SOURCE: Kelly Services, Inc.

Kelly Services, Inc.

January 30, 2014 07:30 ET

Kelly Services® Reports 4th Quarter and Full Year 2013 Results

TROY, MI--(Marketwired - Jan 30, 2014) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2013. 

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2013 totaled $1.4 billion, a 1% increase compared to the corresponding quarter of 2012. Revenue for the full year totaled $5.4 billion, a 1% decrease compared to the prior year. 

Earnings from operations for the fourth quarter of 2013 totaled $9.6 million, compared to $9.8 million reported for the fourth quarter of 2012. Included in the results from operations for the fourth quarter of 2013 are restructuring charges of $0.3 million. Included in the results from operations for the fourth quarter of 2012 are asset impairment charges of $3.1 million and restructuring charges of $1.3 million. Excluding these charges from both years, earnings from operations were $9.9 million in the fourth quarter of 2013 compared to $14.2 million in 2012.

Earnings from operations for the full year of 2013 totaled $53.3 million compared to $72.3 million in 2012. Included in the results from operations for 2013 are asset impairment charges of $1.7 million and restructuring charges of $1.6 million. Included in the results from operations for 2012 are asset impairment charges of $3.1 million and a restructuring benefit of $0.9 million. Excluding these items from both years, earnings from operations were $56.6 million in 2013 compared to $74.5 million in 2012.

Diluted earnings per share from continuing operations in the fourth quarter of 2013 were $0.45 compared to $0.23 per share in the fourth quarter of 2012. Included in diluted earnings per share from continuing operations for the fourth quarter of 2013 are restructuring charges of $0.01 per share. Included in diluted earnings per share from continuing operations for the fourth quarter of 2012 are asset impairment charges of $0.05 per share, restructuring charges of $0.02 per share and a loss on the North Asia joint venture of $0.03 per share. Excluding these charges from both years, diluted earnings per share from continuing operations for the fourth quarter of 2013 were $0.45 per share compared to $0.33 per share in 2012.

Diluted earnings per share from continuing operations for the full year of 2013 were $1.54 compared to $1.31 per share in 2012. Included in diluted earnings per share from continuing operations for 2013 are restructuring charges of $0.04 per share and asset impairment charges of $0.04 per share. Included in diluted earnings per share from continuing operations for 2012 are asset impairment charges of $0.05 per share, a restructuring benefit of $0.04 per share and a loss on the North Asia joint venture of $0.03 per share. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2013 were $1.62 per share compared to $1.34 per share in 2012.

Commenting on the fourth quarter, Camden stated, "Our performance exceeded our expectations, and we're pleased with the strategic progress we've made despite uneven global economic conditions. In the face of flat revenue growth, Kelly experienced an improvement in both GP and staffing fees, and continued to deliver double-digit revenue growth in our outsourcing and consulting segment."

Looking ahead, Camden sees 2014 as a year of significant investment in the Company's long-term growth. "The market is demanding access to specialized talent and more holistic workforce solutions, and we're going to invest heavily in those areas. We will hire niche recruiters, adapt our operating models, and build our talent supply chain capabilities with speed and intensity in 2014. We are confident these investments are right for our business, right for our customers and will support long-term growth for Kelly."

In conjunction with its fourth quarter and full year earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 30, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S. 1 800 288-9626
International 1 651 291-5254

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website: kellyservices.com

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to 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), 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 440,000 employees in 2013. Revenue in 2013 was $5.4 billion. Visit kellyservices.com and connect with us on FacebookLinkedIn, and Twitter. Download The Talent Project, a free iPad® app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED DECEMBER 29, 2013 AND DECEMBER 30, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                         
Revenue from services   $ 1,385.8     $ 1,375.4     $ 10.4     0.8 %
                               
Cost of services     1,154.3       1,153.2       1.1     0.1  
                               
Gross profit     231.5       222.2       9.3     4.1  
                               
Selling, general and administrative                              
expenses     221.9       209.3       12.6     6.0  
                               
Asset impairments     -       3.1       (3.1 )   (100.0 )
                               
Earnings from operations     9.6       9.8       (0.2 )   (2.7 )
                               
Other expense, net     0.6       1.7       (1.1 )   (66.2 )
                               
Earnings from continuing operations before taxes     9.0       8.1       0.9     10.4  
                               
Income tax benefit     8.2       0.8       7.4     NM  
                               
Earnings from continuing operations     17.2       8.9       8.3     93.8  
                               
Earnings from discontinued operations, net of tax     -       -       -     NM  
                               
Net earnings   $ 17.2     $ 8.9     $ 8.3     93.7 %
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.45     $ 0.23     $ 0.22     95.7 %
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.45       0.23       0.22     95.7  
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.45     $ 0.23     $ 0.22     95.7 %
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.45       0.23       0.22     95.7  
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.7 %     16.2 %     0.5  pts.       
                               
Selling, general and administrative expenses:                              
  % of revenue     16.0       15.2       0.8        
  % of gross profit     95.9       94.2       1.7        
                               
% Return:                              
  Earnings from operations     0.7       0.7       0.0        
  Earnings from continuing operations before taxes     0.6       0.6       0.0        
  Earnings from continuing operations     1.2       0.6       0.6        
  Net earnings     1.2       0.6       0.6        
                               
Effective income tax rate     (91.1 )%     (8.9 )%     (82.2 ) pts.       
                               
Average number of shares outstanding                              
(millions):                              
  Basic     37.4       37.1                
  Diluted     37.4       37.1                
                               
Shares adjusted for nonvested restricted awards                              
(millions):                              
  Basic     38.6       38.3                
  Diluted     38.6       38.3                
                               
                               
                               
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 52 WEEKS ENDED DECEMBER 29, 2013 AND DECEMBER 30, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 5,413.1     $ 5,450.5     $ (37.4 )   (0.7) %
                               
Cost of services     4,523.6       4,553.9       (30.3 )   (0.7 )
                               
Gross profit     889.5       896.6       (7.1 )   (0.8 )
                               
Selling, general and administrative                              
expenses     834.5       821.2       13.3     1.6  
                               
Asset impairments     1.7       3.1       (1.4 )   (47.1 )
                               
Earnings from operations     53.3       72.3       (19.0 )   (26.3 )
                               
Other expense, net     4.5       3.5       1.0     29.7  
                               
Earnings from continuing operations before taxes     48.8       68.8       (20.0 )   (29.1 )
                               
Income tax (benefit) expense     (10.1 )     19.1       (29.2 )   (153.0 )
                               
Earnings from continuing operations     58.9       49.7       9.2     18.7  
                               
Earnings from discontinued operations, net of tax     -       0.4       (0.4 )   (99.8 )
                               
Net earnings   $ 58.9     $ 50.1     $ 8.8     17.6 %
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 1.54     $ 1.31     $ 0.23     17.6 %
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     1.54       1.32       0.22     16.7  
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 1.54     $ 1.31     $ 0.23     17.6 %
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     1.54       1.32       0.22     16.7  
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.4 %     16.5 %     (0.1 ) pts.       
                               
Selling, general and administrative expenses:                              
  % of revenue     15.4       15.1       0.3        
  % of gross profit     93.8       91.6       2.2        
                               
% Return:                              
  Earnings from operations     1.0       1.3       (0.3 )      
  Earnings from continuing operations before taxes     0.9       1.3       (0.4 )      
  Earnings from continuing operations     1.1       0.9       0.2        
  Net earnings     1.1       0.9       0.2        
                               
Effective income tax rate     (20.8 )%     27.8 %     (48.6 ) pts.      
                               
Average number of shares outstanding                              
(millions):                              
  Basic     37.3       37.0                
  Diluted     37.3       37.0                
                               
Shares adjusted for nonvested restricted awards                              
(millions):                              
  Basic     38.3       38.0                
  Diluted     38.3       38.1                
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Fourth Quarter  
 
 
 
 
 
 


2013
   

2012
   

Change
    Constant
Currency
Change
 
AMERICAS                            
  Commercial                            
    Revenue from services   $ 641.5     $ 662.3     (3.1 )%   (2.5) %
    Staffing fee-based income (included in revenue from services)     4.0       3.6     9.6     11.2  
    Gross profit     95.7       96.1     (0.5 )   0.2  
                                 
    Gross profit rate     14.9 %     14.5 %   0.4  pts.      
                             
  PT                            
    Revenue from services   $ 242.5     $ 255.6     (5.1 )%   (5.0) %
    Staffing fee-based income (included in revenue from services)     4.1       3.2     29.1     29.3  
    Gross profit     41.1       38.9     5.5     5.6  
                                 
    Gross profit rate     16.9 %     15.2 %   1.7  pts.      
                             
  Total Americas                            
    Revenue from services   $ 884.0     $ 917.9     (3.7 )%   (3.2) %
    Staffing fee-based income (included in revenue from services)     8.1       6.8     18.7     19.7  
    Gross profit     136.8       135.0     1.2     1.8  
    Total SG&A expenses     110.4       102.4     7.8     8.4  
    Earnings from operations     26.4       32.6     (19.4 )      
                                 
    Gross profit rate     15.5 %     14.7 %   0.8  pts.      
    Expense rates:                            
      % of revenue     12.5       11.2     1.3        
      % of gross profit     80.8       75.8     5.0        
    Operating margin     3.0       3.6     (0.6 )      
                             
EMEA                            
  Commercial                            
    Revenue from services   $ 232.2     $ 213.4     8.8 %   6.6 %
    Staffing fee-based income (included in revenue from services)     5.1       4.9     5.5     6.2  
    Gross profit     34.8       32.7     6.5     4.4  
                                 
    Gross profit rate     15.0 %     15.3 %   (0.3 ) pts.      
                             
  PT                            
    Revenue from services   $ 48.0     $ 43.0     11.6 %   8.4 %
    Staffing fee-based income (included in revenue from services)     3.4       3.7     (8.5 )   (9.0 )
    Gross profit     10.6       10.3     3.8     1.6  
                                 
    Gross profit rate     22.2 %     23.9 %   (1.7 ) pts.       
                             
  Total EMEA                            
    Revenue from services   $ 280.2     $ 256.4     9.3 %   6.9 %
    Staffing fee-based income (included in revenue from services)     8.5       8.6     (0.5 )   (0.3 )
    Gross profit     45.4       43.0     5.9     3.8  
    SG&A expenses excluding restructuring charges     42.2       42.6     (0.9 )      
    Restructuring charges     0.3       1.3     (74.8 )      
    Total SG&A expenses     42.5       43.9     (3.0 )   (5.1 )
    Earnings from operations     2.9       (0.9 )   NM        
    Earnings from operations excluding restructuring charges     3.2       0.4     NM        
                                 
    Gross profit rate     16.2 %     16.7 %   (0.5 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.1       16.6     (1.5 )      
      % of gross profit     92.9       99.3     (6.4 )      
    Operating margin (excluding restructuring charges)     1.1       0.1     1.0        
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Fourth Quarter  
   

2013
   

2012
   

Change
    Constant
Currency
Change
 
APAC                            
  Commercial                            
    Revenue from services   $ 87.3     $ 84.9     2.9 %   8.9 %
    Staffing fee-based income (included in revenue from services)     2.4       2.4     2.2     10.6  
    Gross profit     12.5       11.7     6.2     13.5  
                                 
    Gross profit rate     14.3 %     13.8 %   0.5  pts.      
                               
  PT                            
    Revenue from services   $ 9.3     $ 11.7     (20.7 )%   (14.4) %
    Staffing fee-based income (included in revenue from services)     2.1       2.9     (27.2 )   (21.8 )
    Gross profit     3.5       4.3     (18.5 )   (11.9 )
                                 
    Gross profit rate     37.7 %     36.7 %   1.0  pts.       
                               
  Total APAC                            
    Revenue from services   $ 96.6     $ 96.6     0.1 %   6.1 %
    Staffing fee-based income (included in revenue from services)     4.5       5.3     (14.0 )   (7.2 )
    Gross profit     16.0       16.0     (0.4 )   6.7  
    Total SG&A expenses     14.7       15.9     (7.9 )   (1.3 )
    Earnings from operations     1.3       0.1     NM        
                                 
    Gross profit rate     16.5 %     16.6 %   (0.1 ) pts.      
    Expense rates:                            
      % of revenue     15.2       16.5     (1.3 )      
      % of gross profit     91.8       99.3     (7.5 )      
    Operating margin     1.4       0.1     1.3        
                             
OCG                            
    Revenue from services   $ 140.1     $ 113.3     23.6 %   24.0 %
    Gross profit     34.4       29.0     18.4     18.8  
    Total SG&A expenses     27.8       25.8     7.8     8.2  
    Earnings from operations     6.6       3.2     100.9        
                                 
    Gross profit rate     24.5 %     25.6 %   (1.1 ) pts.      
    Expense rates:                            
      % of revenue     19.8       22.7     (2.9 )      
      % of gross profit     80.8       88.7     (7.9 )      
    Operating margin     4.7       2.9     1.8        
                               
                               
                               
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    December Year to Date  
   

2013
   

2012
   

Change
    Constant
Currency
Change
 
AMERICAS                            
  Commercial                            
    Revenue from services   $ 2,545.6     $ 2,642.4     (3.7 )%   (3.3) %
    Staffing fee-based income (included in revenue from services)     16.0       15.7     2.0     3.1  
    Gross profit     370.2       388.2     (4.7 )   (4.3 )
                                 
    Gross profit rate     14.5 %     14.7 %   (0.2 ) pts.      
                               
  PT                            
    Revenue from services   $ 1,001.4     $ 1,029.7     (2.8 )%   (2.7) %
    Staffing fee-based income (included in revenue from services)     16.4       14.5     12.9     13.1  
    Gross profit     163.5       159.7     2.4     2.4  
                                 
    Gross profit rate     16.3 %     15.5 %   0.8  pts.      
                               
  Total Americas                            
    Revenue from services   $ 3,547.0     $ 3,672.1     (3.4 )%   (3.2) %
    Staffing fee-based income (included in revenue from services)     32.4       30.2     7.2     7.9  
    Gross profit     533.7       547.9     (2.6 )   (2.4 )
    Total SG&A expenses     424.9       405.8     4.7     5.0  
    Earnings from operations     108.8       142.1     (23.5 )      
                                 
    Gross profit rate     15.0 %     14.9 %   0.1  pts.      
    Expense rates:                            
      % of revenue     12.0       11.1     0.9        
      % of gross profit     79.6       74.1     5.5        
    Operating margin     3.1       3.9     (0.8 )      
                             
EMEA                            
  Commercial                            
    Revenue from services   $ 877.5     $ 854.6     2.7 %   1.4 %
    Staffing fee-based income (included in revenue from services)     20.6       22.4     (7.9 )   (7.8 )
    Gross profit     133.6       133.8     (0.1 )   (1.4 )
                                 
    Gross profit rate     15.2 %     15.7 %   (0.5 ) pts.      
                               
  PT                            
    Revenue from services   $ 179.7     $ 168.3     6.7 %   5.0 %
    Staffing fee-based income (included in revenue from services)     15.2       16.8     (9.5 )   (9.8 )
    Gross profit     42.6       43.0     (0.7 )   (2.0 )
                                 
    Gross profit rate     23.7 %     25.5 %   (1.8 ) pts.      
                               
  Total EMEA                            
    Revenue from services   $ 1,057.2     $ 1,022.9     3.4 %   1.9 %
    Staffing fee-based income (included in revenue from services)     35.8       39.2     (8.6 )   (8.6 )
    Gross profit     176.2       176.8     (0.2 )   (1.6 )
    SG&A expenses excluding restructuring charges     164.3       169.0     (2.8 )      
    Restructuring charges     0.4       (0.9 )   156.6        
    Total SG&A expenses     164.7       168.1     (1.9 )   (3.3 )
    Earnings from operations     11.5       8.7     32.9        
    Earnings from operations excluding restructuring charges     11.9       7.8     54.9        
                                 
    Gross profit rate     16.7 %     17.3 %   (0.6 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.5       16.5     (1.0 )      
      % of gross profit     93.2       95.6     (2.4 )      
    Operating margin (excluding restructuring charges)     1.1       0.8     0.3        
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    December Year to Date  
   

2013
   

2012
   

Change
    Constant
Currency
Change
 
APAC                            
  Commercial                            
    Revenue from services   $ 344.1     $ 343.2     0.3 %   3.4 %
    Staffing fee-based income (included in revenue from services)     10.6       11.7     (9.1 )   (5.1 )
    Gross profit     49.3       50.1     (1.7 )   1.8  
                                 
    Gross profit rate     14.3 %     14.6 %   (0.3 ) pts.       
                               
  PT                            
    Revenue from services   $ 38.6     $ 51.6     (25.2 )%   (21.9) %
    Staffing fee-based income (included in revenue from services)     8.8       15.8     (44.7 )   (42.5 )
    Gross profit     14.0       21.0     (33.4 )   (30.5 )
                                 
    Gross profit rate     36.2 %     40.6 %   (4.4 ) pts.      
                               
  Total APAC                            
    Revenue from services   $ 382.7     $ 394.8     (3.1 )%   0.1 %
    Staffing fee-based income (included in revenue from services)     19.4       27.5     (29.6 )   (26.6 )
    Gross profit     63.3       71.1     (11.0 )   (7.7 )
    SG&A expenses excluding restructuring charges     60.2       73.4     (18.1 )      
    Restructuring charges     0.3       -     NM        
    Total SG&A expenses     60.5       73.4     (17.7 )   (14.6 )
    Earnings from operations     2.8       (2.3 )   NM        
    Earnings from operations excluding restructuring charges     3.1       (2.3 )   NM        
                                 
    Gross profit rate     16.5 %     18.0 %   (1.5 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     15.7       18.6     (2.9 )      
      % of gross profit     95.1       103.3     (8.2 )      
    Operating margin (excluding restructuring charges)     0.8       (0.6 )   1.4        
                             
OCG                            
    Revenue from services   $ 475.9     $ 396.1     20.2 %   20.4 %
    Gross profit     119.8       104.0     15.1     15.4  
    SG&A expenses excluding restructuring charges     105.5       95.4     10.6        
    Restructuring charges     0.9       -     NM        
    Total SG&A expenses     106.4       95.4     11.5     11.7  
    Asset impairments     1.7       -     NM        
    Earnings from operations     11.7       8.6     35.6        
    Earnings from operations excluding restructuring charges     12.6       8.6     44.9        
                                 
    Gross profit rate     25.2 %     26.3 %   (1.1 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     22.2       24.1     (1.9 )      
      % of gross profit     88.1       91.6     (3.5 )      
    Operating margin (excluding restructuring charges)     2.7       2.2     0.5        
                                 
                                 
                                 
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
             
    Dec. 29, 2013     Dec. 30, 2012  
Current Assets                
  Cash and equivalents   $ 125.7     $ 76.3  
  Trade accounts receivable, less allowances of $9.9 and $10.4, respectively     1,023.1       1,013.9  
  Prepaid expenses and other current assets     52.2       57.5  
  Deferred taxes     35.5       44.9  
                   
    Total current assets     1,236.5       1,192.6  
                 
Property and Equipment, Net     92.0       89.9  
                 
Noncurrent Deferred Taxes     121.7       82.8  
                 
Goodwill, Net     90.3       89.5  
                 
Other Assets     258.1       180.9  
                 
Total Assets   $ 1,798.6     $ 1,635.7  
                 
Current Liabilities                
  Short-term borrowings   $ 28.3     $ 64.1  
  Accounts payable and accrued liabilities     342.4       295.6  
  Accrued payroll and related taxes     294.9       264.5  
  Accrued insurance     27.6       32.8  
  Income and other taxes     68.8       65.3  
                   
    Total current liabilities     762.0       722.3  
                 
Noncurrent Liabilities                
  Accrued insurance     46.0       43.5  
  Accrued retirement benefits     134.7       111.0  
  Other long-term liabilities     33.3       17.9  
                   
    Total noncurrent liabilities     214.0       172.4  
                 
Stockholders' Equity                
  Common stock     40.1       40.1  
  Treasury stock     (56.2 )     (61.6 )
  Paid-in capital     26.0       27.1  
  Earnings invested in the business     751.3       700.0  
  Accumulated other comprehensive income     61.4       35.4  
                   
    Total stockholders' equity     822.6       741.0  
                 
Total Liabilities and Stockholders' Equity   $ 1,798.6     $ 1,635.7  
                 
                 
STATISTICS:                
  Working Capital   $ 474.5     $ 470.3  
  Current Ratio     1.6       1.7  
  Debt-to-capital %     3.3 %     8.0 %
  Global Days Sales Outstanding     52       53  
                   
                   
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 52 WEEKS ENDED DECEMBER 29, 2013 AND DECEMBER 30, 2012  
(UNAUDITED)  
(In millions of dollars)  
             
    2013     2012  
                 
Cash flows from operating activities                
  Net earnings   $ 58.9     $ 50.1  
  Noncash adjustments:                
    Impairment of assets     1.7       3.1  
    Depreciation and amortization     20.4       22.3  
    Provision for bad debts     2.0       1.1  
    Stock-based compensation     3.8       4.8  
    Other, net     0.6       1.3  
  Changes in operating assets and liabilities     27.9       (21.6 )
                   
      Net cash from operating activities     115.3       61.1  
                 
Cash flows from investing activities                
  Capital expenditures     (20.0 )     (21.5 )
  Investment in equity affiliate     -       (6.6 )
  Other investing activities     (0.8 )     -  
                   
      Net cash used in investing activities     (20.8 )     (28.1 )
                 
Cash flows from financing activities                
  Net change in short-term borrowings     (35.8 )     (31.9 )
  Dividend payments     (7.6 )     (7.6 )
  Other financing activities     (0.3 )     0.1  
                   
      Net cash used in financing activities     (43.7 )     (39.4 )
                 
Effect of exchange rates on cash and equivalents     (1.4 )     1.7  
                 
Net change in cash and equivalents     49.4       (4.7 )
Cash and equivalents at beginning of period     76.3       81.0  
                 
                 
Cash and equivalents at end of period   $ 125.7     $ 76.3  
                 
                 
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    Fourth Quarter (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2013   2012   US$     Currency  
                         
Americas                        
  United States   $ 872.6   $ 877.9   (0.6 )%   (0.6 )%
  Canada     52.4     60.5   (13.3 )   (8.4 )
  Mexico     33.9     35.3   (4.1 )   (3.5 )
  Puerto Rico     24.6     23.4   5.1     5.1  
  Brazil     14.0     14.0   (0.0 )   10.3  
Total Americas     997.5     1,011.1   (1.3 )   (0.9 )
                         
EMEA                        
  Switzerland     70.3     61.2   15.0     11.6  
  France     66.1     58.8   12.3     7.1  
  Russia     33.0     33.9   (2.9 )   1.7  
  Portugal     27.3     19.0   43.9     37.2  
  United Kingdom     27.2     25.6   6.2     5.4  
  Germany     17.5     16.4   6.9     1.9  
  Italy     15.3     14.6   4.7     (0.2 )
  Norway     14.8     15.5   (4.3 )   1.9  
  Other     16.9     19.0   (10.7 )   (13.9 )
Total EMEA     288.4     264.0   9.3     6.9  
                         
APAC                        
  Singapore     30.6     26.5   15.6     18.2  
  Australia     30.2     33.9   (10.9 )   (0.5 )
  Malaysia     16.1     18.0   (10.9 )   (6.5 )
  New Zealand     14.0     12.9   8.3     7.6  
  Other     9.0     9.0   0.9     15.3  
Total APAC     99.9     100.3   (0.4 )   5.8  
                         
Total Kelly Services, Inc.   $ 1,385.8   $ 1,375.4   0.8 %   1.1 %
                         
                         
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    December Year to Date (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2013   2012   US$     Currency  
Americas                        
  United States   $ 3,419.9   $ 3,464.2   (1.3 )%   (1.3 )%
  Canada     216.3     243.9   (11.3 )   (8.7 )
  Mexico     133.3     117.7   13.3     9.9  
  Puerto Rico     98.2     99.7   (1.5 )   (1.5 )
  Brazil     59.0     60.7   (2.8 )   7.4  
Total Americas     3,926.7     3,986.2   (1.5 )   (1.3 )
                         
EMEA                        
  Switzerland     255.9     235.6   8.6     7.2  
  France     248.1     243.0   2.1     (1.2 )
  Russia     135.0     131.0   3.0     5.7  
  United Kingdom     105.3     104.9   0.4     1.7  
  Portugal     90.3     75.0   20.4     16.3  
  Germany     66.8     70.3   (4.9 )   (8.0 )
  Norway     61.1     66.3   (7.7 )   (6.8 )
  Italy     58.9     59.1   (0.4 )   (3.5 )
  Other     67.6     67.4   0.3     (2.4 )
Total EMEA     1,089.0     1,052.6   3.5     2.1  
                         
APAC                        
  Australia     130.6     135.5   (3.6 )   3.1  
  Singapore     114.1     101.6   12.3     12.6  
  Malaysia     67.2     72.9   (7.9 )   (6.0 )
  New Zealand     50.1     52.4   (4.4 )   (5.5 )
  Other     35.4     49.3   (28.2 )   (22.0 )
Total APAC     397.4     411.7   (3.5 )   (0.3 )
                         
Total Kelly Services, Inc.   $ 5,413.1   $ 5,450.5   (0.7 )%   (0.6 )%
                         
                         
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED DECEMBER 29, 2013 AND DECEMBER 30, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                               
    2013     2012        
    As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Adjusted Earnings     % Change  
                                         
Revenue from services   $ 1,385.8     $ -     $ 1,385.8     $ 1,375.4       0.8 %
                                         
Cost of services     1,154.3       -       1,154.3       1,153.2       0.1  
                                         
Gross profit     231.5       -       231.5       222.2       4.1  
                                         
Selling, general and administrative expenses     221.9       (0.3 )     221.6       208.0       6.5  
                                         
Asset impairments     -       -       -       -       NM  
                                         
Earnings from operations     9.6       0.3       9.9       14.2       (30.5 )
                                         
Other expense, net     0.6       -       0.6       1.0       (39.6 )
                                         
Earnings from continuing operations before taxes     9.0       0.3       9.3       13.2       (29.9 )
                                         
Income tax expense (benefit)     (8.2 )     -       (8.2 )     0.6       NM  
                                         
Earnings from continuing operations   $ 17.2     $ 0.3     $ 17.5     $ 12.6       39.7 %
                                         
Earnings per share from continuing operations:                                        
  Basic   $ 0.45     $ 0.01     $ 0.45     $ 0.33       36.4 %
  Diluted   $ 0.45     $ 0.01     $ 0.45     $ 0.33       36.4 %
                                         
    2012  
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Loss on Equity Investment (Note 3)     Adjusted Earnings  
                                         
Revenue from services   $ 1,375.4     $ -     $ -     $ -     $ 1,375.4  
                                         
Cost of services     1,153.2       -       -       -       1,153.2  
                                         
Gross profit     222.2       -       -       -       222.2  
                                         
Selling, general and administrative expenses     209.3       (1.3 )     -       -       208.0  
                                         
Asset impairments     3.1       -       (3.1 )     -       -  
                                         
Earnings from operations     9.8       1.3       3.1       -       14.2  
                                         
Other expense, net     1.7       -       -       (0.7 )     1.0  
                                         
Earnings from continuing operations before taxes     8.1       1.3       3.1       0.7       13.2  
                                         
Income tax expense (benefit)     (0.8 )     0.5       1.2       (0.3 )     0.6  
                                         
Earnings from continuing operations   $ 8.9     $ 0.8     $ 1.9     $ 1.0     $ 12.6  
                                         
Earnings per share from continuing operations:                                        
  Basic   $ 0.23     $ 0.02     $ 0.05     $ 0.03     $ 0.33  
  Diluted   $ 0.23     $ 0.02     $ 0.05     $ 0.03     $ 0.33  
 
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
 
 
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 52 WEEKS ENDED DECEMBER 29, 2013 AND DECEMBER 30, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                                   
    2013     2012      
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings     Adjusted Earnings   % Change  
                                             
Revenue from services   $ 5,413.1     $ -     $ -     $ 5,413.1     $ 5,450.5   (0.7 )%
                                             
Cost of services     4,523.6       -       -       4,523.6       4,553.9   (0.7 )
                                             
Gross profit     889.5       -       -       889.5       896.6   (0.8 )
                                             
Selling, general and administrative expenses     834.5       (1.6 )     -       832.9       822.1   1.3  
                                             
Asset impairments     1.7       -       (1.7 )     -       -   NM  
                                             
Earnings from operations     53.3       1.6       1.7       56.6       74.5   (24.1 )
                                             
Other expense, net     4.5       -       -       4.5       2.8   64.5  
                                             
Earnings from continuing operations before taxes     48.8       1.6       1.7       52.1       71.7   (27.5 )
                                             
Income tax expense (benefit)     (10.1 )     0.1       -       (10.0 )     20.5   (148.8 )
                                             
Earnings from continuing operations   $ 58.9     $ 1.5     $ 1.7     $ 62.1     $ 51.2   21.4 %
                                             
                                             
Earnings per share from continuing operations:                                            
  Basic   $ 1.54     $ 0.04     $ 0.04     $ 1.62     $ 1.34   20.9 %
  Diluted   $ 1.54     $ 0.04     $ 0.04     $ 1.62     $ 1.34   20.9 %
                                             
    2012      
    As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Loss on Equity Investment (Note 3)     Adjusted Earnings      
                                             
Revenue from services   $ 5,450.5     $ -     $ -     $ -     $ 5,450.5      
                                             
Cost of services     4,553.9       -       -       -       4,553.9      
                                             
Gross profit     896.6       -       -       -       896.6      
                                             
Selling, general and administrative expenses     821.2       0.9       -       -       822.1      
                                             
Asset impairments     3.1       -       (3.1 )     -       -      
                                             
Earnings from operations     72.3       (0.9 )     3.1       -       74.5      
                                             
Other expense, net     3.5       -       -       (0.7 )     2.8      
                                             
Earnings from continuing operations before taxes     68.8       (0.9 )     3.1       0.7       71.7      
                                             
Income tax expense (benefit)     19.1       0.5       1.2       (0.3 )     20.5      
                                             
Earnings from continuing operations   $ 49.7     $ (1.4 )   $ 1.9     $ 1.0     $ 51.2      
                                             
                                             
Earnings per share from continuing operations:                                            
  Basic   $ 1.31     $ (0.04 )   $ 0.05     $ 0.03     $ 1.34      
  Diluted   $ 1.31     $ (0.04 )   $ 0.05     $ 0.03     $ 1.34      
 
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
 
 
 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
 
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges, asset impairment charges and loss on equity investment is useful to understand the Company's fiscal 2013 financial performance and increases comparability. Specifically, Management believes that excluding these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
     
     
(1)



  In 2013, restructuring charges primarily relate to severance costs incurred from the Company's decision to exit the OCG executive search business operating in Germany, along with adjustments to prior restructuring costs, primarily in France and Italy. In 2012, restructuring charges relate to severance and lease termination costs for EMEA Commercial branches which were in the process of closing, along with revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.
     
(2)

  In 2013, 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. In 2012, asset impairment charges relate to the write-off of previously capitalized costs associated with the PeopleSoft billing system.
     
(3)
  Loss on equity investment represents the difference between the fair value and book value of the North Asia entities contributed by the Company to the investment in TS Kelly Workforce Solutions.
     
     

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