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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): August 9, 2017
 
 
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 and six months ended July 2, 2017. 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 August 9, 2017.
99.2    Presentation materials for August 9, 2017 conference call.

















































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.
 
August 9, 2017
 
 
 
 
 
 
 
 
 
/s/ Olivier G. Thirot
Olivier G. Thirot
 
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) 

 
 
 
 
August 9, 2017
 
 
 
 
 
 
 
 
 
/s/ Laura S. Lockhart
Laura S. Lockhart 

Vice President, Corporate Controller and
Chief Accounting Officer
(Principal Accounting Officer)
 






















3





EXHIBIT INDEX
  
Exhibit No.
                   Description
 
 
99.1
Press release dated August 9, 2017
99.2
Presentation materials for August 9, 2017 conference call


4

Exhibit

Exhibit 99.1

https://cdn.kscope.io/409e46aadb38e9d8b52cd9eb56be07d5-pressreleaseheadera08.jpg
    
KELLY SERVICES® REPORTS
SECOND QUARTER EARNINGS

Financial Highlights
•
Q2 revenue down 3%; up 4% adjusted for the APAC Joint Venture transaction in 2016
•
Q2 operating earnings up 105%; up 71% adjusted for 2016 restructuring charges and the APAC Joint Venture transaction
•
Q2 earnings per share of $0.47 versus $0.23 (2016 Adjusted EPS of $0.27)
    
TROY, MI (August 9, 2017) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the second quarter of 2017.

George S. Corona, President and Chief Executive Officer, announced revenue for the second quarter of 2017 totaled $1.3 billion, a 3% decrease compared to the corresponding quarter of 2016. Revenue comparisons are unfavorably impacted by the transfer of APAC staffing operations to the TS Kelly Asia Pacific Joint Venture at the beginning of the third quarter of 2016.
    
Earnings from operations for the second quarter of 2017 totaled $20.3 million, compared to $9.9 million reported for the second quarter of 2016. Included in the results of operations in the second quarter of 2016 are restructuring charges of $3.4 million. Excluding the restructuring charges and the APAC staffing operations from 2016, earnings from operations in 2016 were $11.9 million.
    
Diluted earnings per share in the second quarter of 2017 were $0.47 compared to $0.23 per share in the second quarter of 2016. Excluding the restructuring charges and the APAC staffing operations, earnings per share were $0.27 in the second quarter of 2016.

Reflecting on the results, Corona stated, “It was a successful quarter that confirmed our strategic direction and continued Kelly’s forward momentum in the market. Our performance demonstrates our sustained ability to grow the top line, operate more efficiently, and deliver solid returns to our shareholders--all while continuing to invest in the future. I’m incredibly proud of our Kelly teams’ commitment to growth and delivering such strong results.”
    
Kelly also reported that on August 8, its board of directors declared a dividend of $0.075 per share. The dividend is payable September 1, 2017 to shareholders of record as of the close of business on August 22, 2017.

In conjunction with its second 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 August 9 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

1


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. (Nasdaq: 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

# # #


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 JULY 2, 2017 AND JULY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,333.6

$
1,375.5

$
(41.9
)
 
(3.1
)
%
(2.7
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,104.8

 
1,145.0

 
(40.2
)
 
(3.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
228.8

 
230.5

 
(1.7
)
 
(0.7
)
 
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
208.5

 
220.6

 
(12.1
)
 
(5.5
)
 
(5.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
20.3

 
9.9

 
10.4

 
104.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
0.5

 
—

 
0.5

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
19.8

 
9.9

 
9.9

 
99.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
1.5

 
0.8

 
0.7

 
87.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
18.3

 
9.1

 
9.2

 
100.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
0.4

 
(0.2
)
 
0.6

 
255.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
18.7

$
8.9

$
9.8

 
110.0

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.48

$
0.23

$
0.25

 
108.7

%
 
 
Diluted earnings per share
$
0.47

$
0.23

$
0.24

 
104.3

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
13.7

$
16.6

$
(2.9
)
 
(16.9
)
%
(17.1
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.2

%
16.8

%
0.4

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
8.9

 
4.3

 
4.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.5

 
0.7

 
0.8

 
 
 
 
 
Net earnings
 
1.4

 
0.6

 
0.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
7.6

%
8.1

%
(0.5
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.3

 
38.0

 
 
 
 
 
 
 
     Diluted
 
38.8

 
38.3

 
 
 
 
 
 
 

3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JULY 2, 2017 AND JULY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,623.3

$
2,724.6

$
(101.3
)
 
(3.7
)
%
(3.4
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
2,162.9

 
2,261.4

 
(98.5
)
 
(4.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
460.4

 
463.2

 
(2.8
)
 
(0.6
)
 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
423.7

 
438.6

 
(14.9
)
 
(3.4
)
 
(3.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
36.7

 
24.6

 
12.1

 
48.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
2.1

 
0.9

 
1.2

 
128.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
34.6

 
23.7

 
10.9

 
45.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
4.2

 
3.5

 
0.7

 
20.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
30.4

 
20.2

 
10.2

 
50.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
0.5

 
(0.1
)
 
0.6

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
30.9

$
20.1

$
10.8

 
53.3

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.79

$
0.52

$
0.27

 
51.9

%
 
 
Diluted earnings per share
$
0.78

$
0.51

$
0.27

 
52.9

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
27.2

$
33.1

$
(5.9
)
 
(17.8
)
%
(18.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.6

%
17.0

%
0.6

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
8.0

 
5.3

 
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.4

 
0.9

 
0.5

 
 
 
 
 
Net earnings
 
1.2

 
0.7

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
12.2

%
14.8

%
(2.6
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.3

 
38.0

 
 
 
 
 
 
 
     Diluted
 
38.7

 
38.2

 
 
 
 
 
 
 


4

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

 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
 
2016
 
Change
 
Change
 
AMERICAS STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
575.6

 
$
542.4

 
6.1

%
6.1

%
Gross profit
 
103.8

 
 
97.2

 
6.8

 
6.8

 
SG&A expenses excluding restructuring charges
 
83.4

 
 
79.8

 
4.7

 
4.6

 
Restructuring charges
 
—

 
 
1.8

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
83.4

 
 
81.6

 
2.3

 
2.3

 
Earnings from operations
 
20.4

 
 
15.6

 
29.9

 
 
 
Earnings from operations excluding restructuring charges
 
20.4

 
 
17.4

 
16.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.0

%
 
17.9

%
0.1

 pts.
 
 
Conversion rate
 
19.7

 
 
16.2

 
3.5

 
 
 
Conversion rate excluding restructuring charges
 
19.7

 
 
18.0

 
1.7

 
 
 
Return on sales
 
3.5

 
 
2.9

 
0.6

 
 
 
Return on sales excluding restructuring charges
 
3.5

 
 
3.2

 
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLOBAL TALENT SOLUTIONS
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
505.5

 
$
500.6

 
1.0

%
1.2

%
Gross profit
 
88.7

 
 
85.7

 
3.5

 
3.9

 
SG&A expenses excluding restructuring charges
 
73.4

 
 
71.4

 
2.8

 
3.2

 
Restructuring charges
 
—

 
 
0.4

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
73.4

 
 
71.8

 
2.2

 
2.7

 
Earnings from operations
 
15.3

 
 
13.9

 
10.1

 
 
 
Earnings from operations excluding restructuring charges
 
15.3

 
 
14.3

 
7.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.5

%
 
17.1

%
0.4

 pts.
 
 
Conversion rate
 
17.2

 
 
16.2

 
1.0

 
 
 
Conversion rate excluding restructuring charges
 
17.2

 
 
16.6

 
0.6

 
 
 
Return on sales
 
3.0

 
 
2.8

 
0.2

 
 
 
Return on sales excluding restructuring charges
 
3.0

 
 
2.8

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERNATIONAL STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
256.8

 
$
337.3

 
(23.9
)
%
(22.8
)
%
Gross profit
 
36.8

 
 
48.6

 
(24.1
)
 
(23.3
)
 
SG&A expenses excluding restructuring charges
 
32.7

 
 
43.4

 
(24.9
)
 
(23.9
)
 
Restructuring charges
 
—

 
 
1.2

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
32.7

 
 
44.6

 
(26.8
)
 
(25.8
)
 
Earnings from operations
 
4.1

 
 
4.0

 
6.3

 
 
 
Earnings from operations excluding restructuring charges
 
4.1

 
 
5.2

 
(17.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.3

%
 
14.4

%
(0.1
)
 pts.
 
 
Conversion rate
 
11.2

 
 
8.0

 
3.2

 
 
 
Conversion rate excluding restructuring charges
 
11.2

 
 
10.3

 
0.9

 
 
 
Return on sales
 
1.6

 
 
1.2

 
0.4

 
 
 
Return on sales excluding restructuring charges
 
1.6

 
 
1.5

 
0.1

 
 
 

5

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
June Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
 
2016
 
Change
 
Change
 
AMERICAS STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,148.7

 
$
1,096.5

 
4.8

%
4.7

%
Gross profit
 
209.1

 
 
197.9

 
5.7

 
5.6

 
SG&A expenses excluding restructuring charges
 
167.1

 
 
163.4

 
2.3

 
2.3

 
Restructuring charges
 
0.4

 
 
1.8

 
(80.0
)
 
(79.8
)
 
Total SG&A expenses
 
167.5

 
 
165.2

 
1.4

 
1.4

 
Earnings from operations
 
41.6

 
 
32.7

 
27.0

 
 
 
Earnings from operations excluding restructuring charges
 
42.0

 
 
34.5

 
21.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.2

%
 
18.1

%
0.1

 pts.
 
 
Conversion rate
 
19.9

 
 
16.6

 
3.3

 
 
 
Conversion rate excluding restructuring charges
 
20.1

 
 
17.5

 
2.6

 
 
 
Return on sales
 
3.6

 
 
3.0

 
0.6

 
 
 
Return on sales excluding restructuring charges
 
3.7

 
 
3.2

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLOBAL TALENT SOLUTIONS
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
992.8

 
$
991.5

 
0.1

%
0.2

%
Gross profit
 
179.2

 
 
171.0

 
4.8

 
5.0

 
SG&A expenses excluding restructuring charges
 
146.6

 
 
143.0

 
2.5

 
2.8

 
Restructuring charges
 
2.0

 
 
0.4

 
415.5

 
417.6

 
Total SG&A expenses
 
148.6

 
 
143.4

 
3.6

 
4.0

 
Earnings from operations
 
30.6

 
 
27.6

 
10.8

 
 
 
Earnings from operations excluding restructuring charges
 
32.6

 
 
28.0

 
16.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.0

%
 
17.2

%
0.8

 pts.
 
 
Conversion rate
 
17.1

 
 
16.1

 
1.0

 
 
 
Conversion rate excluding restructuring charges
 
18.2

 
 
16.3

 
1.9

 
 
 
Return on sales
 
3.1

 
 
2.8

 
0.3

 
 
 
Return on sales excluding restructuring charges
 
3.3

 
 
2.8

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERNATIONAL STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
490.4

 
$
646.3

 
(24.1
)
%
(23.0
)
%
Gross profit
 
73.2

 
 
96.4

 
(24.0
)
 
(23.0
)
 
SG&A expenses excluding restructuring charges
 
63.9

 
 
84.6

 
(24.6
)
 
(23.6
)
 
Restructuring charges
 
—

 
 
1.2

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
63.9

 
 
85.8

 
(25.6
)
 
(24.6
)
 
Earnings from operations
 
9.3

 
 
10.6

 
(11.4
)
 
 
 
Earnings from operations excluding restructuring charges
 
9.3

 
 
11.8

 
(19.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.9

%
 
14.9

%
—

 pts.
 
 
Conversion rate
 
12.8

 
 
11.0

 
1.8

 
 
 
Conversion rate excluding restructuring charges
 
12.8

 
 
12.1

 
0.7

 
 
 
Return on sales
 
1.9

 
 
1.6

 
0.3

 
 
 
Return on sales excluding restructuring charges
 
1.9

 
 
1.8

 
0.1

 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
July 2, 2017
 
Jan. 1, 2017
 
July 3, 2016
 
Current Assets
 
 
 
 
 
 
 
  Cash and equivalents
$
60.8

$
29.6

$
33.3

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
 
 
    $12.7, $12.5 and $11.0, respectively
 
1,188.1

 
1,138.3

 
1,079.8

 
  Prepaid expenses and other current assets
 
61.8

 
46.7

 
47.8

 
  Current assets held for sale
 
—

 
—

 
94.0

 
Total current assets
 
1,310.7

 
1,214.6

 
1,254.9

 
 
 
 
 
 
 
 
 
Noncurrent Assets
 
 
 
 
 
 
 
  Property and equipment, net
 
81.5

 
80.8

 
81.5

 
  Deferred taxes
 
185.8

 
180.1

 
197.0

 
  Goodwill
 
88.4

 
88.4

 
88.3

 
  Investment in equity affiliate
 
115.2

 
114.8

 
9.3

 
  Other assets
 
402.5

 
349.4

 
359.1

 
Total noncurrent assets
 
873.4

 
813.5

 
735.2

 
 
 
 
 
 
 
 
 
Total Assets
$
2,184.1

$
2,028.1

$
1,990.1

 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
  Short-term borrowings
$
0.7

$
—

$
26.9

 
  Accounts payable and accrued liabilities
 
476.1

 
455.1

 
403.7

 
  Accrued payroll and related taxes
 
286.4

 
241.5

 
259.2

 
  Accrued insurance
 
22.8

 
23.4

 
27.1

 
  Income and other taxes
 
57.0

 
51.1

 
50.9

 
  Current liabilities held for sale
 
—

 
—

 
48.0

 
Total current liabilities
 
843.0

 
771.1

 
815.8

 
 
 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
 
 
  Accrued insurance
 
44.2

 
45.5

 
41.1

 
  Accrued retirement benefits
 
170.1

 
157.4

 
148.5

 
  Other long-term liabilities
 
53.4

 
42.1

 
50.6

 
Total noncurrent liabilities
 
267.7

 
245.0

 
240.2

 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
40.1

 
  Treasury stock
 
(37.6
)
 
(39.0
)
 
(42.1
)
 
  Paid-in capital
 
31.1

 
28.6

 
28.1

 
  Earnings invested in the business
 
948.7

 
923.6

 
828.8

 
  Accumulated other comprehensive income
 
91.1

 
58.7

 
79.2

 
Total stockholders' equity
 
1,073.4

 
1,012.0

 
934.1

 
 
 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
2,184.1

$
2,028.1

$
1,990.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 Working Capital
$
467.7

$
443.5

$
439.1

 
 Current Ratio
 
1.6

 
1.6

 
1.5

 
 Debt-to-capital %
 
0.1

%
—

%
2.8

%
 Global Days Sales Outstanding
 
55

 
53

 
53

 
 Year-to-Date Free Cash Flow
$
36.7

$
24.7

$
36.9

 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JULY 2, 2017 AND JULY 3, 2016
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net earnings
$
30.9

$
20.1

Noncash adjustments:
 
 
 
 
Depreciation and amortization
 
10.6

 
10.9

Provision for bad debts
 
2.9

 
3.5

Stock-based compensation
 
3.6

 
4.5

Other, net
 
(0.5
)
 
(0.7
)
Changes in operating assets and liabilities
 
(3.5
)
 
2.9

 
 
 
 
 
Net cash from operating activities
 
44.0

 
41.2

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(7.3
)
 
(4.3
)
Other investing activities
 
(0.1
)
 
(0.4
)
 
 
 
 
 
Net cash used in investing activities
 
(7.4
)
 
(4.7
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
0.7

 
(29.1
)
Dividend payments
 
(5.8
)
 
(4.8
)
Other financing activities
 
(0.1
)
 
0.2

 
 
 
 
 
Net cash used in financing activities
 
(5.2
)
 
(33.7
)
 
 
 
 
 
Effect of exchange rates on cash and equivalents
 
(0.2
)
 
6.4

 
 
 
 
 
Net change in cash and equivalents
 
31.2

 
9.2

Less: cash balance included in current assets held for sale
 
—

 
(18.1
)
Cash and equivalents at beginning of period
 
29.6

 
42.2

 
 
 
 
 
 
 
 
 
 
Cash and equivalents at end of period
$
60.8

$
33.3



8

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
970.1

$
930.8

 
4.2

%
4.2

%
Canada
 
34.6

 
35.8

 
(3.1
)
 
1.0

 
Mexico
 
28.3

 
25.4

 
11.0

 
13.4

 
Puerto Rico
 
17.6

 
22.5

 
(21.9
)
 
(21.9
)
 
Brazil
 
12.7

 
10.2

 
23.8

 
9.2

 
Total Americas
 
1,063.3

 
1,024.7

 
3.8

 
3.8

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
68.3

 
61.3

 
11.5

 
14.1

 
Switzerland
 
53.9

 
54.6

 
(1.2
)
 
—

 
Portugal
 
41.7

 
38.7

 
7.4

 
10.1

 
Russia
 
24.0

 
16.6

 
44.4

 
25.9

 
United Kingdom
 
20.8

 
23.1

 
(9.7
)
 
1.1

 
Italy
 
15.7

 
15.1

 
3.9

 
6.0

 
Germany
 
14.6

 
15.7

 
(6.1
)
 
(3.7
)
 
Norway
 
8.4

 
8.4

 
(1.3
)
 
1.8

 
Ireland
 
7.4

 
5.4

 
36.0

 
39.3

 
Other
 
11.0

 
9.4

 
17.4

 
19.6

 
Total EMEA
 
265.8

 
248.3

 
7.1

 
8.7

 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
4.5

 
102.5

 
(95.6
)
 
(95.6
)
 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,333.6

$
1,375.5

 
(3.1
)
%
(2.7
)
%
 
 
 
 
 
 
 
 
 
 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
June Year to Date (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
1,925.7

$
1,865.5

 
3.2

%
3.2

%
Canada
 
68.7

 
70.3

 
(2.2
)
 
(1.7
)
 
Mexico
 
52.1

 
52.0

 
0.1

 
6.9

 
Puerto Rico
 
35.3

 
45.0

 
(21.7
)
 
(21.7
)
 
Brazil
 
26.0

 
20.2

 
28.6

 
8.9

 
Total Americas
 
2,107.8

 
2,053.0

 
2.7

 
2.7

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
129.1

 
117.8

 
9.6

 
12.9

 
Switzerland
 
102.2

 
101.2

 
1.0

 
2.3

 
Portugal
 
78.0

 
72.4

 
7.6

 
10.9

 
Russia
 
46.8

 
30.6

 
52.9

 
27.4

 
United Kingdom
 
41.0

 
46.7

 
(12.1
)
 
(0.1
)
 
Italy
 
29.4

 
28.5

 
3.1

 
6.0

 
Germany
 
27.8

 
31.1

 
(10.4
)
 
(7.7
)
 
Norway
 
16.0

 
16.0

 
(0.4
)
 
0.2

 
Ireland
 
15.1

 
10.4

 
45.4

 
49.9

 
Other
 
21.4

 
18.1

 
18.4

 
21.6

 
Total EMEA
 
506.8

 
472.8

 
7.2

 
8.9

 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
8.7

 
198.8

 
(95.6
)
 
(95.7
)
 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
2,623.3

$
2,724.6

 
(3.7
)
%
(3.4
)
%
 
 
 
 
 
 
 
 
 
 


10

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JULY 2, 2017 AND JULY 3, 2016
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter
 
June Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Revenue from services
 
$
1,333.6

 
$
1,375.5

 
$
2,623.3

 
$
2,724.6

Disposal of APAC businesses (Note 1)
 
—

 
(98.4
)
 
—

 
(191.1
)
Adjusted revenue from services
 
$
1,333.6

 
$
1,277.1

 
$
2,623.3

 
$
2,533.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter
 
June Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Gross profit
 
$
228.8

 
$
230.5

 
$
460.4

 
$
463.2

Disposal of APAC businesses (Note 1)
 
—

 
(13.9
)
 
—

 
(30.2
)
Adjusted gross profit
 
$
228.8

 
$
216.6

 
$
460.4

 
$
433.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter
 
June Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Earnings from operations
 
$
20.3

 
$
9.9

 
$
36.7

 
$
24.6

Disposal of APAC businesses (Note 1)
 
—

 
(1.4
)
 
—

 
(5.9
)
Restructuring charges (Note 2)
 
—

 
3.4

 
2.4

 
3.4

Adjusted earnings from operations
 
$
20.3

 
$
11.9

 
$
39.1

 
$
22.1


 
 
Second Quarter
 
 
2017
 
2016
 
 
Amount
 
Per Share
 
Amount
 
Per Share
 
 
 
 
 
 
 
 
 
Net earnings
 
$
18.7

 
$
0.47

 
$
8.9

 
$
0.23

Disposal of APAC businesses, net of taxes (Note 1)
 
—

 
—

 
(0.8
)
 
(0.02
)
Restructuring charges, net of taxes (Note 2)
 
—

 
—

 
2.5

 
0.07

Adjusted net earnings
 
$
18.7

 
$
0.47

 
$
10.6

 
$
0.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June Year to Date
 
 
2017
 
2016
 
 
Amount
 
Per Share
 
Amount
 
Per Share
 
 
 
 
 
 
 
 
 
Net earnings
 
$
30.9

 
$
0.78

 
$
20.1

 
$
0.51

Disposal of APAC businesses, net of taxes (Note 1)
 
—

 
—

 
(4.5
)
 
(0.12
)
Restructuring charges, net of taxes (Note 2)
 
1.7

 
0.04

 
2.5

 
0.07

Adjusted net earnings
 
$
32.6

 
$
0.82

 
$
18.1

 
$
0.46


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.

11

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

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2017 and 2016 restructuring charges and 2016 disposal of APAC businesses is useful to understand the Company's fiscal 2017 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) Disposal of APAC businesses represents the second quarter and June year to date 2016 operational results of businesses contributed to TS Kelly Asia Pacific in the third quarter of 2016.

(2) Restructuring charges in 2017 represent costs related primarily to optimizing our GTS service delivery models to deliver expected cost savings. Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and International regions designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.



12
a2q2017earningsreleasesu
Kelly Services, Inc. Second Quarter August 9, 2017 Exhibit 99.2

 
Safe Harbor Statement 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, the risk our intellectual 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, 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 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, 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 developments or operational circumstances, 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 ), 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. 2

 
Second Quarter 2017 Highlights (YOY Comparisons)  Total revenue declined 3% – Excluding APAC results in 2016, total revenue increased 4%  Gross profit down 1% – Excluding APAC results in 2016, gross profit up 6%  Earnings from operations of $20.3 million, up 105% YOY – 2016 results include $3.4 million of restructuring expenses – Excluding restructuring expenses and APAC results in 2016, earnings from operations up more than 70% YOY  Diluted earnings per share of $0.47, up $0.24 – Excluding restructuring expenses and APAC staffing results in 2016, diluted earnings per share up $0.20 3

 
 Results reflect the deconsolidation of APAC at the beginning of Q3 2016  Continued GP rate improvement reflects on-going structural progress, as well as the impact of removing the APAC JV, which carried lower margins  Earnings from operations increased by 105% including the 2016 impact of $3.4 million of restructuring expenses ----- (1)Constant Currency represent year-over-year changes resulting from translating 2017 financial data into USD using 2016 exchange rates. Second Quarter 2017 Financial Summary 4 Actual Results Change Constant Currency Change(1) Revenue $1.3B (3.1)% (2.7)% GP % 17.2% 40 bps Earnings from Operations $20.3M 104.7% 104.5% ROS % 1.5% 80 bps EPS $0.47 $0.24

 
----- (1) Excludes 2016 results from APAC related to the deconsolidation, and $3.4 million of restructuring charges, $2.5 million net of tax or $0.07 per share in Q2 2016. (2) Constant Currency represent year-over-year changes resulting from translating 2017 financial data into USD using 2016 exchange rates.  Revenue growth reflects the continued progress in our branch-based staffing business in the Americas and International, as well as modest GTS revenue improvement  Earnings from operations increased more than 70% and improved in all three operating segments  EPS growth reflects top-line improvement, GP rate increase, and expense control Second Quarter 2017 Financial Summary (Excluding APAC & Restructuring) 5 Actual Results Change(1) Constant Currency Change(2) Revenue $1.3B 4.4% 4.8% GP % 17.2% 20 bps Earnings from Operations $20.3M 70.7% 70.5% ROS % 1.5% 60 bps EPS 0.47$ 0.20$

 
 Americas staffing revenues reflect continued strong top-line growth  International staffing is impacted by the deconsolidation of APAC staffing at the end of 2016. Excluding APAC staffing, the segment grew revenue at 7% Second Quarter 2017 Revenue Growth 6 43% 19% 38% Business Mix Americas Staffing International Staffing Global Talent Solutions -30% -10% 10% 30% Total Americas Staffing International Staffing Global Talent Solutions YoY Growth Reported Constant Currency Excluding APAC in 2016

 
Second Quarter 2017 Gross Profit Growth  Americas staffing GP reflects top-line growth, coupled with a 10 basis point GP rate improvement  International staffing reflects the impact of the deconsolidation of the APAC staffing business. Excluding the impact, GP grew 3%  GTS GP increase reflects solid GP rate improvement on modest revenue growth 7 45% 16% 39% Business Mix Americas Staffing International Staffing Global Talent Solutions -30% -20% -10% 0% 10% 20% 30% Total Americas Staffing International Staffing Global Talent Solutions YoY Growth Reported Constant Currency Excluding APAC in 2016

 
16.8% 17.2% 16.0% 16.2% 16.4% 16.6% 16.8% 17.0% 17.2% 17.4% Q2 2016 GP Rate International Staffing Americas Staffing Global Talent Solutions APAC Deconsolidation Q2 2017 GP Rate Second Quarter 2017 Gross Profit Rate  Overall GP rate up due to the favorable impact related to improving GP rate in GTS as well as the APAC deconsolidation  GTS GP rate improvement due primarily to a favorable business and customer mix 10 bps 20 bps 8 -10 bps 20 bps

 
$221 $209 $202 $204 $206 $208 $210 $212 $214 $216 $218 $220 $222 Q2 2016 SG&A International Staffing Corporate 2016 Restructuring FX Global Talent Solutions Americas Staffing Q2 2017 SG&A Second Quarter 2017 SG&A  International staffing reflects the deconsolidation of our APAC business upon closing the APAC JV transaction in the third quarter of 2016  Corporate expenses primarily reflect one-time savings in executive compensation expenses  2016 Restructuring expenses were related to Americas Staffing and International Staffing  GTS expenses are primarily related to new and existing program implementations, as well as additional sales resources, and were partially offset by cost reductions from last quarter’s service delivery optimization initiative  Americas Staffing expenses were up due to increased performance based compensation expenses and additional sales resources $(10) $(4) $(3) $2 $ in Millions $4 9 $(1)

 
Second Quarter 2017 Conversion Rate ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit.  APAC results are no longer included in the international staffing, total Company’s gross profit, or earnings from operations upon closing of the APAC JV transaction at the beginning of the third quarter of 2016  2016 results reflect restructuring expenses in Americas Staffing and International Staffing $ in Millions 10 2017 2016 Gross Earnings Conversion Gross Earnings Conversion Change Profit from Ops Rate(1) Profit from Ops Rate(1) (bps) Americas Staffing 103.8$ 20.4$ 19.7% 97.2$ 15.6$ 16.2% 350 Global Talent Solutions 88.7 15.3 17.2% 85.7 13.9 16.2% 100 International Staffing 36.8 4.1 11.2% 48.6 4.0 8.0% 320 Total Company 228.8$ 20.3$ 8.9% 230.5$ 9.9$ 4.3% 460

 
Second Quarter 2017 Conversion Rate (Excluding APAC & Restructuring) $ in Millions ----- (1) Excludes 2016 results from APAC related to the deconsolidation, and $3.4 million of restructuring charges in Q2 2016. (2) Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit.  Conversion rate improved in all business segments  Overall Q2 conversion rate increased year-over-year to 8.9% and was up 340 bps from the prior year – consistent with Q1 11 2017 2016 Gross Earnings Conversion Gross Earnings Conversion Change Profit from Ops Rate(2) Profit(1) from Ops(1) Rate(2) (bps) Americas Staffing 103.8$ 20.4$ 19.7% 97.2$ 17.4$ 18.0% 170 Global Talent Solutions 88.7 15.3 17.2% 84.5 13.8 16.4% 80 International Staffing 36.8 4.1 11.2% 35.8 3.9 10.9% 30 Total Company 228.8$ 20.3$ 8.9% 216.6$ 11.9$ 5.5% 340

 
$500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 2016 Q2 2016 2017 Q2 Accounts Receivable Excluding APAC APAC Second Quarter 2017 Balance Sheet Data 12  DSO is up 2 days versus the same period last year, and up 2 days from year end 2016  Continue to operate essentially debt free $ in Millions DSO 53 53 55 Debt-to- 2.8% 0.0% 0.1% Equity Ratio $0 $20 $40 2016 Q2 2016 2017 Q2 Debt (and Debt-to-Equity Ratio) ----- (1) Includes $62 million of accounts receivable included in current assets held for sale. (1)

 
2017 Outlook – Third Quarter  Revenue up 4% to 5% YOY  Gross profit rate up YOY  SG&A up 6% to 7% YOY – Approximately half of increase is a result of higher performance based incentive compensation expenses 13

 
2017 Outlook – Full Year  Revenue down 1% to flat YOY – No significant foreign exchange impact expected – Excluding the impact of the APAC results in the first half of 2016, revenue up 3.0% to 4.0%  Gross profit rate up YOY  SG&A down 1% to flat YOY – Excluding APAC results in the first half of 2016, SG&A up 3.0% to 4.0%  Annual tax rate in the 15-20% range 14

 
APPENDIX: TS KELLY ASIA PACIFIC JOINT VENTURE

 
Highlights – TS Kelly Asia Pacific  Joint Venture capitalizes on the strong reputation of Kelly Services as a leading talent provider in the region and on Temp Holdings’ regional presence – Provides accelerated growth opportunities, larger workforce solutions presence, and enhanced competitive positioning – Expands on 14-year strategic partnership between Kelly and Temp Holdings  TS Kelly Asia Pacific is expected to be one of the largest workforce solutions companies in the Asia Pacific region  Solidifies Kelly’s focus on OCG solutions in the APAC market – Opportunity to accelerate investment in high growth market – Kelly’s outsourcing and consulting group, KellyOCG, is not part of the joint venture and will continue to operate under the complete control of Kelly 16

 
 Expands scope from four geographies to twelve, with headquarters in Singapore  Brings together established businesses with approximately $500 million in revenue and 1,600 employees – TS Kelly North Asia – China, Hong Kong, Taiwan, South Korea – Kelly Services – Singapore, Malaysia, Australia, New Zealand, India, Indonesia, Thailand – Capita – Singapore and Malaysia – First Alliances – Vietnam – Intelligence – Indonesia, Vietnam, Singapore, Malaysia Highlights – TS Kelly Asia Pacific 17

 
 Closed on July 4, 2016, the JV was formed through asset transfers from Kelly and Temp Holdings, and a $36.5 million cash payment to Kelly at closing and a $4.5 million cash true-up payment made to Kelly in Q4 2016  Temp Holdings owns 51%, Kelly owns 49%  Beginning in the third quarter, Kelly accounts for its 49% interest as an Equity Method Investment – APAC results are no longer included in the individual lines of Kelly’s consolidated income statement or balance sheet • Equity method investment asset will be reported as a single line item on the balance sheet • 49% share of income reflected as Income from equity method investments (below earnings from operations), effective on the transaction closing date » Will no longer be included as revenue, cost of service, and SG&A expense TS Kelly Asia Pacific – Transaction Details 18