Kelly Services® Reports 3rd Quarter Results

05 Nov '14

TROY, MI -- (Marketwired) -- 11/05/14 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2014 totaled $1.4 billion, a 3.8% increase compared to the corresponding quarter of 2013.

Earnings from operations for the third quarter of 2014 totaled $7.1 million, compared to $20.2 million reported for the third quarter of 2013. Included in the results of operations in the third quarter of 2014 are restructuring charges of $4.0 million. The results of operations in the third quarter of 2013 included restructuring charges of $0.5 million. Excluding the restructuring charges from both years, earnings from operations were $11.1 million in the third quarter of 2014, compared to adjusted earnings of $20.7 million last year.

Diluted earnings per share in the third quarter of 2014 were $0.03 compared to $0.49 per share in the third quarter of 2013. Adjusted earnings per share were $0.10 in the third quarter of 2014 compared to $0.51 in the third quarter of 2013.

"We're pleased with our third quarter performance," said Camden. "2014 has been a year of aggressive strategic investments at Kelly, and we're seeing early signs that those investments are gaining traction. We are now a leaner, more efficient company that is focused on growth and well-aligned with market demands for high-margin specialty staffing and holistic talent supply chain solutions."

Kelly also reported that on November 4, its board of directors declared a dividend of $0.05 per share. The dividend is payable December 5 to shareholders of record as of the close of business on November 17.

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 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, our ability to retain the services of our senior management, local management and field personnel, our ability to adequately protect our intellectual property rights, including our brand, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry or market developments, unexpected changes in claim trends on workers' compensation, disability and medical benefit plans, the net financial impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws 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, our ability to access credit markets and continued availability of financing for funding working capital, and other risks, uncertainties and factors discussed in this release and in the Company's filings with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein, and we have no intention to update these statements.

About Kelly Services®

Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provided employment to approximately 540,000 employees in 2013. Revenue in 2013 was $5.4 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)

2014

2013

Change
%
Change
Revenue from services $ 1,396.4 $ 1,345.6 $ 50.8 3.8 %
Cost of services 1,171.0 1,125.2 45.8 4.1
Gross profit 225.4 220.4 5.0 2.2
Selling, general and administrative expenses 218.3 200.2 18.1 9.0
Earnings from operations 7.1 20.2 (13.1 ) (65.1 )
Other expense, net 2.2 1.3 0.9 (63.1 )
Earnings before taxes 4.9 18.9 (14.0 ) (74.4 )
Income tax expense 3.5 0.1 3.4 NM
Net earnings $ 1.4 $ 18.8 $ (17.4 ) (93.0) %
Basic earnings per share $ 0.03 $ 0.49 $ (0.46 ) (93.9) %
Diluted earnings per share $ 0.03 $ 0.49 $ (0.46 ) (93.9) %
STATISTICS:
Gross profit rate 16.1 % 16.4 % (0.3 ) pts.
Selling, general and administrative expenses:
% of revenue 15.6 14.9 0.7
% of gross profit 96.9 90.8 6.1
% Return:
Earnings from operations 0.5 1.5 (1.0 )
Earnings before taxes 0.3 1.4 (1.1 )
Net earnings 0.1 1.4 (1.3 )
Effective income tax rate 72.7 % 0.3 % 72.4 pts.
Average number of shares outstanding (millions):
Basic 37.6 37.4
Diluted 37.6 37.4
Shares adjusted for nonvested restricted awards (millions):
Basic 38.5 38.1
Diluted 38.5 38.1
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)

2014

2013

Change
%
Change
Revenue from services $ 4,137.7 $ 4,027.3 $ 110.4 2.7 %
Cost of services 3,461.9 3,369.3 92.6 2.8
Gross profit 675.8 658.0 17.8 2.7
Selling, general and administrative expenses 656.5 612.6 43.9 7.2
Asset impairments -- 1.7 (1.7 ) (100.0 )
Earnings from operations 19.3 43.7 (24.4 ) (56.4 )
Other expense, net 4.2 3.9 0.3 (4.6 )
Earnings before taxes 15.1 39.8 (24.7 ) (62.5 )
Income tax expense (benefit) 8.4 (1.9 ) 10.3 NM
Net earnings $ 6.7 $ 41.7 $ (35.0 ) (84.2) %
Basic earnings per share $ 0.17 $ 1.09 $ (0.92 ) (84.4) %
Diluted earnings per share $ 0.17 $ 1.09 $ (0.92 ) (84.4) %
STATISTICS:
Gross profit rate 16.3 % 16.3 % -- pts.
Selling, general and administrative expenses:
% of revenue 15.9 15.2 0.7
% of gross profit 97.2 93.1 4.1
% Return:
Earnings from operations 0.5 1.1 (0.6 )
Earnings before taxes 0.4 1.0 (0.6 )
Net earnings 0.2 1.0 (0.8 )
Effective income tax rate 55.9 % (5.0) % 60.9 pts.
Average number of shares outstanding (millions):
Basic 37.5 37.2
Diluted 37.5 37.3
Shares adjusted for nonvested restricted awards (millions):
Basic 38.5 38.2
Diluted 38.5 38.2
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 640.8 $ 617.0 3.9 % 4.3 %
Staffing fee-based income included in revenue from services 3.8 3.3 12.3 12.7
Gross profit 91.7 86.8 5.7 6.1
Gross profit rate 14.3 % 14.1 % 0.2 pts.
PT
Revenue from services $ 242.5 $ 239.9 1.1 % 1.2 %
Staffing fee-based income included in revenue from services 4.4 3.9 13.1 13.4
Gross profit 39.6 38.8 1.9 2.1
Gross profit rate 16.3 % 16.2 % 0.1 pts.
Total Americas
Revenue from services $ 883.3 $ 856.9 3.1 % 3.4 %
Staffing fee-based income included in revenue from services 8.2 7.2 12.7 13.1
Gross profit 131.3 125.6 4.5 4.8
Total SG&A expenses 110.8 100.2 10.6 10.9
Earnings from operations 20.5 25.4 (19.7 )
Gross profit rate 14.9 % 14.7 % 0.2 pts.
Expense rates:
% of revenue 12.5 11.7 0.8
% of gross profit 84.5 79.8 4.7
Return on sales 2.3 3.0 (0.7 )
EMEA
Commercial
Revenue from services $ 231.3 $ 224.5 3.0 % 3.2 %
Staffing fee-based income included in revenue from services 4.2 4.6 (8.9 ) (6.1 )
Gross profit 33.6 33.9 (0.9 ) (0.4 )
Gross profit rate 14.5 % 15.1 % (0.6 ) pts.
PT
Revenue from services $ 48.1 $ 45.1 6.5 % 6.0 %
Staffing fee-based income included in revenue from services 3.5 3.9 (9.6 ) (7.8 )
Gross profit 10.9 10.8 0.6 1.0
Gross profit rate 22.6 % 23.9 % (1.3 ) pts.
Total EMEA
Revenue from services $ 279.4 $ 269.6 3.6 % 3.6 %
Staffing fee-based income included in revenue from services 7.7 8.5 (9.3 ) (6.9 )
Gross profit 44.5 44.7 (0.5 ) (0.1 )
SG&A expenses excluding restructuring charges 40.0 40.0 --
Restructuring charges -- 0.3 (100.0 )
Total SG&A expenses 40.0 40.3 (0.8 ) (0.5 )
Earnings from operations 4.5 4.4 1.6
Earnings from operations excluding restructuring charges 4.5 4.7 (5.5 )
Gross profit rate 15.9 % 16.6 % (0.7 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.3 14.8 (0.5 )
% of gross profit 90.0 89.5 0.5
Return on sales (excluding restructuring charges) 1.6 1.7 (0.1 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 91.0 $ 87.6 3.9 % 2.2 %
Staffing fee-based income included in revenue from services 2.0 2.3 (15.5 ) (17.3 )
Gross profit 11.7 12.7 (8.2 ) (9.7 )
Gross profit rate 12.8 % 14.5 % (1.7 ) pts.
PT
Revenue from services $ 10.6 $ 9.1 15.8 % 14.4 %
Staffing fee-based income included in revenue from services 2.0 2.2 (9.9 ) (11.0 )
Gross profit 3.3 3.4 (2.8 ) (4.0 )
Gross profit rate 31.5 % 37.5 % (6.0 ) pts.
Total APAC
Revenue from services $ 101.6 $ 96.7 5.0 % 3.4 %
Staffing fee-based income included in revenue from services 4.0 4.5 (12.8 ) (14.2 )
Gross profit 15.0 16.1 (7.0 ) (8.5 )
SG&A expenses excluding restructuring charges 14.2 14.5 (2.5 )
Restructuring charges 0.3 0.1 410.5
Total SG&A expenses 14.5 14.6 (0.9 ) (2.7 )
Earnings from operations 0.5 1.5 (65.7 )
Earnings from operations excluding restructuring charges 0.8 1.6 (48.4 )
Gross profit rate 14.8 % 16.7 % (1.9 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.0 15.1 (1.1 )
% of gross profit 94.6 90.2 4.4
Return on sales (excluding restructuring charges) 0.8 1.6 (0.8 )
OCG
Revenue from services $ 149.8 $ 135.3 10.7 % 10.9 %
Gross profit 35.8 34.8 2.9 2.8
SG&A expenses excluding restructuring charges 32.2 28.0 15.0
Restructuring charges -- 0.1 (100.0 )
Total SG&A expenses 32.2 28.1 14.7 14.7
Earnings from operations 3.6 6.7 (46.0 )
Earnings from operations excluding restructuring charges 3.6 6.8 (46.6 )
Gross profit rate 23.9 % 25.7 % (1.8 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 21.5 20.7 0.8
% of gross profit 89.8 80.3 9.5
Return on sales (excluding restructuring charges) 2.4 5.1 (2.7 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 1,915.1 $ 1,904.1 0.6 % 1.4 %
Staffing fee-based income included in revenue from services 10.4 9.8 6.1 7.6
Gross profit 280.0 274.5 2.0 2.8
Gross profit rate 14.6 % 14.4 % 0.2 pts.
PT
Revenue from services $ 723.1 $ 733.7 (1.4 ) % (1.3 )%
Staffing fee-based income included in revenue from services 11.7 10.8 8.6 9.1
Gross profit 118.4 116.1 2.0 2.2
Gross profit rate 16.4 % 15.8 % 0.6 pts.
Total Americas
Revenue from services $ 2,638.2 $ 2,637.8 -- % 0.7 %
Staffing fee-based income included in revenue from services 22.1 20.6 7.4 8.4
Gross profit 398.4 390.6 2.0 2.6
Total SG&A expenses 332.9 310.6 7.2 7.9
Earnings from operations 65.5 80.0 (18.3 )
Gross profit rate 15.1 % 14.8 % 0.3 pts.
Expense rates:
% of revenue 12.6 11.8 0.8
% of gross profit 83.6 79.5 4.1
Return on sales 2.5 3.0 (0.5 )
EMEA
Commercial
Revenue from services $ 690.2 $ 645.3 7.0 % 5.7 %
Staffing fee-based income included in revenue from services 14.0 14.9 (6.0 ) (4.3 )
Gross profit 101.0 98.8 2.2 1.2
Gross profit rate 14.6 % 15.3 % (0.7 ) pts.
PT
Revenue from services $ 145.5 $ 131.7 10.3 % 7.7 %
Staffing fee-based income included in revenue from services 10.7 11.7 (8.3 ) (7.6 )
Gross profit 33.3 32.0 3.8 2.3
Gross profit rate 22.8 % 24.3 % (1.5 ) pts.
Total EMEA
Revenue from services $ 835.7 $ 777.0 7.5 % 6.0 %
Staffing fee-based income included in revenue from services 24.7 26.6 (7.0 ) (5.7 )
Gross profit 134.3 130.8 2.6 1.5
SG&A expenses excluding restructuring charges 124.2 122.1 1.7
Restructuring charges 0.8 0.1 327.7
Total SG&A expenses 125.0 122.2 2.2 0.8
Earnings from operations 9.3 8.6 8.1
Earnings from operations excluding restructuring charges 10.1 8.7 15.1
Gross profit rate 16.1 % 16.8 % (0.7 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.9 15.7 (0.8 )
% of gross profit 92.5 93.3 (0.8 )
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)
September Year to Date
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 260.5 $ 256.8 1.4 % 4.2 %
Staffing fee-based income included in revenue from services 5.9 7.0 (17.1 ) (14.0 )
Gross profit 35.7 36.8 (3.1 ) (0.3 )
Gross profit rate 13.7 % 14.3 % (0.6 ) pts.
PT
Revenue from services $ 29.2 $ 29.3 (0.5 ) % 3.3 %
Staffing fee-based income included in revenue from services 5.8 6.7 (13.0 ) (9.7 )
Gross profit 9.4 10.5 (10.2 ) (6.8 )
Gross profit rate 32.2 % 35.7 % (3.5 ) pts.
Total APAC
Revenue from services $ 289.7 $ 286.1 1.3 % 4.1 %
Staffing fee-based income included in revenue from services 11.7 13.7 (15.1 ) (11.9 )
Gross profit 45.1 47.3 (4.6 ) (1.7 )
SG&A expenses excluding restructuring charges 43.3 45.5 (4.7 )
Restructuring charges 1.3 0.3 373.4
Total SG&A expenses 44.6 45.8 (2.3 ) 1.1
Earnings from operations 0.5 1.5 (76.8 )
Earnings from operations excluding restructuring charges 1.8 1.8 (4.2 )
Gross profit rate 15.6 % 16.5 % (0.9 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 15.0 15.9 (0.9 )
% of gross profit 96.2 96.2 --
Return on sales (excluding restructuring charges) 0.6 0.6 --
OCG
Revenue from services $ 422.1 $ 361.0 16.9 % 17.3 %
Gross profit 101.3 91.7 10.5 10.6
SG&A expenses excluding restructuring charges 94.7 81.6 16.0
Restructuring charges -- 0.9 (100.0 )
Total SG&A expenses 94.7 82.5 14.9 15.0
Asset impairments -- 1.7 (100.0 )
Earnings from operations 6.6 7.5 (13.1 )
Earnings from operations excluding restructuring charges 6.6 8.4 (21.4 )
Gross profit rate 24.0 % 25.4 % (1.4 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 22.4 22.6 (0.2 )
% of gross profit 93.4 88.9 4.5
Return on sales (excluding restructuring charges) 1.6 2.4 (0.8 )
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
Sept. 28, 2014 Dec. 29, 2013 Sept. 29, 2013
Current Assets
Cash and equivalents $ 51.6 $ 125.7 $ 73.9
Trade accounts receivable, less allowances of
$9.2, $9.9 and $10.0, respectively 1,158.1 1,023.1 1,071.8
Prepaid expenses and other current assets 56.8 52.2 62.0
Deferred taxes 28.9 35.5 40.3
Total current assets 1,295.4 1,236.5 1,248.0
Property and Equipment, Net 91.1 92.0 87.7
Noncurrent Deferred Taxes 132.7 121.7 104.5
Goodwill, Net 90.3 90.3 90.3
Other Assets 291.5 258.1 241.0
Total Assets $ 1,901.0 $ 1,798.6 $ 1,771.5
Current Liabilities
Short-term borrowings $ 88.7 $ 28.3 $ 58.0
Accounts payable and accrued liabilities 339.0 342.4 308.9
Accrued payroll and related taxes 318.6 294.9 300.9
Accrued insurance 24.4 27.6 30.7
Income and other taxes 74.0 68.8 71.5
Total current liabilities 844.7 762.0 770.0
Noncurrent Liabilities
Accrued insurance 43.4 46.0 40.7
Accrued retirement benefits 146.6 134.7 129.3
Other long-term liabilities 40.7 33.3 28.0
Total noncurrent liabilities 230.7 214.0 198.0
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (52.5 ) (56.2 ) (57.5 )
Paid-in capital 26.7 26.0 26.1
Earnings invested in the business 752.3 751.3 736.0
Accumulated other comprehensive income 59.0 61.4 58.8
Total stockholders' equity 825.6 822.6 803.5
Total Liabilities and Stockholders' Equity $ 1,901.0 $ 1,798.6 $ 1,771.5
STATISTICS:
Working Capital $ 450.7 $ 474.5 $ 478.0
Current Ratio 1.5 1.6 1.6
Debt-to-capital % 9.7 % 3.3 % 6.7 %
Global Days Sales Outstanding 58 52 56
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars)
2014 2013
Cash flows from operating activities:
Net earnings $ 6.7 $ 41.7
Noncash adjustments:
Impairment of assets -- 1.7
Depreciation and amortization 16.2 15.4
Provision for bad debts 3.6 1.1
Stock-based compensation 4.1 2.7
Other, net 1.3 0.7
Changes in operating assets and liabilities (140.9 ) (41.4 )
Net cash (used in) from operating activities (109.0 ) 21.9
Cash flows from investing activities:
Capital expenditures (15.0 ) (11.7 )
Investment in equity affiliate (5.4 ) --
Other investing activities 0.2 --
Net cash used in investing activities (20.2 ) (11.7 )
Cash flows from financing activities:
Net change in short-term borrowings 60.4 (6.1 )
Dividend payments (5.7 ) (5.7 )
Other financing activities 0.4 0.3
Net cash from (used in) financing activities 55.1 (11.5 )
Effect of exchange rates on cash and equivalents -- (1.1 )
Net change in cash and equivalents (74.1 ) (2.4 )
Cash and equivalents at beginning of period 125.7 76.3
Cash and equivalents at end of period $ 51.6 $ 73.9
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Third Quarter (Commercial, PT and OCG)
% Change
2014 2013 US$ Constant Currency
Americas
United States $ 873.7 $ 843.5 3.6 % 3.6 %
Canada 51.9 52.9 (1.9 ) 2.6
Mexico 37.0 33.1 11.8 13.6
Puerto Rico 25.7 24.4 5.1 5.1
Brazil 13.6 13.1 3.7 3.2
Total Americas 1,001.9 967.0 3.6 3.9
EMEA
France 70.1 62.4 12.4 12.0
Switzerland 66.7 68.6 (2.7 ) (4.7 )
Portugal 33.3 24.1 38.0 37.8
Russia 28.7 32.9 (13.0 ) (3.9 )
United Kingdom 26.2 26.5 (1.1 ) (8.4 )
Germany 17.5 17.4 0.6 0.6
Norway 14.8 16.1 (7.7 ) (3.8 )
Italy 14.8 13.8 6.7 6.7
Other 15.8 16.0 (1.0 ) (0.3 )
Total EMEA 287.9 277.8 3.6 3.7
APAC
Singapore 33.4 29.4 13.7 12.2
Australia 32.3 32.4 (0.2 ) (1.3 )
Malaysia 16.7 17.2 (3.0 ) (4.5 )
New Zealand 12.7 12.6 0.4 (5.1 )
Other 11.5 9.2 25.1 26.2
Total APAC 106.6 100.8 5.8 4.1
Total Kelly Services, Inc. $ 1,396.4 $ 1,345.6 3.8 % 3.9 %
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
September Year to Date (Commercial, PT and OCG)
% Change
2014 2013 US$ Constant Currency
Americas
United States $ 2,601.9 $ 2,547.3 2.1 % 2.1 %
Canada 148.2 163.9 (9.6 ) (3.5 )
Mexico 102.3 99.4 2.9 6.4
Puerto Rico 78.4 73.6 6.4 6.4
Brazil 43.2 45.0 (4.1 ) 5.2
Total Americas 2,974.0 2,929.2 1.5 2.1
EMEA
France 202.2 182.0 11.1 7.9
Switzerland 195.7 185.6 5.5 1.4
Russia 96.4 102.0 (5.5 ) 5.9
Portugal 92.4 63.0 46.6 42.5
United Kingdom 82.4 78.1 5.5 (2.4 )
Germany 50.7 49.3 3.0 0.1
Italy 46.3 43.6 6.0 2.9
Norway 43.6 46.3 (5.7 ) (1.0 )
Other 50.9 50.7 0.4 (1.8 )
Total EMEA 860.6 800.6 7.5 6.0
APAC
Singapore 94.8 83.5 13.5 14.0
Australia 88.8 100.4 (11.6 ) (5.9 )
Malaysia 50.0 51.1 (2.1 ) 1.5
New Zealand 38.2 36.1 5.9 2.1
Other 31.3 26.4 18.4 27.7
Total APAC 303.1 297.5 1.9 4.9
Total Kelly Services, Inc. $ 4,137.7 $ 4,027.3 2.7 % 3.1 %
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 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 $ 1,396.4 $ -- $ 1,396.4 $ 1,345.6 3.8 %
Cost of services 1,171.0 -- 1,171.0 1,125.2 4.1
Gross profit 225.4 -- 225.4 220.4 2.2
SG&A expenses 218.3 (4.0 ) 214.3 199.7 7.3
Earnings from operations 7.1 4.0 11.1 20.7 (46.8 )
Other expense, net 2.2 -- 2.2 1.3 (63.1 )
Earnings before taxes 4.9 4.0 8.9 19.4 (54.6 )
Inc. tax expense (benefit) 3.5 1.5 5.0 0.1 NM
Net earnings $ 1.4 $ 2.5 $ 3.9 $ 19.3 (80.5 ) %
Earnings per share:
Basic $ 0.03 $ 0.06 $ 0.10 $ 0.51 (80.4 ) %
Diluted $ 0.03 $ 0.06 $ 0.10 $ 0.51 (80.4 ) %
2013
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 1,345.6 $ -- $ 1,345.6
Cost of services 1,125.2 -- 1,125.2
Gross profit 220.4 -- 220.4
SG&A expenses 200.2 (0.5 ) 199.7
Earnings from operations 20.2 0.5 20.7
Other expense, net 1.3 -- 1.3
Earnings before taxes 18.9 0.5 19.4
Inc. tax expense (benefit) 0.1 -- 0.1
Net earnings $ 18.8 $ 0.5 $ 19.3
Earnings per share:
Basic $ 0.49 $ 0.01 $ 0.51
Diluted $ 0.49 $ 0.01 $ 0.51
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 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 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 $ 4,137.7 $ -- $ 4,137.7 $ 4,027.3 2.7 %
Cost of services 3,461.9 -- 3,461.9 3,369.3 2.8
Gross profit 675.8 -- 675.8 658.0 2.7
SG&A expenses 656.5 (5.8 ) 650.7 611.3 6.5
Earnings from operations 19.3 5.8 25.1 46.7 (46.7 )
Other expense, net 4.2 -- 4.2 3.9 (4.6 )
Earnings before taxes 15.1 5.8 20.9 42.8 (51.4 )
Inc. tax expense (benefit) 8.4 2.1 10.5 (1.8 ) NM
Net earnings $ 6.7 $ 3.7 $ 10.4 $ 44.6 (77.0 ) %
Earnings per share:
Basic $ 0.17 $ 0.10 $ 0.27 $ 1.17 (76.9 ) %
Diluted $ 0.17 $ 0.10 $ 0.27 $ 1.17 (76.9 ) %
2013
As reported Restructuring Charges
(Note 1)
Asset Impairments (Note 2) Adjusted Earnings
Revenue from services $ 4,027.3 $ -- $ -- $ 4,027.3
Cost of services 3,369.3 -- -- 3,369.3
Gross profit 658.0 -- -- 658.0
SG&A expenses 612.6 (1.3 ) -- 611.3
Asset impairments 1.7 -- (1.7 ) --
Earnings from operations 43.7 1.3 1.7 46.7
Other expense, net 3.9 -- -- 3.9
Earnings before taxes 39.8 1.3 1.7 42.8
Inc. tax expense (benefit) (1.9 ) 0.1 -- (1.8 )
Net earnings $ 41.7 $ 1.2 $ 1.7 $ 44.6
Earnings per share:
Basic $ 1.09 $ 0.03 $ 0.04 $ 1.17
Diluted $ 1.09 $ 0.03 $ 0.04 $ 1.17
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 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.

ANALYST CONTACT:
James Polehna
(248) 244-4586
james_polehna@kellyservices.com

MEDIA CONTACT:
Jane Stehney
(248) 244-5630
jane_stehney@kellyservices.com

Source: Kelly Services

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