SOURCE: Kelly Services

Kelly Services

February 02, 2017 07:30 ET

Kelly Services® Reports Fourth Quarter Earnings and Solid 2016 Results

TROY, MI--(Marketwired - February 02, 2017) -

Financial Highlights

  • Q4 revenue down 11%; down 4% adjusted for the APAC Joint Venture transaction (flat when further adjusted for the 53rd week in 2015)
  • Q4 operating earnings down 19%; down 12% adjusted for the APAC Joint Venture transaction
  • Q4 earnings per share of $0.55 versus $0.88 (Adjusted EPS of $0.84)
  • Full-year 2016 operating earnings down 3%; (Adjusted earnings up 9%) off of flat revenue growth

Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2016.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2016 totaled $1.3 billion, an 11% decrease (a 10% decrease on a constant currency basis) compared to the corresponding quarter of 2015. Revenue for the full year totaled $5.3 billion, a 4% decrease (a 3% decrease on a constant currency basis) compared to the prior year. Fourth quarter 2015 and fiscal 2015 include 14 and 53 weeks, respectively. Revenue comparisons are unfavorably impacted by both an additional week of revenue in fourth quarter 2015 and the transfer of APAC staffing operations to the TS Kelly Asia Pacific JV at the beginning of third quarter 2016.

Earnings from operations for the fourth quarter of 2016 totaled $21.6 million, compared to $26.5 million reported for the fourth quarter of 2015. Excluding the APAC staffing operations from the fourth quarter of 2015, adjusted earnings from operations were $24.7 million; therefore Kelly's fourth quarter 2016 earnings decreased 12% year-over-year on an adjusted basis.

Earnings from operations for the full year of 2016 totaled $65.0 million compared to $66.7 million in 2015. Excluding restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings from operations increased 9% on an adjusted basis.

Diluted earnings per share in the fourth quarter of 2016 were $0.55 compared to $0.88 per share in the fourth quarter of 2015. Excluding the APAC staffing operations from 2015 fourth quarter results, earnings per share decreased 35% on an adjusted basis. The decline is primarily the result of the timing of the recognition of the Work Opportunity Credit in 2015.

Diluted earnings per share for the full year of 2016 were $3.13 compared to $1.39 per share in 2015. Excluding the gain from the sale of APAC staffing operations and restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings per share increased 19% on an adjusted basis.

Sifting through the complex results, Camden put Kelly's performance in context, stating "Despite the continued softening market demand in Q4, 2016 was a year of progress for Kelly. For the full year, we improved our GP rate, delivered higher year over year earnings from operations, and improved our conversion rate -- all while adding free cash flow, increasing our quarterly dividend, and ending the year debt-free." Though the APAC JV impacted reported results in the second half of the year, Camden added that "By finalizing the APAC JV transaction in 2016, Kelly is able to move forward in 2017 as an even more focused company committed to profitable growth."

In conjunction with its fourth quarter earnings release, Kelly Services has published a financial presentation on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on February 2 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
kellyservices.com

   
Via the Telephone:  
U.S. 1 800 288-9626
International 1 651 291-5254
The pass code is Kelly Services  
   

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 and disruptions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual property assets could be infringed upon or compromised, 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 including TS Kelly Asia Pacific, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyber attacks or other breaches of network or information technology security, 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 developments or operational circumstances, unexpected changes in claim trends on workers' compensation, unemployment compensation, disability and medical benefit plans, 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 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®

As a global leader in providing workforce solutions, Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) and its subsidiaries, offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Kelly® directly employs nearly 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2016 was $5.3 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 JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
  
               %   CC %  
   2016   2015   Change   Change   Change  
                         
Revenue from services  $1,304.4   $1,461.6   $(157.2 ) (10.8) % (10.1) %
                         
Cost of services   1,076.4    1,212.1    (135.7 ) (11.2 )    
                         
Gross profit   228.0    249.5    (21.5 ) (8.6 ) (8.1 )
                         
Selling, general and administrative expenses   206.4    223.0    (16.6 ) (7.5 ) (7.0 )
                         
Earnings from operations   21.6    26.5    (4.9 ) (18.5 )    
                         
Other income (expense), net   0.7    (0.7 )  1.4   204.1      
                         
Earnings before taxes and equity in net earnings (loss) of affiliate   22.3    25.8    (3.5 ) (13.9 )    
                         
Income tax expense (benefit)   1.8    (8.4 )  10.2   121.4      
                         
Net earnings before equity in net earnings (loss) of affiliate   20.5    34.2    (13.7 ) (40.2 )    
                         
Equity in net earnings (loss) of affiliate   1.1        1.1   NM      
                         
Net earnings  $21.6   $34.2   $(12.6 ) (36.8) %    
                         
Basic earnings per share  $0.56   $0.88   $(0.32 ) (36.4) %    
Diluted earnings per share  $0.55   $0.88   $(0.33 ) (37.5) %    
                         
STATISTICS:                        
                         
Gross profit rate   17.5 %  17.1 %  0.4 pts.          
                         
Selling, general and administrative expenses:                        
 % of revenue   15.8    15.3    0.5          
 % of gross profit   90.5    89.4    1.1          
                         
% Return:                        
 Earnings from operations   1.7    1.8    (0.1 )        
 Earnings before taxes and equity in net earnings (loss) of affiliate   1.7    1.8    (0.1 )        
 Net earnings   1.7    2.3    (0.6 )        
                         
Effective income tax rate   8.1 %  (32.4) %  40.5 pts.          
                         
Average number of shares outstanding (millions):                        
 Basic   38.2    38.0               
 Diluted   38.6    38.0               
                         
Shares adjusted for nonvested restricted awards (millions):                        
 Basic   38.9    38.9               
 Diluted   39.2    38.9               
                   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
               %   CC %  
   2016   2015   Change   Change   Change  
                         
Revenue from services  $5,276.8   $5,518.2   $(241.4 ) (4.4) % (3.2) %
                         
Cost of services   4,370.5    4,597.9    (227.4 ) (4.9 )    
                         
Gross profit   906.3    920.3    (14.0 ) (1.5 ) (0.5 )
                         
Selling, general and administrative expenses   841.3    853.6    (12.3 ) (1.5 ) (0.5 )
                         
Earnings from operations   65.0    66.7    (1.7 ) (2.6 )    
                         
Gain on investment in TS Kelly Asia Pacific   87.2        87.2   NM      
                         
Other expense, net   (0.7 )  (3.5 )  2.8   80.6      
                         
Earnings before taxes and equity in net earnings (loss) of affiliate   151.5    63.2    88.3   139.6      
                         
Income tax expense (benefit)   30.0    8.7    21.3   245.1      
                         
Net earnings before equity in net earnings (loss) of affiliate   121.5    54.5    67.0   122.8      
                         
Equity in net earnings (loss) of affiliate   1.1    (0.7 )  1.8   251.9      
                         
Net earnings  $122.6   $53.8   $68.8   127.8 %    
                         
Basic earnings per share  $3.15   $1.39   $1.76   126.6 %    
Diluted earnings per share  $3.13   $1.39   $1.74   125.2 %    
                         
STATISTICS:                        
                         
Gross profit rate   17.2 %  16.7 %  0.5 pts.          
                         
Selling, general and administrative expenses:                        
% of revenue   15.9    15.5    0.4          
% of gross profit   92.8    92.8              
                         
% Return:                        
 Earnings from operations   1.2    1.2              
 Earnings before taxes and equity in net earnings (loss) of affiliate   2.9    1.1    1.8          
 Net earnings   2.3    1.0    1.3          
                         
Effective income tax rate   19.8 %  13.7 %  6.1 pts.          
                         
Average number of shares outstanding (millions):                        
 Basic   38.1    37.8               
 Diluted   38.4    37.9               
                         
Shares adjusted for nonvested restricted awards (millions):                        
 Basic   38.9    38.8               
 Diluted   39.2    38.9               
                    
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                  
   Fourth Quarter  
                  
   2016   2015   %   CC %  
   (13 Wks)   (14 Wks)   Change   Change  
AMERICAS                   
 Commercial                   
  Revenue from services  $660.4   $696.1   (5.1) % (4.7) %
  Staffing fee-based income included in revenue from services   3.3    3.7   (11.6 ) (11.1 )
  Gross profit   106.5    110.0   (3.2 ) (2.8 )
  Gross profit rate   16.1 %  15.8 % 0.3 pts.      
 PT                   
  Revenue from services  $228.8   $250.1   (8.5) % (8.5) %
  Staffing fee-based income included in revenue from services   4.2    4.5   (6.2 ) (6.3 )
  Gross profit   38.4    43.0   (10.6 ) (10.7 )
  Gross profit rate   16.8 %  17.2 % (0.4) pts.      
 Total Americas                   
  Revenue from services  $889.2   $946.2   (6.0) % (5.7) %
  Staffing fee-based income included in revenue from services   7.5    8.2   (8.7 ) (8.5 )
  Gross profit   144.9    153.0   (5.3 ) (5.0 )
  Total SG&A expenses   114.4    116.8   (2.0 ) (2.1 )
  Earnings from operations   30.5    36.2   (15.7 )    
                    
  Gross profit rate   16.3 %  16.2 % 0.1 pts.      
  Expense rates:                   
   % of revenue   12.9    12.3   0.6      
   % of gross profit   79.0    76.3   2.7      
  Return on sales   3.4    3.8   (0.4 )    
                    
EMEA                   
 Commercial                   
  Revenue from services  $199.1   $200.5   (0.7) % 1.7 %
  Staffing fee-based income included in revenue from services   3.1    3.3   (6.3 ) (5.2 )
  Gross profit   26.4    27.5   (4.0 ) (2.3 )
  Gross profit rate   13.3 %  13.7 % (0.4) pts.      
 PT                   
  Revenue from services  $42.4   $44.7   (5.3) % (3.2) %
  Staffing fee-based income included in revenue from services   2.4    2.4   1.9   3.6  
  Gross profit   8.6    9.4   (8.7 ) (7.1 )
  Gross profit rate   20.2 %  21.0 % (0.8) pts.      
 Total EMEA                   
  Revenue from services  $241.5   $245.2   (1.5) % 0.8 %
  Staffing fee-based income included in revenue from services   5.5    5.7   (2.9 ) (1.6 )
  Gross profit   35.0    36.9   (5.2 ) (3.5 )
  Total SG&A expenses   30.8    29.7   3.5   6.0  
  Earnings from operations   4.2    7.2   (41.2 )    
                    
  Gross profit rate   14.5 %  15.0 % (0.5) pts.      
  Expense rates:                   
   % of revenue   12.7    12.1   0.6      
   % of gross profit   88.0    80.6   7.4      
  Return on sales   1.7    2.9   (1.2 )    
                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                  
      Fourth Quarter  
                  
   2016   2015   %   CC %  
   (13 Wks)   (14 Wks)   Change   Change  
OCG                  
 Revenue from services  $186.1   $187.5   (0.7) % (0.4) %
 Gross profit   49.2    48.0   2.4   2.9  
 Total SG&A expenses   38.4    34.0   13.1   13.9  
 Earnings from operations   10.8    14.0   (23.5 )    
                     
 Gross profit rate   26.4 %  25.6 % 0.8 pts.      
 Expense rates:                   
  % of revenue   20.6    18.1   2.5      
  % of gross profit   78.1    70.7   7.4      
 Return on sales   5.8    7.5   (1.7 )    
                
  
KELLY SERVICES, INC. AND SUBSIDIARIES 
RESULTS OF OPERATIONS BY SEGMENT 
(UNAUDITED) 
(In millions of dollars) 
 
 
  December Year to Date 
             
  2016  2015  %  CC% 
  (52 Wks)  (53 Wks)  Change  Change 
AMERICAS              
 Commercial              
  Revenue from services $2,548.0  $2,604.3  (2.2)% (1.1)%
  Staffing fee-based income included in revenue from services  14.7   14.5  1.1  1.7 
  Gross profit  402.4   400.3  0.5  1.3 
  Gross profit rate  15.8%  15.4% 0.4 pts.    
 PT              
  Revenue from services $947.1  $971.9  (2.6)% (2.5)%
  Staffing fee-based income included in revenue from services  17.9   17.6  1.7  2.3 
  Gross profit  162.7   165.0  (1.4) (1.3)
  Gross profit rate  17.2%  17.0% 0.2 pts.    
 Total Americas              
  Revenue from services $3,495.1  $3,576.2  (2.3)% (1.5)%
  Staffing fee-based income included in revenue from services  32.6   32.1  1.4  2.0 
  Gross profit  565.1   565.3  -  0.6 
  SG&A expenses excluding restructuring charges  454.9   456.6  (0.4) 0.1 
  Restructuring charges  2.2   -  NM    
  Total SG&A expenses  457.1   456.6  0.1  0.6 
  Earnings from operations  108.0   108.7  (0.6)   
  Earnings from operations excluding restructuring charges  110.2   108.7  1.4    
                
  Gross profit rate  16.2%  15.8% 0.4 pts.    
  Expense rates (excluding restructuring charges):              
   % of revenue  13.0   12.8  0.2    
   % of gross profit  80.5   80.8  (0.3)   
  Return on sales (excluding restructuring charges)  3.2   3.0  0.2    
                
EMEA              
 Commercial              
  Revenue from services $769.3  $773.5  (0.5)% 2.1%
  Staffing fee-based income included in revenue from services  13.5   13.2  2.9  6.1 
  Gross profit  103.9   106.6  (2.6) (0.4)
  Gross profit rate  13.5%  13.8% (0.3) pts.    
 PT              
  Revenue from services $168.8  $171.5  (1.6)% 0.7%
  Staffing fee-based income included in revenue from services  9.7   10.1  (4.0) (0.8)
  Gross profit  34.2   36.6  (6.4) (4.2)
  Gross profit rate  20.3%  21.3% (1.0) pts.    
 Total EMEA              
  Revenue from services $938.1  $945.0  (0.7)% 1.9%
  Staffing fee-based income included in revenue from services  23.2   23.3  (0.1) 3.1 
  Gross profit  138.1   143.2  (3.5) (1.4)
  SG&A expenses excluding restructuring charges  123.7   129.2  (4.2) (1.6)
  Restructuring charges  1.2   -  NM    
  Total SG&A expenses  124.9   129.2  (3.3) (0.7)
  Earnings from operations  13.2   14.0  (5.9)   
  Earnings from operations excluding restructuring charges  14.4   14.0  2.1    
                 
  Gross profit rate  14.7%  15.2% (0.5) pts.    
  Expense rates (excluding restructuring charges):              
   % of revenue  13.2   13.7  (0.5)   
   % of gross profit  89.6   90.2  (0.6)   
  Return on sales (excluding restructuring charges)  1.5   1.5  -    
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                  
   December Year to Date  
                  
   2016   2015   %   CC %  
   (52 Wks)   (53 Wks)   Change   Change  
OCG                  
 Revenue from services  $706.4   $673.8   4.8 % 5.3 %
 Gross profit   179.3    160.6   11.6   12.3  
 Total SG&A expenses   150.6    132.1   14.1   15.0  
 Earnings from operations   28.7    28.5   -      
                     
 Gross profit rate   25.4 %  23.8 % 1.6 pts.      
 Expense rates:                   
  % of revenue   21.3    19.6   1.7      
  % of gross profit   84.0    82.2   1.8      
 Return on sales   4.1    4.2   (0.1 )    
                
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
          
   January 1, 2017   Jan. 3, 2016  
Current Assets           
 Cash and equivalents  $29.6   $42.2  
 Trade accounts receivable, less allowances of $12.5 and $10.5, respectively  1,139.5   1,139.1 
 Prepaid expenses and other current assets   46.7    45.8  
 Total current assets   1,215.8    1,227.1  
            
Noncurrent Assets           
 Property and equipment, net   80.8    88.9  
 Deferred taxes   180.1    189.3  
 Goodwill, net   88.3    90.3  
 Investment in equity affiliate   114.8    9.4  
 Other assets   349.5    334.6  
Total noncurrent assets   813.5    712.5  
            
Total Assets  $2,029.3   $1,939.6  
            
Current Liabilities           
 Short-term borrowings  $-   $55.5  
 Accounts payable and accrued liabilities   454.5    405.5  
 Accrued payroll and related taxes   241.5    268.1  
 Accrued insurance   23.4    26.7  
 Income and other taxes   51.1    60.0  
Total current liabilities   770.5    815.8  
            
Noncurrent Liabilities           
 Accrued insurance   45.5    40.0  
 Accrued retirement benefits   157.4    141.0  
 Other long-term liabilities   42.1    47.4  
Total noncurrent liabilities   245.0    228.4  
            
Stockholders' Equity           
 Common stock   40.1    40.1  
 Treasury stock   (39.0 )  (44.3 )
 Paid-in capital   28.6    25.4  
 Earnings invested in the business   925.4    813.5  
 Accumulated other comprehensive income   58.7    60.7  
            
Total stockholders' equity   1,013.8    895.4  
            
Total Liabilities and Stockholders' Equity  $2,029.3   $1,939.6  
            
            
STATISTICS:           
Working Capital  $445.3   $411.3  
Current Ratio   1.6    1.5  
Debt-to-capital %   - %  5.8 %
Global Days Sales Outstanding   54    54  
         
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars)  
      
   2016   2015  
Cash flows from operating activities:           
 Net earnings  $122.6   $53.8  
 Noncash adjustments:           
  Depreciation and amortization   21.3    22.3  
  Provision for bad debts   8.2    3.7  
  Stock-based compensation   8.0    6.1  
  Gain on investment in TS Kelly Asia Pacific equity affiliate   (87.2 )  -  
  Other, net   (3.9 )  (4.7 )
Changes in operating assets and liabilities   (31.0 )  (57.7 )
            
  Net cash from operating activities   38.0    23.5  
            
Cash flows from investing activities:           
 Capital expenditures   (12.7 )  (16.9 )
 Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate   23.3    -  
 Investment in TS Kelly equity affiliate   -    (0.5 )
 Other investing activities   (0.3 )  (0.2 )
            
  Net cash from (used in) investing activities   10.3    (17.6 )
            
Cash flows from financing activities:           
 Net change in short-term borrowings   (55.9 )  (34.7 )
 Dividend payments   (10.7 )  (7.7 )
 Other financing activities   (0.3 )  0.2  
            
  Net cash used in financing activities   (66.9 )  (42.2 )
            
Effect of exchange rates on cash and equivalents   6.0    (4.6 )
            
Net change in cash and equivalents   (12.6 )  (40.9 )
Cash and equivalents at beginning of period   42.2    83.1  
            
            
Cash and equivalents at end of period  $29.6   $42.2  
            
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                
   Fourth Quarter (Commercial, PT and OCG)  
                
   2016  2015  %   CC %  
   (13 Wks)  (14 Wks)  Change   Change  
                  
Americas                 
 United States  $956.7  $998.8  (4.2) % (4.2) %
 Canada   34.5   38.0  (9.3 ) (9.7 )
 Mexico   28.0   35.3  (20.6 ) (6.1 )
 Puerto Rico   18.3   24.7  (25.8 ) (25.8 )
 Brazil   13.3   8.7  52.2   29.4  
Total Americas   1,050.8   1,105.5  (5.0 ) (4.7 )
                  
EMEA                 
 France   61.1   65.6  (6.8 ) (5.2 )
 Switzerland   54.3   55.5  (2.1 ) (1.0 )
 Portugal   40.3   33.8  19.0   21.1  
 Russia   20.9   18.2  15.3   10.1  
 United Kingdom   18.5   26.7  (31.0 ) (15.7 )
 Germany   14.3   16.2  (11.5 ) (10.0 )
 Italy   14.2   14.5  (2.1 ) (0.4 )
 Norway   8.0   9.7  (17.4 ) (18.7 )
 Other   18.0   13.0  38.4   40.5  
Total EMEA   249.6   253.2  (1.4 ) 1.0  
                  
APAC                 
 Australia   3.2   31.1  (89.7 ) (90.1 )
 Singapore   0.2   33.0  (99.5 ) (99.5 )
 Malaysia   0.1   14.1  (98.6 ) (98.6 )
 New Zealand   -   11.2  (99.5 ) (99.6 )
 Other   0.5   13.5  (96.6 ) (96.5 )
Total APAC   4.0   102.9  (96.0 ) (96.1 )
                  
Total Kelly Services, Inc.  $1,304.4  $1,461.6  (10.8) % (10.1) %
                  
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                
   December Year to Date (Commercial, PT and OCG)  
                
   2016  2015  %   CC %  
   (52 Wks)  (53 Wks)  Change   Change  
                  
Americas                 
 United States  $3,722.5  $3,705.2  0.5 % 0.5 %
 Canada   139.7   160.2  (12.8 ) (9.9 )
 Mexico   107.6   130.5  (17.6 ) (2.8 )
 Puerto Rico   84.2   99.9  (15.7 ) (15.7 )
 Brazil   46.8   42.9  9.1   19.3  
Total Americas   4,100.8   4,138.7  (0.9 ) (0.2 )
                  
EMEA                 
 France   239.7   246.0  (2.5 ) (2.1 )
 Switzerland   210.5   216.2  (2.6 ) (0.3 )
 Portugal   151.9   132.5  14.6   15.0  
 United Kingdom   84.7   105.1  (19.5 ) (9.3 )
 Russia   69.9   75.6  (7.6 ) 0.7  
 Germany   59.6   59.3  0.5   0.9  
 Italy   56.3   54.0  4.2   4.5  
 Norway   32.4   39.2  (17.2 ) (13.5 )
 Other   63.9   45.8  39.4   40.2  
Total EMEA   968.9   973.7  (0.5 ) 2.1  
                  
APAC                 
 Australia   67.4   123.2  (45.3 ) (42.3 )
 Singapore   65.1   129.9  (49.9 ) (48.8 )
 Malaysia   27.9   59.5  (53.1 ) (47.3 )
 New Zealand   19.3   41.4  (53.3 ) (48.8 )
 Other   27.4   51.8  (46.9 ) (43.4 )
Total APAC   207.1   405.8  (48.9 ) (45.9 )
                  
Total Kelly Services, Inc.  $5,276.8  $5,518.2  (4.4) % (3.2) %
                  
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
                 
   2016  2015          
   As Reported  Adjusted Earnings   % Change   CC % Change  
                   
Revenue from services  $1,304.4  $1,362.6   (4.3) % (3.6) %
                   
Cost of services   1,076.4   1,126.6   (4.5 )    
                   
Gross profit   228.0   236.0   (3.4 ) (2.9 )
                   
SG&A expenses   206.4   211.3   (2.3 ) (1.9 )
                   
Earnings from operations   21.6   24.7   (12.4 )    
                   
Other income (expense), net   0.7   (0.6 ) 226.9      
                   
Earnings before taxes and equity in net earnings (loss) of affiliate   22.3   24.1   (7.8 )    
                   
Inc. tax expense (benefit)*   1.8   (8.7 ) 120.6      
                   
Net earnings before equity in net earnings (loss) of affiliate   20.5   32.8   (37.7 )    
                   
Equity in net earnings (loss) of affiliate   1.1   -   NM      
                   
Net earnings  $21.6  $32.8   (34.2) %    
                   
Earnings per share:                  
 Basic  $0.56  $0.84   (33.3) %    
 Diluted  $0.55  $0.84   (34.5) %    
               
* Income tax benefit for the fourth quarter of 2015 includes $13.9 million related to the retroactive reinstatement of work opportunity credits for the entire year.
 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
              
   2015  
   As Reported   Disposal of APAC Businesses
(Note 2)
  Adjusted Earnings  
                 
Revenue from services  $1,461.6   $(99.0 ) $1,362.6  
                 
Cost of services   1,212.1    (85.5 )  1,126.6  
                 
Gross profit   249.5    (13.5 )  236.0  
                 
SG&A expenses   223.0    (11.7 )  211.3  
                 
Earnings from operations   26.5    (1.8 )  24.7  
                 
Other (expense) income, net   (0.7 )  0.1    (0.6 )
                 
Earnings before taxes and equity in net earnings (loss) of affiliate   25.8    (1.7 )  24.1  
                 
Inc. tax expense (benefit)   (8.4 )  (0.3 )  (8.7 )
                 
Net earnings before equity in net earnings (loss) of affiliate   34.2    (1.4 )  32.8  
                 
Equity in net earnings (loss) of affiliate   -    -    -  
                 
Net earnings  $34.2   $(1.4 ) $32.8  
                 
Earnings per share:                
 Basic  $0.88   $(0.04 ) $0.84  
 Diluted  $0.88   $(0.04 ) $0.84  
              
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 JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
                        
  2016  2015        
  As Reported  Gain on Investment in Equity Affiliate
(Note 1)
  Restructuring Charges (Note 3)  Adjusted Earnings  Adjusted Earnings  % Change  CC % Change  
                             
Revenue from services $5,276.8  $-   $-  $5,276.8  $5,325.2  (0.9) %0.3 %
                             
Cost of services  4,370.5   -    -   4,370.5   4,432.2  (1.4 )   
                             
Gross profit  906.3   -    -   906.3   893.0  1.5  2.5  
                             
SG&A expenses  841.3   -    (3.4 ) 837.9   830.2  0.9  2.3  
                             
Earnings from operations  65.0   -    3.4   68.4   62.8  9.0     
                             
Gain on investment in TS Kelly Asia Pacific  87.2   (87.2 )  -   -   -  NM     
                             
Other expense, net  (0.7 ) -    -   (0.7 ) (3.3 )79.4     
                             
Earnings before taxes and equity in net earnings (loss) of affiliate  151.5   (87.2 )  3.4   67.7   59.5  13.8     
                             
Inc. tax expense (benefit)  30.0   (23.5 )  1.2   7.7   8.0  (3.6 )   
                             
Net earnings before equity in net earnings (loss) of affiliate  121.5   (63.7 )  2.2   60.0   51.5  16.5     
                             
Equity in net earnings (loss) of affiliate  1.1   -    -   1.1   (0.7 )NM     
                             
Net earnings $122.6  $(63.7 ) $2.2  $61.1  $50.8  20.4 %   
                             
Earnings per share:                            
 Basic $3.15  $(1.64 ) $0.06  $1.57  $1.31  19.8 %   
 Diluted $3.13  $(1.62 ) $0.06  $1.56  $1.31  19.1 %   
                      
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 JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
              
   2015  
   As Reported   Disposal of APAC Businesses
(Note 2)
  Adjusted Earnings  
                 
Revenue from services  $5,518.2   $(193.0 ) $5,325.2  
                 
Cost of services   4,597.9    (165.7 )  4,432.2  
                 
Gross profit   920.3    (27.3 )  893.0  
                 
SG&A expenses   853.6    (23.4 )  830.2  
                 
Earnings from operations   66.7    (3.9 )  62.8  
                 
Other (expense) income, net   (3.5 )  0.2    (3.3 )
                 
Earnings from operations before taxes and equity in net earnings (loss) of affiliate   63.2    (3.7 )  59.5  
                 
Inc. tax expense (benefit)   8.7    (0.7 )  8.0  
                 
Net earnings before equity in net earnings (loss) of affiliate   54.5    (3.0 )  51.5  
                 
Equity in net earnings (loss) of affiliate   (0.7 )  -    (0.7 )
                 
Net earnings  $53.8   $(3.0 ) $50.8  
                 
Earnings per share:                
 Basic  $1.39   $(0.08 ) $1.31  
 Diluted  $1.39   $(0.08 ) $1.31  
              
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 2016 gain on investment in equity affiliate, 2016 restructuring charges and disposal of APAC businesses is useful to understand the Company's 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of 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) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in TS Kelly Asia Pacific.

(2) Disposal of APAC businesses represents the 2015 operational results of business contributed to TS Kelly Asia Pacific in the third quarter of 2016.

(3) Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets. The 2016 year-to-date income tax expense (benefit) was impacted by a $0.3 million benefit for the release of a valuation allowance in Italy in the fourth quarter of 2016.

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