SOURCE: Kelly Services, Inc.

Kelly Services, Inc.

November 10, 2010 07:30 ET

Kelly Services® Reports 3rd Quarter 2010 Results

TROY, MI--(Marketwire - November 10, 2010) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2010.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2010 totaled $1.3 billion, a 22% increase compared to the corresponding quarter in 2009. On a constant currency basis, revenue increased by 23%.

Earnings from operations for the third quarter of 2010 totaled $14.3 million, compared to losses from operations of $28.0 million reported for the third quarter of 2009. Included in the results from operations for the third quarter of 2010 are restructuring charges of $2.8 million. The loss from operations in the third quarter of 2009 included restructuring charges of $4.6 million and impairment charges of $0.5 million. Excluding the restructuring and impairment charges, earnings from operations were $17.1 million in the third quarter of 2010 compared to a loss from operations of $22.9 million in 2009.

Diluted earnings per share from continuing operations in the third quarter of 2010 were $0.26 compared to third quarter 2009 losses of $0.43 per share. The restructuring charges were $0.05 per share in the third quarter of 2010 and the restructuring and impairment charges totaled $0.12 per share in the third quarter of 2009.

Commenting on the third quarter results, Camden stated, "We're very pleased that demand for temporary staffing accelerated as global economic expansion persisted and labor markets continued to slowly strengthen. These trends, along with our ability to maintain a leaner cost structure, translated into solid third quarter earnings.

"Our efforts and discipline are clearly yielding results. We're confident that our realigned strategy enables us to take advantage of growth areas in our industry, particularly professional/technical staffing and supply chain management. We will continue to focus on improving profitability through client-focused solutions that connect the world's top companies with the world's best talent."

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 10, 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, changing market and economic conditions, material changes in demand from large corporate customers, availability of temporary workers with appropriate skills required by customers, increases in wages paid to temporary workers, liabilities for client and employee actions, foreign currency fluctuations, changes in laws and regulations (including federal, state and international tax laws), continued availability of financing for funding working capital and acquisitions and for general corporate purposes, the Company's ability to effectively implement and manage its information technology programs, the ability of the Company to successfully expand into new markets and service lines, and other risks, uncertainties and factors discussed in this release and in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2010 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2010 filed with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein.

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 480,000 employees annually. Revenue in 2009 was $4.3 billion. Visit www.kellyservices.com and connect with us on facebook.com/kellyservices, linkedin.com/companies/kelly-services and twitter.com/kellyservices.

                  KELLY SERVICES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
      FOR THE 13 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
                                (UNAUDITED)
              (In millions of dollars except per share data)


                                  2010       2009       Change   % Change
                                ---------  ---------  ---------  ---------
Revenue from services           $ 1,284.7  $ 1,049.2  $   235.5       22.4%

Cost of services                  1,077.5      883.0      194.5       22.0
                                ---------  ---------  ---------  ---------

Gross profit                        207.2      166.2       41.0       24.7

Selling, general and
 administrative expenses            192.9      193.7       (0.8)      (0.4)
Asset impairments                       -        0.5       (0.5)    (100.0)
                                ---------  ---------  ---------  ---------

Earnings (loss) from operations      14.3      (28.0)      42.3         NM

Other expense, net                   (1.5)      (1.6)       0.1        8.1
                                ---------  ---------  ---------  ---------

Earnings (loss) from continuing
 operations before taxes             12.8      (29.6)      42.4         NM

Income taxes                          3.2      (14.8)      18.0      121.7
                                ---------  ---------  ---------  ---------

Earnings (loss) from continuing
 operations                           9.6      (14.8)      24.4         NM

Earnings from discontinued
 operations, net of tax                 -          -          -         NM
                                ---------  ---------  ---------  ---------

Net earnings (loss)             $     9.6  $   (14.8) $    24.4         NM%
                                =========  =========  =========  =========

Basic earnings (loss) per share
 on common stock
  Earnings (loss) from
   continuing operations        $    0.26  $   (0.43) $    0.69         NM%
  Earnings from discontinued
   operations                           -          -          -         NM
  Net earnings (loss)                0.26      (0.43)      0.69         NM

Diluted earnings (loss) per
 share on common stock
  Earnings (loss) from
   continuing operations        $    0.26  $   (0.43) $    0.69         NM%
  Earnings from discontinued
   operations                           -          -          -         NM
  Net earnings (loss)                0.26      (0.43)      0.69         NM


STATISTICS:

Gross profit rate                    16.1%      15.8%       0.3 pts.

Selling, general and
 administrative expenses:
  % of revenue                       15.0       18.5       (3.5)
  % of gross profit                  93.1      116.5      (23.4)

% Return -  Earnings (loss)
 from operations                      1.1       (2.7)       3.8
      Earnings (loss) from
       continuing operations
       before taxes                   1.0       (2.8)       3.8
      Earnings (loss) from
       continuing operations          0.7       (1.4)       2.1
      Net earnings (loss)             0.7       (1.4)       2.1

Effective income tax rate            25.1%      49.9%     (24.8) pts.

Average number of shares
 outstanding (millions):
  Basic                              36.7       34.9
  Diluted                            36.7       34.9





                   KELLY SERVICES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
       FOR THE 39 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
                                (UNAUDITED)
              (In millions of dollars except per share data)


                                  2010       2009       Change   % Change
                                ---------  ---------  ---------  ---------
Revenue from services           $ 3,624.5  $ 3,120.7  $   503.8       16.1%

Cost of services                  3,046.4    2,607.3      439.1       16.8
                                ---------  ---------  ---------  ---------

Gross profit                        578.1      513.4       64.7       12.6

Selling, general and
 administrative expenses            555.4      593.4      (38.0)      (6.4)
Asset impairments                     1.5       53.1      (51.6)     (97.1)
                                ---------  ---------  ---------  ---------

Earnings (loss) from operations      21.2     (133.1)     154.3         NM

Other expense, net                   (4.7)      (1.3)      (3.4)    (253.3)
                                ---------  ---------  ---------  ---------

Earnings (loss) from continuing
 operations before taxes             16.5     (134.4)     150.9         NM

Income taxes                          5.0      (37.5)      42.5      113.5
                                ---------  ---------  ---------  ---------

Earnings (loss) from continuing
 operations                          11.5      (96.9)     108.4         NM

Earnings from discontinued
 operations, net of tax                 -        0.6       (0.6)    (100.0)
                                ---------  ---------  ---------  ---------

Net earnings (loss)             $    11.5  $   (96.3) $   107.8         NM%
                                =========  =========  =========  =========

Basic earnings (loss) per share
 on common stock
  Earnings (loss) from
   continuing operations        $    0.32  $   (2.78) $    3.10         NM%
  Earnings from discontinued
   operations                           -       0.02      (0.02)    (100.0)
  Net earnings (loss)                0.32      (2.76)      3.08         NM

Diluted earnings (loss) per
 share on common stock
  Earnings (loss) from
   continuing operations        $    0.32  $   (2.78) $    3.10         NM%
  Earnings from discontinued
   operations                           -       0.02      (0.02)    (100.0)
  Net earnings (loss)                0.32      (2.76)      3.08         NM


STATISTICS:

Gross profit rate                    16.0%      16.5%      (0.5) pts.

Selling, general and
 administrative expenses:
  % of revenue                       15.3       19.0       (3.7)
  % of gross profit                  96.1      115.6      (19.5)

% Return -  Earnings (loss)
 from operations                      0.6       (4.3)       4.9
      Earnings (loss) from
       continuing operations
       before taxes                   0.5       (4.3)       4.8
      Earnings (loss) from
       continuing operations          0.3       (3.1)       3.4
      Net earnings (loss)             0.3       (3.1)       3.4

Effective income tax rate            30.6%      27.9%       2.7 pts.

Average number of shares
 outstanding (millions):
  Basic                              35.9       34.9
  Diluted                            35.9       34.9




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


                                              Third Quarter
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  ---------  ---------
Americas Commercial
  Revenue from services
   (including fee-based income) $   633.3  $   467.5       35.5%      34.7%
  Fee-based income                    2.2        1.7       23.8       22.5
  Gross profit                       92.3       67.2       37.4       36.7
  SG&A expenses excluding
   restructuring charges             69.1       66.0        4.7
  Restructuring charges                 -        1.8     (100.0)
  Total SG&A expenses                69.1       67.8        2.0        1.4
  Earnings from operations           23.2       (0.6)        NM
  Earnings from operations
   excluding restructuring
   charges                           23.2        1.2         NM

  Gross profit rate                  14.6%      14.4%       0.2 pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    10.9       14.1       (3.2)
     % of gross profit               74.8       98.2      (23.4)
  Operating margin (excluding
   restructuring charges)             3.7        0.3        3.4

Americas PT
  Revenue from services
   (including fee-based income) $   233.6  $   192.1       21.6%      21.5%
  Fee-based income                    2.2        2.1        1.9        1.8
  Gross profit                       37.2       29.5       26.2       26.0
  SG&A expenses excluding
   restructuring charges             23.5       24.5       (4.4)
  Restructuring charges                 -        0.1     (100.0)
  Total SG&A expenses                23.5       24.6       (4.8)      (5.0)
  Earnings from operations           13.7        4.9      185.1
  Earnings from operations
   excluding restructuring
   charges                           13.7        5.0      178.3

  Gross profit rate                  15.9%      15.4%       0.5 pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    10.1       12.8       (2.7)
     % of gross profit               63.1       83.3      (20.2)
  Operating margin (excluding
   restructuring charges)             5.9        2.6        3.3

EMEA Commercial
  Revenue from services
   (including fee-based income) $   228.1  $   228.0        0.0%       5.2%
  Fee-based income                    4.5        3.7       23.9       27.8
  Gross profit                       37.2       33.9        9.7       15.3
  SG&A expenses excluding
   restructuring charges             32.4       37.7      (13.7)
  Restructuring charges                 -        1.8     (100.0)
  Total SG&A expenses                32.4       39.5      (17.7)     (13.8)
  Earnings from operations            4.8       (5.6)        NM
  Earnings from operations
   excluding restructuring
   charges                            4.8       (3.8)        NM

  Gross profit rate                  16.3%      14.9%       1.4 pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    14.2       16.5       (2.3)
     % of gross profit               87.2      110.9      (23.7)
  Operating margin (excluding
   restructuring charges)             2.1       (1.6)       3.7




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


                                              Third Quarter
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  ---------  ---------
EMEA PT
  Revenue from services
   (including fee-based income) $    37.1  $    36.4        1.9%       8.5%
  Fee-based income                    3.6        3.9       (8.9)      (5.7)
  Gross profit                        9.6        9.8       (1.8)       3.7
  Total SG&A expenses                 9.3        9.9       (6.9)      (2.5)
  Earnings from operations            0.3       (0.1)        NM

  Gross profit rate                  26.0%      27.0%      (1.0) pts.
  Expense rates:
     % of revenue                    25.0       27.3       (2.3)
     % of gross profit               96.1      101.3       (5.2)
  Operating margin                    1.0       (0.4)       1.4

APAC Commercial
  Revenue from services
   (including fee-based income) $    88.7  $    71.2       24.6%      15.4%
  Fee-based income                    3.0        2.3       29.0       19.7
  Gross profit                       12.4       10.3       19.9       10.9
  SG&A expenses excluding
   restructuring charges             11.4       11.4        0.1
  Restructuring charges                 -        0.1     (100.0)
  Total SG&A expenses                11.4       11.5       (0.7)      (7.8)
  Earnings from operations            1.0       (1.2)        NM
  Earnings from operations
   excluding restructuring
   charges                            1.0       (1.1)        NM

  Gross profit rate                  14.0%      14.5%      (0.5) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    12.8       16.0       (3.2)
     % of gross profit               92.0      110.3      (18.3)
  Operating margin (excluding
   restructuring charges)             1.1       (1.5)       2.6

APAC PT
  Revenue from services
   (including fee-based income) $     8.2  $     6.5       27.3%      18.8%
  Fee-based income                    2.9        1.0      179.5      164.0
  Gross profit                        3.8        2.0       89.9       78.6
  Total SG&A expenses                 4.3        2.3       87.9       77.6
  Earnings from operations           (0.5)      (0.3)     (77.2)

  Gross profit rate                  45.2%      30.3%      14.9 pts.
  Expense rates:
     % of revenue                    53.0       35.9       17.1
     % of gross profit              117.1      118.4       (1.3)
  Operating margin                   (7.7)      (5.6)      (2.1)




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


                                              Third Quarter
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  ---------  ---------
OCG
  Revenue from services
   (including fee-based income) $    64.1  $    52.9       21.2%      21.3%
  Fee-based income                    6.6        5.8       13.6       13.5
  Gross profit                       15.4       13.7       11.7       12.0
  SG&A expenses excluding
   restructuring charges             19.6       17.3       12.9
  Restructuring charges                 -        0.1     (100.0)
  Total SG&A expenses                19.6       17.4       12.2       13.0
  Earnings from operations           (4.2)      (3.7)     (14.4)
  Earnings from operations
   excluding restructuring
   charges                           (4.2)      (3.6)     (17.8)

  Gross profit rate                  24.0%      26.1%      (2.1) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    30.5       32.8       (2.3)
     % of gross profit              127.2      125.8        1.4
  Operating margin (excluding
   restructuring charges)            (6.5)      (6.7)       0.2

Corporate Expense
  SG&A expenses excluding
   restructuring charges        $    21.2  $    20.2        4.4%
  Restructuring charges               2.8        0.7      301.3
  Total SG&A expenses                24.0       20.9       14.4
  Asset impairments                     -        0.5     (100.0)

Consolidated Total (net of
 intersegment activity)
  Revenue from services
   (including fee-based income) $ 1,284.7  $ 1,049.2       22.4%      22.7%
  Fee-based income                   24.9       20.5       20.6       19.9
  Gross profit                      207.2      166.2       24.7       25.1
  SG&A expenses excluding
   restructuring charges            190.1      189.1        0.5
  Restructuring charges               2.8        4.6      (38.2)
  Total SG&A expenses               192.9      193.7       (0.4)      (0.1)
  Asset impairments                     -        0.5     (100.0)
  Earnings from operations           14.3      (28.0)        NM
  Earnings from operations
   excluding restructuring
   charges                           17.1      (23.4)        NM

  Gross profit rate                  16.1%      15.8%       0.3  pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    14.8       18.0       (3.2)
     % of gross profit               91.7      113.8      (22.1)
  Operating margin (excluding
   restructuring charges)             1.3       (2.2)       3.5




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


                                         September Year to Date
                                -----------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  --------   --------
Americas Commercial
  Revenue from services
   (including fee-based income) $ 1,781.9  $ 1,422.9      25.2%      23.8%
  Fee-based income                    6.5        5.1      26.4       23.2
  Gross profit                      256.5      210.9      21.6       20.3
  SG&A expenses excluding
   restructuring charges            201.9      205.3      (1.7)
  Restructuring charges               0.3        3.7     (90.3)
  Total SG&A expenses               202.2      209.0      (3.3)      (4.3)
  Earnings from operations           54.3        1.9        NM
  Earnings from operations
   excluding restructuring
   charges                           54.6        5.6        NM

  Gross profit rate                  14.4%      14.8%     (0.4) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    11.3       14.4      (3.1)
     % of gross profit               78.7       97.3     (18.6)
  Operating margin (excluding
   restructuring charges)             3.1        0.4       2.7

Americas PT
  Revenue from services
   (including fee-based income) $   659.1  $   584.3      12.8%      12.6%
  Fee-based income                    6.7        7.2      (7.3)      (7.7)
  Gross profit                      103.2       93.2      10.9       10.6
  SG&A expenses excluding
   restructuring charges             69.2       76.2      (9.1)
  Restructuring charges                 -        0.2    (100.0)
  Total SG&A expenses                69.2       76.4      (9.4)      (9.6)
  Earnings from operations           34.0       16.8     103.2
  Earnings from operations
   excluding restructuring
   charges                           34.0       17.0     100.3

  Gross profit rate                  15.7%      15.9%     (0.2) pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                     10.5       13.0      (2.5)
    % of gross profit                67.0       81.7     (14.7)
  Operating margin (excluding
   restructuring charges)             5.2        2.9       2.3

EMEA Commercial
  Revenue from services
   (including fee-based income) $   642.8  $   656.3      (2.1)%     (1.5)%
  Fee-based income                   14.4       12.3      18.0       16.4
  Gross profit                      103.8      102.8       1.0        1.6
  SG&A expenses excluding
   restructuring charges             95.7      115.1     (16.8)
  Restructuring charges               2.7       10.7     (75.1)
  Total SG&A expenses                98.4      125.8     (21.8)     (21.8)
  Asset impairments                   1.5          -        NM
  Earnings from operations            3.9      (23.0)       NM
  Earnings from operations
   excluding restructuring
   charges                            6.6      (12.3)       NM

  Gross profit rate                  16.1%      15.7%      0.4 pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    14.9       17.5      (2.6)
     % of gross profit               92.2      111.9     (19.7)
  Operating margin (excluding
   restructuring charges)             1.0       (1.9)      2.9




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


                                         September Year to Date
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  ---------  ---------
EMEA PT
  Revenue from services
   (including fee-based income) $   106.4  $   102.3        4.0%       5.5%
  Fee-based income                   11.2       12.1       (7.1)      (8.3)
  Gross profit                       28.3       28.0        1.5        2.0
  Total SG&A expenses                27.6       30.0       (8.1)      (8.0)
  Earnings from operations            0.7       (2.0)        NM

  Gross profit rate                  26.7%      27.4%      (0.7) pts.
  Expense rates:
     % of revenue                    25.9       29.4       (3.5)
     % of gross profit               97.1      107.2      (10.1)
  Operating margin                    0.8       (2.0)       2.8

APAC Commercial
  Revenue from services
   (including fee-based income) $   253.3  $   201.9       25.4%      12.1%
  Fee-based income                    8.5        6.8       23.2       10.4
  Gross profit                       35.5       29.5       20.4        7.0
  SG&A expenses excluding
   restructuring charges             32.0       33.0       (3.0)
  Restructuring charges               0.5        0.2      283.6
  Total SG&A expenses                32.5       33.2       (1.8)     (12.7)
  Earnings from operations            3.0       (3.7)        NM
  Earnings from operations
   excluding restructuring
   charges                            3.5       (3.5)        NM

  Gross profit rate                  14.0%      14.6%      (0.6) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    12.6       16.3       (3.7)
     % of gross profit               90.3      112.0      (21.7)
  Operating margin (excluding
   restructuring charges)             1.4       (1.8)       3.2

APAC PT
  Revenue from services
   (including fee-based income) $    23.6  $    18.2       29.9%      17.1%
  Fee-based income                    7.6        2.8      166.0      150.1
  Gross profit                       10.1        5.6       79.3       65.5
  Total SG&A expenses                12.0        6.6       81.9       67.7
  Earnings from operations           (1.9)      (1.0)     (96.8)

  Gross profit rate                  42.5%      30.8%      11.7 pts.
  Expense rates:
     % of revenue                    50.8       36.3       14.5
     % of gross profit              119.6      117.8        1.8
  Operating margin                   (8.3)      (5.5)      (2.8)





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



                                         September Year to Date
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                  2010       2009       Change     Change
                                ---------  ---------  --------   ---------
OCG
  Revenue from services
   (including fee-based income) $   179.8  $   151.7      18.5%       18.1%
  Fee-based income                   18.3       18.4      (0.5)       (2.0)
  Gross profit                       42.4       44.2      (4.4)       (5.1)
  SG&A expenses excluding
   restructuring charges             56.8       51.7       9.8
  Restructuring charges               0.1        0.6     (87.6)
  Total SG&A expenses                56.9       52.3       8.7         8.0
  Earnings from operations          (14.5)      (8.1)    (80.3)
  Earnings from operations
   excluding restructuring
   charges                          (14.4)      (7.5)    (93.7)

  Gross profit rate                  23.5%      29.2%     (5.7) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    31.6       34.1      (2.5)
     % of gross profit              134.3      116.9      17.4
  Operating margin (excluding
   restructuring charges)            (8.1)      (4.9)     (3.2)

Corporate Expense
  SG&A expenses excluding
   restructuring charges        $    54.7  $    59.8      (8.5)%
  Restructuring charges               3.6        1.1     225.2
  Total SG&A expenses                58.3       60.9      (4.3)
  Asset impairments                     -       53.1    (100.0)

Consolidated Total (excluding
 intersegment activity)
  Revenue from services
   (including fee-based income) $ 3,624.5  $ 3,120.7      16.1%       14.6%
  Fee-based income                   73.0       64.6      12.8         9.5
  Gross profit                      578.1      513.4      12.6        11.2
  SG&A expenses excluding
   restructuring charges            548.2      576.9      (5.0)
  Restructuring charges               7.2       16.5     (56.1)
  Total SG&A expenses               555.4      593.4      (6.4)       (7.6)
  Asset impairments                   1.5       53.1     (97.1)
  Earnings from operations           21.2     (133.1)       NM
  Earnings from operations
   excluding restructuring
   charges                           28.4     (116.6)       NM

  Gross profit rate                  16.0%      16.5%     (0.5) pts.
  Expense rates (excluding
   restructuring charges):
     % of revenue                    15.1       18.5      (3.4)
     % of gross profit               94.8      112.4     (17.6)
  Operating margin (excluding
   restructuring charges)             0.8       (3.7)      4.5




                  KELLY SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE 39 WEEKS ENDED OCTOBER 3, 2010 AND SEPTEMBER 27, 2009
                              (UNAUDITED)
                       (In millions of dollars)


                                                       2010        2009
                                                    ----------  ----------

Cash flows from operating activities
   Net earnings (loss)                              $     11.5  $    (96.3)
   Noncash adjustments:
     Impairment of assets                                  1.5        53.1
     Depreciation and amortization                        26.5        30.9
     Provision for bad debts                               1.0         2.7
     Stock-based compensation                              2.2         3.6
     Other, net                                            1.0        (4.0)
   Changes in operating assets and liabilities           (43.6)       32.9
                                                    ----------  ----------

        Net cash from operating activities                 0.1        22.9
                                                    ----------  ----------

Cash flows from investing activities
   Capital expenditures                                   (5.9)       (7.9)
   Acquisition of companies, net of cash received            -        (7.5)
   Other investing activities                              0.5        (2.9)
                                                    ----------  ----------

        Net cash from investing activities                (5.4)      (18.3)
                                                    ----------  ----------

Cash flows from financing activities
   Net change in revolving line of credit                (12.8)      (11.9)
   Repayment of debt                                      (7.3)      (22.9)
   Sale of stock and other financing activities           24.3        (0.7)
                                                    ----------  ----------

        Net cash from financing activities                 4.2       (35.5)
                                                    ----------  ----------

Effect of exchange rates on cash and equivalents          (0.6)        3.6

Net change in cash and equivalents                        (1.7)      (27.3)
Cash and equivalents at beginning of period               88.9       118.3
                                                    ----------  ----------


Cash and equivalents at end of period               $     87.2  $     91.0
                                                    ==========  ==========



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


                                 October 3,     January 3,    September 27,
                                    2010           2010           2009
                                ------------   ------------   ------------
Current Assets
  Cash and equivalents          $       87.2   $       88.9   $       91.0
  Trade accounts receivable,
   less allowances of $13.0,
   $15.0 and $15.7, respectively       831.3          717.9          707.3
  Prepaid expenses and other
   current assets                       54.7           70.6           54.3
  Deferred taxes                        25.5           21.0           25.7
                                ------------   ------------   ------------

           Total current assets        998.7          898.4          878.3

Property and Equipment, Net            107.2          127.1          132.5

Noncurrent Deferred Taxes               80.4           77.5           66.0

Goodwill, Net                           67.3           67.3           67.3

Other Assets                           135.7          131.4          134.6

                                ------------   ------------   ------------

Total Assets                    $    1,389.3   $    1,301.7   $    1,278.7
                                ============   ============   ============

Current Liabilities
  Short-term borrowings and
   current portion of
   long-term debt               $       68.3   $       79.6   $       15.3
  Accounts payable and accrued
   liabilities                         167.6          182.6          201.9
  Accrued payroll and related
   taxes                               273.0          208.3          229.6
  Accrued insurance                     20.3           19.7           25.0
  Income and other taxes                56.6           47.4           29.8
                                ------------   ------------   ------------

           Total current
            liabilities                585.8          537.6          501.6

Noncurrent Liabilities
  Long-term debt                        52.7           57.5           66.0
  Accrued insurance                     48.2           47.3           43.9
  Accrued retirement benefits           79.0           76.9           74.0
  Other long-term liabilities           15.3           16.0           14.2
                                ------------   ------------   ------------

           Total noncurrent
            liabilities                195.2          197.7          198.1

Stockholders' Equity
  Common stock                          40.1           40.1           40.1
  Treasury stock                       (71.2)        (107.2)        (107.6)
  Paid-in capital                       27.5           36.9           35.9
  Earnings invested in the
   business                            583.0          571.5          579.7
  Accumulated other
   comprehensive income                 28.9           25.1           30.9
                                ------------   ------------   ------------

           Total stockholders'
            equity                     608.3          566.4          579.0
                                ------------   ------------   ------------

Total Liabilities and
 Stockholders' Equity           $    1,389.3   $    1,301.7   $    1,278.7
                                ============   ============   ============


STATISTICS:
  Working Capital               $      412.9   $      360.8   $      376.7
  Current Ratio                          1.7            1.7            1.8
  Debt-to-capital %                     16.6%          19.5%          12.3%
  Global Days Sales Outstanding           52             51             52




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


                                Third Quarter (Commercial, PT and OCG)
                           -----------------------------------------------
                                                           % Change
                                                                 Constant
                              2010        2009          US$      Currency
                           ----------- -----------  ----------  ----------

Americas
  United States            $     811.3 $     623.1        30.2%       30.2%
  Canada                          56.7        48.4        17.3        10.8
  Mexico                          25.2        16.7        50.7        45.4
  Puerto Rico                     21.7        12.6        71.1        71.1
                           ----------- -----------
Total Americas                   914.9       700.8        30.5        30.0

EMEA
  France                          71.3        69.4         2.8        13.3
  Switzerland                     47.9        38.8        23.8        19.7
  United Kingdom                  33.8        50.8       (33.6)      (29.7)
  Russia                          26.8        16.5        61.8        58.0
  Portugal                        21.3        15.8        34.5        48.4
  Germany                         18.1        16.6         9.1        20.3
  Norway                          15.1        16.2        (6.8)       (6.9)
  Italy                           14.7        17.4       (15.5)       (6.9)
  Other                           20.8        26.9       (22.7)      (15.6)
                           ----------- -----------
Total EMEA                       269.8       268.4         0.5         5.9

APAC
  Australia                       31.9        25.0        27.7        16.7
  Singapore                       21.7        16.4        31.7        23.7
  Malaysia                        16.5        12.3        34.5        20.3
  India                           15.5         9.9        56.6        50.2
  Other                           14.4        16.4       (11.6)      (17.1)
                           ----------- -----------
Total APAC                       100.0        80.0        25.1        15.9

Total Kelly Services, Inc. $   1,284.7 $   1,049.2        22.4%       22.7%
                           =========== ===========



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


                           September Year to Date (Commercial, PT and OCG)
                           -----------------------------------------------
                                                           % Change
                                                                 Constant
                              2010        2009          US$      Currency
                           ----------- -----------  ----------  ----------

Americas
  United States            $   2,292.3 $   1,901.2        20.6%       20.6%
  Canada                         162.8       131.9        23.5         9.8
  Mexico                          66.1        47.5        39.1        30.2
  Puerto Rico                     55.6        42.9        29.4        29.4
                           ----------- -----------
Total Americas                 2,576.8     2,123.5        21.3        20.3

EMEA
  France                         206.2       194.0         6.3        10.7
  Switzerland                    120.0        99.8        20.4        16.3
  United Kingdom                 105.6       163.6       (35.5)      (35.3)
  Russia                          75.5        45.5        65.8        55.4
  Portugal                        58.8        40.1        46.7        53.5
  Germany                         50.6        47.5         6.7        11.3
  Italy                           46.1        53.9       (14.5)      (11.2)
  Norway                          43.1        44.4        (3.0)       (8.8)
  Other                           56.9        82.2       (30.8)      (29.3)
                           ----------- -----------
Total EMEA                       762.8       771.0        (1.1)       (0.3)

APAC
  Australia                       88.2        67.9        29.9         9.2
  Singapore                       60.2        46.5        29.3        21.3
  Malaysia                        47.4        36.4        30.2        18.6
  India                           44.4        24.7        79.7        69.2
  Other                           44.7        50.7       (11.7)      (22.4)
                           ----------- -----------
Total APAC                       284.9       226.2        25.9        12.7

Total Kelly Services, Inc. $   3,624.5 $   3,120.7        16.1%       14.6%
                           =========== ===========




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


                                                            September
                                      Third Quarter        Year to Date
                                   ------------------   ------------------
                                     2010      2009       2010      2009
                                   --------  --------   --------  --------

Pretax earnings (loss) from
 operations                        $   14.3  $  (28.0)  $   21.2  $ (133.1)

Restructuring charges (Note 1)          2.8       4.6        7.2      16.5
Asset impairments (Note 2)                -       0.5        1.5      53.1
                                   --------  --------   --------  --------

Earnings (loss) from operations
 excluding restructuring and asset
 impairment charges                $   17.1  $  (22.9)  $   29.9  $  (63.5)
                                   ========  ========   ========  ========


                                                 Third Quarter
                                   ---------------------------------------
                                         2010                 2009
                                   ------------------   ------------------
                                    Amount  Per Share    Amount  Per Share
                                   --------  --------   --------  --------

Earnings (loss) from continuing
 operations, net of taxes          $    9.6  $   0.26   $  (14.8) $  (0.43)

Restructuring charges, net of taxes
 (Note 1)                               1.8      0.05        3.5      0.10
Asset impairments, net of taxes
 (Note 2)                                 -         -        0.8      0.02
                                   --------  --------   --------  --------

Earnings (loss) from continuing
 operations excluding restructuring
 and asset impairment charges,
 net of taxes                      $   11.4  $   0.31   $  (10.5) $  (0.30)
                                   ========  ========   ========  ========


                                           September Year to Date
                                   ---------------------------------------
                                         2010                 2009
                                   ------------------   ------------------
                                    Amount  Per Share    Amount  Per Share
                                   --------  --------   --------  --------

Earnings (loss) from continuing
 operations, net of taxes          $   11.5  $   0.32   $  (96.9) $  (2.78)

Restructuring charges, net of taxes
 (Note 1)                               5.4      0.15       13.9      0.40
Asset impairments, net of taxes
 (Note 2)                               1.2      0.03       50.0      1.43
                                   --------             --------

Earnings (loss) from continuing
 operations excluding restructuring
 and asset impairment charges,
 net of taxes                      $   18.1  $   0.50   $ (33.0)  $  (0.95)
                                   ========  ========   ========  ========




                          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 and impairment charges is useful to understand the Company's fiscal 2010 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) In 2010, restructuring costs relate primarily to severance and lease termination costs for branches in the EMEA and APAC Commercial segments that were in the process of closure at the end of 2009, as well as severance costs related to the corporate headquarters. In 2009, restructuring costs relate primarily to global severance, lease terminations, asset write-offs and other miscellaneous costs incurred in connection with the reduction in the number of permanent employees and the consolidation, sale or closure of branch locations.

(2) In 2010, the asset impairment charges relate to the write-off of incomplete software projects in Europe. In 2009, the asset impairment charges included adjustments to the value of goodwill for the Company's Americas Commercial, APAC Commercial and EMEA PT segments, as well as long-lived assets and intangibles related to operations in Japan and Europe.

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