Kelly Services® Reports 3rd Quarter Results

06 Nov '13

TROY, MI -- (Marketwired) -- 11/06/13 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2013.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2013 totaled $1.3 billion, a 0.6% decrease compared to the corresponding quarter of 2012.

Earnings from operations for the third quarter of 2013 totaled $20.2 million. Included in the results of operations in the third quarter of 2013 are restructuring charges of $0.5 million. Excluding the restructuring charges, earnings from operations were $20.7 million in the third quarter of 2013, compared to earnings of $24.0 million last year.

Diluted earnings per share from continuing operations in the third quarter of 2013 were $0.49. Adjusted earnings per share were $0.51 in the third quarter of 2013 compared to $0.43 in the third quarter of 2012.

"We're pleased that our third quarter performance surpassed our expectations despite an erratic and lackluster economy," said Camden. "The Americas delivered a nice turnaround in fee performance and KellyOCG brought in strong revenue growth and outsized operating profits. Overall, our results continue to demonstrate that Kelly's strategy is responding to market demands for more holistic workforce solutions, access to skilled talent, and workforce models that help companies achieve their short- and long-term business goals."

Kelly also reported that on November 5, its board of directors declared a dividend of $0.05 per share. The dividend is payable December 6 to shareholders of record as of the close of business on November 18.

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 6, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:
U.S. 1800 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:
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, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, 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, unexpected changes in claim trends on workers' compensation and benefit plans, 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, 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 retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws), the net financial impact of the Patient Protection and Affordable Care Act on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, 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 provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter. Download The Talent Project, a free iPad® app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED SEPTEMBER 29, 2013 AND SEPTEMBER 30, 2012
(UNAUDITED)
(In millions of dollars except per share data)
2013 2012 Change % Change
Revenue from services $ 1,345.6 $ 1,354.2 $ (8.6 ) (0.6 )%
Cost of services 1,125.2 1,126.7 (1.5 ) (0.1 )
Gross profit 220.4 227.5 (7.1 ) (3.1 )
Selling, general and administrative expenses
200.2

203.5

(3.3
)
(1.6
)
Earnings from operations 20.2 24.0 (3.8 ) (15.8 )
Other expense, net 1.3 0.7 0.6 88.9
Earnings from continuing operations before taxes 18.9 23.3 (4.4 ) (19.0 )
Income tax expense 0.1 6.7 (6.6 ) (99.2 )
Earnings from continuing operations 18.8 16.6 2.2 13.6
Earnings from discontinued operations, net of tax - - - NM
Net earnings $ 18.8 $ 16.6 $ 2.2 13.5 %
Basic earnings per share on common stock
Earnings from continuing operations $ 0.49 $ 0.43 $ 0.06 14.0 %
Earnings from discontinued operations - - - NM
Net earnings 0.49 0.43 0.06 14.0
Diluted earnings per share on common stock
Earnings from continuing operations $ 0.49 $ 0.43 $ 0.06 14.0 %
Earnings from discontinued operations - - - NM
Net earnings 0.49 0.43 0.06 14.0
STATISTICS:
Gross profit rate 16.4 % 16.8 % (0.4 )pts.
Selling, general and administrative expenses:
% of revenue 14.9 15.0 (0.1 )
% of gross profit 90.8 89.4 1.4
% Return:
Earnings from operations 1.5 1.8 (0.3 )
Earnings from continuing operations before taxes 1.4 1.7 (0.3 )
Earnings from continuing operations 1.4 1.2 0.2
Net earnings 1.4 1.2 0.2
Effective income tax rate 0.3 % 28.9 % (28.6 )pts.
Average number of shares outstanding (millions):
Basic 37.4 37.1
Diluted 37.4 37.1
Shares adjusted for nonvested restricted awards (millions):
Basic 38.1 38.3
Diluted 38.1 38.3
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED SEPTEMBER 29, 2013 AND SEPTEMBER 30, 2012
(UNAUDITED)
(In millions of dollars except per share data)
2013 2012 Change % Change
Revenue from services $ 4,027.3 $ 4,075.1 $ (47.8 ) (1.2 )%
Cost of services 3,369.3 3,400.7 (31.4 ) (0.9 )
Gross profit 658.0 674.4 (16.4 ) (2.4 )
Selling, general and administrative expenses 612.6 611.9 0.7 0.1
Asset impairments 1.7 - 1.7 NM
Earnings from operations 43.7 62.5 (18.8 ) (30.0 )
Other expense, net 3.9 1.8 2.1 118.3
Earnings from continuing operations before taxes 39.8 60.7 (20.9 ) (34.4 )
Income tax (benefit) expense (1.9 ) 19.9 (21.8 ) (109.9 )
Earnings from continuing operations 41.7 40.8 0.9 2.4
Earnings from discontinued operations, net of tax - 0.4 (0.4 ) (99.8 )
Net earnings $ 41.7 $ 41.2 $ 0.5 1.3 %
Basic earnings per share on common stock
Earnings from continuing operations $ 1.09 $ 1.07 $ 0.02 1.9 %
Earnings from discontinued operations - 0.01 (0.01 ) (100.0 )
Net earnings 1.09 1.09 - -
Diluted earnings per share on common stock
Earnings from continuing operations $ 1.09 $ 1.07 $ 0.02 1.9 %
Earnings from discontinued operations - 0.01 (0.01 ) (100.0 )
Net earnings 1.09 1.09 - -
STATISTICS:
Gross profit rate 16.3 % 16.5 % (0.2 )pts.
Selling, general and administrative expenses:
% of revenue 15.2 15.0 0.2
% of gross profit 93.1 90.7 2.4
% Return:
Earnings from operations 1.1 1.5 (0.4 )
Earnings from continuing operations before taxes 1.0 1.5 (0.5 )
Earnings from continuing operations 1.0 1.0 0.0
Net earnings 1.0 1.0 0.0
Effective income tax rate (5.0 )% 32.8 % (37.8 )pts.
Average number of shares outstanding (millions):
Basic 37.2 37.0
Diluted 37.3 37.0
Shares adjusted for nonvested restricted awards (millions):
Basic 38.2 38.0
Diluted 38.2 38.0
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2013 2012 Change Change
AMERICAS
Commercial
Revenue from services (including fee-based income) $ 617.0 $ 642.2 (3.9 )% (3.5 )%
Fee-based income 4.1 4.4 (6.6 ) (5.2 )
Gross profit 86.8 96.4 (10.1 ) (9.6 )
Gross profit rate 14.1 % 15.0 % (0.9 )pts.
PT
Revenue from services (including fee-based income) $ 248.3 $ 261.6 (5.1 )% (5.0 )%
Fee-based income 4.3 3.7 17.2 17.5
Gross profit 40.9 40.9 0.2 0.3
Gross profit rate 16.5 % 15.6 % 0.9 pts.
Total Americas
Revenue from services (including fee-based income) $ 865.3 $ 903.8 (4.3 )% (3.9 )%
Fee-based income 8.4 8.1 4.3 5.2
Gross profit 127.7 137.3 (7.0 ) (6.7 )
Total SG&A expenses 101.5 101.5 - 0.4
Earnings from operations 26.2 35.8 (26.8 )
Gross profit rate 14.8 % 15.2 % (0.4 )pts.
Expense rates:
% of revenue 11.7 11.2 0.5
% of gross profit 79.5 73.9 5.6
Operating margin 3.0 4.0 (1.0 )
EMEA
Commercial
Revenue from services (including fee-based income) $ 224.5 $ 214.5 4.7 % 1.8 %
Fee-based income 4.8 5.2 (7.5 ) (8.0 )
Gross profit 33.9 33.4 1.6 (1.1 )
Gross profit rate 15.1 % 15.6 % (0.5 )pts.
PT
Revenue from services (including fee-based income) $ 45.1 $ 41.5 8.7 % 5.1 %
Fee-based income 3.9 4.1 (3.6 ) (4.8 )
Gross profit 10.8 10.5 2.5 (0.3 )
Gross profit rate 23.9 % 25.4 % (1.5 )pts.
Total EMEA
Revenue from services (including fee-based income) $ 269.6 $ 256.0 5.3 % 2.3 %
Fee-based income 8.7 9.3 (5.8 ) (6.6 )
Gross profit 44.7 43.9 1.8 (0.9 )
SG&A expenses excluding restructuring charges 40.0 40.0 -
Restructuring charges 0.3 - NM
Total SG&A expenses 40.3 40.0 0.9 (2.1 )
Earnings from operations 4.4 3.9 11.5
Earnings from operations excluding restructuring charges 4.7 3.9 19.7
Gross profit rate 16.6 % 17.1 % (0.5 )pts.
Expense rates (excluding restructuring charges):
% of revenue 14.8 15.6 (0.8 )
% of gross profit 89.5 91.1 (1.6 )
Operating margin (excluding restructuring charges) 1.7 1.5 0.2
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2013 2012 Change Change
APAC
Commercial
Revenue from services (including fee-based income) $ 87.6 $ 85.7 2.2 % 8.6 %
Fee-based income 2.6 2.9 (8.7 ) (1.2 )
Gross profit 12.7 12.8 (0.6 ) 6.1
Gross profit rate 14.5 % 14.9 % (0.4 )pts.
PT
Revenue from services (including fee-based income) $ 9.1 $ 14.3 (36.1) % (30.6 )%
Fee-based income 2.2 4.8 (54.0 ) (50.8 )
Gross profit 3.4 6.2 (44.3 ) (40.0 )
Gross profit rate 37.5 % 43.0 % (5.5 )pts.
Total APAC
Revenue from services (including fee-based income) $ 96.7 $ 100.0 (3.3 )% 3.0 %
Fee-based income 4.8 7.7 (37.1 ) (32.3 )
Gross profit 16.1 19.0 (14.8 ) (8.9 )
SG&A expenses excluding restructuring charges 14.5 18.8 (22.6 )
Restructuring charges 0.1 - NM
Total SG&A expenses 14.6 18.8 (22.3 ) (16.6 )
Earnings from operations 1.5 0.2 NM
Earnings from operations excluding restructuring charges 1.6 0.2 NM
Gross profit rate 16.7 % 18.9 % (2.2 )pts.
Expense rates (excluding restructuring charges):
% of revenue 15.1 18.8 (3.7 )
% of gross profit 90.2 99.3 (9.1 )
Operating margin (excluding restructuring charges) 1.6 0.1 1.5
OCG
Revenue from services (including fee-based income) $ 126.9 $ 104.7 21.2 % 21.7 %
Fee-based income 17.0 13.2 29.4 29.5
Gross profit 32.7 28.2 15.7 16.1
SG&A expenses excluding restructuring charges 26.7 24.2 10.4
Restructuring charges 0.1 - NM
Total SG&A expenses 26.8 24.2 10.7 10.9
Earnings from operations 5.9 4.0 45.4
Earnings from operations excluding restructuring charges 6.0 4.0 47.2
Gross profit rate 25.8 % 27.0 % (1.2 )pts.
Expense rates (excluding restructuring charges):
% of revenue 21.0 23.1 (2.1 )
% of gross profit 81.6 85.5 (3.9 )
Operating margin (excluding restructuring charges) 4.7 3.9 0.8
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
Constant
Currency
2013 2012 Change Change
AMERICAS
Commercial
Revenue from services (including fee-based income) $ 1,904.1 $ 1,980.1 (3.8 )% (3.6 )%
Fee-based income 12.0 12.1 (0.3 ) 0.7
Gross profit 274.5 292.1 (6.1 ) (5.8 )
Gross profit rate 14.4 % 14.8 % (0.4 )pts.
PT
Revenue from services (including fee-based income) $ 758.9 $ 774.1 (2.0 )% (2.0 )%
Fee-based income 12.3 11.3 8.3 8.5
Gross profit 122.4 120.8 1.3 1.3
Gross profit rate 16.1 % 15.6 % 0.5 pts.
Total Americas
Revenue from services (including fee-based income) $ 2,663.0 $ 2,754.2 (3.3 )% (3.2 )%
Fee-based income 24.3 23.4 3.9 4.5
Gross profit 396.9 412.9 (3.9 ) (3.7 )
Total SG&A expenses 314.5 303.4 3.6 3.9
Earnings from operations 82.4 109.5 (24.7 )
Gross profit rate 14.9 % 15.0 % (0.1 )pts.
Expense rates:
% of revenue 11.8 11.0 0.8
% of gross profit 79.2 73.5 5.7
Operating margin 3.1 4.0 (0.9 )
EMEA
Commercial
Revenue from services (including fee-based income) $ 645.3 $ 641.2 0.6 % (0.4 )%
Fee-based income 15.5 17.5 (11.7 ) (11.6 )
Gross profit 98.8 101.1 (2.2 ) (3.3 )
Gross profit rate 15.3 % 15.8 % (0.5 )pts.
PT
Revenue from services (including fee-based income) $ 131.7 $ 125.3 5.1 % 3.8 %
Fee-based income 11.8 13.1 (9.8 ) (10.0 )
Gross profit 32.0 32.7 (2.2 ) (3.1 )
Gross profit rate 24.3 % 26.1 % (1.8 )pts.
Total EMEA
Revenue from services (including fee-based income) $ 777.0 $ 766.5 1.4 % 0.3 %
Fee-based income 27.3 30.6 (10.9 ) (11.0 )
Gross profit 130.8 133.8 (2.2 ) (3.3 )
SG&A expenses excluding restructuring charges 122.1 126.4 (3.4 )
Restructuring charges 0.1 (2.2 ) 108.8
Total SG&A expenses 122.2 124.2 (1.6 ) (2.6 )
Earnings from operations 8.6 9.6 (10.5 )
Earnings from operations excluding restructuring charges 8.7 7.4 17.9
Gross profit rate 16.8 % 17.5 % (0.7 )pts.
Expense rates (excluding restructuring charges):
% of revenue 15.7 16.5 (0.8 )
% of gross profit 93.3 94.4 (1.1 )
Operating margin (excluding restructuring charges) 1.1 1.0 0.1
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
Constant
Currency
2013 2012 Change Change
APAC
Commercial
Revenue from services (including fee-based income) $ 256.8 $ 258.3 (0.6 )% 1.6 %
Fee-based income 8.2 9.3 (12.0 ) (9.0 )
Gross profit 36.8 38.4 (4.1 ) (1.8 )
Gross profit rate 14.3 % 14.9 % (0.6 )pts.
PT
Revenue from services (including fee-based income) $ 29.3 $ 39.9 (26.6 )% (24.1 )%
Fee-based income 6.7 12.9 (48.6 ) (47.1 )
Gross profit 10.5 16.7 (37.2 ) (35.3 )
Gross profit rate 35.7 % 41.8 % (6.1 )pts.
Total APAC
Revenue from services (including fee-based income) $ 286.1 $ 298.2 (4.1 )% (1.9 )%
Fee-based income 14.9 22.2 (33.2 ) (31.2 )
Gross profit 47.3 55.1 (14.1 ) (11.9 )
SG&A expenses excluding restructuring charges 45.5 57.5 (20.9 )
Restructuring charges 0.3 - NM
Total SG&A expenses 45.8 57.5 (20.4 ) (18.3 )
Earnings from operations 1.5 (2.4 ) NM
Earnings from operations excluding restructuring charges 1.8 (2.4 ) NM
Gross profit rate 16.5 % 18.5 % (2.0 )pts.
Expense rates (excluding restructuring charges):
% of revenue 15.9 19.3 (3.4 )
% of gross profit 96.2 104.4 (8.2 )
Operating margin (excluding restructuring charges) 0.6 (0.8 ) 1.4
OCG
Revenue from services (including fee-based income) $ 335.8 $ 282.8 18.8 % 19.0 %
Fee-based income 47.3 37.6 26.2 26.4
Gross profit 85.4 75.0 13.8 14.0
SG&A expenses excluding restructuring charges 77.7 69.6 11.6
Restructuring charges 0.9 - NM
Total SG&A expenses 78.6 69.6 12.8 12.9
Asset impairments 1.7 - NM
Earnings from operations 5.1 5.4 (3.8 )
Earnings from operations excluding restructuring charges 6.0 5.4 11.1
Gross profit rate 25.4 % 26.5 % (1.1 )pts.
Expense rates (excluding restructuring charges):
% of revenue 23.1 24.6 (1.5 )
% of gross profit 91.0 92.8 (1.8 )
Operating margin (excluding restructuring charges) 1.8 1.9 (0.1 )
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
Sept. 29, 2013 Dec. 30, 2012
Sept. 30, 2012
Current Assets
Cash and equivalents $ 73.9 $ 76.3 $ 70.3
Trade accounts receivable, less allowances of $10.0 and $10.4 and $11.9, respectively
1,071.8

1,013.9

1,018.8
Prepaid expenses and other current assets 62.0 57.5 62.9
Deferred taxes 40.3 44.9 38.1
Total current assets 1,248.0 1,192.6 1,190.1
Property and Equipment, Net 87.7 89.9 90.4
Noncurrent Deferred Taxes 104.5 82.8 88.8
Goodwill, Net 90.3 89.5 91.2
Other Assets 241.0 180.9 174.8
Total Assets $ 1,771.5 $ 1,635.7 $ 1,635.3
Current Liabilities
Short-term borrowings $ 58.0 $ 64.1 $ 83.6
Accounts payable and accrued liabilities 308.9 295.6 279.1
Accrued payroll and related taxes 300.9 264.5 269.9
Accrued insurance 30.7 32.8 28.8
Income and other taxes 71.5 65.3 62.7
Total current liabilities 770.0 722.3 724.1
Noncurrent Liabilities
Accrued insurance 40.7 43.5 48.9
Accrued retirement benefits 129.3 111.0 108.5
Other long-term liabilities 28.0 17.9 25.1
Total noncurrent liabilities 198.0 172.4 182.5
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (57.5 ) (61.6 ) (63.1 )
Paid-in capital 26.1 27.1 27.7
Earnings invested in the business 736.0 700.0 693.0
Accumulated other comprehensive income 58.8 35.4 31.0
Total stockholders' equity 803.5 741.0 728.7
Total Liabilities and Stockholders' Equity $ 1,771.5 $ 1,635.7 $ 1,635.3
STATISTICS:
Working Capital $ 478.0 $ 470.3 $ 466.0
Current Ratio 1.6 1.7 1.6
Debt-to-capital % 6.7 % 8.0 % 10.3 %
Global Days Sales Outstanding 56 53 54
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED SEPTEMBER 29, 2013 AND SEPTEMBER 30, 2012
(UNAUDITED)
(In millions of dollars)
2013 2012
Cash flows from operating activities
Net earnings $ 41.7 $ 41.2
Noncash adjustments:
Impairment of assets 1.7 -
Depreciation and amortization 15.4 16.8
Provision for bad debts 1.1 1.2
Stock-based compensation 2.7 3.7
Other, net 0.7 -
Changes in operating assets and liabilities (41.4 ) (42.0 )
Net cash from operating activities 21.9 20.9
Cash flows from investing activities
Capital expenditures (11.7 ) (13.9 )
Other investing activities - 0.1
Net cash used in investing activities (11.7 ) (13.8 )
Cash flows from financing activities
Net change in short-term borrowings (6.1 ) (12.6 )
Dividend payments (5.7 ) (5.7 )
Other financing activities 0.3 0.1
Net cash used in financing activities (11.5 ) (18.2 )
Effect of exchange rates on cash and equivalents (1.1 ) 0.4
Net change in cash and equivalents (2.4 ) (10.7 )
Cash and equivalents at beginning of period 76.3 81.0
Cash and equivalents at end of period $ 73.9 $ 70.3
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Third Quarter (Commercial, PT and OCG)
% Change
Constant
2013 2012 US$ Currency
Americas
United States $ 843.5 $ 853.4 (1.2 )% (1.2 )%
Canada 52.9 61.9 (14.5 ) (10.8 )
Mexico 33.1 31.1 6.6 4.5
Puerto Rico 24.4 24.5 (0.3 ) (0.3 )
Brazil 13.1 14.3 (8.0 ) 1.8
Total Americas 967.0 985.2 (1.8 ) (1.5 )
EMEA
Switzerland 68.6 61.0 12.3 8.8
France 62.4 60.3 3.6 (2.2 )
Russia 32.9 31.7 3.7 6.6
United Kingdom 26.5 25.6 3.6 5.6
Portugal 24.1 18.8 28.2 21.2
Germany 17.4 17.8 (1.9 ) (7.4 )
Norway 16.1 17.6 (8.3 ) (7.2 )
Italy 13.8 13.1 4.9 (0.8 )
Other 16.0 17.2 (7.5 ) (11.6 )
Total EMEA 277.8 263.1 5.5 2.6
APAC
Australia 32.4 35.4 (8.5 ) 3.8
Singapore 29.4 26.0 12.8 14.8
Malaysia 17.2 19.1 (9.7 ) (6.2 )
New Zealand 12.6 13.0 (2.6 ) (1.3 )
Other 9.2 12.4 (26.2 ) (18.1 )
Total APAC 100.8 105.9 (4.9 ) 1.5
Total Kelly Services, Inc. $ 1,345.6 $ 1,354.2 (0.6 )% (0.5 )%
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
September Year to Date (Commercial, PT and OCG)
% Change
Constant
2013 2012 US$ Currency
Americas
United States $ 2,547.3 $ 2,586.3 (1.5 )% (1.5 )%
Canada 163.9 183.4 (10.6 ) (8.8 )
Mexico 99.4 82.4 20.7 15.6
Puerto Rico 73.6 76.3 (3.6 ) (3.6 )
Brazil 45.0 46.7 (3.7 ) 6.6
Total Americas 2,929.2 2,975.1 (1.5 ) (1.4 )
EMEA
Switzerland 185.6 174.4 6.4 5.7
France 182.0 184.2 (1.2 ) (3.9 )
Russia 102.0 97.1 5.0 7.1
United Kingdom 78.1 79.3 (1.5 ) 0.5
Portugal 63.0 56.0 12.5 9.3
Germany 49.3 53.9 (8.5 ) (11.0 )
Norway 46.3 50.8 (8.8 ) (9.5 )
Italy 43.6 44.5 (2.0 ) (4.5 )
Other 50.7 48.4 4.6 2.1
Total EMEA 800.6 788.6 1.5 0.4
APAC
Australia 100.4 101.6 (1.2 ) 4.3
Singapore 83.5 75.1 11.2 10.7
Malaysia 51.1 54.9 (6.9 ) (5.8 )
New Zealand 36.1 39.5 (8.5 ) (9.8 )
Other 26.4 40.3 (34.6 ) (30.2 )
Total APAC 297.5 311.4 (4.5 ) (2.2 )
Total Kelly Services, Inc. $ 4,027.3 $ 4,075.1 (1.2 )% (1.1 )%
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED SEPTEMBER 29, 2013 AND SEPTEMBER 30, 2012
(UNAUDITED)
(In millions of dollars except per share data)
2013 2012
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Earnings % Change
Revenue from services $ 1,345.6 $ - $ 1,345.6 $ 1,354.2 (0.6 )%
Cost of services 1,125.2 - 1,125.2 1,126.7 (0.1 )
Gross profit 220.4 - 220.4 227.5 (3.1 )
Selling, general and administrative expenses

200.2


(0.5
)

199.7


203.5

(1.8
)
Earnings from operations 20.2 0.5 20.7 24.0 (13.9 )
Other expense, net 1.3 - 1.3 0.7 (88.9 )
Earnings from continuing operations before taxes 18.9 0.5 19.4 23.3 (17.1 )
Income tax expense (benefit) 0.1 - 0.1 6.7 (99.2 )
Earnings from continuing operations $ 18.8 $ 0.5 $ 19.3 $ 16.6 16.3 %
Earnings per share from continuing operations:
Basic $ 0.49 $ 0.01 $ 0.51 $ 0.43 18.6 %
Diluted $ 0.49 $ 0.01 $ 0.51 $ 0.43 18.6 %
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equalthe amounts computed for the total year.
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 39 WEEKS ENDED SEPTEMBER 29, 2013 AND SEPTEMBER 30, 2012
(UNAUDITED)
(In millions of dollars except per share data)
2013 2012
As reported Restructuring Charges
(Note 1)
Asset Impairments (Note 2) Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 4,027.3 $ - $ - $ 4,027.3 $ 4,075.1 (1.2 )%
Cost of services 3,369.3 - - 3,369.3 3,400.7 (0.9 )
Gross profit 658.0 - - 658.0 674.4 (2.4 )
Selling, general and administrative expenses
612.6

(1.3
)
-

611.3

614.1

(0.4
)
Asset impairments 1.7 - (1.7 ) - - NM
Earnings from operations 43.7 1.3 1.7 # 46.7 60.3 (22.6 )
Other expense, net 3.9 - - 3.9 1.8 (118.3 )
Earnings from continuing operations before taxes 39.8 1.3 1.7 42.8 58.5 (27.0 )
Income tax expense (benefit) (1.9 ) 0.1 - (1.8 ) 19.9 (109.4 )
Earnings from continuing operations $ 41.7 $ 1.2 $ 1.7 $ 44.6 $ 38.6 (15.5 )%
Earnings per share from continuing operations:
Basic $ 1.09 $ 0.03 $ 0.04 $ 1.17 $ 1.02 14.7 %
Diluted $ 1.09 $ 0.03 $ 0.04 $ 1.17 $ 1.02 14.7 %
2012
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 4,075.1 $ - $ 4,075.1
Cost of services 3,400.7 - 3,400.7
Gross profit 674.4 - 674.4
Selling, general and administrative expenses
611.9

2.2

614.1
Earnings from operations 62.5 (2.2 ) 60.3
Other expense, net 1.8 - 1.8
Earnings from continuing operations before taxes 60.7 (2.2 ) 58.5
Income tax expense (benefit) 19.9 - 19.9
Earnings from continuing operations $ 40.8 $ (2.2 ) $ 38.6
Earnings per share from continuing operations:
Basic $ 1.07 $ (0.06 ) $ 1.02
Diluted $ 1.07 $ (0.06 ) $ 1.02
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equalthe 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 and asset impairment charges is useful to understand the Company's fiscal 2013 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) In 2013, restructuring charges relate to severance costs from exiting the executive search business in Germany, along with severance costs for EMEA Commercial branches that closed in prior years. In 2012, restructuring costs relate primarily to revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.
(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, Inc.

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