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Form 8-K 2014 Fourth Quarter



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 
Date of Report (Date of earliest event reported): January 29, 2015
 
 
KELLY SERVICES, INC.
---------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
 
DELAWARE
0-1088
38-1510762
(State or other 
(Commission
(IRS Employer
jurisdiction of 
File Number)
Identification
incorporation) 
 
Number)


                                     
999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
-------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
 
(248) 362-4444
----------------------------------------------------------------------
(Registrant's telephone number, including area code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act
     (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
     (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
     the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
     the Exchange Act (17 CFR 240.13e-4(c))








1


Item 2.02. Results of Operations and Financial Condition
 
Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months and year ended December 28, 2014. A copy of the press release is attached as exhibit 99.1 herein.
 
Item 9.01. Financial Statements and Exhibits
 
(d) Exhibits
 
99.1      Press Release dated January 29, 2015.          
















































2



SIGNATURES
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
 
KELLY SERVICES, INC.
 
January 29, 2015
 
 
 
 
 
 
 
 
 
/s/ Patricia Little
Patricia Little
 
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
January 29, 2015
 
 
 
 
 
 
 
 
 
/s/ Olivier G. Thirot
Olivier G. Thirot
 
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
 






















3




EXHIBIT INDEX
  
Exhibit No.
                   Description
 
 
99.1
Press release dated January 29, 2015


4
2014 4Q Earnings Release Form 8-K

Exhibit 99.1

KELLY SERVICES® REPORTS 4th QUARTER AND FULL YEAR 2014 RESULTS

TROY, MI (January 29, 2015) -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2014.
  
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2014 totaled $1.4 billion, a 3% increase (a 6% increase on a constant currency basis) compared to the corresponding quarter of 2013. Revenue for the full year totaled $5.6 billion, a 3% increase (a 4% increase on a constant currency basis) compared to the prior year.

Earnings from operations for the fourth quarter of 2014 totaled $2.6 million, compared to $9.6 million reported for the fourth quarter of 2013. Included in the results of operations in the fourth quarter of 2014 are restructuring charges of $6.2 million. The results of operations in the fourth quarter of 2013 included restructuring charges of $0.3 million. Excluding the restructuring charges from both years, earnings from operations were $8.8 million in the fourth quarter of 2014, compared to adjusted earnings of $9.9 million last year.

Earnings from operations for the full year of 2014 totaled $21.9 million compared to $53.3 million in 2013. Included in the results from operations for 2014 are restructuring charges of $12.0 million. Included in the results from operations for 2013 are asset impairment charges of $1.7 million and restructuring charges of $1.6 million. Excluding these items from both years, earnings from operations were $33.9 million in 2014 compared to $56.6 million in 2013.

Diluted earnings per share in the fourth quarter of 2014 were $0.44 compared to $0.45 per share in the fourth quarter of 2013. Included in diluted earnings per share from continuing operations for the fourth quarter of 2014 are restructuring charges of $0.10 per share. Included in diluted earnings per share from continuing operations for the fourth quarter of 2013 are restructuring charges of $0.01 per share. Excluding these charges from both years, diluted earnings per share from continuing operations for the fourth quarter of 2014 were $0.54 per share compared to $0.45 per share in 2013.

Diluted earnings per share from continuing operations for the full year of 2014 were $0.61 compared to $1.54 per share in 2013. Included in diluted earnings per share from continuing operations for 2014 are restructuring charges of $0.19 per share. Included in diluted earnings per share from continuing operations for 2013 are restructuring charges of $0.04 per share and asset impairment charges of $0.04 per share. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2014 were $0.81 per share compared to $1.62 per share in 2013.

Commenting on the fourth quarter, Camden stated, “The fourth quarter capped a year of significant investment at Kelly, and we’re pleased that our performance confirms those investments are gaining traction. With our new delivery models fully in place, we have begun capitalizing on improved U.S. market conditions and increased demand for specialized staffing. The strong results delivered by our OCG segment reflects our ongoing ability to also meet the growing demand for holistic talent management solutions, especially among our largest customers.”

In conjunction with its fourth quarter and full year earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 29, 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


1

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, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, 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, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry or market developments, unexpected changes in claim trends on workers’ compensation, disability and medical benefit plans, the impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws and the expiration and/or reinstatement of the U.S. work opportunity credit program), the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to maintain specified financial covenants in our bank facilities 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® 

Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provided employment to approximately 555,000 employees in 2014. Revenue in 2014 was $5.6 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN

# # #


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


2

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2014
 
2013
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,425.0

$
1,385.8

$
39.2

 
2.8

%
5.7

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,192.4

 
1,154.3

 
38.1

 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
232.6

 
231.5

 
1.1

 
0.5

 
3.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
230.0

 
221.9

 
8.1

 
3.6

 
6.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
2.6

 
9.6

 
(7.0
)
 
(71.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
1.1

 
0.6

 
0.5

 
89.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
1.5

 
9.0

 
(7.5
)
 
(81.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(15.5
)
 
(8.2
)
 
(7.3
)
 
(89.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
17.0

$
17.2

$
(0.2
)
 
(0.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.44

$
0.45

$
(0.01
)
 
(2.2
)
%
 
 
Diluted earnings per share
$
0.44

$
0.45

$
(0.01
)
 
(2.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.3

%
16.7

%
(0.4
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
    % of revenue
 
16.1

 
16.0

 
0.1

 
 
 
 
 
    % of gross profit
 
98.8

 
95.9

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
0.2

 
0.7

 
(0.5
)
 
 
 
 
 
Earnings before taxes
 
0.1

 
0.6

 
(0.5
)
 
 
 
 
 
Net earnings
 
1.2

 
1.2

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
(949.7
)
%
(91.1
)
%
(858.6
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
37.7

 
37.4

 
 
 
 
 
 
 
     Diluted
 
37.7

 
37.4

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

 
38.6

 
 
 
 
 
 
 
     Diluted
 
38.9

 
38.6

 
 
 
 
 
 
 


3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2014
 
2013
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,562.7

$
5,413.1

$
149.6

 
2.8

%
3.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,654.3

 
4,523.6

 
130.7

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
908.4

 
889.5

 
18.9

 
2.1

 
3.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
886.5

 
834.5

 
52.0

 
6.2

 
7.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairments
 
—

 
1.7

 
(1.7
)
 
(100.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
21.9

 
53.3

 
(31.4
)
 
(59.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
5.3

 
4.5

 
0.8

 
15.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
16.6

 
48.8

 
(32.2
)
 
(66.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(7.1
)
 
(10.1
)
 
3.0

 
29.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
23.7

$
58.9

$
(35.2
)
 
(59.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.61

$
1.54

$
(0.93
)
 
(60.4
)
%
 
 
Diluted earnings per share
$
0.61

$
1.54

$
(0.93
)
 
(60.4
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.3

%
16.4

%
(0.1
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
    % of revenue
 
15.9

 
15.4

 
0.5

 
 
 
 
 
    % of gross profit
 
97.6

 
93.8

 
3.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
0.4

 
1.0

 
(0.6
)
 
 
 
 
 
Earnings before taxes
 
0.3

 
0.9

 
(0.6
)
 
 
 
 
 
Net earnings
 
0.4

 
1.1

 
(0.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
(43.2
)
%
(20.8
)
%
(22.4
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
37.5

 
37.3

 
 
 
 
 
 
 
     Diluted
 
37.5

 
37.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares adjusted for nonvested restricted awards (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.6

 
38.3

 
 
 
 
 
 
 
     Diluted
 
38.6

 
38.3

 
 
 
 
 
 
 

4

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
694.5

 
$
641.5

 
8.3

%
9.3

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

 
 
3.4

 
16.0

 
17.4

 
Gross profit
 
99.6

 
 
95.7

 
4.2

 
5.2

 
Gross profit rate
 
14.4

%
 
14.9

%
(0.5
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
232.9

 
$
234.1

 
(0.5
)
%
(0.2
)
%
Staffing fee-based income included in revenue from services
 
3.9

 
 
3.7

 
4.1

 
5.0

 
Gross profit
 
37.5

 
 
39.0

 
(3.6
)
 
(3.3
)
 
Gross profit rate
 
16.1

%
 
16.6

%
(0.5
)
 pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
927.4

 
$
875.6

 
5.9

%
6.7

%
Staffing fee-based income included in revenue from services
 
7.9

 
 
7.1

 
9.8

 
10.9

 
Gross profit
 
137.1

 
 
134.7

 
2.0

 
2.7

 
Total SG&A expenses
 
113.9

 
 
109.2

 
4.4

 
5.1

 
Earnings from operations
 
23.2

 
 
25.5

 
(8.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.8

%
 
15.4

%
(0.6
)
 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.3

 
 
12.5

 
(0.2
)
 
 
 
% of gross profit
 
83.0

 
 
81.1

 
1.9

 
 
 
Return on sales
 
2.5

 
 
2.9

 
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
204.5

 
$
232.2

 
(12.0
)
%
(2.4
)
%
Staffing fee-based income included in revenue from services
 
3.3

 
 
4.9

 
(31.9
)
 
(19.2
)
 
Gross profit
 
29.6

 
 
34.8

 
(15.1
)
 
(5.6
)
 
Gross profit rate
 
14.4

%
 
15.0

%
(0.6
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
44.8

 
$
48.0

 
(6.5
)
%
2.7

%
Staffing fee-based income included in revenue from services
 
2.8

 
 
3.3

 
(16.0
)
 
(2.5
)
 
Gross profit
 
9.6

 
 
10.6

 
(8.7
)
 
1.8

 
Gross profit rate
 
21.7

%
 
22.2

%
(0.5
)
 pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
249.3

 
$
280.2

 
(11.0
)
%
(1.5
)
%
Staffing fee-based income included in revenue from services
 
6.1

 
 
8.2

 
(25.5
)
 
(12.5
)
 
Gross profit
 
39.2

 
 
45.4

 
(13.6
)
 
(3.9
)
 
SG&A expenses excluding restructuring charges
 
36.4

 
 
42.2

 
(13.7
)
 
 
 
Restructuring charges
 
—

 
 
0.3

 
(100.0
)
 
 
 
Total SG&A expenses
 
36.4

 
 
42.5

 
(14.4
)
 
(2.9
)
 
Earnings from operations
 
2.8

 
 
2.9

 
(2.2
)
 
 
 
Earnings from operations excluding restructuring charges
 
2.8

 
 
3.2

 
(11.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.7

%
 
16.2

%
(0.5
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.6

 
 
15.1

 
(0.5
)
 
 
 
% of gross profit
 
92.8

 
 
92.9

 
(0.1
)
 
 
 
Return on sales (excluding restructuring charges)
 
1.1

 
 
1.1

 
—

 
 
 

5


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
APAC
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
91.3

 
$
87.3

 
4.6

%
9.7

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

 
 
2.2

 
(6.9
)
 
(3.4
)
 
Gross profit
 
11.8

 
 
12.5

 
(5.4
)
 
(0.8
)
 
Gross profit rate
 
12.9

%
 
14.3

%
(1.4
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
11.2

 
$
9.3

 
20.1

%
26.9

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

 
 
2.1

 
(6.3
)
 
(2.2
)
 
Gross profit
 
3.3

 
 
3.5

 
(4.6
)
 
0.2

 
Gross profit rate
 
29.9

%
 
37.7

%
(7.8
)
 pts.
 
 
  Total APAC
 
 
 
 
 
 
 
 
Revenue from services
$
102.5

 
$
96.6

 
6.1

%
11.4

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

 
 
4.3

 
(6.6
)
 
(2.8
)
 
Gross profit
 
15.1

 
 
16.0

 
(5.2
)
 
(0.6
)
 
Total SG&A expenses
 
13.1

 
 
14.7

 
(11.4
)
 
(6.8
)
 
Earnings from operations
 
2.0

 
 
1.3

 
63.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.8

%
 
16.5

%
(1.7
)
 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.7

 
 
15.2

 
(2.5
)
 
 
 
% of gross profit
 
85.8

 
 
91.8

 
(6.0
)
 
 
 
Return on sales
 
2.1

 
 
1.4

 
0.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
164.7

 
$
148.5

 
10.9

%
11.9

%
Gross profit
 
42.3

 
 
36.5

 
15.8

 
17.1

 
Total SG&A expenses
 
32.6

 
 
29.0

 
12.5

 
14.8

 
Earnings from operations
 
9.7

 
 
7.5

 
28.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
25.6

%
 
24.6

%
1.0

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
19.8

 
 
19.6

 
0.2

 
 
 
% of gross profit
 
77.4

 
 
79.6

 
(2.2
)
 
 
 
Return on sales
 
5.8

 
 
5.0

 
0.8

 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
AMERICAS
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,609.6

 
$
2,545.6

 
2.5

%
3.4

%
Staffing fee-based income included in revenue from services
 
14.4

 
 
13.2

 
8.7

 
10.1

 
Gross profit
 
379.6

 
 
370.2

 
2.6

 
3.4

 
Gross profit rate
 
14.5

%
 
14.5

%
—

 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
956.0

 
$
967.8

 
(1.2
)
%
(1.0
)
%
Staffing fee-based income included in revenue from services
 
15.6

 
 
14.5

 
7.4

 
8.1

 
Gross profit
 
155.9

 
 
155.1

 
0.6

 
0.8

 
Gross profit rate
 
16.3

%
 
16.0

%
0.3

 pts.
 
 
  Total Americas
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
3,565.6

 
$
3,513.4

 
1.5

%
2.2

%
Staffing fee-based income included in revenue from services
 
30.0

 
 
27.7

 
8.0

 
9.1

 
Gross profit
 
535.5

 
 
525.3

 
2.0

 
2.6

 
Total SG&A expenses
 
446.8

 
 
419.8

 
6.5

 
7.1

 
Earnings from operations
 
88.7

 
 
105.5

 
(15.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.0

%
 
14.9

%
0.1

 pts.
 
 
Expense rates:
 
 
 
 
 
 
 
 
 
 
% of revenue
 
12.5

 
 
11.9

 
0.6

 
 
 
% of gross profit
 
83.5

 
 
79.9

 
3.6

 
 
 
Return on sales
 
2.5

 
 
3.0

 
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
894.7

 
$
877.5

 
2.0

%
3.5

%
Staffing fee-based income included in revenue from services
 
17.3

 
 
19.8

 
(12.5
)
 
(8.0
)
 
Gross profit
 
130.6

 
 
133.6

 
(2.3
)
 
(0.6
)
 
Gross profit rate
 
14.6

%
 
15.2

%
(0.6
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
190.3

 
$
179.7

 
5.9

%
6.4

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

 
 
15.0

 
(10.0
)
 
(6.4
)
 
Gross profit
 
42.9

 
 
42.6

 
0.7

 
2.2

 
Gross profit rate
 
22.6

%
 
23.7

%
(1.1
)
 pts.
 
 
  Total EMEA
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,085.0

 
$
1,057.2

 
2.6

%
4.0

%
Staffing fee-based income included in revenue from services
 
30.8

 
 
34.8

 
(11.4
)
 
(7.3
)
 
Gross profit
 
173.5

 
 
176.2

 
(1.6
)
 
0.1

 
SG&A expenses excluding restructuring charges
 
160.6

 
 
164.3

 
(2.3
)
 
 
 
Restructuring charges
 
0.8

 
 
0.4

 
60.5

 
 
 
Total SG&A expenses
 
161.4

 
 
164.7

 
(2.1
)
 
(0.1
)
 
Earnings from operations
 
12.1

 
 
11.5

 
5.5

 
 
 
Earnings from operations excluding restructuring charges
 
12.9

 
 
11.9

 
7.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
16.0

%
 
16.7

%
(0.7
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.8

 
 
15.5

 
(0.7
)
 
 
 
% of gross profit
 
92.5

 
 
93.2

 
(0.7
)
 
 
 
Return on sales (excluding restructuring charges)
 
1.2

 
 
1.1

 
0.1

 
 
 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
Constant
 
 
 
 
 
 
 
 
 
 
Currency
 
 
 
2014
 
 
2013
 
Change
 
Change
 
APAC
 
 
 
 
 
 
 
 
 
  Commercial
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
351.8

 
$
344.1

 
2.2

%
5.6

%
Staffing fee-based income included in revenue from services
 
7.9

 
 
9.2

 
(14.7
)
 
(11.5
)
 
Gross profit
 
47.5

 
 
49.3

 
(3.7
)
 
(0.4
)
 
Gross profit rate
 
13.5

%
 
14.3

%
(0.8
)
 pts.
 
 
  PT
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
40.4

 
$
38.6

 
4.5

%
9.0

%
Staffing fee-based income included in revenue from services
 
7.8

 
 
8.8

 
(11.4
)
 
(7.9
)
 
Gross profit
 
12.7

 
 
14.0

 
(8.8
)
 
(5.0
)
 
Gross profit rate
 
31.6

%
 
36.2

%
(4.6
)
 pts.
 
 
  Total APAC
 
 
 
 
 
 
 
 
Revenue from services
$
392.2

 
$
382.7

 
2.5

%
6.0

%
Staffing fee-based income included in revenue from services
 
15.7

 
 
18.0

 
(13.1
)
 
(9.8
)
 
Gross profit
 
60.2

 
 
63.3

 
(4.8
)
 
(1.4
)
 
SG&A expenses excluding restructuring charges
 
56.4

 
 
60.2

 
(6.3
)
 
 
 
Restructuring charges
 
1.3

 
 
0.3

 
373.4

 
 
 
Total SG&A expenses
 
57.7

 
 
60.5

 
(4.5
)
 
(0.8
)
 
Earnings from operations
 
2.5

 
 
2.8

 
(11.0
)
 
 
 
Earnings from operations excluding restructuring charges
 
3.8

 
 
3.1

 
24.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
15.4

%
 
16.5

%
(1.1
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
14.4

 
 
15.7

 
(1.3
)
 
 
 
% of gross profit
 
93.6

 
 
95.1

 
(1.5
)
 
 
 
Return on sales (excluding restructuring charges)
 
1.0

 
 
0.8

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCG
 
 
 
 
 
 
 
 
 
Revenue from services
$
586.8

 
$
509.5

 
15.2

%
15.7

%
Gross profit
 
143.6

 
 
128.2

 
12.0

 
12.4

 
SG&A expenses excluding restructuring charges
 
127.3

 
 
110.6

 
15.1

 
 
 
Restructuring charges
 
—

 
 
0.9

 
(100.0
)
 
 
 
Total SG&A expenses
 
127.3

 
 
111.5

 
14.3

 
15.0

 
Asset impairments
 
—

 
 
1.7

 
(100.0
)
 
 
 
Earnings from operations
 
16.3

 
 
15.0

 
7.3

 
 
 
Earnings from operations excluding restructuring charges
 
16.3

 
 
15.9

 
1.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
24.5

%
 
25.2

%
(0.7
)
 pts.
 
 
Expense rates (excluding restructuring charges):
 
 
 
 
 
 
 
 
 
 
% of revenue
 
21.7

 
 
21.7

 
—

 
 
 
% of gross profit
 
88.7

 
 
86.3

 
2.4

 
 
 
Return on sales (excluding restructuring charges)
 
2.8

 
 
3.1

 
(0.3
)
 
 
 


8

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
Dec. 28, 2014
 
Dec. 29, 2013
 
Current Assets
 
 
 
 
 
  Cash and equivalents
$
83.1

$
125.7

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
    $10.7 and $9.9, respectively
1,122.8

 
1,023.1

 
  Prepaid expenses and other current assets
 
47.9

 
52.2

 
  Deferred taxes
 
34.4

 
35.5

 
Total current assets
 
1,288.2

 
1,236.5

 
 
 
 
 
 
 
Property and Equipment, Net
 
93.0

 
92.0

 
 
 
 
 
 
 
Noncurrent Deferred Taxes
 
146.3

 
121.7

 
 
 
 
 
 
 
Goodwill, Net
 
90.3

 
90.3

 
 
 
 
 
 
 
Other Assets
 
300.1

 
258.1

 
 
 
 
 
 
 
Total Assets
$
1,917.9

$
1,798.6

 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
  Short-term borrowings
$
91.9

$
28.3

 
  Accounts payable and accrued liabilities
 
364.0

 
342.4

 
  Accrued payroll and related taxes
 
308.5

 
294.9

 
  Accrued insurance
 
26.9

 
27.6

 
  Income and other taxes
 
68.8

 
68.8

 
 
 
 
 
 
 
Total current liabilities
 
860.1

 
762.0

 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
  Accrued insurance
 
43.9

 
46.0

 
  Accrued retirement benefits
 
140.8

 
134.7

 
  Other long-term liabilities
 
39.4

 
33.3

 
 
 
 
 
 
 
Total noncurrent liabilities
 
224.1

 
214.0

 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
  Treasury stock
 
(49.8
)
 
(56.2
)
 
  Paid-in capital
 
24.9

 
26.0

 
  Earnings invested in the business
 
767.4

 
751.3

 
  Accumulated other comprehensive income
 
51.1

 
61.4

 
 
 
 
 
 
 
Total stockholders' equity
 
833.7

 
822.6

 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
1,917.9

$
1,798.6

 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 Working Capital
$
428.1

$
474.5

 
 Current Ratio
 
1.5

 
1.6

 
 Debt-to-capital %
 
9.9

%
3.3

%
 Global Days Sales Outstanding
 
54

 
52

 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2014
 
2013
Cash flows from operating activities:
 
 
 
 
Net earnings
$
23.7

$
58.9

Noncash adjustments:
 
 
 
 
Impairment of assets
 
—

 
1.7

Depreciation and amortization
 
21.7

 
20.4

Provision for bad debts
 
5.3

 
2.0

Stock-based compensation
 
5.3

 
3.8

Other, net
 
(0.4
)
 
0.6

Changes in operating assets and liabilities
 
(125.6
)
 
27.9

 
 
 
 
 
Net cash (used in) from operating activities
 
(70.0
)
 
115.3

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(21.7
)
 
(20.0
)
Investment in equity affiliate
 
(5.7
)
 
—

Other investing activities
 
0.2

 
(0.8
)
 
 
 
 
 
Net cash used in investing activities
 
(27.2
)
 
(20.8
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
63.9

 
(35.8
)
Dividend payments
 
(7.6
)
 
(7.6
)
Other financing activities
 
0.3

 
(0.3
)
 
 
 
 
 
Net cash from (used in) financing activities
 
56.6

 
(43.7
)
 
 
 
 
 
Effect of exchange rates on cash and equivalents
 
(2.0
)
 
(1.4
)
 
 
 
 
 
Net change in cash and equivalents
 
(42.6
)
 
49.4

Cash and equivalents at beginning of period
 
125.7

 
76.3

 
 
 
 
 
 
 
 
 
 
Cash and equivalents at end of period
$
83.1

$
125.7

 
 
 
 
 


10

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter (Commercial, PT and OCG)
 
 
 
 
 
 
 
% Change
 
 
 
 
 
 
 
 
 
Constant
 
 
 
2014
 
2013
 
US$
 
Currency
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
933.9

$
872.6

 
7.0

%
7.0

%
Canada
 
50.0

 
52.4

 
(4.5
)
 
3.2

 
Mexico
 
36.7

 
33.9

 
8.2

 
15.2

 
Puerto Rico
 
26.6

 
24.6

 
8.3

 
8.3

 
Brazil
 
13.9

 
14.0

 
(0.6
)
 
7.6

 
Total Americas
 
1,061.1

 
997.5

 
6.4

 
7.1

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
66.4

 
66.1

 
0.4

 
9.2

 
Switzerland
 
57.8

 
70.3

 
(17.9
)
 
(12.7
)
 
Portugal
 
32.4

 
27.3

 
18.9

 
29.4

 
United Kingdom
 
23.2

 
27.2

 
(14.7
)
 
(13.0
)
 
Russia
 
20.9

 
33.0

 
(36.6
)
 
(9.3
)
 
Germany
 
16.8

 
17.5

 
(4.1
)
 
4.2

 
Italy
 
13.9

 
15.3

 
(8.7
)
 
(0.8
)
 
Norway
 
11.9

 
14.8

 
(19.9
)
 
(9.8
)
 
Other
 
13.6

 
16.9

 
(19.4
)
 
(12.0
)
 
Total EMEA
 
256.9

 
288.4

 
(10.9
)
 
(1.5
)
 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Singapore
 
32.7

 
30.6

 
7.0

 
10.8

 
Australia
 
32.6

 
30.2

 
7.9

 
16.8

 
Malaysia
 
16.2

 
16.1

 
0.6

 
5.4

 
New Zealand
 
13.2

 
14.0

 
(6.1
)
 
(0.6
)
 
Other
 
12.3

 
9.0

 
37.1

 
37.5

 
Total APAC
 
107.0

 
99.9

 
7.1

 
12.6

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,425.0

$
1,385.8

 
2.8

%
5.7

%
 
 
 
 
 
 
 
 
 
 


11

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date (Commercial, PT and OCG)
 
 
 
 
 
 
 
% Change
 
 
 
 
 
 
 
 
 
Constant
 
 
 
2014
 
2013
 
US$
 
Currency
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
3,535.8

$
3,419.9

 
3.4

%
3.4

%
Canada
 
198.2

 
216.3

 
(8.4
)
 
(1.9
)
 
Mexico
 
139.0

 
133.3

 
4.3

 
8.7

 
Puerto Rico
 
105.0

 
98.2

 
6.9

 
6.9

 
Brazil
 
57.1

 
59.0

 
(3.2
)
 
5.8

 
Total Americas
 
4,035.1

 
3,926.7

 
2.8

 
3.4

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
268.6

 
248.1

 
8.3

 
8.3

 
Switzerland
 
253.5

 
255.9

 
(0.9
)
 
(2.5
)
 
Portugal
 
124.8

 
90.3

 
38.2

 
38.5

 
Russia
 
117.3

 
135.0

 
(13.1
)
 
2.2

 
United Kingdom
 
105.6

 
105.3

 
0.3

 
(5.1
)
 
Germany
 
67.5

 
66.8

 
1.1

 
1.2

 
Italy
 
60.2

 
58.9

 
2.2

 
1.9

 
Norway
 
55.5

 
61.1

 
(9.2
)
 
(3.2
)
 
Other
 
64.5

 
67.6

 
(4.6
)
 
(4.4
)
 
Total EMEA
 
1,117.5

 
1,089.0

 
2.6

 
4.0

 
 
 
 
 
 
 
 
 
 
 
APAC
 
 
 
 
 
 
 
 
 
Singapore
 
127.5

 
114.1

 
11.8

 
13.2

 
Australia
 
121.4

 
130.6

 
(7.1
)
 
(0.7
)
 
Malaysia
 
66.2

 
67.2

 
(1.4
)
 
2.4

 
New Zealand
 
51.4

 
50.1

 
2.5

 
1.4

 
Other
 
43.6

 
35.4

 
23.2

 
30.2

 
Total APAC
 
410.1

 
397.4

 
3.2

 
6.8

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
5,562.7

$
5,413.1

 
2.8

%
3.8

%
 
 
 
 
 
 
 
 
 
 


12

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
 FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Adjusted Earnings
 
Adjusted Earnings
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,425.0

$
—

$
1,425.0

$
1,385.8

 
2.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,192.4

 
—

 
1,192.4

 
1,154.3

 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
232.6

 
—

 
232.6

 
231.5

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
230.0

 
(6.2
)
 
223.8

 
221.6

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
2.6

 
6.2

 
8.8

 
9.9

 
(9.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
1.1

 
—

 
1.1

 
0.6

 
89.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
1.5

 
6.2

 
7.7

 
9.3

 
(15.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax (benefit) expense*
 
(15.5
)
 
2.4

 
(13.1
)
 
(8.2
)
 
(60.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
17.0

$
3.8

$
20.8

$
17.5

 
19.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.44

$
0.10

$
0.54

$
0.45

 
20.0

%
Diluted
$
0.44

$
0.10

$
0.54

$
0.45

 
20.0

%
 
 
 
 
 
 
 
 
 
 
 
 
* Income tax benefit for the fourth quarter of 2014 includes $13.6 million related to the retroactive reinstatement of work opportunity credits for the entire year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,385.8

$
—

$
1,385.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,154.3

 
—

 
1,154.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
231.5

 
—

 
231.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
221.9

 
(0.3
)
 
221.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
9.6

 
0.3

 
9.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
0.6

 
—

 
0.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
9.0

 
0.3

 
9.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax (benefit) expense
 
(8.2
)
 
—

 
(8.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
17.2

$
0.3

$
17.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.45

$
0.01

$
0.45

 
 
 
 
 
Diluted
$
0.45

$
0.01

$
0.45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
 
 

13

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
 FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Adjusted Earnings
 
Adjusted Earnings
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,562.7

$
—

$
5,562.7

$
5,413.1

 
2.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,654.3

 
—

 
4,654.3

 
4,523.6

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
908.4

 
—

 
908.4

 
889.5

 
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
886.5

 
(12.0
)
 
874.5

 
832.9

 
5.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
21.9

 
12.0

 
33.9

 
56.6

 
(40.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
5.3

 
—

 
5.3

 
4.5

 
15.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
16.6

 
12.0

 
28.6

 
52.1

 
(45.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax (benefit) expense
 
(7.1
)
 
4.5

 
(2.6
)
 
(10.0
)
 
74.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
23.7

$
7.5

$
31.2

$
62.1

 
(49.7
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.61

$
0.19

$
0.81

$
1.62

 
(50.0
)
%
Diluted
$
0.61

$
0.19

$
0.81

$
1.62

 
(50.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
As reported
 
Restructuring Charges
(Note 1)
 
Asset Impairments (Note 2)
 
Adjusted Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,413.1

$
—

$
—

$
5,413.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,523.6

 
—

 
—

 
4,523.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
889.5

 
—

 
—

 
889.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SG&A expenses
 
834.5

 
(1.6
)
 
—

 
832.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairments
 
1.7

 
—

 
(1.7
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
53.3

 
1.6

 
1.7

 
56.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
4.5

 
—

 
—

 
4.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
 
48.8

 
1.6

 
1.7

 
52.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inc. tax (benefit) expense
 
(10.1
)
 
0.1

 
—

 
(10.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
58.9

$
1.5

$
1.7

$
62.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.54

$
0.04

$
0.04

$
1.62

 
 
 
Diluted
$
1.54

$
0.04

$
0.04

$
1.62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
 
 


14

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

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2014 financial performance and increases comparability. Specifically, Management believes that excluding these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) Restructuring charges in 2014 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.

(2) Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.

15