October 25, 2005

Kelly Services Reports Record Revenue and Strong Earnings Growth for the 3rd Quarter of 2005

TROY, Mich., Oct 25, 2005 -- Kelly Services, Inc., a global provider of staffing services, today announced record revenue and strong earnings growth for third quarter ended October 2, 2005.

(Logo: http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO )

Terence E. Adderley, Kelly Services chairman and chief executive officer, announced revenue for the third quarter of 2005 totaled $1.345 billion, an 8.0% increase compared to the $1.245 billion for the corresponding quarter in 2004. Revenue for the nine-month period totaled $3.906 billion, a 7.7% increase compared to the $3.628 billion for the first nine months of 2004.

Net earnings for the third quarter of 2005 totaled $12.7 million, a 57% increase compared to $8.1 million reported for the third quarter of 2004. Net earnings for the first nine months of 2005 totaled $25.9 million, a 96% increase compared to the $13.3 million earned during the comparable nine-month period of 2004.

Diluted earnings per share in the third quarter of 2005 were $0.35, a 52% increase as compared to third quarter 2004 earnings of $0.23 per share. Diluted earnings per share for the first nine months of 2005 were $0.72, a 95% increase compared to the $0.37 per share earned in the first nine months of 2004.

Commenting on the results, Adderley said, "Our revenue of $1.345 billion achieved a new sales record for the third quarter, exceeding the previous record we set in 2004 by nearly $100 million.

"We expect fourth quarter 2005 earnings to be in the range of $0.28 to $0.33, as compared to $0.22 per share in the fourth quarter of 2004. Our 2005 year to date results, combined with our fourth quarter guidance, will bring us to earnings that will range between $1.00 and $1.05 per share for the full year. This forecast is based on moderate global economic growth over the balance of 2005.

"Revenue in our U.S. Commercial staffing segment, which accounted for 46% of total sales, increased 7.9% year over year during the third quarter. The gross profit rate in this segment increased four-tenths of a percent, due to a combination of improved pricing, lower workers compensation costs, and higher fee based income. Expenses increased 6.8% compared to last year. Operating earnings totaled $34.8 million, an increase of 18.4% compared to last year.

"Revenue in our Professional, Technical, and Staffing Alternatives (PTSA) segment, which accounted for 21% of total sales, increased 9.1% year over year during the third quarter. Kelly Engineering Resources and Kelly IT Resources were the leading professional and technical performers in the third quarter. Vendor Management Services and Kelly HRfirst were the leading staffing alternatives units. The Automotive Services Group and the Kelly Law Registry experienced revenue decreases during the quarter. Kelly Staff Leasing revenue also declined, reflecting the repositioning of its customer mix. The PTSA gross profit rate decreased seven-tenths of a percent, primarily due to changes in business unit mix and rates, partially offset by higher fee based income. Expenses increased 3.5% as compared to last year. Operating earnings totaled $17.6 million and increased 7.1% on a year over year basis.

"Revenue in our International segment, which accounted for 33% of total sales, increased 7.4% year over year during the third quarter. The International gross profit rate decreased by two-tenths of a percent, primarily due to lower temporary staffing gross profit rates partially offset by growth in fee based income. Operating expenses increased by 6.5% in U.S. dollar terms. Operating earnings totaled $6.4 million, an increase of 3.1% compared to last year.

"On a constant currency basis, International segment revenue increased 5.7%, and total Company revenue increased 7.4% year over year in the third quarter."

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on October 25, 2005 to review the results. The call may be accessed in one of the following ways:

Via the Telephone:
U.S. 1-800-553-0273
International 1-612-332-0335

The conference call leader is Terence Adderley
The passcode is Kelly Services

Via the Internet:

You may access the call via the Internet through the Kelly Services website: http://www.kellyservices.com

This release contains statements that are forward looking in nature and accordingly, are subject to risks and uncertainties. These factors include: competition, changing market and economic conditions, currency fluctuations, changes in laws and regulations, including tax laws, the company's ability to effectively manage its information technology programs, and other factors discussed in this release and in the company's filings with the Securities and Exchange Commission. Actual results may differ materially from any projections contained herein.

Kelly Services, Inc. (Nasdaq: KELYA, KELYB) is a Fortune 500 company headquartered in Troy, Mich., offering staffing solutions that include temporary staffing services, staff leasing, outsourcing, vendor on-site and full-time placement. Kelly owns and operates nearly 2,600 offices in 29 countries and territories. Kelly provides employment to over 700,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, light industrial, education, health care, and home care. Revenue in 2004 was $4.98 billion. Visit http://www.kellyservices.com .


                      KELLY SERVICES, INC. AND SUBSIDIARIES
                              STATEMENTS OF EARNINGS
          FOR THE 13 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004
                                   (UNAUDITED)
                 (In thousands of dollars except per share data)

                                  2005          2004        Change   % Change

    Revenue from services      $1,344,644    $1,244,854    $99,790      8.0%

    Cost of services            1,126,466     1,042,486     83,980      8.1

    Gross profit                  218,178       202,368     15,810      7.8

    Selling, general and
     administrative expenses      200,849       190,037     10,812      5.7

    Earnings from operations       17,329        12,331      4,998     40.5

    Interest income (expense),
     net                               10          (194)       204    105.2

    Earnings before taxes          17,339        12,137      5,202     42.9

    Income taxes                    4,664         4,043        621     15.4

    Net earnings                  $12,675        $8,094     $4,581     56.6%

    Basic earnings per share        $0.35         $0.23      $0.12     52.2%

    Diluted earnings per share      $0.35         $0.23      $0.12     52.2%


    STATISTICS:

    Gross profit rate                16.2%         16.3%      (0.1)%

    Expenses as a % of revenue       14.9          15.3       (0.4)

    % Return -
       Earnings from operations       1.3           1.0        0.3
       Earnings before taxes          1.3           1.0        0.3
       Net earnings                   0.9           0.7        0.2

    Effective income tax rate        26.9%         33.3%      (6.4)%

    Average number of shares
     outstanding (thousands):
       Basic                       35,725        35,199
       Diluted                     36,006        35,424



                      KELLY SERVICES, INC. AND SUBSIDIARIES
                              STATEMENTS OF EARNINGS
          FOR THE 39 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004
                                   (UNAUDITED)
                 (In thousands of dollars except per share data)

                                  2005          2004        Change   % Change

    Revenue from services      $3,905,883    $3,628,129    $277,754     7.7%

    Cost of services            3,269,519     3,044,323     225,196     7.4

    Gross profit                  636,364       583,806      52,558     9.0

    Selling, general and
     administrative expenses      599,332       561,013      38,319     6.8

    Earnings from operations       37,032        22,793      14,239    62.5

    Interest expense, net            (177)         (716)        539    75.3

    Earnings before taxes          36,855        22,077      14,778    66.9

    Income taxes                   10,909         8,816       2,093    23.7

    Net earnings                  $25,946       $13,261     $12,685    95.7%

    Basic earnings per share        $0.73         $0.38       $0.35    92.1%

    Diluted earnings per share      $0.72         $0.37       $0.35    94.6%


    STATISTICS:

    Gross profit rate                16.3%         16.1%        0.2%

    Expenses as a % of revenue       15.3          15.5        (0.2)

    % Return -
       Earnings from operations       0.9           0.6         0.3
       Earnings before taxes          0.9           0.6         0.3
       Net earnings                   0.7           0.4         0.3

    Effective income tax rate        29.6%         39.9%      (10.3)%

    Average number of shares
     outstanding (thousands):
       Basic                       35,619        35,046
       Diluted                     35,903        35,400



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

                                                    Third Quarter
                                        2005        2004     Change  % Change

    Revenue from Services:
    U.S. Commercial Staffing          $619,324    $573,873   $45,451    7.9%
    PTSA                               284,889     261,064    23,825    9.1
    International                      440,431     409,917    30,514    7.4

         Consolidated Total         $1,344,644  $1,244,854   $99,790    8.0%

    Earnings from Operations:
    U.S. Commercial Staffing           $34,821     $29,410    $5,411   18.4%
    PTSA                                17,569      16,410     1,159    7.1
    International                        6,351       6,161       190    3.1
    Corporate Expense                  (41,412)    (39,650)   (1,762)  (4.4)

         Consolidated Total            $17,329     $12,331    $4,998   40.5%

                                              September Year to Date
                                        2005        2004     Change  % Change

    Revenue from Services:
    U.S. Commercial Staffing        $1,787,263  $1,704,567   $82,696    4.9%
    PTSA                               838,275     756,427    81,848   10.8
    International                    1,280,345   1,167,135   113,210    9.7

         Consolidated Total         $3,905,883  $3,628,129  $277,754    7.7%

    Earnings from Operations:
    U.S. Commercial Staffing           $96,780     $83,152   $13,628   16.4%
    PTSA                                50,098      46,640     3,458    7.4
    International                       11,318       7,187     4,131   57.5
    Corporate Expense                 (121,164)   (114,186)   (6,978)  (6.1)

         Consolidated Total            $37,032     $22,793   $14,239   62.5%



                      KELLY SERVICES, INC. AND SUBSIDIARIES
                       RECONCILIATION OF CONSTANT CURRENCY
             REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
                                   (UNAUDITED)
                            (In thousands of dollars)

                                                     Third Quarter
                                        2005        2004     Change  % Change

    U.S. Commercial                   $619,324    $573,873   $45,451    7.9%
    PTSA                               284,889     261,064    23,825    9.1
    International - constant
     currency*                         433,304     409,917    23,387    5.7
      Revenue from services -
       constant currency             1,337,517   1,244,854    92,663    7.4%
    Foreign currency impact              7,127                 7,127

      Revenue from services         $1,344,644  $1,244,854   $99,790    8.0%

                                              September Year to Date
                                        2005        2004      Change % Change

    U.S. Commercial                 $1,787,263  $1,704,567   $82,696    4.9%
    PTSA                               838,275     756,427    81,848   10.8
    International - constant
     currency*                       1,240,053   1,167,135    72,918    6.2
      Revenue from services -
       constant currency             3,865,591   3,628,129   237,462    6.5%
    Foreign currency impact             40,292                40,292

      Revenue from services         $3,905,883  $3,628,129  $277,754    7.7%

* Information on constant currencies is provided to allow investors to separate the impact of foreign currency translations on reported results. Constant currency results are calculated by translating the current year results at prior year average exchange rates.



                      KELLY SERVICES, INC. AND SUBSIDIARIES
                                 BALANCE SHEETS
                            (In thousands of dollars)

                                        October 2,  January 2,  September 26,
                                           2005        2005         2004
                                       (UNAUDITED)              (UNAUDITED)
    Current Assets
      Cash and equivalents                $59,286     $79,348      $69,562
      Short-term investments                  221       6,288       16,182
      Trade accounts receivable, less
       allowances of $17,320, $16,228
       and $16,637, respectively          811,583     727,366      741,938
      Prepaid expenses and other
       current assets                      47,032      43,942       39,508
      Deferred taxes                       37,702      36,055       21,827

               Total current assets       955,824     892,999      889,017

    Property and Equipment, Net           165,947     181,086      173,098

    Noncurrent Deferred Taxes              18,353      17,960       11,741

    Goodwill, Net                          88,723      94,652       84,875

    Other Assets                           87,082      63,059       58,674


    Total Assets                       $1,315,929  $1,249,756   $1,217,405

    Current Liabilities
      Short-term borrowings               $47,991     $34,289      $43,109
      Accounts payable                    115,252     105,685       94,859
      Accrued payroll and related taxes   277,392     246,802      254,813
      Accrued insurance                    33,683      33,165       38,602
      Income and other taxes               64,561      67,839       47,503

               Total current liabilities  538,879     487,780      478,886

    Noncurrent Liabilities
      Accrued insurance                    59,883      58,548       62,982
      Accrued retirement benefits          56,024      50,892       49,274

               Total noncurrent
                liabilities               115,907     109,440      112,256

    Stockholders' Equity
      Common stock                         40,116      40,116       40,116
      Treasury stock                      (91,666)    (97,693)    (103,830)
      Paid-in capital                      23,830      22,530       20,917
      Earnings invested in the business   678,298     663,039      658,615
      Accumulated foreign currency
       adjustments                         10,565      24,544       10,445

               Total stockholders'
                equity                    661,143     652,536      626,263

    Total Liabilities and Stockholders'
     Equity                            $1,315,929  $1,249,756   $1,217,405


    STATISTICS:
     Working Capital                     $416,945    $405,219     $410,131
     Current Ratio                            1.8         1.8          1.9
     Debt-to-capital %                        6.8%        5.0%         6.4%
     Global Days Sales Outstanding
         Quarter                               55          53           54
         Year-to-date                          57          54           56



                      KELLY SERVICES, INC. AND SUBSIDIARIES
                             STATEMENTS OF CASH FLOWS
          FOR THE 39 WEEKS ENDED OCTOBER 2, 2005 AND SEPTEMBER 26, 2004
                                   (UNAUDITED)
                            (In thousands of dollars)

                                                     2005              2004

    Cash flows from operating activities
       Net earnings                                 $25,946           $13,261
       Noncash adjustments:
         Depreciation and amortization               31,709            33,478
       Increase in trade accounts receivable, net  (103,981)          (83,377)
       Changes in other operating assets and
        liabilities                                  61,232            54,816

            Net cash from operating activities       14,906            18,178

    Cash flows from investing activities
       Capital expenditures                         (17,899)          (17,650)
       Decrease in short-term investments             1,135                80
       Increase in other assets                      (8,422)             (769)
       Investments in unconsolidated affiliates     (19,681)                -

            Net cash from investing activities      (44,867)          (18,339)

    Cash flows from financing activities
       (Decrease) increase in short-term borrowings  (2,708)            3,896
       Financing to fund long-term investments in
        unconsolidated affiliates                    19,681                 -
       Dividend payments                            (10,687)          (10,517)
       Stock options and other stock sales            5,031             8,532
       Other financing activities                     1,168            (5,964)
       Purchase of treasury stock                         -                (3)

            Net cash from financing activities       12,485            (4,056)

    Effect of exchange rates on cash and
     equivalents                                     (2,586)             (232)

    Net change in cash and equivalents              (20,062)           (4,449)
    Cash and equivalents at beginning of period      79,348            74,011


    Cash and equivalents at end of period           $59,286           $69,562


SOURCE Kelly Services, Inc.

ANALYST CONTACT: James Polehna, +1-248-244-4586,
james_polehna@kellyservices.com , or
MEDIA CONTACT: Renee Walker, +1-248-244-5362,
renee_walker@kellyservices.com , both
of Kelly Services, Inc.


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