SOURCE: Kelly Services

Kelly Services

January 29, 2015 07:30 ET

Kelly Services® Reports 4th Quarter and Full Year 2014 Results

TROY, MI--(Marketwired - Jan 29, 2015) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2014 totaled $1.4 billion, a 3% increase (a 6% increase on a constant currency basis) compared to the corresponding quarter of 2013. Revenue for the full year totaled $5.6 billion, a 3% increase (a 4% increase on a constant currency basis) compared to the prior year.

Earnings from operations for the fourth quarter of 2014 totaled $2.6 million, compared to $9.6 million reported for the fourth quarter of 2013. Included in the results of operations in the fourth quarter of 2014 are restructuring charges of $6.2 million. The results of operations in the fourth quarter of 2013 included restructuring charges of $0.3 million. Excluding the restructuring charges from both years, earnings from operations were $8.8 million in the fourth quarter of 2014, compared to adjusted earnings of $9.9 million last year.

Earnings from operations for the full year of 2014 totaled $21.9 million compared to $53.3 million in 2013. Included in the results from operations for 2014 are restructuring charges of $12.0 million. Included in the results from operations for 2013 are asset impairment charges of $1.7 million and restructuring charges of $1.6 million. Excluding these items from both years, earnings from operations were $33.9 million in 2014 compared to $56.6 million in 2013.

Diluted earnings per share in the fourth quarter of 2014 were $0.44 compared to $0.45 per share in the fourth quarter of 2013. Included in diluted earnings per share from continuing operations for the fourth quarter of 2014 are restructuring charges of $0.10 per share. Included in diluted earnings per share from continuing operations for the fourth quarter of 2013 are restructuring charges of $0.01 per share. Excluding these charges from both years, diluted earnings per share from continuing operations for the fourth quarter of 2014 were $0.54 per share compared to $0.45 per share in 2013.

Diluted earnings per share from continuing operations for the full year of 2014 were $0.61 compared to $1.54 per share in 2013. Included in diluted earnings per share from continuing operations for 2014 are restructuring charges of $0.19 per share. 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. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2014 were $0.81 per share compared to $1.62 per share in 2013.

Commenting on the fourth quarter, Camden stated, "The fourth quarter capped a year of significant investment at Kelly, and we're pleased that our performance confirms those investments are gaining traction. With our new delivery models fully in place, we have begun capitalizing on improved U.S. market conditions and increased demand for specialized staffing. The strong results delivered by our OCG segment reflects our ongoing ability to also meet the growing demand for holistic talent management solutions, especially among our largest customers."

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 29, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

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

The pass code is Kelly Services

Via the Internet:

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

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, 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, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, 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 impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws and the expiration and/or reinstatement of the U.S. work opportunity credit program), the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, 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 555,000 employees in 2014. Revenue in 2014 was $5.6 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN

   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                  %   CC %  
    2014   2013   Change     Change   Change  
                         
Revenue from services   $ 1,425.0   $ 1,385.8   $ 39.2     2.8 % 5.7 %
                               
Cost of services     1,192.4     1,154.3     38.1     3.3      
                               
Gross profit     232.6     231.5     1.1     0.5   3.4  
                               
Selling, general and administrative expenses     230.0     221.9     8.1     3.6   6.8  
                               
Earnings from operations     2.6     9.6     (7.0 )   (71.7 )    
                               
Other expense, net     1.1     0.6     0.5     89.6      
                               
Earnings before taxes     1.5     9.0     (7.5 )   (81.8 )    
                               
Income tax benefit     (15.5 )   (8.2 )   (7.3 )   (89.3 )    
                               
Net earnings   $ 17.0   $ 17.2   $ (0.2 )   (0.2 )%    
                               
Basic earnings per share   $ 0.44   $ 0.45   $ (0.01 )   (2.2 )%    
Diluted earnings per share   $ 0.44   $ 0.45   $ (0.01 )   (2.2 )%    
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.3 %   16.7 %   (0.4 ) pts.        
                               
Selling, general and administrative expenses:                              
  % of revenue     16.1     16.0     0.1            
  % of gross profit     98.8     95.9     2.9            
                               
% Return:                              
  Earnings from operations     0.2     0.7     (0.5 )          
  Earnings before taxes     0.1     0.6     (0.5 )          
  Net earnings     1.2     1.2     -            
                               
Effective income tax rate     (949.7 )%   (91.1 )%   (858.6 ) pts.        
                               
Average number of shares outstanding (millions):                              
  Basic     37.7     37.4                  
  Diluted     37.7     37.4                  
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.9     38.6                  
  Diluted     38.9     38.6                  
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                  %   CC %  
    2014   2013   Change     Change   Change  
                               
Revenue from services   $ 5,562.7   $ 5,413.1   $ 149.6     2.8 % 3.8 %
                               
Cost of services     4,654.3     4,523.6     130.7     2.9      
                               
Gross profit     908.4     889.5     18.9     2.1   3.2  
                               
Selling, general and administrative expenses     886.5     834.5     52.0     6.2   7.3  
                               
Asset impairments     -     1.7     (1.7 )   (100.0 )    
                               
Earnings from operations     21.9     53.3     (31.4 )   (59.1 )    
                               
Other expense, net     5.3     4.5     0.8     15.3      
                               
Earnings before taxes     16.6     48.8     (32.2 )   (66.0 )    
                               
Income tax benefit     (7.1 )   (10.1 )   3.0     29.6      
                               
Net earnings   $ 23.7   $ 58.9   $ (35.2 )   (59.8) %    
                               
Basic earnings per share   $ 0.61   $ 1.54   $ (0.93 )   (60.4) %    
Diluted earnings per share   $ 0.61   $ 1.54   $ (0.93 )   (60.4) %    
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.3 %   16.4 %   (0.1 ) pts.        
                               
Selling, general and administrative expenses:                              
  % of revenue     15.9     15.4     0.5            
  % of gross profit     97.6     93.8     3.8            
                               
% Return:                              
  Earnings from operations     0.4     1.0     (0.6 )          
  Earnings before taxes     0.3     0.9     (0.6 )          
  Net earnings     0.4     1.1     (0.7 )          
                               
Effective income tax rate     (43.2 )%   (20.8 )%   (22.4 ) pts.        
                               
Average number of shares outstanding (millions):                              
  Basic     37.5     37.3                  
  Diluted     37.5     37.3                  
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.6     38.3                  
  Diluted     38.6     38.3                  
                                 
                                 
                                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                     
  Fourth Quarter  
                  Constant  
                  Currency  
  2014     2013   Change     Change  
AMERICAS                    
  Commercial                        
    Revenue from services $ 694.5     $ 641.5   8.3 %   9.3 %
    Staffing fee-based income included in revenue from services   4.0       3.4   16.0     17.4  
    Gross profit   99.6       95.7   4.2     5.2  
    Gross profit rate   14.4 %     14.9 % (0.5 ) pts.    
  PT                        
    Revenue from services $ 232.9     $ 234.1   (0.5 )%   (0.2) %
    Staffing fee-based income included in revenue from services   3.9       3.7   4.1     5.0  
    Gross profit   37.5       39.0   (3.6 )   (3.3 )
    Gross profit rate   16.1 %     16.6 % (0.5 ) pts.    
  Total Americas                        
    Revenue from services $ 927.4     $ 875.6   5.9 %   6.7 %
    Staffing fee-based income included in revenue from services   7.9       7.1   9.8     10.9  
    Gross profit   137.1       134.7   2.0     2.7  
    Total SG&A expenses   113.9       109.2   4.4     5.1  
    Earnings from operations   23.2       25.5   (8.5 )      
                           
    Gross profit rate   14.8 %     15.4 % (0.6 ) pts.    
    Expense rates:                        
      % of revenue   12.3       12.5   (0.2 )      
      % of gross profit   83.0       81.1   1.9        
    Return on sales   2.5       2.9   (0.4 )      
                         
EMEA                        
  Commercial                        
    Revenue from services $ 204.5     $ 232.2   (12.0 )%   (2.4) %
    Staffing fee-based income included in revenue from services   3.3       4.9   (31.9 )   (19.2 )
    Gross profit   29.6       34.8   (15.1 )   (5.6 )
    Gross profit rate   14.4 %     15.0 % (0.6 ) pts.    
  PT                        
    Revenue from services $ 44.8     $ 48.0   (6.5 )%   2.7 %
    Staffing fee-based income included in revenue from services   2.8       3.3   (16.0 )   (2.5 )
    Gross profit   9.6       10.6   (8.7 )   1.8  
    Gross profit rate   21.7 %     22.2 % (0.5 ) pts.    
  Total EMEA                        
    Revenue from services $ 249.3     $ 280.2   (11.0 )%   (1.5) %
    Staffing fee-based income included in revenue from services   6.1       8.2   (25.5 )   (12.5 )
    Gross profit   39.2       45.4   (13.6 )   (3.9 )
    SG&A expenses excluding restructuring charges   36.4       42.2   (13.7 )      
    Restructuring charges   -       0.3   (100.0 )      
    Total SG&A expenses   36.4       42.5   (14.4 )   (2.9 )
    Earnings from operations   2.8       2.9   (2.2 )      
    Earnings from operations excluding restructuring charges   2.8       3.2   (11.8 )      
                           
    Gross profit rate   15.7 %     16.2 % (0.5 ) pts.    
    Expense rates (excluding restructuring charges):                        
      % of revenue   14.6       15.1   (0.5 )      
      % of gross profit   92.8       92.9   (0.1 )      
    Return on sales (excluding restructuring charges)   1.1       1.1   -        
                             
                             
                             
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
   
  Fourth Quarter  
                  Constant  
                  Currency  
  2014     2013   Change     Change  
APAC                        
  Commercial                        
    Revenue from services $ 91.3     $ 87.3   4.6 %   9.7 %
    Staffing fee-based income included in revenue from services   2.0       2.2   (6.9 )   (3.4 )
    Gross profit   11.8       12.5   (5.4 )   (0.8 )
    Gross profit rate   12.9 %     14.3 % (1.4 ) pts.    
  PT                        
    Revenue from services $ 11.2     $ 9.3   20.1 %   26.9 %
    Staffing fee-based income included in revenue from services   2.0       2.1   (6.3 )   (2.2 )
    Gross profit   3.3       3.5   (4.6 )   0.2  
    Gross profit rate   29.9 %     37.7 % (7.8 ) pts.    
  Total APAC                        
    Revenue from services $ 102.5     $ 96.6   6.1 %   11.4 %
    Staffing fee-based income included in revenue from services   4.0       4.3   (6.6 )   (2.8 )
    Gross profit   15.1       16.0   (5.2 )   (0.6 )
    Total SG&A expenses   13.1       14.7   (11.4 )   (6.8 )
    Earnings from operations   2.0       1.3   63.9        
                             
    Gross profit rate   14.8 %     16.5 % (1.7 ) pts.    
    Expense rates:                        
      % of revenue   12.7       15.2   (2.5 )      
      % of gross profit   85.8       91.8   (6.0 )      
    Return on sales   2.1       1.4   0.7        
                         
OCG                        
    Revenue from services $ 164.7     $ 148.5   10.9 %   11.9 %
    Gross profit   42.3       36.5   15.8     17.1  
    Total SG&A expenses   32.6       29.0   12.5     14.8  
    Earnings from operations   9.7       7.5   28.5        
                           
    Gross profit rate   25.6 %     24.6 % 1.0   pts.    
    Expense rates:                        
      % of revenue   19.8       19.6   0.2        
      % of gross profit   77.4       79.6   (2.2 )      
    Return on sales   5.8       5.0   0.8        
                             
                             
                             
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                     
  December Year to Date  
                  Constant  
                  Currency  
  2014     2013   Change     Change  
AMERICAS                        
  Commercial                        
    Revenue from services $ 2,609.6     $ 2,545.6   2.5 %   3.4 %
    Staffing fee-based income included in revenue from services   14.4       13.2   8.7     10.1  
    Gross profit   379.6       370.2   2.6     3.4  
    Gross profit rate   14.5 %     14.5 % -   pts.    
  PT                        
    Revenue from services $ 956.0     $ 967.8   (1.2) %   (1.0) %
    Staffing fee-based income included in revenue from services   15.6       14.5   7.4     8.1  
    Gross profit   155.9       155.1   0.6     0.8  
    Gross profit rate   16.3 %     16.0 % 0.3   pts.    
  Total Americas                        
    Revenue from services $ 3,565.6     $ 3,513.4   1.5 %   2.2 %
    Staffing fee-based income included in revenue from services   30.0       27.7   8.0     9.1  
    Gross profit   535.5       525.3   2.0     2.6  
    Total SG&A expenses   446.8       419.8   6.5     7.1  
    Earnings from operations   88.7       105.5   (15.9 )      
                             
    Gross profit rate   15.0 %     14.9 % 0.1   pts.    
    Expense rates:                        
      % of revenue   12.5       11.9   0.6        
      % of gross profit   83.5       79.9   3.6        
    Return on sales   2.5       3.0   (0.5 )      
                         
EMEA                        
  Commercial                        
    Revenue from services $ 894.7     $ 877.5   2.0 %   3.5 %
    Staffing fee-based income included in revenue from services   17.3       19.8   (12.5 )   (8.0 )
    Gross profit   130.6       133.6   (2.3 )   (0.6 )
    Gross profit rate   14.6 %     15.2 % (0.6 ) pts.    
  PT                        
    Revenue from services $ 190.3     $ 179.7   5.9 %   6.4 %
    Staffing fee-based income included in revenue from services   13.5       15.0   (10.0 )   (6.4 )
    Gross profit   42.9       42.6   0.7     2.2  
    Gross profit rate   22.6 %     23.7 % (1.1 ) pts.    
  Total EMEA                        
    Revenue from services $ 1,085.0     $ 1,057.2   2.6 %   4.0 %
    Staffing fee-based income included in revenue from services   30.8       34.8   (11.4 )   (7.3 )
    Gross profit   173.5       176.2   (1.6 )   0.1  
    SG&A expenses excluding restructuring charges   160.6       164.3   (2.3 )      
    Restructuring charges   0.8       0.4   60.5        
    Total SG&A expenses   161.4       164.7   (2.1 )   (0.1 )
    Earnings from operations   12.1       11.5   5.5        
    Earnings from operations excluding restructuring charges   12.9       11.9   7.9        
                           
    Gross profit rate   16.0 %     16.7 % (0.7 ) pts.    
    Expense rates (excluding restructuring charges):                        
      % of revenue   14.8       15.5   (0.7 )      
      % of gross profit   92.5       93.2   (0.7 )      
    Return on sales (excluding restructuring charges)   1.2       1.1   0.1        
                         
                         
                         
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
       
    December Year to Date  
                    Constant  
                    Currency  
    2014     2013   Change     Change  
APAC                      
  Commercial                          
    Revenue from services   $ 351.8     $ 344.1   2.2 %   5.6 %
    Staffing fee-based income included in revenue from services     7.9       9.2   (14.7 )   (11.5 )
    Gross profit     47.5       49.3   (3.7 )   (0.4 )
    Gross profit rate     13.5 %     14.3 % (0.8 ) pts.    
  PT                          
    Revenue from services   $ 40.4     $ 38.6   4.5 %   9.0 %
    Staffing fee-based income included in revenue from services     7.8       8.8   (11.4 )   (7.9 )
    Gross profit     12.7       14.0   (8.8 )   (5.0 )
    Gross profit rate     31.6 %     36.2 % (4.6 ) pts.    
  Total APAC                          
    Revenue from services   $ 392.2     $ 382.7   2.5 %   6.0 %
    Staffing fee-based income included in revenue from services     15.7       18.0   (13.1 )   (9.8 )
    Gross profit     60.2       63.3   (4.8 )   (1.4 )
    SG&A expenses excluding restructuring charges     56.4       60.2   (6.3 )      
    Restructuring charges     1.3       0.3   373.4        
    Total SG&A expenses     57.7       60.5   (4.5 )   (0.8 )
    Earnings from operations     2.5       2.8   (11.0 )      
    Earnings from operations excluding restructuring charges     3.8       3.1   24.7        
                             
    Gross profit rate     15.4 %     16.5 % (1.1 ) pts.    
    Expense rates (excluding restructuring charges):                          
      % of revenue     14.4       15.7   (1.3 )      
      % of gross profit     93.6       95.1   (1.5 )      
    Return on sales (excluding restructuring charges)     1.0       0.8   0.2        
                           
OCG                          
    Revenue from services   $ 586.8     $ 509.5   15.2 %   15.7 %
    Gross profit     143.6       128.2   12.0     12.4  
    SG&A expenses excluding restructuring charges     127.3       110.6   15.1        
    Restructuring charges     -       0.9   (100.0 )      
    Total SG&A expenses     127.3       111.5   14.3     15.0  
    Asset impairments     -       1.7   (100.0 )      
    Earnings from operations     16.3       15.0   7.3        
    Earnings from operations excluding restructuring charges     16.3       15.9   1.8        
                               
    Gross profit rate     24.5 %     25.2 % (0.7 ) pts.    
    Expense rates (excluding restructuring charges):                          
      % of revenue     21.7       21.7   -        
      % of gross profit     88.7       86.3   2.4        
    Return on sales (excluding restructuring charges)     2.8       3.1   (0.3 )      
                               
                               
                               
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
             
    Dec. 28, 2014     Dec. 29, 2013  
Current Assets                
  Cash and equivalents   $ 83.1     $ 125.7  
  Trade accounts receivable, less allowances of $10.7 and $9.9, respectively     1,122.8       1,023.1  
  Prepaid expenses and other current assets     47.9       52.2  
  Deferred taxes     34.4       35.5  
  Total current assets     1,288.2       1,236.5  
                 
Property and Equipment, Net     93.0       92.0  
                 
Noncurrent Deferred Taxes     146.3       121.7  
                 
Goodwill, Net     90.3       90.3  
                 
Other Assets     300.1       258.1  
                 
Total Assets   $ 1,917.9     $ 1,798.6  
                 
Current Liabilities                
  Short-term borrowings   $ 91.9     $ 28.3  
  Accounts payable and accrued liabilities     364.0       342.4  
  Accrued payroll and related taxes     308.5       294.9  
  Accrued insurance     26.9       27.6  
  Income and other taxes     68.8       68.8  
                 
Total current liabilities     860.1       762.0  
                 
Noncurrent Liabilities                
  Accrued insurance     43.9       46.0  
  Accrued retirement benefits     140.8       134.7  
  Other long-term liabilities     39.4       33.3  
                 
Total noncurrent liabilities     224.1       214.0  
                 
Stockholders' Equity                
  Common stock     40.1       40.1  
  Treasury stock     (49.8 )     (56.2 )
  Paid-in capital     24.9       26.0  
  Earnings invested in the business     767.4       751.3  
  Accumulated other comprehensive income     51.1       61.4  
                 
Total stockholders' equity     833.7       822.6  
                 
Total Liabilities and Stockholders' Equity   $ 1,917.9     $ 1,798.6  
                 
                 
STATISTICS:                
Working Capital   $ 428.1     $ 474.5  
Current Ratio     1.5       1.6  
Debt-to-capital %     9.9 %     3.3 %
Global Days Sales Outstanding     54       52  
                 
                 
                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars)  
       
    2014     2013  
Cash flows from operating activities:                
  Net earnings   $ 23.7     $ 58.9  
  Noncash adjustments:                
    Impairment of assets     -       1.7  
    Depreciation and amortization     21.7       20.4  
    Provision for bad debts     5.3       2.0  
    Stock-based compensation     5.3       3.8  
    Other, net     (0.4 )     0.6  
  Changes in operating assets and liabilities     (125.6 )     27.9  
                 
    Net cash (used in) from operating activities     (70.0 )     115.3  
                 
Cash flows from investing activities:                
  Capital expenditures     (21.7 )     (20.0 )
  Investment in equity affiliate     (5.7 )     -  
  Other investing activities     0.2       (0.8 )
                   
    Net cash used in investing activities     (27.2 )     (20.8 )
                 
Cash flows from financing activities:                
  Net change in short-term borrowings     63.9       (35.8 )
  Dividend payments     (7.6 )     (7.6 )
  Other financing activities     0.3       (0.3 )
                   
    Net cash from (used in) financing activities     56.6       (43.7 )
                 
Effect of exchange rates on cash and equivalents     (2.0 )     (1.4 )
                 
Net change in cash and equivalents     (42.6 )     49.4  
Cash and equivalents at beginning of period     125.7       76.3  
                 
                 
Cash and equivalents at end of period   $ 83.1     $ 125.7  
                 
                 
                 
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                   
  Fourth Quarter (Commercial, PT and OCG)  
          % Change  
                Constant  
  2014   2013   US$     Currency  
                       
Americas                      
  United States $ 933.9   $ 872.6   7.0 %   7.0 %
  Canada   50.0     52.4   (4.5 )   3.2  
  Mexico   36.7     33.9   8.2     15.2  
  Puerto Rico   26.6     24.6   8.3     8.3  
  Brazil   13.9     14.0   (0.6 )   7.6  
Total Americas   1,061.1     997.5   6.4     7.1  
                       
EMEA                      
  France   66.4     66.1   0.4     9.2  
  Switzerland   57.8     70.3   (17.9 )   (12.7 )
  Portugal   32.4     27.3   18.9     29.4  
  United Kingdom   23.2     27.2   (14.7 )   (13.0 )
  Russia   20.9     33.0   (36.6 )   (9.3 )
  Germany   16.8     17.5   (4.1 )   4.2  
  Italy   13.9     15.3   (8.7 )   (0.8 )
  Norway   11.9     14.8   (19.9 )   (9.8 )
  Other   13.6     16.9   (19.4 )   (12.0 )
Total EMEA   256.9     288.4   (10.9 )   (1.5 )
                       
APAC                      
  Singapore   32.7     30.6   7.0     10.8  
  Australia   32.6     30.2   7.9     16.8  
  Malaysia   16.2     16.1   0.6     5.4  
  New Zealand   13.2     14.0   (6.1 )   (0.6 )
  Other   12.3     9.0   37.1     37.5  
Total APAC   107.0     99.9   7.1     12.6  
                       
Total Kelly Services, Inc. $ 1,425.0   $ 1,385.8   2.8 %   5.7 %
                       
                       
                       
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                   
  December Year to Date (Commercial, PT and OCG)  
          % Change  
                Constant  
  2014   2013   US$     Currency  
                       
Americas                      
  United States $ 3,535.8   $ 3,419.9   3.4 %   3.4 %
  Canada   198.2     216.3   (8.4 )   (1.9 )
  Mexico   139.0     133.3   4.3     8.7  
  Puerto Rico   105.0     98.2   6.9     6.9  
  Brazil   57.1     59.0   (3.2 )   5.8  
Total Americas   4,035.1     3,926.7   2.8     3.4  
                       
EMEA                      
  France   268.6     248.1   8.3     8.3  
  Switzerland   253.5     255.9   (0.9 )   (2.5 )
  Portugal   124.8     90.3   38.2     38.5  
  Russia   117.3     135.0   (13.1 )   2.2  
  United Kingdom   105.6     105.3   0.3     (5.1 )
  Germany   67.5     66.8   1.1     1.2  
  Italy   60.2     58.9   2.2     1.9  
  Norway   55.5     61.1   (9.2 )   (3.2 )
  Other   64.5     67.6   (4.6 )   (4.4 )
Total EMEA   1,117.5     1,089.0   2.6     4.0  
                       
APAC                      
  Singapore   127.5     114.1   11.8     13.2  
  Australia   121.4     130.6   (7.1 )   (0.7 )
  Malaysia   66.2     67.2   (1.4 )   2.4  
  New Zealand   51.4     50.1   2.5     1.4  
  Other   43.6     35.4   23.2     30.2  
Total APAC   410.1     397.4   3.2     6.8  
                       
Total Kelly Services, Inc. $ 5,562.7   $ 5,413.1   2.8 %   3.8 %
                       
                       
                       
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                             
  2014     2013        
  As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Adjusted Earnings     % Change  
                                     
Revenue from services $ 1,425.0     $ -     $ 1,425.0     $ 1,385.8     2.8 %
                                     
Cost of services   1,192.4       -       1,192.4       1,154.3     3.3  
                                     
Gross profit   232.6       -       232.6       231.5     0.5  
                                     
SG&A expenses   230.0       (6.2 )     223.8       221.6     1.1  
                                     
Earnings from operations   2.6       6.2       8.8       9.9     (9.7 )
                                     
Other expense, net   1.1       -       1.1       0.6     89.6  
                                     
Earnings before taxes   1.5       6.2       7.7       9.3     (15.7 )
                                     
Inc. tax (benefit) expense*   (15.5 )     2.4       (13.1 )     (8.2 )   (60.2 )
                                     
Net earnings $ 17.0     $ 3.8     $ 20.8     $ 17.5     19.8 %
                                     
Earnings per share:                                    
  Basic $ 0.44     $ 0.10     $ 0.54     $ 0.45     20.0 %
  Diluted $ 0.44     $ 0.10     $ 0.54     $ 0.45     20.0 %
                                     
* Income tax benefit for the fourth quarter of 2014 includes $13.6 million related to the retroactive reinstatement of work opportunity credits for the entire year.  
                             
  2013              
  As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings              
                                     
Revenue from services $ 1,385.8     $ -     $ 1,385.8                
                                     
Cost of services   1,154.3       -       1,154.3                
                                     
Gross profit   231.5       -       231.5                
                                     
SG&A expenses   221.9       (0.3 )     221.6                
                                     
Earnings from operations   9.6       0.3       9.9                
                                     
Other expense, net   0.6       -       0.6                
                                     
Earnings before taxes   9.0       0.3       9.3                
                                     
Inc. tax (benefit) expense   (8.2 )     -       (8.2 )              
                                     
Net earnings $ 17.2     $ 0.3     $ 17.5                
                                     
Earnings per share:                                    
  Basic $ 0.45     $ 0.01     $ 0.45                
  Diluted $ 0.45     $ 0.01     $ 0.45                
                                     
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 28, 2014 AND DECEMBER 29, 2013  
(UNAUDITED)  
(In millions of dollars except per share data)  
                             
  2014     2013        
  As reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Adjusted Earnings     % Change  
                                     
Revenue from services $ 5,562.7     $ -     $ 5,562.7     $ 5,413.1     2.8 %
                                     
Cost of services   4,654.3       -       4,654.3       4,523.6     2.9  
                                     
Gross profit   908.4       -       908.4       889.5     2.1  
                                     
SG&A expenses   886.5       (12.0 )     874.5       832.9     5.0  
                                     
Earnings from operations   21.9       12.0       33.9       56.6     (40.2 )
                                     
Other expense, net   5.3       -       5.3       4.5     15.3  
                                     
Earnings before taxes   16.6       12.0       28.6       52.1     (45.0 )
                                     
Inc. tax (benefit) expense   (7.1 )     4.5       (2.6 )     (10.0 )   74.0  
                                     
Net earnings $ 23.7     $ 7.5     $ 31.2     $ 62.1     (49.7) %
                                     
Earnings per share:                                    
  Basic $ 0.61     $ 0.19     $ 0.81     $ 1.62     (50.0 )%
  Diluted $ 0.61     $ 0.19     $ 0.81     $ 1.62     (50.0 )%
                                     
  2013        
  As reported     Restructuring Charges
(Note 1)
    Asset Impairments (Note 2)     Adjusted Earnings        
                                     
Revenue from services $ 5,413.1     $ -     $ -     $ 5,413.1        
                                     
Cost of services   4,523.6       -       -       4,523.6        
                                     
Gross profit   889.5       -       -       889.5        
                                     
SG&A expenses   834.5       (1.6 )     -       832.9        
                                     
Asset impairments   1.7       -       (1.7 )     -        
                                     
Earnings from operations   53.3       1.6       1.7       56.6        
                                     
Other expense, net   4.5       -       -       4.5        
                                     
Earnings before taxes   48.8       1.6       1.7       52.1        
                                     
Inc. tax (benefit) expense   (10.1 )     0.1       -       (10.0 )      
                                     
Net earnings $ 58.9     $ 1.5     $ 1.7     $ 62.1        
                                     
Earnings per share:                                    
  Basic $ 1.54     $ 0.04     $ 0.04     $ 1.62        
  Diluted $ 1.54     $ 0.04     $ 0.04     $ 1.62        
                                     
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.  
                                     
KELLY SERIVCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2014 financial performance and increases comparability. Specifically, Management believes that excluding these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) Restructuring charges in 2014 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.

(2) Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.

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