion operates under the following brands: Spherion Staffing Services Group for administrative, clerical and light industrial workers; Technisource for technology professionals and solutions; The Mergis Group for accounting and finance and other professional positions; Todays Office Professionals for specialty administrative personnel; and Spherion Recruitment Process Outsourcing. To learn more, visit 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; Business interruptions - natural disasters or failures with hardware, software or utilities could adversely affect our ability to complete normal business processes; Tax filings - regulatory challenges to our tax filing positions could result in additional taxes; Personnel - our business is dependent upon the availability of qualified personnel and we may lose key personnel which could cause our business to suffer; 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; Common stock - the price of our common stock may fluctuate significantly, which may result in losses for our investors and further decreases in the Company's common stock price and market capitalization may impact our ability to comply with the NYSE continued listing standards; Government Regulation - government regulation may increase our costs; International operations - we are subject to business risks associated with our operations in Canada which could make those operations more costly; Integrating acquisitions - managing or integrating any future acquisitions may strain our resources; and Debt and debt compliance - failure to meet certain covenant requirements under our credit facility could impact part or all of our availability to borrow, and adverse conditions in the credit market may impact the Company's cost of borrowing and access to capital. 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). Organic revenue growth is a non-GAAP financial measure, which includes pro-forma revenues of acquired companies. Adjusted earnings from continuing operations is a non-GAAP financial measure, which excludes certain non-operating related charges. Items excluded from the calculation of adjusted earnings from continuing operations include interest expense related to adjustment of the Canadian purchase liability, impairment of goodwill and other intangibles, restructuring and other charges related to acquisitions and other cost reduction initiatives, and a tax valuation allowance adjustment. Adjusted EBITDA from continuing operations is a non-GAAP financial measure which excludes interest, impairment of goodwill and other intangibles, restructuring and other charges, taxes, depreciation and amortization from earnings from continuing operations. Organic growth, adjusted earnings and adjusted EBITDA from continuing operations are key measures used by management to evaluate its operations. Management includes revenues prior to acquisition date for acquired companies in the organic revenue growth calculation in order to evaluate the Company's operating performance. Organic growth, adjusted earnings and adjusted EBITDA from continuing operations should not be considered measures of financial performance in isolation or as an alternative to revenue growth or earnings from continuing operations or net earnings (loss) as determined in the Statement of Operations 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.



SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

Three Months Ended
December 28, December 30,
2008 2007

Revenues(1) $507,541 $581,600
Cost of services 402,440 446,999
Gross profit(2) 105,101 134,601
Selling, general and administrative
expenses 101,425 118,460
Goodwill and intangible asset
impairment 149,793 -
Amortization of intangibles 2,018 868
Interest expense 806 1,155
Interest income (87) (869)
Restructuring and other charges 9,487 700
263,442 120,314

(Loss) earnings from continuing
operations before income taxes (158,341) 14,287
Income tax benefit (expense) 32,134 (4,270)

(Loss) earnings from continuing
operations (126,207) 10,017
Loss from discontinued
operations, net of tax (34) (250)
Net (loss) earnings $(126,241) $9,767



(Loss) earnings per share, Basic and
Diluted: (3)
(Loss) earnings from continuing
operations $(2.45) $0.18
Loss from discontinued
operations - -
$(2.45) $0.17

Weighted-average shares used in
computation of (loss) earnings per
share:
Basic 51,482 55,972
Diluted 51,482 56,633


(1) Includes sales of all company-owned and franchised offices and
royalties on sales of area-based franchised offices.
(2) Gross profit is revenues less temporary employee wages, employment
related taxes such as FICA, federal and state unemployment taxes,
medical and other insurance for temporary employees, workers'
compensation, benefits, billable expenses and other direct costs.
(3) Earnings per share amounts are calculated independently for each
component and may not add due to rounding.



SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

Twelve Months Ended
December 28, December 30,
2008 2007

Revenues(1) $2,189,156 $2,017,114
Cost of services 1,707,153 1,539,128
Gross profit(2) 482,003 477,986
Selling, general and administrative
expenses 448,615 430,289
Goodwill and intangible asset
impairment 149,793 -
Amortization of intangibles 8,142 1,406
Interest expense 5,703 3,746
Interest income (407) (4,631)
Restructuring and other charges 11,427 700
623,273 431,510

(Loss) earnings from continuing
operations before income taxes (141,270) 46,476
Income tax benefit (expense) 26,713 (17,339)

(Loss) earnings from continuing
operations (114,557) 29,137
Loss from discontinued
operations, net of tax (3,932) (3,871)
Net (loss) earnings $(118,489) $25,266

(Loss) earnings per share, Basic:(3)
(Loss) earnings from continuing
operations $(2.14) $0.52
Loss from discontinued
operations (0.07) (0.07)
$(2.22) $0.45
(Loss) earnings per share,
Diluted:(3)
(Loss) earnings from continuing
operations $(2.14) $0.51
Loss from discontinued operations (0.07) (0.07)
$(2.22) $0.44
Weighted-average shares used in
computation of (loss) earnings per share:
Basic 53,490 56,234
Diluted 53,490 56,893


(1) Includes sales of all company-owned and franchised offices and
royalties on sales of area-based franchised offices.
(2) Gross profit is revenues less temporary employee wages, employment
related taxes such as FICA, federal and state unemployment taxes,
medical and other insurance for temporary employees, workers'
compensation, benefits, billable expenses and other direct costs.
(3) Earnings per share amounts are calculated independently for each
component and may not add due to rounding.



SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share data)

December 28, December 30,
Assets 2008 2007
Current Assets:
Cash and cash equivalents $7,601 $15,324
Receivables, less allowance for
doubtful accounts of $2,978 and
$6,523, respectively 269,203 347,908
Deferred tax asset 11,198 13,413
Insurance deposits 546 6,986
Other current assets 13,884 22,606
Total current assets 302,432 406,237
Goodwill - 146,584
Property and equipment, net of
accumulated depreciation of $128,323
and $109,229 respectively 67,269 78,077
Deferred tax asset 132,412 102,024
Trade names and other intangibles,
net 65,856 76,776
Insurance deposits - 11,259
Other assets 16,412 23,861
$584,381 $844,818

Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term
debt and revolving lines of
credit $37,699 $86,035
Accounts payable and other
accrued expenses 67,638 79,779
Accrued salaries, wages and
payroll taxes 49,888 78,850
Accrued insurance reserves 20,145 19,174
Accrued income tax payable 1,236 1,042
Other current liabilities 13,234 16,419
Total current liabilities 189,840 281,299
Long-term debt, net of current
portion 1,646 22,148
Accrued insurance reserves 16,912 20,501
Deferred compensation 12,404 17,287
Other long-term liabilities 7,391 2,923
Total liabilities 228,193 344,158
Stockholders' Equity:
Preferred stock, par value $0.01
per share; authorized,
2,500,000 shares; none issued
or outstanding - -
Common stock, par value $0.01
per share; authorized,
200,000,000; issued
65,341,609 shares 653 653
Treasury stock, at cost,
14,006,730 and 9,443,034
shares, respectively (106,500) (83,681)
Additional paid-in capital 850,653 848,628
Accumulated deficit (391,882) (273,393)
Accumulated other comprehensive
income 3,264 8,453
Total stockholders' equity 356,188 500,660
$584,381 $844,818



SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)


Three Months Ended Twelve Months Ended
Dec. 28, Dec. 30, Dec. 28, Dec. 30,
2008 2007 2008 2007
Adjusted earnings from continuing
operations $820 $11,146 $12,587 $32,612

Adjustment of tax valuation
allowance - - 1,064 -

Adjustment of Canadian Acquisition - - - (2,346)

Impairment of goodwill and other
intangibles, net of tax benefit (121,249) - (121,249) -

Restructuring and other charges,
net of tax benefit (5,778) (1,129) (6,959) (1,129)

(Loss) earnings from continuing
operations (126,207) 10,017 (114,557) 29,137

Loss from discontinued operations,
net of tax (34) (250) (3,932) (3,871)

Net (loss) earnings $(126,241) $9,767 $(118,489) $25,266

Per share-Diluted amounts :(1)
Adjusted earnings from continuing
operations $0.02 $0.20 $0.24 $0.57

Adjustment of tax valuation
allowance - - 0.02 -

Adjustment of Canadian Acquisition - - - (0.04)

Impairment of goodwill and other
intangibles, net of tax benefit (2.36) - (2.27) -

Restructuring and other charges,
net of tax benefit (0.11) (0.02) (0.13) (0.02)

(Loss) earnings from continuing
operations (2.45) 0.18 (2.14) 0.51

Loss from discontinued
operations, net of tax - - (0.07) (0.07)

Net (loss) earnings $(2.45) $0.17 $(2.22) $0.44

Weighted-average shares used in
computation of earnings per share 51,482 56,633 53,490 56,893


(1) Earnings per share amounts are calculated independently for each
component and may not add due to rounding.



RECONCILIATION OF EBITDA TO (LOSS) EARNINGS FROM CONTINUING OPERATIONS

Three Months Ended Twelve Months Ended
Dec. 28, Dec. 30, Dec. 28, Dec. 30,
2008 2007 2008 2007
Adjusted EBITDA from continuing
operations $8,962 $20,798 $54,620 $69,000

Interest income 87 869 407 4,631

Impairment of goodwill and other
intangibles (149,793) - (149,793) -

Restructuring and other charges (9,487) - (11,427) -

Interest expense (806) (1,155) (5,703) (3,746)

Depreciation and amortization(2) (7,304) (6,225) (29,374) (23,409)

(Loss) earnings from continuing
operations before income taxes (158,341) 14,287 (141,270) 46,476

Income tax benefit (expense) 32,134 (4,270) 26,713 (17,339)

(Loss) earnings from continuing
operations $(126,207) $10,017 $(114,557) $29,137

EBITDA as a percentage of revenue 1.8% 3.6% 2.5% 3.4%


(2) Includes depreciation and amortization from continuing operations
only.



SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited)

RECONCILIATION OF YEAR-OVER-YEAR ORGANIC(1) REVENUE GROWTH

Three Months Ended
December 28, 2008

Total Professional Staffing
Company Services Services

Organic revenue growth (20.3%) (22.8%) (19.1%)
Impact of acquisitions
and business reclassifications 7.6% 29.4% (0.6%)
GAAP revenue growth (12.7%) 6.6% (19.7%)


Twelve Months Ended
December 28, 2008

Total Professional Staffing
Company Services Services

Organic revenue growth (9.5%) (10.8%) (8.8%)
Impact of acquisitions
and business reclassifications 18.0% 48.2% 6.7%
GAAP revenue growth 8.5% 37.4% (2.1%)



Three Months Ended December 28, 2008

Revenue Growth Rate by Skill

Total Information Finance &
Professional Technology Accounting Other
Professional Services
Organic revenue growth (22.8%) (23.5%) (17.3%) (25.6%)
Impact of acquisitions
and business reclassifications 29.4% 41.9% 2.3% (3.7%)
GAAP revenue growth 6.6% 18.4% (15.0%) (29.3%)


Three Months Ended December 28, 2008

Revenue Growth Rate by Service

Total Permanent Temporary
Professional Placement Staffing (2)
Professional Services
Organic revenue growth (22.8%) (50.0%) (21.1%)
Impact of acquisitions
and business reclassifications 29.4% 1.7% 32.5%
GAAP revenue growth 6.6% (48.3%) 11.4%



Twelve Months Ended December 28, 2008

Revenue Growth Rate by Skill

Total Information Finance &
Professional Technology Accounting Other
Professional Services
Organic revenue growth (10.8%) (12.3%) (7.6%) (2.3%)
Impact of acquisitions
and business reclassification 48.2% 70.3% 5.6% (3.8%)
GAAP revenue growth 37.4% 58.0% (2.0%) (6.1%)


Twelve Months Ended December 28, 2008

Revenue Growth Rate by Service

Total Permanent Temporary
Professional Services Professional Placement Staffing (2)
Organic revenue growth (10.8%) (21.2%) (10.0%)
Impact of acquisitions
and business reclassifications 48.2% 6.0% 53.3%
GAAP revenue growth 37.4% (15.2%) 43.3%


Three Months Ended December 28, 2008

Revenue Growth Rate by Skill

Total Light
Staffing Services Staffing Clerical Industrial
Organic revenue growth (19.1%) (12.2%) (29.8%)
Impact of acquisitions
and business reclassifications (0.6%) (2.5%) 1.9%
GAAP revenue growth (19.7%) (14.7%) (27.9%)


Three Months Ended December 28, 2008

Revenue Growth Rate by Service

Total Permanent Temporary Managed
Staffing Services Staffing Placement Staffing(2) Services(2)
Organic revenue growth (19.1%) (56.5%) (18.4%) (19.9%)
Impact of acquisitions
and business reclassifications (0.6%) 0.0% 1.3% (14.8%)
GAAP revenue growth (19.7%) (56.5%) (17.1%) (34.7%)



Twelve Months Ended December 28, 2008

Revenue Growth Rate by Skill

Total Light
Staffing Services Staffing Clerical Industrial
Organic revenue growth (8.8%) (5.6%) (14.3%)
Impact of acquisitions
and business reclassifications 6.7% 7.8% 5.0%
GAAP revenue growth (2.1%) 2.2% (9.3%)



Twelve Months Ended December 28, 2008

Revenue Growth Rate by Service

Total Permanent Temporary Managed
Staffing Services Staffing Placement Staffing(2) Services(2)
Organic revenue growth (8.8%) (39.3%) (8.5%) (6.3%)
Impact of acquisitions
and business reclassifications 6.7% 6.1% 10.4% (19.0%)
GAAP revenue growth (2.1%) (33.2%) 1.9% (25.3%)


(1) Organic revenue growth is calculated assuming that all acquisitions
were consummated on January 1, 2007. This calculation has the effect
of adding revenues for the acquired businesses prior to their
acquisition dates to Spherion Corporation's reported revenues. In
addition, organic revenue growth is calculated assuming that business
reclassifications were effective on January 1, 2007, so that revenues
for this business are included in the same segment, skill and service
in the current and prior period for purposes of calculating year over
year growth.
(2) Effective with the first quarter of 2008, the management of certain
customer contracts was transferred between operating segments,
primarily to Professional Services from Staffing Services, and has
been adjusted for purposes of calculating organic growth.



SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)

Three Months Ended
Dec. 28, Dec. 30, Sept. 28,
2008 2007 2008

Revenues:
Professional Services $164,682 $154,509 $181,908
Staffing Services 342,859 427,091 360,267
Segment revenue $507,541 $581,600 $542,175

Gross profit:
Professional Services $44,489 $49,399 $53,314
Staffing Services 60,612 85,202 65,233
Segment gross profit $105,101 $134,601 $118,547

Segment SG&A:
Professional Services $(38,592) $(41,324) $(45,064)
Staffing Services (58,650) (73,120) (59,099)
Segment SG&A $(97,242) $(114,444) $(104,163)

Segment operating profit:
Professional Services $5,897 $8,075 $8,250
Staffing Services 1,962 12,082 6,134
Segment operating profit 7,859 20,157 14,384

Unallocated corporate costs (4,183) (4,016) (4,249)
Goodwill and intangible asset
impairment (149,793) - -
Amortization of intangibles (2,018) (868) (2,037)
Interest expense (806) (1,155) (1,573)
Interest income 87 869 69
Restructuring and other charges (9,487) (700) -

(Loss) earnings from continuing
operations before income
taxes $(158,341) $14,287 $6,594

MEMO:

Gross profit margin:
Professional Services 27.0% 32.0% 29.3%
Staffing Services 17.7% 19.9% 18.1%
Total Spherion 20.7% 23.1% 21.9%

Segment SG&A:
Professional Services 23.4% 26.7% 24.8%
Staffing Services 17.1% 17.1% 16.4%
Total Spherion 19.2% 19.7% 19.2%

Segment operating profit margin:
Professional Services 3.6% 5.2% 4.5%
Staffing Services 0.6% 2.8% 1.7%
Total Spherion 1.5% 3.5% 2.7%

Segment revenue per billing day:
Professional Services $2,656 $2,492 $2,887
Staffing Services $5,530 $6,889 $5,719
Total Spherion $8,186 $9,381 $8,606

Supplemental Cash Flow and Other
Information:
Operating cash flow $35,477 $19,825 $6,754
Capital expenditures $1,716 $2,318 $2,356
Depreciation and amortization $7,303 $6,225 $7,328
DSO 49 50 53
Billing Days 62 62 63



SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)

Twelve Months Ended
Dec. 28, Dec. 30,
2008 2007
Revenues:
Professional Services $748,399 $544,878
Staffing Services 1,440,757 1,472,236
Segment revenue $2,189,156 $2,017,114

Gross profit:
Professional Services $218,139 $181,683
Staffing Services 263,864 296,303
Segment gross profit $482,003 $477,986

Segment SG&A:
Professional Services $(181,429) $(153,452)
Staffing Services (250,474) (260,844)
Segment SG&A $(431,903) $(414,296)

Segment operating profit:
Professional Services $36,710 $28,231
Staffing Services 13,390 35,459
Segment operating profit 50,100 63,690

Unallocated corporate costs (16,712) (15,993)
Goodwill and intangible asset
impairment (149,793) -
Amortization of intangibles (8,142) (1,406)
Interest expense (5,703) (3,746)
Interest income 407 4,631
Restructuring and other charges (11,427) (700)

(Loss) earnings from continuing
operations before income taxes $(141,270) $46,476

MEMO:

Gross profit margin:
Professional Services 29.1% 33.3%
Staffing Services 18.3% 20.1%
Total Spherion 22.0% 23.7%

Segment SG&A:
Professional Services 24.2% 28.2%
Staffing Services 17.4% 17.7%
Total Spherion 19.7% 20.5%

Segment operating profit margin:
Professional Services 4.9% 5.2%
Staffing Services 0.9% 2.4%
Total Spherion 2.3% 3.2%

Segment revenue per billing day:
Professional Services $2,970 $2,154
Staffing Services $5,717 $5,819
Total Spherion $8,687 $7,973

Supplemental Cash Flow and Other
Information:
Operating cash flow $79,183 $56,087
Capital expenditures $8,935 $8,324
Depreciation and amortization $29,373 $23,409
DSO 49 50
Billing Days 252 253



SPHERION CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited, dollar amounts in thousands)

Three Months Ended
Dec. 28, Dec. 30, Sept. 28,
2008 2007 2008
Professional Services
Revenues by Skill:
Information Technology $127,744 $107,847 $139,614
Finance & Accounting 23,385 27,503 25,758
Other 13,553 19,159 16,536
Segment Revenues $164,682 $154,509 $181,908

Revenues by Service:
Temporary Staffing (1) $158,203 $141,966 $170,216
Permanent Placement 6,479 12,543 11,692
Segment Revenues $164,682 $154,509 $181,908

Gross Profit Margin by Service:
(As % of Applicable Revenues)
Temporary Staffing 24.0% 26.0% 24.5%
Permanent Placement 100.0% 100.0% 100.0%
Total Professional Services 27.0% 32.0% 29.3%

Revenues per billing day by Skill:
Information Technology $2,060 $1,739 $2,216
Finance & Accounting $377 $444 $409
Other $219 $309 $262

Revenues per billing day by Service:
Temporary Staffing $2,552 $2,290 $2,702
Permanent Placement $105 $202 $186

Staffing Services
Revenues by Skill:
Clerical $225,690 $264,668 $233,393
Light Industrial 117,169 162,423 126,874
Segment Revenues $342,859 $427,091 $360,267

Revenues by Service:
Temporary Staffing $307,530 $371,012 $322,455
Managed Services (1) 32,793 50,254 34,074
Permanent Placement 2,536 5,825 3,738
Segment Revenues $342,859 $427,091 $360,267

Gross Profit Margin by Service:
(As % of Applicable Revenues)
Temporary Staffing 15.9% 17.1% 16.1%
Managed Services 28.2% 31.9% 28.4%
Permanent Placement 100.0% 100.0% 100.0%
Total Staffing Services 17.7% 19.9% 18.1%

Revenues per billing day by Skill:
Clerical $3,640 $4,269 $3,705
Light Industrial $1,890 $2,620 $2,014

Revenues per billing day by Service:
Temporary Staffing $4,960 $5,984 $5,118
Managed Services $529 $811 $541
Permanent Placement $41 $94 $59



SPHERION CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited, dollar amounts in thousands)

Twelve Months Ended
Dec. 28, Dec. 30,
2008 2007
Professional Services
Revenues by Skill:
Information Technology $572,690 $362,569
Finance & Accounting 107,555 109,712
Other 68,154 72,597
Segment Revenues $748,399 $544,878

Revenues by Service:
Temporary Staffing(1) $701,635 $489,713
Permanent Placement 46,764 55,165
Segment Revenues $748,399 $544,878

Gross Profit Margin by Service:
(As % of Applicable Revenues)
Temporary Staffing 24.4% 25.8%
Permanent Placement 100.0% 100.0%
Total Professional Services 29.1% 33.3%

Revenues per billing day by Skill:
Information Technology $2,273 $1,433
Finance & Accounting $427 $434
Other $270 $287

Revenues per billing day by Service:
Temporary Staffing $2,784 $1,936
Permanent Placement $186 $218

Staffing Services
Revenues by Skill:
Clerical $940,507 $920,558
Light Industrial 500,250 551,678
Segment Revenues $1,440,757 $1,472,236

Revenues by Service:
Temporary Staffing $1,283,529 $1,259,411
Managed Services(1) 141,697 189,574
Permanent Placement 15,531 23,251
Segment Revenues $1,440,757 $1,472,236

Gross Profit Margin by Service:
(As % of Applicable Revenues)
Temporary Staffing 16.1% 17.0%
Managed Services 29.4% 30.9%
Permanent Placement 100.0% 100.0%
Total Staffing Services 18.3% 20.1%

Revenues per billing day by Skill:
Clerical $3,732 $3,639
Light Industrial $1,985 $2,181

Revenues per billing day by Service:
Temporary Staffing $5,093 $4,978
Managed Services $562 $749
Permanent Placement $62 $92


(1) Effective with the first quarter of 2008, the management of certain
customer contracts was transferred to Professional Services from
Staffing Services. This change is being reported on a prospective
basis.



SOURCE: Spherion Corporation

###

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