8-K

1

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): April 22, 2008

KELLY SERVICES, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	0-1088	38-1510762
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification 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))

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Item 2.02. Results of Operations and Financial Condition

Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months ended March 30, 2008. 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 April 22, 2008.

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SIGNATURE

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: April 22, 2008
	/s/ Michael E. Debs
	Michael E. Debs
	Senior Vice President and Interim Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated April 22, 2008

EX-99.1

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Exhibit 99.1

ANALYST CONTACT:	MEDIA CONTACT:
James Polehna	Renee Walker
(248) 244-4586	(248) 244-4305
james_polehna@kellyservices.com	renee_walker@kellyservices.com

KELLY SERVICES REPORTS 1st QUARTER 2008 RESULTS

TROY, MI (April 22, 2008) -- Kelly Services, Inc., a world leader in human resources solutions, today announced results for the first quarter of 2008.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2008 totaled $1.4 billion, a 3% increase compared to the corresponding quarter in 2007.

Earnings from operations for the first quarter of 2008 totaled $12.9 million, a 23% increase compared to $10.5 million reported for the first quarter of 2007. Included in earnings from operations in the first quarter of 2007 are $2.6 million of restructuring costs related to our UK operations.

Diluted earnings per share from continuing operations in the first quarter of 2008 were $0.23, an increase of 64% as compared to first quarter 2007 earnings of $0.14 per share. Included in first quarter 2007 diluted earnings is the $0.07 per share cost of the UK restructuring.

Commenting on the results, Camden said “We’re pleased that we delivered another quarter of solid, profitable results, despite the ongoing weak economic conditions and continued softness in the US staffing market. Our strategic commitment to diversify geographically, move into higher-margin, fee-based business, expand our professional and technical businesses, and improve operating margins, is proving its value.

“We have recently completed our organizational alignment to three regions-the Americas, EMEA, and APAC. Commencing this quarter, we began the practice of separately reporting our Commercial and Professional and Technical financial results for each region. In addition, we’ve organized our Staffing Alternatives Businesses under our global Outsourcing and Consulting Group.”

Camden concluded, “We expect second quarter 2008 earnings from continuing operations to be in the range of $0.37 to $0.41 per share, compared to $0.41 per share from continuing operations in the second quarter of 2007. Included in the second quarter 2007 earnings from continuing operations was $.07 of UK restructuring costs, as well as a $0.07 benefit from a temporary change in French payroll tax law.”

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In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on April 22, 2008 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S.	1-800-398-9397
International	1-612-332-0523

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website:

www.kellyservices.com

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

Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a world leader in human resources solutions headquartered in Troy, Michigan, offering temporary staffing services, outsourcing, vendor on-site and full-time placement. Kelly operates in 37 countries and territories. Kelly provides employment to more than 750,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, creative services, light industrial, education, and health care. Revenue in 2007 was $5.7 billion. Visit www.kellyservices.com.

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KELLY SERVICES, INC. AND SUBSIDIARIES

STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED MARCH 30, 2008 AND APRIL 1, 2007

(UNAUDITED)

(In thousands of dollars except per share data)

	2008			2007			Change			% Change
Revenue from services	$	1,388,444		$	1,350,858		$	37,586		2.8	%
Cost of services		1,138,557			1,121,650			16,907		1.5
Gross profit		249,887			229,208			20,679		9.0
Selling, general and administrative expenses		236,947			218,715			18,232		8.3
Earnings from operations		12,940			10,493			2,447		23.3
Other (expense) income, net		(51	)		673			(724	)	(107.6	)
Earnings from continuing operations before taxes		12,889			11,166			1,723		15.4
Income taxes		4,898			5,908			(1,010	)	(17.1	)
Earnings from continuing operations		7,991			5,258			2,733		52.0
Earnings from discontinued operations, net of tax		238			6,657			(6,419	)	(96.4	)
Net earnings	$	8,229		$	11,915		$	(3,686	)	(30.9	) %
Basic earnings per share
Earnings from continuing operations	$	0.23		$	0.14		$	0.09		64.3	%
Earnings from discontinued operations		0.01			0.18			(0.17	)	(94.4	)
Net earnings	$	0.24		$	0.33		$	(0.09	)	(27.3	) %
Diluted earnings per share
Earnings from continuing operations	$	0.23		$	0.14		$	0.09		64.3	%
Earnings from discontinued operations		0.01			0.18			(0.17	)	(94.4	)
Net earnings	$	0.24		$	0.32		$	(0.08	)	(25.0	) %
STATISTICS:
Gross profit rate		18.0	%		17.0	%		1.0	%
Selling, general and administrative expenses:
% of revenue		17.1			16.2			0.9
% of gross profit		94.8			95.4			(0.6	)
% Return - Earnings from operations		0.9			0.8			0.1
Earnings from continuing operations before taxes		0.9			0.8			0.1
Earnings from continuing operations		0.6			0.4			0.2
Net earnings		0.6			0.9			(0.3	)
Effective income tax rate		38.0	%		52.9	%		(14.9	) %
Average number of shares outstanding (thousands):
Basic		34,823			36,511
Diluted		34,955			36,898

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KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(UNAUDITED)

(In thousands of dollars)

	First Quarter
	2008			2007			Change			% Change
Revenue from Services:
Americas Commercial	$	639,939		$	684,051		$	(44,112	)	(6.4	) %
Americas PT		232,177			227,629			4,548		2.0
Total Americas Commercial and PT		872,116			911,680			(39,564	)	(4.3	)
EMEA Commercial		321,909			297,439			24,470		8.2
EMEA PT		43,787			36,116			7,671		21.2
Total EMEA Commercial and PT		365,696			333,555			32,141		9.6
APAC Commercial		86,693			62,799			23,894		38.0
APAC PT		8,486			4,599			3,887		84.5
Total APAC Commercial and PT		95,179			67,398			27,781		41.2
OCG		55,453			38,225			17,228		45.1
Consolidated Total	$	1,388,444		$	1,350,858		$	37,586		2.8	%
Earnings from Operations:
Americas Commercial	$	22,195		$	23,107		$	(912	)	(3.9	) %
Americas PT		14,103			13,552			551		4.1
Total Americas Commercial and PT		36,298			36,659			(361	)	(1.0	)
EMEA Commercial		(1,579	)		(4,468	)		2,889		64.7
EMEA PT		1,024			316			708		224.1
Total EMEA Commercial and PT		(555	)		(4,152	)		3,597		86.6
APAC Commercial		65			676			(611	)	(90.4	)
APAC PT		(210	)		(147	)		(63	)	(42.9	)
Total APAC Commercial and PT		(145	)		529			(674	)	(127.4	)
OCG		1,817			527			1,290		244.8
Corporate Expense		(24,475	)		(23,070	)		(1,405	)	(6.1	)
Consolidated Total	$	12,940		$	10,493		$	2,447		23.3	%
Earnings from Operations (Excluding Restructuring Charges):
Americas Commercial	$	22,195		$	23,107		$	(912	)	(3.9	) %
Americas PT		14,103			13,552			551		4.1
Total Americas Commercial and PT		36,298			36,659			(361	)	(1.0	)
EMEA Commercial		(1,579	)		(1,834	)		255		13.9
EMEA PT		1,024			316			708		224.1
Total EMEA Commercial and PT		(555	)		(1,518	)		963		63.4
APAC Commercial		65			676			(611	)	(90.4	)
APAC PT		(210	)		(147	)		(63	)	(42.9	)
Total APAC Commercial and PT		(145	)		529			(674	)	(127.4	)
OCG		1,817			527			1,290		244.8
Corporate Expense		(24,475	)		(23,070	)		(1,405	)	(6.1	)
Consolidated Total	$	12,940		$	13,127		$	(187	)	(1.4	)  %

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KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF CONSTANT CURRENCY

REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES

(UNAUDITED)

(In thousands of dollars)

	First Quarter
	2008		2007		Change			% Change
Revenue from services - constant currency*:
Americas Commercial	$	631,311	$	684,051	$	(52,740	)	(7.7	)%
Americas PT		231,742		227,629		4,113		1.8
Total Americas Commercial and PT - constant currency*		863,053		911,680		(48,627	)	(5.3	)
EMEA Commercial		292,664		297,439		(4,775	)	(1.6	)
EMEA PT		39,475		36,116		3,359		9.3
Total EMEA Commercial and PT - constant currency*		332,139		333,555		(1,416	)	(0.4	)
APAC Commercial		77,504		62,799		14,705		23.4
APAC PT		7,518		4,599		2,919		63.5
Total APAC Commercial and PT - constant currency*		85,022		67,398		17,624		26.1
OCG		54,339		38,225		16,114		42.2
Total revenue from services - constant currency*		1,334,553		1,350,858		(16,305	)	(1.2	)%
Foreign currency impact		53,891				53,891
Revenue from services	$	1,388,444	$	1,350,858	$	37,586		2.8	%

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

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KELLY SERVICES, INC. AND SUBSIDIARIES

SUMMARY OF DISCONTINUED OPERATIONS

(UNAUDITED)

(In thousands of dollars)

	First Quarter
	2008		2007
Revenue from services	$	—	$	14,777
Operating income from discontinued operations	$	385	$	798
Less: Income taxes		147		307
Earnings from discontinued operations, net of tax		238		491
Gain on sale of discontinued operations		—		10,153
Less: Income taxes		—		3,987
Gain on sale of discontinued operations, net of tax		—		6,166
Discontinued operations, net of tax	$	238	$	6,657

Effective March 31, 2007, the Company sold Kelly Home Care (“KHC”), a wholly owned subsidiary. Effective December 31, 2006, the Company sold Kelly Staff Leasing (“KSL”), a wholly owned subsidiary. The operating results for KHC and KSL, as well as the gain on the sale of KHC, have been excluded from earnings from continuing operations. This schedule provides information on KHC’s and KSL’s results from operations for the first quarter of 2008 and 2007, as well as the gain on the sale of KHC, all of which are included as discontinued operations on the face of the statements of earnings.

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KELLY SERVICES, INC. AND SUBSIDIARIES

BALANCE SHEETS

(UNAUDITED)

(In thousands of dollars)

	March 30, 2008			December 30, 2007			April 1, 2007
Current Assets
Cash and equivalents	$	87,933		$	92,817		$	120,829
Trade accounts receivable, less allowances of
$18,393, $18,172 and $17,884, respectively		931,429			888,334			828,005
Prepaid expenses and other current assets		58,266			53,392			49,569
Deferred taxes		26,996			29,294			25,678
Total current assets		1,104,624			1,063,837			1,024,081
Property and Equipment, Net		175,587			178,019			168,230
Noncurrent Deferred Taxes		43,171			43,436			35,731
Goodwill, Net		145,134			147,168			121,207
Other Assets		154,310			141,537			135,570
Total Assets	$	1,622,826		$	1,573,997		$	1,484,819
Current Liabilities
Short-term borrowings	$	47,839		$	49,729		$	75,594
Accounts payable		218,296			171,471			135,382
Accrued payroll and related taxes		275,852			270,575			266,039
Accrued insurance		22,609			23,696			24,203
Income and other taxes		60,681			69,779			56,580
Total current liabilities		625,277			585,250			557,798
Noncurrent Liabilities
Long-term debt		54,947			48,394			—
Accrued insurance		57,703			60,404			57,219
Accrued retirement benefits		75,108			78,382			74,519
Other long-term liabilities		16,209			13,338			21,293
Total noncurrent liabilities		203,967			200,518			153,031
Stockholders’ Equity
Common stock		40,116			40,116			40,116
Treasury stock		(113,454	)		(106,312	)		(74,231	)
Paid-in capital		34,488			34,500			33,205
Earnings invested in the business		780,824			777,338			742,718
Accumulated other comprehensive income		51,608			42,587			32,182
Total stockholders’ equity		793,582			788,229			773,990
Total Liabilities and Stockholders’ Equity	$	1,622,826		$	1,573,997		$	1,484,819
STATISTICS:
Working Capital	$	479,347		$	478,587		$	466,283
Current Ratio		1.8			1.8			1.8
Debt-to-capital %		11.5	%		11.1	%		8.9	%
Global Days Sales Outstanding		52			49			51

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KELLY SERVICES, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

FOR THE 13 WEEKS ENDED MARCH 30, 2008 AND APRIL 1, 2007

(UNAUDITED)

(In thousands of dollars)

	2008			2007
Cash flows from operating activities
Net earnings	$	8,229		$	11,915
Noncash adjustments:
Depreciation and amortization		11,303			10,551
Provision for bad debts		1,451			1,961
Stock-based compensation		1,049			918
Gain on sale of discontinued operations		—			(6,166	)
Other, net		105			(262	)
Changes in operating assets and liabilities		(2,860	)		(4,884	)
Net cash from operating activities		19,277			14,033
Cash flows from investing activities
Capital expenditures		(6,431	)		(8,544	)
Acquisition of companies, net of cash received		(3,261	)		(16,869	)
Proceeds from sale of discontinued operations		—			12,500
Other investing activities		(308	)		13
Net cash from investing activities		(10,000	)		(12,900	)
Cash flows from financing activities
Net decrease in revolving line of credit		(4,263	)		(1,857	)
Proceeds from debt		—			8,223
Dividend payments		(4,743	)		(4,633	)
Purchase of treasury stock		(7,975	)		—
Stock options and other stock sales		32			4,895
Other financing activities		(1,534	)		(6,565	)
Net cash from financing activities		(18,483	)		63
Effect of exchange rates on cash and equivalents		4,322			1,205
Net change in cash and equivalents		(4,884	)		2,401
Cash and equivalents at beginning of period		92,817			118,428
Cash and equivalents at end of period	$	87,933		$	120,829

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KELLY SERVICES, INC. AND SUBSIDIARIES

REVENUE FROM SERVICES

(UNAUDITED)

(In thousands of dollars)

	First Quarter
					% Change
							Constant
	2008		2007		US$		Currency
Americas
United States	$	820,740	$	852,272	(3.7	) %	(3.7	) %
Canada		61,839		59,444	4.0		(10.9	)
Puerto Rico		18,843		18,753	0.5		0.5
Mexico		17,670		17,015	3.8		1.8
Total Americas		919,092		947,484	(3.0	)	(4.0	)
EMEA
United Kingdom		104,879		117,883	(11.0	)	(12.1	)
France		86,602		68,971	25.6		9.9
Switzerland		42,191		36,561	15.4		0.0
Italy		35,352		30,362	16.4		1.9
Germany		21,373		13,518	58.1		38.4
Russia		20,744		15,162	36.8		26.1
Norway		19,976		16,140	23.8		5.7
Other		40,458		35,339	14.5		0.4
Total EMEA		371,575		333,936	11.3		1.0
APAC
Australia		35,700		29,301	21.8		5.9
Singapore		17,791		13,130	35.5		24.7
Other		44,286		27,007	64.0		48.0
Total APAC		97,777		69,438	40.8		25.8
Total Kelly Services, Inc.	$	1,388,444	$	1,350,858	2.8	%	(1.2	) %

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KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In thousands of dollars except per share data)

	First Quarter
	2008					2007
	Amount			Per Share		Amount			Per Share
Earnings from continuing operations	$	7,991		$	0.23	$	5,258		$	0.14
U.K. restructuring charge (1)		—			—		2,634			0.07
Earnings from continuing operations excluding
the U.K. restructuring charge	$	7,991		$	0.23	$	7,892		$	0.21
	First Quarter
	2008					2007			% Change
Selling, general and administrative expenses	$	236,947				$	218,715
U.K. restructuring charge (1)		—					(2,634	)
Selling, general and administrative expenses
excluding the U.K. restructuring charge	$	236,947				$	216,081			9.7	%
Earnings from operations	$	12,940				$	10,493
U.K. restructuring charge (1)		—					2,634
Earnings from operations excluding
the U.K. restructuring charge	$	12,940				$	13,127			(1.4	) %
EMEA Commercial selling, general
and administrative expenses	$	57,191				$	53,448
U.K. restructuring charge (1)		—					(2,634	)
EMEA Commercial selling, general
and administrative expenses
excluding the U.K. restructuring charge	$	57,191				$	50,814			12.5	%
EMEA Commercial earnings
from operations	$	(1,579	)			$	(4,468	)
U.K. restructuring charge (1)		—					2,634
EMEA Commercial earnings from operations
excluding the U.K. restructuring charge	$	(1,579	)			$	(1,834	)		13.9	%
EMEA Commercial and PT earnings from operations	$	(555	)			$	(4,152	)
U.K. restructuring charge (1)		—					2,634
EMEA Commercial and PT earnings from operations
excluding the U.K. restructuring charge	$	(555	)			$	(1,518	)		63.4	%

15

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In thousands of dollars except per share data)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charge from prior year results is useful to understand the Company's fiscal 2008 financial performance and increases comparability. Specifically, Management believes that excluding this item allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) The U.K. restructuring charge is comprised of facility exit costs associated with the closure of 22 branch locations and the accelerated depreciation of the leasehold improvements and personal property at the impacted locations.