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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1088
KELLY SERVICES, INC.
---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware38-1510762
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

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)

No Change
-----------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each
class
Trading
Symbols
Name of each exchange
on which registered
Class A CommonKELYANASDAQ Global Market
Class B CommonKELYBNASDAQ Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company
Emerging growth company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
At August 2, 2021, 36,027,928 shares of Class A and 3,358,521 shares of Class B common stock of the Registrant were outstanding.
2


KELLY SERVICES, INC. AND SUBSIDIARIES 
 Page Number

3


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In millions of dollars except per share data)
 
 13 Weeks Ended26 Weeks Ended
 July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
Revenue from services$1,258.1 $975.3 $2,464.0 $2,236.4 
Cost of services1,027.1 786.1 2,019.7 1,823.9 
Gross profit231.0 189.2 444.3 412.5 
Selling, general and administrative expenses217.3 178.1 420.0 397.6 
Goodwill impairment charge   147.7 
Gain on sale of assets   (32.1)
Earnings (loss) from operations13.7 11.1 24.3 (100.7)
Gain (loss) on investment in Persol Holdings6.3 29.6 36.3 (48.2)
Other income (expense), net(0.3)2.6 (3.7)4.3 
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate19.7 43.3 56.9 (144.6)
Income tax expense (benefit)(2.6)0.9 7.9 (35.3)
Net earnings (loss) before equity in net earnings (loss) of affiliate22.3 42.4 49.0 (109.3)
Equity in net earnings (loss) of affiliate1.7 (1.3)0.6 (2.8)
Net earnings (loss)$24.0 $41.1 $49.6 $(112.1)
Basic earnings (loss) per share$0.60 $1.04 $1.25 $(2.86)
Diluted earnings (loss) per share$0.60 $1.04 $1.25 $(2.86)
Average shares outstanding (millions):  
Basic39.4 39.3 39.4 39.2 
Diluted39.5 39.4 39.5 39.2 
 
See accompanying unaudited Notes to Consolidated Financial Statements.
4


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In millions of dollars)
 
 13 Weeks Ended26 Weeks Ended
 July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
Net earnings (loss)$24.0 $41.1 $49.6 $(112.1)
Other comprehensive income (loss), net of tax:  
Foreign currency translation adjustments, net of tax benefit of $0.1 and $0.5, tax expense of $0.4 and tax benefit of $0.4, respectively2.0 2.7 (11.6)(4.7)
Less: Reclassification adjustments included in net earnings (loss)    
Foreign currency translation adjustments2.0 2.7 (11.6)(4.7)
Other comprehensive income (loss)2.0 2.7 (11.6)(4.7)
Comprehensive income (loss)$26.0 $43.8 $38.0 $(116.8)

See accompanying unaudited Notes to Consolidated Financial Statements.
5


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)
(In millions)
July 4,
2021
January 3,
2021
Assets
Current Assets  
Cash and equivalents$64.4 $223.0 
Trade accounts receivable, less allowances of $12.5 and $13.3, respectively1,362.5 1,265.2 
Prepaid expenses and other current assets82.4 61.4 
Total current assets1,509.3 1,549.6 
Noncurrent Assets
Property and equipment:
Property and equipment207.9 222.3 
Accumulated depreciation(170.2)(181.3)
Net property and equipment37.7 41.0 
Operating lease right-of-use assets83.2 83.2 
Deferred taxes302.9 282.0 
Goodwill, net114.8 3.5 
Investment in Persol Holdings187.7 164.2 
Investment in equity affiliate120.0 118.5 
Other assets391.3 319.9 
Total noncurrent assets1,237.6 1,012.3 
Total Assets$2,746.9 $2,561.9 

See accompanying unaudited Notes to Consolidated Financial Statements.

6


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)
(In millions)
July 4,
2021
January 3,
2021
Liabilities and Stockholders’ Equity
Current Liabilities  
Short-term borrowings$0.1 $0.3 
Accounts payable and accrued liabilities612.6 536.8 
Operating lease liabilities19.6 19.6 
Accrued payroll and related taxes337.0 293.0 
Accrued workers’ compensation and other claims22.0 22.7 
Income and other taxes62.6 53.2 
Total current liabilities1,053.9 925.6 
Noncurrent Liabilities  
Operating lease liabilities67.1 67.5 
Accrued payroll and related taxes58.5 58.5 
Accrued workers’ compensation and other claims40.8 42.2 
Accrued retirement benefits214.6 205.8 
Other long-term liabilities68.2 59.3 
Total noncurrent liabilities449.2 433.3 
Commitments and contingencies (see Contingencies footnote)
Stockholders’ Equity  
Capital stock, $1.00 par value  
Class A common stock, 100.0 shares authorized; 36.7 shares issued at 2021 and 202036.7 36.7 
Class B common stock, 10.0 shares authorized; 3.4 shares issued at 2021 and 20203.4 3.4 
Treasury stock, at cost 
Class A common stock, 0.7 shares at 2021 and 0.8 shares at 2020(14.7)(16.5)
Class B common stock(0.6)(0.6)
Paid-in capital22.3 21.3 
Earnings invested in the business1,212.5 1,162.9 
Accumulated other comprehensive income (loss)(15.8)(4.2)
Total stockholders’ equity1,243.8 1,203.0 
Total Liabilities and Stockholders’ Equity$2,746.9 $2,561.9 

See accompanying unaudited Notes to Consolidated Financial Statements.
7


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In millions of dollars)
 13 Weeks Ended26 Weeks Ended
 July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
Capital Stock  
Class A common stock  
Balance at beginning of period$36.7 $36.6 $36.7 $36.6 
Conversions from Class B— — — — 
Balance at end of period36.7 36.6 36.7 36.6 
Class B common stock  
Balance at beginning of period3.4 3.5 3.4 3.5 
Conversions to Class A— — — — 
Balance at end of period3.4 3.5 3.4 3.5 
Treasury Stock  
Class A common stock  
Balance at beginning of period(15.1)(17.4)(16.5)(20.3)
Net issuance of stock awards0.4 0.7 1.8 3.6 
Balance at end of period(14.7)(16.7)(14.7)(16.7)
Class B common stock  
Balance at beginning of period(0.6)(0.6)(0.6)(0.6)
Net issuance of stock awards    
Balance at end of period(0.6)(0.6)(0.6)(0.6)
Paid-in Capital  
Balance at beginning of period20.6 19.5 21.3 22.5 
Net issuance of stock awards1.7 1.0 1.0 (2.0)
Balance at end of period22.3 20.5 22.3 20.5 
Earnings Invested in the Business  
Balance at beginning of period1,188.5 1,081.7 1,162.9 1,238.6 
Cumulative-effect adjustment, net of tax, from adoption of ASU 2016-13, Credit Losses— — — (0.7)
Net earnings (loss)24.0 41.1 49.6 (112.1)
Dividends   (3.0)
Balance at end of period1,212.5 1,122.8 1,212.5 1,122.8 
Accumulated Other Comprehensive Income (Loss)  
Balance at beginning of period(17.8)(23.2)(4.2)(15.8)
Other comprehensive income (loss), net of tax2.0 2.7 (11.6)(4.7)
Balance at end of period(15.8)(20.5)(15.8)(20.5)
Stockholders’ Equity at end of period$1,243.8 $1,145.6 $1,243.8 $1,145.6 

See accompanying unaudited Notes to Consolidated Financial Statements.
8


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions of dollars)
 26 Weeks Ended
 July 4,
2021
June 28,
2020
Cash flows from operating activities:  
Net earnings (loss)$49.6 $(112.1)
Adjustments to reconcile net earnings (loss) to net cash from operating activities:  
Goodwill impairment charge 147.7 
Deferred income taxes on goodwill impairment charge (23.0)
Depreciation and amortization14.1 12.0 
Operating lease asset amortization10.7 10.5 
Provision for credit losses and sales allowances 0.1 
Stock-based compensation2.8 2.4 
(Gain) loss on investment in Persol Holdings(36.3)48.2 
Gain on sale of assets (32.1)
Equity in net (earnings) loss of PersolKelly Pte. Ltd.(0.6)2.8 
Other, net2.2 0.8 
Changes in operating assets and liabilities, net of acquisitions5.1 120.8 
Net cash from operating activities47.6 178.1 
Cash flows from investing activities:  
Capital expenditures(4.9)(7.7)
Proceeds from sale of assets 55.5 
Acquisition of companies, net of cash received(219.0)(36.4)
Proceeds (payments) related to loans with equity affiliate5.8  
Proceeds from company-owned life insurance10.4 2.3 
Proceeds from (investment in) equity securities5.0  
Other investing activities1.0 (0.4)
Net cash (used in) from investing activities(201.7)13.3 
Cash flows from financing activities:  
Net change in short-term borrowings(0.1)(1.4)
Financing lease payments(0.3)(0.6)
Payments of tax withholding for stock awards(0.6)(1.1)
Dividend payments (3.0)
  Other financing activities (0.1)
Net cash used in financing activities(1.0)(6.2)
Effect of exchange rates on cash, cash equivalents and restricted cash(2.3)5.7 
Net change in cash, cash equivalents and restricted cash(157.4)190.9 
Cash, cash equivalents and restricted cash at beginning of period228.1 31.0 
Cash, cash equivalents and restricted cash at end of period (1)
$70.7 $221.9 



9



KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
(In millions of dollars)

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported in our consolidated balance sheets:
26 Weeks Ended
July 4,
2021
June 28,
2020
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents$64.4 $216.2 
Restricted cash included in prepaid expenses and other current assets0.1 0.5 
Noncurrent assets:
Restricted cash included in other assets6.2 5.2 
Cash, cash equivalents and restricted cash at end of period$70.7 $221.9 

See accompanying unaudited Notes to Consolidated Financial Statements.
10

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.  Basis of Presentation
The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the “Company,” “Kelly,” “we” or “us”) have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended January 3, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2021 (the 2020 consolidated financial statements). The Company’s second fiscal quarter ended on July 4, 2021 (2021) and June 28, 2020 (2020), each of which contained 13 weeks. The corresponding June year to date periods for 2021 and 2020 each contained 26 weeks.

As discussed in the Segment Disclosures footnote, the Company changed its reportable segments during the third quarter of 2020. As a result, certain reclassifications have been made to the financial statements for the second quarter of 2020 and June year to date 2020 to conform to our updated reportable segment presentation.
11

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
2.  Revenue
Revenue Disaggregated by Service Type

Kelly has five specialty segments: Professional & Industrial (“P&I”), Science, Engineering & Technology (“SET”), Education, Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG") and International. Other than OCG, each segment delivers talent through staffing services, permanent placement or outcome-based services. Our OCG segment delivers talent solutions including managed service provider ("MSP"), payroll process outsourcing ("PPO"), recruitment process outsourcing ("RPO"), and talent advisory services. International also delivers RPO talent solutions within its local markets.

The following table presents our segment revenues disaggregated by service type (in millions of dollars):

Second QuarterJune Year to Date
2021202020212020
Professional & Industrial
Staffing services$359.8 $300.6 $712.3 $689.0 
Permanent placement5.3 1.7 10.2 4.7 
Outcome-based services101.4 104.1 211.6 206.5 
Total Professional & Industrial466.5 406.4 934.1 900.2 
Science, Engineering & Technology
Staffing services212.9 181.6 399.1 380.8 
Permanent placement6.1 2.5 10.9 5.9 
Outcome-based services79.2 63.2 142.9 130.8 
Total Science, Engineering & Technology298.2 247.3 552.9 517.5 
Education
Staffing services104.1 25.1 214.9 167.5 
Permanent placement1.8  2.6 0.1 
Total Education105.9 25.1 217.5 167.6 
Outsourcing & Consulting
Talent solutions107.3 83.6 206.6 173.1 
Total Outsourcing & Consulting107.3 83.6 206.6 173.1 
International
Staffing services272.0 209.6 537.6 469.1 
Permanent placement5.4 3.4 10.9 9.1 
Talent solutions3.0  4.8  
Total International280.4 213.0 553.3 478.2 
Total Intersegment(0.2)(0.1)(0.4)(0.2)
Total Revenue from Services$1,258.1 $975.3 $2,464.0 $2,236.4 

12

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Revenue Disaggregated by Geography

Our operations are subject to different economic and regulatory environments depending on geographic location. Our P&I and Education segments operate in the Americas region, our SET segment operates in the Americas and Europe regions, and OCG operates in the Americas, Europe and Asia-Pacific regions. The International segment includes Europe and our Brazil and Mexico operations, which are included in the Americas region. Our Brazil operations were sold in August 2020 (see Acquisitions and Disposition footnote).

The below table presents our revenues disaggregated by geography (in millions of dollars):

Second QuarterJune Year to Date
2021202020212020
Americas
United States$894.6 $700.1 $1,753.1 $1,628.6 
Canada39.5 25.6 73.6 58.4 
Mexico33.1 22.5 67.7 51.2 
Puerto Rico26.9 20.0 51.1 37.7 
Brazil 6.1  15.2 
Total Americas Region994.1 774.3 1,945.5 1,791.1 
Europe
France57.5 39.9 111.8 92.4 
Switzerland54.0 47.4 106.7 91.6 
Portugal40.6 23.8 84.3 67.4 
Russia33.7 29.3 66.3 61.4 
Italy19.4 13.3 37.5 28.0 
United Kingdom17.7 17.8 34.7 40.1 
Germany8.5 7.1 15.6 15.1 
Ireland6.3 4.1 11.4 9.1 
Other17.0 11.5 32.6 26.7 
Total Europe Region254.7 194.2 500.9 431.8 
Total Asia-Pacific Region9.3 6.8 17.6 13.5 
Total Kelly Services, Inc.$1,258.1 $975.3 $2,464.0 $2,236.4 
















13

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)

The below table presents our SET, OCG and International segment revenues disaggregated by geographic region (in millions of dollars):

Second QuarterJune Year to Date
2021202020212020
Science, Engineering & Technology
Americas$296.6 $246.1 $549.8 $514.5 
Europe1.6 1.2 3.1 3.0 
Total Science, Engineering & Technology$298.2 $247.3 $552.9 $517.5 
Outsourcing & Consulting
Americas$92.6 $68.4 $177.4 $143.0 
Europe5.5 8.3 11.7 16.5 
Asia-Pacific9.2 6.9 17.5 13.6 
Total Outsourcing & Consulting$107.3 $83.6 $206.6 $173.1 
International
Americas$32.8 $28.4 $67.1 $66.0 
Europe247.6 184.6 486.2 412.2 
Total International$280.4 $213.0 $553.3 $478.2 

Deferred Costs

Deferred sales commissions, which are included in other assets in the consolidated balance sheet, were $0.9 million as of second quarter-end 2021 and $1.0 million as of year-end 2020. Amortization expense for the deferred costs for the second quarter and June year to date 2021 was $0.2 million and $0.4 million, respectively. Amortization expense for the deferred costs for the second quarter and June year to date 2020 was $0.3 million and $0.6 million, respectively.

Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were $2.0 million as of second quarter-end 2021 and $4.1 million as of year-end 2020. Amortization expense for the deferred costs for the second quarter and June year to date 2021 was $5.2 million and $12.1 million, respectively. Amortization expense for the deferred costs for the second quarter and June year to date 2020 was $4.8 million and $9.6 million, respectively.

3. Credit Losses
On December 30, 2019, we adopted Accounting Standards Codification ("ASC") Topic 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures, as applicable.

14

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
The rollforward of our allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheet, is as follows (in millions of dollars):
June Year to Date
20212020
Allowance for credit losses:
Beginning balance$9.8 $9.7 
Impact of adopting ASC 326 0.3 
Current period provision(0.2)0.4 
Currency exchange effects0.1 (0.4)
Write-offs(0.8)(0.7)
Ending balance$8.9 $9.3 

Write-offs are presented net of recoveries, which were not material for June year to date 2021 and 2020.

We are engaged in litigation with a customer over a disputed accounts receivable balance of approximately $10 million for certain services rendered more than five years ago, which is recorded as a long-term receivable in other assets in the consolidated balance sheet. In September 2020, a ruling was issued in favor of the customer, which we have appealed. Upon receiving the ruling, we increased our allowance for credit losses by $9.2 million to reflect the likelihood of collection, which is recorded in other assets in the consolidated balance sheet.

The rollforward of our allowance for credit losses related to the long-term customer receivable, which is recorded in other assets in the consolidated balance sheet, is as follows (in millions of dollars):
June Year to Date
20212020
Allowance for credit losses:
Beginning balance$10.9 $1.0 
  Impact of adopting ASC 326 0.7 
  Current period provision  
  Currency exchange effects  
Ending Balance$10.9 $1.7 

We are also exposed to credit losses for other receivables measured at amortized cost, including the working capital adjustment receivable for Softworld (see Acquisitions and Disposition footnote). No other allowances related to the working capital adjustment receivable or other receivables were material for second quarter-end 2021.

4.  Acquisitions and Disposition
Acquisitions

In the second quarter of 2021, the Company acquired Softworld, Inc. ("Softworld"), as detailed below. In the first quarter of 2020, Kelly Services USA, LLC ("KSU"), a wholly owned subsidiary of the Company, acquired Insight Workforce Solutions LLC and its affiliate, Insight EDU LLC (collectively, "Insight"), as detailed below. In the fourth quarter of 2020, KSU acquired Greenwood/Asher & Associates, LLC ("Greenwood/Asher"), as detailed below.

Softworld

On April 5, 2021, the Company acquired 100% of the shares of Softworld for a purchase price of $215.0 million. Softworld is a leading technology staffing and workforce solutions firm that serves clients across several end-markets, including financial services, life sciences, aerospace, defense, insurance, retail and IT consulting. This acquisition will expand our capabilities, scale and solution set in our technology specialty. Under terms of the purchase agreement, the purchase price was adjusted for
15

KELLY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
cash held by Softworld at the closing date and estimated working capital adjustments resulting in the Company paying cash of $220.4 million. Total consideration includes $2.6 million of additional consideration that is payable to the seller in 2022. The Company recorded a post-close receivable for a working capital adjustment of $6.0 million, which is included in prepaid expenses and other current assets in the consolidated balance sheet. There are no expected credit losses associated with the receivable as of second quarter-end 2021. The total consideration is as follows (in millions of dollars):

Cash consideration paid$220.4 
Additional consideration payable2.6 
Net working capital adjustment(6.0)
Total consideration$217.0 

Due to the limited amount of time that has passed since acquiring Softworld, the purchase price allocation for this acquisition is preliminary and could change.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition (in millions of dollars):

Cash$1.4 
Trade accounts receivable21.6 
Prepaid expenses and other current assets3.3 
Net property and equipment1.2 
Operating lease right-of-use assets7.6 
Non-current deferred tax5.9