UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

KELLY SERVICES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		0-1088		38-1510762
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

999 WEST BIG BEAVER ROAD, TROY, MICHIGAN		48084
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (248) 362-4444

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition

Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months ended April 4, 2010. A copy of the press release is attached as exhibit 99.1 herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1		Press Release dated May 12, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press release dated May 12, 2010

Exhibit 99.1

KELLY SERVICES REPORTS 1st QUARTER 2010 RESULTS

TROY, MI (May 12, 2010) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter of 2010.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2010 totaled $1.1 billion, an 8% increase compared to the corresponding quarter in 2009. On a constant currency basis, revenue increased by 4%.

Losses from operations for the first quarter of 2010 totaled $1.6 million, compared to losses from operations of $30.6 million reported for the first quarter of 2009. Included in the results from operations for the first quarter of 2010 are restructuring charges of $4.4 million. The loss from operations in the first quarter of 2009 included restructuring and litigation charges of $8.1 million. Excluding the restructuring and litigation charges, earnings from operations were $2.8 million in the first quarter of 2010 compared to a loss from operations of $22.5 million in 2009.

Diluted losses per share from continuing operations in the first quarter of 2010 were $0.06 compared to first quarter 2009 losses of $0.46 per share. The restructuring and litigation charges totaled $0.10 per share in the first quarter of 2010 and $0.21 per share in the first quarter of 2009.

Commenting on the first quarter results, Camden was optimistic. “After many months, we were pleased to see the economy pick up and note positive trends in our business. Combined with our ongoing focus on cost control, those factors helped us return to profitability in what has typically been a weak quarter for our industry.”

That said, Camden expects 2010 will continue to be a challenging year for Kelly, but also a year of opportunities. “It’s important that we keep a careful eye on managing costs to gain the greatest leverage as this recovery strengthens. At the same time, as the workforce solutions market expands, Kelly is redefining itself in the marketplace. And our new strategic alliance with Temp Holdings enhances our ability to execute our long-term strategy, and grow our business in two critical staffing markets.”

Camden said while the Company will look to maximize profits across all operations, it will concentrate on accelerating growth of higher-margin Professional & Technical disciplines, as well as outsourcing and consulting services. “Our customers’ needs are changing, and Kelly is responding with a broad array of flexible, customized workforce solutions.”

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 8:30 a.m. (ET) on May 12, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S.		1 800 288-9626
International		1 651 291-5254

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website:
www.kellyservices.com

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

About Kelly Services

Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader in providing workforce solutions. Kelly offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temp-to-hire and direct-hire basis. Serving clients around the globe, Kelly provides employment to 480,000 employees annually. Revenue in 2009 was $4.3 billion. Visit www.kellyservices.com.

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

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED APRIL 4, 2010 AND MARCH 29, 2009
(UNAUDITED)
(In millions of dollars except per share data)

		2010				2009				Change				% Change
Revenue from services		$	1,130.4			$	1,042.6			$	87.8				8.4	%
Cost of services			950.4				867.1				83.3				9.6
Gross profit			180.0				175.5				4.5				2.6
Selling, general and administrative expenses			181.6				206.1				(24.5	)			(11.9	)
Loss from operations			(1.6	)			(30.6	)			29.0				94.9
Other (expense) income, net			(1.1	)			1.3				(2.4	)			(184.6	)
Loss from continuing operations before taxes			(2.7	)			(29.3	)			26.6				90.9
Income taxes			(0.7	)			(13.2	)			12.5				94.7
Loss from continuing operations			(2.0	)			(16.1	)			14.1				87.9
Earnings from discontinued operations, net of tax			—				0.6				(0.6	)			(100.0	)
Net loss		$	(2.0	)		$	(15.5	)		$	13.5				87.4	%
Basic loss per share on common stock
Loss from continuing operations		$	(0.06	)		$	(0.46	)		$	0.40				87.0	%
Earnings from discontinued operations			0.00				0.02				(0.02	)			(100.0	)
Net loss			(0.06	)			(0.45	)			0.39				86.7
Diluted loss per share on common stock
Loss from continuing operations		$	(0.06	)		$	(0.46	)		$	0.40				87.0	%
Earnings from discontinued operations			0.00				0.02				(0.02	)			(100.0	)
Net loss			(0.06	)			(0.45	)			0.39				86.7
STATISTICS:
Gross profit rate			15.9	%			16.8	%		(0.9		)pts.
Selling, general and administrative expenses:
% of revenue			16.1				19.8				(3.7	)
% of gross profit			100.9				117.5				(16.6	)
% Return — Loss from operations			(0.1	)			(2.9	)			2.8
Loss from continuing operations before taxes			(0.2	)			(2.8	)			2.6
Loss from continuing operations			(0.2	)			(1.5	)			1.3
Net loss			(0.2	)			(1.5	)			1.3
Effective income tax rate			26.4	%			45.1	%		(18.7		)pts.

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

		First Quarter
														Constant
														Currency
		2010				2009				Change				Change
Americas Commercial
Revenue from services (including fee-based income)		$	547.7			$	482.4				13.5	%			11.5	%
Fee-based income			2.1				1.8				15.6				10.7
Gross profit			78.5				73.1				7.4				5.6
SG&A expenses excluding restructuring charges			65.1				71.8				(9.5	)
Restructuring charges			0.3				0.8				(54.7	)
Total SG&A expenses			65.4				72.6				(10.0	)			(11.5	)
Earnings from operations			13.1				0.5			NM
Earnings from operations excluding restructuring charges			13.4				1.3			NM
Gross profit rate			14.3	%			15.2	%		(0.9		)pts.
Expense rates (excluding restructuring charges):
% of revenue			11.9				14.9				(3.0	)
% of gross profit			82.8				98.2				(15.4	)
Operating margin (excluding restructuring charges)			2.5				0.3				2.2
Americas PT
Revenue from services (including fee-based income)		$	205.6			$	197.4				4.1	%			3.8	%
Fee-based income			2.3				2.8				(18.3	)			(19.0	)
Gross profit			31.5				31.5				0.3				(0.1	)
SG&A expenses excluding restructuring charges			23.0				26.2				(12.1	)
Restructuring charges			—				—				(100.0	)
Total SG&A expenses			23.0				26.2				(12.1	)			(12.4	)
Earnings from operations			8.5				5.3				62.3
Earnings from operations excluding restructuring charges			8.5				5.3				61.9
Gross profit rate			15.3	%			15.9	%		(0.6		)pts.
Expense rates (excluding restructuring charges):
% of revenue			11.2				13.3				(2.1	)
% of gross profit			73.0				83.3				(10.3	)
Operating margin (excluding restructuring charges)			4.1				2.7				1.4
EMEA Commercial
Revenue from services (including fee-based income)		$	204.9			$	216.6				(5.4	)%			(12.4	)%
Fee-based income			4.8				4.7				1.2				(7.6	)
Gross profit			32.8				34.5				(5.1	)			(12.2	)
SG&A expenses excluding restructuring charges			32.4				40.8				(20.8	)
Restructuring charges			2.7				5.8				(53.6	)
Total SG&A expenses			35.1				46.6				(24.8	)			(30.4	)
Earnings from operations			(2.3	)			(12.1	)			81.3
Earnings from operations excluding restructuring charges			0.4				(6.3	)		NM
Gross profit rate			16.0	%			15.9	%		0.1		pts.
Expense rates (excluding restructuring charges):
% of revenue			15.8				18.8				(3.0	)
% of gross profit			98.7				118.3				(19.6	)
Operating margin (excluding restructuring charges)			0.2				(2.9	)			3.1

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)

		First Quarter
														Constant
														Currency
		2010				2009				Change				Change
EMEA PT
Revenue from services (including fee-based income)		$	34.9			$	32.8				6.3	%			(0.9	)%
Fee-based income			3.7				4.4				(14.7	)			(22.2	)
Gross profit			9.4				9.4				0.5				(7.0	)
Total SG&A expenses			9.5				10.0				(4.3	)			(11.4	)
Earnings from operations			(0.1	)			(0.6	)			83.3
Gross profit rate			27.1	%			28.6	%		(1.5		)pts.
Expense rates:
% of revenue			27.3				30.4				(3.1	)
% of gross profit			101.0				106.1				(5.1	)
Operating margin			(0.3	)			(1.7	)			1.4
APAC Commercial
Revenue from services (including fee-based income)		$	80.9			$	64.4				25.6	%			6.8	%
Fee-based income			2.8				2.2				25.7				7.9
Gross profit			11.4				9.5				20.4				1.1
SG&A expenses excluding restructuring charges			9.9				10.8				(8.5	)
Restructuring charges			0.5				—			NM
Total SG&A expenses			10.4				10.8				(3.6	)			(19.3	)
Earnings from operations			1.0				(1.3	)		NM
Earnings from operations excluding restructuring charges			1.5				(1.3	)		NM
Gross profit rate			14.1	%			14.7	%		(0.6		)pts.
Expense rates (excluding restructuring charges):
% of revenue			12.2				16.7				(4.5	)
% of gross profit			86.8				114.1				(27.3	)
Operating margin (excluding restructuring charges)			1.9				(2.1	)			4.0
APAC PT
Revenue from services (including fee-based income)		$	7.6			$	6.2				22.7	%			4.9	%
Fee-based income			1.9				1.0				96.4				81.1
Gross profit			2.8				1.9				46.1				29.4
Total SG&A expenses			3.8				2.2				73.2				54.3
Earnings from operations			(1.0	)			(0.3	)			(284.1	)
Gross profit rate			36.7	%			30.8	%		5.9		pts.
Expense rates:
% of revenue			49.1				34.7				14.4
% of gross profit			133.8				112.9				20.9
Operating margin			(12.4	)			(4.0	)			(8.4	)

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)

		First Quarter
														Constant
														Currency
		2010				2009				Change				Change
OCG
Revenue from services (including fee-based income)		$	55.3			$	48.7				13.5	%			12.1	%
Fee-based income			6.1				6.6				(7.9	)			(11.4	)
Gross profit			14.0				15.9				(12.3	)			(14.5	)
SG&A expenses excluding restructuring charges			18.4				17.0				8.5
Restructuring charges			0.1				0.1				(36.2	)
Total SG&A expenses			18.5				17.1				8.2				5.3
Earnings from operations			(4.5	)			(1.2	)			(280.6	)
Earnings from operations excluding restructuring charges			(4.4	)			(1.1	)			(314.6	)
Gross profit rate			25.3	%			32.7	%		(7.4		)pts.
Expense rates (excluding restructuring charges):
% of revenue			33.4				34.9				(1.5	)
% of gross profit			132.1				106.8				25.3
Operating margin (excluding restructuring charges)			(8.1	)			(2.2	)			(5.9	)
Corporate Expense
SG&A expenses excluding restructuring charges		$	15.5			$	20.4				(23.8	)%
Restructuring charges			0.8				0.5				56.8
Total SG&A expenses			16.3				20.9				(22.0	)
Asset Impairments		$	—			$	—			NM		%
Consolidated Total (net of intersegment activity)
Revenue from services (including fee-based income)		$	1,130.4			$	1,042.6				8.4	%			4.4	%
Fee-based income			23.7				23.5				0.7				(6.2	)
Gross profit			180.0				175.5				2.6				(1.5	)
SG&A expenses excluding restructuring charges			177.2				198.9				(11.0	)
Restructuring charges			4.4				7.2				(38.6	)
Total SG&A expenses			181.6				206.1				(11.9	)			(15.3	)
Earnings from operations			(1.6	)			(30.6	)			94.9
Earnings from operations excluding restructuring charges			2.8				(23.4	)		NM
Gross profit rate			15.9	%			16.8	%		(0.9		)pts.
Expense rates (excluding restructuring charges):
% of revenue			15.7				19.1				(3.4	)
% of gross profit			98.4				113.4				(15.0	)
Operating margin (excluding restructuring charges)			0.3				(2.2	)			2.5

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)

		April 4,				January 3,				March 29,
		2010				2010				2009
Current Assets
Cash and equivalents		$	55.7			$	88.9			$	115.4
Trade accounts receivable, less allowances of $14.4, $15.0 and $17.2, respectively			727.3				717.9				706.3
Prepaid expenses and other current assets			79.7				70.6				55.8
Deferred taxes			18.4				21.0				29.2
Total current assets			881.1				898.4				906.7
Property and Equipment, Net			120.0				127.1				143.1
Noncurrent Deferred Taxes			76.9				77.5				39.8
Goodwill, Net			67.3				67.3				117.8
Other Assets			133.6				131.4				107.5
Total Assets		$	1,278.9			$	1,301.7			$	1,314.9
Current Liabilities
Short-term borrowings and current portion of long-term debt		$	68.2			$	79.6			$	16.9
Accounts payable and accrued liabilities			165.8				182.6				220.7
Accrued payroll and related taxes			218.2				208.3				209.5
Accrued insurance			19.2				19.7				25.5
Income and other taxes			46.5				47.4				26.3
Total current liabilities			517.9				537.6				498.9
Noncurrent Liabilities
Long-term debt			56.1				57.5				67.6
Accrued insurance			45.9				47.3				45.4
Accrued retirement benefits			77.7				76.9				59.2
Other long-term liabilities			15.5				16.0				15.2
Total noncurrent liabilities			195.2				197.7				187.4
Stockholders’ Equity
Common stock			40.1				40.1				40.1
Treasury stock			(106.7	)			(107.2	)			(110.5	)
Paid-in capital			37.4				36.9				36.3
Earnings invested in the business			569.5				571.5				660.5
Accumulated other comprehensive income			25.5				25.1				2.2
Total stockholders’ equity			565.8				566.4				628.6
Total Liabilities and Stockholders’ Equity		$	1,278.9			$	1,301.7			$	1,314.9
STATISTICS:
Working Capital		$	363.2			$	360.8			$	407.8
Current Ratio			1.7				1.7				1.8
Debt-to-capital %			18.0	%			19.5	%			11.9	%
Global Days Sales Outstanding			51				51				51

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 4, 2010 AND MARCH 29, 2009
(UNAUDITED)
(In millions of dollars)

		2010				2009
Cash flows from operating activities
Net loss		$	(2.0	)		$	(15.5	)
Noncash adjustments:
Depreciation and amortization			9.1				10.6
Provision for bad debts			0.1				1.5
Stock-based compensation			1.1				1.3
Other, net			0.2				(1.9	)
Changes in operating assets and liabilities			(27.4	)			29.1
Net cash from operating activities			(18.9	)			25.1
Cash flows from investing activities
Capital expenditures			(1.4	)			(2.0	)
Acquisition of companies, net of cash received			—				(0.2	)
Other investing activities			0.1				—
Net cash from investing activities			(1.3	)			(2.2	)
Cash flows from financing activities
Net change in revolving line of credit			(11.2	)			(1.0	)
Repayment of debt			—				(22.9	)
Net cash from financing activities			(11.2	)			(23.9	)
Effect of exchange rates on cash and equivalents			(1.8	)			(1.9	)
Net change in cash and equivalents			(33.2	)			(2.9	)
Cash and equivalents at beginning of period			88.9				118.3
Cash and equivalents at end of period		$	55.7			$	115.4

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)

		First Quarter (Commercial, PT and OCG)
										% Change
														Constant
		2010				2009				US$				Currency
Americas
United States		$	710.2			$	644.8				10.1	%			10.1	%
Canada			51.6				40.9				26.1				5.5
Mexico			19.0				14.7				28.9				14.3
Puerto Rico			14.7				15.7				(5.9	)			(5.9	)
Total Americas			795.5				716.1				11.1				9.6
EMEA
France			67.3				61.7				9.1				3.4
United Kingdom			37.6				62.6				(39.8	)			(44.5	)
Switzerland			31.4				28.5				10.0				1.7
Russia			23.3				13.9				67.7				47.9
Portugal			18.4				11.7				57.6				49.5
Italy			16.7				18.9				(11.7	)			(16.2	)
Germany			16.3				15.4				5.6				0.2
Norway			13.9				13.1				6.3				(9.4	)
Other			19.2				28.2				(32.0	)			(37.2	)
Total EMEA			244.1				254.0				(3.9	)			(10.9	)
APAC
Australia			27.6				20.4				35.6				(0.2	)
Singapore			18.9				14.9				26.4				17.4
Malaysia			14.6				12.1				20.4				11.7
India			13.7				7.0				96.7				81.6
Other			16.0				18.1				(11.5	)			(27.2	)
Total APAC			90.8				72.5				25.3				6.5
Total Kelly Services, Inc.		$	1,130.4			$	1,042.6				8.4	%			4.4	%

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)

		First Quarter
		2010				2009
Pretax loss from operations		$	(1.6	)		$	(30.6	)
Restructuring charges (Note 1)			4.4				7.2
Litigation charges			—				0.9
Earnings (loss) from operations excluding restructuring and litigation charges		$	2.8			$	(22.5	)

		First Quarter
		2010								2009
		Amount				Per Share				Amount				Per Share
Loss from continuing operations, net of taxes		$	(2.0	)		$	(0.06	)		$	(16.1	)		$	(0.46	)
Restructuring charges, net of taxes (Note 1)			3.6				0.10				6.4				0.19
Litigation charges, net of taxes			—				—				0.6				0.02
Earnings (loss) from continuing operations excluding restructuring and litigation charges, net of taxes		$	1.6			$	0.05			$	(9.1	)		$	(0.26	)

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

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

(1) Restructuring charges represent global costs incurred in connection with the reduction in the number of permanent employees and the consolidation, sale or closure of branch locations. These costs include severance, lease terminations, asset write-offs and other miscellaneous costs.