EX-99.1 2 a20164qearningsreleaseform.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1    

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2016
 
2015
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,304.4

$
1,461.6

$
(157.2
)
 
(10.8
)
%
(10.1
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,076.4

 
1,212.1

 
(135.7
)
 
(11.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
228.0

 
249.5

 
(21.5
)
 
(8.6
)
 
(8.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
208.2

 
223.0

 
(14.8
)
 
(6.7
)
 
(6.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
19.8

 
26.5

 
(6.7
)
 
(25.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
0.7

 
(0.7
)
 
1.4

 
204.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
20.5

 
25.8

 
(5.3
)
 
(20.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
 
1.8

 
(8.4
)
 
10.2

 
121.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
18.7

 
34.2

 
(15.5
)
 
(45.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.1

 
—

 
1.1

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
19.8

$
34.2

$
(14.4
)
 
(42.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.51

$
0.88

$
(0.37
)
 
(42.0
)
%
 
 
Diluted earnings per share
$
0.51

$
0.88

$
(0.37
)
 
(42.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.5

%
17.1

%
0.4

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
    % of revenue
 
16.0

 
15.3

 
0.7

 
 
 
 
 
    % of gross profit
 
91.3

 
89.4

 
1.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.5

 
1.8

 
(0.3
)
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
1.6

 
1.8

 
(0.2
)
 
 
 
 
 
Net earnings
 
1.5

 
2.3

 
(0.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
8.8

%
(32.4
)
%
41.2

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.2

 
38.0

 
 
 
 
 
 
 
     Diluted
 
38.6

 
38.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares adjusted for nonvested restricted awards (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.9

 
38.9

 
 
 
 
 
 
 
     Diluted
 
39.2

 
38.9

 
 
 
 
 
 
 

1

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2016
 
2015
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,276.8

$
5,518.2

$
(241.4
)
 
(4.4
)
%
(3.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,370.5

 
4,597.9

 
(227.4
)
 
(4.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
906.3

 
920.3

 
(14.0
)
 
(1.5
)
 
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
843.1

 
853.6

 
(10.5
)
 
(1.2
)
 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
63.2

 
66.7

 
(3.5
)
 
(5.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on investment in TS Kelly Asia Pacific
 
87.2

 
—

 
87.2

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
(0.7
)
 
(3.5
)
 
2.8

 
80.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
149.7

 
63.2

 
86.5

 
136.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
 
30.0

 
8.7

 
21.3

 
245.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
119.7

 
54.5

 
65.2

 
119.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.1

 
(0.7
)
 
1.8

 
251.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
120.8

$
53.8

$
67.0

 
124.5

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
3.10

$
1.39

$
1.71

 
123.0

%
 
 
Diluted earnings per share
$
3.08

$
1.39

$
1.69

 
121.6

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.2

%
16.7

%
0.5

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
    % of revenue
 
16.0

 
15.5

 
0.5

 
 
 
 
 
    % of gross profit
 
93.0

 
92.8

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.2

 
1.2

 
—

 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
2.8

 
1.1

 
1.7

 
 
 
 
 
Net earnings
 
2.3

 
1.0

 
1.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
20.0

%
13.7

%
6.3

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.1

 
37.8

 
 
 
 
 
 
 
     Diluted
 
38.4

 
37.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares adjusted for nonvested restricted awards (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.9

 
38.8

 
 
 
 
 
 
 
     Diluted
 
39.2

 
38.9

 
 
 
 
 
 
 

2

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
2015
 
%
 
CC %
 
 
 
(13 Wks)
 
 
(14 Wks)
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
660.4

 
$
696.1

 
(5.1
)
%
(4.7
)
%
Staffing fee-based income included in revenue from services
 
3.3

 
 
3.7

 
(11.6
)
 
(11.1
)
 
Gross profit
 
106.5

 
 
110.0

 
(3.2
)
 
(2.8
)
 
Gross profit rate
 
16.1

%
 
15.8

%
0.3

pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
228.8

 
$
250.1

 
(8.5
)
%
(8.5
)
%
Staffing fee-based income included in revenue from services
 
4.2

 
 
4.5

 
(6.2
)
 
(6.3
)
 
Gross profit
 
38.4

 
 
43.0

 
(10.6
)
 
(10.7
)
 
Gross profit rate
 
16.8

%
 
17.2

%
(0.4
)
pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
889.2

 
$
946.2

 
(6.0
)
%
(5.7
)
%
Staffing fee-based income included in revenue from services
 
7.5

 
 
8.2

 
(8.7
)
 
(8.5
)
 
Gross profit
 
144.9

 
 
153.0

 
(5.3
)
 
(5.0
)
 
Total SG&A expenses
 
114.4

 
 
116.8

 
(2.0
)
 
(2.1
)
 
Earnings from operations
 
30.5

 
 
36.2

 
(15.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.3

%
 
16.2

%
0.1

pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.9

 
 
12.3

 
0.6

 
 
 
% of gross profit
 
79.0

 
 
76.3

 
2.7

 
 
 
Return on sales
 
3.4

 
 
3.8

 
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
199.1

 
$
200.5

 
(0.7
)
%
1.7

%
Staffing fee-based income included in revenue from services
 
3.1

 
 
3.3

 
(6.3
)
 
(5.2
)
 
Gross profit
 
26.4

 
 
27.5

 
(4.0
)
 
(2.3
)
 
Gross profit rate
 
13.3

%
 
13.7

%
(0.4
)
pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
42.4

 
$
44.7

 
(5.3
)
%
(3.2
)
%
Staffing fee-based income included in revenue from services
 
2.4

 
 
2.4

 
1.9

 
3.6

 
Gross profit
 
8.6

 
 
9.4

 
(8.7
)
 
(7.1
)
 
Gross profit rate
 
20.2

%
 
21.0

%
(0.8
)
pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
241.5

 
$
245.2

 
(1.5
)
%
0.8

%
Staffing fee-based income included in revenue from services
 
5.5

 
 
5.7

 
(2.9
)
 
(1.6
)
 
Gross profit
 
35.0

 
 
36.9

 
(5.2
)
 
(3.5
)
 
Total SG&A expenses
 
30.8

 
 
29.7

 
3.5

 
6.0

 
Earnings from operations
 
4.2

 
 
7.2

 
(41.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.5

%
 
15.0

%
(0.5
)
pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.7

 
 
12.1

 
0.6

 
 
 
% of gross profit
 
88.0

 
 
80.6

 
7.4

 
 
 
Return on sales
 
1.7

 
 
2.9

 
(1.2
)
 
 
 

3


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
2015
 
%
 
CC %
 
 
 
(13 Wks)
 
 
(14 Wks)
 
Change
 
Change
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
186.1

 
$
187.5

 
(0.7
)
%
(0.4
)
%
Gross profit
 
49.2

 
 
48.0

 
2.4

 
2.9

 
Total SG&A expenses
 
41.2

 
 
34.0

 
21.3

 
22.3

 
Earnings from operations
 
8.0

 
 
14.0

 
(43.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
26.4

%
 
25.6

%
0.8

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
22.1

 
 
18.1

 
4.0

 
 
 
% of gross profit
 
83.8

 
 
70.7

 
13.1

 
 
 
Return on sales
 
4.3

 
 
7.5

 
(3.2
)
 
 
 


4

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
2015
 
%
 
CC %
 
 
 
(52 Wks)
 
 
(53 Wks)
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,548.0

 
$
2,604.3

 
(2.2
)
%
(1.1
)
%
Staffing fee-based income included in revenue from services
 
14.7

 
 
14.5

 
1.1

 
1.7

 
Gross profit
 
402.4

 
 
400.3

 
0.5

 
1.3

 
Gross profit rate
 
15.8

%
 
15.4

%
0.4

 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
947.1

 
$
971.9

 
(2.6
)
%
(2.5
)
%
Staffing fee-based income included in revenue from services
 
17.9

 
 
17.6

 
1.7

 
2.3

 
Gross profit
 
162.7

 
 
165.0

 
(1.4
)
 
(1.3
)
 
Gross profit rate
 
17.2

%
 
17.0

%
0.2

 pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
3,495.1

 
$
3,576.2

 
(2.3
)
%
(1.5
)
%
Staffing fee-based income included in revenue from services
 
32.6

 
 
32.1

 
1.4

 
2.0

 
Gross profit
 
565.1

 
 
565.3

 
—

 
0.6

 
SG&A expenses excluding restructuring charges
 
454.9

 
 
456.6

 
(0.4
)
 
0.1

 
Restructuring charges
 
2.2

 
 
—

 
      NM

 
 
 
Total SG&A expenses
 
457.1

 
 
456.6

 
0.1

 
0.6

 
Earnings from operations
 
108.0

 
 
108.7

 
(0.6
)
 
 
 
Earnings from operations excluding restructuring charges
 
110.2

 
 
108.7

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.2

%
 
15.8

%
0.4

 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
13.0

 
 
12.8

 
0.2

 
 
 
% of gross profit
 
80.5

 
 
80.8

 
(0.3
)
 
 
 
Return on sales (excluding restructuring charges)
 
3.2

 
 
3.0

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
769.3

 
$
773.5

 
(0.5
)
%
2.1

%
Staffing fee-based income included in revenue from services
 
13.5

 
 
13.2

 
2.9

 
6.1

 
Gross profit
 
103.9

 
 
106.6

 
(2.6
)
 
(0.4
)
 
Gross profit rate
 
13.5

%
 
13.8

%
(0.3
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
168.8

 
$
171.5

 
(1.6
)
%
0.7

%
Staffing fee-based income included in revenue from services
 
9.7

 
 
10.1

 
(4.0
)
 
(0.8
)
 
Gross profit
 
34.2

 
 
36.6

 
(6.4
)
 
(4.2
)
 
Gross profit rate
 
20.3

%
 
21.3

%
(1.0
)
 pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
938.1

 
$
945.0

 
(0.7
)
%
1.9

%
Staffing fee-based income included in revenue from services
 
23.2

 
 
23.3

 
(0.1
)
 
3.1

 
Gross profit
 
138.1

 
 
143.2

 
(3.5
)
 
(1.4
)
 
SG&A expenses excluding restructuring charges
 
123.7

 
 
129.2

 
(4.2
)
 
(1.6
)
 
Restructuring charges
 
1.2

 
 
—

 
NM

 
 
 
Total SG&A expenses
 
124.9

 
 
129.2

 
(3.3
)
 
(0.7
)
 
Earnings from operations
 
13.2

 
 
14.0

 
(5.9
)
 
 
 
Earnings from operations excluding restructuring charges
 
14.4

 
 
14.0

 
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.7

%
 
15.2

%
(0.5
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
13.2

 
 
13.7

 
(0.5
)
 
 
 
% of gross profit
 
89.6

 
 
90.2

 
(0.6
)
 
 
 
Return on sales (excluding restructuring charges)
 
1.5

 
 
1.5

 
—

 
 
 

5

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
2015
 
%
 
CC %
 
 
 
(52 Wks)
 
 
(53 Wks)
 
Change
 
Change
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
706.4

 
$
673.8

 
4.8

%
5.3

%
Gross profit
 
179.3

 
 
160.6

 
11.6

 
12.3

 
Total SG&A expenses
 
153.4

 
 
132.1

 
16.2

 
17.1

 
Earnings from operations
 
25.9

 
 
28.5

 
(9.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
25.4

%
 
23.8

%
1.6

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
21.7

 
 
19.6

 
2.1

 
 
 
% of gross profit
 
85.6

 
 
82.2

 
3.4

 
 
 
Return on sales
 
3.7

 
 
4.2

 
(0.5
)
 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
Jan. 1, 2017
 
Jan. 3, 2016
 
Current Assets
 
 
 
 
 
  Cash and equivalents
$
29.6

$
42.2

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
    $12.5 and $10.5, respectively
 
1,138.3

 
1,139.1

 
  Prepaid expenses and other current assets
 
46.7

 
45.8

 
Total current assets
 
1,214.6

 
1,227.1

 
 
 
 
 
 
 
Noncurrent Assets
 
 
 
 
 
Property and equipment, net
 
80.8

 
88.9

 
Deferred taxes
 
180.1

 
189.3

 
Goodwill, net
 
88.4

 
90.3

 
Investment in equity affiliate
 
114.8

 
9.4

 
Other assets
 
349.4

 
334.6

 
Total noncurrent assets
 
813.5

 
712.5

 
 
 
 
 
 
 
Total Assets
$
2,028.1

$
1,939.6

 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
  Short-term borrowings
$
—

$
55.5

 
  Accounts payable and accrued liabilities
 
455.1

 
405.5

 
  Accrued payroll and related taxes
 
241.5

 
268.1

 
  Accrued insurance
 
23.4

 
26.7

 
  Income and other taxes
 
51.1

 
60.0

 
Total current liabilities
 
771.1

 
815.8

 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
  Accrued insurance
 
45.5

 
40.0

 
  Accrued retirement benefits
 
157.4

 
141.0

 
  Other long-term liabilities
 
42.1

 
47.4

 
Total noncurrent liabilities
 
245.0

 
228.4

 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
  Treasury stock
 
(39.0
)
 
(44.3
)
 
  Paid-in capital
 
28.6

 
25.4

 
  Earnings invested in the business
 
923.6

 
813.5

 
  Accumulated other comprehensive income
 
58.7

 
60.7

 
 
 
 
 
 
 
Total stockholders' equity
 
1,012.0

 
895.4

 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
2,028.1

$
1,939.6

 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 Working Capital
$
443.5

$
411.3

 
 Current Ratio
 
1.6

 
1.5

 
 Debt-to-capital %
 
—

%
5.8

%
 Global Days Sales Outstanding
 
53

 
54

 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net earnings
$
120.8

$
53.8

Noncash adjustments:
 
 
 
 
Depreciation and amortization
 
21.3

 
22.3

Provision for bad debts
 
11.0

 
3.7

Stock-based compensation
 
8.0

 
6.1

Gain on investment in TS Kelly Asia Pacific equity affiliate
 
(87.2
)
 
—

Other, net
 
(3.9
)
 
(4.7
)
Changes in operating assets and liabilities
 
(32.6
)
 
(57.7
)
 
 
 
 
 
Net cash from operating activities
 
37.4

 
23.5

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(12.7
)
 
(16.9
)
Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate
 
23.3

 
—

Investment in TS Kelly equity affiliate
 
—

 
(0.5
)
Other investing activities
 
(0.3
)
 
(0.2
)
 
 
 
 
 
Net cash from (used in) investing activities
 
10.3

 
(17.6
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
(55.9
)
 
(34.7
)
Dividend payments
 
(10.7
)
 
(7.7
)
Other financing activities
 
(0.3
)
 
0.2

 
 
 
 
 
Net cash used in financing activities
 
(66.9
)
 
(42.2
)
 
 
 
 
 
Effect of exchange rates on cash and equivalents
 
6.6

 
(4.6
)
 
 
 
 
 
Net change in cash and equivalents
 
(12.6
)
 
(40.9
)
Cash and equivalents at beginning of period
 
42.2

 
83.1

 
 
 
 
 
 
 
 
 
 
Cash and equivalents at end of period
$
29.6

$
42.2

 
 
 
 
 


8

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter (Commercial, PT and OCG)
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
%
 
CC %
 
 
 
(13 Wks)
 
(14 Wks)
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
956.7

$
998.8

 
(4.2
)
%
(4.2
)
%
Canada
 
34.5

 
38.0

 
(9.3
)
 
(9.7
)
 
Mexico
 
28.0

 
35.3

 
(20.6
)
 
(6.1
)
 
Puerto Rico
 
18.3

 
24.7

 
(25.8
)
 
(25.8
)
 
Brazil
 
13.3

 
8.7

 
52.2

 
29.4

 
Total Americas
 
1,050.8

 
1,105.5

 
(5.0
)
 
(4.7
)
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
61.1

 
65.6

 
(6.8
)
 
(5.2
)
 
Switzerland
 
54.3

 
55.5

 
(2.1
)
 
(1.0
)
 
Portugal
 
40.3

 
33.8

 
19.0

 
21.1

 
Russia
 
20.9

 
18.2

 
15.3

 
10.1

 
United Kingdom
 
18.5

 
26.7

 
(31.0
)
 
(15.7
)
 
Germany
 
14.3

 
16.2

 
(11.5
)
 
(10.0
)
 
Italy
 
14.2

 
14.5

 
(2.1
)
 
(0.4
)
 
Norway
 
8.0

 
9.7

 
(17.4
)
 
(18.7
)
 
Other
 
18.0

 
13.0

 
38.4

 
40.5

 
Total EMEA
 
249.6

 
253.2

 
(1.4
)
 
1.0

 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Australia
 
3.2

 
31.1

 
(89.7
)
 
(90.1
)
 
Singapore
 
0.2

 
33.0

 
(99.5
)
 
(99.5
)
 
Malaysia
 
0.1

 
14.1

 
(98.6
)
 
(98.6
)
 
New Zealand
 
—

 
11.2

 
(99.5
)
 
(99.6
)
 
Other
 
0.5

 
13.5

 
(96.6
)
 
(96.5
)
 
Total APAC
 
4.0

 
102.9

 
(96.0
)
 
(96.1
)
 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,304.4

$
1,461.6

 
(10.8
)
%
(10.1
)
%
 
 
 
 
 
 
 
 
 
 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date (Commercial, PT and OCG)
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
%
 
CC %
 
 
 
(52 Wks)
 
(53 Wks)
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
3,722.5

$
3,705.2

 
0.5

%
0.5

%
Canada
 
139.7

 
160.2

 
(12.8
)
 
(9.9
)
 
Mexico
 
107.6

 
130.5

 
(17.6
)
 
(2.8
)
 
Puerto Rico
 
84.2

 
99.9

 
(15.7
)
 
(15.7
)
 
Brazil
 
46.8

 
42.9

 
9.1

 
19.3

 
Total Americas
 
4,100.8

 
4,138.7

 
(0.9
)
 
(0.2
)
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
239.7

 
246.0

 
(2.5
)
 
(2.1
)
 
Switzerland
 
210.5

 
216.2

 
(2.6
)
 
(0.3
)
 
Portugal
 
151.9

 
132.5

 
14.6

 
15.0

 
United Kingdom
 
84.7

 
105.1

 
(19.5
)
 
(9.3
)
 
Russia
 
69.9

 
75.6

 
(7.6
)
 
0.7

 
Germany
 
59.6

 
59.3

 
0.5

 
0.9

 
Italy
 
56.3

 
54.0

 
4.2

 
4.5

 
Norway
 
32.4

 
39.2

 
(17.2
)
 
(13.5
)
 
Other
 
63.9

 
45.8

 
39.4

 
40.2

 
Total EMEA
 
968.9

 
973.7

 
(0.5
)
 
2.1

 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Australia
 
67.4

 
123.2

 
(45.3
)
 
(42.3
)
 
Singapore
 
65.1

 
129.9

 
(49.9
)
 
(48.8
)
 
Malaysia
 
27.9

 
59.5

 
(53.1
)
 
(47.3
)
 
New Zealand
 
19.3

 
41.4

 
(53.3
)
 
(48.8
)
 
Other
 
27.4

 
51.8

 
(46.9
)
 
(43.4
)
 
Total APAC
 
207.1

 
405.8

 
(48.9
)
 
(45.9
)
 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
5,276.8

$
5,518.2

 
(4.4
)
%
(3.2
)
%
 
 
 
 
 
 
 
 
 
 


10

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
 
 
 
 
 
 
As Reported
 
Adjusted Earnings
 
% Change
 
CC % Change
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,304.4

$
1,362.6

 
(4.3
)
%
(3.6
)
%
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,076.4

 
1,126.6

 
(4.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
228.0

 
236.0

 
(3.4
)
 
(2.9
)
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
208.2

 
211.3

 
(1.5
)
 
(1.0
)
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
19.8

 
24.7

 
(19.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
0.7

 
(0.6
)
 
226.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
20.5

 
24.1

 
(15.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)*
 
1.8

 
(8.7
)
 
120.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
18.7

 
32.8

 
(43.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.1

 
—

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
19.8

$
32.8

 
(39.6
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.51

$
0.84

 
(39.3
)
%
 
 
Diluted
$
0.51

$
0.84

 
(39.3
)
%
 
 
 
 
 
 
 
 
 
 
 
 
* Income tax benefit for the fourth quarter of 2015 includes $13.9 million related to the retroactive reinstatement of work opportunity credits for the entire year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

11

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
As Reported
 
Disposal of APAC Businesses
(Note 2)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,461.6

$
(99.0
)
$
1,362.6

 
 
 
 
 
 
 
 
 
Cost of services
 
1,212.1

 
(85.5
)
 
1,126.6

 
 
 
 
 
 
 
 
 
Gross profit
 
249.5

 
(13.5
)
 
236.0

 
 
 
 
 
 
 
 
 
SG&A expenses
 
223.0

 
(11.7
)
 
211.3

 
 
 
 
 
 
 
 
 
Earnings from operations
 
26.5

 
(1.8
)
 
24.7

 
 
 
 
 
 
 
 
 
Other (expense) income, net
 
(0.7
)
 
0.1

 
(0.6
)
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
25.8

 
(1.7
)
 
24.1

 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
(8.4
)
 
(0.3
)
 
(8.7
)
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
34.2

 
(1.4
)
 
32.8

 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Net earnings
$
34.2

$
(1.4
)
$
32.8

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.88

$
(0.04
)
$
0.84

 
Diluted
$
0.88

$
(0.04
)
$
0.84

 
 
 
 
 
 
 
 
 
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.
 
 


12

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
2015
 
 
 
 
 
 
 
As Reported
 
Gain on Investment in Equity Affiliate
(Note 1)
 
Restructuring Charges
(Note 3)
 
Adjusted Earnings
 
Adjusted Earnings
 
% Change
 
CC % Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,276.8

$
—

$
—

$
5,276.8

$
5,325.2

 
(0.9
)
%
0.3

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,370.5

 
—

 
—

 
4,370.5

 
4,432.2

 
(1.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
906.3

 
—

 
—

 
906.3

 
893.0

 
1.5

 
2.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
843.1

 
—

 
(3.4
)
 
839.7

 
830.2

 
1.1

 
2.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
63.2

 
—

 
3.4

 
66.6

 
62.8

 
6.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on investment in TS Kelly Asia Pacific
 
87.2

 
(87.2
)
 
—

 
—

 
—

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
(0.7
)
 
—

 
—

 
(0.7
)
 
(3.3
)
 
79.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
149.7

 
(87.2
)
 
3.4

 
65.9

 
59.5

 
10.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
30.0

 
(23.5
)
 
1.2

 
7.7

 
8.0

 
(3.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
119.7

 
(63.7
)
 
2.2

 
58.2

 
51.5

 
13.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.1

 
—

 
—

 
1.1

 
(0.7
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
120.8

$
(63.7
)
$
2.2

$
59.3

$
50.8

 
16.9

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
3.10

$
(1.64
)
$
0.06

$
1.53

$
1.31

 
16.8

%
 
 
Diluted
$
3.08

$
(1.62
)
$
0.06

$
1.52

$
1.31

 
16.0

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
As Reported
 
Disposal of APAC Businesses
(Note 2)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,518.2

$
(193.0
)
$
5,325.2

 
 
 
 
 
 
 
 
 
Cost of services
 
4,597.9

 
(165.7
)
 
4,432.2

 
 
 
 
 
 
 
 
 
Gross profit
 
920.3

 
(27.3
)
 
893.0

 
 
 
 
 
 
 
 
 
SG&A expenses
 
853.6

 
(23.4
)
 
830.2

 
 
 
 
 
 
 
 
 
Earnings from operations
 
66.7

 
(3.9
)
 
62.8

 
 
 
 
 
 
 
 
 
Other (expense) income, net
 
(3.5
)
 
0.2

 
(3.3
)
 
 
 
 
 
 
 
 
 
Earnings from operations before taxes and equity in net earnings (loss) of affiliate
 
63.2

 
(3.7
)
 
59.5

 
 
 
 
 
 
 
 
 
Inc. tax expense (benefit)
 
8.7

 
(0.7
)
 
8.0

 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
54.5

 
(3.0
)
 
51.5

 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
(0.7
)
 
—

 
(0.7
)
 
 
 
 
 
 
 
 
 
Net earnings
$
53.8

$
(3.0
)
$
50.8

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
1.39

$
(0.08
)
$
1.31

 
Diluted
$
1.39

$
(0.08
)
$
1.31

 
 
 
 
 
 
 
 
 
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 2016 gain on investment in equity affiliate, 2016 restructuring charges and disposal of APAC businesses is useful to understand the Company's 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of 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) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in TS Kelly Asia Pacific.
(2) Disposal of APAC businesses represents the 2015 operational results of business contributed to TS Kelly Asia Pacific in the third quarter of 2016.
(3) Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets. The 2016 year-to-date income tax expense (benefit) was impacted by a $0.3 million benefit for the release of a valuation allowance in Italy in the fourth quarter of 2016.





15