Kelly Services® Reports 2nd Quarter Results

06 Aug '14

TROY, MI -- (Marketwired) -- 08/06/14 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2014 totaled $1.4 billion, a 3.2% increase compared to the corresponding quarter of 2013.

Earnings from operations for the second quarter of 2014 totaled $5.9 million, compared to $16.4 million reported for the second quarter of 2013. Included in the results of operations in the second quarter of 2014 are restructuring charges of $1.8 million. The results of operations in the second quarter of 2013 included impairment charges of $1.7 million and restructuring charges of $0.8 million. Excluding the impairment and restructuring charges, earnings from operations were $7.7 million in the second quarter of 2014, compared to adjusted earnings of $18.9 million last year.

Diluted earnings per share in the second quarter of 2014 were $0.07 compared to $0.26 per share in the second quarter of 2013. Adjusted earnings per share were $0.10 in the second quarter of 2014 compared to $0.33 in the second quarter of 2013.

"Our second quarter results aligned with our expectations, and we're pleased with how we've executed our strategy in the first half of 2014," said Camden. "Our investments in OCG continue to yield double-digit revenue, GP, and earnings growth, confirming this segment is meeting the market's increased demand for higher-margin talent supply chain solutions. We're also making the aggressive investments needed to drive growth in specialty staffing across our local US markets, while continuing to invest in the success of our large account base."

Kelly also reported that on August 5, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 8 to shareholders of record as of the close of business on August 18.

In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 6, 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 JUNE 29, 2014 AND JUNE 30, 2013
(UNAUDITED)
(In millions of dollars except per share data)
2014 2013 Change % Change
Revenue from services $ 1,410.5 $ 1,366.9 $ 43.6 3.2 %
Cost of services 1,182.4 1,146.2 36.2 3.2
Gross profit 228.1 220.7 7.4 3.4
Selling, general and administrative expenses 222.2 202.6 19.6 9.7
Asset impairments -- 1.7 (1.7 ) (100.0 )
Earnings from operations 5.9 16.4 (10.5 ) (64.8 )
Other expense, net 0.3 1.6 (1.3 ) 84.0
Earnings before taxes 5.6 14.8 (9.2 ) (62.7 )
Income tax expense 2.8 4.8 (2.0 ) (41.8 )
Net earnings $ 2.8 $ 10.0 $ (7.2 ) (72.6 )%
Basic earnings per share $ 0.07 $ 0.26 $ (0.19 ) (73.1 )%
Diluted earnings per share $ 0.07 $ 0.26 $ (0.19 ) (73.1 )%
STATISTICS:
Gross profit rate 16.2 % 16.1 % 0.1 pts.
Selling, general and administrative expenses:
% of revenue 15.8 14.8 1.0
% of gross profit 97.5 91.8 5.7
% Return:
Earnings from operations 0.4 1.2 (0.8 )
Earnings before taxes 0.4 1.1 (0.7 )
Net earnings 0.2 0.7 (0.5 )
Effective income tax rate 50.2 % 32.2 % 18.0 pts.
Average number of shares outstanding (millions):
Basic 37.4 37.2
Diluted 37.4 37.2
Shares adjusted for nonvested restricted awards (millions):
Basic 38.5 38.2
Diluted 38.6 38.2
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013
(UNAUDITED)
(In millions of dollars except per share data)
2014 2013 Change % Change
Revenue from services $ 2,741.3 $ 2,681.7 $ 59.6 2.2 %
Cost of services 2,290.9 2,244.1 46.8 2.1
Gross profit 450.4 437.6 12.8 2.9
Selling, general and administrative expenses 438.2 412.4 25.8 6.3
Asset impairments -- 1.7 (1.7 ) (100.0 )
Earnings from operations 12.2 23.5 (11.3 ) (48.9 )
Other expense, net 2.0 2.6 (0.6 ) 26.2
Earnings before taxes 10.2 20.9 (10.7 ) (51.7 )
Income tax expense (benefit) 4.9 (2.0 ) 6.9 338.4
Net earnings $ 5.3 $ 22.9 $ (17.6 ) (77.0 )%
Basic earnings per share $ 0.14 $ 0.60 $ (0.46 ) (76.7 )%
Diluted earnings per share $ 0.14 $ 0.60 $ (0.46 ) (76.7 )%
STATISTICS:
Gross profit rate 16.4 % 16.3 % 0.1 pts.
Selling, general and administrative expenses:
% of revenue 16.0 15.4 0.6
% of gross profit 97.3 94.3 3.0
% Return:
Earnings from operations 0.4 0.9 (0.5 )
Earnings before taxes 0.4 0.8 (0.4 )
Net earnings 0.2 0.9 (0.7 )
Effective income tax rate 47.9 % (9.7) % 57.6 pts.
Average number of shares outstanding (millions):
Basic 37.4 37.2
Diluted 37.4 37.2
Shares adjusted for nonvested restricted awards (millions):
Basic 38.5 38.2
Diluted 38.6 38.2
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Second Quarter
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 661.1 $ 648.8 1.9 % 2.8 %
Staffing fee-based income included in revenue from services 3.4 3.2 4.5 6.3
Gross profit 96.5 94.2 2.5 3.3
Gross profit rate 14.6 % 14.5 % 0.1 pts.
PT
Revenue from services $ 244.2 $ 251.2 (2.8) % (2.6 )%
Staffing fee-based income included in revenue from services 3.7 3.5 5.4 6.1
Gross profit 39.0 39.0 -- 0.2
Gross profit rate 16.0 % 15.5 % 0.5 pts.
Total Americas
Revenue from services $ 905.3 $ 900.0 0.6 % 1.3 %
Staffing fee-based income included in revenue from services 7.1 6.7 5.0 6.2
Gross profit 135.5 133.2 1.8 2.4
Total SG&A expenses 112.6 102.5 9.9 10.6
Earnings from operations 22.9 30.7 (25.5 )
Gross profit rate 15.0 % 14.8 % 0.2 pts.
Expense rates:
% of revenue 12.4 11.4 1.0
% of gross profit 83.1 77.0 6.1
Return on sales 2.5 3.4 (0.9 )
EMEA
Commercial
Revenue from services $ 237.0 $ 219.8 7.8 % 4.6 %
Staffing fee-based income included in revenue from services 5.0 5.0 1.0 0.9
Gross profit 34.5 33.8 2.1 (0.9 )
Gross profit rate 14.6 % 15.4 % (0.8 ) pts.
PT
Revenue from services $ 49.7 $ 43.1 15.1 % 10.3 %
Staffing fee-based income included in revenue from services 3.6 3.8 (6.3 ) (7.0 )
Gross profit 11.3 10.5 7.0 3.7
Gross profit rate 22.6 % 24.4 % (1.8 ) pts.
Total EMEA
Revenue from services $ 286.7 $ 262.9 9.0 % 5.5 %
Staffing fee-based income included in revenue from services 8.6 8.8 (2.2 ) (2.5 )
Gross profit 45.8 44.3 3.2 0.2
SG&A expenses excluding restructuring charges 42.3 39.9 5.9
Restructuring charges 0.8 -- NM
Total SG&A expenses 43.1 39.9 7.8 4.4
Earnings from operations 2.7 4.4 (38.5 )
Earnings from operations excluding restructuring charges 3.5 4.4 (20.6 )
Gross profit rate 16.0 % 16.9 % (0.9 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.7 15.2 (0.5 )
% of gross profit 92.3 90.0 2.3
Return on sales (excluding restructuring charges) 1.2 1.7 (0.5 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Second Quarter
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 86.5 $ 87.7 (1.3) % 1.5 %
Staffing fee-based income included in revenue from services 2.0 2.5 (20.8 ) (17.5 )
Gross profit 11.7 12.5 (6.8 ) (4.2 )
Gross profit rate 13.5 % 14.3 % (0.8 ) pts.
PT
Revenue from services $ 10.0 $ 10.0 (0.2) % 3.9 %
Staffing fee-based income included in revenue from services 2.1 2.5 (14.2 ) (10.7 )
Gross profit 3.3 3.8 (11.4 ) (7.7 )
Gross profit rate 33.2 % 37.4 % (4.2 ) pts.
Total APAC
Revenue from services $ 96.5 $ 97.7 (1.2) % 1.8 %
Staffing fee-based income included in revenue from services 4.1 5.0 (17.5 ) (14.1 )
Gross profit 15.0 16.3 (7.8 ) (5.0 )
SG&A expenses excluding restructuring charges 14.8 15.4 (3.5 )
Restructuring charges 1.0 -- NM
Total SG&A expenses 15.8 15.4 3.3 7.1
Earnings from operations (0.8 ) 0.9 NM
Earnings from operations excluding restructuring charges 0.2 0.9 (82.8 )
Gross profit rate 15.5 % 16.6 % (1.1 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 15.4 15.7 (0.3 )
% of gross profit 99.0 94.5 4.5
Return on sales (excluding restructuring charges) 0.2 0.9 (0.7 )
OCG
Revenue from services $ 137.9 $ 118.3 16.5 % 16.8 %
Gross profit 32.9 27.7 18.6 (18.5 )
SG&A expenses excluding restructuring charges 31.1 26.9 15.3
Restructuring charges -- 0.8 (100.0 )
Total SG&A expenses 31.1 27.7 12.2 12.1
Asset impairments -- 1.7 (100.0 )
Earnings from operations 1.8 (1.7 ) NM
Earnings from operations excluding restructuring charges 1.8 (0.9 ) NM
Gross profit rate 23.9 % 23.4 % 0.5 pts.
Expense rates (excluding restructuring charges):
% of revenue 22.5 22.8 (0.3 )
% of gross profit 94.4 97.1 (2.7 )
Return on sales (excluding restructuring charges) 1.3 (0.7 ) 2.0
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
June Year to Date
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 1,274.3 $ 1,287.1 (1.0 )% -- %
Staffing fee-based income included in revenue from services 6.6 6.5 2.9 5.0
Gross profit 188.3 187.7 0.3 1.3
Gross profit rate 14.8 % 14.6 % 0.2 pts.
PT
Revenue from services $ 480.6 $ 493.8 (2.7 )% (2.5 )%
Staffing fee-based income included in revenue from services 7.3 6.9 6.1 6.8
Gross profit 78.8 77.3 2.0 2.2
Gross profit rate 16.4 % 15.6 % 0.8 pts.
Total Americas
Revenue from services $ 1,754.9 $ 1,780.9 (1.5) % (0.7 )%
Staffing fee-based income included in revenue from services 13.9 13.4 4.5 5.9
Gross profit 267.1 265.0 0.8 1.6
Total SG&A expenses 222.1 210.4 5.6 6.4
Earnings from operations 45.0 54.6 (17.7 )
Gross profit rate 15.2 % 14.9 % 0.3 pts.
Expense rates:
% of revenue 12.7 11.8 0.9
% of gross profit 83.2 79.4 3.8
Return on sales 2.6 3.1 (0.5 )
EMEA
Commercial
Revenue from services $ 458.9 $ 420.8 9.1 % 7.0 %
Staffing fee-based income included in revenue from services 9.8 10.3 (4.7 ) (3.5 )
Gross profit 67.4 64.9 3.9 2.0
Gross profit rate 14.7 % 15.4 % (0.7 ) pts.
PT
Revenue from services $ 97.4 $ 86.6 12.4 % 8.6 %
Staffing fee-based income included in revenue from services 7.2 7.8 (7.6 ) (7.5 )
Gross profit 22.4 21.2 5.4 3.0
Gross profit rate 23.0 % 24.5 % (1.5 ) pts.
Total EMEA
Revenue from services $ 556.3 $ 507.4 9.6 % 7.3 %
Staffing fee-based income included in revenue from services 17.0 18.1 (6.0 ) (5.2 )
Gross profit 89.8 86.1 4.3 2.3
SG&A expenses excluding restructuring charges 84.2 82.1 2.6
Restructuring charges 0.8 (0.2 ) NM
Total SG&A expenses 85.0 81.9 3.7 1.4
Earnings from operations 4.8 4.2 15.0
Earnings from operations excluding restructuring charges 5.6 4.0 38.6
Gross profit rate 16.1 % 17.0 % (0.9 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 15.1 16.2 (1.1 )
% of gross profit 93.7 95.2 (1.5 )
Return on sales (excluding restructuring charges) 1.0 0.8 0.2
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
June Year to Date
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 169.5 $ 169.2 0.2 % 5.3 %
Staffing fee-based income included in revenue from services 3.9 4.7 (17.9 ) (12.4 )
Gross profit 24.0 24.1 (0.4 ) 4.7
Gross profit rate 14.2 % 14.2 % -- pts.
PT
Revenue from services $ 18.6 $ 20.2 (7.8 )% (1.7 )%
Staffing fee-based income included in revenue from services 3.8 4.5 (14.5 ) (9.1 )
Gross profit 6.1 7.1 (13.8 ) (8.1 )
Gross profit rate 32.7 % 34.9 % (2.2 ) pts.
Total APAC
Revenue from services $ 188.1 $ 189.4 (0.7 )% 4.5 %
Staffing fee-based income included in revenue from services 7.7 9.2 (16.3 ) (10.8 )
Gross profit 30.1 31.2 (3.4 ) 1.8
SG&A expenses excluding restructuring charges 29.1 31.0 (5.7 )
Restructuring charges 1.0 0.2 364.2
Total SG&A expenses 30.1 31.2 (2.9 ) 2.9
Earnings from operations -- -- NM
Earnings from operations excluding restructuring charges 1.0 0.2 335.1
Gross profit rate 16.0 % 16.4 % (0.4 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 15.5 16.3 (0.8 )
% of gross profit 97.0 99.3 (2.3 )
Return on sales (excluding restructuring charges) 0.5 0.1 0.4
OCG
Revenue from services $ 272.3 $ 225.7 20.6 % 21.1 %
Gross profit 65.5 56.9 15.1 15.3
SG&A expenses excluding restructuring charges 62.5 53.6 16.6
Restructuring charges -- 0.8 (100.0 )
Total SG&A expenses 62.5 54.4 15.0 15.2
Asset impairments -- 1.7 (100.0 )
Earnings from operations 3.0 0.8 226.9
Earnings from operations excluding restructuring charges 3.0 1.6 82.1
Gross profit rate 24.1 % 25.2 % (1.1 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 22.9 23.7 (0.8 )
% of gross profit 95.4 94.1 1.3
Return on sales (excluding restructuring charges) 1.1 0.7 0.4
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
June 29, 2014 Dec. 29, 2013 June 30, 2013
Current Assets
Cash and equivalents $ 62.8 $ 125.7 $ 70.3
Trade accounts receivable, less allowances of $9.2, $9.9 and $9.8, respectively 1,132.9 1,023.1 1,038.8
Prepaid expenses and other current assets 57.6 52.2 60.0
Deferred taxes 31.5 35.5 39.0
Total current assets 1,284.8 1,236.5 1,208.1
Property and Equipment, Net 91.4 92.0 87.2
Noncurrent Deferred Taxes 130.8 121.7 103.1
Goodwill, Net 90.3 90.3 90.3
Other Assets 295.7 258.1 227.8
Total Assets $ 1,893.0 $ 1,798.6 $ 1,716.5
Current Liabilities
Short-term borrowings $ 89.5 $ 28.3 $ 83.2
Accounts payable and accrued liabilities 328.4 342.4 289.2
Accrued payroll and related taxes 300.5 294.9 277.9
Accrued insurance 25.2 27.6 31.2
Income and other taxes 74.9 68.8 64.9
Total current liabilities 818.5 762.0 746.4
Noncurrent Liabilities
Accrued insurance 44.7 46.0 41.4
Accrued retirement benefits 147.4 134.7 123.2
Other long-term liabilities 41.9 33.3 28.2
Total noncurrent liabilities 234.0 214.0 192.8
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (55.5 ) (56.2 ) (60.6 )
Paid-in capital 29.0 26.0 28.9
Earnings invested in the business 752.8 751.3 719.1
Accumulated other comprehensive income 74.1 61.4 49.8
Total stockholders' equity 840.5 822.6 777.3
Total Liabilities and Stockholders' Equity $ 1,893.0 $ 1,798.6 $ 1,716.5
STATISTICS:
Working Capital $ 466.3 $ 474.5 $ 461.7
Current Ratio 1.6 1.6 1.6
Debt-to-capital % 9.6 % 3.3 % 9.7 %
Global Days Sales Outstanding 57 52 54
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013
(UNAUDITED)
(In millions of dollars)
2014 2013
Cash flows from operating activities:
Net earnings $ 5.3 $ 22.9
Noncash adjustments:
Impairment of assets -- 1.7
Depreciation and amortization 10.8 10.5
Provision for bad debts 2.6 0.5
Stock-based compensation 3.5 2.6
Other, net 0.7 0.7
Changes in operating assets and liabilities (130.4 ) (53.1 )
Net cash used in operating activities (107.5 ) (14.2 )
Cash flows from investing activities:
Capital expenditures (8.9 ) (7.7 )
Investment in equity affiliate (5.4 ) --
Other investing activities 0.4 (0.2 )
Net cash used in investing activities (13.9 ) (7.9 )
Cash flows from financing activities:
Net change in short-term borrowings 61.2 19.1
Dividend payments (3.8 ) (3.8 )
Net cash from financing activities 57.4 15.3
Effect of exchange rates on cash and equivalents 1.1 0.8
Net change in cash and equivalents (62.9 ) (6.0 )
Cash and equivalents at beginning of period 125.7 76.3
Cash and equivalents at end of period $ 62.8 $ 70.3
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Second Quarter (Commercial, PT and OCG)
% Change
Constant
2014 2013 US$ Currency
Americas
United States $ 888.3 $ 864.3 2.8 % 2.8 %
Canada 49.6 55.0 (9.8 ) (3.9 )
Mexico 34.6 35.9 (3.4 ) 0.5
Puerto Rico 27.6 26.1 5.8 5.8
Brazil 13.7 13.4 1.9 14.4
Total Americas 1,013.8 994.7 1.9 2.6
EMEA
France 69.3 62.3 11.2 5.9
Switzerland 66.7 63.6 5.0 (0.9 )
Russia 32.8 34.6 (5.1 ) 4.8
Portugal 32.5 21.1 53.7 46.5
United Kingdom 28.4 25.8 10.1 0.5
Italy 16.6 14.7 12.8 7.5
Germany 16.5 15.9 4.3 (0.7 )
Norway 14.4 15.4 (6.2 ) (3.7 )
Other 18.0 17.3 3.7 (0.4 )
Total EMEA 295.2 270.7 9.1 5.6
APAC
Singapore 31.1 28.0 11.0 11.2
Australia 30.0 35.3 (15.0 ) (9.8 )
Malaysia 16.8 17.2 (2.5 ) 2.8
New Zealand 13.2 12.0 10.1 5.0
Other 10.4 9.0 15.1 25.9
Total APAC 101.5 101.5 (0.1 ) 3.1
Total Kelly Services, Inc. $ 1,410.5 $ 1,366.9 3.2 % 3.2 %
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
June Year to Date (Commercial, PT and OCG)
% Change
Constant
2014 2013 US$ Currency
Americas
United States $ 1,728.2 $ 1,703.8 1.4 % 1.4 %
Canada 96.3 111.0 (13.3 ) (6.4 )
Mexico 65.3 66.3 (1.5 ) 2.9
Puerto Rico 52.7 49.2 7.1 7.1
Brazil 29.6 31.9 (7.2 ) 6.1
Total Americas 1,972.1 1,962.2 0.5 1.2
EMEA
France 132.1 119.6 10.5 5.8
Switzerland 129.0 117.0 10.3 4.9
Russia 67.7 69.1 (2.0 ) 10.7
Portugal 59.1 38.9 51.9 45.3
United Kingdom 56.2 51.6 8.9 0.7
Germany 33.2 31.9 4.2 (0.2 )
Italy 31.5 29.8 5.7 1.2
Norway 28.8 30.2 (4.7 ) 0.5
Other 35.1 34.7 1.0 (2.5 )
Total EMEA 572.7 522.8 9.6 7.2
APAC
Singapore 61.4 54.1 13.5 15.0
Australia 56.5 68.0 (17.0 ) (8.1 )
Malaysia 33.3 33.9 (1.6 ) 4.5
New Zealand 25.5 23.5 8.8 6.1
Other 19.8 17.2 14.9 28.5
Total APAC 196.5 196.7 (0.1 ) 5.3
Total Kelly Services, Inc. $ 2,741.3 $ 2,681.7 2.2 % 2.7 %
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 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 $ 1,410.5 $ -- $ 1,410.5 $ 1,366.9 3.2 %
Cost of services 1,182.4 -- 1,182.4 1,146.2 3.2
Gross profit 228.1 -- 228.1 220.7 3.4
SG&A expenses 222.2 (1.8 ) 220.4 201.8 9.2
Earnings from operations 5.9 1.8 7.7 18.9 (59.5 )
Other expense, net 0.3 -- 0.3 1.6 84.0
Earnings before taxes 5.6 1.8 7.4 17.3 (57.1 )
Inc. tax expense (benefit) 2.8 0.6 3.4 4.8 (28.2 )
Net earnings $ 2.8 $ 1.2 $ 4.0 $ 12.5 (68.2) %
Earnings per share:
Basic $ 0.07 $ 0.03 $ 0.10 $ 0.33 (69.7) %
Diluted $ 0.07 $ 0.03 $ 0.10 $ 0.33 (69.7) %
2013
As reported Restructuring Charges
(Note 1)
Asset Impairments (Note 2) Adjusted Earnings
Revenue from services $ 1,366.9 $ -- $ -- $ 1,366.9
Cost of services 1,146.2 -- -- 1,146.2
Gross profit 220.7 -- -- 220.7
SG&A expenses 202.6 (0.8 ) -- 201.8
Asset impairments 1.7 -- (1.7 ) --
Earnings from operations 16.4 0.8 1.7 18.9
Other expense, net 1.6 -- -- 1.6
Earnings before taxes 14.8 0.8 1.7 17.3
Inc. tax expense (benefit) 4.8 -- -- 4.8
Net earnings $ 10.0 $ 0.8 $ 1.7 $ 12.5
Earnings per share:
Basic $ 0.26 $ 0.02 $ 0.04 $ 0.33
Diluted $ 0.26 $ 0.02 $ 0.04 $ 0.33
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 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 $ 2,741.3 $ -- $ 2,741.3 $ 2,681.7 2.2 %
Cost of services 2,290.9 -- 2,290.9 2,244.1 2.1
Gross profit 450.4 -- 450.4 437.6 2.9
SG&A expenses 438.2 (1.8 ) 436.4 411.6 6.1
Earnings from operations 12.2 1.8 14.0 26.0 (46.5 )
Other expense, net 2.0 -- 2.0 2.6 26.2
Earnings before taxes 10.2 1.8 12.0 23.4 (48.8 )
Inc. tax expense (benefit) 4.9 0.6 5.5 (1.9 ) 384.4
Net earnings $ 5.3 $ 1.2 $ 6.5 $ 25.3 (74.4) %
Earnings per share:
Basic $ 0.14 $ 0.03 $ 0.17 $ 0.66 (74.2) %
Diluted $ 0.14 $ 0.03 $ 0.17 $ 0.66 (74.2) %
2013
As reported Restructuring Charges
(Note 1)
Asset Impairments (Note 2) Adjusted Earnings
Revenue from services $ 2,681.7 $ -- $ -- $ 2,681.7
Cost of services 2,244.1 -- -- 2,244.1
Gross profit 437.6 -- -- 437.6
SG&A expenses 412.4 (0.8 ) -- 411.6
Asset impairments 1.7 -- (1.7 ) --
Earnings from operations 23.5 0.8 1.7 26.0
Other expense, net 2.6 -- -- 2.6
Earnings before taxes 20.9 0.8 1.7 23.4
Inc. tax expense (benefit) (2.0 ) 0.1 -- (1.9 )
Net earnings $ 22.9 $ 0.7 $ 1.7 $ 25.3
Earnings per share:
Basic $ 0.60 $ 0.02 $ 0.04 $ 0.66
Diluted $ 0.60 $ 0.02 $ 0.04 $ 0.66
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 relate to costs incurred for exiting the staffing business in Sweden and closing branches in Australia. 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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