Kelly Services® Reports 2nd Quarter 2015 Results

05 Aug '15

TROY, MI -- (Marketwired) -- 08/05/15 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2015.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2015 totaled $1.4 billion, a 2% decrease (a 4% increase on a constant currency basis) compared to the corresponding quarter of 2014.

Earnings from operations for the second quarter of 2015 totaled $11.5 million, compared to $5.9 million reported for the second quarter of 2014. Included in the results of operations in the second quarter of 2014 are restructuring charges of $1.8 million. Excluding the restructuring charges, earnings from operations were $7.7 million in the second quarter of 2014.

Diluted earnings per share in the second quarter of 2015 were $0.18 compared to $0.07 per share in the second quarter of 2014. Adjusted earnings per share were $0.10 in the second quarter of 2014.

Commenting on the second quarter, Camden stated, "I'm pleased to report that Kelly once again delivered strong operating leverage and improved returns. On a constant currency basis, we grew second quarter revenue and held our expenses relatively flat, dropping more than half of our gross profit growth to the bottom line. Last year's investments in PT and OCG are yielding results, and we are executing a strategy that clearly aligns with market trends and customer needs."

Kelly also reported that on August 4, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 8 to shareholders of record as of the close of business on August 18.

In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 5, 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 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, 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®

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® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. 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 JUNE 28, 2015 AND JUNE 29, 2014
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2015 2014 Change Change Change
Revenue from services $ 1,385.0 $ 1,410.5 $ (25.5 ) (1.8) % 3.9 %
Cost of services 1,162.7 1,182.4 (19.7 ) (1.7 )
Gross profit 222.3 228.1 (5.8 ) (2.5 ) 2.9
Selling, general and administrative expenses 210.8 222.2 (11.4 ) (5.2 ) (0.4 )
Earnings from operations 11.5 5.9 5.6 99.9
Other expense, net 1.0 0.3 0.7 276.3
Earnings before taxes 10.5 5.6 4.9 91.4
Income tax expense 3.7 2.8 0.9 34.7
Net earnings $ 6.8 $ 2.8 $ 4.0 148.6 %
Basic earnings per share $ 0.18 $ 0.07 $ 0.11 157.1 %
Diluted earnings per share $ 0.18 $ 0.07 $ 0.11 157.1 %
STATISTICS:
Gross profit rate 16.1 % 16.2 % (0.1 ) pts.
Selling, general and administrative expenses:
% of revenue 15.2 15.8 (0.6 )
% of gross profit 94.8 97.5 (2.7 )
% Return:
Earnings from operations 0.8 0.4 0.4
Earnings before taxes 0.8 0.4 0.4
Net earnings 0.5 0.2 0.3
Effective income tax rate 35.3 % 50.2 % (14.9 ) pts.
Average number of shares outstanding (millions):
Basic 37.7 37.4
Diluted 37.8 37.4
Shares adjusted for nonvested restricted awards (millions):
Basic 38.8 38.5
Diluted 38.8 38.6
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 28, 2015 AND JUNE 29, 2014
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2015 2014 Change Change Change
Revenue from services $ 2,705.6 $ 2,741.3 $ (35.7 ) (1.3 )% 4.1 %
Cost of services 2,263.0 2,290.9 (27.9 ) (1.2 )
Gross profit 442.6 450.4 (7.8 ) (1.7 ) 3.3
Selling, general and administrative expenses 419.0 438.2 (19.2 ) (4.4 ) 0.3
Earnings from operations 23.6 12.2 11.4 96.9
Other expense, net 3.5 2.0 1.5 82.2
Earnings before taxes 20.1 10.2 9.9 99.6
Income tax expense 9.6 4.9 4.7 98.4
Net earnings $ 10.5 $ 5.3 $ 5.2 100.8 %
Basic earnings per share $ 0.27 $ 0.14 $ 0.13 92.9 %
Diluted earnings per share $ 0.27 $ 0.14 $ 0.13 92.9 %
STATISTICS:
Gross profit rate 16.4 % 16.4 % -- pts.
Selling, general and administrative expenses:
% of revenue 15.5 16.0 (0.5 )
% of gross profit 94.7 97.3 (2.6 )
% Return:
Earnings from operations 0.9 0.4 0.5
Earnings before taxes 0.7 0.4 0.3
Net earnings 0.4 0.2 0.2
Effective income tax rate 47.6 % 47.9 % (0.3 ) pts.
Average number of shares outstanding (millions):
Basic 37.7 37.4
Diluted 37.8 37.4
Shares adjusted for nonvested restricted awards (millions):
Basic 38.8 38.5
Diluted 38.8 38.6
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Second Quarter
Constant
Currency
2015 2014 Change Change
AMERICAS
Commercial
Revenue from services $ 651.3 $ 661.1 (1.5 )% 0.5 %
Staffing fee-based income included in revenue from services 3.5 3.4 4.6 7.3
Gross profit 95.9 96.5 (0.7 ) 1.1
Gross profit rate 14.7 % 14.6 % 0.1 pts.
PT
Revenue from services $ 246.2 $ 244.2 0.8 % 1.2 %
Staffing fee-based income included in revenue from services 4.9 3.7 29.1 30.2
Gross profit 42.1 39.0 8.0 8.4
Gross profit rate 17.1 % 16.0 % 1.1 pts.
Total Americas
Revenue from services $ 897.5 $ 905.3 (0.9 )% 0.7 %
Staffing fee-based income included in revenue from services 8.4 7.1 17.4 19.3
Gross profit 138.0 135.5 1.8 3.2
Total SG&A expenses 112.6 112.6 (0.1 ) 1.2
Earnings from operations 25.4 22.9 11.4
Gross profit rate 15.4 % 15.0 % 0.4 pts.
Expense rates:
% of revenue 12.5 12.4 0.1
% of gross profit 81.6 83.1 (1.5 )
Return on sales 2.8 2.5 0.3
EMEA
Commercial
Revenue from services $ 195.7 $ 237.0 (17.4 )% -- %
Staffing fee-based income included in revenue from services 3.2 5.0 (35.9 ) (20.2 )
Gross profit 26.8 34.5 (22.5 ) (5.9 )
Gross profit rate 13.7 % 14.6 % (0.9 ) pts.
PT
Revenue from services $ 42.9 $ 49.7 (13.6 )% 4.5 %
Staffing fee-based income included in revenue from services 2.5 3.6 (30.2 ) (13.3 )
Gross profit 9.1 11.3 (19.0 ) (1.2 )
Gross profit rate 21.2 % 22.6 % (1.4 ) pts.
Total EMEA
Revenue from services $ 238.6 $ 286.7 (16.8 )% 0.8 %
Staffing fee-based income included in revenue from services 5.7 8.6 (33.5 ) (17.3 )
Gross profit 35.9 45.8 (21.6 ) (4.7 )
SG&A expenses excluding restructuring charges 34.2 42.3 (19.1 )
Restructuring charges -- 0.8 (100.0 )
Total SG&A expenses 34.2 43.1 (20.6 ) (5.0 )
Earnings from operations 1.7 2.7 (38.1 )
Earnings from operations excluding restructuring charges 1.7 3.5 (52.4 )
Gross profit rate 15.0 % 16.0 % (1.0 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.3 14.7 (0.4 )
% of gross profit 95.3 92.3 3.0
Return on sales (excluding restructuring charges) 0.7 1.2 (0.5 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Second Quarter
Constant
Currency
2015 2014 Change Change
APAC
Commercial
Revenue from services $ 90.3 $ 86.5 4.3 % 17.7 %
Staffing fee-based income included in revenue from services 1.8 2.0 (10.9 ) (0.1 )
Gross profit 11.2 11.7 (3.8 ) 8.3
Gross profit rate 12.4 % 13.5 % (1.1 ) pts.
PT
Revenue from services $ 10.3 $ 10.0 3.5 % 17.8 %
Staffing fee-based income included in revenue from services 1.5 2.1 (29.0 ) (20.9 )
Gross profit 2.7 3.3 (17.9 ) (7.6 )
Gross profit rate 26.4 % 33.2 % (6.8 ) pts.
Total APAC
Revenue from services $ 100.6 $ 96.5 4.3 % 17.7 %
Staffing fee-based income included in revenue from services 3.3 4.1 (20.3 ) (10.9 )
Gross profit 13.9 15.0 (6.9 ) 4.8
SG&A expenses excluding restructuring charges 12.3 14.8 (17.0 )
Restructuring charges -- 1.0 (100.0 )
Total SG&A expenses 12.3 15.8 (22.5 ) (12.9 )
Earnings from operations 1.6 (0.8 ) NM
Earnings from operations excluding restructuring charges 1.6 0.2 NM
Gross profit rate 13.9 % 15.5 % (1.6 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 12.2 15.4 (3.2 )
% of gross profit 88.3 99.0 (10.7 )
Return on sales (excluding restructuring charges) 1.6 0.2 1.4
OCG
Revenue from services $ 165.0 $ 137.9 19.7 % 21.6 %
Gross profit 35.7 32.9 8.4 11.4
Total SG&A expenses 32.2 31.1 3.6 6.4
Earnings from operations 3.5 1.8 88.8
Gross profit rate 21.6 % 23.9 % (2.3 ) pts.
Expense rates:
% of revenue 19.5 22.5 (3.0 )
% of gross profit 90.2 94.4 (4.2 )
Return on sales 2.1 1.3 0.8
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
June Year to Date
Constant
Currency
2015 2014 Change Change
AMERICAS
Commercial
Revenue from services $ 1,292.7 $ 1,274.3 1.4 % 3.2 %
Staffing fee-based income included in revenue from services 7.0 6.6 5.3 7.8
Gross profit 193.7 188.3 2.9 4.4
Gross profit rate 15.0 % 14.8 % 0.2 pts.
PT
Revenue from services $ 479.0 $ 480.6 (0.3 )% 0.1 %
Staffing fee-based income included in revenue from services 8.4 7.3 13.5 14.3
Gross profit 81.0 78.8 2.9 3.3
Gross profit rate 16.9 % 16.4 % 0.5 pts.
Total Americas
Revenue from services $ 1,771.7 $ 1,754.9 1.0 % 2.4 %
Staffing fee-based income included in revenue from services 15.4 13.9 9.6 11.2
Gross profit 274.7 267.1 2.9 4.1
Total SG&A expenses 226.1 222.1 1.8 3.0
Earnings from operations 48.6 45.0 8.4
Gross profit rate 15.5 % 15.2 % 0.3 pts.
Expense rates:
% of revenue 12.8 12.7 0.1
% of gross profit 82.3 83.2 (0.9 )
Return on sales 2.7 2.6 0.1
EMEA
Commercial
Revenue from services $ 374.0 $ 458.9 (18.5 )% (0.9 )%
Staffing fee-based income included in revenue from services 6.7 9.8 (31.5 ) (13.8 )
Gross profit 51.4 67.4 (23.8 ) (7.3 )
Gross profit rate 13.7 % 14.7 % (1.0 ) pts.
PT
Revenue from services $ 83.2 $ 97.4 (14.5 )% 3.4 %
Staffing fee-based income included in revenue from services 5.1 7.2 (29.5 ) (12.1 )
Gross profit 17.8 22.4 (20.4 ) (2.8 )
Gross profit rate 21.4 % 23.0 % (1.6 ) pts.
Total EMEA
Revenue from services $ 457.2 $ 556.3 (17.8 )% (0.1 )%
Staffing fee-based income included in revenue from services 11.8 17.0 (30.7 ) (13.1 )
Gross profit 69.2 89.8 (23.0 ) (6.2 )
SG&A expenses excluding restructuring charges 67.7 84.2 (19.6 )
Restructuring charges -- 0.8 (100.0 )
Total SG&A expenses 67.7 85.0 (20.3 ) (4.1 )
Earnings from operations 1.5 4.8 (69.1 )
Earnings from operations excluding restructuring charges 1.5 5.6 (73.5 )
Gross profit rate 15.1 % 16.1 % (1.0 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.8 15.1 (0.3 )
% of gross profit 97.8 93.7 4.1
Return on sales (excluding restructuring charges) 0.3 1.0 (0.7 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
June Year to Date
Constant
Currency
2015 2014 Change Change
APAC
Commercial
Revenue from services $ 175.9 $ 169.5 3.8 % 15.1 %
Staffing fee-based income included in revenue from services 3.3 3.9 (16.2 ) (7.7 )
Gross profit 24.2 24.0 0.9 11.6
Gross profit rate 13.8 % 14.2 % (0.4 ) pts.
PT
Revenue from services $ 20.8 $ 18.6 12.1 % 25.4 %
Staffing fee-based income included in revenue from services 3.1 3.8 (18.1 ) (10.3 )
Gross profit 5.6 6.1 (7.6 ) 2.2
Gross profit rate 26.9 % 32.7 % (5.8 ) pts.
Total APAC
Revenue from services $ 196.7 $ 188.1 4.6 % 16.2 %
Staffing fee-based income included in revenue from services 6.4 7.7 (17.1 ) (9.0 )
Gross profit 29.8 30.1 (0.8 ) 9.7
SG&A expenses excluding restructuring charges 24.4 29.1 (16.3 )
Restructuring charges -- 1.0 (100.0 )
Total SG&A expenses 24.4 30.1 (19.2 ) (10.7 )
Earnings from operations 5.4 -- NM
Earnings from operations excluding restructuring charges 5.4 1.0 NM
Gross profit rate 15.2 % 16.0 % (0.8 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 12.4 15.5 (3.1 )
% of gross profit 82.0 97.0 (15.0 )
Return on sales (excluding restructuring charges) 2.7 0.5 2.2
OCG
Revenue from services $ 314.5 $ 272.3 15.5 % 17.1 %
Gross profit 71.2 65.5 8.6 10.7
Total SG&A expenses 64.9 62.5 3.8 6.4
Earnings from operations 6.3 3.0 108.3
Gross profit rate 22.6 % 24.1 % (1.5 ) pts.
Expense rates:
% of revenue 20.6 22.9 (2.3 )
% of gross profit 91.1 95.4 (4.3 )
Return on sales 2.0 1.1 0.9
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
June 28, 2015 Dec. 28, 2014 June 29, 2014
Current Assets
Cash and equivalents $ 48.7 $ 83.1 $ 62.8
Trade accounts receivable, less allowances of $9.4, $10.7 and $9.2, respectively
1,152.3

1,122.8

1,132.9
Prepaid expenses and other current assets 50.6 47.9 57.6
Deferred taxes 35.8 34.4 31.5
Total current assets 1,287.4 1,288.2 1,284.8
Property and Equipment, Net 88.6 93.0 91.4
Noncurrent Deferred Taxes 144.6 146.3 130.8
Goodwill, Net 90.3 90.3 90.3
Other Assets 321.7 300.1 295.7
Total Assets $ 1,932.6 $ 1,917.9 $ 1,893.0
Current Liabilities
Short-term borrowings $ 89.9 $ 91.9 $ 89.5
Accounts payable and accrued liabilities 380.4 364.0 328.4
Accrued payroll and related taxes 296.5 308.5 300.5
Accrued insurance 27.1 26.9 25.2
Income and other taxes 62.8 68.8 74.9
Total current liabilities 856.7 860.1 818.5
Noncurrent Liabilities
Accrued insurance 44.3 43.9 44.7
Accrued retirement benefits 146.5 140.8 147.4
Other long-term liabilities 40.6 39.4 41.9
Total noncurrent liabilities 231.4 224.1 234.0
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (49.0 ) (49.8 ) (55.5 )
Paid-in capital 27.5 24.9 29.0
Earnings invested in the business 774.1 767.4 752.8
Accumulated other comprehensive income 51.8 51.1 74.1
Total stockholders' equity 844.5 833.7 840.5
Total Liabilities and Stockholders' Equity $ 1,932.6 $ 1,917.9 $ 1,893.0
STATISTICS:
Working Capital $ 430.7 $ 428.1 $ 466.3
Current Ratio 1.5 1.5 1.6
Debt-to-capital % 9.6 % 9.9 % 9.6 %
Global Days Sales Outstanding 56 54 57
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JUNE 28, 2015 AND JUNE 29, 2014
(UNAUDITED)
(In millions of dollars)
2015 2014
Cash flows from operating activities:
Net earnings $ 10.5 $ 5.3
Noncash adjustments:
Depreciation and amortization 11.0 10.8
Provision for bad debts 2.1 2.6
Stock-based compensation 3.1 3.5
Other, net (0.3 ) 0.7
Changes in operating assets and liabilities (52.9 ) (130.4 )
Net cash used in operating activities (26.5 ) (107.5 )
Cash flows from investing activities:
Capital expenditures (6.7 ) (8.9 )
Investment in equity affiliate (0.5 ) (5.4 )
Other investing activities (0.1 ) 0.4
Net cash used in investing activities (7.3 ) (13.9 )
Cash flows from financing activities:
Net change in short-term borrowings (1.4 ) 61.2
Dividend payments (3.8 ) (3.8 )
Net cash (used in) from financing activities (5.2 ) 57.4
Effect of exchange rates on cash and equivalents 4.6 1.1
Net change in cash and equivalents (34.4 ) (62.9 )
Cash and equivalents at beginning of period 83.1 125.7
Cash and equivalents at end of period $ 48.7 $ 62.8
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Second Quarter (Commercial, PT and OCG)
% Change
Constant
2015 2014 US$ Currency
Americas
United States $ 923.6 $ 888.3 4.0 % 4.0 %
Canada 41.6 49.6 (16.0 ) (5.5 )
Mexico 32.0 34.6 (7.9 ) 8.5
Puerto Rico 26.6 27.6 (3.7 ) (3.7 )
Brazil 9.9 13.7 (27.8 ) (1.5 )
Total Americas 1,033.7 1,013.8 2.0 3.4
EMEA
France 60.9 69.3 (12.1 ) 9.0
Switzerland 54.6 66.7 (18.3 ) (13.4 )
Portugal 33.9 32.5 4.2 29.0
United Kingdom 27.1 28.4 (4.3 ) 5.2
Russia 22.2 32.8 (32.3 ) 1.7
Germany 14.3 16.5 (13.3 ) 7.5
Italy 13.0 16.6 (21.8 ) (3.3 )
Norway 10.0 14.4 (31.0 ) (10.8 )
Other 10.3 18.0 (42.9 ) (29.3 )
Total EMEA 246.3 295.2 (16.6 ) 0.9
APAC
Singapore 33.0 31.1 6.3 14.0
Australia 32.9 30.0 9.5 31.3
Malaysia 15.9 16.8 (5.1 ) 7.2
New Zealand 10.3 13.2 (21.9 ) (8.3 )
Other 12.9 10.4 24.3 33.1
Total APAC 105.0 101.5 3.6 17.1
Total Kelly Services, Inc. $ 1,385.0 $ 1,410.5 (1.8 )% 3.9 %
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
June Year to Date (Commercial, PT and OCG)
% Change
Constant
2015 2014 US$ Currency
Americas
United States $ 1,806.6 $ 1,728.2 4.5 % 4.5 %
Canada 84.3 96.3 (12.4 ) 1.7
Mexico 63.9 65.3 (2.3 ) 12.8
Puerto Rico 51.4 52.7 (2.3 ) (2.3 )
Brazil 23.8 29.6 (19.6 ) (1.2 )
Total Americas 2,030.0 1,972.1 2.9 4.2
EMEA
France 117.3 132.1 (11.3 ) 8.8
Switzerland 102.7 129.0 (20.4 ) (15.4 )
Portugal 65.2 59.1 10.3 35.4
United Kingdom 50.7 56.2 (9.7 ) (1.1 )
Russia 40.4 67.7 (40.3 ) (2.5 )
Germany 27.7 33.2 (16.5 ) 2.2
Italy 25.5 31.5 (18.9 ) (0.6 )
Norway 19.4 28.8 (32.9 ) (13.9 )
Other 21.3 35.1 (39.4 ) (25.7 )
Total EMEA 470.2 572.7 (17.9 ) (0.4 )
APAC
Singapore 64.3 61.4 4.8 12.1
Australia 63.3 56.5 12.0 31.2
Malaysia 31.4 33.3 (5.9 ) 4.8
New Zealand 20.8 25.5 (18.4 ) (6.8 )
Other 25.6 19.8 29.3 34.8
Total APAC 205.4 196.5 4.5 16.2
Total Kelly Services, Inc. $ 2,705.6 $ 2,741.3 (1.3 )% 4.1 %
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JUNE 28, 2015 AND JUNE 29, 2014
(UNAUDITED)
(In millions of dollars except per share data)
2015 2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 1,385.0 $ -- $ 1,385.0 $ 1,410.5 (1.8 )%
Cost of services 1,162.7 -- 1,162.7 1,182.4 (1.7 )
Gross profit 222.3 -- 222.3 228.1 (2.5 )
SG&A expenses 210.8 -- 210.8 220.4 (4.4 )
Earnings from operations 11.5 -- 11.5 7.7 50.7
Other expense, net 1.0 -- 1.0 0.3 276.3
Earnings before taxes 10.5 -- 10.5 7.4 42.8
Inc. tax expense (benefit) 3.7 -- 3.7 3.4 9.1
Net earnings $ 6.8 $ -- $ 6.8 $ 4.0 71.7 %
Earnings per share:
Basic $ 0.18 $ -- $ 0.18 $ 0.10 80.0 %
Diluted $ 0.18 $ -- $ 0.18 $ 0.10 80.0 %
2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 1,410.5 $ -- $ 1,410.5
Cost of services 1,182.4 -- 1,182.4
Gross profit 228.1 -- 228.1
SG&A expenses 222.2 (1.8 ) 220.4
Earnings from operations 5.9 1.8 7.7
Other expense, net 0.3 -- 0.3
Earnings before taxes 5.6 1.8 7.4
Inc. tax expense (benefit) 2.8 0.6 3.4
Net earnings $ 2.8 $ 1.2 $ 4.0
Earnings per share:
Basic $ 0.07 $ 0.03 $ 0.10
Diluted $ 0.07 $ 0.03 $ 0.10
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 26 WEEKS ENDED JUNE 28, 2015 AND JUNE 29, 2014
(UNAUDITED)
(In millions of dollars except per share data)
2015 2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 2,705.6 $ -- $ 2,705.6 $ 2,741.3 (1.3 )%
Cost of services 2,263.0 -- 2,263.0 2,290.9 (1.2 )
Gross profit 442.6 -- 442.6 450.4 (1.7 )
SG&A expenses 419.0 -- 419.0 436.4 (4.0 )
Earnings from operations 23.6 -- 23.6 14.0 70.2
Other expense, net 3.5 -- 3.5 2.0 82.2
Earnings before taxes 20.1 -- 20.1 12.0 68.2
Inc. tax expense (benefit) 9.6 -- 9.6 5.5 74.9
Net earnings $ 10.5 $ -- $ 10.5 $ 6.5 62.6 %
Earnings per share:
Basic $ 0.27 $ -- $ 0.27 $ 0.17 58.8 %
Diluted $ 0.27 $ -- $ 0.27 $ 0.17 58.8 %
2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 2,741.3 $ -- $ 2,741.3
Cost of services 2,290.9 -- 2,290.9
Gross profit 450.4 -- 450.4
SG&A expenses 438.2 (1.8 ) 436.4
Earnings from operations 12.2 1.8 14.0
Other expense, net 2.0 -- 2.0
Earnings before taxes 10.2 1.8 12.0
Inc. tax expense (benefit) 4.9 0.6 5.5
Net earnings $ 5.3 $ 1.2 $ 6.5
Earnings per share:
Basic $ 0.14 $ 0.03 $ 0.17
Diluted $ 0.14 $ 0.03 $ 0.17
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges is useful to understand the Company's fiscal 2015 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 relate to costs incurred for exiting the staffing business in Sweden and closing branches in Australia.

Source: Kelly Services

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