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Kelly Services Inc.$21.37$.08.38%

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 Kelly Services(R) Reports Fourth Quarter Earnings and Solid 2016 Results
   Thursday, February 02, 2017 7:30:43 AM ET

TROY, MI--(Marketwired - February 02, 2017) -

Financial Highlights

Q4 revenue down 11%; down 4% adjusted for the APAC Joint Venture transaction (flat when further adjusted for the 53rd week in 2015)

Q4 operating earnings down 19%; down 12% adjusted for the APAC Joint Venture transaction

Q4 earnings per share of $0.55 versus $0.88 (Adjusted EPS of $0.84)

Full-year 2016 operating earnings down 3%; (Adjusted earnings up 9%) off of flat revenue growth

Kelly Services (KELYA ) (KELYB ), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2016.



Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2016 totaled $1.3 billion, an 11% decrease (a 10% decrease on a constant currency basis) compared to the corresponding quarter of 2015. Revenue for the full year totaled $5.3 billion, a 4% decrease (a 3% decrease on a constant currency basis) compared to the prior year. Fourth quarter 2015 and fiscal 2015 include 14 and 53 weeks, respectively. Revenue comparisons are unfavorably impacted by both an additional week of revenue in fourth quarter 2015 and the transfer of APAC staffing operations to the TS Kelly Asia Pacific JV at the beginning of third quarter 2016.

Earnings from operations for the fourth quarter of 2016 totaled $21.6 million, compared to $26.5 million reported for the fourth quarter of 2015. Excluding the APAC staffing operations from the fourth quarter of 2015, adjusted earnings from operations were $24.7 million; therefore Kelly’s fourth quarter 2016 earnings decreased 12% year-over-year on an adjusted basis.

Earnings from operations for the full year of 2016 totaled $65.0 million compared to $66.7 million in 2015. Excluding restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings from operations increased 9% on an adjusted basis.

Diluted earnings per share in the fourth quarter of 2016 were $0.55 compared to $0.88 per share in the fourth quarter of 2015. Excluding the APAC staffing operations from 2015 fourth quarter results, earnings per share decreased 35% on an adjusted basis. The decline is primarily the result of the timing of the recognition of the Work Opportunity Credit in 2015.

Diluted earnings per share for the full year of 2016 were $3.13 compared to $1.39 per share in 2015. Excluding the gain from the sale of APAC staffing operations and restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings per share increased 19% on an adjusted basis.

Sifting through the complex results, Camden put Kelly’s performance in context, stating "Despite the continued softening market demand in Q4, 2016 was a year of progress for Kelly. For the full year, we improved our GP rate, delivered higher year over year earnings from operations, and improved our conversion rate -- all while adding free cash flow, increasing our quarterly dividend, and ending the year debt-free." Though the APAC JV impacted reported results in the second half of the year, Camden added that "By finalizing the APAC JV transaction in 2016, Kelly is able to move forward in 2017 as an even more focused company committed to profitable growth."

In conjunction with its fourth quarter earnings release, Kelly Services has published a financial presentation on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on February 2 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet: kellyservices.com

                            
Via the Telephone:                 
U.S.                              1 800 288-9626
International                     1 651 291-5254
The pass code is Kelly Services    
                            

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 and disruptions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual property assets could be infringed upon or compromised, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates including TS Kelly Asia Pacific, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyber attacks or other breaches of network or information technology security, 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 developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, unemployment compensation, disability and medical benefit plans, the impact of changes in laws and regulations (including federal, state and international tax laws), 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 to continue to access credit markets, 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®

As a global leader in providing workforce solutions, Kelly Services, Inc. (KELYA ) (KELYB ) and its subsidiaries, offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Kelly® directly employs nearly 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2016 was $5.3 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN

                                                                                                                                                                                                                                       
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                                                                206.4          223.0          (16.6     )          (7.5     )          (7.0     )
                                                                                                                                     
Earnings from operations                                                                                    21.6           26.5           (4.9      )          (18.5    )             
                                                                                                                                     
Other income (expense), net                                                                                 0.7            (0.7     )            1.4           204.1           
                                                                                                                                     
Earnings before taxes and equity in net earnings (loss) of affiliate                                        22.3           25.8           (3.5      )          (13.9    )             
                                                                                                                                     
Income tax expense (benefit)                                                                                1.8            (8.4     )            10.2          121.4           
                                                                                                                                     
Net earnings before equity in net earnings (loss) of affiliate                                              20.5           34.2           (13.7     )          (40.2    )             
                                                                                                                                     
Equity in net earnings (loss) of affiliate                                                                  1.1            —       1.1           NM              
                                                                                                                                     
Net earnings                                                                                              $        21.6         $        34.2         $        (12.6     )          (36.8)   %             
                                                                                                                                     
Basic earnings per share                                                                                  $        0.56         $        0.88         $        (0.32     )          (36.4)   %             
Diluted earnings per share                                                                                $        0.55         $        0.88         $        (0.33     )          (37.5)   %             
                                                                                                                                     
STATISTICS:                                                                                                                                 
                                                                                                                                     
Gross profit rate                                                                                           17.5     %            17.1     %            0.4 pts.               
                                                                                                                                     
Selling, general and administrative expenses:                                                                                               
                            % of revenue                                                             15.8           15.3           0.5                    
                            % of gross profit                                                        90.5           89.4           1.1                    
                                                                                                                                     
% Return:                                                                                                                                   
                            Earnings from operations                                                 1.7            1.8            (0.1      )                   
                            Earnings before taxes and equity in net earnings (loss) of affiliate     1.7            1.8            (0.1      )                   
                            Net earnings                                                             1.7            2.3            (0.6      )                   
                                                                                                                                     
Effective income tax rate                                                                                   8.1      %            (32.4)   %            40.5 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                           
                                                                                                                                     
                                                                                                                                                                                                                                       
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                                                                841.3          853.6          (12.3    )          (1.5     )          (0.5     )
                                                                                                                                    
Earnings from operations                                                                                    65.0           66.7           (1.7     )          (2.6     )             
                                                                                                                                    
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                                        151.5          63.2           88.3         139.6           
                                                                                                                                    
Income tax expense (benefit)                                                                                30.0           8.7            21.3         245.1           
                                                                                                                                    
Net earnings before equity in net earnings (loss) of affiliate                                              121.5          54.5           67.0         122.8           
                                                                                                                                    
Equity in net earnings (loss) of affiliate                                                                  1.1            (0.7     )            1.8          251.9           
                                                                                                                                    
Net earnings                                                                                              $        122.6        $        53.8         $        68.8         127.8    %             
                                                                                                                                    
Basic earnings per share                                                                                  $        3.15         $        1.39         $        1.76         126.6    %             
Diluted earnings per share                                                                                $        3.13         $        1.39         $        1.74         125.2    %             
                                                                                                                                    
STATISTICS:                                                                                                                                
                                                                                                                                    
Gross profit rate                                                                                           17.2     %            16.7     %            0.5 pts.              
                                                                                                                                    
Selling, general and administrative expenses:                                                                                              
% of revenue                                                                                                15.9           15.5           0.4                   
% of gross profit                                                                                           92.8           92.8           —              
                                                                                                                                    
% Return:                                                                                                                                  
                            Earnings from operations                                                 1.2            1.2            —              
                            Earnings before taxes and equity in net earnings (loss) of affiliate     2.9            1.1            1.8                   
                            Net earnings                                                             2.3            1.0            1.3                   
                                                                                                                                    
Effective income tax rate                                                                                   19.8     %            13.7     %            6.1 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                          
                                                                                                                             
                                                                                                                                                                                                       
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       )             
                                                                                              
                                                                                                                                                                 
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                   38.4           34.0         13.1         13.9      
  Earnings from operations              10.8           14.0         (23.5    )             
                                                               
  Gross profit rate                     26.4     %            25.6     %          0.8 pts.        
  Expense rates:                                               
           % of revenue          20.6           18.1         2.5             
           % of gross profit     78.1           70.7         7.4             
  Return on sales                              5.8            7.5          (1.7     )             
                                                               
  
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          -                 
                                                                                                                                                                 
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                   150.6          132.1        14.1         15.0      
  Earnings from operations              28.7           28.5         -               
                                                               
  Gross profit rate                     25.4     %            23.8     %          1.6 pts.        
  Expense rates:                                               
           % of revenue          21.3           19.6         1.7             
           % of gross profit     84.0           82.2         1.8             
  Return on sales                              4.1            4.2          (0.1     )             
                                                               
KELLY SERVICES, INC. AND SUBSIDIARIES                                                                                                                         
CONSOLIDATED BALANCE SHEETS                                                                                                                                          
(UNAUDITED)                                                                                                                                                          
(In millions of dollars)                                                                                                                                             
                                                                                                                           
                                                                                                January 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     1,139.5        1,139.1   
                  Prepaid expenses and other current assets                                       46.7           45.8      
                  Total current assets                                                     1,215.8        1,227.1   
                                                                                                             
Noncurrent Assets                                                                                                   
                  Property and equipment, net                                              80.8           88.9      
                  Deferred taxes                                                           180.1          189.3     
                  Goodwill, net                                                                   88.3           90.3      
                  Investment in equity affiliate                                           114.8          9.4       
                  Other assets                                                             349.5          334.6     
Total noncurrent assets                                                                           813.5          712.5     
                                                                                                             
Total Assets                                                                                           $        2,029.3      $        1,939.6   
                                                                                                             
Current Liabilities                                                                                                 
                  Short-term borrowings                                                         $        -            $        55.5      
                  Accounts payable and accrued liabilities                                        454.5          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                                                                         770.5          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                                               925.4          813.5     
                  Accumulated other comprehensive income                                          58.7           60.7      
                                                                                                             
Total stockholders’ equity                                                                        1,013.8        895.4     
                                                                                                             
Total Liabilities and Stockholders’ Equity                                                      $        2,029.3      $        1,939.6   
                                                                                                             
                                                                                                             
STATISTICS:                                                                                                         
Working Capital                                                                                 $        445.3        $        411.3     
Current Ratio                                                                                     1.6            1.5       
Debt-to-capital %                                                                                        -        %            5.8      %
Global Days Sales Outstanding                                                                     54             54        
                                                                                                             
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                                                                                             $        122.6        $        53.8      
            Noncash adjustments:                                                                                                  
                                               Depreciation and amortization                                    21.3           22.3      
                                               Provision for bad debts                                          8.2            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                                                                                   (31.0    )            (57.7    )
                                                                                                                                         
                                               Net cash from operating activities                               38.0           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                                                                              6.0            (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      
                                                                                                                                         
                                                                                                                                    
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)   %
                                                       
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)    %
                                                       
                                                                                                                                                                                     
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                                                            206.4        211.3        (2.3     )          (1.9        )
                                                                                                 
Earnings from operations                                                 21.6         24.7         (12.4    )                
                                                                                                 
Other income (expense), net                                              0.7          (0.6     )          226.9              
                                                                                                 
Earnings before taxes and equity in net earnings (loss) of affiliate     22.3         24.1         (7.8     )                
                                                                                                 
Inc. tax expense (benefit)*                                                     1.8          (8.7     )          120.6              
                                                                                                 
Net earnings before equity in net earnings (loss) of affiliate           20.5         32.8         (37.7    )                
                                                                                                 
Equity in net earnings (loss) of affiliate                               1.1          -            NM                 
                                                                                                 
Net earnings                                                           $        21.6       $        32.8         (34.2)   %                
                                                                                                 
Earnings per share:                                                                              
                               Basic                                   $        0.56       $        0.84         (33.3)   %                
                               Diluted                                 $        0.55       $        0.84         (34.5)   %                
                                                                                          
* 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.
 
                                                                                                                                                                                                     
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      Adjusted Earnings   
                                                                                                                           (Note 2)
                                                                                                                        
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.
 
                                                                                                                                                                                                                                       
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      Restructuring Charges (Note 3)   Adjusted Earnings   Adjusted Earnings   % Change   CC % Change  
                                                                                                       (Note 1)
                                                                                                                                                         
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                                                          841.3                   -                                   (3.4               )          837.9        830.2      0.9        2.3          
                                                                                                                                                         
Earnings from operations                                               65.0                    -                                   3.4                    68.4         62.8       9.0              
                                                                                                                                                         
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   151.5                   (87.2               )                      3.4                    67.7         59.5       13.8             
                                                                                                                                                         
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         121.5                   (63.7               )                      2.2                    60.0         51.5       16.5             
                                                                                                                                                         
Equity in net earnings (loss) of affiliate                             1.1                     -                                   -                      1.1          (0.7     )        NM               
                                                                                                                                                         
Net earnings                                                         $        122.6      $                   (63.7               )          $                  2.2                  $        61.1       $        50.8       20.4     %              
                                                                                                                                                         
Earnings per share:                                                                                                                                      
                               Basic                                 $        3.15       $                   (1.64               )          $                  0.06                 $        1.57       $        1.31       19.8     %              
                               Diluted                               $        3.13       $                   (1.62               )          $                  0.06                 $        1.56       $        1.31       19.1     %              
                                                                                                                                                  
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.
 
                                                                                                                                                                                                   
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     Adjusted Earnings  
                                                                                                                                         (Note 2)
                                                                                                                      
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.
 

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.

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



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