0000055135-14-000026.txt : 20140806 0000055135-14-000026.hdr.sgml : 20140806 20140806073317 ACCESSION NUMBER: 0000055135-14-000026 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140806 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140806 DATE AS OF CHANGE: 20140806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KELLY SERVICES INC CENTRAL INDEX KEY: 0000055135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 381510762 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01088 FILM NUMBER: 141018083 BUSINESS ADDRESS: STREET 1: 999 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 2483624444 MAIL ADDRESS: STREET 1: 999 WEST BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 8-K 1 form8-k2014secondquarter.htm 8-K Form 8-K 2014 Second Quarter



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
 
 
Date of Report (Date of earliest event reported): August 6, 2014
 
 
KELLY SERVICES, INC.
---------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
 
DELAWARE
0-1088
38-1510762
(State or other 
(Commission
(IRS Employer
jurisdiction of 
File Number)
Identification
incorporation) 
 
Number)


                                     
999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
-------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
 
(248) 362-4444
----------------------------------------------------------------------
(Registrant's telephone number, including area code)
 
 
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 (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act
     (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
     (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
     the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
     the Exchange Act (17 CFR 240.13e-4(c))








1


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 and six months ended June 29, 2014. 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 August 6, 2014.          
















































2



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.
 
 
 
KELLY SERVICES, INC.
 
Date: August 6, 2014
 
 
 
 
 
 
 
 
 
/s/ Patricia Little
Patricia Little
 
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
Date: August 6, 2014
 
 
 
 
 
 
 
 
 
/s/ Michael E. Debs
Michael E. Debs
 
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
 






















3




EXHIBIT INDEX
  
Exhibit No.
                   Description
 
 
99.1
Press release dated August 6, 2014


4
 EX-99.1 2 a20142qearningsreleaseform.htm EXHIBIT 99.1 2014 2Q Earnings Release Form 8-K - 1

Exhibit 99.1
KELLY SERVICES® REPORTS 2nd QUARTER RESULTS

TROY, MI (August 6, 2014) -- 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








1

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, 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.

# # #


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


2

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

 
 
 
 
 


3

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

 
 
 
 
 


4

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
)
 
 
 

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

 
 
 


6

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

 
 
 

7

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

 
 
 


8

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

 


9

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

 
 
 
 
 


10

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

%
 
 
 
 
 
 
 
 
 
 


11

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

%
 
 
 
 
 
 
 
 
 
 


12

 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.
 
 


13

 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.
 
 


14

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.

15
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