0000055135-14-000047.txt : 20141105 0000055135-14-000047.hdr.sgml : 20141105 20141105073619 ACCESSION NUMBER: 0000055135-14-000047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20141031 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141105 DATE AS OF CHANGE: 20141105 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: 141195042 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-k2014thirdquarter.htm 8-K Form 8-K 2014 Third 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): November 5, 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 nine months ended September 28, 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 November 5, 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.
 
November 5, 2014
 
 
 
 
 
 
 
 
 
/s/ Patricia Little
Patricia Little
 
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
November 5, 2014
 
 
 
 
 
 
 
 
 
/s/ Olivier Thirot
Olivier Thirot
 
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
 






















3




EXHIBIT INDEX
  
Exhibit No.
                   Description
 
 
99.1
Press release dated November 5, 2014


4
 EX-99.1 2 a20143qearningsreleaseform.htm EXHIBIT 99.1 2014 3Q Earnings Release Form 8-K

Exhibit 99.1
KELLY SERVICES® REPORTS 3rd QUARTER RESULTS

TROY, MI (November 5, 2014) -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the third quarter of 2014.
  
Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2014 totaled $1.4 billion, a 3.8% increase compared to the corresponding quarter of 2013.

Earnings from operations for the third quarter of 2014 totaled $7.1 million, compared to $20.2 million reported for the third quarter of 2013. Included in the results of operations in the third quarter of 2014 are restructuring charges of $4.0 million. The results of operations in the third quarter of 2013 included restructuring charges of $0.5 million. Excluding the restructuring charges from both years, earnings from operations were $11.1 million in the third quarter of 2014, compared to adjusted earnings of $20.7 million last year.

Diluted earnings per share in the third quarter of 2014 were $0.03 compared to $0.49 per share in the third quarter of 2013. Adjusted earnings per share were $0.10 in the third quarter of 2014 compared to $0.51 in the third quarter of 2013.

“We’re pleased with our third quarter performance,” said Camden. “2014 has been a year of aggressive strategic investments at Kelly, and we’re seeing early signs that those investments are gaining traction. We are now a leaner, more efficient company that is focused on growth and well-aligned with market demands for high-margin specialty staffing and holistic talent supply chain solutions.”

Kelly also reported that on November 4, its board of directors declared a dividend of $0.05 per share. The dividend is payable December 5 to shareholders of record as of the close of business on November 17.

In conjunction with its third quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on November 5, 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 SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
 
 
2014
 
2013
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,396.4

$
1,345.6

$
50.8

 
3.8

%
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,171.0

 
1,125.2

 
45.8

 
4.1

 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
225.4

 
220.4

 
5.0

 
2.2

 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
218.3

 
200.2

 
18.1

 
9.0

 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
7.1

 
20.2

 
(13.1
)
 
(65.1
)
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
2.2

 
1.3

 
0.9

 
(63.1
)
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
4.9

 
18.9

 
(14.0
)
 
(74.4
)
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
3.5

 
0.1

 
3.4

 
NM

 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
1.4

$
18.8

$
(17.4
)
 
(93.0
)
%
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.03

$
0.49

$
(0.46
)
 
(93.9
)
%
Diluted earnings per share
$
0.03

$
0.49

$
(0.46
)
 
(93.9
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.1

%
16.4

%
(0.3
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
    % of revenue
 
15.6

 
14.9

 
0.7

 
 
 
    % of gross profit
 
96.9

 
90.8

 
6.1

 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
Earnings from operations
 
0.5

 
1.5

 
(1.0
)
 
 
 
Earnings before taxes
 
0.3

 
1.4

 
(1.1
)
 
 
 
Net earnings
 
0.1

 
1.4

 
(1.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
72.7

%
0.3

%
72.4

pts.
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding
 
 
 
 
 
 
 
 
 
  (millions):
 
 
 
 
 
 
 
 
 
     Basic
 
37.6

 
37.4

 
 
 
 
 
     Diluted
 
37.6

 
37.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares adjusted for nonvested restricted awards
 
 
 
 
 
 
 
 
 
  (millions):
 
 
 
 
 
 
 
 
 
     Basic
 
38.5

 
38.1

 
 
 
 
 
     Diluted
 
38.5

 
38.1

 
 
 
 
 


3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
 
 
2014
 
2013
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
4,137.7

$
4,027.3

$
110.4

 
2.7

%
 
 
 
 
 
 
 
 
 
 
Cost of services
 
3,461.9

 
3,369.3

 
92.6

 
2.8

 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
675.8

 
658.0

 
17.8

 
2.7

 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
656.5

 
612.6

 
43.9

 
7.2

 
 
 
 
 
 
 
 
 
 
 
Asset impairments
 
—

 
1.7

 
(1.7
)
 
(100.0
)
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
19.3

 
43.7

 
(24.4
)
 
(56.4
)
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
4.2

 
3.9

 
0.3

 
(4.6
)
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
15.1

 
39.8

 
(24.7
)
 
(62.5
)
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
 
8.4

 
(1.9
)
 
10.3

 
NM

 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
6.7

$
41.7

$
(35.0
)
 
(84.2
)
%
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.17

$
1.09

$
(0.92
)
 
(84.4
)
%
Diluted earnings per share
$
0.17

$
1.09

$
(0.92
)
 
(84.4
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.3

%
16.3

%
—

pts.
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
    % of revenue
 
15.9

 
15.2

 
0.7

 
 
 
    % of gross profit
 
97.2

 
93.1

 
4.1

 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
Earnings from operations
 
0.5

 
1.1

 
(0.6
)
 
 
 
Earnings before taxes
 
0.4

 
1.0

 
(0.6
)
 
 
 
Net earnings
 
0.2

 
1.0

 
(0.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
55.9

%
(5.0
)
%
60.9

pts.
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding
 
 
 
 
 
 
 
 
 
  (millions):
 
 
 
 
 
 
 
 
 
     Basic
 
37.5

 
37.2

 
 
 
 
 
     Diluted
 
37.5

 
37.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares adjusted for nonvested restricted awards
 
 
 
 
 
 
 
 
 
  (millions):
 
 
 
 
 
 
 
 
 
     Basic
 
38.5

 
38.2

 
 
 
 
 
     Diluted
 
38.5

 
38.2

 
 
 
 
 


4

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Quarter
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
640.8

 
$
617.0

 
3.9

%
4.3

%
Staffing fee-based income included in revenue from services
 
3.8

 
 
3.3

 
12.3

 
12.7

 
Gross profit
 
91.7

 
 
86.8

 
5.7

 
6.1

 
Gross profit rate
 
14.3

%
 
14.1

%
0.2

 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
242.5

 
$
239.9

 
1.1

%
1.2

%
Staffing fee-based income included in revenue from services
 
4.4

 
 
3.9

 
13.1

 
13.4

 
Gross profit
 
39.6

 
 
38.8

 
1.9

 
2.1

 
Gross profit rate
 
16.3

%
 
16.2

%
0.1

 pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
883.3

 
$
856.9

 
3.1

%
3.4

%
Staffing fee-based income included in revenue from services
 
8.2

 
 
7.2

 
12.7

 
13.1

 
Gross profit
 
131.3

 
 
125.6

 
4.5

 
4.8

 
Total SG&A expenses
 
110.8

 
 
100.2

 
10.6

 
10.9

 
Earnings from operations
 
20.5

 
 
25.4

 
(19.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.9

%
 
14.7

%
0.2

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.5

 
 
11.7

 
0.8

 
 
 
% of gross profit
 
84.5

 
 
79.8

 
4.7

 
 
 
Return on sales
 
2.3

 
 
3.0

 
(0.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
231.3

 
$
224.5

 
3.0

%
3.2

%
Staffing fee-based income included in revenue from services
 
4.2

 
 
4.6

 
(8.9
)
 
(6.1
)
 
Gross profit
 
33.6

 
 
33.9

 
(0.9
)
 
(0.4
)
 
Gross profit rate
 
14.5

%
 
15.1

%
(0.6
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
48.1

 
$
45.1

 
6.5

%
6.0

%
Staffing fee-based income included in revenue from services
 
3.5

 
 
3.9

 
(9.6
)
 
(7.8
)
 
Gross profit
 
10.9

 
 
10.8

 
0.6

 
1.0

 
Gross profit rate
 
22.6

%
 
23.9

%
(1.3
)
 pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
279.4

 
$
269.6

 
3.6

%
3.6

%
Staffing fee-based income included in revenue from services
 
7.7

 
 
8.5

 
(9.3
)
 
(6.9
)
 
Gross profit
 
44.5

 
 
44.7

 
(0.5
)
 
(0.1
)
 
SG&A expenses excluding restructuring charges
 
40.0

 
 
40.0

 
—

 
 
 
Restructuring charges
 
—

 
 
0.3

 
(100.0
)
 
 
 
Total SG&A expenses
 
40.0

 
 
40.3

 
(0.8
)
 
(0.5
)
 
Earnings from operations
 
4.5

 
 
4.4

 
1.6

 
 
 
Earnings from operations excluding restructuring charges
 
4.5

 
 
4.7

 
(5.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.9

%
 
16.6

%
(0.7
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.3

 
 
14.8

 
(0.5
)
 
 
 
% of gross profit
 
90.0

 
 
89.5

 
0.5

 
 
 
Return on sales (excluding restructuring charges)
 
1.6

 
 
1.7

 
(0.1
)
 
 
 

5


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Quarter
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
APAC
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
91.0

 
$
87.6

 
3.9

%
2.2

%
Staffing fee-based income included in revenue from services
 
2.0

 
 
2.3

 
(15.5
)
 
(17.3
)
 
Gross profit
 
11.7

 
 
12.7

 
(8.2
)
 
(9.7
)
 
Gross profit rate
 
12.8

%
 
14.5

%
(1.7
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
10.6

 
$
9.1

 
15.8

%
14.4

%
Staffing fee-based income included in revenue from services
 
2.0

 
 
2.2

 
(9.9
)
 
(11.0
)
 
Gross profit
 
3.3

 
 
3.4

 
(2.8
)
 
(4.0
)
 
Gross profit rate
 
31.5

%
 
37.5

%
(6.0
)
 pts.
 
 
  Total APAC
 
 
 
 
 
 
 
 
Revenue from services
$
101.6

 
$
96.7

 
5.0

%
3.4

%
Staffing fee-based income included in revenue from services
 
4.0

 
 
4.5

 
(12.8
)
 
(14.2
)
 
Gross profit
 
15.0

 
 
16.1

 
(7.0
)
 
(8.5
)
 
SG&A expenses excluding restructuring charges
 
14.2

 
 
14.5

 
(2.5
)
 
 
 
Restructuring charges
 
0.3

 
 
0.1

 
410.5

 
 
 
Total SG&A expenses
 
14.5

 
 
14.6

 
(0.9
)
 
(2.7
)
 
Earnings from operations
 
0.5

 
 
1.5

 
(65.7
)
 
 
 
Earnings from operations excluding restructuring charges
 
0.8

 
 
1.6

 
(48.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.8

%
 
16.7

%
(1.9
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.0

 
 
15.1

 
(1.1
)
 
 
 
% of gross profit
 
94.6

 
 
90.2

 
4.4

 
 
 
Return on sales (excluding restructuring charges)
 
0.8

 
 
1.6

 
(0.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
149.8

 
$
135.3

 
10.7

%
10.9

%
Gross profit
 
35.8

 
 
34.8

 
2.9

 
2.8

 
SG&A expenses excluding restructuring charges
 
32.2

 
 
28.0

 
15.0

 
 
 
Restructuring charges
 
—

 
 
0.1

 
(100.0
)
 
 
 
Total SG&A expenses
 
32.2

 
 
28.1

 
14.7

 
14.7

 
Earnings from operations
 
3.6

 
 
6.7

 
(46.0
)
 
 
 
Earnings from operations excluding restructuring charges
 
3.6

 
 
6.8

 
(46.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
23.9

%
 
25.7

%
(1.8
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
21.5

 
 
20.7

 
0.8

 
 
 
% of gross profit
 
89.8

 
 
80.3

 
9.5

 
 
 
Return on sales (excluding restructuring charges)
 
2.4

 
 
5.1

 
(2.7
)
 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
September Year to Date
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,915.1

 
$
1,904.1

 
0.6

%
1.4

%
Staffing fee-based income included in revenue from services
 
10.4

 
 
9.8

 
6.1

 
7.6

 
Gross profit
 
280.0

 
 
274.5

 
2.0

 
2.8

 
Gross profit rate
 
14.6

%
 
14.4

%
0.2

 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
723.1

 
$
733.7

 
(1.4
)
%
(1.3
)
%
Staffing fee-based income included in revenue from services
 
11.7

 
 
10.8

 
8.6

 
9.1

 
Gross profit
 
118.4

 
 
116.1

 
2.0

 
2.2

 
Gross profit rate
 
16.4

%
 
15.8

%
0.6

 pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,638.2

 
$
2,637.8

 
—

%
0.7

%
Staffing fee-based income included in revenue from services
 
22.1

 
 
20.6

 
7.4

 
8.4

 
Gross profit
 
398.4

 
 
390.6

 
2.0

 
2.6

 
Total SG&A expenses
 
332.9

 
 
310.6

 
7.2

 
7.9

 
Earnings from operations
 
65.5

 
 
80.0

 
(18.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.1

%
 
14.8

%
0.3

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.6

 
 
11.8

 
0.8

 
 
 
% of gross profit
 
83.6

 
 
79.5

 
4.1

 
 
 
Return on sales
 
2.5

 
 
3.0

 
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
690.2

 
$
645.3

 
7.0

%
5.7

%
Staffing fee-based income included in revenue from services
 
14.0

 
 
14.9

 
(6.0
)
 
(4.3
)
 
Gross profit
 
101.0

 
 
98.8

 
2.2

 
1.2

 
Gross profit rate
 
14.6

%
 
15.3

%
(0.7
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
145.5

 
$
131.7

 
10.3

%
7.7

%
Staffing fee-based income included in revenue from services
 
10.7

 
 
11.7

 
(8.3
)
 
(7.6
)
 
Gross profit
 
33.3

 
 
32.0

 
3.8

 
2.3

 
Gross profit rate
 
22.8

%
 
24.3

%
(1.5
)
 pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
835.7

 
$
777.0

 
7.5

%
6.0

%
Staffing fee-based income included in revenue from services
 
24.7

 
 
26.6

 
(7.0
)
 
(5.7
)
 
Gross profit
 
134.3

 
 
130.8

 
2.6

 
1.5

 
SG&A expenses excluding restructuring charges
 
124.2

 
 
122.1

 
1.7

 
 
 
Restructuring charges
 
0.8

 
 
0.1

 
327.7

 
 
 
Total SG&A expenses
 
125.0

 
 
122.2

 
2.2

 
0.8

 
Earnings from operations
 
9.3

 
 
8.6

 
8.1

 
 
 
Earnings from operations excluding restructuring charges
 
10.1

 
 
8.7

 
15.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.1

%
 
16.8

%
(0.7
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.9

 
 
15.7

 
(0.8
)
 
 
 
% of gross profit
 
92.5

 
 
93.3

 
(0.8
)
 
 
 
Return on sales (excluding restructuring charges)
 
1.2

 
 
1.1

 
0.1

 
 
 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
September Year to Date
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
APAC
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
260.5

 
$
256.8

 
1.4

%
4.2

%
Staffing fee-based income included in revenue from services
 
5.9

 
 
7.0

 
(17.1
)
 
(14.0
)
 
Gross profit
 
35.7

 
 
36.8

 
(3.1
)
 
(0.3
)
 
Gross profit rate
 
13.7

%
 
14.3

%
(0.6
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
29.2

 
$
29.3

 
(0.5
)
%
3.3

%
Staffing fee-based income included in revenue from services
 
5.8

 
 
6.7

 
(13.0
)
 
(9.7
)
 
Gross profit
 
9.4

 
 
10.5

 
(10.2
)
 
(6.8
)
 
Gross profit rate
 
32.2

%
 
35.7

%
(3.5
)
 pts.
 
 
  Total APAC
 
 
 
 
 
 
 
 
Revenue from services
$
289.7

 
$
286.1

 
1.3

%
4.1

%
Staffing fee-based income included in revenue from services
 
11.7

 
 
13.7

 
(15.1
)
 
(11.9
)
 
Gross profit
 
45.1

 
 
47.3

 
(4.6
)
 
(1.7
)
 
SG&A expenses excluding restructuring charges
 
43.3

 
 
45.5

 
(4.7
)
 
 
 
Restructuring charges
 
1.3

 
 
0.3

 
373.4

 
 
 
Total SG&A expenses
 
44.6

 
 
45.8

 
(2.3
)
 
1.1

 
Earnings from operations
 
0.5

 
 
1.5

 
(76.8
)
 
 
 
Earnings from operations excluding restructuring charges
 
1.8

 
 
1.8

 
(4.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.6

%
 
16.5

%
(0.9
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
15.0

 
 
15.9

 
(0.9
)
 
 
 
% of gross profit
 
96.2

 
 
96.2

 
—

 
 
 
Return on sales (excluding restructuring charges)
 
0.6

 
 
0.6

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
422.1

 
$
361.0

 
16.9

%
17.3

%
Gross profit
 
101.3

 
 
91.7

 
10.5

 
10.6

 
SG&A expenses excluding restructuring charges
 
94.7

 
 
81.6

 
16.0

 
 
 
Restructuring charges
 
—

 
 
0.9

 
(100.0
)
 
 
 
Total SG&A expenses
 
94.7

 
 
82.5

 
14.9

 
15.0

 
Asset impairments
 
—

 
 
1.7

 
(100.0
)
 
 
 
Earnings from operations
 
6.6

 
 
7.5

 
(13.1
)
 
 
 
Earnings from operations excluding restructuring charges
 
6.6

 
 
8.4

 
(21.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
24.0

%
 
25.4

%
(1.4
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
22.4

 
 
22.6

 
(0.2
)
 
 
 
% of gross profit
 
93.4

 
 
88.9

 
4.5

 
 
 
Return on sales (excluding restructuring charges)
 
1.6

 
 
2.4

 
(0.8
)
 
 
 


8

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
Sept. 28, 2014
 
Dec. 29, 2013
 
Sept. 29, 2013
 
Current Assets
 
 
 
 
 
 
 
  Cash and equivalents
$
51.6

$
125.7

$
73.9

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
 
 
    $9.2, $9.9 and $10.0, respectively
 
1,158.1

 
1,023.1

 
1,071.8

 
  Prepaid expenses and other current assets
 
56.8

 
52.2

 
62.0

 
  Deferred taxes
 
28.9

 
35.5

 
40.3

 
Total current assets
 
1,295.4

 
1,236.5

 
1,248.0

 
 
 
 
 
 
 
 
 
Property and Equipment, Net
 
91.1

 
92.0

 
87.7

 
 
 
 
 
 
 
 
 
Noncurrent Deferred Taxes
 
132.7

 
121.7

 
104.5

 
 
 
 
 
 
 
 
 
Goodwill, Net
 
90.3

 
90.3

 
90.3

 
 
 
 
 
 
 
 
 
Other Assets
 
291.5

 
258.1

 
241.0

 
 
 
 
 
 
 
 
 
Total Assets
$
1,901.0

$
1,798.6

$
1,771.5

 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
  Short-term borrowings
$
88.7

$
28.3

$
58.0

 
  Accounts payable and accrued liabilities
 
339.0

 
342.4

 
308.9

 
  Accrued payroll and related taxes
 
318.6

 
294.9

 
300.9

 
  Accrued insurance
 
24.4

 
27.6

 
30.7

 
  Income and other taxes
 
74.0

 
68.8

 
71.5

 
 
 
 
 
 
 
 
 
Total current liabilities
 
844.7

 
762.0

 
770.0

 
 
 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
 
 
  Accrued insurance
 
43.4

 
46.0

 
40.7

 
  Accrued retirement benefits
 
146.6

 
134.7

 
129.3

 
  Other long-term liabilities
 
40.7

 
33.3

 
28.0

 
 
 
 
 
 
 
 
 
Total noncurrent liabilities
 
230.7

 
214.0

 
198.0

 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
40.1

 
  Treasury stock
 
(52.5
)
 
(56.2
)
 
(57.5
)
 
  Paid-in capital
 
26.7

 
26.0

 
26.1

 
  Earnings invested in the business
 
752.3

 
751.3

 
736.0

 
  Accumulated other comprehensive income
 
59.0

 
61.4

 
58.8

 
 
 
 
 
 
 
 
 
Total stockholders' equity
 
825.6

 
822.6

 
803.5

 
 
 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
1,901.0

$
1,798.6

$
1,771.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 Working Capital
$
450.7

$
474.5

$
478.0

 
 Current Ratio
 
1.5

 
1.6

 
1.6

 
 Debt-to-capital %
 
9.7

%
3.3

%
6.7

%
 Global Days Sales Outstanding
 
58

 
52

 
56

 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 29, 2013
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2014
 
2013
Cash flows from operating activities:
 
 
 
 
Net earnings
$
6.7

$
41.7

Noncash adjustments:
 
 
 
 
Impairment of assets
 
—

 
1.7

Depreciation and amortization
 
16.2

 
15.4

Provision for bad debts
 
3.6

 
1.1

Stock-based compensation
 
4.1

 
2.7

Other, net
 
1.3

 
0.7

Changes in operating assets and liabilities
 
(140.9
)
 
(41.4
)
 
 
 
 
 
Net cash (used in) from operating activities
 
(109.0
)
 
21.9

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(15.0
)
 
(11.7
)
Investment in equity affiliate
 
(5.4
)
 
—

Other investing activities
 
0.2

 
—

 
 
 
 
 
Net cash used in investing activities
 
(20.2
)
 
(11.7
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
60.4

 
(6.1
)
Dividend payments
 
(5.7
)
 
(5.7
)
Other financing activities
 
0.4

 
0.3

 
 
 
 
 
Net cash from (used in) financing activities
 
55.1

 
(11.5
)
 
 
 
 
 
Effect of exchange rates on cash and equivalents
 
—

 
(1.1
)
 
 
 
 
 
Net change in cash and equivalents
 
(74.1
)
 
(2.4
)
Cash and equivalents at beginning of period
 
125.7

 
76.3

 
 
 
 
 
 
 
 
 
 
Cash and equivalents at end of period
$
51.6

$
73.9

 
 
 
 
 


10

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Third Quarter (Commercial, PT and OCG)
 
 
 
 
 
 
 
% Change
 
 
 
 
 
 
 
 
 
Constant
 
 
 
2014
 
2013
 
US$
 
Currency
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
873.7

$
843.5

 
3.6

%
3.6

%
Canada
 
51.9

 
52.9

 
(1.9
)
 
2.6

 
Mexico
 
37.0

 
33.1

 
11.8

 
13.6

 
Puerto Rico
 
25.7

 
24.4

 
5.1

 
5.1

 
Brazil
 
13.6

 
13.1

 
3.7

 
3.2

 
Total Americas
 
1,001.9

 
967.0

 
3.6

 
3.9

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
70.1

 
62.4

 
12.4

 
12.0

 
Switzerland
 
66.7

 
68.6

 
(2.7
)
 
(4.7
)
 
Portugal
 
33.3

 
24.1

 
38.0

 
37.8

 
Russia
 
28.7

 
32.9

 
(13.0
)
 
(3.9
)
 
United Kingdom
 
26.2

 
26.5

 
(1.1
)
 
(8.4
)
 
Germany
 
17.5

 
17.4

 
0.6

 
0.6

 
Norway
 
14.8

 
16.1

 
(7.7
)
 
(3.8
)
 
Italy
 
14.8

 
13.8

 
6.7

 
6.7

 
Other
 
15.8

 
16.0

 
(1.0
)
 
(0.3
)
 
Total EMEA
 
287.9

 
277.8

 
3.6

 
3.7

 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Singapore
 
33.4

 
29.4

 
13.7

 
12.2

 
Australia
 
32.3

 
32.4

 
(0.2
)
 
(1.3
)
 
Malaysia
 
16.7

 
17.2

 
(3.0
)
 
(4.5
)
 
New Zealand
 
12.7

 
12.6

 
0.4

 
(5.1
)
 
Other
 
11.5

 
9.2

 
25.1

 
26.2

 
Total APAC
 
106.6

 
100.8

 
5.8

 
4.1

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,396.4

$
1,345.6

 
3.8

%
3.9

%
 
 
 
 
 
 
 
 
 
 


11

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
September Year to Date (Commercial, PT and OCG)
 
 
 
 
 
 
 
% Change
 
 
 
 
 
 
 
 
 
Constant
 
 
 
2014
 
2013
 
US$
 
Currency
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
2,601.9

$
2,547.3

 
2.1

%
2.1

%
Canada
 
148.2

 
163.9

 
(9.6
)
 
(3.5
)
 
Mexico
 
102.3

 
99.4

 
2.9

 
6.4

 
Puerto Rico
 
78.4

 
73.6

 
6.4

 
6.4

 
Brazil
 
43.2

 
45.0

 
(4.1
)
 
5.2

 
Total Americas
 
2,974.0

 
2,929.2

 
1.5

 
2.1

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
202.2

 
182.0

 
11.1

 
7.9

 
Switzerland
 
195.7

 
185.6

 
5.5

 
1.4

 
Russia
 
96.4

 
102.0

 
(5.5
)
 
5.9

 
Portugal
 
92.4

 
63.0

 
46.6

 
42.5

 
United Kingdom
 
82.4

 
78.1

 
5.5

 
(2.4
)
 
Germany
 
50.7

 
49.3

 
3.0

 
0.1

 
Italy
 
46.3

 
43.6

 
6.0

 
2.9

 
Norway
 
43.6

 
46.3

 
(5.7
)
 
(1.0
)
 
Other
 
50.9

 
50.7

 
0.4

 
(1.8
)
 
Total EMEA
 
860.6

 
800.6

 
7.5

 
6.0

 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Singapore
 
94.8

 
83.5

 
13.5

 
14.0

 
Australia
 
88.8

 
100.4

 
(11.6
)
 
(5.9
)
 
Malaysia
 
50.0

 
51.1

 
(2.1
)
 
1.5

 
New Zealand
 
38.2

 
36.1

 
5.9

 
2.1

 
Other
 
31.3

 
26.4

 
18.4

 
27.7

 
Total APAC
 
303.1

 
297.5

 
1.9

 
4.9

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
4,137.7

$
4,027.3

 
2.7

%
3.1

%
 
 
 
 
 
 
 
 
 
 


12

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
 FOR THE 13 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 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
$
1,396.4

$
—

$
1,396.4

$
1,345.6

 
3.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,171.0

 
—

 
1,171.0

 
1,125.2

 
4.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
225.4

 
—

 
225.4

 
220.4

 
2.2

 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
218.3

 
(4.0
)
 
214.3

 
199.7

 
7.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
7.1

 
4.0

 
11.1

 
20.7

 
(46.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
2.2

 
—

 
2.2

 
1.3

 
(63.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
4.9

 
4.0

 
8.9

 
19.4

 
(54.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
3.5

 
1.5

 
5.0

 
0.1

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
1.4

$
2.5

$
3.9

$
19.3

 
(80.5
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.03

$
0.06

$
0.10

$
0.51

 
(80.4
)
%
Diluted
$
0.03

$
0.06

$
0.10

$
0.51

 
(80.4
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,345.6

$
—

$
1,345.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,125.2

 
—

 
1,125.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
220.4

 
—

 
220.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
200.2

 
(0.5
)
 
199.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
20.2

 
0.5

 
20.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
1.3

 
—

 
1.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
18.9

 
0.5

 
19.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
0.1

 
—

 
0.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
18.8

$
0.5

$
19.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.49

$
0.01

$
0.51

 
 
 
 
 
Diluted
$
0.49

$
0.01

$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 39 WEEKS ENDED SEPTEMBER 28, 2014 AND SEPTEMBER 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
$
4,137.7

$
—

$
4,137.7

$
4,027.3

 
2.7

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
3,461.9

 
—

 
3,461.9

 
3,369.3

 
2.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
675.8

 
—

 
675.8

 
658.0

 
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
656.5

 
(5.8
)
 
650.7

 
611.3

 
6.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
19.3

 
5.8

 
25.1

 
46.7

 
(46.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
4.2

 
—

 
4.2

 
3.9

 
(4.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
15.1

 
5.8

 
20.9

 
42.8

 
(51.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
8.4

 
2.1

 
10.5

 
(1.8
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
6.7

$
3.7

$
10.4

$
44.6

 
(77.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.17

$
0.10

$
0.27

$
1.17

 
(76.9
)
%
Diluted
$
0.17

$
0.10

$
0.27

$
1.17

 
(76.9
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Asset Impairments (Note 2)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
4,027.3

$
—

$
—

$
4,027.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
3,369.3

 
—

 
—

 
3,369.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
658.0

 
—

 
—

 
658.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
612.6

 
(1.3
)
 
—

 
611.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairments
 
1.7

 
—

 
(1.7
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
43.7

 
1.3

 
1.7

 
46.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
3.9

 
—

 
—

 
3.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
39.8

 
1.3

 
1.7

 
42.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
(1.9
)
 
0.1

 
—

 
(1.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
41.7

$
1.2

$
1.7

$
44.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.09

$
0.03

$
0.04

$
1.17

 
 
 
Diluted
$
1.09

$
0.03

$
0.04

$
1.17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 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.

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