Kelly Services(R) Reports 1st Quarter Results

TROY, MI--(Marketwired - May 8, 2013) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter of 2013. 

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2013 totaled $1.3 billion, a 3% decrease compared to the corresponding quarter of 2012. 

Earnings from operations for the first quarter of 2013 totaled $7.1 million, compared to $14.7 million reported for the first quarter of 2012.

Diluted earnings per share from continuing operations in the first quarter of 2013 were $0.34 compared to $0.24 per share in the first quarter of 2012. 

"The sluggish economic growth we saw throughout 2012 continued into the first quarter of 2013, accompanied by a softening in demand for temporary labor," noted Camden. "Given these tough conditions, we're pleased to report that Kelly's performance exceeded expectations. We delivered an operating profit and controlled our expenses while moving ahead with strategic investments."

Camden acknowledged that the persistently slow pace of this recovery may be a medium-term reality, but remains confident that Kelly is positioned for long-term growth. "Our strategy was designed with the modern labor market in mind. We're winning higher-margin business, expanding key customer relationships, and strengthening our talent supply chain. The growth we're seeing in our professional and technical solutions and in our outsourcing and consulting group confirms that we're on the right track."

Kelly also reported that on May 7, its board of directors declared a dividend of $0.05 per share. The dividend is payable June 4 to shareholders of record as of the close of business on May 20.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 8, 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, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers' compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws), the net financial impact of the Patient Protection and Affordable Care Act on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, and other risks, uncertainties and 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, and we have no intention to update these statements.

About Kelly Services^®
Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader in providing workforce solutions. Kelly^® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, and Twitter. Download The Talent Project, a free iPad app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012
(UNAUDITED)
(In millions of dollars except per share data)
			2013				2012				Change				% Change
Revenue from services			$	1,314.8			$	1,354.8			$	(40.0	)		(3.0	)%
Cost of services				1,097.9				1,131.1				(33.2	)		(2.9	)
Gross profit				216.9				223.7				(6.8	)		(3.1	)
Selling, general and administrative expenses				209.8				209.0				0.8			0.4
Earnings from operations				7.1				14.7				(7.6	)		(51.8	)
Other expense, net				1.0				0.6				0.4			58.9
Earnings from continuing operations before taxes				6.1				14.1				(8.0	)		(56.6	)
Income tax (benefit) expense				(6.8	)			4.9				(11.7	)		(239.4	)
Earnings from continuing operations				12.9				9.2				3.7			40.0
Earnings from discontinued operations, net of tax				-				0.4				(0.4	)		(100.0	)
Net earnings			$	12.9			$	9.6			$	3.3			33.8	%
Basic earnings per share on common stock
	Earnings from continuing operations		$	0.34			$	0.24			$	0.10			41.7	%
	Earnings from discontinued operations			-				0.01				(0.01	)		(100.0	)
	Net earnings			0.34				0.26				0.08			30.8
Diluted earnings per share on common stock
	Earnings from continuing operations		$	0.34			$	0.24			$	0.10			41.7	%
	Earnings from discontinued operations			-				0.01				(0.01	)		(100.0	)
	Net earnings			0.34				0.26				0.08			30.8
STATISTICS:
Gross profit rate				16.5	%			16.5	%			-			pts.
Selling, general and administrative expenses:
	% of revenue			16.0				15.4				0.6
	% of gross profit			96.7				93.4				3.3
% Return:
	Earnings from operations			0.5				1.1				(0.6	)
	Earnings from continuing operations before taxes			0.5				1.0				(0.5	)
	Earnings from continuing operations			1.0				0.7				0.3
	Net earnings			1.0				0.7				0.3
Effective income tax rate				(110.9	)%			34.6	%			(145.5	)		pts.
Average number of shares outstanding (millions):
	Basic			37.2				36.9
	Diluted			37.2				36.9
Shares adjusted for nonvested restricted awards (millions):
	Basic			38.2				37.8
	Diluted			38.2				37.8

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
					First Quarter
																Constant
																Currency
					2013				2012				Change			Change
AMERICAS
	Commercial
		Revenue from services (including fee-based income)			$	638.3			$	669.3			(4.6	)%		(4.3	)%
		Fee-based income				3.9				3.5			13.3			14.4
		Gross profit				93.5				98.0			(4.5	)		(4.2	)
		Gross profit rate				14.7	%			14.6	%		0.1	pts.
	PT
		Revenue from services (including fee-based income)			$	251.0			$	250.1			0.4	%		0.4	%
		Fee-based income				3.9				3.4			13.4			13.5
		Gross profit				40.4				40.2			0.4			0.4
		Gross profit rate				16.1	%			16.1	%		-	pts.
	Total Americas
		Revenue from services (including fee-based income)			$	889.3			$	919.4			(3.3	)%		(3.0	)%
		Fee-based income				7.8				6.9			13.4			14.0
		Gross profit				133.9				138.2			(3.1	)		(2.9	)
		Total SG&A expenses				109.2				102.9			6.1			6.3
		Earnings from operations				24.7				35.3			(30.0	)
		Gross profit rate				15.1	%			15.0	%		0.1	pts.
		Expense rates:
			% of revenue			12.3				11.2			1.1
			% of gross profit			81.6				74.5			7.1
		Operating margin				2.8				3.8			(1.0	)
EMEA
	Commercial
		Revenue from services (including fee-based income)			$	201.0			$	213.0			(5.6	)%		(5.5	)%
		Fee-based income				5.5				6.1			(9.9	)		(9.8	)
		Gross profit				31.1				33.5			(7.2	)		(7.1	)
		Gross profit rate				15.5	%			15.7	%		(0.2)	pts.
	PT
		Revenue from services (including fee-based income)			$	43.5			$	42.2			3.0	%		3.1	%
		Fee-based income				4.0				4.6			(13.2	)		(13.0	)
		Gross profit				10.7				11.3			(5.4	)		(5.3	)
		Gross profit rate				24.6	%			26.8	%		(2.2)	pts.
	Total EMEA
		Revenue from services (including fee-based income)			$	244.5			$	255.2			(4.2	)%		(4.1	)%
		Fee-based income				9.5				10.7			(11.3	)		(11.2	)
		Gross profit				41.8				44.8			(6.7	)		(6.6	)
		SG&A expenses excluding restructuring charges				42.2				44.5			(5.2	)
		Restructuring charges				(0.2	)			-			NM
		Total SG&A expenses				42.0				44.5			(5.6	)		(5.5	)
		Earnings from operations				(0.2	)			0.3			NM
		Earnings from operations excluding restructuring charges				(0.4	)			0.3			NM
		Gross profit rate				17.1	%			17.6	%		(0.5)	pts.
		Expense rates (excluding restructuring charges):
			% of revenue			17.2				17.4			(0.2	)
			% of gross profit			100.8				99.2			1.6
		Operating margin (excluding restructuring charges)				(0.1	)			0.1			(0.2	)

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
					First Quarter
																Constant
																Currency
					2013				2012				Change			Change
APAC
	Commercial
		Revenue from services (including fee-based income)			$	81.5			$	88.3			(7.7	)%		(7.4	)%
		Fee-based income				2.7				3.3			(18.7	)		(17.4	)
		Gross profit				11.6				13.1			(11.5	)		(11.0	)
		Gross profit rate				14.2	%			14.8	%		(0.6	) pts.
	PT
		Revenue from services (including fee-based income)			$	10.2			$	12.8			(20.9	)%		(20.0	)%
		Fee-based income				2.0				4.0			(51.0	)		(50.5	)
		Gross profit				3.3				5.2			(36.6	)		(35.9	)
		Gross profit rate				32.5	%			40.5	%		(8.0	) pts.
	Total APAC
		Revenue from services (including fee-based income)			$	91.7			$	101.1			(9.4	)%		(9.0	)%
		Fee-based income				4.7				7.3			(36.2	)		(35.4	)
		Gross profit				14.9				18.3			(18.7	)		(18.1	)
		SG&A expenses excluding restructuring charges				15.6				19.7			(20.9	)
		Restructuring charges				0.2				-			NM
		Total SG&A expenses				15.8				19.7			(19.9	)		(19.3	)
		Earnings from operations				(0.9	)			(1.4	)		35.7
		Earnings from operations excluding restructuring charges				(0.7	)			(1.4	)		50.1
		Gross profit rate				16.2	%			18.1	%		(1.9	) pts.
		Expense rates (excluding restructuring charges):
			% of revenue			17.0				19.4			(2.4	)
			% of gross profit			104.7				107.6			(2.9	)
		Operating margin (excluding restructuring charges)				(0.8	)			(1.4	)		0.6
OCG
		Revenue from services (including fee-based income)			$	99.0			$	86.7			14.2	%		14.4	%
		Fee-based income				14.6				11.6			25.8			26.3
		Gross profit				27.1				23.1			17.0			17.3
		Total SG&A expenses				25.4				22.6			12.2			12.5
		Earnings from operations				1.7				0.5			233.4
		Gross profit rate				27.3	%			26.7	%		0.6	pts.
		Expense rates:
			% of revenue			25.6				26.1			(0.5	)
			% of gross profit			93.8				97.8			(4.0	)
		Operating margin				1.7				0.6			1.1

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
					Mar. 31, 2013				Dec. 30, 2012				Apr. 1, 2012
Current Assets
	Cash and equivalents				$	62.1			$	76.3			$	88.3
	Trade accounts receivable, less allowances of $10.1, $10.4 and $12.9, respectively					999.8				1,013.9				977.9
	Prepaid expenses and other current assets					56.8				57.5				64.2
	Deferred taxes					36.3				44.9				34.3
			Total current assets			1,155.0				1,192.6				1,164.7
Property and Equipment, Net						87.5				89.9				90.3
Noncurrent Deferred Taxes						106.6				82.8				96.4
Goodwill, Net						90.3				89.5				89.8
Other Assets						208.6				180.9				165.5
Total Assets					$	1,648.0			$	1,635.7			$	1,606.7
Current Liabilities
	Short-term borrowings				$	50.2			$	64.1			$	94.7
	Accounts payable and accrued liabilities					311.8				295.6				275.7
	Accrued payroll and related taxes					250.2				264.5				273.8
	Accrued insurance					31.4				32.8				30.5
	Income and other taxes					61.2				65.3				61.1
			Total current liabilities			704.8				722.3				735.8
Noncurrent Liabilities
	Accrued insurance					41.6				43.5				51.8
	Accrued retirement benefits					120.2				111.0				101.5
	Other long-term liabilities					22.9				17.9				24.6
			Total noncurrent liabilities			184.7				172.4				177.9
Stockholders' Equity
	Common stock					40.1				40.1				40.1
	Treasury stock					(61.1	)			(61.6	)			(66.6	)
	Paid-in capital					27.8				27.1				29.8
	Earnings invested in the business					711.0				700.0				665.2
	Accumulated other comprehensive income					40.7				35.4				24.5
			Total stockholders' equity			758.5				741.0				693.0
Total Liabilities and Stockholders' Equity					$	1,648.0			$	1,635.7			$	1,606.7
STATISTICS:
	Working Capital				$	450.2			$	470.3			$	428.9
	Current Ratio					1.6				1.7				1.6
	Debt-to-capital %					6.2	%			8.0	%			12.0	%
	Global Days Sales Outstanding					54				53				54

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012
(UNAUDITED)
(In millions of dollars)
					2013				2012
Cash flows from operating activities
	Net earnings				$	12.9			$	9.6
	Noncash adjustments:
		Depreciation and amortization				5.3				5.7
		Provision for bad debts				0.4				0.2
		Stock-based compensation				1.2				1.4
		Other, net				0.2				-
	Changes in operating assets and liabilities					(14.1	)			(3.5	)
			Net cash from operating activities			5.9				13.4
Cash flows from investing activities
	Capital expenditures					(2.8	)			(4.0	)
	Other investing activities					0.2				(0.4	)
			Net cash used in investing activities			(2.6	)			(4.4	)
Cash flows from financing activities
	Net change in short-term borrowings					(13.7	)			(2.3	)
	Dividend payments					(1.9	)			(1.9	)
			Net cash used in financing activities			(15.6	)			(4.2	)
Effect of exchange rates on cash and equivalents						(1.9	)			2.5
Net change in cash and equivalents						(14.2	)			7.3
Cash and equivalents at beginning of period						76.3				81.0
Cash and equivalents at end of period					$	62.1			$	88.3

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
			First Quarter (Commercial, PT and OCG)
									% Change
												Constant
			2013			2012			US$			Currency
Americas
	United States		$	839.5		$	858.5		(2.2	)%		(2.2	)%
	Canada			56.0			59.5		(5.9	)		(5.2	)
	Mexico			30.4			25.5		19.6			16.7
	Puerto Rico			23.1			25.9		(10.7	)		(10.7	)
	Brazil			18.5			18.0		2.4			16.4
Total Americas				967.5			987.4		(2.0	)		(1.8	)
EMEA
	France			57.3			62.8		(8.8	)		(9.3	)
	Switzerland			53.4			53.6		(0.3	)		0.8
	Russia			34.5			33.6		2.5			3.8
	United Kingdom			25.8			27.7		(6.7	)		(5.5	)
	Portugal			17.8			18.2		(2.5	)		(2.8	)
	Germany			16.0			18.7		(14.4	)		(14.9	)
	Norway			14.8			16.5		(9.9	)		(12.3	)
	Italy			15.1			16.3		(7.3	)		(7.7	)
	Other			17.4			15.6		11.2			10.2
Total EMEA				252.1			263.0		(4.2	)		(4.0	)
APAC
	Australia			32.7			33.9		(3.3	)		(1.6	)
	Singapore			26.1			24.2		8.1			6.0
	Malaysia			16.7			17.8		(6.5	)		(5.7	)
	New Zealand			11.5			13.1		(12.7	)		(14.3	)
	Other			8.2			15.4		(46.9	)		(43.8	)
Total APAC				95.2			104.4		(8.8	)		(8.4	)
Total Kelly Services, Inc.			$	1,314.8		$	1,354.8		(3.0	)%		(2.7	)%