Kelly Services(R) Reports Second Quarter 2016 Earnings and Announces Quarterly Dividend

10 Aug '16

TROY, MI -- (Marketwired) -- 08/10/16 -- Second Quarter Highlights

  • Total Revenue declines 0.7% (up 0.6% in constant currency)
  • Gross Profit up 3.7% (up 4.8% in constant currency); Gross Profit Rate up 70 basis points
  • Earnings per share of $0.23 (Adjusted EPS of $0.29) versus $0.18, a 28% increase
  • TS Kelly Asia Pacific Joint Venture completed, forming one of the region's largest workforce solutions providers

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

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2016 totaled $1.4 billion, a 0.7% decrease (a 0.6% increase on a constant currency basis) compared to the corresponding quarter of 2015.

Earnings from operations for the second quarter of 2016 totaled $9.9 million, compared to $11.5 million reported for the second quarter of 2015. Included in the results of operations in the second quarter of 2016 are restructuring charges of $3.4 million. Excluding the restructuring charges, earnings from operations were $13.3 million in the second quarter of 2016.

Diluted earnings per share in the second quarter of 2016 were $0.23 compared to $0.18 per share in the second quarter of 2015. Excluding restructuring charges, earnings per share were $0.29 in the second quarter of 2016.

Commenting on the second quarter, Camden stated, "We are pleased with Kelly's ability to deliver strategic growth, improve Gross Profit, and increase shareholder value in the second quarter. The finalization of our Joint Venture in APAC positions us for growth in staffing-related services while enabling us to accelerate investments in OCG, which remains a Kelly-owned entity." Referring to the apparent slow-down in U.S. staffing demand facing the workforce solutions industry in the second quarter, Camden commented, "Kelly responded quickly to flat top-line growth in the Americas by managing Gross Profit, adjusting our operating costs, and delivering solid leverage. We remain committed to increasing shareholder value by efficiently delivering the best workforce solutions for our customers around the world."

Kelly also reported that on August 9, its board of directors declared a dividend of $0.075 per share. The dividend is payable September 2, 2016 to shareholders of record as of the close of business on August 23, 2016.

In conjunction with its second 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 August 10 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, the risk our intellectual 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, 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 developments or operational circumstances, 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 ), 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. In 2016, the Company is commemorating 70 years of industry leadership. 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 2015 was $5.5 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 JULY 3, 2016 AND JUNE 28, 2015
(UNAUDITED)
(In millions of dollars except per share data)
                              %     CC %  
      2016       2015       Change       Change     Change  
                                       
Revenue from services   $ 1,375.5   $   1,385.0   $   (9.5 )       (0.7 ) %   0.6 %
                                       
Cost of services     1,145.0       1,162.7       (17.7 )       (1.5 )        
                                       
Gross profit     230.5       222.3       8.2         3.7       4.8  
                                       
Selling, general and administrative expenses     220.6       210.8       9.8         4.6       5.7  
                                       
Earnings from operations     9.9       11.5       (1.6 )       (13.9 )        
                                       
Other expense, net     0.2       1.0       (0.8 )       (74.8 )        
                                       
Earnings before taxes     9.7       10.5       (0.8 )       (8.2 )        
                                       
Income tax expense     0.8       3.7       (2.9 )       (78.5 )        
                                       
Net earnings   $ 8.9   $   6.8   $   2.1         30.2   %      
                                       
Basic earnings per share   $ 0.23   $   0.18   $   0.05         27.8   %      
Diluted earnings per share   $ 0.23   $   0.18   $   0.05         27.8   %      
                                       
                                       
STATISTICS:                                      
                                       
Gross profit rate     16.8   %   16.1   %   0.7     pts.            
                                       
Selling, general and administrative expenses:                                      
  % of revenue     16.0       15.2       0.8                  
  % of gross profit     95.7       94.8       0.9                  
                                       
% Return:                                      
  Earnings from operations     0.7       0.8       (0.1 )                
  Earnings before taxes     0.7       0.8       (0.1 )                
  Net earnings     0.6       0.5       0.1                  
                                       
Effective income tax rate     8.3   %   35.3   %   (27.0 )   pts.            
                                       
Average number of shares outstanding (millions):                                      
  Basic     38.0       37.7                        
  Diluted     38.3       37.8                        
                                       
Shares adjusted for nonvested restricted awards (millions):                                      
  Basic     39.0       38.8                        
  Diluted     39.2       38.8                        
 
 
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015
(UNAUDITED)
(In millions of dollars except per share data)
                              %     CC %  
      2016       2015       Change       Change     Change  
                                       
Revenue from services   $ 2,724.6   $   2,705.6   $   19.0         0.7   %   2.5 %
                                       
Cost of services     2,261.4       2,263.0       (1.6 )       (0.1 )        
                                       
Gross profit     463.2       442.6       20.6         4.6       6.2  
                                       
Selling, general and administrative expenses     438.6       419.0       19.6         4.7       6.2  
                                       
Earnings from operations     24.6       23.6       1.0         4.2          
                                       
Other expense, net     1.0       3.5       (2.5 )       (70.9 )        
                                       
Earnings before taxes     23.6       20.1       3.5         17.2          
                                       
Income tax expense     3.5       9.6       (6.1 )       (63.4 )        
                                       
Net earnings   $ 20.1   $   10.5   $   9.6         90.5   %      
                                       
Basic earnings per share   $ 0.52   $   0.27   $   0.25         92.6   %      
Diluted earnings per share   $ 0.51   $   0.27   $   0.24         88.9   %      
                                       
                                       
STATISTICS:                                      
                                       
Gross profit rate     17.0   %   16.4   %   0.6     pts.            
                                       
Selling, general and administrative expenses:                                      
  % of revenue     16.1       15.5       0.6                  
  % of gross profit     94.7       94.7       -                  
                                       
% Return:                                      
  Earnings from operations     0.9       0.9       -                  
  Earnings before taxes     0.9       0.7       0.2                  
  Net earnings     0.7       0.4       0.3                  
                                       
Effective income tax rate     14.9   %   47.6   %   (32.7 )   pts.            
                                       
Average number of shares outstanding (millions):                                      
  Basic     38.0       37.7                        
  Diluted     38.2       37.8                        
                                       
Shares adjusted for nonvested restricted awards (millions):                                      
  Basic     39.0       38.8                        
  Diluted     39.2       38.8                        
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                             
      Second Quarter
                    %     CC %  
      2016       2015     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services   $ 635.3     $ 651.3     (2.5 ) %   (1.3 ) %
    Staffing fee-based income included in revenue from services     3.6       3.5     2.9       3.7    
    Gross profit     98.9       95.9     3.2       4.2    
    Gross profit rate     15.6 %     14.7 %   0.9   pts.      
  PT                            
    Revenue from services   $ 241.6     $ 246.2     (1.9 ) %   (1.7 ) %
    Staffing fee-based income included in revenue from services     4.3       4.9     (11.1 )     (10.8 )  
    Gross profit     41.3       42.1     (2.0 )     (1.9 )  
    Gross profit rate     17.1 %     17.1 %   -   pts.      
  Total Americas                            
    Revenue from services   $ 876.9     $ 897.5     (2.3 ) %   (1.4 ) %
    Staffing fee-based income included in revenue from services     7.9       8.4     (5.2 )     (4.7 )  
    Gross profit     140.2       138.0     1.6       2.3    
    SG&A expenses excluding restructuring charges     111.7       112.6     (0.8 )     (0.2 )  
    Restructuring charges     2.2       -     NM        
    Total SG&A expenses     113.9       112.6     1.2       1.8    
    Earnings from operations     26.3       25.4     3.6          
    Earnings from operations excluding restructuring charges     28.5       25.4     12.2          
                             
     Gross profit rate     16.0 %     15.4 %   0.6   pts.      
     Expense rates (excluding restructuring charges):                            
        % of revenue     12.7       12.5     0.2          
       % of gross profit     79.6       81.6     (2.0 )        
     Return on sales (excluding restructuring charges)     3.3       2.8     0.5          
                             
EMEA                            
  Commercial                            
    Revenue from services   $ 197.1     $ 195.7     0.8   %   3.0   %
    Staffing fee-based income included in revenue from services     3.7       3.2     16.6       21.4    
    Gross profit     27.1       26.8     1.5       3.4    
    Gross profit rate     13.8 %     13.7 %   0.1   pts.      
  PT                            
    Revenue from services   $ 43.1     $ 42.9     0.5   %   2.2   %
    Staffing fee-based income included in revenue from services     2.5       2.5     (4.4 )     (1.0 )  
    Gross profit     8.7       9.1     (5.5 )     (3.6 )  
    Gross profit rate     20.0 %     21.2 %   (1.2 ) pts.      
  Total EMEA                            
    Revenue from services   $ 240.2     $ 238.6     0.7   %   2.8   %
    Staffing fee-based income included in revenue from services     6.2       5.7     7.4       11.6    
    Gross profit     35.8       35.9     (0.3 )     1.6    
    SG&A expenses excluding restructuring charges     32.0       34.2     (6.3 )     (3.9 )  
    Restructuring charges     1.2       -     NM        
    Total SG&A expenses     33.2       34.2     (3.0 )     (0.6 )  
    Earnings from operations     2.6       1.7     54.4          
    Earnings from operations excluding restructuring charges     3.8       1.7     121.7          
                             
    Gross profit rate     14.9 %     15.0 %   (0.1 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     13.3       14.3     (1.0 )        
      % of gross profit     89.6       95.3     (5.7 )        
    Return on sales (excluding restructuring charges)     1.5       0.7     0.8          
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                             
      Second Quarter
                    %     CC %  
      2016       2015     Change     Change  
APAC                        
  Commercial                            
    Revenue from services   $ 87.9     $ 90.3     (2.6 ) %   1.6   %
    Staffing fee-based income included in revenue from services     1.7       1.8     (7.1 )     (3.5 )  
    Gross profit     10.3       11.2     (8.6 )     (4.7 )  
    Gross profit rate     11.7 %     12.4 %   (0.7 ) pts.      
  PT                            
    Revenue from services   $ 9.2     $ 10.3     (11.4 ) %   (7.8 ) %
    Staffing fee-based income included in revenue from services     1.4       1.5     (6.1 )     (1.1 )  
    Gross profit     2.5       2.7     (7.8 )     (3.6 )  
    Gross profit rate     27.4 %     26.4 %   1.0   pts.      
  Total APAC                      
    Revenue from services   $ 97.1     $ 100.6     (3.5 ) %   0.6   %
    Staffing fee-based income included in revenue from services     3.1       3.3     (6.6 )     (2.4 )  
    Gross profit     12.8       13.9     (8.4 )     (4.5 )  
    Total SG&A expenses     11.6       12.3     (5.4 )     (1.5 )  
    Earnings from operations     1.2       1.6     (31.4 )        
                             
    Gross profit rate     13.2 %     13.9 %   (0.7 ) pts.      
    Expense rates:                            
      % of revenue     12.0       12.2     (0.2 )        
      % of gross profit     91.2       88.3     2.9          
    Return on sales     1.2       1.6     (0.4 )        
                             
OCG                        
    Revenue from services   $ 173.9     $ 165.0     5.4   %   5.9   %
    Gross profit     42.8       35.7     20.1       20.9    
    Total SG&A expenses     38.0       32.2     18.1       19.0    
    Earnings from operations     4.8       3.5     38.2          
                               
    Gross profit rate     24.6 %     21.6 %   3.0   pts.      
    Expense rates:                            
    % of revenue     21.8       19.5     2.3          
    % of gross profit     88.7       90.2     (1.5 )        
    Return on sales     2.8       2.1     0.7          
                             
Corporate                        
    Total SG&A expenses   $ 25.0     $ 20.7     20.5   %      
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                             
      June Year to Date
                    %     CC %  
      2016       2015     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services   $ 1,283.9     $ 1,292.7     (0.7 ) %   0.9   %
    Staffing fee-based income included in revenue from services     7.2       7.0     3.0       4.0    
    Gross profit     201.0       193.7     3.8       5.1    
    Gross profit rate     15.7 %     15.0 %   0.7   pts.      
  PT                            
    Revenue from services   $ 478.7     $ 479.0     (0.1 ) %   0.1   %
    Staffing fee-based income included in revenue from services     9.3       8.4     10.9       12.1    
    Gross profit     82.9       81.0     2.3       2.5    
    Gross profit rate     17.3 %     16.9 %   0.4   pts.      
  Total Americas                            
    Revenue from services   $ 1,762.6     $ 1,771.7     (0.5 ) %   0.7   %
    Staffing fee-based income included in revenue from services     16.5       15.4     7.3       8.4    
    Gross profit     283.9       274.7     3.3       4.3    
    SG&A expenses excluding restructuring charges     228.3       226.1     1.0       1.9    
    Restructuring charges     2.2       -     NM        
    Total SG&A expenses     230.5       226.1     1.9       2.9    
    Earnings from operations     53.4       48.6     9.9          
    Earnings from operations excluding restructuring charges     55.6       48.6     14.4          
                                 
    Gross profit rate     16.1 %     15.5 %   0.6   pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     13.0       12.8     0.2          
      % of gross profit     80.4       82.3     (1.9 )        
    Return on sales (excluding restructuring charges)     3.2       2.7     0.5          
                             
EMEA                            
   Commercial                            
    Revenue from services   $ 372.6     $ 374.0     (0.4 ) %   2.9   %
    Staffing fee-based income included in revenue from services     7.1       6.7     6.5       11.5    
    Gross profit     50.7       51.4     (1.3 )     1.7    
    Gross profit rate     13.6 %     13.7 %   (0.1 ) pts.      
   PT                            
    Revenue from services   $ 84.7     $ 83.2     1.8   %   4.7   %
    Staffing fee-based income included in revenue from services     5.1       5.1     (0.5 )     4.3    
    Gross profit     17.4       17.8     (2.4 )     0.8    
    Gross profit rate     20.5 %     21.4 %   (0.9 ) pts.      
   Total EMEA                            
    Revenue from services   $ 457.3     $ 457.2     -   %   3.3   %
    Staffing fee-based income included in revenue from services     12.2       11.8     3.5       8.4    
    Gross profit     68.1       69.2     (1.6 )     1.5    
    SG&A expenses excluding restructuring charges     62.3       67.7     (7.8 )     (4.7 )  
    Restructuring charges     1.2       -     NM        
    Total SG&A expenses     63.5       67.7     (6.2 )     (3.0 )  
    Earnings from operations     4.6       1.5     205.2          
    Earnings from operations excluding restructuring charges     5.8       1.5     280.2          
                                 
    Gross profit rate     14.9 %     15.1 %   (0.2 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     13.6       14.8     (1.2 )        
      % of gross profit     91.6       97.8     (6.2 )        
    Return on sales (excluding restructuring charges)     1.2       0.3     0.9          
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                             
      June Year to Date
                    %     CC %  
      2016       2015     Change     Change  
APAC                        
    Commercial                                
    Revenue from services   $ 170.7         $ 175.9         (2.9 ) %   3.1   %
    Staffing fee-based income included in revenue from services     2.9           3.3         (12.1 )     (7.1 )  
    Gross profit     23.3           24.2         (3.7 )     1.2    
    Gross profit rate     13.7     %     13.8     %   (0.1 ) pts.      
    PT                            
    Revenue from services   $ 18.3         $ 20.8         (12.2 ) %   (7.0 ) %
    Staffing fee-based income included in revenue from services     2.8           3.1         (9.7 )     (3.3 )  
    Gross profit     5.0           5.6         (10.7 )     (4.9 )  
    Gross profit rate     27.4     %     26.9     %   0.5   pts.      
  Total APAC                      
    Revenue from services   $ 189.0         $ 196.7         (3.9 ) %   2.1   %
    Staffing fee-based income included in revenue from services     5.7           6.4         (10.9 )     (5.2 )  
    Gross profit     28.3           29.8         (5.0 )     0.1    
    Total SG&A expenses     22.7           24.4         (7.0 )     (1.4 )  
    Earnings from operations     5.6           5.4         3.8          
                             
    Gross profit rate     15.0     %     15.2     %   (0.2 ) pts.      
    Expense rates:                            
      % of revenue     12.0           12.4         (0.4 )        
      % of gross profit     80.3           82.0         (1.7 )        
    Return on sales     3.0           2.7         0.3          
                             
OCG                        
    Revenue from services   $ 342.1         $ 314.5         8.8   %   9.5   %
    Gross profit     85.1           71.2         19.6       20.6    
    Total SG&A expenses     74.9           64.9         15.5       16.7    
    Earnings from operations     10.2           6.3         61.3          
                             
    Gross profit rate     24.9     %     22.6     %   2.3   pts.      
    Expense rates:                            
      % of revenue     21.9           20.6         1.3          
      % of gross profit     88.0           91.1         (3.1 )        
    Return on sales     3.0           2.0         1.0          
                             
Corporate                        
    Total SG&A expenses   $ 49.2         $ 38.2         28.8   %      
 
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
                     
      July 3, 2016     Jan. 3, 2016     June 28, 2015  
Current Assets                    
  Cash and equivalents   $ 33.3   $   42.2     $ 48.7    
  Trade accounts receivable, less allowances of                    
  $11.0, $10.5 and $9.4, respectively     1,079.8       1,139.1       1,152.3    
  Prepaid expenses and other current assets     47.8       45.8       50.6    
  Deferred taxes     -       -       35.8    
  Current assets held for sale     94.0       -       -    
  Total current assets     1,254.9       1,227.1       1,287.4    
                     
Noncurrent Assets                    
  Property and equipment, net     81.5       88.9       88.6    
  Noncurrent deferred taxes     197.0       189.3       144.6    
  Goodwill, net     88.3       90.3       90.3    
  Other assets     368.4       344.0       321.7    
  Total noncurrent assets     735.2       712.5       645.2    
                     
Total Assets   $ 1,990.1   $   1,939.6     $ 1,932.6    
                     
Current Liabilities                    
  Short-term borrowings   $ 26.9   $   55.5     $ 89.9    
  Accounts payable and accrued liabilities     403.7       405.5       380.4    
  Accrued payroll and related taxes     259.2       268.1       296.5    
  Accrued insurance     27.1       26.7       27.1    
  Income and other taxes     50.9       60.0       62.8    
  Current liabilities held for sale     48.0       -       -    
  Total current liabilities     815.8       815.8       856.7    
                     
Noncurrent Liabilities                    
  Accrued insurance     41.1       40.0       44.3    
  Accrued retirement benefits     148.5       141.0       146.5    
  Other long-term liabilities     50.6       47.4       40.6    
  Total noncurrent liabilities     240.2       228.4       231.4    
                     
Stockholders' Equity                    
  Common stock     40.1       40.1       40.1    
  Treasury stock     (42.1 )     (44.3 )     (49.0 )  
  Paid-in capital     28.1       25.4       27.5    
  Earnings invested in the business     828.8       813.5       774.1    
  Accumulated other comprehensive income     79.2       60.7       51.8    
  Total stockholders' equity     934.1       895.4       844.5    
                     
Total Liabilities and Stockholders' Equity   $ 1,990.1   $   1,939.6     $ 1,932.6    
                     
                     
STATISTICS:                    
  Working Capital (including net assets held for sale)   $ 439.1   $   411.3     $ 430.7    
  Current Ratio     1.5       1.5       1.5    
  Debt-to-capital %     2.8   %   5.8 %     9.6   %
  Global Days Sales Outstanding     53       54       56    
 
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015
(UNAUDITED)
(In millions of dollars)
       
      2016     2015
Cash flows from operating activities:            
  Net earnings   $ 20.1     $ 10.5  
  Noncash adjustments:            
    Depreciation and amortization     10.9       11.0  
    Provision for bad debts     3.5       2.1  
    Stock-based compensation     4.5       3.1  
    Other, net     (0.7 )     (0.3 )
  Changes in operating assets and liabilities     2.9       (52.9 )
             
    Net cash from (used in) operating activities     41.2       (26.5 )
             
Cash flows from investing activities:            
  Capital expenditures     (4.3 )     (6.7 )
  Investment in equity affiliate     -       (0.5 )
  Other investing activities     (0.4 )     (0.1 )
             
    Net cash used in investing activities     (4.7 )     (7.3 )
             
Cash flows from financing activities:            
  Net change in short-term borrowings     (29.1 )     (1.4 )
  Dividend payments     (4.8 )     (3.8 )
  Other financing activities     0.2       -  
             
    Net cash used in financing activities     (33.7 )     (5.2 )
             
Effect of exchange rates on cash and equivalents     6.4       4.6  
             
Net change in cash and equivalents     9.2       (34.4 )
Less: cash balance included in current assets held for sale     (18.1 )     -  
Cash and equivalents at beginning of period     42.2       83.1  
             
             
Cash and equivalents at end of period   $ 33.3     $ 48.7  
             
 
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                         
      Second Quarter (Commercial, PT and OCG)  
                         
                %     CC %  
      2016     2015   Change     Change  
                         
Americas                        
  United States   $ 930.8   $ 923.6   0.8   %   0.8   %
  Canada     35.8     41.6   (14.1 )     (10.6 )  
  Mexico     25.4     32.0   (20.2 )     (5.5 )  
  Puerto Rico     22.5     26.6   (15.3 )     (15.3 )  
  Brazil     10.2     9.9   3.8       20.6    
Total Americas     1,024.7     1,033.7   (0.9 )     (0.1 )  
                         
EMEA                        
  France     61.3     60.9   0.7       (1.2 )  
  Switzerland     54.6     54.6   (0.1 )     3.0    
  Portugal     38.7     33.9   14.5       12.1    
  United Kingdom     23.1     27.1   (15.0 )     (9.2 )  
  Russia     16.6     22.2   (25.3 )     (6.8 )  
  Germany     15.7     14.3   9.2       7.0    
  Italy     15.1     13.0   16.0       13.9    
  Norway     8.4     10.0   (15.6 )     (10.0 )  
  Other     14.8     10.3   44.3       42.2    
Total EMEA     248.3     246.3   0.8       2.9    
                         
APAC                        
  Singapore     33.0     33.0   0.2       1.3    
  Australia     32.1     32.9   (2.3 )     2.0    
  Malaysia     14.5     15.9   (9.6 )     (0.8 )  
  New Zealand     9.5     10.3   (7.7 )     (1.9 )  
  Other     13.4     12.9   3.7       8.6    
Total APAC     102.5     105.0   (2.4 )     1.8    
                         
Total Kelly Services, Inc.   $ 1,375.5   $ 1,385.0   (0.7 ) %   0.6   %
                         
 
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                         
      June Year to Date (Commercial, PT and OCG)  
                         
                %     CC %  
      2016     2015   Change     Change  
                         
Americas                        
  United States   $ 1,865.5   $ 1,806.6   3.3   %   3.3   %
  Canada     70.3     84.3   (16.6 )     (10.6 )  
  Mexico     52.0     63.9   (18.5 )     (2.6 )  
  Puerto Rico     45.0     51.4   (12.5 )     (12.5 )  
  Brazil     20.2     23.8   (14.9 )     11.7    
Total Americas     2,053.0     2,030.0   1.1       2.2    
                         
EMEA                        
  France     117.8     117.3   0.5       0.6    
  Switzerland     101.2     102.7   (1.5 )     2.0    
  Portugal     72.4     65.2   11.1       11.2    
  United Kingdom     46.7     50.7   (8.1 )     (2.1 )  
  Germany     31.1     27.7   12.1       12.3    
  Russia     30.6     40.4   (24.3 )     (7.8 )  
  Italy     28.5     25.5   11.6       11.5    
  Norway     16.0     19.4   (17.1 )     (9.6 )  
  Other     28.5     21.3   33.9       34.6    
Total EMEA     472.8     470.2   0.5       3.8    
                         
APAC                        
  Singapore     64.8     64.3   0.8       2.9    
  Australia     60.6     63.3   (4.3 )     2.0    
  Malaysia     27.7     31.4   (11.9 )     (0.9 )  
  New Zealand     19.2     20.8   (7.8 )     1.3    
  Other     26.5     25.6   3.6       10.7    
Total APAC     198.8     205.4   (3.2 )     2.9    
                         
Total Kelly Services, Inc.   $ 2,724.6   $ 2,705.6   0.7   %   2.5   %
                         
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015
(UNAUDITED)
(In millions of dollars except per share data)
                               
      2016     2015      
      As Reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Reported Earnings   % Change  
                               
Revenue from services   $ 1,375.5   $ -     $ 1,375.5   $ 1,385.0   (0.7 ) %
                               
Cost of services     1,145.0     -       1,145.0     1,162.7   (1.5 )  
                               
Gross profit     230.5     -       230.5     222.3   3.7    
                               
SG&A expenses     220.6     (3.4 )     217.2     210.8   3.0    
                               
Earnings from operations     9.9     3.4       13.3     11.5   15.9    
                               
Other expense, net     0.2     -       0.2     1.0   (74.8 )  
                               
Earnings before taxes     9.7     3.4       13.1     10.5   24.4    
                               
Inc. tax expense (benefit)     0.8     0.9       1.7     3.7   (55.5 )  
                               
Net earnings   $ 8.9   $ 2.5     $ 11.4   $ 6.8   68.1   %
                               
Earnings per share:                              
  Basic   $ 0.23   $ 0.07     $ 0.29   $ 0.18   61.1   %
  Diluted   $ 0.23   $ 0.07     $ 0.29   $ 0.18   61.1   %
                               
                           
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 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015
(UNAUDITED)
(In millions of dollars except per share data)
                               
      2016     2015      
      As Reported     Restructuring Charges
(Note 1)
    Adjusted Earnings     Reported Earnings   % Change  
                               
Revenue from services   $ 2,724.6   $ -     $ 2,724.6   $ 2,705.6   0.7   %
                               
Cost of services     2,261.4     -       2,261.4     2,263.0   (0.1 )  
                               
Gross profit     463.2     -       463.2     442.6   4.6    
                               
SG&A expenses     438.6     (3.4 )     435.2     419.0   3.8    
                               
Earnings from operations     24.6     3.4       28.0     23.6   18.8    
                               
Other expense, net     1.0     -       1.0     3.5   (70.9 )  
                               
Earnings before taxes     23.6     3.4       27.0     20.1   34.4    
                               
Inc. tax expense (benefit)     3.5     0.9       4.4     9.6   (54.5 )  
                               
Net earnings   $ 20.1   $ 2.5     $ 22.6   $ 10.5   115.0   %
                               
Earnings per share:                              
  Basic   $ 0.52   $ 0.07     $ 0.58   $ 0.27   114.8   %
  Diluted   $ 0.51   $ 0.07     $ 0.58   $ 0.27   114.8   %
                               
                               
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 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of restructuring charges 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 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.

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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