SOURCE: Kelly Services

Kelly Services

November 08, 2017 07:30 ET

Kelly Services® Reports Third Quarter 2017 Earnings

TROY, MI--(Marketwired - November 08, 2017) -

Financial Highlights

  • Q3 revenue up 6.5%, up 5.3% in constant currency
  • Q3 operating earnings of $18.2 million, down 3%
  • Q3 earnings per share of $0.58 compared to $2.06, or $0.44 on an adjusted basis, a 32% increase year-over-year on an adjusted basis.

Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the third quarter of 2017.

George S. Corona, President and Chief Executive Officer, announced revenue for the third quarter of 2017 totaled $1.3 billion, a 6.5% increase, or 5.3% in constant currency, compared to the corresponding quarter of 2016.

Earnings from operations for the third quarter of 2017 totaled $18.2 million, compared to $18.8 million reported for the third quarter of 2016.

Diluted earnings per share in the third quarter of 2017 were $0.58 compared to $2.06 per share in the third quarter of 2016. During the third quarter of 2016, Kelly transferred its APAC staffing operations to the TS Kelly Asia Pacific joint venture and recorded a pre-tax gain of $87.2 million. Kelly retains a 49% ownership interest in the joint venture. Diluted earnings per share in the third quarter of 2016 include the $1.62 after-tax gain on the APAC JV transaction. Excluding the after-tax gain from 2016 third quarter results, adjusted earnings per share were $0.44 in the third quarter of 2016.

Reflecting on the results, Corona stated, "Our third quarter performance confirmed that we are continuing to drive top-line growth and shareholder value, even as we invest in talent, technology, and solutions to accelerate our progress. Our acquisition of Teachers On Call and our decision to implement a digital talent platform confirm that we are not content to stop at short-term growth, and we are strategically positioning Kelly for long-term success as the world of work evolves."

Kelly also reported that on November 7, its board of directors declared a dividend of $0.075 per share. The dividend is payable December 7, 2017 to shareholders of record as of the close of business on November 22, 2017.

In conjunction with its third 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 November 8 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 OCTOBER 1, 2017 AND OCTOBER 2, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
                  %   CC %  
    2017    2016    Change   Change   Change  
                         
Revenue from services  $1,328.8   $1,247.8   $81.0   6.5 % 5.3 %
                         
Cost of services   1,098.1    1,032.7    65.4   6.3      
                         
Gross profit   230.7    215.1    15.6   7.3   6.2  
                         
Selling, general and administrative expenses   212.5    196.3    16.2   8.3   7.3  
                         
Earnings from operations   18.2    18.8    (0.6 ) (2.9 )    
                         
Gain on investment in TS Kelly Asia Pacific   -    87.2    (87.2 ) NM      
                         
Other expense, net   (0.4 )  (0.4 )  -   (4.8 )    
                         
Earnings before taxes and equity in net earnings (loss) of affiliate   17.8    105.6    (87.8 ) (83.1 )    
                         
Income tax (benefit) expense   (4.1 )  24.7    (28.8 ) (116.5 )    
                         
Net earnings before equity in net earnings (loss) of affiliate   21.9    80.9    (59.0 ) (72.9 )    
                         
Equity in net earnings (loss) of affiliate   1.1    -    1.1   NM      
                         
Net earnings  $23.0   $80.9   $(57.9 ) (71.5 )%    
                         
Basic earnings per share  $0.59   $2.08   $(1.49 ) (71.6 )%    
Diluted earnings per share  $0.58   $2.06   $(1.48 ) (71.8 )%    
                         
                         
STATISTICS:                        
                         
Staffing fee-based income (included in revenue from services)  $14.2   $13.2   $1.0   6.9 % 4.1 %
                         
Gross profit rate   17.4 %  17.2 %  0.2 pts.          
                         
Conversion rate   7.9    8.7    (0.8 )        
                         
% Return:                        
 Earnings from operations   1.4    1.5    (0.1 )        
 Net earnings   1.7    6.5    (4.8 )        
                         
Effective income tax rate   (22.9 )%  23.4 %  (46.3) pts.          
                         
Average number of shares outstanding (millions):                        
 Basic   38.3    38.1               
 Diluted   38.8    38.4               
                   
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 39 WEEKS ENDED OCTOBER 1, 2017 AND OCTOBER 2, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
                  %   CC %  
    2017    2016    Change   Change   Change  
                         
Revenue from services  $3,952.1   $3,972.4   $(20.3 ) (0.5 )% (0.7 )%
                         
Cost of services   3,261.0    3,294.1    (33.1 ) (1.0 )    
                         
Gross profit   691.1    678.3    12.8   1.9   1.7  
                         
Selling, general and administrative expenses   636.2    634.9    1.3   0.2   0.1  
                         
Earnings from operations   54.9    43.4    11.5   26.5      
                         
Gain on investment in TS Kelly Asia Pacific   -    87.2    (87.2   NM      
                         
Other expense, net   (2.5 )  (1.3 )  (1.2 ) (91.7 )    
                         
Earnings before taxes and equity in net earnings (loss) of affiliate   52.4    129.3    (76.9 ) (59.5 )    
                         
Income tax expense   0.1    28.2    (28.1 ) (99.6 )    
                         
Net earnings before equity in net earnings (loss) of affiliate   52.3    101.1    (48.8 ) (48.3 )    
                         
Equity in net earnings (loss) of affiliate   1.6    (0.1 )  1.7   NM      
                         
Net earnings  $53.9   $101.0   $(47.1 ) (46.7 )%    
                         
Basic earnings per share  $1.38   $2.59   $(1.21 ) (46.7 )%    
Diluted earnings per share  $1.37   $2.58   $(1.21 ) (46.9 )%    
                         
                         
STATISTICS:                        
                         
Staffing fee-based income (included in revenue from services)  $41.4   $46.3   $(4.9 ) (10.8 )% (11.7 )%
                         
Gross profit rate   17.5 %  17.1 %  0.4 pts.          
                         
Conversion rate   7.9    6.4    1.5          
                         
% Return:                        
 Earnings from operations   1.4    1.1    0.3          
 Net earnings   1.4    2.5    (1.1 )        
                         
Effective income tax rate   0.2 %  21.8 %  (21.6) pts.          
                         
Average number of shares outstanding (millions):                        
 Basic   38.3    38.0               
 Diluted   38.8    38.3               
                   
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                    
    Third Quarter  
                    
             %   CC %  
    2017    2016   Change   Change  
AMERICAS STAFFING                   
 Revenue from services  $554.8   $518.2   7.1 % 6.6 %
 Gross profit   98.8    95.0   4.1   3.7  
 Total SG&A expenses   85.5    80.7   6.0   5.6  
 Earnings from operations   13.3    14.3   (6.7 )    
                     
 Gross profit rate   17.8 %  18.3 % (0.5) pts.      
 Conversion rate   13.5    15.0   (1.5 )    
 Return on sales   2.4    2.8   (0.4 )    
                    
GLOBAL TALENT SOLUTIONS                   
 Revenue from services  $503.0   $495.0   1.6 % 1.3 %
 Gross profit   93.0    86.2   7.9   7.6  
 Total SG&A expenses   72.2    70.2   2.8   2.5  
 Earnings from operations   20.8    16.0   30.3      
                     
 Gross profit rate   18.5 %  17.4 % 1.1 pts.      
 Conversion rate   22.4    18.5   3.9      
 Return on sales   4.1    3.2   0.9      
                    
INTERNATIONAL STAFFING                   
 Revenue from services  $275.6   $239.3   15.2 % 10.4 %
 Gross profit   39.5    35.0   12.7   7.7  
 Total SG&A expenses   32.3    30.5   6.1   1.9  
 Earnings from operations   7.2    4.5   57.0      
                     
 Gross profit rate   14.3 %  14.7 % (0.4) pts.      
 Conversion rate   18.0    12.9   5.1      
 Return on sales   2.6    1.9   0.7      
               
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                    
    September Year to Date  
                    
             %   CC %  
    2017    2016   Change   Change  
AMERICAS STAFFING                   
 Revenue from services  $1,703.5   $1,614.7   5.5 % 5.3 %
 Gross profit   307.9    292.9   5.1   5.0  
 SG&A expenses excluding restructuring charges   252.6    244.1   3.5   3.4  
 Restructuring charges   0.4    1.8   (80.0 ) (79.8 )
 Total SG&A expenses   253.0    245.9   2.9   2.8  
 Earnings from operations   54.9    47.0   16.8      
 Earnings from operations excluding restructuring charges   55.3    48.8   13.2      
                     
 Gross profit rate   18.1 %  18.1 % - pts.      
 Conversion rate   17.8    16.1   1.7      
 Conversion rate excluding restructuring charges   18.0    16.7   1.3      
 Return on sales   3.2    2.9   0.3      
 Return on sales excluding restructuring charges   3.2    3.0   0.2      
                    
GLOBAL TALENT SOLUTIONS                   
 Revenue from services  $1,495.8   $1,486.5   0.6 % 0.6 %
 Gross profit   272.2    257.2   5.8   5.9  
 SG&A expenses excluding restructuring charges   218.8    213.2   2.6   2.7  
 Restructuring charges   2.0    0.4   415.5   417.6  
 Total SG&A expenses   220.8    213.6   3.4   3.5  
 Earnings from operations   51.4    43.6   18.0      
 Earnings from operations excluding restructuring charges   53.4    44.0   21.5      
                     
 Gross profit rate   18.2 %  17.3 % 0.9 pts.      
 Conversion rate   18.9    16.9   2.0      
 Conversion rate excluding restructuring charges   19.6    17.1   2.5      
 Return on sales   3.4    2.9   0.5      
 Return on sales excluding restructuring charges   3.6    3.0   0.6      
                    
INTERNATIONAL STAFFING                   
 Revenue from services  $766.0   $885.6   (13.5 )% (14.0 )%
 Gross profit   112.7    131.4   (14.2 ) (14.8 )
 SG&A expenses excluding restructuring charges   96.2    115.1   (16.4 ) (16.8 )
 Restructuring charges   -    1.2   (100.0 ) (100.0 )
 Total SG&A expenses   96.2    116.3   (17.2 ) (17.6 )
 Earnings from operations   16.5    15.1   9.1      
 Earnings from operations excluding restructuring charges   16.5    16.3   1.6      
                     
 Gross profit rate   14.7 %  14.8 % (0.1) pts.      
 Conversion rate   14.6    11.5   3.1      
 Conversion rate excluding restructuring charges   14.6    12.3   2.3      
 Return on sales   2.2    1.7   0.5      
 Return on sales excluding restructuring charges   2.2    1.8   0.4      
               
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
                 
    October 1, 2017    Jan. 1, 2017    October 2, 2016  
Current Assets                
 Cash and equivalents  $22.2   $29.6   $27.6  
 Trade accounts receivable, less allowances of $13.1, $12.5 and $11.1, respectively   1,271.7    1,138.3    1,125.8  
 Prepaid expenses and other current assets   70.0    46.7    53.0  
Total current assets   1,363.9    1,214.6    1,206.4  
                 
Noncurrent Assets                
 Property and equipment, net   81.4    80.8    80.5  
 Deferred taxes   192.0    180.1    179.8  
 Goodwill   107.1    88.4    88.4  
 Investment in equity affiliate   116.4    114.8    113.6  
 Other assets   475.9    349.4    370.6  
Total noncurrent assets   972.8    813.5    832.9  
                 
Total Assets  $2,336.7   $2,028.1   $2,039.3  
                 
Current Liabilities                
 Short-term borrowings  $23.9   $-   $8.7  
 Accounts payable and accrued liabilities   496.1    455.1    408.7  
 Accrued payroll and related taxes   312.6    241.5    276.9  
 Accrued insurance   25.6    23.4    26.8  
 Income and other taxes   60.0    51.1    56.9  
Total current liabilities   918.2    771.1    778.0  
                 
Noncurrent Liabilities                
 Accrued insurance   49.7    45.5    40.2  
 Accrued retirement benefits   175.0    157.4    153.9  
 Other long-term liabilities   66.8    42.1    50.7  
Total noncurrent liabilities   291.5    245.0    244.8  
                 
Stockholders' Equity                
 Common stock   40.1    40.1    40.1  
 Treasury stock   (35.2 )  (39.0 )  (39.1 )
 Paid-in capital   30.0    28.6    26.2  
 Earnings invested in the business   968.8    923.6    906.8  
 Accumulated other comprehensive income   123.3    58.7    82.5  
Total stockholders' equity   1,127.0    1,012.0    1,016.5  
                 
Total Liabilities and Stockholders' Equity  $2,336.7   $2,028.1   $2,039.3  
                 
                 
STATISTICS:                
 Working Capital  $445.7   $443.5   $428.4  
 Current Ratio   1.5    1.6    1.6  
 Debt-to-capital %   2.1 %  - %  0.9 %
 Global Days Sales Outstanding   58    53    56  
 Year-to-Date Free Cash Flow  $18.2   $26.9   $20.4  
             
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 39 WEEKS ENDED OCTOBER 1, 2017 AND OCTOBER 2, 2016  
(UNAUDITED)  
(In millions of dollars)  
       
    2017    2016  
Cash flows from operating activities:           
 Net earnings  $53.9   $101.0  
 Noncash adjustments:           
  Depreciation and amortization   16.5    16.0  
  Provision for bad debts   3.6    6.1  
  Stock-based compensation   6.8    7.6  
  Gain on investment in TS Kelly Asia Pacific equity affiliate   -    (87.2 )
  Other, net   (2.3 )  (2.2 )
 Changes in operating assets and liabilities, net of acquisition   (45.6 )  (13.1 )
             
  Net cash from operating activities   32.9    28.2  
         
            
Cash flows from investing activities:           
 Capital expenditures   (14.7 )  (7.8 )
 Acquisition of company, net of cash received   (37.2 )  -  
 Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate   -    18.8  
 Proceeds from repayment of loan to TS Kelly equity affiliate   0.6    -  
 Other investing activities   -    (0.4 )
             
  Net cash (used in) from investing activities   (51.3 )  10.6  
            
Cash flows from financing activities:           
 Net change in short-term borrowings   23.9    (47.8 )
 Dividend payments   (8.7 )  (7.7 )
 Payments of tax withholding for restricted shares   (1.7 )  (2.1 )
 Other financing activities   (0.1 )  0.4  
             
  Net cash from (used in) financing activities   13.4    (57.2 )
            
Effect of exchange rates on cash and equivalents   (2.4 )  3.8  
            
Net change in cash and equivalents   (7.4 )  (14.6 )
Cash and equivalents at beginning of period   29.6    42.2  
            
            
Cash and equivalents at end of period  $22.2   $27.6  
         
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                  
    Third Quarter (Americas, International and GTS)  
                  
           %   CC %  
    2017   2016  Change   Change  
                  
Americas                 
 United States  $941.1  $900.3  4.5 % 4.5 %
 Canada   37.1   34.9  6.2   1.9  
 Mexico   32.9   27.6  19.4   13.3  
 Puerto Rico   15.9   20.9  (23.8 ) (23.8 )
 Brazil   12.3   13.3  (7.4 ) (9.4 )
Total Americas   1,039.3   997.0  4.2   3.9  
                  
EMEA                 
 France   73.0   60.8  20.1   14.1  
 Switzerland   59.1   55.0  7.4   6.0  
 Portugal   46.0   39.2  17.5   11.6  
 United Kingdom   23.3   19.5  19.1   19.5  
 Russia   22.5   18.4  22.4   11.6  
 Italy   15.9   13.6  17.1   11.1  
 Germany   15.5   14.2  8.5   3.0  
 Norway   8.9   8.4  7.2   2.5  
 Ireland   8.3   7.7  8.1   2.6  
 Other   12.1   9.7  25.0   18.4  
Total EMEA   284.6   246.5  15.5   10.7  
                  
Total APAC   4.9   4.3  12.6   8.8  
                  
Total Kelly Services, Inc.  $1,328.8  $1,247.8  6.5 % 5.3 %
                  
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                  
    September Year to Date (Americas, International and GTS)  
                  
           %   CC %  
    2017   2016  Change   Change  
                  
Americas                 
 United States  $2,866.8  $2,765.8  3.7 % 3.7 %
 Canada   105.8   105.2  0.6   (0.5 )
 Mexico   85.0   79.6  6.8   9.1  
 Puerto Rico   51.2   65.9  (22.3 ) (22.3 )
 Brazil   38.3   33.5  14.3   1.6  
Total Americas   3,147.1   3,050.0  3.2   3.1  
                  
EMEA                 
 France   202.1   178.6  13.2   13.3  
 Switzerland   161.3   156.2  3.3   3.6  
 Portugal   124.0   111.6  11.1   11.2  
 Russia   69.3   49.0  41.5   21.5  
 United Kingdom   64.3   66.2  (2.9 ) 5.7  
 Italy   45.3   42.1  7.6   7.7  
 Germany   43.3   45.3  (4.5 ) (4.3 )
 Norway   24.9   24.4  2.2   1.0  
 Ireland   23.4   18.1  295.0   29.8  
 Other   33.5   27.8  20.7   20.5  
Total EMEA   791.4   719.3  10.0   9.6  
                  
Total APAC   13.6   203.1  (93.3 ) (13.1 )
                  
Total Kelly Services, Inc.  $3,952.1  $3,972.4  (0.5 )% (0.7 )%
                  
  
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 AND 39 WEEKS ENDED OCTOBER 1, 2017 AND OCTOBER 2, 2016  
(UNAUDITED)  
(In millions of dollars except per share data)  
                    
       
    Third Quarter   September Year to Date  
    2017   2016   2017    2016  
                    
Revenue from services  $1,328.8  $1,247.8  $3,952.1   $3,972.4  
Disposal of APAC businesses (Note 1)   -   -   -    (191.1 )
Adjusted revenue from services  $1,328.8  $1,247.8  $3,952.1   $3,781.3  
                    
                    
    Third Quarter   September Year to Date  
    2017   2016   2017    2016  
                    
Gross profit  $230.7  $215.1  $691.1   $678.3  
Disposal of APAC businesses (Note 1)   -   -   -    (30.2 )
Adjusted gross profit  $230.7  $215.1  $691.1   $648.1  
                    
                    
    Third Quarter   September Year to Date  
    2017   2016   2017    2016  
                    
Earnings from operations  $18.2  $18.8  $54.9   $43.4  
Disposal of APAC businesses (Note 1)   -   -   -    (5.9 )
Restructuring charges (Note 2)   -   -   2.4    3.4  
Adjusted earnings from operations  $18.2  $18.8  $57.3   $40.9  
     
     
    Third Quarter  
    2017   2016  
    Amount   Per Share   Amount    Per Share  
                    
Net earnings  $23.0  $0.58  $80.9   $2.06  
Gain on investment in equity affiliate, net of taxes (Note 3)   -   -   (63.7 )  (1.62 )
Adjusted net earnings  $23.0  $0.58  $17.2   $0.44  
                    
                    
    September Year to Date  
    2017   2016  
    Amount   Per Share   Amount    Per Share  
                    
Net earnings  $53.9  $1.37  $101.0   $2.58  
Disposal of APAC businesses (Note 1)   -   -   (4.5 )  (0.12 )
Restructuring charges, net of taxes (Note 2)   1.7   0.04   2.5    0.07  
Gain on investment in equity affiliate, net of taxes (Note 3)   -   -   (63.7 )  (1.63 )
Adjusted net earnings  $55.6  $1.41  $35.3   $0.90  
               

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 2016 disposal of APAC businesses, 2017 and 2016 restructuring charges and the 2016 gain on investment of equity affiliate is useful to understand the Company's fiscal 2017 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) Disposal of APAC businesses represents the 2016 operational results of business contributed to TS Kelly Asia Pacific in the third quarter of 2016.
   
  (2) Restructuring charges in 2017 represent costs related primarily to optimizing our GTS service delivery models to deliver expected cost savings. Restructuring charges in 2016 include costs related to actions taken in the Americas and International regions designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.
   
  (3) 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 in the third quarter of 2016.

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