UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

KELLY SERVICES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		0-1088		38-1510762
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

999 WEST BIG BEAVER ROAD, TROY, MICHIGAN		48084
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (248) 362-4444

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition

Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months ended April 3, 2011. A copy of the press release is attached as exhibit 99.1 herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1   Press Release dated May 11, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press release dated May 11, 2011

Exhibit 99.1

KELLY SERVICES REPORTS 1st QUARTER 2011 RESULTS

TROY, MI (May 11, 2011) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2011 totaled $1.3 billion, a 19% increase compared to the corresponding quarter in 2010.

Earnings from operations for the first quarter of 2011 totaled $1.6 million, compared to losses from operations of $1.6 million reported for the first quarter of 2010. Included in the results from operations are restructuring charges of $4.0 million in the first quarter of 2011 and $4.4 million in the first quarter of 2010. Excluding restructuring charges, earnings from operations were $5.6 million in the first quarter of 2011 and $2.8 million in the first quarter of 2010.

Diluted earnings per share in the first quarter of 2011 were $0.03 compared to first quarter 2010 losses of $0.06 per share. Excluding restructuring charges, diluted earnings per share were $0.14 in the first quarter of 2011 and $0.05 in the first quarter of 2010.

Commenting on the first quarter results, Camden stated, “We continue to see evidence of a solid, sustainable economic recovery. Kelly’s revenue growth for the period certainly confirms that we are on track for a profitable year.”

Camden added, “Until full confidence is restored, and employers remain cautious about ramping up too aggressively, this environment seems to favor the staffing industry — and we intend to capitalize on the opportunities presented.

“Going forward, Kelly is committed to improving our competitive position and enhancing shareholder value by delivering customer-focused workforce solutions — spanning traditional staffing, professional and technical offerings, and outsourcing and consulting services, and maintaining talent excellence throughout our company.”

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 11, 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, 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, further impairment charges initiated 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, 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 recent U.S. healthcare legislation 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, 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 530,000 employees annually. Revenue in 2010 was $5.0 billion. Visit www.kellyservices.com and connect with us on facebook.com/kellyservices, linkedin.com/companies/kelly-services and twitter.com/kellyservices.

#

ANALYST CONTACT:		MEDIA CONTACT:
James Polehna		Jane Stehney
(248) 244-4586		(248) 244-5630
james_polehna@kellyservices.com		jane_stehney@kellyservices.com

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED APRIL 3, 2011 AND APRIL 4, 2010
(UNAUDITED)
(In millions of dollars except per share data)

		2011				2010				Change				% Change
Revenue from services		$	1,339.1			$	1,130.4			$	208.7				18.5	%
Cost of services			1,125.4				950.4				175.0				18.4
Gross profit			213.7				180.0				33.7				18.7
Selling, general and administrative expenses			212.1				181.6				30.5				16.8
Earnings (loss) from operations			1.6				(1.6	)			3.2			NM
Other expense, net			(0.4	)			(1.1	)			0.7				60.5
Earnings (loss) before taxes			1.2				(2.7	)			3.9			NM
Income taxes			0.1				(0.7	)			0.8				107.7
Net earnings (loss)		$	1.1			$	(2.0	)		$	3.1				NM	%
Earnings (loss) per share
Basic		$	0.03			$	(0.06	)		$	0.09				NM	%
Diluted		$	0.03			$	(0.06	)		$	0.09				NM	%
STATISTICS:
Gross profit rate			16.0	%			15.9	%			0.1	pts.
Selling, general and administrative expenses:
% of revenue			15.8				16.1				(0.3	)
% of gross profit			99.2				100.9				(1.7	)
% Return — Earnings (loss) from operations			0.1				(0.1	)			0.2
Earnings (loss) before taxes			0.1				(0.2	)			0.3
Net earnings (loss)			0.1				(0.2	)			0.3
Effective income tax rate			4.5	%			26.4	%			(21.9	)pts.
Average number of shares outstanding (millions):
Basic			36.7				35.0
Diluted			36.7				35.0
Shares adjusted for nonvested restricted awards (millions):
Basic			37.4				N/A
Diluted			37.4				N/A

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

		First Quarter
														Constant
														Currency
		2011				2010				Change				Change
Americas Commercial
Revenue from services (including fee-based income)		$	653.3			$	547.7				19.3	%			18.5	%
Fee-based income			2.8				2.1				34.2				32.6
Gross profit			92.5				78.5				17.8				17.1
SG&A expenses excluding restructuring charges			75.8				65.1				16.6
Restructuring charges			—				0.3				(100.0	)
Total SG&A expenses			75.8				65.4				16.0				15.4
Earnings from operations			16.7				13.1				26.8
Earnings from operations excluding restructuring charges			16.7				13.4				23.4
Gross profit rate			14.2	%			14.3	%			(0.1	)pts.
Expense rates (excluding restructuring charges):
% of revenue			11.6				11.9				(0.3	)
% of gross profit			82.0				82.8				(0.8	)
Operating margin (excluding restructuring charges)			2.6				2.5				0.1
Americas PT
Revenue from services (including fee-based income)		$	240.6			$	205.6				17.0	%			16.9	%
Fee-based income			2.8				2.3				21.2				21.0
Gross profit			36.1				31.5				14.5				14.4
Total SG&A expenses			27.6				23.0				19.8				19.7
Earnings from operations			8.5				8.5				0.2
Gross profit rate			15.0	%			15.3	%			(0.3	)pts.
Expense rates:
% of revenue			11.5				11.2				0.3
% of gross profit			76.4				73.0				3.4
Operating margin			3.5				4.1				(0.6	)
EMEA Commercial
Revenue from services (including fee-based income)		$	231.5			$	204.9				13.0	%			10.1	%
Fee-based income			5.8				4.8				19.4				16.1
Gross profit			37.3				32.8				13.7				10.8
SG&A expenses excluding restructuring charges			35.3				32.4				9.0
Restructuring charges			4.0				2.7				47.9
Total SG&A expenses			39.3				35.1				12.0				8.1
Earnings from operations			(2.0	)			(2.3	)			13.1
Earnings from operations excluding restructuring charges			2.0				0.4				378.2
Gross profit rate			16.1	%			16.0	%			0.1	pts.
Expense rates (excluding restructuring charges):
% of revenue			15.2				15.8				(0.6	)
% of gross profit			94.6				98.7				(4.1	)
Operating margin (excluding restructuring charges)			0.9				0.2				0.7

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

		First Quarter
														Constant
														Currency
		2011				2010				Change				Change
EMEA PT
Revenue from services (including fee-based income)		$	41.4			$	34.9				18.6	%			16.3	%
Fee-based income			4.4				3.7				18.5				15.7
Gross profit			11.0				9.4				16.6				14.4
Total SG&A expenses			10.7				9.5				12.4				9.0
Earnings from operations			0.3				(0.1	)		NM
Gross profit rate			26.6	%			27.1	%			(0.5	)pts.
Expense rates:
% of revenue			25.9				27.3				(1.4	)
% of gross profit			97.3				101.0				(3.7	)
Operating margin			0.7				(0.3	)			1.0
APAC Commercial
Revenue from services (including fee-based income)		$	99.7			$	80.9				23.2	%			13.5	%
Fee-based income			3.5				2.8				26.6				16.4
Gross profit			13.5				11.4				18.7				8.8
SG&A expenses excluding restructuring charges			13.3				9.9				35.1
Restructuring charges			—				0.5				(100.0	)
Total SG&A expenses			13.3				10.4				28.1				17.7
Earnings from operations			0.2				1.0				(82.8	)
Earnings from operations excluding restructuring charges			0.2				1.5				(89.0	)
Gross profit rate			13.6	%			14.1	%			(0.5	)pts.
Expense rates (excluding restructuring charges):
% of revenue			13.4				12.2				1.2
% of gross profit			98.8				86.8				12.0
Operating margin (excluding restructuring charges)			0.2				1.9				(1.7	)
APAC PT
Revenue from services (including fee-based income)		$	11.5			$	7.6				50.6	%			40.6	%
Fee-based income			3.8				1.9				104.0				90.0
Gross profit			5.0				2.8				79.4				66.8
Total SG&A expenses			5.7				3.8				52.9				42.2
Earnings from operations			(0.7	)			(1.0	)			25.6
Gross profit rate			43.7	%			36.7	%			7.0	pts.
Expense rates:
% of revenue			49.8				49.1				0.7
% of gross profit			114.0				133.8				(19.8	)
Operating margin			(6.1	)			(12.4	)			6.3

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

		First Quarter
														Constant
														Currency
		2011				2010				Change				Change
OCG
Revenue from services (including fee-based income)		$	68.2			$	55.3				23.4	%			22.7	%
Fee-based income			8.7				6.1				42.6				39.6
Gross profit			18.9				14.0				35.5				33.9
SG&A expenses excluding restructuring charges			21.3				18.4				15.4
Restructuring charges			—				0.1				(100.0	)
Total SG&A expenses			21.3				18.5				14.9				13.0
Earnings from operations			(2.4	)			(4.5	)			48.0
Earnings from operations excluding restructuring charges			(2.4	)			(4.4	)			47.1
Gross profit rate			27.7	%			25.3	%			2.4	pts.
Expense rates (excluding restructuring charges):
% of revenue			31.2				33.4				(2.2	)
% of gross profit			112.5				132.1				(19.6	)
Operating margin (excluding restructuring charges)			(3.5	)			(8.1	)			4.6
Corporate Expense
SG&A expenses excluding restructuring charges		$	19.0			$	15.5				22.0	%
Restructuring charges			—				0.8				(100.0	)
Total SG&A expenses			19.0				16.3				16.3
Consolidated Total (net of intersegment activity)
Revenue from services (including fee-based income)		$	1,339.1			$	1,130.4				18.5	%			16.7	%
Fee-based income			31.8				23.7				34.3				29.9
Gross profit			213.7				180.0				18.7				16.8
SG&A expenses excluding restructuring charges			208.1				177.2				17.4
Restructuring charges			4.0				4.4				(10.3	)
Total SG&A expenses			212.1				181.6				16.8				14.6
Earnings from operations			1.6				(1.6	)		NM
Earnings from operations excluding restructuring charges			5.6				2.8				95.7
Gross profit rate			16.0	%			15.9	%			0.1	pts.
Expense rates (excluding restructuring charges):
% of revenue			15.5				15.7				(0.2	)
% of gross profit			97.4				98.4				(1.0	)
Operating margin (excluding restructuring charges)			0.4				0.3				0.1

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

						January 2,
		April 3, 2011				2011				April 4, 2010
Current Assets
Cash and equivalents		$	59.8			$	80.5			$	55.7
Trade accounts receivable, less allowances of $13.2, $12.3 and $14.4, respectively			875.8				810.9				727.3
Prepaid expenses and other current assets			68.4				44.8				79.7
Deferred taxes			17.4				22.4				18.4
Total current assets			1,021.4				958.6				881.1
Property and Equipment, Net			99.5				104.0				120.0
Noncurrent Deferred Taxes			83.9				84.0				76.9
Goodwill, Net			67.3				67.3				67.3
Other Assets			154.9				154.5				144.7
Total Assets		$	1,427.0			$	1,368.4			$	1,290.0
Current Liabilities
Short-term borrowings and current portion of long-term debt		$	65.4			$	78.8			$	68.2
Accounts payable and accrued liabilities			207.3				181.6				165.8
Accrued payroll and related taxes			270.9				243.3				218.2
Accrued insurance			31.5				31.3				22.5
Income and other taxes			61.7				56.0				46.5
Total current liabilities			636.8				591.0				521.2
Noncurrent Liabilities
Long-term debt			—				—				56.1
Accrued insurance			54.1				53.6				53.7
Accrued retirement benefits			90.2				85.4				77.7
Other long-term liabilities			14.2				14.6				15.5
Total noncurrent liabilities			158.5				153.6				203.0
Stockholders’ Equity
Common stock			40.1				40.1				40.1
Treasury stock			(70.8	)			(70.9	)			(106.7	)
Paid-in capital			29.3				28.0				37.4
Earnings invested in the business			598.7				597.6				569.5
Accumulated other comprehensive income			34.4				29.0				25.5
Total stockholders’ equity			631.7				623.8				565.8
Total Liabilities and Stockholders’ Equity		$	1,427.0			$	1,368.4			$	1,290.0
STATISTICS:
Working Capital		$	384.6			$	367.6			$	359.9
Current Ratio			1.6				1.6				1.7
Debt-to-capital %			9.4	%			11.2	%			18.0	%
Global Days Sales Outstanding			52				49				51

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 3, 2011 AND APRIL 4, 2010
(UNAUDITED)
(In millions of dollars)

		2011				2010
Cash flows from operating activities
Net earnings (loss)		$	1.1			$	(2.0	)
Noncash adjustments:
Depreciation and amortization			8.3				9.1
Provision for bad debts			1.2				0.1
Stock-based compensation			1.4				1.1
Other, net			(0.1	)			0.2
Changes in operating assets and liabilities			(16.9	)			(27.4	)
Net cash from operating activities			(5.0	)			(18.9	)
Cash flows from investing activities
Capital expenditures			(2.5	)			(1.4	)
Other investing activities			—				0.1
Net cash from investing activities			(2.5	)			(1.3	)
Cash flows from financing activities
Net change in short-term borrowings			48.3				(11.2	)
Repayment of debt			(62.9	)			—
Other financing activities			(1.0	)			—
Net cash from financing activities			(15.6	)			(11.2	)
Effect of exchange rates on cash and equivalents			2.4				(1.8	)
Net change in cash and equivalents			(20.7	)			(33.2	)
Cash and equivalents at beginning of period			80.5				88.9
Cash and equivalents at end of period		$	59.8			$	55.7

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

		First Quarter (Commercial, PT and OCG)
										% Change
														Constant
		2011				2010				US$				Currency
Americas
United States		$	839.7			$	710.2				18.2	%			18.2	%
Canada			59.4				51.6				15.1				9.2
Mexico			25.1				19.0				32.1				25.0
Puerto Rico			22.1				14.7				49.6				49.6
Total Americas			946.3				795.5				18.9				18.4
EMEA
France			70.0				67.3				4.0				4.9
Switzerland			47.2				31.4				50.6				33.5
Russia			34.2				23.3				46.8				43.6
United Kingdom			31.1				37.6				(17.4	)			(19.9	)
Portugal			20.6				18.4				12.3				12.8
Germany			20.3				16.3				24.7				25.5
Italy			16.6				16.7				(0.8	)			(0.5	)
Norway			15.1				13.9				8.8				6.1
Other			23.2				19.2				20.7				20.3
Total EMEA			278.3				244.1				14.0				11.3
APAC
Australia			36.4				27.6				31.7				18.4
Singapore			26.1				18.9				38.1				25.6
Malaysia			17.6				14.6				20.7				9.3
India			17.6				13.7				28.5				26.8
Other			16.8				16.0				4.6				(1.0	)
Total APAC			114.5				90.8				26.0				16.3
Total Kelly Services, Inc.		$	1,339.1			$	1,130.4				18.5	%			16.7	%

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)

		First Quarter
		2011				2010
Pretax earnings (loss) from operations		$	1.6			$	(1.6	)
Restructuring charges (Note 1)			4.0				4.4
Earnings from operations excluding restructuring charges		$	5.6			$	2.8

		First Quarter
		2011								2010
		Amount				Per Share				Amount				Per Share
Net earnings (loss)		$	1.1			$	0.03			$	(2.0	)		$	(0.06	)
Restructuring charges, net of taxes (Note 1)			4.0				0.11				3.6				0.10
Net earnings excluding restructuring charges, net of taxes		$	5.1			$	0.14			$	1.6			$	0.05

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 is useful to understand the Company’s fiscal 2011 financial performance and increases comparability. Specifically, Management believes that excluding this item 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.