SOURCE: Kelly Services, Inc.

October 21, 2008 07:30 ET

Kelly Services Reports 3rd Quarter 2008 Results

TROY, MI--(Marketwire - October 21, 2008) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a world leader in human resources solutions, today announced results for the third quarter of 2008.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2008 totaled $1.4 billion, a 2% decrease compared to the corresponding quarter in 2007.

Losses from operations for the third quarter of 2008 totaled $14.5 million, compared to $20.8 million earnings from operations reported for the third quarter of 2007. Included in the results of operations for the third quarter 2008 is a $22.5 million pre-tax charge related to several litigation matters. Earnings from operations in the third quarter of 2007 included $2.5 million of pre-tax restructuring costs.

Diluted losses per share from continuing operations in the third quarter of 2008 were $0.33, compared to third quarter 2007 earnings of $0.40 per share. The litigation charge in 2008 was $0.40 per diluted share from continuing operations. Included in third quarter 2007 diluted earnings is the $0.05 per share cost of restructuring.

Year-to-date 2008 earnings from continuing operations totaled $6.9 million or $0.20 per share.

Commenting on the results, Camden said, "Our third quarter performance reflects the rapid deterioration in global economic conditions and further weakening of the staffing market, particularly in the U.S. Absent the litigation charge, we would have reported modest earnings for the quarter. Although a disappointment, these lawsuits do not affect our ability to execute our long-term strategy."

Camden concluded, "In spite of the tumultuous economic landscape and the cyclical nature of our business, Kelly remains focused on building a stronger company for our employees and customers, while creating lasting value for our shareholders."

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on October 21, 2008 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S.             1-800-398-9398
International    1-612-288-0329

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.

About Kelly Services

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 to clients on a global basis. 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 2007 was $5.7 billion. Visit www.kellyservices.com.

                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
     FOR THE 13 WEEKS ENDED SEPTEMBER 28, 2008 AND SEPTEMBER 30, 2007
                                (UNAUDITED)
              (In thousands of dollars except per share data)


                                                                      %
                               2008        2007      Change        Change
                            ----------  ----------  --------      -------
Revenue from services       $1,397,748  $1,425,298  $(27,550)        (1.9)%

Cost of services             1,152,032   1,178,419   (26,387)        (2.2)
                            ----------  ----------  --------      -------

Gross profit                   245,716     246,879    (1,163)        (0.5)

Selling, general and
 administrative expenses       260,260     226,099    34,161         15.1
                            ----------  ----------  --------      -------

(Loss) earnings from
 operations                    (14,544)     20,780   (35,324)      (170.0)

Other (expense) income, net       (124)        587      (711)      (121.1)
                            ----------  ----------  --------      -------

(Loss) earnings from
 continuing operations
 before taxes                  (14,668)     21,367   (36,035)      (168.6)

Income taxes                    (3,115)      6,685    (9,800)      (146.6)
                            ----------  ----------  --------      -------

(Loss) earnings from
 continuing operations         (11,553)     14,682   (26,235)      (178.7)

(Loss) earnings from
 discontinued operations,
 net of tax                       (663)        459    (1,122)      (244.4)
                            ----------  ----------  --------      -------

Net (loss) earnings         $  (12,216) $   15,141  $(27,357)      (180.7)%
                            ==========  ==========  ========      =======

Basic (loss) earnings per share
  (Loss) earnings from
   continuing operations    $    (0.33) $     0.40  $  (0.73)      (182.5)%
  (Loss) earnings from
   discontinued operations       (0.02)       0.01     (0.03)      (300.0)
                            ----------  ----------  --------      -------
  Net (loss) earnings       $    (0.35) $     0.41  $  (0.76)      (185.4)%
                            ==========  ==========  ========      =======

Diluted (loss) earnings per share
  (Loss) earnings from
   continuing operations    $    (0.33) $     0.40  $  (0.73)      (182.5)%
  (Loss) earnings from
   discontinued operations       (0.02)       0.01     (0.03)      (300.0)
                            ----------  ----------  --------      -------
  Net (loss) earnings       $    (0.35) $     0.41  $  (0.76)      (185.4)%
                            ==========  ==========  ========      =======


STATISTICS:

Gross profit rate                 17.6%       17.3%      0.3 pts.

Selling, general and
 administrative expenses:
  % of revenue                    18.6        15.9       2.7
  % of gross profit              105.9        91.6      14.3

% Return -  (Loss) earnings
             from operations      (1.0)        1.5      (2.5)
            (Loss) earnings
             from continuing
             operations before
             taxes                (1.0)        1.5      (2.5)
            (Loss) earnings
             from continuing
             operations           (0.8)        1.0      (1.8)
             Net (loss)
              earnings            (0.9)        1.1      (2.0)

Effective income tax rate         21.2%       31.3%    (10.1) pts.

Average number of shares
 outstanding (thousands):
  Basic                         34,759      36,500
  Diluted                       34,801      36,537






                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
     FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2008 AND SEPTEMBER 30, 2007
                                (UNAUDITED)
              (In thousands of dollars except per share data)


                                                                      %
                                2008        2007      Change       Change
                             ----------  ----------  --------      ------
Revenue from services        $4,238,199  $4,191,830  $ 46,369         1.1%

Cost of services              3,485,194   3,468,177    17,017         0.5
                             ----------  ----------  --------      ------

Gross profit                    753,005     723,653    29,352         4.1

Selling, general and
 administrative expenses        739,655     670,114    69,541        10.4
                             ----------  ----------  --------      ------

Earnings from operations         13,350      53,539   (40,189)      (75.1)

Other (expense) income, net         (26)      2,190    (2,216)     (101.2)
                             ----------  ----------  --------      ------

Earnings from continuing
 operations before taxes         13,324      55,729   (42,405)      (76.1)

Income taxes                      6,456      20,478   (14,022)      (68.5)
                             ----------  ----------  --------      ------

Earnings from continuing
 operations                       6,868      35,251   (28,383)      (80.5)

(Loss) earnings from
 discontinued operations, net
 of tax                            (338)      7,134    (7,472)     (104.7)
                             ----------  ----------  --------      ------

Net earnings                 $    6,530  $   42,385  $(35,855)      (84.6)%
                             ==========  ==========  ========      ======

Basic earnings per share
  Earnings from continuing
   operations                $     0.20  $     0.96  $  (0.76)      (79.2)%
  (Loss) earnings from
   discontinued operations        (0.01)       0.20     (0.21)     (105.0)
                             ----------  ----------  --------      ------
  Net earnings               $     0.19  $     1.16  $  (0.97)      (83.6)%
                             ==========  ==========  ========      ======

Diluted earnings per share
  Earnings from continuing
   operations                $     0.20  $     0.96  $  (0.76)      (79.2)%
  (Loss) earnings from
   discontinued operations        (0.01)       0.19     (0.20)     (105.3)
                             ----------  ----------  --------      ------
  Net earnings               $     0.19  $     1.15  $  (0.96)      (83.5)%
                             ==========  ==========  ========      ======


STATISTICS:

Gross profit rate                  17.8%       17.3%      0.5 pts.

Selling, general and
 administrative expenses:
  % of revenue                     17.5        16.0       1.5
  % of gross profit                98.2        92.6       5.6

% Return - Earnings from
            operations              0.3         1.3      (1.0)
           Earnings from
            continuing
            operations before
            taxes                   0.3         1.3      (1.0)
           Earnings from
            continuing
            operations              0.2         0.8      (0.6)
           Net earnings             0.2         1.0      (0.8)

Effective income tax rate          48.5%       36.7%     11.8 pts.

Average number of shares
 outstanding (thousands):
  Basic                          34,759      36,557
  Diluted                        34,850      36,843






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


                                               Third Quarter
                                 ----------------------------------------
                                                                 Constant
                                                                 Currency
                                   2008     2007   Change         Change
                                 -------  -------  -------       --------
Americas Commercial
  Revenue from services
   (including fee-based income)  $ 618.3  $ 682.5     (9.4)%         (9.6)%
  Fee-based income                   4.3      4.9    (10.9)         (11.2)

  Earnings from operations          11.8     20.9    (43.3)
  Earnings from operations
   (excluding restructuring
   charges)                         11.8     22.4    (47.2)

  Gross profit rate                 15.4%    15.7%    (0.3) pts.
  Expense rates:
    % of revenue                    13.4     12.7      0.7
    % of gross profit               87.5     80.5      7.0
  Operating margin                   1.9      3.1     (1.2)

Americas PT
  Revenue from services
   (including fee-based income)  $ 228.2  $ 235.6     (3.1)%         (3.2)%
  Fee-based income                   5.0      5.6    (10.7)         (10.7)

  Earnings from operations          10.0     13.2    (24.2)

  Gross profit rate                 17.0%    17.7%    (0.7) pts.
  Expense rates:
    % of revenue                    12.6     12.1      0.5
    % of gross profit               74.2     68.4      5.8
  Operating margin                   4.4      5.6     (1.2)

EMEA Commercial
  Revenue from services
   (including fee-based income)  $ 353.6  $ 332.9      6.2%           1.3%
  Fee-based income                  10.2      9.8      3.9           (0.1)

  Earnings from operations           4.0      3.8      6.7
  Earnings from operations
   (excluding restructuring
   charges)                          4.0      4.7    (14.9)

  Gross profit rate                 17.8%    17.2%     0.6 pts.
  Expense rates:
    % of revenue                    16.7     16.1      0.6
    % of gross profit               93.6     93.4      0.2
  Operating margin                   1.1      1.1      0.0

EMEA PT
  Revenue from services
   (including fee-based income)  $  44.0  $  40.4      8.9%           2.7%
  Fee-based income                   6.7      5.8     15.3            7.2

  Earnings from operations           0.4      1.1    (61.4)

  Gross profit rate                 29.3%    28.8%     0.5 pts.
  Expense rates:
    % of revenue                    28.3     26.2      2.1
    % of gross profit               96.8     90.7      6.1
  Operating margin                   0.9      2.7     (1.8)






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


                                               Third Quarter
                                 -----------------------------------------
                                                                 Constant
                                                                 Currency
                                   2008      2007    Change       Change
                                 --------  --------  -----       ---------
APAC Commercial
  Revenue from services
   (including fee-based income)  $   84.9  $   80.6    5.4%            1.7%
  Fee-based income                    4.5       4.1   10.0             6.4

  Earnings from operations            0.2       1.2  (84.3)

  Gross profit rate                  17.3%     17.3%   0.0 pts.
  Expense rates:
    % of revenue                     17.1      15.8    1.3
    % of gross profit                98.7      91.6    7.1
  Operating margin                    0.2       1.5   (1.3)

APAC PT
  Revenue from services
   (including fee-based income)  $    9.2  $    8.0   14.8%            9.5%
  Fee-based income                    1.5       1.5    0.4            (4.3)

  Earnings from operations            0.1       0.1   26.1

  Gross profit rate                  31.2%     33.3%  (2.1) pts.
  Expense rates:
    % of revenue                     29.6      31.8   (2.2)
    % of gross profit                94.9      95.7   (0.8)
  Operating margin                    1.6       1.4    0.2

OCG
  Revenue from services
   (including fee-based income)  $   59.6  $   45.3   31.5%           30.5%
  Fee-based income                    7.4       4.0   86.4            83.3

  Earnings from operations            0.1       1.9  (94.7)

  Gross profit rate                  31.1%     26.9%   4.2 pts.
  Expense rates:
    % of revenue                     31.0      22.8    8.2
    % of gross profit                99.5      84.6   14.9
  Operating margin                    0.2       4.1   (3.9)

Corporate Expense                $  (41.2) $  (21.3) (93.5)%






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


                                           September Year to Date
                                 ----------------------------------------
                                                                 Constant
                                                                 Currency
                                   2008      2007    Change       Change
                                 --------  --------  -----       --------
Americas Commercial
  Revenue from services
   (including fee-based income)  $1,912.4  $2,063.6   (7.3)%         (8.1)%
  Fee-based income                   13.0      14.0   (7.7)          (9.5)

  Earnings from operations           53.7      69.1  (22.2)
  Earnings from operations
   (excluding restructuring
   charges)                          53.7      70.6  (23.9)

  Gross profit rate                  15.8%     15.8%   0.0 pts.
  Expense rates:
    % of revenue                     13.0      12.4    0.6
    % of gross profit                82.2      78.8    3.4
  Operating margin                    2.8       3.3   (0.5)

Americas PT
  Revenue from services
   (including fee-based income)  $  698.8  $  699.6   (0.1)%         (0.2)%
  Fee-based income                   15.8      15.6    1.2            0.9

  Earnings from operations           38.2      40.5   (5.8)

  Gross profit rate                  17.6%     17.7%  (0.1) pts.
  Expense rates:
    % of revenue                     12.2      11.9    0.3
    % of gross profit                69.0      67.2    1.8
  Operating margin                    5.5       5.8   (0.3)

EMEA Commercial
  Revenue from services
   (including fee-based income)  $1,027.2  $  951.6    7.9%          (0.4)%
  Fee-based income                   32.0      28.2   13.5            5.2

  Earnings from operations            3.8       2.8   36.3
  Earnings from operations
   (excluding restructuring
   charges)                           3.8       8.8  (57.2)

  Gross profit rate                  17.5%     17.4%   0.1 pts.
  Expense rates:
    % of revenue                     17.1      17.1    0.0
    % of gross profit                97.9      98.3   (0.4)
  Operating margin                    0.4       0.3    0.1

EMEA PT
  Revenue from services
   (including fee-based income)  $  134.1  $  115.7   15.9%           5.7%
  Fee-based income                   21.3      15.5   37.5           23.9

  Earnings from operations            2.8       1.8   53.7

  Gross profit rate                  29.8%     27.9%   1.9 pts.
  Expense rates:
    % of revenue                     27.7      26.3    1.4
    % of gross profit                93.0      94.3   (1.3)
  Operating margin                    2.1       1.6    0.5






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


                                           September Year to Date
                                 -----------------------------------------
                                                                 Constant
                                                                 Currency
                                   2008      2007    Change       Change
                                 --------  --------  ------      ---------
APAC Commercial
  Revenue from services
   (including fee-based income)  $  262.5  $  221.3   18.6%            9.6%
  Fee-based income                   13.9      11.0   26.3            17.1

  Earnings from operations            0.8       3.3  (77.2)

  Gross profit rate                  17.1%     17.2%  (0.1) pts.
  Expense rates:
    % of revenue                     16.8      15.7    1.1
    % of gross profit                98.3      91.2    7.1
  Operating margin                    0.3       1.5   (1.2)

APAC PT
  Revenue from services
   (including fee-based income)  $   27.1  $   18.5   46.3%           33.4%
  Fee-based income                    4.3       3.7   18.1             8.3

  Earnings from operations           (0.2)     (0.3)  18.5

  Gross profit rate                  30.7%     33.5%  (2.8) pts.
  Expense rates:
    % of revenue                     31.5      34.9   (3.4)
    % of gross profit               102.6     104.3   (1.7)
  Operating margin                   (0.8)     (1.4)   0.6

OCG
  Revenue from services
   (including fee-based income)  $  176.1  $  121.6   44.8%           42.4%
  Fee-based income                   20.6      11.7   76.3            71.2

  Earnings from operations            2.8       3.0   (9.0)

  Gross profit rate                  31.0%     26.5%   4.5 pts.
  Expense rates:
    % of revenue                     29.5      24.0    5.5
    % of gross profit                94.9      90.6    4.3
  Operating margin                    1.6       2.5   (0.9)

Corporate Expense                $  (88.5) $  (66.8) (32.5)%






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


                                      Third Quarter     Sept. Year to Date
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------- --------  ---------


Revenue from services               $      -  $       - $      -  $  14,777


Operating (loss) income from
 discontinued operations            $ (1,073) $     746 $   (547) $   1,573

Less:  Income taxes                     (410)       287     (209)       605
                                    --------  --------- --------  ---------

(Loss) earnings from discontinued
 operations, net of tax                 (663)       459     (338)       968
                                    --------  --------- --------  ---------

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 $   (663) $     459 $   (338) $   7,134
                                    ========  ========= ========  =========


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 2008 and 2007 and September year to date 2008 and 2007, 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
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
                        (In thousands of dollars)


                                 September 28,  December 30, September 30,
                                      2008          2007          2007
                                  ------------  ------------  ------------
Current Assets
   Cash and equivalents           $    113,566  $     92,817  $    102,982
   Trade accounts receivable,
    less allowances of
   $18,550, $18,172 and $18,357,
    respectively                       913,742       888,334       903,566
   Prepaid expenses and other
    current assets                      59,651        53,392        49,734
   Deferred taxes                       30,237        29,294        30,342
                                  ------------  ------------  ------------
      Total current assets           1,117,196     1,063,837     1,086,624

Property and Equipment, Net            168,288       178,019       175,106

Noncurrent Deferred Taxes               48,639        43,436        37,458

Goodwill, Net                          161,439       147,168       122,917

Other Assets                           134,189       141,537       147,570

                                  ------------  ------------  ------------
Total Assets                      $  1,629,751  $  1,573,997  $  1,569,675
                                  ============  ============  ============

Current Liabilities
   Short-term borrowings          $     63,274  $     49,729  $     75,489
   Accounts payable                    242,127       171,471       161,843
   Accrued payroll and related
    taxes                              282,004       270,575       286,056
   Accrued insurance                    23,281        23,696        25,495
   Income and other taxes               62,398        69,779        65,073
                                  ------------  ------------  ------------
      Total current liabilities        673,084       585,250       613,956

Noncurrent Liabilities
   Long-term debt                       51,245        48,394             -
   Accrued insurance                    59,488        60,404        59,489
   Accrued retirement benefits          70,196        78,382        81,249
   Other long-term liabilities          16,981        13,338        17,865
                                  ------------  ------------  ------------

      Total noncurrent liabilities     197,910       200,518       158,603

Stockholders' Equity
   Common stock                         40,116        40,116        40,116
   Treasury stock                     (111,346)     (106,312)      (84,323)
   Paid-in capital                      34,511        34,500        33,406
   Earnings invested in the
    business                           769,599       777,338       763,577
   Accumulated other
    comprehensive income                25,877        42,587        44,340
                                  ------------  ------------  ------------
      Total stockholders' equity       758,757       788,229       797,116
                                  ------------  ------------  ------------

Total Liabilities and
 Stockholders' Equity             $  1,629,751  $  1,573,997  $  1,569,675
                                  ============  ============  ============


STATISTICS:
   Working Capital                $    444,112  $    478,587  $    472,668
   Current Ratio                           1.7           1.8           1.8
   Debt-to-capital %                      13.1%         11.1%          8.7%
   Global Days Sales Outstanding            51            49            52






                  KELLY SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
     FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2008 AND SEPTEMBER 30, 2007
                                (UNAUDITED)
                        (In thousands of dollars)




                                                        2008       2007
                                                      ---------  ---------

Cash flows from operating activities
   Net earnings                                       $   6,530  $  42,385
   Noncash adjustments:
      Depreciation and amortization                      34,145     31,051
      Provision for bad debts                             4,813      4,926
      Stock-based compensation                            3,004      2,683
      Gain on sale of discontinued operations                 -     (6,166)
      Other, net                                          1,767       (422)
   Changes in operating assets and liabilities           36,166    (24,808)
                                                      ---------  ---------

        Net cash from operating activities               86,425     49,649
                                                      ---------  ---------

Cash flows from investing activities
   Capital expenditures                                 (23,519)   (33,567)
   Acquisition of companies, net of cash received       (32,433)   (25,255)
   Proceeds from sale of discontinued operations              -     12,500
   Other investing activities                              (409)      (586)
                                                      ---------  ---------

        Net cash from investing activities              (56,361)   (46,908)
                                                      ---------  ---------

Cash flows from financing activities
   Net increase (decrease) in revolving line of
    credit                                               12,483     (3,469)
   Proceeds from debt                                         -      8,223
   Dividend payments                                    (14,269)   (14,244)
   Purchase of treasury stock                            (7,975)   (12,500)
   Stock options and other stock sales                       98      5,760
   Other financing activities                             1,033     (5,767)
                                                      ---------  ---------

        Net cash from financing activities               (8,630)   (21,997)
                                                      ---------  ---------

Effect of exchange rates on cash and equivalents           (685)     3,810
                                                      ---------  ---------

Net change in cash and equivalents                       20,749    (15,446)
Cash and equivalents at beginning of period              92,817    118,428
                                                      ---------  ---------


Cash and equivalents at end of period                 $ 113,566  $ 102,982
                                                      =========  =========






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


                                Third Quarter (Commercial, PT and OCG)
                            ---------------------------------------------
                                                           % Change
                                                                 Constant
                               2008        2007         US$      Currency
                            ----------- ----------- ---------   ---------

Americas
   United States            $   795,791 $   854,563      (6.9)%      (6.9)%
   Canada                        62,084      67,542      (8.1)       (8.6)
   Mexico                        20,849      19,119       9.0         2.5
   Puerto Rico                   19,304      19,169       0.7         0.7
                            ----------- -----------
Total Americas                  898,028     960,393      (6.5)       (6.7)

Europe
   United Kingdom               102,530     119,385     (14.1)       (8.6)
   France                        93,707      82,497      13.6         3.4
   Switzerland                   49,007      49,363      (0.7)      (11.5)
   Italy                         33,868      28,795      17.6         7.4
   Russia                        25,339      17,542      44.4        37.7
   Norway                        24,911      21,902      13.7         5.2
   Germany                       21,131      16,605      27.3        16.3
   Other                         52,247      38,074      37.2        25.9
                            ----------- -----------
Total Europe                    402,740     374,163       7.6         2.5

Asia-Pacific
   Australia                     33,893      35,169      (3.6)       (8.4)
   Singapore                     18,656      16,354      14.1         5.1
   Other                         44,431      39,219      13.3        12.6
                            ----------- -----------
Total Asia-Pacific               96,980      90,742       6.9         3.1

Total Kelly Services, Inc.  $ 1,397,748 $ 1,425,298      (1.9)%      (3.6)%
                            =========== ===========







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


                            September Year to Date (Commercial, PT and OCG)
                            ----------------------------------------------
                                                           % Change
                                                                 Constant
                               2008        2007         US$      Currency
                            ----------- ----------- ---------   ---------

Americas
   United States            $ 2,455,641 $ 2,573,282      (4.6)%      (4.6)%
   Canada                       187,584     191,009      (1.8)       (9.3)
   Puerto Rico                   58,800      57,341       2.5         2.5
   Mexico                        58,119      54,849       6.0         1.6
                            ----------- -----------
Total Americas                2,760,144   2,876,481      (4.0)       (4.6)

Europe
   United Kingdom               317,328     355,790     (10.8)       (9.1)
   France                       275,727     227,924      21.0         6.8
   Switzerland                  143,463     130,752       9.7        (4.9)
   Italy                        106,654      92,781      15.0         1.5
   Norway                        69,143      56,523      22.3         7.3
   Russia                        68,584      48,876      40.3        30.6
   Germany                       65,309      45,502      43.5        26.8
   Other                        133,599     110,807      20.6         7.1
                            ----------- -----------
Total Europe                  1,179,807   1,068,955      10.4         1.6

Asia-Pacific
   Australia                    107,633      96,107      12.0         0.7
   Singapore                     55,161      44,074      25.2        14.2
   Other                        135,454     106,213      27.5        20.7
                            ----------- -----------
Total Asia-Pacific              298,248     246,394      21.0        11.7

Total Kelly Services, Inc.  $ 4,238,199 $ 4,191,830       1.1 %      (2.1)%
                            =========== ===========







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



                                              Third Quarter
                                ------------------------------------------
                                        2008                  2007
                                --------------------  --------------------
                                  Amount   Per Share    Amount   Per Share
                                ---------  ---------  ---------  ---------

(Loss) earnings from continuing
 operations                     $ (11,553) $   (0.33) $  14,682  $    0.40
   Restructuring charges, net
    of taxes (Notes 1 and 2)            -          -      1,882       0.05

                                ---------  ---------  ---------  ---------
(Loss) earnings from continuing
 operations excluding
 restructuring charges, net of
 taxes                          $ (11,553) $   (0.33) $  16,564  $    0.45
                                =========  =========  =========  =========


                                              Third Quarter
                                -----------------------------------------
                                  2008                  2007     % Change
                                ---------             ---------  --------
Selling, general and
 administrative expenses        $ 260,260             $ 226,099
   Restructuring charges (Notes
    1 and 2)                            -                (2,464)
                                ---------             ---------
Selling, general and
 administrative expenses
 excluding restructuring
 charges                        $ 260,260             $ 223,635      16.4%
                                =========             =========  ========


(Loss) earnings from operations $ (14,544)            $  20,780
   Restructuring charges (Notes
    1 and 2)                            -                 2,464
                                ---------             ---------
Earnings from operations
 excluding restructuring
 charges                        $ (14,544)            $  23,244    (162.6%)
                                =========             =========  ========


Americas Commercial selling,
 general and administrative
 expenses                       $  83,124             $  86,529
   Americas restructuring
    charge (1)                          -                (1,511)
                                ---------             ---------
Americas Commercial selling,
 general and administrative
 expenses excluding the Americas
 restructuring charge           $  83,124             $  85,018      (2.2%)
                                =========             =========  ========


Americas Commercial earnings
 from operations                $  11,848             $  20,911
   Americas restructuring
    charge (1)                          -                 1,511
                                ---------             ---------
Americas Commercial earnings
 from operations excluding the
 Americas restructuring charge  $  11,848             $  22,422     (47.2%)
                                =========             =========  ========


EMEA Commercial Earnings from
 operations                     $   4,010             $   3,758
   UK restructuring charge
    (Note 2)                            -                   953
                                ---------             ---------
EMEA Commercial earnings from
 operations excluding the UK
 restructuring charge           $   4,010             $   4,711     (14.9%)
                                =========             =========  ========






                  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 charge from prior year results is useful to understand the Company's fiscal 2008 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 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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