Kelly Services(R) Reports Third Quarter 2016 Earnings and Announces EPS

November 7, 2016

TROY, MI -- (Marketwired) -- 11/07/16 --

Third Quarter Highlights

APAC Joint Venture completed
Total Revenue declines 8%; down 1% adjusted for APAC JV transaction
Operating earnings increase 13%; up 29% adjusted for APAC JV transaction
Earnings per share of $2.06 (Adjusted EPS of $0.44) versus $0.23 (Adjusted EPS of $0.19), a 132% increase 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 2016.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2016 totaled $1.2 billion, a 7.6% decrease (a 7.1% decrease on a constant currency basis) compared to the corresponding quarter of 2015. During the third quarter of 2016, Kelly transferred its APAC staffing operations to the TS Kelly Asia Pacific joint venture and recorded a gain of $87.2 million. Kelly retains a 49% ownership interest in the newly formed joint venture. Excluding the APAC staffing operations from the third quarter of 2015, adjusted 2016 third quarter revenue was down 0.7% year over year (a 0.1% decrease on a constant currency basis).

Earnings from operations for the third quarter of 2016 totaled $18.8 million, compared to $16.6 million reported for the third quarter of 2015. Excluding the APAC staffing operations from the third quarter of 2015, adjusted earnings from operations were $14.5 million; therefore, Kelly's third quarter 2016 earnings increased 29% year-over-year on an adjusted basis.

Diluted earnings per share in the third quarter of 2016 were $2.06 compared to $0.23 per share in the third quarter of 2015. Excluding the gain from 2016 third quarter results and APAC staffing operations from 2015 third quarter results, adjusted earnings per share were $0.44 in the third quarter of 2016 and $0.19 in the third quarter of 2015.

Commenting on the third quarter, Camden stated, "Sorting through the financial complexity around the JV transaction, Kelly's third quarter performance reflects good operating leverage on basically flat revenue. We increased our gross profit rate, reduced expenses, and turned in healthy operating earnings and solid returns for our shareholders. Our U.S. Staffing segment showed competitive strength and agility in an uncertain economic environment, and our OCG business delivered year-over-year GP improvement. With the APAC JV now firmly in place, we are operating as a more focused, disciplined company relentlessly committed to profitability."

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 7 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
www.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, 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 including TS Kelly Asia Pacific, 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, 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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)
													%		CC %
			2016			2015			Change				Change		Change

Revenue from services			$	1,247.8		$	1,351.0		$	(103.2	)		(7.6	)%	(7.1	)%

Cost of services				1,032.7			1,122.8			(90.1	)		(8.0	)

Gross profit				215.1			228.2			(13.1	)		(5.8	)	(5.3	)

Selling, general and administrative expenses				196.3			211.6			(15.3	)		(7.3	)	(6.9	)

Earnings from operations				18.8			16.6			2.2			13.1

Gain on investment in TS Kelly Asia Pacific				87.2			-			87.2			NM

Other expense, net				(0.4	)		-			(0.4	)		NM

Earnings before taxes				105.6			16.6			89.0			NM

Income tax expense				24.7			7.5			17.2			230.6

Net earnings			$	80.9		$	9.1		$	71.8			NM	%

Basic earnings per share			$	2.08		$	0.23		$	1.85			NM	%
Diluted earnings per share			$	2.06		$	0.23		$	1.83			NM	%


STATISTICS:

Gross profit rate				17.2	%		16.9	%		0.3		pts.

Selling, general and administrative expenses:
		% of revenue		15.7			15.7			-
		% of gross profit		91.3			92.7			(1.4	)

% Return:
	Earnings from operations			1.5			1.2			0.3
	Earnings before taxes			8.5			1.2			7.3
	Net earnings			6.5			0.7			5.8

Effective income tax rate				23.4	%		45.2	%		(21.8	)	pts.

Average number of shares outstanding (millions):
		Basic		38.1			37.9
		Diluted		38.4			37.9

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 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)
													%		CC %
			2016			2015			Change				Change		Change

Revenue from services			$	3,972.4		$	4,056.6		$	(84.2	)		(2.1	)%	(0.7	)%

Cost of services				3,294.1			3,385.8			(91.7	)		(2.7	)

Gross profit				678.3			670.8			7.5			1.1		2.3

Selling, general and administrative expenses				634.9			630.6			4.3			0.7		1.8

Earnings from operations				43.4			40.2			3.2			7.9

Gain on investment in TS Kelly Asia Pacific				87.2			-			87.2			NM

Other expense, net				(1.4	)		(3.5	)		2.1			61.2

Earnings before taxes				129.2			36.7			92.5			252.3

Income tax expense				28.2			17.1			11.1			65.4

Net earnings			$	101.0		$	19.6		$	81.4			414.7	%

Basic earnings per share			$	2.59		$	0.51		$	2.08			NM	%
Diluted earnings per share			$	2.58		$	0.51		$	2.07			NM	%


STATISTICS:

Gross profit rate				17.1	%		16.5	%		0.6		pts.

Selling, general and administrative expenses:
		% of revenue		16.0			15.5			0.5
		% of gross profit		93.6			94.0			(0.4	)

% Return:
	Earnings from operations			1.1			1.0			0.1
	Earnings before taxes			3.3			0.9			2.4
	Net earnings			2.5			0.5			2.0

Effective income tax rate				21.8	%		46.5	%		(24.7	)	pts.

Average number of shares outstanding (millions):
		Basic		38.0			37.8
		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
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				Third Quarter

										%			CC %
				2016			2015			Change			Change
AMERICAS
	Commercial
		Revenue from services		$	603.7		$	615.5		(1.9	)%		(1.3	)%
		Staffing fee-based income included in revenue from services			4.2			3.8		10.0			10.1
		Gross profit			94.9			96.6		(1.8	)		(1.3	)
		Gross profit rate			15.7	%		15.7	%	-		pts.
	PT
		Revenue from services		$	239.6		$	242.8		(1.3	)%		(1.3	)%
		Staffing fee-based income included in revenue from services			4.4			4.7		(6.9	)		(6.9	)
		Gross profit			41.4			41.0		1.0			1.0
		Gross profit rate			17.3	%		16.9	%	0.4		pts.
	Total Americas
		Revenue from services		$	843.3		$	858.3		(1.8	)%		(1.3	)%
		Staffing fee-based income included in revenue from services			8.6			8.5		0.6			0.7
		Gross profit			136.3			137.6		(1.0	)		(0.6	)
		Total SG&A expenses			112.2			113.7		(1.4	)		(1.2	)
		Earnings from operations			24.1			23.9		1.0

		Gross profit rate			16.2	%		16.0	%	0.2		pts.
		Expense rates:
			% of revenue		13.3			13.2		0.1
			% of gross profit		82.3			82.7		(0.4	)
		Return on sales			2.9			2.8		0.1

EMEA
	Commercial
		Revenue from services		$	197.6		$	199.0		(0.8	)%		1.0	%
		Staffing fee-based income included in revenue from services			3.3			3.2		5.0			6.7
		Gross profit			26.8			27.7		(3.5	)		(2.5	)
		Gross profit rate			13.6	%		13.9	%	(0.3	)	pts.
	PT
		Revenue from services		$	41.7		$	43.6		(4.3	)%		(2.9	)%
		Staffing fee-based income included in revenue from services			2.2			2.6		(16.1	)		(14.4	)
		Gross profit			8.2			9.4		(11.7	)		(10.6	)
		Gross profit rate			19.9	%		21.6	%	(1.7	)	pts.
	Total EMEA
		Revenue from services		$	239.3		$	242.6		(1.4	)%		0.3	%
		Staffing fee-based income included in revenue from services			5.5			5.8		(4.6	)		(2.9	)
		Gross profit			35.0			37.1		(5.6	)		(4.6	)
		Total SG&A expenses			30.6			31.8		(3.5	)		(2.0	)
		Earnings from operations			4.4			5.3		(17.8	)

		Gross profit rate			14.7	%		15.3	%	(0.6	)	pts.
		Expense rates:
			% of revenue		12.8			13.1		(0.3	)
			% of gross profit		87.3			85.4		1.9
		Return on sales			1.9			2.2		(0.3	)


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

			Third Quarter

									%			CC %
			2016			2015			Change			Change
OCG
	Revenue from services		$	178.2		$	171.8		3.7	%		3.9	%
	Gross profit			45.0			41.4		8.5			8.9
	Total SG&A expenses			37.3			33.2		12.3			12.8
	Earnings from operations			7.7			8.2		(7.0	)

	Gross profit rate			25.2	%		24.1	%	1.1		pts.
	Expense rates:
		% of revenue		20.9			19.3		1.6
		% of gross profit		83.0			80.2		2.8
	Return on sales			4.3			4.8		(0.5	)

Corporate
	Total SG&A expenses		$	17.4		$	22.9		(24.4	)%


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				September Year to Date

										%			CC %
				2016			2015			Change			Change
AMERICAS
	Commercial
		Revenue from services		$	1,887.6		$	1,908.2		(1.1	)%		0.2	%
		Staffing fee-based income included in revenue from services			11.4			10.8		5.5			6.1
		Gross profit			295.9			290.3		1.9			2.9
		Gross profit rate			15.7	%		15.2	%	0.5		pts.
	PT
		Revenue from services		$	718.3		$	721.8		(0.5	)%		(0.4	)%
		Staffing fee-based income included in revenue from services			13.7			13.1		4.4			5.2
		Gross profit			124.3			122.0		1.8			2.0
		Gross profit rate			17.3	%		16.9	%	0.4		pts.
	Total Americas
		Revenue from services		$	2,605.9		$	2,630.0		(0.9	)%		-	%
		Staffing fee-based income included in revenue from services			25.1			23.9		4.9			5.6
		Gross profit			420.2			412.3		1.9			2.7
		SG&A expenses excluding restructuring charges			340.5			339.8		0.2			0.9
		Restructuring charges			2.2			-		NM
		Total SG&A expenses			342.7			339.8		0.8			1.5
		Earnings from operations			77.5			72.5		7.0
		Earnings from operations excluding restructuring charges			79.7			72.5		10.0

		Gross profit rate			16.1	%		15.7	%	0.4		pts.
		Expense rates (excluding restructuring charges):
			% of revenue		13.1			12.9		0.2
			% of gross profit		81.0			82.4		(1.4	)
		Return on sales (excluding restructuring charges)			3.1			2.8		0.3

EMEA
	Commercial
		Revenue from services		$	570.2		$	573.0		(0.5	)%		2.3	%
		Staffing fee-based income included in revenue from services			10.4			9.9		6.0			10.0
		Gross profit			77.5			79.1		(2.1	)		0.2
		Gross profit rate			13.6	%		13.8	%	(0.2	)	pts.
	PT
		Revenue from services		$	126.4		$	126.8		(0.3	)%		2.1	%
		Staffing fee-based income included in revenue from services			7.3			7.7		(5.8	)		(2.1	)
		Gross profit			25.6			27.2		(5.7	)		(3.2	)
		Gross profit rate			20.3	%		21.5	%	(1.2	)	pts.
	Total EMEA
		Revenue from services		$	696.6		$	699.8		(0.5	)%		2.2	%
		Staffing fee-based income included in revenue from services			17.7			17.6		0.8			4.7
		Gross profit			103.1			106.3		(3.0	)		(0.6	)
		SG&A expenses excluding restructuring charges			92.9			99.5		(6.5	)		(3.8	)
		Restructuring charges			1.2			-		NM
		Total SG&A expenses			94.1			99.5		(5.3	)		(2.7	)
		Earnings from operations			9.0			6.8		30.5
		Earnings from operations excluding restructuring charges			10.2			6.8		46.7

		Gross profit rate			14.8	%		15.2	%	(0.4	)	pts.
		Expense rates (excluding restructuring charges):
			% of revenue		13.4			14.2		(0.8	)
			% of gross profit		90.1			93.5		(3.4	)
		Return on sales (excluding restructuring charges)			1.5			1.0		0.5


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

			September Year to Date

									%			CC %
			2016			2015			Change			Change
OCG
	Revenue from services		$	520.3		$	486.3		7.0	%		7.5	%
	Gross profit			130.1			112.6		15.5			16.3
	Total SG&A expenses			112.2			98.1		14.4			15.3
	Earnings from operations			17.9			14.5		22.8

	Gross profit rate			25.0	%		23.1	%	1.9		pts.
	Expense rates:
		% of revenue		21.6			20.2		1.4
		% of gross profit		86.3			87.1		(0.8	)
	Return on sales			3.4			3.0		0.4

Corporate
	Total SG&A expenses		$	66.6		$	61.1		8.8	%


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)

		October 2, 2016			Jan. 3, 2016			September 27, 2015
Current Assets
	Cash and equivalents	$	27.6		$	42.2		$	44.9
	Trade accounts receivable, less allowances of $11.1, $10.5 and $9.7, respectively		1,125.8			1,139.1			1,160.3
	Prepaid expenses and other current assets		53.0			45.8			49.0
	Deferred taxes		-			-			35.0
Total current assets			1,206.4			1,227.1			1,289.2

Noncurrent Assets
	Property and equipment, net		80.5			88.9			88.3
	Noncurrent deferred taxes		179.8			189.3			140.8
	Goodwill, net		88.4			90.3			90.3
	Investment in equity affiliate		113.6			9.4			9.4
	Other assets		370.6			334.6			331.9
Total noncurrent assets			832.9			712.5			660.7

Total Assets		$	2,039.3		$	1,939.6		$	1,949.9

Current Liabilities
	Short-term borrowings	$	8.7		$	55.5		$	76.8
	Accounts payable and accrued liabilities		408.7			405.5			385.2
	Accrued payroll and related taxes		276.9			268.1			312.8
	Accrued insurance		26.8			26.7			25.9
	Income and other taxes		56.9			60.0			59.5
Total current liabilities			778.0			815.8			860.2

Noncurrent Liabilities
	Accrued insurance		40.2			40.0			42.2
	Accrued retirement benefits		153.9			141.0			139.5
	Other long-term liabilities		50.7			47.4			48.4
Total noncurrent liabilities			244.8			228.4			230.1

Stockholders' Equity
	Common stock		40.1			40.1			40.1
	Treasury stock		(39.1	)		(44.3	)		(46.9	)
	Paid-in capital		26.2			25.4			26.7
	Earnings invested in the business		906.8			813.5			781.3
	Accumulated other comprehensive income		82.5			60.7			58.4
Total stockholders' equity			1,016.5			895.4			859.6

Total Liabilities and Stockholders' Equity		$	2,039.3		$	1,939.6		$	1,949.9


STATISTICS:
	Working Capital	$	428.4		$	411.3		$	429.0
	Current Ratio		1.6			1.5			1.5
	Debt-to-capital %		0.9	%		5.8	%		8.2	%
	Global Days Sales Outstanding		56			54			57


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars)

			2016			2015
Cash flows from operating activities:
	Net earnings		$	101.0		$	19.6
	Noncash adjustments:
		Depreciation and amortization		16.0			16.6
		Provision for bad debts		6.1			3.3
		Stock-based compensation		5.5			4.6
		Gain on investment in TS Kelly Asia Pacific equity affiliate		(87.2	)		-
		Other, net		(2.2	)		(0.7	)
	Changes in operating assets and liabilities			(13.1	)		(44.9	)

		Net cash from (used in) operating activities		26.1			(1.5	)

Cash flows from investing activities:
	Capital expenditures			(7.8	)		(12.3	)
	Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate			18.8			-
	Investment in TS Kelly equity affiliate			-			(0.5	)
	Other investing activities			(0.4	)		(0.4	)

		Net cash from (used in) investing activities		10.6			(13.2	)

Cash flows from financing activities:
	Net change in short-term borrowings			(47.8	)		(13.8	)
	Dividend payments			(7.7	)		(5.7	)
	Other financing activities			0.4			0.2

		Net cash used in financing activities		(55.1	)		(19.3	)

Effect of exchange rates on cash and equivalents				3.8			(4.2	)

Net change in cash and equivalents				(14.6	)		(38.2	)
Cash and equivalents at beginning of period				42.2			83.1


Cash and equivalents at end of period			$	27.6		$	44.9


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)

		Third Quarter (Commercial, PT and OCG)

						%		CC %
		2016		2015		Change		Change

Americas
	United States	$	900.3	$	899.8	0.1	%	0.1	%
	Canada		34.9		37.9	(7.8	)	(8.5	)
	Mexico		27.6		31.3	(12.3	)	0.4
	Puerto Rico		20.9		23.8	(12.2	)	(12.2	)
	Brazil		13.3		10.4	27.9		28.1
Total Americas			997.0		1,003.2	(0.6	)	(0.3	)

EMEA
	France		60.8		63.1	(3.7	)	(4.1	)
	Switzerland		55.0		58.0	(5.2	)	(3.9	)
	Portugal		39.2		33.5	16.9		16.5
	United Kingdom		19.5		27.7	(29.3	)	(16.4	)
	Russia		18.4		17.0	7.9		11.2
	Germany		14.2		15.4	(7.7	)	(8.1	)
	Italy		13.6		14.0	(2.8	)	(3.1	)
	Norway		8.4		10.1	(17.3	)	(15.9	)
	Other		17.4		11.5	50.8		50.3
Total EMEA			246.5		250.3	(1.5	)	0.2

APAC
	Australia		3.6		28.8	(87.5	)	(88.0	)
	Singapore		0.1		32.6	(99.7	)	(99.7	)
	New Zealand		0.1		9.4	(99.1	)	(99.2	)
	Malaysia		0.1		14.0	(99.5	)	(99.5	)
	Other		0.4		12.7	(96.5	)	(96.4	)
Total APAC			4.3		97.5	(95.6	)	(95.7	)

Total Kelly Services, Inc.		$	1,247.8	$	1,351.0	(7.6	)%	(7.1	)%


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)

		September Year to Date (Commercial, PT and OCG)

						%		CC %
		2016		2015		Change		Change

Americas
	United States	$	2,765.8	$	2,706.4	2.2	%	2.2	%
	Canada		105.2		122.2	(13.9	)	(9.9	)
	Mexico		79.6		95.2	(16.4	)	(1.6	)
	Puerto Rico		65.9		75.2	(12.4	)	(12.4	)
	Brazil		33.5		34.2	(1.8	)	16.7
Total Americas			3,050.0		3,033.2	0.6		1.4

EMEA
	France		178.6		180.4	(1.0	)	(1.0	)
	Switzerland		156.2		160.7	(2.8	)	(0.1	)
	Portugal		111.6		98.7	13.1		13.0
	United Kingdom		66.2		78.4	(15.5	)	(7.2	)
	Russia		49.0		57.4	(14.8	)	(2.2	)
	Germany		45.3		43.1	5.0		5.0
	Italy		42.1		39.5	6.5		6.3
	Norway		24.4		29.5	(17.2	)	(11.8	)
	Other		45.9		32.8	39.8		40.1
Total EMEA			719.3		720.5	(0.2	)	2.5

APAC
	Singapore		64.9		96.9	(33.0	)	(31.6	)
	Australia		64.2		92.1	(30.3	)	(26.2	)
	Malaysia		27.8		45.4	(38.9	)	(31.4	)
	New Zealand		19.3		30.2	(36.1	)	(29.8	)
	Other		26.9		38.3	(29.5	)	(24.7	)
Total APAC			203.1		302.9	(32.9	)	(28.9	)

Total Kelly Services, Inc.		$	3,972.4	$	4,056.6	(2.1	)%	(0.7	)%


KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)

		2016									2015
		As Reported			Gain on Investment in Equity Affiliate (Note 1)			Adjusted Earnings			Adjusted Earnings		% Change		CC % Change

Revenue from services		$	1,247.8		$	-		$	1,247.8		$	1,257.0	(0.7	)%	(0.1	)%

Cost of services			1,032.7			-			1,032.7			1,042.6	(1.0	)

Gross profit			215.1			-			215.1			214.4	0.3		0.8

SG&A expenses			196.3			-			196.3			199.9	(1.8	)	(1.4	)

Earnings from operations			18.8			-			18.8			14.5	29.4

Gain on investment in TS Kelly Asia Pacific			87.2			(87.2	)		-			-	-

Other (expense) income, net			(0.4	)		-			(0.4	)		0.1	NM

Earnings before taxes			105.6			(87.2	)		18.4			14.6	26.7

Inc. tax expense (benefit)			24.7			(23.5	)		1.2			7.1	(83.1	)

Net earnings		$	80.9		$	(63.7	)	$	17.2		$	7.5	130.7	%

Earnings per share:
	Basic	$	2.08		$	(1.63	)	$	0.44		$	0.19	131.6	%
	Diluted	$	2.06		$	(1.62	)	$	0.44		$	0.19	131.6	%

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 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)

		2015
		As Reported		Disposal of APAC Businesses (Note 2)			Adjusted Earnings

Revenue from services		$	1,351.0	$	(94.0	)	$	1,257.0

Cost of services			1,122.8		(80.2	)		1,042.6

Gross profit			228.2		(13.8	)		214.4

SG&A expenses			211.6		(11.7	)		199.9

Earnings from operations			16.6		(2.1	)		14.5

Other income, net			-		0.1			0.1

Earnings before taxes			16.6		(2.0	)		14.6

Inc. tax expense (benefit)			7.5		(0.4	)		7.1

Net earnings		$	9.1	$	(1.6	)	$	7.5

Earnings per share:
	Basic	$	0.23	$	(0.04	)	$	0.19
	Diluted	$	0.23	$	(0.04	)	$	0.19

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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)

		2016												2015
		As Reported			Gain on Investment in Equity Affiliate (Note 1)			Restructuring Charges (Note 3)			Adjusted Earnings			Adjusted Earnings			% Change		CC % Change

Revenue from services		$	3,972.4		$	-		$	-		$	3,972.4		$	3,962.6		0.2	%	1.7	%

Cost of services			3,294.1			-			-			3,294.1			3,305.6		(0.3	)

Gross profit			678.3			-			-			678.3			657.0		3.2		4.5

SG&A expenses			634.9			-			(3.4	)		631.5			618.9		2.0		3.2

Earnings from operations			43.4			-			3.4			46.8			38.1		22.8

Gain on investment in TS Kelly Asia Pacific			87.2			(87.2	)		-			-			-		-

Other expense, net			(1.4	)		-			-			(1.4	)		(3.4	)	60.3

Earnings before taxes			129.2			(87.2	)		3.4			45.4			34.7		31.1

Inc. tax expense (benefit)			28.2			(23.5	)		0.9			5.6			16.7		(66.6	)

Net earnings		$	101.0		$	(63.7	)	$	2.5		$	39.8		$	18.0		121.5	%

Earnings per share:
	Basic	$	2.59		$	(1.63	)	$	0.07		$	1.02		$	0.46		121.7	%
	Diluted	$	2.58		$	(1.63	)	$	0.07		$	1.02		$	0.46		121.7	%

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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)

		2015
		As Reported			Disposal of APAC Businesses (Note 2)			Adjusted Earnings

Revenue from services		$	4,056.6		$	(94.0	)	$	3,962.6

Cost of services			3,385.8			(80.2	)		3,305.6

Gross profit			670.8			(13.8	)		657.0

SG&A expenses			630.6			(11.7	)		618.9

Earnings from operations			40.2			(2.1	)		38.1

Other (expense) income, net			(3.5	)		0.1			(3.4	)

Earnings before taxes			36.7			(2.0	)		34.7

Inc. tax expense (benefit)			17.1			(0.4	)		16.7

Net earnings		$	19.6		$	(1.6	)	$	18.0

Earnings per share:
	Basic	$	0.51		$	(0.04	)	$	0.46
	Diluted	$	0.51		$	(0.04	)	$	0.46

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 gain on investment in equity affiliate, 2016 restructuring charges and disposal of APAC businesses is useful to understand the Company's fiscal 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.


	(1) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in TS Kelly Asia Pacific.

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

	(3) Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.

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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Press Release Details

Kelly Services(R) Reports Third Quarter 2016 Earnings and Announces EPS