SOURCE: Kelly Services

Kelly Services

August 06, 2014 07:30 ET

Kelly Services® Reports 2nd Quarter Results

TROY, MI--(Marketwired - Aug 6, 2014) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2014 totaled $1.4 billion, a 3.2% increase compared to the corresponding quarter of 2013.

Earnings from operations for the second quarter of 2014 totaled $5.9 million, compared to $16.4 million reported for the second quarter of 2013. Included in the results of operations in the second quarter of 2014 are restructuring charges of $1.8 million. The results of operations in the second quarter of 2013 included impairment charges of $1.7 million and restructuring charges of $0.8 million. Excluding the impairment and restructuring charges, earnings from operations were $7.7 million in the second quarter of 2014, compared to adjusted earnings of $18.9 million last year.

Diluted earnings per share in the second quarter of 2014 were $0.07 compared to $0.26 per share in the second quarter of 2013. Adjusted earnings per share were $0.10 in the second quarter of 2014 compared to $0.33 in the second quarter of 2013.

"Our second quarter results aligned with our expectations, and we're pleased with how we've executed our strategy in the first half of 2014," said Camden. "Our investments in OCG continue to yield double-digit revenue, GP, and earnings growth, confirming this segment is meeting the market's increased demand for higher-margin talent supply chain solutions. We're also making the aggressive investments needed to drive growth in specialty staffing across our local US markets, while continuing to invest in the success of our large account base."

Kelly also reported that on August 5, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 8 to shareholders of record as of the close of business on August 18.

In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 6, 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, our ability to retain the services of our senior management, local management and field personnel, our ability to adequately protect our intellectual property rights, including our brand, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, 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, 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 maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry or market developments, unexpected changes in claim trends on workers' compensation, disability and medical benefit plans, the net financial impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws and the expiration and/or reinstatement of the U.S. work opportunity credit program), the risk of additional tax or unclaimed property liabilities in excess of our estimates, 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, 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 provided employment to approximately 540,000 employees in 2013. Revenue in 2013 was $5.4 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2014     2013     Change     % Change  
                               
Revenue from services   $ 1,410.5     $ 1,366.9     $ 43.6     3.2 %
                               
Cost of services     1,182.4       1,146.2       36.2     3.2  
                               
Gross profit     228.1       220.7       7.4     3.4  
                               
Selling, general and administrative expenses     222.2       202.6       19.6     9.7  
                               
Asset impairments     --       1.7       (1.7 )   (100.0 )
                               
Earnings from operations     5.9       16.4       (10.5 )   (64.8 )
                               
Other expense, net     0.3       1.6       (1.3 )   84.0  
                               
Earnings before taxes     5.6       14.8       (9.2 )   (62.7 )
                               
Income tax expense     2.8       4.8       (2.0 )   (41.8 )
                               
Net earnings   $ 2.8     $ 10.0     $ (7.2 )   (72.6 )%
                               
                               
Basic earnings per share   $ 0.07     $ 0.26     $ (0.19 )   (73.1 )%
Diluted earnings per share   $ 0.07     $ 0.26     $ (0.19 )   (73.1 )%
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.2 %     16.1 %     0.1   pts.    
                               
Selling, general and administrative expenses:                              
  % of revenue     15.8       14.8       1.0        
  % of gross profit     97.5       91.8       5.7        
                               
% Return:                              
  Earnings from operations     0.4       1.2       (0.8 )      
  Earnings before taxes     0.4       1.1       (0.7 )      
  Net earnings     0.2       0.7       (0.5 )      
                               
Effective income tax rate     50.2 %     32.2 %     18.0   pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.4       37.2                
  Diluted     37.4       37.2                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.5       38.2                
  Diluted     38.6       38.2                
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2014     2013     Change     % Change  
                               
Revenue from services   $ 2,741.3     $ 2,681.7     $ 59.6     2.2 %
                               
Cost of services     2,290.9       2,244.1       46.8     2.1  
                               
Gross profit     450.4       437.6       12.8     2.9  
                               
Selling, general and administrative expenses     438.2       412.4       25.8     6.3  
                               
Asset impairments     --       1.7       (1.7 )   (100.0 )
                               
Earnings from operations     12.2       23.5       (11.3 )   (48.9 )
                               
Other expense, net     2.0       2.6       (0.6 )   26.2  
                               
Earnings before taxes     10.2       20.9       (10.7 )   (51.7 )
                               
Income tax expense (benefit)     4.9       (2.0 )     6.9     338.4  
                               
Net earnings   $ 5.3     $ 22.9     $ (17.6 )   (77.0 )%
                               
                               
Basic earnings per share   $ 0.14     $ 0.60     $ (0.46 )   (76.7 )%
Diluted earnings per share   $ 0.14     $ 0.60     $ (0.46 )   (76.7 )%
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.4 %     16.3 %     0.1   pts.    
                               
Selling, general and administrative expenses:                              
  % of revenue     16.0       15.4       0.6        
  % of gross profit     97.3       94.3       3.0        
                               
% Return:                              
  Earnings from operations     0.4       0.9       (0.5 )      
  Earnings before taxes     0.4       0.8       (0.4 )      
  Net earnings     0.2       0.9       (0.7 )      
                               
Effective income tax rate     47.9 %     (9.7) %     57.6   pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.4       37.2                
  Diluted     37.4       37.2                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.5       38.2                
  Diluted     38.6       38.2                
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                           
    Second Quarter  
                        Constant  
                        Currency  
    2014     2013     Change       Change  
AMERICAS                              
  Commercial                              
    Revenue from services   $ 661.1     $ 648.8     1.9 %     2.8 %
    Staffing fee-based income included in revenue from services     3.4       3.2     4.5       6.3  
    Gross profit     96.5       94.2     2.5       3.3  
                                   
    Gross profit rate     14.6 %     14.5 %   0.1     pts.    
                               
  PT                              
    Revenue from services   $ 244.2     $ 251.2     (2.8) %     (2.6 )%
    Staffing fee-based income included in revenue from services     3.7       3.5     5.4       6.1  
    Gross profit     39.0       39.0     --       0.2  
                                   
    Gross profit rate     16.0 %     15.5 %   0.5     pts.    
                               
  Total Americas                              
    Revenue from services   $ 905.3     $ 900.0     0.6 %     1.3 %
    Staffing fee-based income included in revenue from services     7.1       6.7     5.0       6.2  
    Gross profit     135.5       133.2     1.8       2.4  
    Total SG&A expenses     112.6       102.5     9.9       10.6  
    Earnings from operations     22.9       30.7     (25.5 )        
                                   
    Gross profit rate     15.0 %     14.8 %   0.2     pts.    
    Expense rates:                              
      % of revenue     12.4       11.4     1.0          
      % of gross profit     83.1       77.0     6.1          
    Return on sales     2.5       3.4     (0.9 )        
                         
EMEA                        
  Commercial                        
    Revenue from services   $ 237.0     $ 219.8     7.8 %     4.6 %
    Staffing fee-based income included in revenue from services     5.0       5.0     1.0       0.9  
    Gross profit     34.5       33.8     2.1       (0.9 )
                                   
    Gross profit rate     14.6 %     15.4 %   (0.8 )   pts.    
                               
  PT                              
    Revenue from services   $ 49.7     $ 43.1     15.1 %     10.3 %
    Staffing fee-based income included in revenue from services     3.6       3.8     (6.3 )     (7.0 )
    Gross profit     11.3       10.5     7.0       3.7  
                                   
    Gross profit rate     22.6 %     24.4 %   (1.8 )   pts.    
                               
Total EMEA                              
    Revenue from services   $ 286.7     $ 262.9     9.0 %     5.5 %
    Staffing fee-based income included in revenue from services     8.6       8.8     (2.2 )     (2.5 )
    Gross profit     45.8       44.3     3.2       0.2  
    SG&A expenses excluding restructuring charges     42.3       39.9     5.9          
    Restructuring charges     0.8       --     NM          
    Total SG&A expenses     43.1       39.9     7.8       4.4  
    Earnings from operations     2.7       4.4     (38.5 )        
    Earnings from operations excluding restructuring charges     3.5       4.4     (20.6 )        
                                 
    Gross profit rate     16.0 %     16.9 %   (0.9 )   pts.    
    Expense rates (excluding restructuring charges):                              
      % of revenue     14.7       15.2     (0.5 )        
      % of gross profit     92.3       90.0     2.3          
    Return on sales (excluding restructuring charges)     1.2       1.7     (0.5 )        
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Second Quarter  
                      Constant  
                      Currency  
    2014     2013     Change     Change  
APAC                            
  Commercial                            
    Revenue from services   $ 86.5     $ 87.7     (1.3) %   1.5 %
    Staffing fee-based income included in revenue from services     2.0       2.5     (20.8 )   (17.5 )
    Gross profit     11.7       12.5     (6.8 )   (4.2 )
                                 
    Gross profit rate     13.5 %     14.3 %   (0.8 ) pts.    
                             
  PT                            
    Revenue from services   $ 10.0     $ 10.0     (0.2) %   3.9 %
    Staffing fee-based income included in revenue from services     2.1       2.5     (14.2 )   (10.7 )
    Gross profit     3.3       3.8     (11.4 )   (7.7 )
                                 
    Gross profit rate     33.2 %     37.4 %   (4.2 ) pts.    
                             
  Total APAC                            
    Revenue from services   $ 96.5     $ 97.7     (1.2) %   1.8 %
    Staffing fee-based income included in revenue from services     4.1       5.0     (17.5 )   (14.1 )
    Gross profit     15.0       16.3     (7.8 )   (5.0 )
    SG&A expenses excluding restructuring charges     14.8       15.4     (3.5 )      
    Restructuring charges     1.0       --     NM        
    Total SG&A expenses     15.8       15.4     3.3     7.1  
    Earnings from operations     (0.8 )     0.9     NM        
    Earnings from operations excluding restructuring charges     0.2       0.9     (82.8 )      
                             
    Gross profit rate     15.5 %     16.6 %   (1.1 ) pts.    
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.4       15.7     (0.3 )      
      % of gross profit     99.0       94.5     4.5        
    Return on sales (excluding restructuring charges)     0.2       0.9     (0.7 )      
                         
OCG                        
    Revenue from services   $ 137.9     $ 118.3     16.5 %   16.8 %
    Gross profit     32.9       27.7     18.6     (18.5 )
    SG&A expenses excluding restructuring charges     31.1       26.9     15.3        
    Restructuring charges     --       0.8     (100.0 )      
    Total SG&A expenses     31.1       27.7     12.2     12.1  
    Asset impairments     --       1.7     (100.0 )      
    Earnings from operations     1.8       (1.7 )   NM        
    Earnings from operations excluding restructuring charges     1.8       (0.9 )   NM        
                                 
    Gross profit rate     23.9 %     23.4 %   0.5   pts.    
    Expense rates (excluding restructuring charges):                            
      % of revenue     22.5       22.8     (0.3 )      
      % of gross profit     94.4       97.1     (2.7 )      
    Return on sales (excluding restructuring charges)     1.3       (0.7 )   2.0        
                             
                             
                             
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                           
    June Year to Date  
                        Constant  
                        Currency  
    2014     2013     Change       Change  
AMERICAS                              
  Commercial                              
    Revenue from services   $ 1,274.3     $ 1,287.1     (1.0 )%     -- %
    Staffing fee-based income included in revenue from services     6.6       6.5     2.9       5.0  
    Gross profit     188.3       187.7     0.3       1.3  
                                   
    Gross profit rate     14.8 %     14.6 %   0.2     pts.    
                                 
  PT                              
    Revenue from services   $ 480.6     $ 493.8     (2.7 )%     (2.5 )%
    Staffing fee-based income included in revenue from services     7.3       6.9     6.1       6.8  
    Gross profit     78.8       77.3     2.0       2.2  
                                   
    Gross profit rate     16.4 %     15.6 %   0.8     pts.    
                                 
  Total Americas                              
    Revenue from services   $ 1,754.9     $ 1,780.9     (1.5) %     (0.7 )%
    Staffing fee-based income included in revenue from services     13.9       13.4     4.5       5.9  
    Gross profit     267.1       265.0     0.8       1.6  
    Total SG&A expenses     222.1       210.4     5.6       6.4  
    Earnings from operations     45.0       54.6     (17.7 )        
                                   
    Gross profit rate     15.2 %     14.9 %   0.3     pts.    
    Expense rates:                              
      % of revenue     12.7       11.8     0.9          
      % of gross profit     83.2       79.4     3.8          
    Return on sales     2.6       3.1     (0.5 )        
                               
EMEA                              
  Commercial                              
    Revenue from services   $ 458.9     $ 420.8     9.1 %     7.0 %
    Staffing fee-based income included in revenue from services     9.8       10.3     (4.7 )     (3.5 )
    Gross profit     67.4       64.9     3.9       2.0  
                                   
    Gross profit rate     14.7 %     15.4 %   (0.7 )   pts.    
                                 
  PT                              
    Revenue from services   $ 97.4     $ 86.6     12.4 %     8.6 %
    Staffing fee-based income included in revenue from services     7.2       7.8     (7.6 )     (7.5 )
    Gross profit     22.4       21.2     5.4       3.0  
                                   
    Gross profit rate     23.0 %     24.5 %   (1.5 )   pts.    
                               
Total EMEA                              
    Revenue from services   $ 556.3     $ 507.4     9.6 %     7.3 %
    Staffing fee-based income included in revenue from services     17.0       18.1     (6.0 )     (5.2 )
    Gross profit     89.8       86.1     4.3       2.3  
    SG&A expenses excluding restructuring charges     84.2       82.1     2.6          
    Restructuring charges     0.8       (0.2 )   NM          
    Total SG&A expenses     85.0       81.9     3.7       1.4  
    Earnings from operations     4.8       4.2     15.0          
    Earnings from operations excluding restructuring charges     5.6       4.0     38.6          
                                 
    Gross profit rate     16.1 %     17.0 %   (0.9 )   pts.    
    Expense rates (excluding restructuring charges):                              
      % of revenue     15.1       16.2     (1.1 )        
      % of gross profit     93.7       95.2     (1.5 )        
    Return on sales (excluding restructuring charges)     1.0       0.8     0.2          
                                   
                                   
                                   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    June Year to Date  
                      Constant  
                      Currency  
    2014     2013     Change     Change  
APAC                            
  Commercial                            
    Revenue from services   $ 169.5     $ 169.2     0.2 %   5.3 %
    Staffing fee-based income included in revenue from services     3.9       4.7     (17.9 )   (12.4 )
    Gross profit     24.0       24.1     (0.4 )   4.7  
                                 
    Gross profit rate     14.2 %     14.2 %   --   pts.    
                               
  PT                            
    Revenue from services   $ 18.6     $ 20.2     (7.8 )%   (1.7 )%
    Staffing fee-based income included in revenue from services     3.8       4.5     (14.5 )   (9.1 )
    Gross profit     6.1       7.1     (13.8 )   (8.1 )
                                 
    Gross profit rate     32.7 %     34.9 %   (2.2 ) pts.    
                               
  Total APAC                            
    Revenue from services   $ 188.1     $ 189.4     (0.7 )%   4.5 %
    Staffing fee-based income included in revenue from services     7.7       9.2     (16.3 )   (10.8 )
    Gross profit     30.1       31.2     (3.4 )   1.8  
    SG&A expenses excluding restructuring charges     29.1       31.0     (5.7 )      
    Restructuring charges     1.0       0.2     364.2        
    Total SG&A expenses     30.1       31.2     (2.9 )   2.9  
    Earnings from operations     --       --     NM        
    Earnings from operations excluding restructuring charges     1.0       0.2     335.1        
                                 
    Gross profit rate     16.0 %     16.4 %   (0.4 ) pts.    
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.5       16.3     (0.8 )      
      % of gross profit     97.0       99.3     (2.3 )      
    Return on sales (excluding restructuring charges)     0.5       0.1     0.4        
                             
OCG                            
    Revenue from services   $ 272.3     $ 225.7     20.6 %   21.1 %
    Gross profit     65.5       56.9     15.1     15.3  
    SG&A expenses excluding restructuring charges     62.5       53.6     16.6        
    Restructuring charges     --       0.8     (100.0 )      
    Total SG&A expenses     62.5       54.4     15.0     15.2  
    Asset impairments     --       1.7     (100.0 )      
    Earnings from operations     3.0       0.8     226.9        
    Earnings from operations excluding restructuring charges     3.0       1.6     82.1        
                                 
    Gross profit rate     24.1 %     25.2 %   (1.1 ) pts.    
    Expense rates (excluding restructuring charges):                            
      % of revenue     22.9       23.7     (0.8 )      
      % of gross profit     95.4       94.1     1.3        
    Return on sales (excluding restructuring charges)     1.1       0.7     0.4        
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
                   
    June 29, 2014     Dec. 29, 2013     June 30, 2013  
Current Assets                        
  Cash and equivalents   $ 62.8     $ 125.7     $ 70.3  
  Trade accounts receivable, less allowances of $9.2, $9.9 and $9.8, respectively     1,132.9       1,023.1       1,038.8  
  Prepaid expenses and other current assets     57.6       52.2       60.0  
  Deferred taxes     31.5       35.5       39.0  
Total current assets     1,284.8       1,236.5       1,208.1  
                         
Property and Equipment, Net     91.4       92.0       87.2  
                         
Noncurrent Deferred Taxes     130.8       121.7       103.1  
                         
Goodwill, Net     90.3       90.3       90.3  
                         
Other Assets     295.7       258.1       227.8  
                         
Total Assets   $ 1,893.0     $ 1,798.6     $ 1,716.5  
                         
Current Liabilities                        
  Short-term borrowings   $ 89.5     $ 28.3     $ 83.2  
  Accounts payable and accrued liabilities     328.4       342.4       289.2  
  Accrued payroll and related taxes     300.5       294.9       277.9  
  Accrued insurance     25.2       27.6       31.2  
  Income and other taxes     74.9       68.8       64.9  
                         
Total current liabilities     818.5       762.0       746.4  
                         
Noncurrent Liabilities                        
  Accrued insurance     44.7       46.0       41.4  
  Accrued retirement benefits     147.4       134.7       123.2  
  Other long-term liabilities     41.9       33.3       28.2  
                         
Total noncurrent liabilities     234.0       214.0       192.8  
                         
Stockholders' Equity                        
  Common stock     40.1       40.1       40.1  
  Treasury stock     (55.5 )     (56.2 )     (60.6 )
  Paid-in capital     29.0       26.0       28.9  
  Earnings invested in the business     752.8       751.3       719.1  
  Accumulated other comprehensive income     74.1       61.4       49.8  
                         
Total stockholders' equity     840.5       822.6       777.3  
                         
Total Liabilities and Stockholders' Equity   $ 1,893.0     $ 1,798.6     $ 1,716.5  
                         
                         
STATISTICS:                        
  Working Capital   $ 466.3     $ 474.5     $ 461.7  
  Current Ratio     1.6       1.6       1.6  
  Debt-to-capital %     9.6 %     3.3 %     9.7 %
  Global Days Sales Outstanding     57       52       54  
                           
                           
                           
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013  
(UNAUDITED)  
(In millions of dollars)  
             
    2014     2013  
Cash flows from operating activities:                
  Net earnings   $ 5.3     $ 22.9  
  Noncash adjustments:                
    Impairment of assets     --       1.7  
    Depreciation and amortization     10.8       10.5  
    Provision for bad debts     2.6       0.5  
    Stock-based compensation     3.5       2.6  
    Other, net     0.7       0.7  
  Changes in operating assets and liabilities     (130.4 )     (53.1 )
                   
    Net cash used in operating activities     (107.5 )     (14.2 )
                 
Cash flows from investing activities:                
  Capital expenditures     (8.9 )     (7.7 )
  Investment in equity affiliate     (5.4 )     --  
  Other investing activities     0.4       (0.2 )
                 
    Net cash used in investing activities     (13.9 )     (7.9 )
                 
Cash flows from financing activities:                
  Net change in short-term borrowings     61.2       19.1  
  Dividend payments     (3.8 )     (3.8 )
                 
    Net cash from financing activities     57.4       15.3  
                 
Effect of exchange rates on cash and equivalents     1.1       0.8  
                 
Net change in cash and equivalents     (62.9 )     (6.0 )
Cash and equivalents at beginning of period     125.7       76.3  
                 
                 
Cash and equivalents at end of period   $ 62.8     $ 70.3  
                 
                 
                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    Second Quarter (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2014   2013   US$     Currency  
                         
Americas                        
  United States   $ 888.3   $ 864.3   2.8 %   2.8 %
  Canada     49.6     55.0   (9.8 )   (3.9 )
  Mexico     34.6     35.9   (3.4 )   0.5  
  Puerto Rico     27.6     26.1   5.8     5.8  
  Brazil     13.7     13.4   1.9     14.4  
Total Americas     1,013.8     994.7   1.9     2.6  
                         
EMEA                        
  France     69.3     62.3   11.2     5.9  
  Switzerland     66.7     63.6   5.0     (0.9 )
  Russia     32.8     34.6   (5.1 )   4.8  
  Portugal     32.5     21.1   53.7     46.5  
  United Kingdom     28.4     25.8   10.1     0.5  
  Italy     16.6     14.7   12.8     7.5  
  Germany     16.5     15.9   4.3     (0.7 )
  Norway     14.4     15.4   (6.2 )   (3.7 )
  Other     18.0     17.3   3.7     (0.4 )
Total EMEA     295.2     270.7   9.1     5.6  
                         
APAC                        
  Singapore     31.1     28.0   11.0     11.2  
  Australia     30.0     35.3   (15.0 )   (9.8 )
  Malaysia     16.8     17.2   (2.5 )   2.8  
  New Zealand     13.2     12.0   10.1     5.0  
  Other     10.4     9.0   15.1     25.9  
Total APAC     101.5     101.5   (0.1 )   3.1  
                         
Total Kelly Services, Inc.   $ 1,410.5   $ 1,366.9   3.2 %   3.2 %
                         
                         
                         
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    June Year to Date (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2014   2013   US$     Currency  
                         
Americas                        
  United States   $ 1,728.2   $ 1,703.8   1.4 %   1.4 %
  Canada     96.3     111.0   (13.3 )   (6.4 )
  Mexico     65.3     66.3   (1.5 )   2.9  
  Puerto Rico     52.7     49.2   7.1     7.1  
  Brazil     29.6     31.9   (7.2 )   6.1  
Total Americas     1,972.1     1,962.2   0.5     1.2  
                         
EMEA                        
  France     132.1     119.6   10.5     5.8  
  Switzerland     129.0     117.0   10.3     4.9  
  Russia     67.7     69.1   (2.0 )   10.7  
  Portugal     59.1     38.9   51.9     45.3  
  United Kingdom     56.2     51.6   8.9     0.7  
  Germany     33.2     31.9   4.2     (0.2 )
  Italy     31.5     29.8   5.7     1.2  
  Norway     28.8     30.2   (4.7 )   0.5  
  Other     35.1     34.7   1.0     (2.5 )
Total EMEA     572.7     522.8   9.6     7.2  
                         
APAC                        
  Singapore     61.4     54.1   13.5     15.0  
  Australia     56.5     68.0   (17.0 )   (8.1 )
  Malaysia     33.3     33.9   (1.6 )   4.5  
  New Zealand     25.5     23.5   8.8     6.1  
  Other     19.8     17.2   14.9     28.5  
Total APAC     196.5     196.7   (0.1 )   5.3  
                         
Total Kelly Services, Inc.   $ 2,741.3   $ 2,681.7   2.2 %   2.7 %
                         
                         
                         
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                           
    2014     2013      
    As reported   Restructuring Charges
(Note 1)
    Adjusted Earnings     Adjusted Earnings   % Change  
                                   
Revenue from services   $ 1,410.5   $ --     $ 1,410.5     $ 1,366.9   3.2 %
                                   
Cost of services     1,182.4     --       1,182.4       1,146.2   3.2  
                                   
Gross profit     228.1     --       228.1       220.7   3.4  
                                   
SG&A expenses     222.2     (1.8 )     220.4       201.8   9.2  
                                   
Earnings from operations     5.9     1.8       7.7       18.9   (59.5 )
                                   
Other expense, net     0.3     --       0.3       1.6   84.0  
                                   
Earnings before taxes     5.6     1.8       7.4       17.3   (57.1 )
                                   
Inc. tax expense (benefit)     2.8     0.6       3.4       4.8   (28.2 )
                                   
Net earnings   $ 2.8   $ 1.2     $ 4.0     $ 12.5   (68.2) %
                                   
Earnings per share:                                  
  Basic   $ 0.07   $ 0.03     $ 0.10     $ 0.33   (69.7) %
  Diluted   $ 0.07   $ 0.03     $ 0.10     $ 0.33   (69.7) %
                                   
                                   
    2013      
    As reported   Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings      
                                   
Revenue from services   $ 1,366.9   $ --     $ --     $ 1,366.9      
                                   
Cost of services     1,146.2     --       --       1,146.2      
                                   
Gross profit     220.7     --       --       220.7      
                                   
SG&A expenses     202.6     (0.8 )     --       201.8      
                                   
Asset impairments     1.7     --       (1.7 )     --      
                                   
Earnings from operations     16.4     0.8       1.7       18.9      
                                   
Other expense, net     1.6     --       --       1.6      
                                   
Earnings before taxes     14.8     0.8       1.7       17.3      
                                   
Inc. tax expense (benefit)     4.8     --       --       4.8      
                                   
Net earnings   $ 10.0   $ 0.8     $ 1.7     $ 12.5      
                                   
Earnings per share:                                  
  Basic   $ 0.26   $ 0.02     $ 0.04     $ 0.33      
  Diluted   $ 0.26   $ 0.02     $ 0.04     $ 0.33      
                                   
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 29, 2014 AND JUNE 30, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                               
    2014     2013        
    As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Adjusted Earnings     % Change  
                                       
Revenue from services   $ 2,741.3     $ --     $ 2,741.3     $ 2,681.7     2.2 %
                                       
Cost of services     2,290.9       --       2,290.9       2,244.1     2.1  
                                       
Gross profit     450.4       --       450.4       437.6     2.9  
                                       
SG&A expenses     438.2       (1.8 )     436.4       411.6     6.1  
                                       
Earnings from operations     12.2       1.8       14.0       26.0     (46.5 )
                                       
Other expense, net     2.0       --       2.0       2.6     26.2  
                                       
Earnings before taxes     10.2       1.8       12.0       23.4     (48.8 )
                                       
Inc. tax expense (benefit)     4.9       0.6       5.5       (1.9 )   384.4  
                                       
Net earnings   $ 5.3     $ 1.2     $ 6.5     $ 25.3     (74.4) %
                                       
Earnings per share:                                      
  Basic   $ 0.14     $ 0.03     $ 0.17     $ 0.66     (74.2) %
  Diluted   $ 0.14     $ 0.03     $ 0.17     $ 0.66     (74.2) %
                                       
                                       
    2013        
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings        
                                       
Revenue from services   $ 2,681.7     $ --     $ --     $ 2,681.7        
                                       
Cost of services     2,244.1       --       --       2,244.1        
                                       
Gross profit     437.6       --       --       437.6        
                                       
SG&A expenses     412.4       (0.8 )     --       411.6        
                                       
Asset impairments     1.7       --       (1.7 )     --        
                                       
Earnings from operations     23.5       0.8       1.7       26.0        
                                       
Other expense, net     2.6       --       --       2.6        
                                       
Earnings before taxes     20.9       0.8       1.7       23.4        
                                       
Inc. tax expense (benefit)     (2.0 )     0.1       --       (1.9 )      
                                       
Net earnings   $ 22.9     $ 0.7     $ 1.7     $ 25.3        
                                       
Earnings per share:                                      
  Basic   $ 0.60     $ 0.02     $ 0.04     $ 0.66        
  Diluted   $ 0.60     $ 0.02     $ 0.04     $ 0.66        
                                       
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 SERIVCES, 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 2014 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) Restructuring charges in 2014 relate to costs incurred for exiting the staffing business in Sweden and closing branches in Australia. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.

(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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