SOURCE: Kelly Services, Inc.

Kelly Services, Inc.

February 03, 2011 07:30 ET

Kelly Services® Reports 4th Quarter and Full Year 2010 Results

TROY, MI--(Marketwire - February 3, 2011) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year 2010.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2010 totaled $1.3 billion, an 11% increase compared to the corresponding quarter in 2009. Revenue for the full year totaled $5.0 billion, a 15% increase compared to the prior year. The fourth quarter of 2009 included an extra week which reduces the quarterly and annual comparisons by approximately 5% and 1%, respectively.

Earnings from operations for the fourth quarter of 2010 totaled $16.9 million, compared to losses from operations of $13.0 million reported for the fourth quarter of 2009. Included in the results from operations for the fourth quarter of 2009 are restructuring charges of $13.4 million.

Earnings from operations for the full year of 2010 totaled $38.1 million compared to a loss of $146.1 million in 2009. The results for the full year 2010 include $7.2 million of restructuring charges. The results for 2009 include $29.9 million of restructuring charges and $53.1 million of goodwill and related impairment charges.

Diluted earnings per share from continuing operations in the fourth quarter of 2010 were $0.39 compared to fourth quarter 2009 losses of $0.23 per share. The restructuring charges were $0.29 per share in the fourth quarter of 2009.

Diluted earnings per share from continuing operations for the full year of 2010 were $0.71 compared to 2009 losses of $3.01 per share. In 2010, the restructuring charges totaled $0.15 per share. In 2009, the restructuring charges totaled $0.69 per share and goodwill and related impairment charges totaled $1.43 per share.

Commenting on the fourth quarter results, Camden stated, "We're pleased to report another successful quarter fueled by sustained demand for temporary staffing, a healthier global economy, and Kelly's focus on business execution and operational excellence."

Camden added that 2010 was much improved over a very difficult 2009, and Kelly made significant progress during the year in response to a changing labor market.

"As we begin 2011 and look to the future, we will continue to focus on building shareholder value by delivering a competitive profit in our industry, from the right solutions for our customers, delivered by the best talent in the business," said Camden.

In conjunction with its fourth quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on February 3, 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 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 more than 530,000 employees annually. Revenue in 2010 was $5.0 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 JANUARY 2, 2011 AND 14 WEEKS ENDED JANUARY 3, 2010
                                (UNAUDITED)
              (In millions of dollars except per share data)



                            2010         2009       Change      % Change
                        -----------  -----------  -----------  -----------
Revenue from services   $   1,325.8  $   1,194.1  $     131.7         11.0%

Cost of services            1,109.4      1,005.8        103.6         10.3
                        -----------  -----------  -----------  -----------

Gross profit                  216.4        188.3         28.1         15.0

Selling, general and
 administrative expenses      199.0        201.3         (2.3)        (1.1)
Asset impairments               0.5            -          0.5           NM
                        -----------  -----------  -----------  -----------

Earnings (loss) from
 operations                    16.9        (13.0)        29.9           NM

Other expense, net             (0.7)        (0.9)         0.2         14.6
                        -----------  -----------  -----------  -----------

Earnings (loss) from
 continuing operations
 before taxes                  16.2        (13.9)        30.1           NM

Income taxes                    1.6         (5.7)         7.3        127.2
                        -----------  -----------  -----------  -----------

Earnings (loss) from
 continuing operations         14.6         (8.2)        22.8           NM

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

Net earnings (loss)     $      14.6  $      (8.2) $      22.8           NM%
                        ===========  ===========  ===========  ===========

Basic earnings (loss)
 per share on common
 stock
  Earnings (loss) from
   continuing
   operations           $      0.39  $     (0.23) $      0.62           NM%
  Earnings from
   discontinued
   operations                     -            -            -           NM
  Net earnings (loss)          0.39        (0.23)        0.62           NM

Diluted Earnings (loss)
 per share on common
 stock
  Earnings (loss) from
   continuing
   operations           $      0.39  $     (0.23) $      0.62           NM%
  Earnings from
   discontinued
   operations                     -            -            -           NM
  Net earnings (loss)          0.39        (0.23)        0.62           NM

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

STATISTICS:

Gross profit rate              16.3%        15.8%         0.5 pts.

Selling, general and
 administrative
 expenses:
    % of revenue               15.0         16.8         (1.8)
    % of gross profit          92.0        106.9        (14.9)

% Return - Earnings (loss)
 from operations                1.3         (1.1)         2.4
           Earnings (loss)
            from continuing
            operations
            before taxes        1.2         (1.2)         2.4
           Earnings (loss)
            from
            continuing
            operations          1.1         (0.7)         1.8
           Net earnings (loss)  1.1         (0.7)         1.8

Effective income tax rate       9.5%        41.0%       (31.5) 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 52 WEEKS ENDED JANUARY 2, 2011 AND 53 WEEKS ENDED JANUARY 3, 2010
                                (UNAUDITED)
              (In millions of dollars except per share data)




                               2010        2009       Change     % Change
                            ----------  ----------  ----------  ----------
Revenue from services       $  4,950.3  $  4,314.8  $    635.5        14.7%

Cost of services               4,155.8     3,613.1       542.7        15.0
                            ----------  ----------  ----------  ----------

Gross profit                     794.5       701.7        92.8        13.2

Selling, general and
 administrative
  expenses                       754.4       794.7       (40.3)       (5.1)
Asset impairments                  2.0        53.1       (51.1)      (96.2)
                            ----------  ----------  ----------  ----------

Earnings (loss) from
 operations                       38.1      (146.1)      184.2          NM

Other expense, net                (5.4)       (2.2)       (3.2)     (144.7)
                            ----------  ----------  ----------  ----------

Earnings (loss) from
 continuing operations
 before taxes                     32.7      (148.3)      181.0          NM

Income taxes                       6.6       (43.2)       49.8       115.3
                            ----------  ----------  ----------  ----------

Earnings (loss) from
 continuing operations            26.1      (105.1)      131.2          NM

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

Net earnings (loss)         $     26.1  $   (104.5) $    130.6          NM%
                            ==========  ==========  ==========  ==========

Basic earnings (loss) per
 share on common stock
  Earnings (loss) from
   continuing operations    $     0.71  $    (3.01) $     3.72          NM%
  Earnings from discontinued
   operations                        -        0.02       (0.02)     (100.0)
  Net earnings (loss)             0.71       (3.00)       3.71          NM

Diluted Earnings (loss) per
 share on common stock
  Earnings (loss) from
   continuing operations    $     0.71  $    (3.01) $     3.72          NM%
  Earnings from discontinued
   operations                        -        0.02       (0.02)     (100.0)
  Net earnings (loss)             0.71       (3.00)       3.71          NM

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

STATISTICS:

Gross profit rate                 16.0%       16.3%       (0.3) pts.

Selling, general and
 administrative expenses:
    % of revenue                  15.2        18.4        (3.2)
    % of gross profit             94.9       113.2       (18.3)

% Return - Earnings (loss)
 from operations                   0.8        (3.4)        4.2
           Earnings (loss) from
            continuing operations
            before taxes           0.7        (3.4)        4.1
           Earnings (loss) from
            continuing operations  0.5        (2.4)        2.9
           Net earnings (loss)     0.5        (2.4)        2.9

Effective income tax rate         20.2%       29.1%       (8.9) pts.

Average number of shares
 outstanding (millions):
   Basic                          36.1        34.9
   Diluted                        36.1        34.9





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


                                           Fourth Quarter
                            ---------------------------------------------
                                                                 Constant
                               2010        2009                  Currency
                            (13 Weeks)  (14 Weeks)    Change      Change
                            ----------  ----------  ---------   ----------
Americas Commercial
 Revenue from services
  (including fee-based
  income)                   $    646.3  $    557.4       16.0%        15.3%
 Fee-based income                  2.3         1.5       49.9         48.6
 Gross profit                     98.4        79.8       23.3         22.6
 SG&A expenses excluding
  restructuring charges           73.4        67.9        8.2
 Restructuring charges               -         3.5     (100.0)
 Total SG&A expenses              73.4        71.4        2.9          2.4
 Earnings from operations         25.0         8.4      194.8
 Earnings from operations
  excluding restructuring
  charges                         25.0        11.9      108.3

 Gross profit rate                15.2%       14.3%       0.9 pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                   11.4        12.2       (0.8)
   % of gross profit              74.6        85.0      (10.4)
 Operating margin
  (excluding restructuring
  charges)                         3.9         2.2        1.7

Americas PT
 Revenue from services
  (including fee-based
  income)                   $    229.9  $    208.3       10.4%        10.3%
 Fee-based income                  2.3         2.2        4.8          4.6
 Gross profit                     36.8        31.9       15.2         15.1
 SG&A expenses excluding
  restructuring charges           24.5        24.7       (0.8)
 Restructuring charges               -         0.8     (100.0)
 Total SG&A expenses              24.5        25.5       (3.9)        (4.0)
 Earnings from operations         12.3         6.4       92.0
 Earnings from operations
  excluding restructuring
  charges                         12.3         7.2       70.5

 Gross profit rate                16.0%       15.3%       0.7 pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                   10.7        11.9       (1.2)
   % of gross profit              66.8        77.5      (10.7)
 Operating margin
  (excluding restructuring
  charges)                         5.3         3.4        1.9

EMEA Commercial
 Revenue from services
  (including fee-based
  income)                   $    229.2  $    238.9       (4.0)%        0.6%
 Fee-based income                  4.7         4.3        9.9         14.8
 Gross profit                     37.2        37.4       (0.6)         4.4
 SG&A expenses excluding
  restructuring charges           34.8        35.2       (1.4)
 Restructuring charges               -         4.9     (100.0)
 Total SG&A expenses              34.8        40.1      (13.3)        (9.7)
 Earnings from operations          2.4        (2.7)        NM
 Earnings from operations
  excluding restructuring
  charges                          2.4         2.2       12.8

 Gross profit rate                16.2%       15.7%       0.5 pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                   15.2        14.8        0.4
   % of gross profit              93.5        94.2       (0.7)
 Operating margin
  (excluding restructuring
  charges)                         1.1         0.9        0.2




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


                                           Fourth Quarter
                            ---------------------------------------------
                                                                 Constant
                               2010        2009                  Currency
                            (13 Weeks)  (14 Weeks)    Change      Change
                            ----------  ----------  ----------  ----------
EMEA PT
 Revenue from services
  (including fee-based
  income)                   $     41.2  $     39.6         4.0%        9.8%
 Fee-based income                  3.8         3.6         5.1        10.0
 Gross profit                     10.4         9.8         6.9        12.7
 Total SG&A expenses               9.3        10.6       (12.7)       (8.6)
 Earnings from operations          1.1        (0.8)         NM

 Gross profit rate                25.4%       24.7%        0.7 pts.
 Expense rates:
   % of revenue                   22.5        26.8        (4.3)
   % of gross profit              88.7       108.5       (19.8)
 Operating margin                  2.9        (2.1)        5.0

APAC Commercial
 Revenue from services
  (including fee-based
  income)                   $    102.0  $     83.0        22.9%       14.8%
 Fee-based income                  2.9         2.9         0.7        (6.1)
 Gross profit                     12.9        12.1         6.0        (1.1)
 SG&A expenses excluding
  restructuring charges           13.1        11.6        13.7
 Restructuring charges               -         1.4      (100.0)
 Total SG&A expenses              13.1        13.0         0.9        (5.7)
 Earnings from operations         (0.2)       (0.9)       72.3
 Earnings from operations
  excluding restructuring
  charges                         (0.2)        0.5          NM

 Gross profit rate                12.6%       14.6%       (2.0) pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                   12.9        13.9        (1.0)
   % of gross profit             101.8        95.0         6.8
 Operating margin
  (excluding restructuring
  charges)                        (0.2)        0.7        (0.9)

APAC PT
 Revenue from services
  (including fee-based
  income)                   $      8.9  $      7.2        23.8%       16.2%
 Fee-based income                  2.9         1.0       189.7       174.1
 Gross profit                      3.8         2.1        86.7        76.1
 Total SG&A expenses               5.0         2.6        93.3        82.8
 Earnings from operations         (1.2)       (0.5)     (119.4)

 Gross profit rate                43.2%       28.6%       14.6 pts.
 Expense rates:
   % of revenue                   55.9        35.8        20.1
   % of gross profit             129.6       125.2         4.4
 Operating margin                (12.8)       (7.2)       (5.6)




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

                                           Fourth Quarter
                              --------------------------------------------
                                                                 Constant
                                 2010        2009                Currency
                              (13 Weeks)  (14 Weeks)    Change    Change
                              ----------  ----------  ---------  ---------
OCG
 Revenue from services
  (including fee-based
  income)                     $     75.0  $     68.2        9.9%      10.1%
 Fee-based income                    7.3         6.0       21.4       21.7
 Gross profit                       17.6        15.5       13.5       14.1
 SG&A expenses excluding
  restructuring charges             20.7        17.9       15.8
 Restructuring charges                 -         1.3     (100.0)
 Total SG&A expenses                20.7        19.2        8.2        8.5
 Earnings from operations           (3.1)       (3.7)      14.0
 Earnings from operations
  excluding restructuring
  charges                           (3.1)       (2.4)     (30.6)

 Gross profit rate                  23.4%       22.7%       0.7 pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                     27.6        26.2        1.4
   % of gross profit               118.0       115.7        2.3
 Operating margin (excluding
  restructuring charges)            (4.2)       (3.6)      (0.6)

Corporate Expense
 SG&A expenses excluding
  restructuring charges       $     18.9  $     17.7        6.7%
 Restructuring charges                 -         1.5     (100.0)
 Total SG&A expenses                18.9        19.2       (1.7)
 Asset impairments                   0.5           -         NM

Consolidated Total (net of
 intersegment activity)
 Revenue from services
  (including fee-based
  income)                     $  1,325.8  $  1,194.1       11.0%      11.3%
 Fee-based income                   26.0        21.5       21.7       21.8
 Gross profit                      216.4       188.3       15.0       15.4
 SG&A expenses excluding
  restructuring charges            199.0       187.9        6.0
 Restructuring charges                 -        13.4     (100.0)
 Total SG&A expenses               199.0       201.3       (1.1)      (0.9)
 Asset impairments                   0.5           -         NM
 Earnings from operations           16.9       (13.0)        NM
 Earnings from operations
  excluding restructuring
  charges                           16.9         0.4         NM

 Gross profit rate                  16.3%       15.8%       0.5 pts.
 Expense rates (excluding
  restructuring charges):
   % of revenue                     15.0        15.7       (0.7)
   % of gross profit                92.0        99.8       (7.8)
 Operating margin (excluding
  restructuring charges)             1.3         0.0        1.3




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

                                          December Year to Date
                               ------------------------------------------
                                                                  Constant
                                 2010        2009                 Currency
                              (52 Weeks)  (53 Weeks)    Change     Change
                               ---------  ---------  ----------   -------
Americas Commercial
  Revenue from services
   (including fee-based
   income)                     $ 2,428.2  $ 1,980.3        22.6 %    21.4 %
  Fee-based income                   8.8        6.6        31.8      29.0
  Gross profit                     354.9      290.7        22.0      21.0
  SG&A expenses excluding
   restructuring charges           275.3      273.2         0.7
  Restructuring charges              0.3        7.2       (95.0)
  Total SG&A expenses              275.6      280.4        (1.7)     (2.6)
  Earnings from operations          79.3       10.3          NM
  Earnings from operations
   excluding restructuring
   charges                          79.6       17.5       352.7

  Gross profit rate                 14.6%      14.7%       (0.1) pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    11.3       13.8        (2.5)
    % of gross profit               77.5       93.9       (16.4)
  Operating margin (excluding
   restructuring charges)            3.3        0.9         2.4

Americas PT
  Revenue from services
   (including fee-based
   income)                     $   889.0  $   792.6        12.2 %    12.0 %
  Fee-based income                   9.0        9.4        (4.5)     (4.9)
  Gross profit                     140.0      125.1        12.0      11.8
  SG&A expenses excluding
   restructuring charges            93.7      100.9        (7.0)
  Restructuring charges                -        1.0      (100.0)
  Total SG&A expenses               93.7      101.9        (8.0)     (8.2)
  Earnings from operations          46.3       23.2       100.1
  Earnings from operations
   excluding restructuring
   charges                          46.3       24.2        91.4

  Gross profit rate                 15.8%      15.8%          - pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    10.5       12.7        (2.2)
    % of gross profit               67.0       80.7       (13.7)
  Operating margin (excluding
   restructuring charges)            5.2        3.0         2.2

EMEA Commercial
  Revenue from services
   (including fee-based
   income)                     $   872.0  $   895.2        (2.6)%    (0.9)%
  Fee-based income                  19.1       16.6        15.9      16.0
  Gross profit                     141.0      140.2         0.6       2.3
  SG&A expenses excluding
   restructuring charges           130.5      150.3       (13.2)
  Restructuring charges              2.7       15.6       (82.8)
  Total SG&A expenses              133.2      165.9       (19.7)    (18.9)
  Asset impairments                  1.5          -          NM
  Earnings from operations           6.3      (25.7)         NM
  Earnings from operations
   excluding restructuring
   charges                           9.0      (10.1)         NM

  Gross profit rate                 16.2%      15.7%        0.5 pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    15.0       16.8        (1.8)
    % of gross profit               92.6      107.2       (14.6)
  Operating margin (excluding
   restructuring charges)            1.0       (1.1)        2.1




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

                                          December Year to Date
                              --------------------------------------------
                                                                  Constant
                                 2010        2009                 Currency
                              (52 Weeks)  (53 Weeks)    Change     Change
                              ----------  ----------  ----------  --------
EMEA PT
  Revenue from services
   (including fee-based
   income)                    $    147.6  $    141.9         4.0%      6.7%
  Fee-based income                  15.0        15.7        (4.3)     (4.1)
  Gross profit                      38.7        37.8         2.9       4.8
  Total SG&A expenses               36.9        40.6        (9.3)     (8.2)
  Earnings from operations           1.8        (2.8)         NM

  Gross profit rate                 26.3%       26.6%       (0.3) pts.
  Expense rates:
    % of revenue                    25.0        28.6        (3.6)
    % of gross profit               94.8       107.6       (12.8)
  Operating margin                   1.4        (2.0)        3.4

APAC Commercial
  Revenue from services
   (including fee-based
   income)                    $    355.3  $    284.9        24.7%     12.9%
  Fee-based income                  11.4         9.7        16.6       5.6
  Gross profit                      48.4        41.6        16.2       4.6
  SG&A expenses excluding
   restructuring charges            45.1        44.6         1.3
  Restructuring charges              0.5         1.6       (66.5)
  Total SG&A expenses               45.6        46.2        (1.0)    (10.7)
  Earnings from operations           2.8        (4.6)         NM
  Earnings from operations
   excluding restructuring
   charges                           3.3        (3.0)         NM

  Gross profit rate                 13.6%       14.6%       (1.0) pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    12.7        15.6        (2.9)
    % of gross profit               93.3       107.0       (13.7)
  Operating margin (excluding
   restructuring charges)            0.9        (1.0)        1.9

APAC PT
  Revenue from services
   (including fee-based
   income)                    $     32.5  $     25.4        28.2%     16.8%
  Fee-based income                  10.5         3.8       172.1     156.3
  Gross profit                      13.9         7.7        81.3      68.3
  Total SG&A expenses               17.0         9.2        85.1      72.0
  Earnings from operations          (3.1)       (1.5)     (104.5)

  Gross profit rate                 42.7%       30.2%       12.5 pts.
  Expense rates:
    % of revenue                    52.2        36.2        16.0
    % of gross profit              122.3       119.8         2.5
  Operating margin                  (9.5)       (6.0)       (3.5)




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

                                          December Year to Date
                               -------------------------------------------
                                                                  Constant
                                  2010       2009                 Currency
                               (52 Weeks) (53 Weeks)   Change      Change
                               ---------  ---------  ----------   --------
OCG
  Revenue from services
   (including fee-based
   income)                     $   254.8  $   219.9        15.8 %     15.6%
  Fee-based income                  25.6       24.4         4.9        3.9
  Gross profit                      60.0       59.7         0.2       (0.1)
  SG&A expenses excluding
   restructuring charges            77.5       69.6        11.3
  Restructuring charges              0.1        1.9       (96.0)
  Total SG&A expenses               77.6       71.5         8.5        8.1
  Earnings from operations         (17.6)     (11.8)      (50.8)
  Earnings from operations
   excluding restructuring
   charges                         (17.5)      (9.9)      (78.3)

  Gross profit rate                 23.5%      27.2%       (3.7) pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    30.4       31.7        (1.3)
    % of gross profit              129.5      116.6        12.9
  Operating margin (excluding
   restructuring charges)           (6.9)      (4.5)       (2.4)

Corporate Expense
  SG&A expenses excluding
   restructuring charges       $    73.6  $    77.5        (5.1)%
  Restructuring charges              3.6        2.6        37.4
  Total SG&A expenses               77.2       80.1        (3.7)
  Asset impairments                  0.5       53.1       (99.1)

Consolidated Total (net of
 intersegment activity)
  Revenue from services
   (including fee-based
   income)                     $ 4,950.3  $ 4,314.8        14.7 %     13.7%
  Fee-based income                  99.0       86.1        15.0       12.6
  Gross profit                     794.5      701.7        13.2       12.3
  SG&A expenses excluding
   restructuring charges           747.2      764.8        (2.3)
  Restructuring charges              7.2       29.9       (75.8)
  Total SG&A expenses              754.4      794.7        (5.1)      (5.9)
  Asset impairments                  2.0       53.1       (96.2)
  Earnings from operations          38.1     (146.1)         NM
  Earnings from operations
   excluding restructuring
   charges                          45.3     (116.2)         NM

  Gross profit rate                 16.0%      16.3%       (0.3) pts.
  Expense rates (excluding
   restructuring charges):
    % of revenue                    15.1       17.7        (2.6)
    % of gross profit               94.0      109.0       (15.0)
  Operating margin (excluding
   restructuring charges)            0.9       (2.7)        3.6






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


                                                     January 2,  January 3,
                                                        2011        2010
                                                      ---------  ---------
Current Assets
  Cash and equivalents                                $    80.5  $    88.9
  Trade accounts receivable, less allowances of
   $12.3 and $15.0, respectively                          810.9      717.9
  Prepaid expenses and other current assets                44.8       70.6
  Deferred taxes                                           22.4       21.0
                                                      ---------  ---------
            Total current assets                          958.6      898.4

Property and Equipment, Net                               104.0      127.1

Noncurrent Deferred Taxes                                  84.0       77.5

Goodwill, Net                                              67.3       67.3

Other Assets                                              154.5      142.2

                                                      ---------  ---------
Total Assets                                          $ 1,368.4  $ 1,312.5
                                                      =========  =========

Current Liabilities
  Short-term borrowings and current portion of
   long-term debt                                     $    78.8  $    79.6
  Accounts payable and accrued liabilities                181.6      182.6
  Accrued payroll and related taxes                       243.3      208.3
  Accrued insurance                                        31.3       22.9
  Income and other taxes                                   56.0       47.4
                                                      ---------  ---------
  Total current liabilities                               591.0      540.8

Noncurrent Liabilities
  Long-term debt                                              -       57.5
  Accrued insurance                                        53.6       54.9
  Accrued retirement benefits                              85.4       76.9
  Other long-term liabilities                              14.6       16.0
                                                      ---------  ---------
            Total noncurrent liabilities                  153.6      205.3

Stockholders' Equity
  Common stock                                             40.1       40.1
  Treasury stock                                          (70.9)    (107.2)
  Paid-in capital                                          28.0       36.9
  Earnings invested in the business                       597.6      571.5
  Accumulated other comprehensive income                   29.0       25.1
                                                      ---------  ---------
            Total stockholders' equity                    623.8      566.4
                                                      ---------  ---------

Total Liabilities and Stockholders' Equity            $ 1,368.4  $ 1,312.5
                                                      =========  =========

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

STATISTICS:
 Working Capital                                      $   367.6  $   357.6
 Current Ratio                                              1.6        1.7
 Debt-to-capital %                                         11.2%      19.5%
 Global Days Sales Outstanding                               49         51






                  KELLY SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED JANUARY 2, 2011 AND 53 WEEKS ENDED JANUARY 3, 2010
                                (UNAUDITED)
                         (In millions of dollars)

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

Cash flows from operating activities
   Net earnings (loss)                                  $   26.1  $ (104.5)
   Noncash adjustments:
     Impairment of assets                                    2.0      53.1
     Depreciation and amortization                          34.9      40.9
     Provision for bad debts                                 2.1       2.2
     Stock-based compensation                                3.2       5.1
     Other, net                                              0.5      (2.2)
   Changes in operating assets and liabilities             (27.0)    (22.0)
                                                        --------  --------

        Net cash from operating activities                  41.8     (27.4)
                                                        --------  --------

Cash flows from investing activities
   Capital expenditures                                    (11.0)    (13.1)
   Acquisition of companies, net of cash received              -      (7.5)
   Other investing activities                               (0.3)     (2.8)

        Net cash from investing activities                 (11.3)    (23.4)
                                                        --------  --------

Cash flows from financing activities
   Net change in short-term borrowings                     (44.8)     52.7
   Repayment of debt                                       (14.9)    (30.5)
   Sale of stock and other financing activities             24.4      (2.6)
                                                        --------  --------

        Net cash from financing activities                 (35.3)     19.6
                                                        --------  --------

Effect of exchange rates on cash and equivalents            (3.6)      1.8
                                                        --------  --------

Net change in cash and equivalents                          (8.4)    (29.4)
Cash and equivalents at beginning of period                 88.9     118.3
                                                        --------  --------


Cash and equivalents at end of period                   $   80.5  $   88.9
                                                        ========  ========



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

                                    Fourth Quarter (Commercial, PT and OCG)
                                    --------------------------------------
                                                             % Change
                                      2010      2009              Constant
                                   (13 Weeks) (14 Weeks)   US$    Currency
                                    --------- --------- --------  --------

Americas
  United States                     $   829.6 $   733.1     13.2%     13.2%
  Canada                                 56.2      51.5      8.9       4.4
  Mexico                                 27.6      19.0     45.2      37.4
  Puerto Rico                            22.6      15.0     51.5      51.5
                                    --------- ---------
Total Americas                          936.0     818.6     14.4      13.9

EMEA
  France                                 72.2      78.7     (8.2)     (0.0)
  Switzerland                            50.7      38.8     30.5      24.5
  United Kingdom                         28.5      43.1    (33.9)    (31.6)
  Russia                                 28.1      19.9     41.3      47.4
  Portugal                               21.8      19.4     12.5      22.5
  Germany                                19.2      17.6      8.3      17.9
  Italy                                  17.2      19.0     (9.5)     (1.3)
  Norway                                 14.3      17.3    (17.3)    (13.6)
  Other                                  23.8      29.0    (17.7)    (11.4)
                                    --------- ---------
Total EMEA                              275.8     282.8     (2.5)      2.4

APAC
  Australia                              40.6      30.4     33.8      23.2
  Singapore                              24.1      17.9     34.6      25.7
  Malaysia                               15.9      13.7     15.9       6.1
  India                                  17.0      11.9     43.1      37.8
  Other                                  16.4      18.8    (13.1)    (16.6)
                                    --------- ---------
Total APAC                              114.0      92.7     23.0      14.9

Total Kelly Services, Inc.          $ 1,325.8 $ 1,194.1     11.0%     11.3%
                                    ========= =========





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

                                            December Year to Date
                                          (Commercial, PT and OCG)
                                    --------------------------------------
                                                             % Change
                                      2010      2009              Constant
                                   (52 Weeks) (53 Weeks)   US$    Currency
                                    --------- --------- --------  --------

Americas
  United States                     $ 3,121.9 $ 2,634.3     18.5%     18.5%
  Canada                                219.0     183.4     19.4       8.3
  Mexico                                 93.7      66.5     40.8      32.2
  Puerto Rico                            78.2      57.9     35.1      35.1
                                    --------- ---------
Total Americas                        3,512.8   2,942.1     19.4      18.5

EMEA
  France                                278.4     272.7      2.1       7.6
  Switzerland                           170.7     138.6     23.2      18.6
  United Kingdom                        134.1     206.7    (35.1)    (34.5)
  Russia                                103.6      65.4     58.4      53.0
  Portugal                               80.6      59.5     35.5      43.4
  Germany                                69.8      65.1      7.1      13.1
  Italy                                  63.3      72.9    (13.2)     (8.6)
  Norway                                 57.4      61.7     (7.0)    (10.2)
  Other                                  80.7     111.2    (27.4)    (24.6)
                                    --------- ---------
Total EMEA                            1,038.6   1,053.8     (1.4)      0.4

APAC
  Australia                             128.8      98.3     31.1      13.5
  Singapore                              84.3      64.4     30.8      22.5
  Malaysia                               63.3      50.1     26.3      15.2
  India                                  61.4      36.6     67.8      59.0
  Other                                  61.1      69.5    (12.1)    (20.8)
                                    --------- ---------
Total APAC                              398.9     318.9     25.1      13.3

Total Kelly Services, Inc.          $ 4,950.3 $ 4,314.8     14.7%     13.7%
                                    ========= =========




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

                                                          December Year
                                      Fourth Quarter         to Date
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------- --------  --------  --------

 Pretax earnings (loss) from
  operations                        $    16.9 $  (13.0) $   38.1  $ (146.1)

 Restructuring charges (Note 1)             -     13.4       7.2      29.9
 Goodwill and related impairment
  charges (Note 2)                          -        -         -      53.1
                                    --------- --------  --------  --------

 Earnings (loss) from operations
  excluding restructuring and
  goodwill and related impairment
  charges                           $    16.9 $    0.4  $   45.3  $  (63.1)
                                    ========= ========  ========  ========


                                                Fourth Quarter
                                    --------------------------------------
                                           2010                2009
                                    ------------------  ------------------
                                      Amount  Per Share  Amount  Per Share
                                    --------- --------  --------  --------

 Earnings (loss) from continuing
  operations, net of taxes          $    14.6 $   0.39  $   (8.2) $  (0.23)

 Restructuring charges, net of
  taxes (Note 1)                            -        -      10.1      0.29
                                    ---------           --------

 Earnings from continuing operations
  excluding restructuring charges,
  net of taxes                      $    14.6 $   0.39  $    1.9  $   0.05
                                    ========= ========  ========  ========


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

 Earnings (loss) from continuing
  operations, net of taxes          $    26.1 $   0.71  $ (105.1) $  (3.01)

 Restructuring charges, net of
  taxes (Note 1)                          5.4     0.15      24.0      0.69
 Goodwill and related impairment
  charges, net of taxes (Note 2)            -        -      50.0      1.43
                                    ---------           --------

 Earnings (loss) from continuing
  operations excluding restructuring
  and goodwill and related
  impairment charges, net of taxes  $    31.5 $   0.86  $  (31.1) $  (0.89)
                                    ========= ========  ========  ========



                  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 2009, the goodwill and related 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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