Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Executive Overview
The Staffing Industry
The worldwide staffing industry is competitive and highly fragmented. In the United States, approximately 100 competitors operate nationally, and approximately 10,000 smaller companies compete in varying degrees at local levels. Additionally, several similar staffing companies compete globally. Demand for temporary services is highly dependent on the overall strength of the global economy and labor markets. In periods of economic growth, demand for temporary services generally increases, and the need to recruit, screen, train, retain and manage a pool of employees who match the skills required by particular customers becomes critical. Conversely, during an economic downturn, competitive pricing pressures can pose a threat to retaining a qualified temporary workforce. Accordingly, the on-going economic crisis in the Eurozone and slow recovery from recession in the U.S. has impacted all staffing firms over the last several years.
Our Business
Kelly Services is a global staffing company, providing innovative workforce solutions for customers in a variety of industries. Our staffing operations are divided into three regions, Americas, EMEA and APAC, with commercial and professional and technical staffing businesses in each region. As the human capital arena has become more complex, we have also developed a suite of innovative solutions within our global OCG Group. We are forging strategic relationships with our customers to help them manage their flexible workforces, through outsourcing, consulting, recruitment, career transition and vendor management services.
We earn revenues from the hourly sales of services by our temporary employees to customers, as a result of recruiting permanent employees for our customers, and through our outsourcing and consulting activities. Our working capital requirements are primarily generated from temporary employee payroll and customer accounts receivable. The nature of our business is such that trade accounts receivable are our most significant financial asset. Average days sales outstanding varies within and outside the U.S., but averages more than 50 days on a global basis. Since receipts from customers generally lag temporary employee payroll, working capital requirements increase substantially in periods of growth.
Our Strategy and Outlook
Our long-term strategic objective is to create shareholder value by delivering a competitive profit from the best workforce solutions and talent in the industry. In addition, we have set a long-term goal to achieve a competitive return on sales of 4%. To attain this, we are focused on the following key areas:
|
·
|
Maintain our core strengths in commercial staffing and key markets;
|
|
·
|
Aggressively grow our professional and technical staffing;
|
|
·
|
Transform our OCG segment into a market-leading provider of talent supply chain management;
|
|
·
|
Capture permanent placement growth in selected specialties; and
|
|
·
|
Lower our costs through deployment of efficient service delivery models.
|
The slow and uneven economic growth we saw throughout 2012 continued into 2013, impacting our industry. For Kelly in particular, first quarter revenue was down year over year by 3%. In spite of persistent economic uncertainty and the current state of demand for temporary labor, we exceeded our expectations. During the first quarter of 2013:
|
·
|
We maintained stable professional and technical business volume despite a 3% decline in total revenue;
|
|
·
|
In our OCG segment, we increased revenue by 14% year over year, improved the gross profit rate by 60 basis points and improved earnings from operations by over $1 million;
|
|
·
|
While continuing to make strategic investments, we held expenses flat in comparison to the prior year.
|
At 0.5% for the first quarter of 2013, our return on sales is still well below our long-term goal of 4.0%. To make significant progress against our ROS goal and better leverage our business, we will need to see stronger, more sustained economic growth along with growing demand for labor.
Looking ahead, although the U.S. unemployment rate is currently below 8% and declining, one of the primary drivers has been a shrinking labor force, rather than a growing demand for labor. We expect that the current tepid labor market growth across the U.S. will continue to constrain hiring in the near-term. Though modest job growth is occurring, we are not experiencing the corresponding uplift in our industry that was typical in previous recoveries. In Europe, we do not anticipate any significant changes to the recessionary conditions that continue to take their toll on the labor market.
An additional challenge for us will be to meet the 2014 provisions of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Acts”). The Acts represent comprehensive U.S. healthcare reform legislation that, in addition to other provisions, will subject us to a potential penalty unless we offer to our employees minimal essential coverage that is affordable and provides minimum value. In order to comply with the Acts, Kelly intends to begin offering health care coverage in 2014 to all temporary employees eligible for coverage under the Acts.
Estimating the costs of complying with the Acts is difficult due to a variety of factors associated with our temporary employee population, including: the number of employees who are eligible for coverage; the percentage of eligible employees who will enroll for health care coverage; the number of months during the following year that those employees who accept coverage remain an employee; determination of the appropriate employee contribution share for affordability purposes; the cost and availability of health care coverage that meets the Acts’ requirements; and the cost of implementation and ongoing administrative costs of compliance. Taking these factors into consideration, we preliminarily estimate compliance costs to approximate one percent of U.S. cost of services. Although we intend to pass ongoing costs on to our customers, there can be no assurance that we will be able to increase pricing to our customers in a sufficient amount to cover the increased costs, and the net financial impact on our results of operations could be significant.
Longer-term, we believe the trends in the staffing industry are positive: companies are becoming more comfortable with the use of flexible staffing models; there is increasing acceptance of free agents and contractual employment by companies and candidates alike; and companies are searching for more comprehensive workforce management solutions. This shift in demand for contingent labor plays to our strengths and experience -- particularly serving large companies.
Financial Measures – Operating Margin and Constant Currency
Operating margin (earnings from operations divided by revenue from services) in the following tables is a ratio used to measure the Company’s pricing strategy and operating efficiency. Constant currency (“CC”) change amounts are non-GAAP measures. CC change amounts in the following tables refer to the year-over-year percentage changes resulting from translating 2013 financial data into U.S. dollars using the same foreign currency exchange rates used to translate financial data for 2012. We believe that CC measurements are an important analytical tool to aid in understanding underlying operating trends without distortion due to currency fluctuations.
Results of Operations
Total Company - First Quarter
|
|
2013
|
|
|
2012
|
|
Change
|
|
|
|
|
|
Revenue from Services
|
|
$
|
1,314.8
|
|
|
$
|
1,354.8
|
|
(3.0
|
)
|
%
|
|
|
(2.7
|
) %
|
Fee-based income
|
|
|
36.7
|
|
|
|
36.6
|
|
0.2
|
|
|
|
|
0.6
|
|
Gross profit
|
|
|
216.9
|
|
|
|
223.7
|
|
(3.1
|
)
|
|
|
|
(2.8
|
)
|
Total SG&A expenses
|
|
|
209.8
|
|
|
|
209.0
|
|
0.4
|
|
|
|
|
0.6
|
|
Earnings from Operations
|
|
|
7.1
|
|
|
|
14.7
|
|
(51.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate
|
|
|
16.5
|
%
|
|
|
16.5
|
%
|
-
|
|
pts.
|
|
|
|
|
Expense rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue
|
|
|
16.0
|
|
|
|
15.4
|
|
0.6
|
|
|
|
|
|
|
% of gross profit
|
|
|
96.7
|
|
|
|
93.4
|
|
3.3
|
|
|
|
|
|
|
Operating margin
|
|
|
0.5
|
|
|
|
1.1
|
|
(0.6
|
)
|
|
|
|
|
|
Total Company revenue for the first quarter of 2013 was down 3% in comparison to the prior year and down 3% on a CC basis. This reflected a 9% decrease in hours worked, partially offset by a 6% increase in average bill rates on a CC basis. Hours decreased in our staffing business in all three regions. The decrease in the Americas and EMEA was due, in large part, to the economic uncertainty existing in both regions, while the decline in APAC was due to decisions we made to exit low-margin business in India. The improvement in average bill rates was primarily due to the mix of countries, particularly the business we exited in India with very low average bill rates.
Compared to the first quarter of 2012, the gross profit rate was flat. An increase in the gross profit rate in OCG and slight increase in the Americas region was offset by decreases in the EMEA and APAC regions.
Selling, general and administrative (“SG&A”) expenses increased slightly year over year. Included in SG&A expenses in the first quarter is $3 million for a settlement with the state of Delaware related to unclaimed property examinations.
Income tax benefit for the first quarter of 2013 was $7 million (-110.9%), compared to tax expense of $5 million (34.6%) for the first quarter of 2012. The first quarter 2013 income tax expense was impacted by the work opportunity credit, which was retroactively reinstated on January 2, 2013, and resulted in a first quarter 2013 tax benefit of $10 million that would have been recognized in 2012 if the law had been in effect at year-end 2012.
Diluted earnings from continuing operations per share for the first quarter of 2013 were $0.34, as compared to $0.24 for the first quarter of 2012.
Earnings from discontinued operations for the first quarter of 2012 represent adjustments to the estimated costs of litigation, net of tax, retained from the 2007 sale of the Kelly Home Care business unit.
Total Americas - First Quarter
(Dollars in millions)
|
|
2013
|
|
|
2012
|
|
|
Change
|
|
|
|
|
|
Revenue from Services
|
|
$
|
889.3
|
|
|
$
|
919.4
|
|
|
|
(3.3
|
)
|
%
|
|
|
(3.0
|
) %
|
Fee-based income
|
|
|
7.8
|
|
|
|
6.9
|
|
|
|
13.4
|
|
|
|
|
14.0
|
|
Gross profit
|
|
|
133.9
|
|
|
|
138.2
|
|
|
|
(3.1
|
)
|
|
|
|
(2.9
|
)
|
Total SG&A expenses
|
|
|
109.2
|
|
|
|
102.9
|
|
|
|
6.1
|
|
|
|
|
6.3
|
|
Earnings from Operations
|
|
|
24.7
|
|
|
|
35.3
|
|
|
|
(30.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate
|
|
|
15.1
|
%
|
|
|
15.0
|
%
|
|
|
0.1
|
|
pts.
|
|
|
|
|
Expense rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue
|
|
|
12.3
|
|
|
|
11.2
|
|
|
|
1.1
|
|
|
|
|
|
|
% of gross profit
|
|
|
81.6
|
|
|
|
74.5
|
|
|
|
7.1
|
|
|
|
|
|
|
Operating margin
|
|
|
2.8
|
|
|
|
3.8
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
The change in Americas revenue represents a 4% decrease in hours worked, partially offset by a 1% increase in average bill rates on a CC basis. During the first quarter of 2013, the PT segment revenue was relatively flat, while Commercial segment revenue declined 4%. The PT segment result was due to increases in hours and revenues in our engineering and health care services, offset by decreases in our science, IT and finance practices. Many of our customers in the higher-end PT market are completing projects, then delaying new project implementations. The decrease in Commercial segment revenue was driven primarily by decreases in our office-clerical and electronic assembly service lines, somewhat offset by growth in our educational staffing business due to new customer wins. We believe this slowing demand continues to be a reflection of economic uncertainties in the region. Americas represented 68% of total Company revenue in the first quarter of both 2013 and 2012.
The increase in our gross profit rate was due to the effect of increased fee-based income. Fee-based income, which is included in revenue from services, has a significant impact on gross profit rates. There are very low direct costs of services associated with fee-based income. Therefore, increases or decreases in fee-based income can have a disproportionate impact on gross profit rates.
Americas SG&A expenses increased 6% over the prior year. Included in Americas SG&A expenses for the first quarter of 2013 is the $3 million unclaimed property settlement noted above. The remainder of the increase in SG&A expenses is due to continued investments in PT, our centralized operations staff to support our largest customers and investments in our technology infrastructure.
Total EMEA - First Quarter
(Dollars in millions)
|
|
2013
|
|
|
2012
|
|
|
Change
|
|
|
|
|
|
Revenue from Services
|
|
$
|
244.5
|
|
|
$
|
255.2
|
|
|
|
(4.2
|
)
|
%
|
|
|
(4.1
|
) %
|
Fee-based income
|
|
|
9.5
|
|
|
|
10.7
|
|
|
|
(11.3
|
)
|
|
|
|
(11.2
|
)
|
Gross profit
|
|
|
41.8
|
|
|
|
44.8
|
|
|
|
(6.7
|
)
|
|
|
|
(6.6
|
)
|
SG&A expenses excluding
restructuring charges
|
|
|
42.2
|
|
|
|
44.5
|
|
|
|
(5.2
|
)
|
|
|
|
|
|
Restructuring charges
|
|
|
(0.2
|
)
|
|
|
-
|
|
|
NM
|
|
|
|
|
|
|
Total SG&A expenses
|
|
|
42.0
|
|
|
|
44.5
|
|
|
|
(5.6
|
)
|
|
|
|
(5.5
|
)
|
Earnings from Operations
|
|
|
(0.2
|
)
|
|
|
0.3
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate
|
|
|
17.1
|
%
|
|
|
17.6
|
%
|
|
|
(0.5
|
)
|
pts.
|
|
|
|
|
Expense rates (excluding
restructuring charges):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue
|
|
|
17.2
|
|
|
|
17.4
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
% of gross profit
|
|
|
100.8
|
|
|
|
99.2
|
|
|
|
1.6
|
|
|
|
|
|
|
Operating margin
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
The change in EMEA revenue from services reflected a 7% decrease in hours worked. The decrease primarily reflects the difficult economic environment in the European Union, mainly in France, Portugal, Germany and Italy. However, we also saw a decrease in our hours in Russia and the U.K., where we were focused on gaining higher-margin customers. The decrease in volume was partially offset by a 3% increase in average bill rates on a CC basis. This was the result of average bill rate increases in Switzerland and France, due to favorable customer mix and Russia and the U.K. where, as noted above, we were focused on higher-margin customers. EMEA represented 19% of total Company revenue in the first quarter of both 2013 and 2012.
The EMEA gross profit rate decreased due to both a mix change, where higher-margin retail business decreased while lower-margin corporate accounts increased, and a decrease in fee-based income in the Eurozone due to the economic environment. The effect of these decreases, which accounted for 110 basis points, was partially offset by the effect of a tax credit related to a new law in France, the CICE tax credit, which has been introduced to enhance the competitiveness of businesses in France. The effect of this credit, which is recorded in cost of services, accounted for 60 basis points.
The decrease in SG&A expenses excluding restructuring charges was primarily due to a reduction of full-time employees in specific countries. Restructuring costs recorded in the first quarter of 2013 reflect the adjustments to prior restructuring costs in the U.K., France and Italy.
Total APAC - First Quarter
(Dollars in millions)
|
|
2013
|
|
|
2012
|
|
|
Change
|
|
|
|
|
|
Revenue from Services
|
|
$
|
91.7
|
|
|
$
|
101.1
|
|
|
|
(9.4
|
)
|
%
|
|
|
(9.0
|
) %
|
Fee-based income
|
|
|
4.7
|
|
|
|
7.3
|
|
|
|
(36.2
|
)
|
|
|
|
(35.4
|
)
|
Gross profit
|
|
|
14.9
|
|
|
|
18.3
|
|
|
|
(18.7
|
)
|
|
|
|
(18.1
|
)
|
SG&A expenses excluding
restructuring charges
|
|
|
15.6
|
|
|
|
19.7
|
|
|
|
(20.9
|
)
|
|
|
|
|
|
Restructuring charges
|
|
|
0.2
|
|
|
|
-
|
|
|
NM
|
|
|
|
|
|
|
Total SG&A expenses
|
|
|
15.8
|
|
|
|
19.7
|
|
|
|
(19.9
|
)
|
|
|
|
(19.3
|
)
|
Earnings from Operations
|
|
|
(0.9
|
)
|
|
|
(1.4
|
)
|
|
|
35.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate
|
|
|
16.2
|
%
|
|
|
18.1
|
%
|
|
|
(1.9
|
)
|
pts.
|
|
|
|
|
Expense rates (excluding
restructuring charges):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue
|
|
|
17.0
|
|
|
|
19.4
|
|
|
|
(2.4
|
)
|
|
|
|
|
|
% of gross profit
|
|
|
104.7
|
|
|
|
107.6
|
|
|
|
(2.9
|
)
|
|
|
|
|
|
Operating margin
|
|
|
(1.0
|
)
|
|
|
(1.4
|
)
|
|
|
0.4
|
|
|
|
|
|
|
The change in total APAC revenue reflected a 30% decrease in hours worked, partially offset by a 34% increase in average bill rates on a CC basis. Excluding the 2012 results from the North Asia operations which were deconsolidated in the fourth quarter of 2012, APAC revenue declined 7% on a constant currency basis. The change in hours worked was due to: the decrease in hours worked in Australia and New Zealand, which were impacted by the loss of large customers and fewer temporary employees in the automotive sector in Australia; the move to exit low-margin customers as well as the subsequent loss of certain customers in India; and a reduction in the number of temporary employees in Malaysia and New Zealand related to the conversion of employees from temporary to permanent and management of such employees in-house. The increase in average bill rates was the result of the customer mix changes from last year’s exits of low-margin customers in India, as well as higher billing rates per hour related to overtime from the seasonal projects in Singapore and Malaysia. APAC revenue represented 7% of total Company revenue in the first quarter of 2013 and 8% in the first quarter of 2012.
Excluding the North Asia operations from 2012 results, the APAC gross profit rate decreased 60 basis points, due to a decrease in fee-based income. Fee-based income decreased 17% on a constant currency basis excluding the North Asia operations, with all APAC countries, excluding India, experiencing declines. The decrease in fees is attributed to the weakening economic climate in Australia and New Zealand and lower productivity levels in Singapore and Malaysia, due to high turnover in consultants.
SG&A expenses declined 10% on a constant currency basis, excluding the North Asia operations from 2012 results. This change was the result of lower salaries due to a decision to intentionally hold positions open in response to volume pressures in the region, particularly in Australia and New Zealand, where there has been a 22% drop in full-time headcount.
OCG - First Quarter
(Dollars in millions)
|
|
2013
|
|
|
2012
|
|
|
Change
|
|
|
|
|
|
Revenue from Services
|
|
$
|
99.0
|
|
|
$
|
86.7
|
|
|
|
14.2
|
|
%
|
|
|
14.4
|
%
|
Fee-based income
|
|
|
14.6
|
|
|
|
11.6
|
|
|
|
25.8
|
|
|
|
|
26.3
|
|
Gross profit
|
|
|
27.1
|
|
|
|
23.1
|
|
|
|
17.0
|
|
|
|
|
17.3
|
|
Total SG&A expenses
|
|
|
25.4
|
|
|
|
22.6
|
|
|
|
12.2
|
|
|
|
|
12.5
|
|
Earnings from Operations
|
|
|
1.7
|
|
|
|
0.5
|
|
|
|
233.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate
|
|
|
27.3
|
%
|
|
|
26.7
|
%
|
|
|
0.6
|
|
pts.
|
|
|
|
|
Expense rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue
|
|
|
25.6
|
|
|
|
26.1
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
% of gross profit
|
|
|
93.8
|
|
|
|
97.8
|
|
|
|
(4.0
|
)
|
|
|
|
|
|
Operating margin
|
|
|
1.7
|
|
|
|
0.6
|
|
|
|
1.1
|
|
|
|
|
|
|
Revenue from services in the OCG segment increased during the first quarter of 2013 due to growth in BPO of 30% and CWO growth of 13%. Fee-based income represents primarily the CWO practice area. The revenue growth in BPO and CWO was due to expansion of programs with existing customers. OCG revenue represented 8% of total Company revenue in the first quarter of 2013 and 6% in the first quarter of 2012.
The OCG gross profit rate increased primarily due to increased volume mix in the higher-margin BPO and CWO practice areas. The increase in SG&A expenses is primarily the result of support costs associated with increased volumes on existing programs in our BPO and CWO practice areas, as well as new customer program implementations.
Financial Condition
Historically, we have financed our operations through cash generated by operating activities and access to credit markets. Our working capital requirements are primarily generated from temporary employee payroll and customer accounts receivable. Since receipts from customers generally lag payroll to temporary employees, working capital requirements increase substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease. As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash and equivalents, operating activities, investing activities and financing activities.
Cash and Equivalents
Cash and equivalents totaled $62 million at the end of the first quarter of 2013 and $76 million at year-end 2012. As further described below, we generated $6 million in cash from operating activities, used $3 million of cash for investing activities and used $16 million of cash for financing activities.
Operating Activities
In the first three months of 2013, we generated $6 million in cash from operating activities, as compared to $13 million in the first three months of 2012. The decrease in cash generated was due to higher additional working capital requirements.
Trade accounts receivable totaled $1 billion at the end of the first quarter of 2013. Global days sales outstanding were 54 days at the end of the first quarter of both 2013 and 2012.
Our working capital position was $450 million at the end of the first quarter of 2013, a decrease of $20 million from year-end 2012. The current ratio was 1.6% at the end of the first quarter of 2013 and 1.7% at year-end 2012.
Investing Activities
In the first three months of 2013, we used $3 million of cash for investing activities, compared to $4 million in the first three months of 2012. Capital expenditures in both years relate primarily to the Company’s information technology programs, including costs for the implementation of the PeopleSoft payroll project.
Financing Activities
In the first three months of 2013, we used $16 million of cash for financing activities, compared to using $4 million in the first three months of 2012. Debt totaled $50 million at the end of the first quarter of 2013 and $64 million at year-end 2012. Debt-to-total capital (total debt reported on the balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 6.2% at the end of the first quarter of 2013 and 8.0% at year-end 2012.
The net change in short-term borrowings in the first three months of 2013 was primarily due to payments on our securitization facility. The net change in short-term borrowings in the first three months of 2012 was primarily due to payments on our revolving credit facility.
We made dividend payments of $2 million in the first quarter of 2013 and first quarter of 2012.
New Accounting Pronouncement
See New Accounting Pronouncement footnote in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a description of a new accounting pronouncement.
Contractual Obligations and Commercial Commitments
There are no material changes in our obligations and commitments to make future payments from those included in the Company’s Annual Report on Form 10-K filed February 14, 2013. We have no material, unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities
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Liquidity
We expect to meet our ongoing short- and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities. Additional funding sources could include public or private bonds, asset-based lending, additional bank facilities, issuance of equity or other sources.
We utilize intercompany loans, dividends, capital contributions and redemptions to effectively manage our cash on a global basis. We periodically review our foreign subsidiaries’ cash balances and projected cash needs. As part of those reviews, we may identify cash that we feel should be repatriated to optimize the Company’s overall capital structure. At the present time, these reviews have not resulted in any specific plans to repatriate a majority of our international cash balances. We expect much of our international cash will be needed to fund working capital growth in our local operations. The majority of our international cash is concentrated in a cash pooling arrangement (the “Cash Pool”) and is available to fund general corporate needs internationally. The Cash Pool is a set of cash accounts maintained with a single bank that must, as a whole, maintain at least a zero balance; individual accounts may be positive or negative. This allows countries with excess cash to invest and countries with cash needs to utilize the excess cash.
We manage our cash and debt very closely to optimize our capital structure. As our cash balances build, we tend to pay down debt as appropriate. Conversely, when working capital needs grow, we tend to use corporate cash and cash available in the Cash Pool first, and then access our borrowing facilities.
At the 2013 first quarter end, we had $150 million of available capacity on our $150 million revolving credit facility and $46 million of available capacity on our $150 million securitization facility. The securitization facility carried $48 million of short-term borrowings and $56 million of standby letters of credit related to workers’ compensation. Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes. While we believe these facilities will cover our working capital needs over the short term, if economic conditions or operating results change significantly, we may need to seek additional sources of funds. As of the 2013 first quarter end, we met the debt covenants related to our revolving credit facility and securitization facility.
We monitor the credit ratings of our major banking partners on a regular basis. We also have regular discussions with them. Based on our reviews and communications, we believe the risk of one or more of our banks not being able to honor commitments is insignificant. We also review the ratings and holdings of our money market funds and other investment vehicles regularly to ensure high credit quality and access to our invested cash.
As of the 2013 first quarter end, we had no holdings of sovereign debt in Italy, Portugal, Ireland, Spain or Greece. Our investment policy requires our international affiliates to contribute any excess cash balances to the Cash Pool. We then manage this as counterparty exposure and distribute the risk among our Cash Pool provider and other banks we may designate from time to time.
As of the 2013 first quarter end, our total exposure to European receivables from our customers was $275 million, which represents 28% of total trade accounts receivable, net. The percentage of trade accounts receivable over 90 days past due for Europe was consistent with our global experience. Net trade accounts receivable for Italy, Portugal and Ireland, specific countries currently experiencing economic volatility, totaled $39 million as of the 2013 first quarter end.
Forward-Looking Statements
Certain statements contained in this report are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as "expects,” "anticipates,” "intends,” “plans,” "believes,” “estimates,” or variations or negatives thereof or by similar or comparable words or phrases. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions by us that may be provided by management, including oral statements or other written materials released to the public, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our company and economic and market factors in the countries in which we do business, among other things. These statements are not guarantees of future performance, and we have no specific intention to update these statements.
Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers’ compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws), the net financial impact of the Patient Protection and Affordable Care Act on our business, and risks associated with conducting business in foreign countries, including foreign currency fluctuations. Certain risk factors are discussed more fully under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K.