SOURCE: Kelly Services

Kelly Services

November 05, 2014 07:30 ET

Kelly Services® Reports 3rd Quarter Results

TROY, MI--(Marketwired - Nov 5, 2014) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2014 totaled $1.4 billion, a 3.8% increase compared to the corresponding quarter of 2013.

Earnings from operations for the third quarter of 2014 totaled $7.1 million, compared to $20.2 million reported for the third quarter of 2013. Included in the results of operations in the third quarter of 2014 are restructuring charges of $4.0 million. The results of operations in the third quarter of 2013 included restructuring charges of $0.5 million. Excluding the restructuring charges from both years, earnings from operations were $11.1 million in the third quarter of 2014, compared to adjusted earnings of $20.7 million last year.

Diluted earnings per share in the third quarter of 2014 were $0.03 compared to $0.49 per share in the third quarter of 2013. Adjusted earnings per share were $0.10 in the third quarter of 2014 compared to $0.51 in the third quarter of 2013.

"We're pleased with our third quarter performance," said Camden. "2014 has been a year of aggressive strategic investments at Kelly, and we're seeing early signs that those investments are gaining traction. We are now a leaner, more efficient company that is focused on growth and well-aligned with market demands for high-margin specialty staffing and holistic talent supply chain solutions."

Kelly also reported that on November 4, its board of directors declared a dividend of $0.05 per share. The dividend is payable December 5 to shareholders of record as of the close of business on November 17.

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 5, 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 SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
   
   
2014
   
2013
   
Change
      %
Change
 
                                 
Revenue from services   $ 1,396.4     $ 1,345.6     $ 50.8       3.8 %
                                 
Cost of services     1,171.0       1,125.2       45.8       4.1  
                                 
Gross profit     225.4       220.4       5.0       2.2  
                                 
Selling, general and administrative expenses     218.3       200.2       18.1       9.0  
                                 
Earnings from operations     7.1       20.2       (13.1 )     (65.1 )
                                 
Other expense, net     2.2       1.3       0.9       (63.1 )
                                 
Earnings before taxes     4.9       18.9       (14.0 )     (74.4 )
                                 
Income tax expense     3.5       0.1       3.4       NM  
                                 
Net earnings   $ 1.4     $ 18.8     $ (17.4 )     (93.0) %
                                 
Basic earnings per share   $ 0.03     $ 0.49     $ (0.46 )     (93.9) %
Diluted earnings per share   $ 0.03     $ 0.49     $ (0.46 )     (93.9) %
                                 
                                 
STATISTICS:                                
                                 
Gross profit rate     16.1 %     16.4 %     (0.3 )  pts.      
                                 
Selling, general and administrative expenses:                                
  % of revenue     15.6       14.9       0.7          
  % of gross profit     96.9       90.8       6.1          
                                 
% Return:                                
Earnings from operations     0.5       1.5       (1.0 )        
Earnings before taxes     0.3       1.4       (1.1 )        
Net earnings     0.1       1.4       (1.3 )        
                                 
Effective income tax rate     72.7 %     0.3 %     72.4   pts.      
                                 
Average number of shares outstanding (millions):                                
  Basic     37.6       37.4                  
  Diluted     37.6       37.4                  
                                 
Shares adjusted for nonvested restricted awards (millions):                                
  Basic     38.5       38.1                  
  Diluted     38.5       38.1                  
                                   
                                   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
   
   
2014
   
2013
   
Change
      %
Change
 
                                 
Revenue from services   $ 4,137.7     $ 4,027.3     $ 110.4       2.7 %
                                 
Cost of services     3,461.9       3,369.3       92.6       2.8  
                                 
Gross profit     675.8       658.0       17.8       2.7  
                                 
Selling, general and administrative expenses     656.5       612.6       43.9       7.2  
                                 
Asset impairments     --       1.7       (1.7 )     (100.0 )
                                 
Earnings from operations     19.3       43.7       (24.4 )     (56.4 )
                                 
Other expense, net     4.2       3.9       0.3       (4.6 )
                                 
Earnings before taxes     15.1       39.8       (24.7 )     (62.5 )
                                 
Income tax expense (benefit)     8.4       (1.9 )     10.3       NM  
                                 
Net earnings   $ 6.7     $ 41.7     $ (35.0 )     (84.2) %
                                 
Basic earnings per share   $ 0.17     $ 1.09     $ (0.92 )     (84.4) %
Diluted earnings per share   $ 0.17     $ 1.09     $ (0.92 )     (84.4) %
                                 
                                 
STATISTICS:                                
                                 
Gross profit rate     16.3 %     16.3 %     --   pts.      
                                 
Selling, general and administrative expenses:                                
  % of revenue     15.9       15.2       0.7          
  % of gross profit     97.2       93.1       4.1          
                                 
% Return:                                
Earnings from operations     0.5       1.1       (0.6 )        
Earnings before taxes     0.4       1.0       (0.6 )        
Net earnings     0.2       1.0       (0.8 )        
                                 
Effective income tax rate     55.9 %     (5.0) %     60.9   pts.      
                                 
Average number of shares outstanding (millions):                                
  Basic     37.5       37.2                  
  Diluted     37.5       37.3                  
                                 
Shares adjusted for nonvested restricted awards (millions):                                
  Basic     38.5       38.2                  
  Diluted     38.5       38.2                  
                                   
                                   
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                           
    Third Quarter
                        Constant  
                        Currency  
    2014     2013     Change       Change  
AMERICAS                              
Commercial                              
  Revenue from services   $ 640.8     $ 617.0     3.9   %   4.3 %
  Staffing fee-based income included in revenue from services     3.8       3.3     12.3       12.7  
  Gross profit     91.7       86.8     5.7       6.1  
  Gross profit rate     14.3 %     14.1 %   0.2    pts.      
PT                              
  Revenue from services   $ 242.5     $ 239.9     1.1   %   1.2 %
  Staffing fee-based income included in revenue from services     4.4       3.9     13.1       13.4  
  Gross profit     39.6       38.8     1.9       2.1  
  Gross profit rate     16.3 %     16.2 %   0.1    pts.      
Total Americas                              
  Revenue from services   $ 883.3     $ 856.9     3.1   %   3.4 %
  Staffing fee-based income included in revenue from services     8.2       7.2     12.7       13.1  
  Gross profit     131.3       125.6     4.5       4.8  
  Total SG&A expenses     110.8       100.2     10.6       10.9  
  Earnings from operations     20.5       25.4     (19.7 )        
                               
  Gross profit rate     14.9 %     14.7 %   0.2    pts.      
  Expense rates:                              
    % of revenue     12.5       11.7     0.8          
    % of gross profit     84.5       79.8     4.7          
  Return on sales     2.3       3.0     (0.7 )        
                               
EMEA                              
Commercial                              
  Revenue from services   $ 231.3     $ 224.5     3.0   %   3.2 %
  Staffing fee-based income included in revenue from services     4.2       4.6     (8.9 )     (6.1 )
  Gross profit     33.6       33.9     (0.9 )     (0.4 )
  Gross profit rate     14.5 %     15.1 %   (0.6 )  pts.      
PT                              
  Revenue from services   $ 48.1     $ 45.1     6.5   %   6.0 %
  Staffing fee-based income included in revenue from services     3.5       3.9     (9.6 )     (7.8 )
  Gross profit     10.9       10.8     0.6       1.0  
  Gross profit rate     22.6 %     23.9 %   (1.3 )  pts.      
Total EMEA                              
  Revenue from services   $ 279.4     $ 269.6     3.6   %   3.6 %
  Staffing fee-based income included in revenue from services     7.7       8.5     (9.3 )     (6.9 )
  Gross profit     44.5       44.7     (0.5 )     (0.1 )
  SG&A expenses excluding restructuring charges     40.0       40.0     --          
  Restructuring charges     --       0.3     (100.0 )        
  Total SG&A expenses     40.0       40.3     (0.8 )     (0.5 )
  Earnings from operations     4.5       4.4     1.6          
  Earnings from operations excluding restructuring charges     4.5       4.7     (5.5 )        
                               
  Gross profit rate     15.9 %     16.6 %   (0.7 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     14.3       14.8     (0.5 )        
    % of gross profit     90.0       89.5     0.5          
  Return on sales (excluding restructuring charges)     1.6       1.7     (0.1 )        
                                 
                                 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                           
    Third Quarter
                        Constant  
                        Currency  
    2014     2013     Change       Change  
APAC                              
Commercial                              
  Revenue from services   $ 91.0     $ 87.6     3.9   %   2.2 %
  Staffing fee-based income included in revenue from services     2.0       2.3     (15.5 )     (17.3 )
  Gross profit     11.7       12.7     (8.2 )     (9.7 )
  Gross profit rate     12.8 %     14.5 %   (1.7 )  pts.      
PT                              
  Revenue from services   $ 10.6     $ 9.1     15.8   %   14.4 %
  Staffing fee-based income included in revenue from services     2.0       2.2     (9.9 )     (11.0 )
  Gross profit     3.3       3.4     (2.8 )     (4.0 )
  Gross profit rate     31.5 %     37.5 %   (6.0 )  pts.      
Total APAC                        
  Revenue from services   $ 101.6     $ 96.7     5.0   %   3.4 %
  Staffing fee-based income included in revenue from services     4.0       4.5     (12.8 )     (14.2 )
  Gross profit     15.0       16.1     (7.0 )     (8.5 )
  SG&A expenses excluding restructuring charges     14.2       14.5     (2.5 )        
  Restructuring charges     0.3       0.1     410.5          
  Total SG&A expenses     14.5       14.6     (0.9 )     (2.7 )
  Earnings from operations     0.5       1.5     (65.7 )        
  Earnings from operations excluding restructuring charges     0.8       1.6     (48.4 )        
                               
  Gross profit rate     14.8 %     16.7 %   (1.9 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     14.0       15.1     (1.1 )        
    % of gross profit     94.6       90.2     4.4          
  Return on sales (excluding restructuring charges)     0.8       1.6     (0.8 )        
                               
OCG                              
  Revenue from services   $ 149.8     $ 135.3     10.7   %   10.9 %
  Gross profit     35.8       34.8     2.9       2.8  
  SG&A expenses excluding restructuring charges     32.2       28.0     15.0          
  Restructuring charges     --       0.1     (100.0 )        
  Total SG&A expenses     32.2       28.1     14.7       14.7  
  Earnings from operations     3.6       6.7     (46.0 )        
  Earnings from operations excluding restructuring charges     3.6       6.8     (46.6 )        
                               
  Gross profit rate     23.9 %     25.7 %   (1.8 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     21.5       20.7     0.8          
    % of gross profit     89.8       80.3     9.5          
  Return on sales (excluding restructuring charges)     2.4       5.1     (2.7 )        
                                 
                                 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                           
    September Year to Date
                        Constant  
                        Currency  
    2014     2013     Change       Change  
AMERICAS                              
Commercial                              
  Revenue from services   $ 1,915.1     $ 1,904.1     0.6   %   1.4 %
  Staffing fee-based income included in revenue from services     10.4       9.8     6.1       7.6  
  Gross profit     280.0       274.5     2.0       2.8  
  Gross profit rate     14.6 %     14.4 %   0.2    pts.      
PT                              
  Revenue from services   $ 723.1     $ 733.7     (1.4 ) %   (1.3 )%
  Staffing fee-based income included in revenue from services     11.7       10.8     8.6       9.1  
  Gross profit     118.4       116.1     2.0       2.2  
  Gross profit rate     16.4 %     15.8 %   0.6    pts.      
Total Americas                              
  Revenue from services   $ 2,638.2     $ 2,637.8     --   %   0.7 %
  Staffing fee-based income included in revenue from services     22.1       20.6     7.4       8.4  
  Gross profit     398.4       390.6     2.0       2.6  
  Total SG&A expenses     332.9       310.6     7.2       7.9  
  Earnings from operations     65.5       80.0     (18.3 )        
                               
  Gross profit rate     15.1 %     14.8 %   0.3    pts.      
  Expense rates:                              
    % of revenue     12.6       11.8     0.8          
    % of gross profit     83.6       79.5     4.1          
  Return on sales     2.5       3.0     (0.5 )        
                               
EMEA                              
Commercial                              
  Revenue from services   $ 690.2     $ 645.3     7.0   %   5.7 %
  Staffing fee-based income included in revenue from services     14.0       14.9     (6.0 )     (4.3 )
  Gross profit     101.0       98.8     2.2       1.2  
  Gross profit rate     14.6 %     15.3 %   (0.7 )  pts.      
PT                              
  Revenue from services   $ 145.5     $ 131.7     10.3   %   7.7 %
  Staffing fee-based income included in revenue from services     10.7       11.7     (8.3 )     (7.6 )
  Gross profit     33.3       32.0     3.8       2.3  
  Gross profit rate     22.8 %     24.3 %   (1.5 )  pts.      
Total EMEA                              
  Revenue from services   $ 835.7     $ 777.0     7.5   %   6.0 %
  Staffing fee-based income included in revenue from services     24.7       26.6     (7.0 )     (5.7 )
  Gross profit     134.3       130.8     2.6       1.5  
  SG&A expenses excluding restructuring charges     124.2       122.1     1.7          
  Restructuring charges     0.8       0.1     327.7          
  Total SG&A expenses     125.0       122.2     2.2       0.8  
  Earnings from operations     9.3       8.6     8.1          
  Earnings from operations excluding restructuring charges     10.1       8.7     15.1          
                               
  Gross profit rate     16.1 %     16.8 %   (0.7 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     14.9       15.7     (0.8 )        
    % of gross profit     92.5       93.3     (0.8 )        
  Return on sales (excluding restructuring charges)     1.2       1.1     0.1          
                                 
                                 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                           
    September Year to Date
                        Constant  
                        Currency  
    2014     2013     Change       Change  
APAC                              
Commercial                              
  Revenue from services   $ 260.5     $ 256.8     1.4   %   4.2 %
  Staffing fee-based income included in revenue from services     5.9       7.0     (17.1 )     (14.0 )
  Gross profit     35.7       36.8     (3.1 )     (0.3 )
  Gross profit rate     13.7 %     14.3 %   (0.6 )  pts.      
PT                              
  Revenue from services   $ 29.2     $ 29.3     (0.5 ) %   3.3 %
  Staffing fee-based income included in revenue from services     5.8       6.7     (13.0 )     (9.7 )
  Gross profit     9.4       10.5     (10.2 )     (6.8 )
  Gross profit rate     32.2 %     35.7 %   (3.5 )  pts.      
Total APAC                        
  Revenue from services   $ 289.7     $ 286.1     1.3   %   4.1 %
  Staffing fee-based income included in revenue from services     11.7       13.7     (15.1 )     (11.9 )
  Gross profit     45.1       47.3     (4.6 )     (1.7 )
  SG&A expenses excluding restructuring charges     43.3       45.5     (4.7 )        
  Restructuring charges     1.3       0.3     373.4          
  Total SG&A expenses     44.6       45.8     (2.3 )     1.1  
  Earnings from operations     0.5       1.5     (76.8 )        
  Earnings from operations excluding restructuring charges     1.8       1.8     (4.2 )        
                               
  Gross profit rate     15.6 %     16.5 %   (0.9 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     15.0       15.9     (0.9 )        
    % of gross profit     96.2       96.2     --          
  Return on sales (excluding restructuring charges)     0.6       0.6     --          
                               
OCG                              
  Revenue from services   $ 422.1     $ 361.0     16.9   %   17.3 %
  Gross profit     101.3       91.7     10.5       10.6  
  SG&A expenses excluding restructuring charges     94.7       81.6     16.0          
  Restructuring charges     --       0.9     (100.0 )        
  Total SG&A expenses     94.7       82.5     14.9       15.0  
  Asset impairments     --       1.7     (100.0 )        
  Earnings from operations     6.6       7.5     (13.1 )        
  Earnings from operations excluding restructuring charges     6.6       8.4     (21.4 )        
                               
  Gross profit rate     24.0 %     25.4 %   (1.4 )  pts.      
  Expense rates (excluding restructuring charges):                              
    % of revenue     22.4       22.6     (0.2 )        
    % of gross profit     93.4       88.9     4.5          
  Return on sales (excluding restructuring charges)     1.6       2.4     (0.8 )        
                                 
                                 
     
KELLY SERVICES, INC. AND SUBSIDIARIES    
CONSOLIDATED BALANCE SHEETS    
(UNAUDITED)    
(In millions of dollars)    
                     
    Sept. 28, 2014     Dec. 29, 2013     Sept. 29, 2013    
Current Assets                          
  Cash and equivalents   $ 51.6     $ 125.7     $ 73.9    
  Trade accounts receivable, less allowances of                          
  $9.2, $9.9 and $10.0, respectively     1,158.1       1,023.1       1,071.8    
  Prepaid expenses and other current assets     56.8       52.2       62.0    
  Deferred taxes     28.9       35.5       40.3    
Total current assets     1,295.4       1,236.5       1,248.0    
                           
Property and Equipment, Net     91.1       92.0       87.7    
                           
Noncurrent Deferred Taxes     132.7       121.7       104.5    
                           
Goodwill, Net     90.3       90.3       90.3    
                           
Other Assets     291.5       258.1       241.0    
                           
Total Assets   $ 1,901.0     $ 1,798.6     $ 1,771.5    
                           
Current Liabilities                          
  Short-term borrowings   $ 88.7     $ 28.3     $ 58.0    
  Accounts payable and accrued liabilities     339.0       342.4       308.9    
  Accrued payroll and related taxes     318.6       294.9       300.9    
  Accrued insurance     24.4       27.6       30.7    
  Income and other taxes     74.0       68.8       71.5    
                           
Total current liabilities     844.7       762.0       770.0    
                           
Noncurrent Liabilities                          
  Accrued insurance     43.4       46.0       40.7    
  Accrued retirement benefits     146.6       134.7       129.3    
  Other long-term liabilities     40.7       33.3       28.0    
                           
Total noncurrent liabilities     230.7       214.0       198.0    
                           
Stockholders' Equity                          
  Common stock     40.1       40.1       40.1    
  Treasury stock     (52.5 )     (56.2 )     (57.5 )  
  Paid-in capital     26.7       26.0       26.1    
  Earnings invested in the business     752.3       751.3       736.0    
  Accumulated other comprehensive income     59.0       61.4       58.8    
                           
Total stockholders' equity     825.6       822.6       803.5    
                           
Total Liabilities and Stockholders' Equity   $ 1,901.0     $ 1,798.6     $ 1,771.5    
                           
                           
STATISTICS:                          
  Working Capital   $ 450.7     $ 474.5     $ 478.0    
  Current Ratio     1.5       1.6       1.6    
  Debt-to-capital %     9.7   %   3.3   %   6.7   %
  Global Days Sales Outstanding     58       52       56    
                             
                             
 
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars)
       
      2014       2013  
Cash flows from operating activities:                
Net earnings   $ 6.7     $ 41.7  
Noncash adjustments:                
  Impairment of assets     --       1.7  
  Depreciation and amortization     16.2       15.4  
  Provision for bad debts     3.6       1.1  
  Stock-based compensation     4.1       2.7  
  Other, net     1.3       0.7  
Changes in operating assets and liabilities     (140.9 )     (41.4 )
                 
  Net cash (used in) from operating activities     (109.0 )     21.9  
                 
Cash flows from investing activities:                
  Capital expenditures     (15.0 )     (11.7 )
  Investment in equity affiliate     (5.4 )     --  
  Other investing activities     0.2       --  
                 
    Net cash used in investing activities     (20.2 )     (11.7 )
                 
Cash flows from financing activities:                
  Net change in short-term borrowings     60.4       (6.1 )
  Dividend payments     (5.7 )     (5.7 )
  Other financing activities     0.4       0.3  
                 
    Net cash from (used in) financing activities     55.1       (11.5 )
                 
Effect of exchange rates on cash and equivalents     --       (1.1 )
                 
Net change in cash and equivalents     (74.1 )     (2.4 )
Cash and equivalents at beginning of period     125.7       76.3  
                 
                 
Cash and equivalents at end of period   $ 51.6     $ 73.9  
                 
                 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                             
      Third Quarter (Commercial, PT and OCG)  
                % Change  
      2014     2013        US$        Constant Currency    
                             
Americas                            
  United States   $ 873.7   $ 843.5   3.6   %   3.6   %
  Canada     51.9     52.9   (1.9 )     2.6    
  Mexico     37.0     33.1   11.8       13.6    
  Puerto Rico     25.7     24.4   5.1       5.1    
  Brazil     13.6     13.1   3.7       3.2    
Total Americas     1,001.9     967.0   3.6       3.9    
                             
EMEA                            
  France     70.1     62.4   12.4       12.0    
  Switzerland     66.7     68.6   (2.7 )     (4.7 )  
  Portugal     33.3     24.1   38.0       37.8    
  Russia     28.7     32.9   (13.0 )     (3.9 )  
  United Kingdom     26.2     26.5   (1.1 )     (8.4 )  
  Germany     17.5     17.4   0.6       0.6    
  Norway     14.8     16.1   (7.7 )     (3.8 )  
  Italy     14.8     13.8   6.7       6.7    
  Other     15.8     16.0   (1.0 )     (0.3 )  
Total EMEA     287.9     277.8   3.6       3.7    
                             
APAC                            
  Singapore     33.4     29.4   13.7       12.2    
  Australia     32.3     32.4   (0.2 )     (1.3 )  
  Malaysia     16.7     17.2   (3.0 )     (4.5 )  
  New Zealand     12.7     12.6   0.4       (5.1 )  
  Other     11.5     9.2   25.1       26.2    
Total APAC     106.6     100.8   5.8       4.1    
                             
Total Kelly Services, Inc.   $ 1,396.4   $ 1,345.6   3.8   %   3.9   %
                             
                             
 
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                         
    September Year to Date (Commercial, PT and OCG)  
            % Change  
    2014   2013   US$       Constant Currency    
                             
Americas                            
  United States   $ 2,601.9   $ 2,547.3   2.1   %   2.1   %
  Canada     148.2     163.9   (9.6 )     (3.5 )  
  Mexico     102.3     99.4   2.9       6.4    
  Puerto Rico     78.4     73.6   6.4       6.4    
  Brazil     43.2     45.0   (4.1 )     5.2    
Total Americas     2,974.0     2,929.2   1.5       2.1    
                             
EMEA                            
  France     202.2     182.0   11.1       7.9    
  Switzerland     195.7     185.6   5.5       1.4    
  Russia     96.4     102.0   (5.5 )     5.9    
  Portugal     92.4     63.0   46.6       42.5    
  United Kingdom     82.4     78.1   5.5       (2.4 )  
  Germany     50.7     49.3   3.0       0.1    
  Italy     46.3     43.6   6.0       2.9    
  Norway     43.6     46.3   (5.7 )     (1.0 )  
  Other     50.9     50.7   0.4       (1.8 )  
Total EMEA     860.6     800.6   7.5       6.0    
                             
APAC                            
  Singapore     94.8     83.5   13.5       14.0    
  Australia     88.8     100.4   (11.6 )     (5.9 )  
  Malaysia     50.0     51.1   (2.1 )     1.5    
  New Zealand     38.2     36.1   5.9       2.1    
  Other     31.3     26.4   18.4       27.7    
Total APAC     303.1     297.5   1.9       4.9    
                             
Total Kelly Services, Inc.   $ 4,137.7   $ 4,027.3   2.7   %   3.1   %
                             
                             
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 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 $ 1,396.4   $ --     $ 1,396.4   $ 1,345.6   3.8   %
                                 
Cost of services   1,171.0     --       1,171.0     1,125.2   4.1    
                                 
Gross profit   225.4     --       225.4     220.4   2.2    
                                 
SG&A expenses   218.3     (4.0 )     214.3     199.7   7.3    
                                 
Earnings from operations   7.1     4.0       11.1     20.7   (46.8 )  
                                 
Other expense, net   2.2     --       2.2     1.3   (63.1 )  
                                 
Earnings before taxes   4.9     4.0       8.9     19.4   (54.6 )  
                                 
Inc. tax expense (benefit)   3.5     1.5       5.0     0.1   NM    
                                 
Net earnings $ 1.4   $ 2.5     $ 3.9   $ 19.3   (80.5 ) %
                                 
Earnings per share:                                
  Basic $ 0.03   $ 0.06     $ 0.10   $ 0.51   (80.4 ) %
  Diluted $ 0.03   $ 0.06     $ 0.10   $ 0.51   (80.4 ) %
                                 
                                 
    2013              
    As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings              
                                 
Revenue from services $ 1,345.6   $ --     $ 1,345.6              
                                 
Cost of services   1,125.2     --       1,125.2              
                                 
Gross profit   220.4     --       220.4              
                                 
SG&A expenses   200.2     (0.5 )     199.7              
                                 
Earnings from operations   20.2     0.5       20.7              
                                 
Other expense, net   1.3     --       1.3              
                                 
Earnings before taxes   18.9     0.5       19.4              
                                 
Inc. tax expense (benefit)   0.1     --       0.1              
                                 
Net earnings $ 18.8   $ 0.5     $ 19.3              
                                 
Earnings per share:                                
  Basic $ 0.49   $ 0.01     $ 0.51              
  Diluted $ 0.49   $ 0.01     $ 0.51              
                                 
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 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 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 $ 4,137.7     $ --     $ 4,137.7     $ 4,027.3     2.7   %
                                       
Cost of services   3,461.9       --       3,461.9       3,369.3     2.8    
                                       
Gross profit   675.8       --       675.8       658.0     2.7    
                                       
SG&A expenses   656.5       (5.8 )     650.7       611.3     6.5    
                                       
Earnings from operations   19.3       5.8       25.1       46.7     (46.7 )  
                                       
Other expense, net   4.2       --       4.2       3.9     (4.6 )  
                                       
Earnings before taxes   15.1       5.8       20.9       42.8     (51.4 )  
                                       
Inc. tax expense (benefit)   8.4       2.1       10.5       (1.8 )   NM    
                                       
Net earnings $ 6.7     $ 3.7     $ 10.4     $ 44.6     (77.0 ) %
                                       
Earnings per share:                                      
  Basic $ 0.17     $ 0.10     $ 0.27     $ 1.17     (76.9 ) %
  Diluted $ 0.17     $ 0.10     $ 0.27     $ 1.17     (76.9 ) %
                                       
                                       
    2013        
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings        
                                       
Revenue from services $ 4,027.3     $ --     $ --     $ 4,027.3          
                                       
Cost of services   3,369.3       --       --       3,369.3          
                                       
Gross profit   658.0       --       --       658.0          
                                       
SG&A expenses   612.6       (1.3 )     --       611.3          
                                       
Asset impairments   1.7       --       (1.7 )     --          
                                       
Earnings from operations   43.7       1.3       1.7       46.7          
                                       
Other expense, net   3.9       --       --       3.9          
                                       
Earnings before taxes   39.8       1.3       1.7       42.8          
                                       
Inc. tax expense (benefit)   (1.9 )     0.1       --       (1.8 )        
                                       
Net earnings $ 41.7     $ 1.2     $ 1.7     $ 44.6          
                                       
Earnings per share:                                      
  Basic $ 1.09     $ 0.03     $ 0.04     $ 1.17          
  Diluted $ 1.09     $ 0.03     $ 0.04     $ 1.17          
                                       
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 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand. 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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