SOURCE: Kelly Services

Kelly Services

August 07, 2013 07:30 ET

Kelly Services® Reports 2nd Quarter Results

TROY, MI--(Marketwired - Aug 7, 2013) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2013.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2013 totaled $1.4 billion, a 0.1% increase compared to the corresponding quarter of 2012.

Earnings from operations for the second quarter of 2013 totaled $16.4 million, compared to $23.8 million reported for the second quarter of 2012. Included in the results of operations in the second quarter of 2013 are impairment charges of $1.7 million and restructuring charges of $0.8 million. The results of operations in the second quarter of 2012 included a benefit due to changes in the estimated cost of restructuring of $2.2 million. Excluding the impairment and restructuring charges, earnings from operations were $18.9 million in the second quarter of 2013, compared to adjusted earnings of $21.6 million last year.

Diluted earnings per share from continuing operations in the second quarter of 2013 were $0.26 compared to $0.40 per share in the second quarter of 2012. Adjusted earnings per share were $0.33 in the second quarter of 2013 compared to $0.34 in the second quarter of 2012.

"We're pleased with our second quarter performance in each operating segment, given the uneven and generally subpar global economic growth," said Camden. "The Americas delivered solid results that were in line with our expectations, considering both our investment strategy and the lower volume we're experiencing. In EMEA and APAC, we're proud of our efforts in recalibrating our operations to bring costs in line with revenue in a tough environment. In addition, the growth we are seeing in KellyOCG's revenue and fees confirms that our solutions are meeting market demand for outsourced talent management programs, and we believe the investments we're making will support our long-term growth in that segment."

Kelly also reported that on August 6, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 9 to shareholders of record as of the close of business on August 19.

In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 7, 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:
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 JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 1,366.9     $ 1,366.1     $ 0.8     0.1 %
                               
Cost of services     1,146.2       1,142.9       3.3     0.3  
                               
Gross profit     220.7       223.2       (2.5 )   (1.1 )
                               
Selling, general and administrative expenses     202.6       199.4       3.2      1.6  
                               
Asset impairments     1.7       -       1.7     NM  
                               
Earnings from operations     16.4       23.8       (7.4 )   (30.9 )
                               
Other expense, net     1.6       0.5       1.1     234.2  
                               
Earnings from continuing operations before taxes     14.8       23.3       (8.5 )   (36.5 )
                               
Income tax expense     4.8       8.3       (3.5 )   (42.4 )
                               
Earnings from continuing operations     10.0       15.0       (5.0 )   (33.2 )
                               
Earnings from discontinued operations, net of tax     -       -       -     NM  
                               
Net earnings   $ 10.0     $ 15.0     $ (5.0 )   (33.2 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.26     $ 0.40     $ (0.14 )   (35.0 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.26       0.40       (0.14 )   (35.0 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.26     $ 0.40     $ (0.14 )   (35.0 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.26       0.40       (0.14 )   (35.0 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.1 %     16.3 %     (0.2 ) pts.    
                           
Selling, general and administrative expenses:                          
  % of revenue     14.8       14.6       0.2    
  % of gross profit     91.8       89.4       2.4    
                           
% Return:                          
  Earnings from operations     1.2       1.7       (0.5 )    
  Earnings from continuing operations before taxes     1.1       1.7       (0.6 )    
  Earnings from continuing operations     0.7       1.1       (0.4 )    
  Net earnings     0.7       1.1       (0.4 )    
                           
Effective income tax rate     32.2 %     35.5 %     (3.3 ) pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.2       37.0                
  Diluted     37.2       37.0                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.2       37.8                
  Diluted     38.2       37.8                
                               
                               
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 26 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 2,681.7     $ 2,720.9     $ (39.2 )   (1.4 )%
                               
Cost of services     2,244.1       2,274.0       (29.9 )   (1.3 )
                               
Gross profit     437.6       446.9       (9.3 )   (2.1 )
                               
Selling, general and administrative expenses     412.4       408.4       4.0     1.0  
                               
Asset impairments     1.7       -       1.7     NM  
                               
Earnings from operations     23.5       38.5       (15.0 )   (38.9 )
                               
Other expense, net     2.6       1.1       1.5     137.7  
                               
Earnings from continuing operations before taxes     20.9       37.4       (16.5 )   (44.0 )
                               
Income tax (benefit) expense     (2.0 )     13.2       (15.2 )   (115.4 )
                               
Earnings from continuing operations     22.9       24.2       (1.3 )   (5.3 )
                               
Earnings from discontinued operations, net of tax     -       0.4       (0.4 )   (99.8 )
                               
Net earnings   $ 22.9     $ 24.6     $ (1.7 )   (7.0 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.60     $ 0.64     $ (0.04 )   (6.3 )%
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.60       0.65       (0.05 )   (7.7 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.60     $ 0.64     $ (0.04 )   (6.3 )%
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.60       0.65       (0.05 )   (7.7 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.3 %     16.4 %     (0.1 ) pts.     
                           
Selling, general and administrative expenses:                          
  % of revenue     15.4       15.0       0.4    
  % of gross profit     94.3       91.4       2.9    
                           
% Return:                          
  Earnings from operations     0.9       1.4       (0.5 )    
  Earnings from continuing operations before taxes     0.8       1.4       (0.6 )    
  Earnings from continuing operations     0.9       0.9       0.0    
  Net earnings     0.9       0.9       0.0    
                           
Effective income tax rate     (9.7 )%     35.2 %     (44.9 ) pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.2       36.9                
  Diluted     37.2       37.0                
                               
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)  
                         
    Second Quarter  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 648.8     $ 668.6     (3.0 )%   (3.1 )%
    Fee-based income     4.0       4.2     (4.9 )   (4.5 )
    Gross profit     94.2       97.7     (3.6 )   (3.7 )
                             
    Gross profit rate     14.5 %     14.6 %   (0.1 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 259.6     $ 262.4     (1.1 )%   (1.2 )%
    Fee-based income     4.1       4.2     (3.5 )   (3.4 )
    Gross profit     41.1       39.7     3.5     3.4  
                             
    Gross profit rate     15.8 %     15.1 %   0.7  pts.      
                             
  Total Americas                            
    Revenue from services (including fee-based income)   $ 908.4     $ 931.0     (2.4 )%   (2.6 )%
    Fee-based income     8.1       8.4     (4.2 )   (4.0 )
    Gross profit     135.3       137.4     (1.6 )   (1.6 )
    Total SG&A expenses     103.8       99.0     4.8     4.8  
    Earnings from operations     31.5       38.4     (18.0 )      
                             
    Gross profit rate     14.9 %     14.8 %   0.1  pts.      
    Expense rates:                            
      % of revenue     11.4       10.6     0.8        
      % of gross profit     76.7       72.0     4.7        
    Operating margin     3.5       4.1     (0.6 )      
                             
EMEA                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 219.8     $ 213.7     2.8 %   2.5 %
    Fee-based income     5.2       6.2     (16.9 )   (16.6 )
    Gross profit     33.8       34.2     (1.0 )   (1.8 )
                             
    Gross profit rate     15.4 %     16.0 %   (0.6 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 43.1     $ 41.6     3.6 %   3.2 %
    Fee-based income     3.9       4.4     (12.0 )   (11.7 )
    Gross profit     10.5       10.9     (3.3 )   (3.6 )
                             
    Gross profit rate     24.4 %     26.1 %   (1.7 ) pts.      
                             
  Total EMEA                            
    Revenue from services (including fee-based income)   $ 262.9     $ 255.3     3.0 %   2.6 %
    Fee-based income     9.1       10.6     (14.9 )   (14.6 )
    Gross profit     44.3       45.1     (1.6 )   (2.2 )
    SG&A expenses excluding restructuring charges     39.9       41.9     (4.7 )      
    Restructuring charges     -       (2.2 )   101.8        
    Total SG&A expenses     39.9       39.7     0.5     -  
    Earnings from operations     4.4       5.4     (17.3 )      
    Earnings from operations excluding restructuring charges     4.4       3.2     40.5        
                             
    Gross profit rate     16.9 %     17.6 %   (0.7 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.2       16.4     (1.2 )      
      % of gross profit     90.1       93.0     (2.9 )      
    Operating margin (excluding restructuring charges)     1.7       1.2     0.5        
                                 
                                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Second Quarter  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
APAC                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 87.7     $ 84.3     4.0 %   3.7 %
    Fee-based income     2.9       3.0     (7.8 )   (7.2 )
    Gross profit     12.5       12.5     -     (0.2 )
                             
    Gross profit rate     14.3 %     14.9 %   (0.6 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 10.0     $ 12.8     (21.5 )%   (21.0 )%
    Fee-based income     2.5       4.1     (40.0 )   (39.7 )
    Gross profit     3.8       5.3     (29.6 )   (29.1 )
                             
    Gross profit rate     37.4 %     41.7 %   (4.3 ) pts.      
                             
  Total APAC                            
    Revenue from services (including fee-based income)   $ 97.7     $ 97.1     0.7 %   0.5 %
    Fee-based income     5.4       7.1     (26.2 )   (25.7 )
    Gross profit     16.3       17.8     (8.8 )   (8.8 )
    Total SG&A expenses     15.4       19.0     (19.0 )   (18.9 )
    Earnings from operations     0.9       (1.2 )   NM        
                             
    Gross profit rate     16.6 %     18.4 %   (1.8 ) pts.      
    Expense rates:                            
      % of revenue     15.8       19.6     (3.8 )      
      % of gross profit     94.7       106.6     (11.9 )      
    Operating margin     0.9       (1.2 )   2.1        
                             
OCG                            
    Revenue from services (including fee-based income)   $ 109.9     $ 91.4     20.2 %   20.3 %
    Fee-based income     15.7       12.8     23.1     23.3  
    Gross profit     25.6       23.7     8.4     8.5  
    Total SG&A excluding restructuring charges     25.6       22.8     12.4        
    Restructuring charges     0.8       -     NM        
    Total SG&A expenses     26.4       22.8     15.6     15.6  
    Asset impairments     1.7       -     NM        
    Earnings from operations     (2.5 )     0.9     NM        
    Earnings from operations excluding restructuring charges     (1.7 )     0.9     NM        
                             
    Gross profit rate     23.3 %     25.9 %   (2.6 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     23.3       25.0     (1.7 )      
      % of gross profit     100.1       96.5     3.6        
    Operating margin (excluding restructuring charges)     (1.5 )     0.9     (2.4 )      
                                 
                                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    June Year to Date  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 1,287.1     $ 1,337.9     (3.8 )%   (3.7 )%
    Fee-based income     7.9       7.7     3.3     4.1  
    Gross profit     187.7       195.7     (4.1 )   (3.9 )
                               
    Gross profit rate     14.6 %     14.6 %   -  pts.      
                               
  PT                            
    Revenue from services (including fee-based income)   $ 510.6     $ 512.5     (0.4 )%   (0.5 )%
    Fee-based income     8.0       7.6     4.1     4.1  
    Gross profit     81.5       79.9     1.9     1.9  
                               
    Gross profit rate     16.0 %     15.6 %   0.4  pts.      
                               
  Total Americas                            
    Revenue from services (including fee-based income)   $ 1,797.7     $ 1,850.4     (2.9 )%   (2.8 )%
    Fee-based income     15.9       15.3     3.7     4.1  
    Gross profit     269.2       275.6     (2.3 )   (2.2 )
    Total SG&A expenses     213.0       201.9     5.5     5.6  
    Earnings from operations     56.2       73.7     (23.7 )      
                                 
    Gross profit rate     15.0 %     14.9 %   0.1  pts.      
    Expense rates:                            
      % of revenue     11.8       10.9     0.9        
      % of gross profit     79.1       73.3     5.8        
    Operating margin     3.1       4.0     (0.9 )      
                             
EMEA                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 420.8     $ 426.7     (1.4 )%   (1.5 )%
    Fee-based income     10.7       12.3     (13.4 )   (13.2 )
    Gross profit     64.9       67.7     (4.1 )   (4.4 )
                             
    Gross profit rate     15.4 %     15.9 %   (0.5 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 86.6     $ 83.8     3.3 %   3.1 %
    Fee-based income     7.9       9.0     (12.6 )   (12.4 )
    Gross profit     21.2       22.2     (4.4 )   (4.5 )
                             
    Gross profit rate     24.5 %     26.4 %   (1.9 ) pts.      
                             
  Total EMEA                            
    Revenue from services (including fee-based income)   $ 507.4     $ 510.5     (0.6 )%   (0.7 )%
    Fee-based income     18.6       21.3     (13.1 )   (12.9 )
    Gross profit     86.1       89.9     (4.2 )   (4.4 )
    SG&A expenses excluding restructuring charges     82.1       86.4     (5.0 )      
    Restructuring charges     (0.2 )     (2.2 )   93.8        
    Total SG&A expenses     81.9       84.2     (2.7 )   (2.9 )
    Earnings from operations     4.2       5.7     (25.7 )      
    Earnings from operations excluding restructuring charges     4.0       3.5     16.0        
                                 
    Gross profit rate     17.0 %     17.6 %   (0.6 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     16.2       16.9     (0.7 )      
      % of gross profit     95.2       96.1     (0.9 )      
    Operating margin (excluding restructuring charges)     0.8       0.7     0.1        
                                 
                                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    June Year to Date  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
APAC                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 169.2     $ 172.6     (2.0 )%   (2.0 )%
    Fee-based income     5.6       6.4     (13.4 )   (12.5 )
    Gross profit     24.1       25.6     (5.9 )   (5.7 )
                                 
    Gross profit rate     14.2 %     14.8 %   (0.6 ) pts.      
                               
  PT                            
    Revenue from services (including fee-based income)   $ 20.2     $ 25.6     (21.2 )%   (20.5 )%
    Fee-based income     4.5       8.1     (45.4 )   (45.0 )
    Gross profit     7.1       10.5     (33.1 )   (32.5 )
                                 
    Gross profit rate     34.9 %     41.1 %   (6.2 ) pts.      
                               
  Total APAC                            
    Revenue from services (including fee-based income)   $ 189.4     $ 198.2     (4.5 )%   (4.3) )%
    Fee-based income     10.1       14.5     (31.2 )   (30.6 )
    Gross profit     31.2       36.1     (13.8 )   (13.5 )
    SG&A expenses excluding restructuring charges     31.0       38.7     (20.0 )      
    Restructuring charges     0.2       -     NM        
    Total SG&A expenses     31.2       38.7     (19.4 )   (19.1 )
    Earnings from operations     -       (2.6 )   98.9        
    Earnings from operations excluding restructuring charges     0.2       (2.6 )   NM        
                               
    Gross profit rate     16.4 %     18.2 %   (1.8 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     16.3       19.5     (3.2 )      
      % of gross profit     99.3       107.1     (7.8 )      
    Operating margin (excluding restructuring charges)     0.1       (1.3 )   1.4        
                             
OCG                            
    Revenue from services (including fee-based income)   $ 208.9     $ 178.1     17.3 %   17.4 %
    Fee-based income     30.3       24.4     24.4     24.7  
    Gross profit     52.7       46.8     12.6     12.8  
    SG&A expenses excluding restructuring charges     51.0       45.4     12.3        
    Restructuring charges     0.8       -     NM        
    Total SG&A expenses     51.8       45.4     13.9     14.0  
    Asset impairments     1.7       -     NM        
    Earnings from operations     (0.8 )     1.4     NM        
    Earnings from operations excluding restructuring charges     -       1.4     NM        
                             
    Gross profit rate     25.2 %     26.3 %   (1.1 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     24.4       25.5     (1.1 )      
      % of gross profit     96.8       97.1     (0.3 )      
    Operating margin (excluding restructuring charges)     -       0.7     (0.7 )      
                             
                             
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
    June 30, 2013     Dec. 30, 2012    
July 1, 2012
 
Current Assets                        
  Cash and equivalents   $ 70.3     $ 76.3     $ 65.2  
  Trade accounts receivable, less allowances of $9.8 and $10.4 and $11.8, respectively     1,038.8       1,013.9       985.0  
  Prepaid expenses and other current assets     60.0       57.5       57.9  
  Deferred taxes     39.0       44.9       33.4  
                         
      Total current assets     1,208.1       1,192.6       1,141.5  
                         
Property and Equipment, Net     87.2       89.9       90.3  
                         
Noncurrent Deferred Taxes     103.1       82.8       93.4  
                         
Goodwill, Net     90.3       89.5       91.4  
                         
Other Assets     227.8       180.9       168.4  
                         
Total Assets   $ 1,716.5     $ 1,635.7     $ 1,585.0  
                         
Current Liabilities                        
  Short-term borrowings   $ 83.2     $ 64.1     $ 88.5  
  Accounts payable and accrued liabilities     289.2       295.6       269.5  
  Accrued payroll and related taxes     277.9       264.5       253.7  
  Accrued insurance     31.2       32.8       30.3  
  Income and other taxes     64.9       65.3       56.5  
                         
      Total current liabilities     746.4       722.3       698.5  
                         
Noncurrent Liabilities                        
  Accrued insurance     41.4       43.5       51.4  
  Accrued retirement benefits     123.2       111.0       102.8  
  Other long-term liabilities     28.2       17.9       24.0  
                         
      Total noncurrent liabilities     192.8       172.4       178.2  
                         
Stockholders' Equity                        
  Common stock     40.1       40.1       40.1  
  Treasury stock     (60.6 )     (61.6 )     (63.2 )
  Paid-in capital     28.9       27.1       27.4  
  Earnings invested in the business     719.1       700.0       678.3  
  Accumulated other comprehensive income     49.8       35.4       25.7  
                         
      Total stockholders' equity     777.3       741.0       708.3  
                         
Total Liabilities and Stockholders' Equity   $ 1,716.5     $ 1,635.7     $ 1,585.0  
                         
                         
STATISTICS:                        
  Working Capital   $ 461.7     $ 470.3     $ 443.0  
  Current Ratio     1.6       1.7       1.6  
  Debt-to-capital %     9.7 %     8.0 %     11.1 %
  Global Days Sales Outstanding     54       53       53  
                           
                           
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 26 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars)  
             
    2013     2012  
                 
Cash flows from operating activities                
  Net earnings   $ 22.9     $ 24.6  
  Noncash adjustments:                
    Impairment of assets     1.7       -  
    Depreciation and amortization     10.5       11.6  
    Provision for bad debts     0.5       0.6  
    Stock-based compensation     2.6       2.1  
    Other, net     0.7       -  
  Changes in operating assets and liabilities     (53.1 )     (33.0 )
                 
      Net cash (used in) from operating activities     (14.2 )     5.9  
                 
Cash flows from investing activities                
  Capital expenditures     (7.7 )     (9.8 )
  Other investing activities     (0.2 )     -  
                 
      Net cash used in investing activities     (7.9 )     (9.8 )
                 
Cash flows from financing activities                
  Net change in short-term borrowings     19.1       (7.8 )
  Dividend payments     (3.8 )     (3.8 )
                 
      Net cash from (used in) financing activities     15.3       (11.6 )
                 
Effect of exchange rates on cash and equivalents     0.8       (0.3 )
                 
Net change in cash and equivalents     (6.0 )     (15.8 )
Cash and equivalents at beginning of period     76.3       81.0  
                 
                 
Cash and equivalents at end of period   $ 70.3     $ 65.2  
                 
                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    Second Quarter (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2013   2012   US$     Currency  
                         
Americas                        
  United States   $ 864.3   $ 874.4   (1.2 )%   (1.2 )%
  Canada     55.0     62.0   (11.3 )   (10.1 )
  Mexico     35.9     25.8   38.9     27.9  
  Puerto Rico     26.1     25.9   0.5     0.5  
  Brazil     13.4     14.4   (7.0 )   (0.9 )
Total Americas     994.7     1,002.5   (0.8 )   (0.9 )
                         
EMEA                        
  France     62.3     61.1   2.0     0.1  
  Switzerland     63.6     59.8   6.3     6.8  
  Russia     34.6     31.8   9.1     11.2  
  United Kingdom     25.8     26.0   (1.0 )   2.0  
  Portugal     21.1     19.0   11.2     9.0  
  Germany     15.9     17.4   (8.9 )   (10.7 )
  Norway     15.4     16.7   (8.1 )   (9.2 )
  Italy     14.7     15.1   (2.4 )   (4.4 )
  Other     17.3     15.6   11.4     9.2  
Total EMEA     270.7     262.5   3.1     2.8  
                         
APAC                        
  Australia     35.3     32.3   9.1     11.2  
  Singapore     28.0     24.9   12.4     11.1  
  Malaysia     17.2     18.0   (4.2 )   (5.6 )
  New Zealand     12.0     13.4   (10.2 )   (13.6 )
  Other     9.0     12.5   (27.7 )   (25.5 )
Total APAC     101.5     101.1   0.4     0.3  
                         
Total Kelly Services, Inc.   $ 1,366.9   $ 1,366.1   0.1 %   (0.1 )%
                         
                         
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    June Year to Date (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2013   2012   US$     Currency  
                         
Americas                        
  United States   $ 1,703.8   $ 1,732.9   (1.7 )%   (1.7 )%
  Canada     111.0     121.5   (8.6 )   (7.7 )
  Mexico     66.3     51.3   29.3     22.4  
  Puerto Rico     49.2     51.8   (5.1 )   (5.1 )
  Brazil     31.9     32.4   (1.8 )   8.7  
Total Americas     1,962.2     1,989.9   (1.4 )   (1.3 )
                         
EMEA                        
  France     119.6     123.9   (3.5 )   (4.7 )
  Switzerland     117.0     113.4   3.2     4.0  
  Russia     69.1     65.4   5.7     7.4  
  United Kingdom     51.6     53.7   (3.9 )   (1.9 )
  Portugal     38.9     37.2   4.5     3.2  
  Germany     31.9     36.1   (11.8 )   (12.9 )
  Norway     30.2     33.2   (9.0 )   (10.7 )
  Italy     29.8     31.4   (4.9 )   (6.1 )
  Other     34.7     31.2   11.3     9.7  
Total EMEA     522.8     525.5   (0.5 )   (0.6 )
                         
APAC                        
  Australia     68.0     66.2   2.8     4.6  
  Singapore     54.1     49.1   10.3     8.5  
  Malaysia     33.9     35.8   (5.3 )   (5.7 )
  New Zealand     23.5     26.5   (11.4 )   (14.0 )
  Other     17.2     27.9   (38.3 )   (35.6 )
Total APAC     196.7     205.5   (4.3 )   (4.1 )
                         
Total Kelly Services, Inc.   $ 2,681.7   $ 2,720.9   (1.4 )%   (1.4 )%
                         
                         
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                               
    2013   2012      
    As reported   Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings   Adjusted Earnings   % Change  
                                         
Revenue from services   $ 1,366.9   $ -     $ -     $ 1,366.9   $ 1,366.1   0.1 %
                                         
Cost of services     1,146.2     -       -       1,146.2     1,142.9   0.3  
                                         
Gross profit     220.7     -       -       220.7     223.2   (1.1 )
                                         
Selling, general and administrative expenses     202.6     (0.8 )     -       201.8     201.6   0.1  
                                         
Asset impairments     1.7     -       (1.7 )     -     -   NM  
                                         
Earnings from operations     16.4     0.8       1.7       18.9     21.6   (12.5 )
                                         
Other expense, net     1.6     -       -       1.6     0.5   (234.2 )
                                         
Earnings from continuing operations before taxes     14.8     0.8       1.7       17.3     21.1   (18.3 )
                                         
Income tax expense (benefit)     4.8     -       -       4.8     8.3   (42.4 )
                                         
Earnings from continuing operations   $ 10.0   $ 0.8     $ 1.7     $ 12.5   $ 12.8   (5.8 )%
                                         
                                         
Earnings per share from continuing operations:                                        
  Basic   $ 0.26   $ 0.02     $ 0.04     $ 0.33   $ 0.34   (2.9 )%
  Diluted   $ 0.26   $ 0.02     $ 0.04     $ 0.33   $ 0.34   (2.9 )%
                                         
                                         
    2012                    
    As reported   Restructuring Charges
(Note 1)
    Adjusted Earnings                    
                                         
Revenue from services   $ 1,366.1   $ -     $ 1,366.1                    
                                         
Cost of services     1,142.9     -       1,142.9                    
                                         
Gross profit     223.2     -       223.2                    
                                         
Selling, general and administrative expenses     199.4     2.2       201.6                    
                                         
Earnings from operations     23.8     (2.2 )     21.6                    
                                         
Other expense, net     0.5     -       0.5                    
                                         
Earnings from continuing operations before taxes     23.3     (2.2 )     21.1                    
                                         
Income tax expense (benefit)     8.3     -       8.3                    
                                         
Earnings from continuing operations   $ 15.0   $ (2.2 )   $ 12.8                    
                                         
Earnings per share from continuing operations:                                        
  Basic   $ 0.40   $ (0.06 )   $ 0.34                    
  Diluted   $ 0.40   $ (0.06 )   $ 0.34                    
                                         
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.  
   
                                   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 26 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                                   
    2013     2012      
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings     Adjusted Earnings   % Change  
                                             
Revenue from services   $ 2,681.7     $ -     $ -     $ 2,681.7     $ 2,720.9   (1.4) %
                                             
Cost of services     2,244.1       -       -       2,244.1       2,274.0   (1.3 )
                                             
Gross profit     437.6       -       -       437.6       446.9   (2.1 )
                                             
Selling, general and administrative expenses     412.4       (0.8 )     -       411.6       410.6   0.2  
                                             
Asset impairments     1.7       -       (1.7 )     -       -   NM  
                                             
Earnings from operations     23.5       0.8       1.7       26.0       36.3   (28.4 )
                                             
Other expense, net     2.6       -       -       2.6       1.1   (137.7 )
                                             
Earnings from continuing operations before taxes     20.9       0.8       1.7       23.4       35.2   (33.5 )
                                             
Income tax expense (benefit)     (2.0 )     -       -       (2.0 )     13.2   (115.4 )
                                             
Earnings from continuing operations   $ 22.9     $ 0.8     $ 1.7     $ 25.4     $ 22.0   13.1 %
                                             
                                             
Earnings per share from continuing operations:                                            
  Basic   $ 0.60     $ 0.02     $ 0.04     $ 0.67     $ 0.58   15.5 %
  Diluted   $ 0.60     $ 0.02     $ 0.04     $ 0.67     $ 0.58   15.5 %
                                             
                                             
    2012                      
    As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings                      
                                             
Revenue from services   $ 2,720.9     $ -     $ 2,720.9                      
                                             
Cost of services     2,274.0       -       2,274.0                      
                                             
Gross profit     446.9       -       446.9                      
                                             
Selling, general and administrative expenses     408.4       2.2       410.6                      
                                             
Asset impairments     -       -       -                      
                                             
Earnings from operations     38.5       (2.2 )     36.3                      
                                             
Other expense, net     1.1       -       1.1                      
                                             
Earnings from continuing operations before taxes     37.4       (2.2 )     35.2                      
                                             
Income tax expense (benefit)     13.2       -       13.2                      
                                             
Earnings from continuing operations   $ 24.2     $ (2.2 )   $ 22.0                      
                                             
Earnings per share from continuing operations:                                            
  Basic   $ 0.64     $ (0.06 )   $ 0.58                      
  Diluted   $ 0.64     $ (0.06 )   $ 0.58                      
                                             
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.  
   
                                       
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
 

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2013 financial performance and increases comparability. Specifically, Management believes that excluding these items 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)   During the second quarter of 2013, the Company made the decision to exit the executive search business operating in Germany. The restructuring charges primarily relate to severance costs from exiting this business. In the second quarter of 2012, restructuring costs relate primarily to revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.
     
(2)   Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.
     
     

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