SOURCE: Kelly Services, Inc.

Kelly Services, Inc.

April 28, 2009 07:30 ET

Kelly Services Reports 1st Quarter 2009 Results

TROY, MI--(Marketwire - April 28, 2009) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a world leader in workforce management services and human resources solutions, today announced results for the first quarter of 2009.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2009 totaled $1.0 billion, a 25% decrease compared to the corresponding quarter in 2008. On a constant currency basis, revenue decreased by 19%.

Losses from operations for the first quarter of 2009 totaled $30.6 million, compared to earnings from operations of $12.9 million reported for the first quarter of 2008. Included in the results from operations for the first quarter 2009 are $5.4 million of restructuring costs relating to the Company's UK operations. The UK restructuring charge is part of a plan to further consolidate and close branches in the UK during 2009.

Diluted losses per share from continuing operations in the first quarter of 2009 were $0.46, compared to first quarter 2008 earnings of $0.23 per share. The UK restructuring charge totaled $0.15 per share in 2009.

Commenting on the first quarter results, Camden called the Company's loss disappointing, but not unexpected given the condition of the global labor market and widespread economic slowdown.

"In spite of the challenges we're facing, we've made significant progress in reducing operating costs by 13%, while pursuing our strategic plan aimed at building long-term value for our stakeholders.

"Our ability to remain focused on diversifying globally, expanding our professional and technical staffing, and growing our outsourcing and consulting services, in this bad economy, is critical to our future success," said Camden.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on April 28, 2009 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S.                1 800 288-9626
International       1 651 291-5254

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 forward looking statements contained herein.

A reconciliation of certain non-GAAP financial measures discussed in this release is included in the attached financial information schedules.

About Kelly Services

Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a world leader in workforce management services and human resources solutions headquartered in Troy, Michigan, offering temporary staffing services, outsourcing, vendor on-site and full-time placement to clients on a global basis. Kelly provides employment to nearly 650,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, creative services, light industrial, education, and health care. Revenue in 2008 was $5.5 billion. Visit www.kellyservices.com.

                  KELLY SERVICES, INC. AND SUBSIDIARIES
                          STATEMENTS OF EARNINGS
         FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
                                (UNAUDITED)
              (In millions of dollars except per share data)




                                  2009        2008      Change   % Change
                                ---------  ---------- ---------  --------
Revenue from services           $ 1,042.6  $  1,388.4 $  (345.8)    (24.9)%

Cost of services                    867.1     1,138.5    (271.4)    (23.8)
                                ---------  ---------- ---------  --------

Gross profit                        175.5       249.9     (74.4)    (29.8)

Selling, general and
 administrative expenses            206.1       237.0     (30.9)    (13.0)
                                ---------  ---------- ---------  --------

(Loss) earnings from operations     (30.6)       12.9     (43.5)   (336.7)

Other income, net                     1.3           -       1.3        NM
                                ---------  ---------- ---------  --------

(Loss) earnings from continuing
 operations before taxes            (29.3)       12.9     (42.2)   (327.5)

Income taxes                        (13.2)        4.9     (18.1)   (370.1)
                                ---------  ---------- ---------  --------

(Loss) earnings from continuing
 operations                         (16.1)        8.0     (24.1)   (301.4)

Earnings from discontinued
 operations, net of tax               0.6         0.2       0.4     146.6
                                ---------  ---------- ---------  --------

Net (loss) earnings             $   (15.5) $      8.2 $   (23.7)   (288.4)%
                                =========  ========== =========  ========

Basic (loss) earnings per share
 on common stock
  (Loss) earnings from
   continuing operations        $   (0.46) $     0.23 $   (0.69)   (300.0)%
  Earnings from discontinued
   operations                        0.02        0.01      0.01     100.0
  Net (loss) earnings               (0.45)       0.23     (0.68)   (295.7)

Diluted (loss) earnings per
 share on common stock
  (Loss) earnings from
   continuing operations        $   (0.46) $     0.23 $   (0.69)   (300.0)%
  Earnings from discontinued
   operations                        0.02        0.01      0.01     100.0
  Net (loss) earnings               (0.45)       0.23     (0.68)   (295.7)


STATISTICS:

Gross profit rate                    16.8%      18.0%       (1.2) pts.

Selling, general and
 administrative expenses:
    % of revenue                     19.8       17.1         2.7
    % of gross profit               117.5       94.8        22.7

% Return - (Loss) earnings
 from operations                     (2.9)       0.9        (3.8)
           (Loss) earnings
            from continuing
            operations before
            taxes                    (2.8)       0.9        (3.7)
           (Loss) earnings
            from continuing
            operations               (1.5)       0.6        (2.1)
           Net (loss) earnings       (1.5)       0.6        (2.1)

Effective income tax rate            45.1%      38.0%         7.1 pts.





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

                                          First Quarter
                        -------------------------------------------------
                                                                Constant
                                                                Currency
                           2009         2008        Change       Change
                        ----------   ----------   ----------   ----------
Americas Commercial
  Revenue from services
   (including fee-based
   income)              $    482.4   $    642.7        (24.9)%      (22.8)%
  Fee-based income             1.8          4.2        (57.0)       (52.7)

  Earnings from
   operations                  0.5         22.2        (97.8)

  Gross profit rate           15.2%        16.3%        (1.1) pts.
  Expense rates:
    % of revenue              15.1         12.9          2.2
    % of gross profit         99.3         78.8         20.5
  Operating margin             0.1          3.5         (3.4)

Americas PT
  Revenue from services
   (including fee-based
   income)              $    197.4   $    238.6        (17.3)%      (17.0)%
  Fee-based income             2.8          5.3        (47.8)       (47.7)

  Earnings from
   operations                  5.3         14.1        (62.7)

  Gross profit rate           15.9%        17.7%        (1.8) pts.
  Expense rates:
    % of revenue              13.3         11.8          1.5
    % of gross profit         83.3         66.7         16.6
  Operating margin             2.7          5.9         (3.2)

EMEA Commercial
  Revenue from services
   (including fee-based
   income)              $    216.6   $    321.9        (32.7)%      (17.9)%
  Fee-based income             4.7         10.7        (55.2)       (44.9)

  Earnings from
   operations                (12.1)        (1.6)          NM
  Earnings from
   operations
   (excluding
   restructuring
   charges)                   (6.7)        (1.6)      (325.0)

  Gross profit rate           15.9%        17.3%        (1.4) pts.
  Expense rates:
    % of revenue              21.5         17.8          3.7
    % of gross profit        135.0        102.8         32.2
  Operating margin            (5.6)        (0.5)        (5.1)

EMEA PT
  Revenue from services
   (including fee-based
   income)              $     32.8   $     43.8        (25.0)%       (9.7)%
  Fee-based income             4.4          6.9        (36.6)       (21.2)

  Earnings from
   operations                 (0.6)         1.0       (155.6)

  Gross profit rate           28.6%        29.8%        (1.2) pts.
  Expense rates:
    % of revenue              30.4         27.4          3.0
    % of gross profit        106.1         92.1         14.0
  Operating margin            (1.7)         2.3         (4.0)





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

                                           First Quarter
                        -------------------------------------------------
                                                                Constant
                                                                Currency
                            2009         2008       Change       Change
                        -----------   ----------  ----------   ----------
APAC Commercial
  Revenue from services
   (including fee-based
   income)              $      64.4   $     86.7       (25.7)%      (11.6)%
  Fee-based income              2.2          4.3       (48.2)       (40.5)

  Earnings from
   operations                  (1.3)           -          NM

  Gross profit rate            14.7%        16.7%       (2.0) pts.
  Expense rates:
    % of revenue               16.8         16.7         0.1
    % of gross profit         114.2         99.6        14.6
  Operating margin             (2.1)         0.1        (2.2)

APAC PT
  Revenue from services
   (including fee-based
   income)              $       6.2   $      8.5       (26.8)%      (16.7)%
  Fee-based income              1.0          1.4       (31.5)       (21.7)

  Earnings from
   operations                  (0.3)        (0.2)      (17.1)

  Gross profit rate            30.8%        30.7%        0.1  pts.
  Expense rates:
    % of revenue               34.7         33.2         1.5
    % of gross profit         112.9        108.1         4.8
  Operating margin             (4.0)        (2.5)       (1.5)

OCG
  Revenue from services
   (including fee-based
   income)              $      48.7   $     51.8        (6.1)%       (3.2)%
  Fee-based income              6.6          6.1         8.4         16.5

  Earnings from
   operations                  (1.2)         1.9      (164.6)

  Gross profit rate            32.7%        33.1%       (0.4) pts.
  Expense rates:
    % of revenue               35.2         29.5         5.7
    % of gross profit         107.5         89.2        18.3
  Operating margin             (2.5)         3.6        (6.1)

Corporate Expense       $     (20.9)  $    (24.5)       14.5 %





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


                                                      December
                                           March 29,     28,     March 30,
                                             2009       2008       2008
                                           ---------  ---------  ---------
Current Assets
  Cash and equivalents                     $   115.4  $   118.3  $    87.9
  Trade accounts receivable, less
   allowances of $17.2, $17.0 and
   $18.4, respectively                         706.3      815.8      931.4
  Prepaid expenses and other current
   assets                                       55.8       62.0       58.3
  Deferred taxes                                29.2       31.9       27.0
                                           ---------  ---------  ---------
            Total current assets               906.7    1,028.0    1,104.6

Property and Equipment, Net                    143.1      151.3      175.6

Noncurrent Deferred Taxes                       39.8       40.0       43.2

Goodwill, Net                                  117.8      117.8      145.1

Other Assets                                   107.5      120.2      154.3

                                           ---------  ---------  ---------
Total Assets                               $ 1,314.9  $ 1,457.3  $ 1,622.8
                                           =========  =========  =========

Current Liabilities
  Short-term borrowings                    $    16.9  $    35.2  $    47.8
  Accounts payable and accrued liabilities     220.7      244.1      218.3
  Accrued payroll and related taxes            209.5      243.2      275.9
  Accrued insurance                             25.5       26.3       22.6
  Income and other taxes                        26.3       51.8       60.7
                                           ---------  ---------  ---------
            Total current liabilities          498.9      600.6      625.3

Noncurrent Liabilities
  Long-term debt                                67.6       80.0       54.9
  Accrued insurance                             45.4       46.9       57.7
  Accrued retirement benefits                   59.2       61.6       75.1
  Other long-term liabilities                   15.2       15.3       16.2
                                           ---------  ---------  ---------

            Total noncurrent liabilities       187.4      203.8      203.9

Stockholders' Equity
  Common stock                                  40.1       40.1       40.1
  Treasury stock                              (110.5)    (111.2)    (113.4)
  Paid-in capital                               36.3       35.8       34.5
  Earnings invested in the business            660.5      676.0      780.8
  Accumulated other comprehensive income         2.2       12.2       51.6
                                           ---------  ---------  ---------
            Total stockholders' equity         628.6      652.9      793.6
                                           ---------  ---------  ---------

Total Liabilities and Stockholders' Equity $ 1,314.9  $ 1,457.3  $ 1,622.8
                                           =========  =========  =========


STATISTICS:
 Working Capital                           $   407.8  $   427.4  $   479.3
 Current Ratio                                   1.8        1.7        1.8
 Debt-to-capital %                              11.9%      15.0%      11.5%
 Global Days Sales Outstanding                    51         50         52





                  KELLY SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
                                (UNAUDITED)
                         (In millions of dollars)




                                                            2009     2008
                                                          -------  -------

Cash flows from operating activities
   Net (loss) earnings                                    $ (15.5) $   8.2
   Noncash adjustments:
     Depreciation and amortization                           10.6     11.3
     Provision for bad debts                                  1.5      1.5
     Stock-based compensation                                 1.3      1.0
     Other, net                                              (1.9)     1.0
   Changes in operating assets and liabilities               47.8      1.4
                                                          -------  -------

        Net cash from operating activities                   43.8     24.4
                                                          -------  -------

Cash flows from investing activities
   Capital expenditures                                      (2.0)    (7.3)
   Acquisition of companies, net of cash received            (0.2)    (7.5)
   Other investing activities                                   -     (0.3)

        Net cash from investing activities                   (2.2)   (15.1)
                                                          -------  -------

Cash flows from financing activities
   Net change in revolving line of credit                    (1.0)    (4.3)
   Repayment of debt                                        (22.9)       -
   Dividend payments                                            -     (4.7)
   Purchase of treasury stock                                   -     (8.0)
   Stock options and other stock sales                          -        -
   Other financing activities                               (18.7)    (1.5)
                                                          -------  -------

        Net cash from financing activities                  (42.6)   (18.5)
                                                          -------  -------

Effect of exchange rates on cash and equivalents             (1.9)     4.3
                                                          -------  -------

Net change in cash and equivalents                           (2.9)    (4.9)
Cash and equivalents at beginning of period                 118.3     92.8
                                                          -------  -------


Cash and equivalents at end of period                     $ 115.4  $  87.9
                                                          =======  =======




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


                                  First Quarter (Commercial, PT and OCG)
                                -----------------------------------------
                                                            % Change
                                                                 Constant
                                   2009       2008       US$     Currency
                                ---------- ---------- --------   --------

Americas
  United States                 $    644.8 $    820.7    (21.4)%    (21.4)%
  Canada                              40.9       61.8    (33.8)     (18.2)
  Puerto Rico                         15.7       18.8    (16.8)     (16.8)
  Mexico                              14.7       17.7    (16.6)      10.8
                                ---------- ----------
Total Americas                       716.1      919.0    (22.1)     (20.5)

EMEA
  United Kingdom                      62.6      104.9    (40.4)     (17.9)
  France                              61.7       86.6    (28.8)     (18.7)
  Switzerland                         28.5       42.2    (32.4)     (27.6)
  Italy                               18.9       35.4    (46.5)     (38.7)
  Germany                             15.4       21.4    (27.8)     (17.3)
  Russia                              13.9       20.7    (33.0)      (6.3)
  Norway                              13.1       20.0    (34.6)     (15.4)
  Portugal                            11.7          -       NM         NM
  Other                               28.2       40.4    (30.2)     (18.1)
                                ---------- ----------
Total EMEA                           254.0      371.6    (31.6)     (16.8)

APAC
  Australia                           20.4       35.7    (42.9)     (22.3)
  Singapore                           14.9       17.8    (16.1)     (10.1)
  Malaysia                            12.1       14.8    (18.0)      (7.9)
  Other                               25.1       29.5    (15.1)      (2.9)
                                ---------- ----------
Total APAC                            72.5       97.8    (25.9)     (12.1)

Total Kelly Services, Inc.      $  1,042.6 $  1,388.4    (24.9)%    (18.9)%
                                ========== ==========





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


                                            First Quarter
                              -------------------------------------------
                                      2009                  2008
                              --------------------  ---------------------
                                Amount   Per Share    Amount   Per Share
                              ---------  ---------  ---------  ----------

(Loss) earnings from
 continuing operations        $   (16.1) $   (0.46) $     8.0  $     0.23

     U.K. restructuring
      charge (Note 1)               5.4      (0.15)         -           -

                              ---------             ---------
(Loss) earnings from
 continuing operations
 excluding the U.K.
 restructuring charge,
 net of taxes                 $   (10.7) $   (0.31) $     8.0  $     0.23
                              =========             =========


                                            First Quarter
                              -------------------------------------------
                                 2009                  2008     % Change
                              ---------             ---------  ----------

Selling, general and
 administrative expenses      $   206.1             $   237.0
     U.K. restructuring
      charge (Note 1)              (5.4)                    -
                              ---------             ---------
Selling, general and
 administrative expenses
 excluding the U.K.
 restructuring charge         $   200.7             $   237.0       (15.3%)
                              =========             =========  ==========

(Loss) earnings from
 operations                   $   (30.6)            $    12.9
     U.K. restructuring
      charge (Note 1)               5.4                     -
                              ---------             ---------
(Loss) earnings from
 operations excluding
 the U.K. restructuring
 charge                       $   (25.2)            $    12.9      (295.2%)
                              =========             =========  ==========

EMEA Commercial selling,
 general and administrative
 expenses                     $    46.6             $    57.2
     U.K. restructuring
      charge (Note 1)              (5.4)                    -
                              ---------             ---------
EMEA Commercial selling,
 general and administrative
 expenses excluding the U.K.
 restructuring charge         $    41.2             $    57.2       (27.9%)
                              =========             =========  ==========

EMEA Commercial (loss)
 earnings from operations     $   (12.1)            $    (1.6)
     U.K. restructuring
      charge (Note 1)               5.4                     -
                              ---------             ---------
EMEA Commercial (loss)
 earnings from operations
 excluding the U.K.
 restructuring charge         $    (6.7)            $    (1.6)     (325.0%)
                              =========             =========  ==========




                   KELLY SERVICES, INC. AND SUBSIDIARIES
                    RECONCILIATION OF NON-GAAP MEASURES
                                (UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting
Principles) information excluding the U.K. restructuring charge is useful
to understand the Company's fiscal 2009 financial performance and increases
comparability. 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 U.K. restructuring charge is comprised of facility and other exit
costs associated with the disposal or closure of 37 branch locations
related to the restructuring program.

Contact Information