Kelly Services® Reports 4th Quarter and Full Year 2014 Results

29 Jan '15

TROY, MI -- (Marketwired) -- 01/29/15 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2014.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2014 totaled $1.4 billion, a 3% increase (a 6% increase on a constant currency basis) compared to the corresponding quarter of 2013. Revenue for the full year totaled $5.6 billion, a 3% increase (a 4% increase on a constant currency basis) compared to the prior year.

Earnings from operations for the fourth quarter of 2014 totaled $2.6 million, compared to $9.6 million reported for the fourth quarter of 2013. Included in the results of operations in the fourth quarter of 2014 are restructuring charges of $6.2 million. The results of operations in the fourth quarter of 2013 included restructuring charges of $0.3 million. Excluding the restructuring charges from both years, earnings from operations were $8.8 million in the fourth quarter of 2014, compared to adjusted earnings of $9.9 million last year.

Earnings from operations for the full year of 2014 totaled $21.9 million compared to $53.3 million in 2013. Included in the results from operations for 2014 are restructuring charges of $12.0 million. Included in the results from operations for 2013 are asset impairment charges of $1.7 million and restructuring charges of $1.6 million. Excluding these items from both years, earnings from operations were $33.9 million in 2014 compared to $56.6 million in 2013.

Diluted earnings per share in the fourth quarter of 2014 were $0.44 compared to $0.45 per share in the fourth quarter of 2013. Included in diluted earnings per share from continuing operations for the fourth quarter of 2014 are restructuring charges of $0.10 per share. Included in diluted earnings per share from continuing operations for the fourth quarter of 2013 are restructuring charges of $0.01 per share. Excluding these charges from both years, diluted earnings per share from continuing operations for the fourth quarter of 2014 were $0.54 per share compared to $0.45 per share in 2013.

Diluted earnings per share from continuing operations for the full year of 2014 were $0.61 compared to $1.54 per share in 2013. Included in diluted earnings per share from continuing operations for 2014 are restructuring charges of $0.19 per share. Included in diluted earnings per share from continuing operations for 2013 are restructuring charges of $0.04 per share and asset impairment charges of $0.04 per share. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2014 were $0.81 per share compared to $1.62 per share in 2013.

Commenting on the fourth quarter, Camden stated, "The fourth quarter capped a year of significant investment at Kelly, and we're pleased that our performance confirms those investments are gaining traction. With our new delivery models fully in place, we have begun capitalizing on improved U.S. market conditions and increased demand for specialized staffing. The strong results delivered by our OCG segment reflects our ongoing ability to also meet the growing demand for holistic talent management solutions, especially among our largest customers."

In conjunction with its fourth quarter and full year earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 29, 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, 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 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 or market developments, 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 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 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®

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 555,000 employees in 2014. Revenue in 2014 was $5.6 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 DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2014 2013 Change Change Change
Revenue from services $ 1,425.0 $ 1,385.8 $ 39.2 2.8 % 5.7 %
Cost of services 1,192.4 1,154.3 38.1 3.3
Gross profit 232.6 231.5 1.1 0.5 3.4
Selling, general and administrative expenses 230.0 221.9 8.1 3.6 6.8
Earnings from operations 2.6 9.6 (7.0 ) (71.7 )
Other expense, net 1.1 0.6 0.5 89.6
Earnings before taxes 1.5 9.0 (7.5 ) (81.8 )
Income tax benefit (15.5 ) (8.2 ) (7.3 ) (89.3 )
Net earnings $ 17.0 $ 17.2 $ (0.2 ) (0.2 )%
Basic earnings per share $ 0.44 $ 0.45 $ (0.01 ) (2.2 )%
Diluted earnings per share $ 0.44 $ 0.45 $ (0.01 ) (2.2 )%
STATISTICS:
Gross profit rate 16.3 % 16.7 % (0.4 ) pts.
Selling, general and administrative expenses:
% of revenue 16.1 16.0 0.1
% of gross profit 98.8 95.9 2.9
% Return:
Earnings from operations 0.2 0.7 (0.5 )
Earnings before taxes 0.1 0.6 (0.5 )
Net earnings 1.2 1.2 -
Effective income tax rate (949.7 )% (91.1 )% (858.6 ) pts.
Average number of shares outstanding (millions):
Basic 37.7 37.4
Diluted 37.7 37.4
Shares adjusted for nonvested restricted awards (millions):
Basic 38.9 38.6
Diluted 38.9 38.6
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2014 2013 Change Change Change
Revenue from services $ 5,562.7 $ 5,413.1 $ 149.6 2.8 % 3.8 %
Cost of services 4,654.3 4,523.6 130.7 2.9
Gross profit 908.4 889.5 18.9 2.1 3.2
Selling, general and administrative expenses 886.5 834.5 52.0 6.2 7.3
Asset impairments - 1.7 (1.7 ) (100.0 )
Earnings from operations 21.9 53.3 (31.4 ) (59.1 )
Other expense, net 5.3 4.5 0.8 15.3
Earnings before taxes 16.6 48.8 (32.2 ) (66.0 )
Income tax benefit (7.1 ) (10.1 ) 3.0 29.6
Net earnings $ 23.7 $ 58.9 $ (35.2 ) (59.8) %
Basic earnings per share $ 0.61 $ 1.54 $ (0.93 ) (60.4) %
Diluted earnings per share $ 0.61 $ 1.54 $ (0.93 ) (60.4) %
STATISTICS:
Gross profit rate 16.3 % 16.4 % (0.1 ) pts.
Selling, general and administrative expenses:
% of revenue 15.9 15.4 0.5
% of gross profit 97.6 93.8 3.8
% Return:
Earnings from operations 0.4 1.0 (0.6 )
Earnings before taxes 0.3 0.9 (0.6 )
Net earnings 0.4 1.1 (0.7 )
Effective income tax rate (43.2 )% (20.8 )% (22.4 ) pts.
Average number of shares outstanding (millions):
Basic 37.5 37.3
Diluted 37.5 37.3
Shares adjusted for nonvested restricted awards (millions):
Basic 38.6 38.3
Diluted 38.6 38.3
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Fourth Quarter
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 694.5 $ 641.5 8.3 % 9.3 %
Staffing fee-based income included in revenue from services 4.0 3.4 16.0 17.4
Gross profit 99.6 95.7 4.2 5.2
Gross profit rate 14.4 % 14.9 % (0.5 ) pts.
PT
Revenue from services $ 232.9 $ 234.1 (0.5 )% (0.2) %
Staffing fee-based income included in revenue from services 3.9 3.7 4.1 5.0
Gross profit 37.5 39.0 (3.6 ) (3.3 )
Gross profit rate 16.1 % 16.6 % (0.5 ) pts.
Total Americas
Revenue from services $ 927.4 $ 875.6 5.9 % 6.7 %
Staffing fee-based income included in revenue from services 7.9 7.1 9.8 10.9
Gross profit 137.1 134.7 2.0 2.7
Total SG&A expenses 113.9 109.2 4.4 5.1
Earnings from operations 23.2 25.5 (8.5 )
Gross profit rate 14.8 % 15.4 % (0.6 ) pts.
Expense rates:
% of revenue 12.3 12.5 (0.2 )
% of gross profit 83.0 81.1 1.9
Return on sales 2.5 2.9 (0.4 )
EMEA
Commercial
Revenue from services $ 204.5 $ 232.2 (12.0 )% (2.4) %
Staffing fee-based income included in revenue from services 3.3 4.9 (31.9 ) (19.2 )
Gross profit 29.6 34.8 (15.1 ) (5.6 )
Gross profit rate 14.4 % 15.0 % (0.6 ) pts.
PT
Revenue from services $ 44.8 $ 48.0 (6.5 )% 2.7 %
Staffing fee-based income included in revenue from services 2.8 3.3 (16.0 ) (2.5 )
Gross profit 9.6 10.6 (8.7 ) 1.8
Gross profit rate 21.7 % 22.2 % (0.5 ) pts.
Total EMEA
Revenue from services $ 249.3 $ 280.2 (11.0 )% (1.5) %
Staffing fee-based income included in revenue from services 6.1 8.2 (25.5 ) (12.5 )
Gross profit 39.2 45.4 (13.6 ) (3.9 )
SG&A expenses excluding restructuring charges 36.4 42.2 (13.7 )
Restructuring charges - 0.3 (100.0 )
Total SG&A expenses 36.4 42.5 (14.4 ) (2.9 )
Earnings from operations 2.8 2.9 (2.2 )
Earnings from operations excluding restructuring charges 2.8 3.2 (11.8 )
Gross profit rate 15.7 % 16.2 % (0.5 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.6 15.1 (0.5 )
% of gross profit 92.8 92.9 (0.1 )
Return on sales (excluding restructuring charges) 1.1 1.1 -
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Fourth Quarter
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 91.3 $ 87.3 4.6 % 9.7 %
Staffing fee-based income included in revenue from services 2.0 2.2 (6.9 ) (3.4 )
Gross profit 11.8 12.5 (5.4 ) (0.8 )
Gross profit rate 12.9 % 14.3 % (1.4 ) pts.
PT
Revenue from services $ 11.2 $ 9.3 20.1 % 26.9 %
Staffing fee-based income included in revenue from services 2.0 2.1 (6.3 ) (2.2 )
Gross profit 3.3 3.5 (4.6 ) 0.2
Gross profit rate 29.9 % 37.7 % (7.8 ) pts.
Total APAC
Revenue from services $ 102.5 $ 96.6 6.1 % 11.4 %
Staffing fee-based income included in revenue from services 4.0 4.3 (6.6 ) (2.8 )
Gross profit 15.1 16.0 (5.2 ) (0.6 )
Total SG&A expenses 13.1 14.7 (11.4 ) (6.8 )
Earnings from operations 2.0 1.3 63.9
Gross profit rate 14.8 % 16.5 % (1.7 ) pts.
Expense rates:
% of revenue 12.7 15.2 (2.5 )
% of gross profit 85.8 91.8 (6.0 )
Return on sales 2.1 1.4 0.7
OCG
Revenue from services $ 164.7 $ 148.5 10.9 % 11.9 %
Gross profit 42.3 36.5 15.8 17.1
Total SG&A expenses 32.6 29.0 12.5 14.8
Earnings from operations 9.7 7.5 28.5
Gross profit rate 25.6 % 24.6 % 1.0 pts.
Expense rates:
% of revenue 19.8 19.6 0.2
% of gross profit 77.4 79.6 (2.2 )
Return on sales 5.8 5.0 0.8
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
December Year to Date
Constant
Currency
2014 2013 Change Change
AMERICAS
Commercial
Revenue from services $ 2,609.6 $ 2,545.6 2.5 % 3.4 %
Staffing fee-based income included in revenue from services 14.4 13.2 8.7 10.1
Gross profit 379.6 370.2 2.6 3.4
Gross profit rate 14.5 % 14.5 % - pts.
PT
Revenue from services $ 956.0 $ 967.8 (1.2) % (1.0) %
Staffing fee-based income included in revenue from services 15.6 14.5 7.4 8.1
Gross profit 155.9 155.1 0.6 0.8
Gross profit rate 16.3 % 16.0 % 0.3 pts.
Total Americas
Revenue from services $ 3,565.6 $ 3,513.4 1.5 % 2.2 %
Staffing fee-based income included in revenue from services 30.0 27.7 8.0 9.1
Gross profit 535.5 525.3 2.0 2.6
Total SG&A expenses 446.8 419.8 6.5 7.1
Earnings from operations 88.7 105.5 (15.9 )
Gross profit rate 15.0 % 14.9 % 0.1 pts.
Expense rates:
% of revenue 12.5 11.9 0.6
% of gross profit 83.5 79.9 3.6
Return on sales 2.5 3.0 (0.5 )
EMEA
Commercial
Revenue from services $ 894.7 $ 877.5 2.0 % 3.5 %
Staffing fee-based income included in revenue from services 17.3 19.8 (12.5 ) (8.0 )
Gross profit 130.6 133.6 (2.3 ) (0.6 )
Gross profit rate 14.6 % 15.2 % (0.6 ) pts.
PT
Revenue from services $ 190.3 $ 179.7 5.9 % 6.4 %
Staffing fee-based income included in revenue from services 13.5 15.0 (10.0 ) (6.4 )
Gross profit 42.9 42.6 0.7 2.2
Gross profit rate 22.6 % 23.7 % (1.1 ) pts.
Total EMEA
Revenue from services $ 1,085.0 $ 1,057.2 2.6 % 4.0 %
Staffing fee-based income included in revenue from services 30.8 34.8 (11.4 ) (7.3 )
Gross profit 173.5 176.2 (1.6 ) 0.1
SG&A expenses excluding restructuring charges 160.6 164.3 (2.3 )
Restructuring charges 0.8 0.4 60.5
Total SG&A expenses 161.4 164.7 (2.1 ) (0.1 )
Earnings from operations 12.1 11.5 5.5
Earnings from operations excluding restructuring charges 12.9 11.9 7.9
Gross profit rate 16.0 % 16.7 % (0.7 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.8 15.5 (0.7 )
% of gross profit 92.5 93.2 (0.7 )
Return on sales (excluding restructuring charges) 1.2 1.1 0.1
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
December Year to Date
Constant
Currency
2014 2013 Change Change
APAC
Commercial
Revenue from services $ 351.8 $ 344.1 2.2 % 5.6 %
Staffing fee-based income included in revenue from services 7.9 9.2 (14.7 ) (11.5 )
Gross profit 47.5 49.3 (3.7 ) (0.4 )
Gross profit rate 13.5 % 14.3 % (0.8 ) pts.
PT
Revenue from services $ 40.4 $ 38.6 4.5 % 9.0 %
Staffing fee-based income included in revenue from services 7.8 8.8 (11.4 ) (7.9 )
Gross profit 12.7 14.0 (8.8 ) (5.0 )
Gross profit rate 31.6 % 36.2 % (4.6 ) pts.
Total APAC
Revenue from services $ 392.2 $ 382.7 2.5 % 6.0 %
Staffing fee-based income included in revenue from services 15.7 18.0 (13.1 ) (9.8 )
Gross profit 60.2 63.3 (4.8 ) (1.4 )
SG&A expenses excluding restructuring charges 56.4 60.2 (6.3 )
Restructuring charges 1.3 0.3 373.4
Total SG&A expenses 57.7 60.5 (4.5 ) (0.8 )
Earnings from operations 2.5 2.8 (11.0 )
Earnings from operations excluding restructuring charges 3.8 3.1 24.7
Gross profit rate 15.4 % 16.5 % (1.1 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.4 15.7 (1.3 )
% of gross profit 93.6 95.1 (1.5 )
Return on sales (excluding restructuring charges) 1.0 0.8 0.2
OCG
Revenue from services $ 586.8 $ 509.5 15.2 % 15.7 %
Gross profit 143.6 128.2 12.0 12.4
SG&A expenses excluding restructuring charges 127.3 110.6 15.1
Restructuring charges - 0.9 (100.0 )
Total SG&A expenses 127.3 111.5 14.3 15.0
Asset impairments - 1.7 (100.0 )
Earnings from operations 16.3 15.0 7.3
Earnings from operations excluding restructuring charges 16.3 15.9 1.8
Gross profit rate 24.5 % 25.2 % (0.7 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 21.7 21.7 -
% of gross profit 88.7 86.3 2.4
Return on sales (excluding restructuring charges) 2.8 3.1 (0.3 )
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
Dec. 28, 2014 Dec. 29, 2013
Current Assets
Cash and equivalents $ 83.1 $ 125.7
Trade accounts receivable, less allowances of $10.7 and $9.9, respectively 1,122.8 1,023.1
Prepaid expenses and other current assets 47.9 52.2
Deferred taxes 34.4 35.5
Total current assets 1,288.2 1,236.5
Property and Equipment, Net 93.0 92.0
Noncurrent Deferred Taxes 146.3 121.7
Goodwill, Net 90.3 90.3
Other Assets 300.1 258.1
Total Assets $ 1,917.9 $ 1,798.6
Current Liabilities
Short-term borrowings $ 91.9 $ 28.3
Accounts payable and accrued liabilities 364.0 342.4
Accrued payroll and related taxes 308.5 294.9
Accrued insurance 26.9 27.6
Income and other taxes 68.8 68.8
Total current liabilities 860.1 762.0
Noncurrent Liabilities
Accrued insurance 43.9 46.0
Accrued retirement benefits 140.8 134.7
Other long-term liabilities 39.4 33.3
Total noncurrent liabilities 224.1 214.0
Stockholders' Equity
Common stock 40.1 40.1
Treasury stock (49.8 ) (56.2 )
Paid-in capital 24.9 26.0
Earnings invested in the business 767.4 751.3
Accumulated other comprehensive income 51.1 61.4
Total stockholders' equity 833.7 822.6
Total Liabilities and Stockholders' Equity $ 1,917.9 $ 1,798.6
STATISTICS:
Working Capital $ 428.1 $ 474.5
Current Ratio 1.5 1.6
Debt-to-capital % 9.9 % 3.3 %
Global Days Sales Outstanding 54 52
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars)
2014 2013
Cash flows from operating activities:
Net earnings $ 23.7 $ 58.9
Noncash adjustments:
Impairment of assets - 1.7
Depreciation and amortization 21.7 20.4
Provision for bad debts 5.3 2.0
Stock-based compensation 5.3 3.8
Other, net (0.4 ) 0.6
Changes in operating assets and liabilities (125.6 ) 27.9
Net cash (used in) from operating activities (70.0 ) 115.3
Cash flows from investing activities:
Capital expenditures (21.7 ) (20.0 )
Investment in equity affiliate (5.7 ) -
Other investing activities 0.2 (0.8 )
Net cash used in investing activities (27.2 ) (20.8 )
Cash flows from financing activities:
Net change in short-term borrowings 63.9 (35.8 )
Dividend payments (7.6 ) (7.6 )
Other financing activities 0.3 (0.3 )
Net cash from (used in) financing activities 56.6 (43.7 )
Effect of exchange rates on cash and equivalents (2.0 ) (1.4 )
Net change in cash and equivalents (42.6 ) 49.4
Cash and equivalents at beginning of period 125.7 76.3
Cash and equivalents at end of period $ 83.1 $ 125.7
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Fourth Quarter (Commercial, PT and OCG)
% Change
Constant
2014 2013 US$ Currency
Americas
United States $ 933.9 $ 872.6 7.0 % 7.0 %
Canada 50.0 52.4 (4.5 ) 3.2
Mexico 36.7 33.9 8.2 15.2
Puerto Rico 26.6 24.6 8.3 8.3
Brazil 13.9 14.0 (0.6 ) 7.6
Total Americas 1,061.1 997.5 6.4 7.1
EMEA
France 66.4 66.1 0.4 9.2
Switzerland 57.8 70.3 (17.9 ) (12.7 )
Portugal 32.4 27.3 18.9 29.4
United Kingdom 23.2 27.2 (14.7 ) (13.0 )
Russia 20.9 33.0 (36.6 ) (9.3 )
Germany 16.8 17.5 (4.1 ) 4.2
Italy 13.9 15.3 (8.7 ) (0.8 )
Norway 11.9 14.8 (19.9 ) (9.8 )
Other 13.6 16.9 (19.4 ) (12.0 )
Total EMEA 256.9 288.4 (10.9 ) (1.5 )
APAC
Singapore 32.7 30.6 7.0 10.8
Australia 32.6 30.2 7.9 16.8
Malaysia 16.2 16.1 0.6 5.4
New Zealand 13.2 14.0 (6.1 ) (0.6 )
Other 12.3 9.0 37.1 37.5
Total APAC 107.0 99.9 7.1 12.6
Total Kelly Services, Inc. $ 1,425.0 $ 1,385.8 2.8 % 5.7 %
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
December Year to Date (Commercial, PT and OCG)
% Change
Constant
2014 2013 US$ Currency
Americas
United States $ 3,535.8 $ 3,419.9 3.4 % 3.4 %
Canada 198.2 216.3 (8.4 ) (1.9 )
Mexico 139.0 133.3 4.3 8.7
Puerto Rico 105.0 98.2 6.9 6.9
Brazil 57.1 59.0 (3.2 ) 5.8
Total Americas 4,035.1 3,926.7 2.8 3.4
EMEA
France 268.6 248.1 8.3 8.3
Switzerland 253.5 255.9 (0.9 ) (2.5 )
Portugal 124.8 90.3 38.2 38.5
Russia 117.3 135.0 (13.1 ) 2.2
United Kingdom 105.6 105.3 0.3 (5.1 )
Germany 67.5 66.8 1.1 1.2
Italy 60.2 58.9 2.2 1.9
Norway 55.5 61.1 (9.2 ) (3.2 )
Other 64.5 67.6 (4.6 ) (4.4 )
Total EMEA 1,117.5 1,089.0 2.6 4.0
APAC
Singapore 127.5 114.1 11.8 13.2
Australia 121.4 130.6 (7.1 ) (0.7 )
Malaysia 66.2 67.2 (1.4 ) 2.4
New Zealand 51.4 50.1 2.5 1.4
Other 43.6 35.4 23.2 30.2
Total APAC 410.1 397.4 3.2 6.8
Total Kelly Services, Inc. $ 5,562.7 $ 5,413.1 2.8 % 3.8 %
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
2014 2013
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 1,425.0 $ - $ 1,425.0 $ 1,385.8 2.8 %
Cost of services 1,192.4 - 1,192.4 1,154.3 3.3
Gross profit 232.6 - 232.6 231.5 0.5
SG&A expenses 230.0 (6.2 ) 223.8 221.6 1.1
Earnings from operations 2.6 6.2 8.8 9.9 (9.7 )
Other expense, net 1.1 - 1.1 0.6 89.6
Earnings before taxes 1.5 6.2 7.7 9.3 (15.7 )
Inc. tax (benefit) expense* (15.5 ) 2.4 (13.1 ) (8.2 ) (60.2 )
Net earnings $ 17.0 $ 3.8 $ 20.8 $ 17.5 19.8 %
Earnings per share:
Basic $ 0.44 $ 0.10 $ 0.54 $ 0.45 20.0 %
Diluted $ 0.44 $ 0.10 $ 0.54 $ 0.45 20.0 %
* Income tax benefit for the fourth quarter of 2014 includes $13.6 million related to the retroactive reinstatement of work opportunity credits for the entire year.
2013
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 1,385.8 $ - $ 1,385.8
Cost of services 1,154.3 - 1,154.3
Gross profit 231.5 - 231.5
SG&A expenses 221.9 (0.3 ) 221.6
Earnings from operations 9.6 0.3 9.9
Other expense, net 0.6 - 0.6
Earnings before taxes 9.0 0.3 9.3
Inc. tax (benefit) expense (8.2 ) - (8.2 )
Net earnings $ 17.2 $ 0.3 $ 17.5
Earnings per share:
Basic $ 0.45 $ 0.01 $ 0.45
Diluted $ 0.45 $ 0.01 $ 0.45
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 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
2014 2013
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 5,562.7 $ - $ 5,562.7 $ 5,413.1 2.8 %
Cost of services 4,654.3 - 4,654.3 4,523.6 2.9
Gross profit 908.4 - 908.4 889.5 2.1
SG&A expenses 886.5 (12.0 ) 874.5 832.9 5.0
Earnings from operations 21.9 12.0 33.9 56.6 (40.2 )
Other expense, net 5.3 - 5.3 4.5 15.3
Earnings before taxes 16.6 12.0 28.6 52.1 (45.0 )
Inc. tax (benefit) expense (7.1 ) 4.5 (2.6 ) (10.0 ) 74.0
Net earnings $ 23.7 $ 7.5 $ 31.2 $ 62.1 (49.7) %
Earnings per share:
Basic $ 0.61 $ 0.19 $ 0.81 $ 1.62 (50.0 )%
Diluted $ 0.61 $ 0.19 $ 0.81 $ 1.62 (50.0 )%
2013
As reported Restructuring Charges
(Note 1)
Asset Impairments (Note 2) Adjusted Earnings
Revenue from services $ 5,413.1 $ - $ - $ 5,413.1
Cost of services 4,523.6 - - 4,523.6
Gross profit 889.5 - - 889.5
SG&A expenses 834.5 (1.6 ) - 832.9
Asset impairments 1.7 - (1.7 ) -
Earnings from operations 53.3 1.6 1.7 56.6
Other expense, net 4.5 - - 4.5
Earnings before taxes 48.8 1.6 1.7 52.1
Inc. tax (benefit) expense (10.1 ) 0.1 - (10.0 )
Net earnings $ 58.9 $ 1.5 $ 1.7 $ 62.1
Earnings per share:
Basic $ 1.54 $ 0.04 $ 0.04 $ 1.62
Diluted $ 1.54 $ 0.04 $ 0.04 $ 1.62
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
KELLY SERIVCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2014 financial performance and increases comparability. Specifically, Management believes that excluding these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) Restructuring charges in 2014 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.

(2) Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.

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

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

Source: Kelly Services

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