SOURCE: Kelly Services, Inc.

October 23, 2007 07:30 ET

Kelly Services Reports 3rd Quarter 2007 Results

TROY, MI--(Marketwire - October 23, 2007) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a global provider of staffing services, today announced results for the third quarter ended September 30, 2007.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2007 totaled $1.425 billion, a 2.0% increase compared to the $1.397 billion for the corresponding quarter in 2006. On a constant currency basis revenue decreased 0.6%.

Earnings from operations for the third quarter of 2007 totaled $20.8 million, a 9.6% decrease compared to $23.0 million reported for the third quarter of 2006. Included in earnings from operations are $2.5 million of costs related to the restructuring of our Americas Commercial and UK operations.

Diluted earnings per share from continuing operations in the third quarter of 2007 were $0.40, a decrease of 11% as compared to third quarter 2006 earnings of $0.45 per share. Included in third quarter diluted earnings is the $0.05 per share cost of the Americas Commercial and UK restructuring.

Commenting on the results, Camden said, "Despite continued weakness in the U.S. staffing market, we're pleased that we delivered solid profitable results. We also accomplished a number of key strategic objectives during the quarter as we continue to diversify geographically and move into higher margin fee based businesses.

"We recently announced an agreement to acquire access AG, a $15 million revenue recruiting process outsourcing firm with operations in Germany and Austria. The acquisition of access AG will position Kelly as a leader in one of the fastest growing recruitment markets in the world.

"Revenue in our Americas Commercial segment, which accounted for 48% of total sales, decreased 5.7% year over year in the third quarter. Operating earnings totaled $19.0 million, and decreased 26.4% compared to last year. Included in the segment operating earnings are $1.5 million of restructuring costs.

"Revenue in the Americas PTSA segment, which accounted for 19% of total sales, increased 1.6% year over year in the third quarter. Operating earnings totaled $14.5 million and decreased 3.1% on a year over year basis.

"Revenue in our International Commercial segment, which accounted for 29% of total sales, increased 13.8% year over year in the third quarter. On a constant currency basis revenue increased 5.8%. The segment operating earnings totaled $4.6 million, an increase of 43.5% compared to $3.2 million the prior year. Included in the segment operating earnings are $953 thousand of UK restructuring costs.

"Revenue in our International PTSA segment, which accounted for 4% of total sales, increased 40.4% year over year in the third quarter. On a constant currency basis revenue increased 30.3%. Operating earnings totaled $950 thousand, an increase of 230% compared to earnings of $288 thousand the prior year.

"Corporate expenses totaled $18.3 million, a decrease of 14.2% compared to the prior year.

Mr. Camden added, "We expect fourth quarter 2007 earnings to be in the range of $0.46 to $0.51 per share, as compared to $0.56 per share from continuing operations in the fourth quarter of 2006. Last year the fourth quarter benefited from an unusually low 11.3% effective tax rate. Not included in this guidance are planned restructuring costs in our Americas operations.

"We have completed our UK restructuring at a total cost of approximately $6.0 million, or $0.16 per share. In addition, we plan to complete our restructuring of our Americas operations in the fourth quarter. The full year charge will total approximately $2.1 million pre tax, or about $0.03 per share, including approximately $600 thousand pre tax, or about $0.01 per share, in the fourth quarter of 2007.

Mr. Camden concluded, "For the full year of 2007, we are currently forecasting that earnings will range between $1.61 and $1.66 per share, compared to $1.56 per share from continuing operations in 2006. The range excludes the gain on the sale of the Home Care business and the UK and Americas restructuring costs."

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on October 23, 2007 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S.                    1-800-288-8960
International           1-612-288-0337

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website: www.kellyservices.com

This release contains statements that are forward looking in nature and accordingly, are subject to risks and uncertainties. These factors include: competition, changing market and economic conditions, currency fluctuations, changes in laws and regulations, including tax laws, and other factors discussed in this release and in the company's filings with the Securities and Exchange Commission. Actual results may differ materially from any projections contained herein.

Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a world leader in human resources solutions headquartered in Troy, Michigan, offering temporary staffing services, outsourcing, vendor on-site and full-time placement. Kelly operates in 33 countries and territories. Kelly provides employment to more than 750,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, creative services, light industrial, education, and health care. Revenue in 2006 was $5.5 billion. Visit www.kellyservices.com.

                  KELLY SERVICES, INC. AND SUBSIDIARIES
                          STATEMENTS OF EARNINGS
      FOR THE 13 WEEKS ENDED SEPTEMBER 30, 2007 AND OCTOBER 1, 2006
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                  2007         2006       Change   % Change
                              -----------  -----------  ---------  ------
Revenue from services         $ 1,425,298  $ 1,396,911  $  28,387     2.0 %

Cost of services                1,178,419    1,166,061     12,358     1.1
                              -----------  -----------  ---------  ------

Gross profit                      246,879      230,850     16,029     6.9

Selling, general and
 administrative expenses          226,099      207,870     18,229     8.8
                              -----------  -----------  ---------  ------

Earnings from operations           20,780       22,980     (2,200)   (9.6)

Other income, net                     587          348        239    68.7
                              -----------  -----------  ---------  ------

Earnings from continuing
 operations before taxes           21,367       23,328     (1,961)   (8.4)

Income taxes                        6,685        6,893       (208)   (3.0)
                              -----------  -----------  ---------  ------

Earnings from continuing
 operations                        14,682       16,435     (1,753)  (10.7)

Earnings from discontinued
 operations, net of tax               459        1,383       (924)  (66.8)
                              -----------  -----------  ---------  ------

Net earnings                  $    15,141  $    17,818  $  (2,677)  (15.0)%
                              ===========  ===========  =========  ======

Basic earnings per share
    Earnings from continuing
     operations               $      0.40  $      0.46  $   (0.06)  (13.0)%
    Earnings from
     discontinued operations         0.01         0.04      (0.03)  (75.0)
                              -----------  -----------  ---------  ------
    Net earnings              $      0.41  $      0.49  $   (0.08)  (16.3)%
                              ===========  ===========  =========  ======

Diluted earnings per share
    Earnings from continuing
     operations               $      0.40  $      0.45  $   (0.05)  (11.1)%
    Earnings from
     discontinued operations         0.01         0.04      (0.03)  (75.0)
                              -----------  -----------  ---------  ------
    Net earnings              $      0.41  $      0.49  $   (0.08)  (16.3)%
                              ===========  ===========  =========  ======


STATISTICS:

Gross profit rate                    17.3%        16.5%       0.8%

Expenses as a % of revenue           15.9         14.9        1.0

% Return -  Earnings from
 operations                           1.5          1.6       (0.1)
      Earnings from continuing
       operations before taxes        1.5          1.7       (0.2)
      Earnings from continuing
       operations                     1.0          1.2       (0.2)
      Net earnings                    1.1          1.3       (0.2)

Effective income tax rate            31.3%        29.5%       1.8%

Average number of shares
 outstanding (thousands):
   Basic                           36,500       35,997
   Diluted                         36,537       36,225




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                          STATEMENTS OF EARNINGS
      FOR THE 39 WEEKS ENDED SEPTEMBER 30, 2007 AND OCTOBER 1, 2006
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                  2007         2006       Change  % Change
                              -----------  -----------  ---------  ------
Revenue from services         $ 4,191,830  $ 4,125,402  $  66,428     1.6 %


Cost of services                3,468,177    3,458,168     10,009     0.3
                              -----------  -----------  ---------  ------

Gross profit                      723,653      667,234     56,419     8.5

Selling, general and
 administrative expenses          670,114      611,494     58,620     9.6
                              -----------  -----------  ---------  ------

Earnings from operations           53,539       55,740     (2,201)   (3.9)

Other income, net                   2,190          853      1,337   156.7
                              -----------  -----------  ---------  ------

Earnings from continuing
 operations before taxes           55,729       56,593       (864)   (1.5)

Income taxes                       20,478       20,136        342     1.7
                              -----------  -----------  ---------  ------

Earnings from continuing
 operations                        35,251       36,457     (1,206)   (3.3)

Earnings from discontinued
 operations, net of tax             7,134        2,592      4,542   175.2
                              -----------  -----------  ---------  ------

Net earnings                  $    42,385  $    39,049  $   3,336     8.5 %
                              ===========  ===========  =========  ======

Basic earnings per share
    Earnings from continuing
     operations               $      0.96  $      1.01  $   (0.05)   (5.0)%
    Earnings from
     discontinued operations         0.20         0.07       0.13   185.7
                              -----------  -----------  ---------  ------
    Net earnings              $      1.16  $      1.09  $    0.07     6.4 %
                              ===========  ===========  =========  ======

Diluted earnings per share
    Earnings from continuing
     operations               $      0.96  $      1.01  $   (0.05)   (5.0)%
    Earnings from
     discontinued operations         0.19         0.07       0.12   171.4
                              -----------  -----------  ---------  ------
    Net earnings              $      1.15  $      1.08  $    0.07     6.5 %
                              ===========  ===========  =========  ======

STATISTICS:

Gross profit rate                    17.3%        16.2%       1.1%

Expenses as a % of revenue           16.0         14.8        1.2

% Return -  Earnings from
 operations                           1.3          1.4       (0.1)
      Earnings from continuing
       operations before taxes        1.3          1.4       (0.1)
      Earnings from continuing
       operations                     0.8          0.9       (0.1)
      Net earnings                    1.0          0.9        0.1

Effective income tax rate            36.7%        35.6%       1.1%

Average number of shares
 outstanding (thousands):
   Basic                           36,557       35,937
   Diluted                         36,843       36,226




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                     RESULTS OF OPERATIONS BY SEGMENT
                                (UNAUDITED)
                        (In thousands of dollars)


                                              Third Quarter
                                  2007         2006       Change  % Change
                              -----------  -----------  ---------  ------

Revenue from Services:
Americas - Commercial         $   682,534  $   723,762  $ (41,228)   (5.7)%
Americas - PTSA                   277,859      273,482      4,377     1.6
                              -----------  -----------  ---------  ------
   Total Americas                 960,393      997,244    (36,851)   (3.7)

International - Commercial        412,292      362,187     50,105    13.8
International - PTSA               52,613       37,480     15,133    40.4
                              -----------  -----------  ---------  ------
   Total International            464,905      399,667     65,238    16.3

                              $ 1,425,298  $ 1,396,911  $  28,387     2.0 %
                              ===========  ===========  =========  ======


Earnings from Operations (As Reported):
Americas - Commercial         $    19,001  $    25,808  $  (6,807)  (26.4)%
Americas - PTSA                    14,532       15,003       (471)   (3.1)
                              -----------  -----------  ---------  ------
   Total Americas                  33,533       40,811     (7,278)  (17.8)

International - Commercial          4,605        3,209      1,396    43.5
International - PTSA                  950          288        662   229.9
                              -----------  -----------  ---------  ------
   Total International              5,555        3,497      2,058    58.9

Corporate Expense                 (18,308)     (21,328)     3,020    14.2
                              -----------  -----------  ---------  ------


                              $    20,780  $    22,980  $  (2,200)   (9.6)%
                              ===========  ===========  =========  ======


Earnings from Operations (Excluding the Restructuring Charges):
Americas - Commercial         $    20,512  $    25,808  $  (5,296)  (20.5)%
Americas - PTSA                    14,532       15,003       (471)   (3.1)
                              -----------  -----------  ---------  ------
   Total Americas                  35,044       40,811     (5,767)  (14.1)

International - Commercial          5,558        3,209      2,349    73.2
International - PTSA                  950          288        662   229.9
                              -----------  -----------  ---------  ------
   Total International              6,508        3,497      3,011    86.1

Corporate Expense                 (18,308)     (21,328)     3,020    14.2
                              -----------  -----------  ---------  ------


                              $    23,244  $    22,980  $     264     1.1 %
                              ===========  ===========  =========  ======




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                     RESULTS OF OPERATIONS BY SEGMENT
                                (UNAUDITED)
                        (In thousands of dollars)


                                         September Year to Date
                                 2007         2006       Change   % Change
                             -----------  -----------  ----------  ------

Revenue from Services:
Americas - Commercial        $ 2,063,559  $ 2,176,961  $ (113,402)   (5.2)%
Americas - PTSA                  812,922      830,982     (18,060)   (2.2)
                             -----------  -----------  ----------  ------
   Total Americas              2,876,481    3,007,943    (131,462)   (4.4)

International - Commercial     1,168,924    1,013,698     155,226    15.3
International - PTSA             146,425      103,761      42,664    41.1
                             -----------  -----------  ----------  ------
   Total International         1,315,349    1,117,459     197,890    17.7

                             $ 4,191,830  $ 4,125,402  $   66,428     1.6 %
                             ===========  ===========  ==========  ======


Earnings from Operations (As Reported):
Americas - Commercial        $    63,051  $    73,321  $  (10,270)  (14.0)%
Americas - PTSA                   41,745       43,005      (1,260)   (2.9)
                             -----------  -----------  ----------  ------
   Total Americas                104,796      116,326     (11,530)   (9.9)

International - Commercial         4,406          312       4,094      NM
International - PTSA               1,742          390       1,352   346.7
                             -----------  -----------  ----------  ------
   Total International             6,148          702       5,446   775.8

Corporate Expense                (57,405)     (61,288)      3,883     6.3
                             -----------  -----------  ----------  ------


                             $    53,539  $    55,740  $   (2,201)   (3.9)%
                             ===========  ===========  ==========  ======


Earnings from Operations (Excluding the Restructuring Charges):
Americas - Commercial        $    64,562  $    73,321  $   (8,759)  (11.9)%
Americas - PTSA                   41,745       43,005      (1,260)   (2.9)
                             -----------  -----------  ----------  ------
   Total Americas                106,307      116,326     (10,019)   (8.6)

International - Commercial        10,441          312      10,129      NM
International - PTSA               1,742          390       1,352   346.7
                             -----------  -----------  ----------  ------
   Total International            12,183          702      11,481      NM

Corporate Expense                (57,405)     (61,288)      3,883     6.3
                             -----------  -----------  ----------  ------


                             $    61,085  $    55,740  $    5,345     9.6 %
                             ===========  ===========  ==========  ======




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    RECONCILIATION OF CONSTANT CURRENCY
          REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
                                (UNAUDITED)
                        (In thousands of dollars)


                                              Third Quarter
                                  2007        2006       Change   % Change
                               ----------- ----------- ----------  ------
Revenue from services -
 constant currency*:
Americas - Commercial          $   678,265 $   723,762 $  (45,497)   (6.3)%
Americas - PTSA                    277,611     273,482      4,129     1.5
                               ----------- ----------- ----------  ------
   Total Americas - constant
    currency*                      955,876     997,244    (41,368)   (4.1)

International - Commercial         383,372     362,187     21,185     5.8

International - PTSA                48,835      37,480     11,355    30.3
                               ----------- ----------- ----------  ------
   Total International -
    constant currency*             432,207     399,667     32,540     8.1

   Total revenue from services
    - constant currency*         1,388,083   1,396,911     (8,828)   (0.6)%
Foreign currency impact             37,215                 37,215
                               ----------- ----------- ----------  ------

   Revenue from services       $ 1,425,298 $ 1,396,911 $   28,387     2.0 %
                               =========== =========== ==========  ======



                                           September Year to Date
                                  2007        2006       Change   % Change
                               ----------- ----------- ----------  ------
Revenue from services -
 constant currency*:
Americas - Commercial          $ 2,059,003 $ 2,176,961 $ (117,958)   (5.4)%
Americas - PTSA                    812,639     830,982    (18,343)   (2.2)
                               ----------- ----------- ----------  ------
   Total Americas - constant
    currency*                    2,871,642   3,007,943   (136,301)   (4.5)

International - Commercial       1,086,089   1,013,698     72,391     7.1
International - PTSA               135,821     103,761     32,060    30.9
                               ----------- ----------- ----------  ------
   Total International -
    constant currency*           1,221,910   1,117,459    104,451     9.3

   Total revenue from services
    - constant currency*         4,093,552   4,125,402    (31,850)   (0.8)%
Foreign currency impact             98,278                 98,278
                               ----------- ----------- ----------  ------

   Revenue from services       $ 4,191,830 $ 4,125,402 $   66,428     1.6 %
                               =========== =========== ==========  ======


  * Information on constant currencies is provided to allow investors to
    separate the impact of foreign currency translations on reported
    results.  Constant currency results are calculated by translating the
    current year results at prior year average exchange rates.




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    SUMMARY OF DISCONTINUED OPERATIONS
                                (UNAUDITED)
                        (In thousands of dollars)


                                                              September
                                          Third Quarter     Year to Date
                                        ----------------- -----------------
                                          2007     2006     2007     2006
                                        -------- -------- -------- --------


Revenue from services                   $      - $ 21,893 $ 14,777 $ 69,900


Operating income from discontinued
 operations                             $    746 $  2,272 $  1,573 $  4,275

Less:  Income taxes                          287      889      605    1,683
                                        -------- -------- -------- --------

Earnings from discontinued operations,
 net of tax                                  459    1,383      968    2,592
                                        -------- -------- -------- --------

Gain on sale of discontinued operations        -        -   10,153        -
Less:  Income taxes                            -        -    3,987        -
                                        -------- -------- -------- --------
Gain on sale of discontinued
 operations, net of tax                        -        -    6,166        -
                                        -------- -------- -------- --------

Discontinued operations, net of tax     $    459 $  1,383 $  7,134 $  2,592
                                        ======== ======== ======== ========


Effective March 31, 2007, the Company sold Kelly Home Care ("KHC"), a
wholly owned subsidiary. Effective December 31, 2006, the Company sold
Kelly Staff Leasing ("KSL"), a wholly owned subsidiary. The operating
results for KHC and KSL, as well as the gain on the sale of KHC, have been
excluded from earnings from continuing operations.  This schedule provides
information on KHC's and KSL's results from operations for the third
quarter of 2007 and 2006 and September year to date 2007 and 2006 as well
as the gain on the sale of KHC, all of which are included as discontinued
operations on the face of the statements of earnings.




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                              BALANCE SHEETS
                               (UNAUDITED)
                        (In thousands of dollars)


                                    September 30, December 31,  October 1,
                                         2007         2006         2006
                                     -----------  -----------  -----------
Current Assets
   Cash and equivalents              $   102,982  $   118,428  $    77,493
   Trade accounts receivable, less
    allowances of $18,357, $16,818
    and $17,840, respectively            903,566      838,246      878,336
   Prepaid expenses and other
    current assets                        49,734       45,316       45,076
   Deferred taxes                         30,342       29,543       34,693
                                     -----------  -----------  -----------
      Total current assets             1,086,624    1,031,533    1,035,598

Property and Equipment, Net              175,106      170,288      162,791

Noncurrent Deferred Taxes                 37,458       35,437       23,128

Goodwill, Net                            122,917       96,504       94,592

Other Assets                             147,570      135,662      113,599

                                     -----------  -----------  -----------
Total Assets                         $ 1,569,675  $ 1,469,424  $ 1,429,708
                                     ===========  ===========  ===========

Current Liabilities
   Short-term borrowings             $    75,489  $    68,928  $    58,375
   Accounts payable                      161,843      132,819      125,213
   Accrued payroll and related taxes     286,056      274,284      293,223
   Accrued insurance                      25,495       24,191       32,728
   Income and other taxes                 65,073       68,055       63,559
                                     -----------  -----------  -----------
      Total current liabilities          613,956      568,277      573,098

Noncurrent Liabilities
   Accrued insurance                      59,489       57,277       53,294
   Accrued retirement benefits            81,249       71,990       63,641
   Other long-term liabilities            17,865       13,323       15,238
                                     -----------  -----------  -----------

      Total noncurrent liabilities       158,603      142,590      132,173

Stockholders' Equity
   Common stock                           40,116       40,116       40,116
   Treasury stock                        (84,323)     (78,841)     (86,665)
   Paid-in capital                        33,406       32,048       28,955
   Earnings invested in the business     763,577      735,104      715,249
   Accumulated other comprehensive
    income                                44,340       30,130       26,782
                                     -----------  -----------  -----------
      Total stockholders' equity         797,116      758,557      724,437
                                     -----------  -----------  -----------

Total Liabilities and Stockholders'
 Equity                              $ 1,569,675  $ 1,469,424  $ 1,429,708
                                     ===========  ===========  ===========


STATISTICS:
   Working Capital                   $   472,668  $   463,256  $   462,500
   Current Ratio                             1.8          1.8          1.8
   Debt-to-capital %                         8.7%         8.3%         7.5%
   Global Days Sales Outstanding
      Quarter                                 58           54           57
      Year-to-date                            59           55           58




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                         STATEMENTS OF CASH FLOWS
      FOR THE 39 WEEKS ENDED SEPTEMBER 30, 2007 AND OCTOBER 1, 2006
                                (UNAUDITED)
                        (In thousands of dollars)



                                                         2007       2006
                                                      ---------  ---------

Cash flows from operating activities
   Net earnings                                       $  42,385  $  39,049
   Noncash adjustments:
      Depreciation and amortization                      31,051     30,949
      Provision for bad debts                             4,926      3,981
      Stock-based compensation                            2,683      3,913
      Gain on sale of discontinued operations            (6,166)         -
      Other, net                                           (422)       (99)
   Changes in operating assets and liabilities          (24,808)   (18,679)
                                                      ---------  ---------

      Net cash from operating activities                 49,649     59,114
                                                      ---------  ---------

Cash flows from investing activities
   Capital expenditures                                 (33,567)   (26,111)
   Proceeds from sale of discontinued operations         12,500          -
   Acquisition of companies, net of cash received       (25,255)    (4,531)
   Other investing activities                              (586)      (541)

      Net cash from investing activities                (46,908)   (31,183)
                                                      ---------  ---------


Cash flows from financing activities
   Net decrease in revolving line of credit              (3,469)    (5,369)
   Proceeds from short-term debt                          8,223      5,080
   Dividend payments                                    (14,244)   (11,833)
   Purchase of treasury stock                           (12,500)         -
   Stock options and other stock sales                    5,760      1,683
   Other financing activities                            (5,767)    (4,504)
                                                      ---------  ---------

      Net cash from financing activities                (21,997)   (14,943)
                                                      ---------  ---------

Effect of exchange rates on cash and equivalents          3,810        806
                                                      ---------  ---------

Net change in cash and equivalents                      (15,446)    13,794
Cash and equivalents at beginning of period             118,428     63,699
                                                      ---------  ---------


Cash and equivalents at end of period                 $ 102,982  $  77,493
                                                      =========  =========



                  KELLY SERVICES, INC. AND SUBSIDIARIES
                          REVENUE FROM SERVICES
                                (UNAUDITED)
                        (In thousands of dollars)


                                            Third Quarter
                            -----------------------------------------------
                                                         % Change
                                                                 Constant
                               2007        2006         US$      Currency
                            ----------- ----------- ---------   ---------

Americas
  United States             $   854,562 $   890,940      (4.1)%      (4.1)%
  Canada                         67,541      69,619      (3.0)       (9.5)
  Puerto Rico                    19,171      18,338       4.5         4.5
  Mexico                         19,119      18,347       4.2         4.4
                            ----------- ----------- ---------   ---------
Total Americas                  960,393     997,244      (3.7)       (4.1)

EMEA
  United Kingdom                119,385     111,687       6.9        (0.9)
  France                         82,498      72,574      13.7         5.4
  Switzerland                    49,363      46,945       5.2         1.8
  Italy                          28,795      28,638       0.5        (6.9)
  Norway                         21,902      17,118      27.9        16.6
  Russia                         17,542      14,256      23.0        17.0
  Germany                        16,605      11,268      47.4        36.6
  Other                          38,071      30,927      23.1        13.8
                            ----------- ----------- ---------   ---------
Total EMEA                      374,161     333,413      12.2         4.6

APAC
  Australia                      35,169      29,958      17.4         4.8
  Singapore                      16,354      12,702      28.8        23.6
  Other                          39,221      23,594      66.2        53.6
                            ----------- ----------- ---------   ---------
Total APAC                       90,744      66,254      37.0        25.8

Total Kelly Services, Inc.  $ 1,425,298 $ 1,396,911       2.0%       (0.6)%
                            =========== =========== =========   =========




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                          REVENUE FROM SERVICES
                                (UNAUDITED)
                        (In thousands of dollars)


                                        September Year to Date
                            -----------------------------------------------
                                                          % Change
                                                                 Constant
                               2007        2006         US$      Currency
                            ----------- ----------- ---------   ---------

Americas
  United States             $ 2,573,282 $ 2,692,586      (4.4)%      (4.4)%
  Canada                        191,009     205,986      (7.3)       (9.7)
  Puerto Rico                    57,341      57,577      (0.4)       (0.4)
  Mexico                         54,849      51,794       5.9         6.3
                            ----------- ----------- ---------   ---------
Total Americas                2,876,481   3,007,943      (4.4)       (4.5)

EMEA
  United Kingdom                355,790     331,239       7.4        (1.7)
  France                        227,924     201,991      12.8         4.5
  Switzerland                   130,752     114,595      14.1        10.6
  Italy                          92,781      87,757       5.7        (2.1)
  Norway                         56,523      40,832      38.4        29.5
  Russia                         48,876      37,574      30.1        23.1
  Germany                        45,502      29,386      54.8        43.4
  Other                         110,807      85,834      29.1        19.3
                            ----------- ----------- ---------   ---------
Total EMEA                    1,068,955     929,208      15.0         6.9

APAC
  Australia                      96,107      87,344      10.0         0.0
  Singapore                      44,074      37,934      16.2        10.9
  Other                         106,213      62,973      68.7        57.9
                            ----------- ----------- ---------   ---------
Total APAC                      246,394     188,251      30.9        21.6

Total Kelly Services, Inc.  $ 4,191,830 $ 4,125,402       1.6%       (0.8)%
                            =========== =========== =========   =========




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    RECONCILIATION OF NON-GAAP MEASURES
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                              Third Quarter
                                ------------------------------------------
                                        2007                  2006
                                --------------------  ---------------------
                                  Amount   Per Share    Amount   Per Share
                                ---------  ---------- ---------- ---------

Earnings from continuing
 operations                     $  14,682  $     0.40 $   16,435 $    0.45
     Restructuring charges,
      net of taxes (Notes
      1 & 2)                        1,882        0.05          -         -
                                ---------  ---------- ---------- ---------
Earnings from continuing
 operations excluding
 restructuring charges, net
 of taxes                       $  16,564  $     0.45 $   16,435 $    0.45
                                =========  ========== ========== =========


                                              Third Quarter
                                ------------------------------------------
                                  2007                   2006     % Change
                                ---------             ---------- ---------

Selling, general and
 administrative expenses        $ 226,099             $  207,870
     Restructuring charges
      (Notes 1 & 2)                (2,464)                     -
                                ---------             ----------
Selling, general and
 administrative expenses
 excluding restructuring
 charges                        $ 223,635             $  207,870       7.6%
                                =========             ========== =========


Earnings from operations        $  20,780             $   22,980
     Restructuring charges
      (Notes 1 & 2)                 2,464                      -
                                ---------             ----------
Earnings from operations
 excluding restructuring
 charges                        $  23,244             $   22,980       1.1%
                                =========             ========== =========


Americas Commercial selling,
 general and administrative
 expenses                       $  88,440             $   85,971
     Americas restructuring
      charge (Note 1)              (1,511)                     -
                                ---------             ----------
Americas Commercial selling,
 general and administrative
 expenses excluding the
 Americas restructuring
 charge                         $  86,929             $   85,971       1.1%
                                =========             ========== =========


Americas Commercial Earnings
 from operations                $  19,001             $   25,808
     Americas restructuring
      charge (Note 1)               1,511                      -
                                ---------             ----------
Americas Commercial earnings
 excluding the Americas
 restructuring charge           $  20,512             $   25,808   (20.5%)
                                =========             ========== =========



                  KELLY SERVICES, INC. AND SUBSIDIARIES
              RECONCILIATION OF NON-GAAP MEASURES (continued)
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                                      Third Quarter
                                              ----------------------------
                                                2007      2006    % Change
                                              --------  --------- --------

 Americas Earnings from operations            $ 33,533  $  40,811
     Americas restructuring charge (Note 1)      1,511          -
                                              --------  ---------

 Americas earnings excluding the Americas
  restructuring charge                        $ 35,044  $  40,811  (14.1%)
                                              ========  ========= ========

 International Commercial selling, general
  and administrative expenses                 $ 66,822  $  58,598
     UK restructuring charge (Note 2)             (953)         -
                                              --------  ---------
  International Commercial selling, general
   and administrative expenses excluding the
   UK restructuring charge                    $ 65,869  $  58,598     12.4%
                                              ========  ========= ========

 International Commercial Earnings from
  operations                                  $  4,605  $   3,209
     UK restructuring charge (Note 2)              953          -
                                              --------  ---------
  International Commercial earnings excluding
   the UK restructuring charge                $  5,558  $   3,209     73.2%
                                              ========  ========= ========

 International Earnings from operations       $  5,555  $   3,497
     UK restructuring charge (Note 2)              953          -
                                              --------  ---------
  International earnings excluding the UK
   restructuring charge                       $  6,508  $   3,497     86.1%
                                              ========  ========= ========





                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    RECONCILIATION OF NON-GAAP MEASURES
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                          September Year to Date
                                ------------------------------------------
                                        2007                  2006
                                --------------------  ---------------------
                                  Amount   Per Share    Amount   Per Share
                                ---------  ---------- ---------- ---------

Earnings from continuing
 operations                     $  35,251  $     0.96 $   36,457 $    1.01
     Restructuring charges,
     net of taxes (Notes 1 & 2)     6,964        0.19          -         -
                                ---------  ---------- ---------- ---------
Earnings from continuing
 operations excluding
 restructuring charges, net
 of taxes                       $  42,215  $     1.15 $   36,457 $    1.01
                                =========  ========== ========== =========

                                          September Year to Date
                                ------------------------------------------
                                  2007                   2006    % Change
                                ---------             ---------- ---------

Selling, general and
 administrative expenses        $ 670,114             $  611,494
     Restructuring charges
      (Notes 1 & 2)                (7,546)                     -
                                ---------             ----------
Selling, general and
 administrative expenses
 excluding restructuring
 charges                        $ 662,568             $  611,494       8.4%
                                =========             ========== =========

Earnings from operations        $  53,539             $   55,740
     Restructuring charges
      (Notes 1 & 2)                 7,546                      -
                                ---------             ----------
Earnings from operations
 excluding restructuring
 charges                        $  61,085             $   55,740       9.6%
                                =========             ========== =========

Americas Commercial selling,
 general and administrative
 expenses                       $ 262,530             $  257,036
     Americas restructuring
      charge (Note 1)              (1,511)                     -
                                ---------             ----------
Americas Commercial selling,
 general and administrative
 expenses excluding the
 Americas restructuring
 charge                         $ 261,019             $  257,036       1.5%
                                =========             ========== =========

Americas Commercial Earnings
 from operations                $  63,051             $   73,321
     Americas restructuring
      charge (Note 1)               1,511                      -
                                ---------             ----------
Americas Commercial Earnings
 excluding the Americas
 restructuring charge           $  64,562             $   73,321   (11.9%)
                                =========             ========== =========






                  KELLY SERVICES, INC. AND SUBSIDIARIES
              RECONCILIATION OF NON-GAAP MEASURES (continued)
                                (UNAUDITED)
              (In thousands of dollars except per share data)



                                               September Year to Date
                                           -------------------------------
                                             2007       2006     % Change
                                           ---------  ---------- ---------

 Americas Earnings from operations         $ 104,796  $  116,326
     Americas restructuring charge
     (Note 1)                                  1,511           -
                                           ---------  ----------
  Americas Earnings excluding the Americas
   restructuring charge                    $ 106,307  $  116,326    (8.6%)
                                           =========  ========== =========


 International Commercial selling, general
  and administrative expenses              $ 199,111  $  171,205
     UK restructuring charge (Note 2)         (6,035)          -
                                           ---------  ----------
  International Commercial selling,
   general and administrative expenses
   excluding the UK restructuring charge   $ 193,076  $  171,205      12.8%
                                           =========  ========== =========


 International Commercial Earnings from
  operations                               $   4,406  $      312
     UK restructuring charge (Note 2)          6,035           -
                                           ---------  ----------
  International Commercial Earnings
   excluding the UK restructuring charge   $  10,441  $      312        NM
                                           =========  ========== =========


 International Earnings from operations    $   6,148  $      702
     UK restructuring charge (Note 2)          6,035           -
                                           ---------  ----------
  International Earnings excluding the UK
   restructuring charge                    $  12,183  $      702        NM
                                           =========  ========== =========




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                   RECONCILIATION OF NON-GAAP MEASURES
                             (UNAUDITED)
            (In thousands of dollars except per share data)


Management believes that the non-GAAP (Generally Accepted Accounting
Principles) information excluding the restructuring charges is useful to
understand the Company's fiscal 2007 financial performance and increases
comparability with prior year results.  Specifically, Management believes
that excluding this item allows for a more meaningful comparison of current
period operating performance with the operating results of prior periods.
These non-GAAP measures may have limitations as analytical tools because
they exclude items which can have a material impact on cash flow and
earnings per share.  As a result, Management considers these measures,
along with reported results, when it reviews and evaluates the Company's
financial performance.  Management believes that these measures provide
greater transparency to investors and provide insight into how Management
is evaluating the Company's financial performance. Non-GAAP measures should
not be considered a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.

(1)  The Americas restructuring charge is comprised of facility exit costs
associated with the closure of 42 branch locations and the accelerated
depreciation of the leasehold improvements and personal property at the
impacted locations.

(2)  The UK restructuring charge is comprised of facility exit costs
associated with the closure of 22 branch locations and the accelerated
depreciation of the leasehold improvements and personal property at the
impacted locations.

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