KELLY SERVICES INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - KELLY SERVICES INC	d342727d8k.htm

Exhibit 99.1

LOGO

KELLY SERVICES^® REPORTS 1st QUARTER 2012 RESULTS

TROY, MI (May 9, 2012) — Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter 2012.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2012 totaled $1.4 billion, a 1% increase compared to the corresponding quarter in 2011.

Earnings from continuing operations for the first quarter of 2012 totaled $9.2 million, compared to $1.1 million reported for the first quarter of 2011.

Diluted earnings per share from continuing operations in the first quarter of 2012 were $0.24 compared to $0.03 per share in the first quarter 2011.

Commenting on the first quarter results, Camden stated, “We are pleased to report solid quarterly performance in spite of the economic challenges that continue to test the sustainability of this recovery. By staying focused on our strategy, we were able to leverage a leaner cost structure, improve our gross profit rate, and increase earnings.”

Camden added that Kelly has strengthened its competitive position this cycle and is focused on building shareholder value and increasing profit levels. “We remain committed to meeting our customers’ needs for flexible, innovative solutions for managing their workforce across the full spectrum of talent – from traditional staffing to professional and technical specialties, to outsourcing and consulting programs,” he said.

Kelly also reported that on May 8, its board of directors declared a dividend of $0.05 per share. The dividend is payable June 4, 2012 to shareholders of record as of the close of business on May 21, 2012.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 9, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:


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

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website:

www.kellyservices.com

This release contains statements that are forward looking in nature and accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, competitive market pressures including pricing, changing market and economic conditions, our ability to achieve our business strategy, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers’ compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, 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 retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws and the expiration of the U.S. work opportunity credit program), the net financial impact of recent U.S. healthcare legislation on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, 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 provides employment to more than 550,000 employees annually. Revenue in 2011 was $5.6 billion. Visit www.kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter. Click to download The Talent Project, our free iPad app.

# # #


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

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED APRIL 1, 2012 AND APRIL 3, 2011

(UNAUDITED)

(In millions of dollars except per share data)


	2012			2011			Change			% Change
Revenue from services	$	1,354.8		$	1,339.1		$	15.7			1.2	%

Cost of services		1,131.1			1,127.9			3.2			0.3

Gross profit		223.7			211.2			12.5			5.9

Selling, general and administrative expenses		209.0			209.6			(0.6	)		(0.3	)

Earnings from operations		14.7			1.6			13.1			NM

Other expense, net		(0.6	)		(0.4	)		(0.2	)		(37.5	)

Earnings from continuing operations before taxes		14.1			1.2			12.9			NM

Income taxes		4.9			0.1			4.8			NM

Earnings from continuing operations		9.2			1.1			8.1			NM

Earnings from discontinued operations, net of tax		0.4			—			0.4			NM

Net earnings	$	9.6		$	1.1		$	8.5			NM	%

Basic earnings per share on common stock
Earnings from continuing operations	$	0.24		$	0.03		$	0.21			NM	%
Earnings from discontinued operations		0.01			—			0.01			NM
Net earnings		0.26			0.03			0.23			NM

Diluted earnings per share on common stock
Earnings from continuing operations	$	0.24		$	0.03		$	0.21			NM	%
Earnings from discontinued operations		0.01			—			0.01			NM
Net earnings		0.26			0.03			0.23			NM

STATISTICS:

Gross profit rate		16.5	%		15.8	%		0.7	pts.

Selling, general and administrative expenses:
% of revenue		15.4			15.7			(0.3	)
% of gross profit		93.4			99.2			(5.8	)

% Return:
Earnings from operations		1.1			0.1			1.0
Earnings from continuing operations before taxes		1.0			0.1			0.9
Earnings from continuing operations		0.7			0.1			0.6
Net earnings		0.7			0.1			0.6

Effective income tax rate		34.6	%		4.5	%		30.1	pts.

Average number of shares outstanding (millions):
Basic		36.9			36.7
Diluted		36.9			36.7

Shares adjusted for nonvested restricted awards (millions):
Basic		37.8			37.4
Diluted		37.8			37.4

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(UNAUDITED)

(In millions of dollars)


	First Quarter
										Constant
										Currency
	2012			2011			Change			Change
Americas Commercial
Revenue from services (including fee-based income)	$	669.3		$	653.3			2.4	%		3.0	%
Fee-based income		3.5			2.8			24.7			25.8
Gross profit		98.0			92.0			6.4			7.0

Gross profit rate		14.6	%		14.1	%		0.5	pts.

Americas PT
Revenue from services (including fee-based income)	$	250.1		$	240.6			4.0	%		4.1	%
Fee-based income		3.4			2.8			23.6			23.7
Gross profit		40.2			36.0			11.6			11.7

Gross profit rate		16.1	%		15.0	%		1.1	pts.

Total Americas
Revenue from services (including fee-based income)	$	919.4		$	893.9			2.9	%		3.3	%
Fee-based income		6.9			5.6			24.1			24.8
Gross profit		138.2			128.0			7.9			8.3
Total SG&A expenses		102.9			102.8			0.1			0.5
Earnings from operations		35.3			25.2			39.8

Gross profit rate		15.0	%		14.3	%		0.7	pts.
Expense rates:
% of revenue		11.2			11.5			(0.3	)
% of gross profit		74.5			80.3			(5.8	)
Operating margin		3.8			2.8			1.0

EMEA Commercial
Revenue from services (including fee-based income)	$	213.0		$	231.5			(8.0	)%		(5.7	)%
Fee-based income		6.1			5.8			6.1			9.1
Gross profit		33.5			37.2			(10.0	)		(7.7	)

Gross profit rate		15.7	%		16.1	%		(0.4	) pts.

EMEA PT
Revenue from services (including fee-based income)	$	42.2		$	41.4			2.0	%		4.7	%
Fee-based income		4.6			4.4			4.0			6.7
Gross profit		11.3			11.0			2.7			5.5

Gross profit rate		26.8	%		26.6	%		0.2	pts.

Total EMEA
Revenue from services (including fee-based income)	$	255.2		$	272.9			(6.5	)%		(4.1	)%
Fee-based income		10.7			10.2			5.2			8.0
Gross profit		44.8			48.2			(7.1	)		(4.6	)
SG&A expenses excluding restructuring charges		44.5			45.9			(3.3	)
Restructuring charges		—			4.0			(100.0	)
Total SG&A expenses		44.5			49.9			(11.0	)		(8.9	)
Earnings from operations		0.3			(1.7	)		NM
Earnings from operations excluding restructuring charges		0.3			2.3			(83.4	)

Gross profit rate		17.6	%		17.7	%		(0.1	) pts.
Expense rates (excluding restructuring charges):
% of revenue		17.4			16.8			0.6
% of gross profit		99.2			95.3			3.9
Operating margin (excluding restructuring charges)		0.1			0.8			(0.7	)

KELLY SERVICES, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(UNAUDITED)

(In millions of dollars)


	First Quarter
										Constant
										Currency
	2012			2011			Change			Change
APAC Commercial
Revenue from services (including fee-based income)	$	88.3		$	99.7			(11.4	)%		(12.9	)%
Fee-based income		3.3			3.5			(5.0	)		(6.2	)
Gross profit		13.1			13.5			(3.1	)		(5.4	)

Gross profit rate		14.8	%		13.5	%		1.3	pts.

APAC PT
Revenue from services (including fee-based income)	$	12.8		$	11.5			12.0	%		10.3	%
Fee-based income		4.0			3.8			3.9			1.5
Gross profit		5.2			5.0			3.9			1.6

Gross profit rate		40.5	%		43.7	%		(3.2	) pts.

Total APAC
Revenue from services (including fee-based income)	$	101.1		$	111.2			(9.0	)%		(10.5	)%
Fee-based income		7.3			7.3			(0.4	)		(2.2	)
Gross profit		18.3			18.5			(1.2	)		(3.5	)
Total SG&A expenses		19.7			19.0			3.3			1.0
Earnings from operations		(1.4	)		(0.5	)		(158.7	)

Gross profit rate		18.1	%		16.6	%		1.5	pts.
Expense rates:
% of revenue		19.4			17.1			2.3
% of gross profit		107.6			102.9			4.7
Operating margin		(1.4	)		(0.5	)		(0.9	)

OCG
Revenue from services (including fee-based income)	$	86.7		$	68.2			27.1	%		27.5	%
Fee-based income		11.6			8.7			33.6			34.2
Gross profit		23.1			17.0			35.6			36.3
Total SG&A expenses		22.6			19.4			16.5			16.8
Earnings from operations		0.5			(2.4	)		NM

Gross profit rate		26.7	%		25.0	%		1.7	pts.
Expense rates:
% of revenue		26.1			28.5			(2.4	)
% of gross profit		97.8			113.9			(16.1	)
Operating margin		0.6			(3.5	)		4.1

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In millions of dollars)


	April 1, 2012			January 1, 2012			April 3, 2011
Current Assets
Cash and equivalents	$	88.3		$	81.0		$	59.8
Trade accounts receivable, less allowances of $12.9, $13.4 and $13.2, respectively		977.9			944.9			875.8
Prepaid expenses and other current assets		64.2			50.6			68.4
Deferred taxes		34.3			38.2			17.4

Total current assets		1,164.7			1,114.7			1,021.4

Property and Equipment, Net		90.3			90.6			99.5

Noncurrent Deferred Taxes		96.4			94.1			83.9

Goodwill, Net		89.8			90.2			67.3

Other Assets		165.5			152.1			154.9

Total Assets	$	1,606.7		$	1,541.7		$	1,427.0

Current Liabilities
Short-term borrowings	$	94.7		$	96.3		$	65.4
Accounts payable and accrued liabilities		275.7			237.2			207.3
Accrued payroll and related taxes		273.8			271.4			270.9
Accrued insurance		30.5			31.5			31.5
Income and other taxes		61.1			61.3			61.7

Total current liabilities		735.8			697.7			636.8

Noncurrent Liabilities
Accrued insurance		51.8			53.5			54.1
Accrued retirement benefits		101.5			91.1			90.2
Other long-term liabilities		24.6			23.7			14.2

Total noncurrent liabilities		177.9			168.3			158.5

Stockholders’ Equity
Common stock		40.1			40.1			40.1
Treasury stock		(66.6	)		(66.9	)		(70.8	)
Paid-in capital		29.8			28.8			29.3
Earnings invested in the business		665.2			657.5			598.7
Accumulated other comprehensive income		24.5			16.2			34.4

Total stockholders’ equity		693.0			675.7			631.7

Total Liabilities and Stockholders’ Equity	$	1,606.7		$	1,541.7		$	1,427.0

STATISTICS:
Working Capital	$	428.9		$	417.0		$	384.6
Current Ratio		1.6			1.6			1.6
Debt-to-capital %		12.0	%		12.5	%		9.4	%
Global Days Sales Outstanding		54			52			52

KELLY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE 13 WEEKS ENDED APRIL 1, 2012 AND APRIL 3, 2011

(UNAUDITED)

(In millions of dollars)


	2012			2011
Cash flows from operating activities
Net earnings	$	9.6		$	1.1
Noncash adjustments:
Depreciation and amortization		5.7			8.3
Provision for bad debts		0.2			1.2
Stock-based compensation		1.4			1.4
Other, net		—			(0.1	)
Changes in operating assets and liabilities		(3.5	)		(16.9	)

Net cash from operating activities		13.4			(5.0	)

Cash flows from investing activities
Capital expenditures		(4.0	)		(2.5	)
Other investing activities		(0.4	)		—

Net cash from investing activities		(4.4	)		(2.5	)

Cash flows from financing activities
Net change in short-term borrowings		(2.3	)		48.3
Repayment of debt		—			(62.9	)
Dividend payments		(1.9	)		—
Other financing activities		—			(1.0	)

Net cash from financing activities		(4.2	)		(15.6	)

Effect of exchange rates on cash and equivalents		2.5			2.4

Net change in cash and equivalents		7.3			(20.7	)
Cash and equivalents at beginning of period		81.0			80.5

Cash and equivalents at end of period	$	88.3		$	59.8

KELLY SERVICES, INC. AND SUBSIDIARIES

REVENUE FROM SERVICES

(UNAUDITED)

(In millions of dollars)


	First Quarter (Commercial, PT and OCG)
					% Change
								Constant
	2012		2011		US$			Currency
Americas
United States	$	858.5	$	839.7		2.2	%		2.2	%
Canada		59.5		59.4		0.2			1.8
Puerto Rico		25.9		22.1		17.3			17.3
Mexico		25.5		25.1		1.5			8.9
Brazil		18.0		—		NM			NM

Total Americas		987.4		946.3		4.3			4.8

EMEA
France		62.8		70.0		(10.3	)		(6.3	)
Switzerland		53.6		47.2		13.4			11.1
Russia		33.6		34.2		(1.7	)		1.3
United Kingdom		27.7		31.1		(10.9	)		(9.1	)
Germany		18.7		20.3		(7.9	)		(3.8	)
Portugal		18.2		20.6		(11.8	)		(7.8	)
Norway		16.5		15.1		8.8			10.2
Italy		16.3		16.6		(1.8	)		2.6
Other		15.6		23.2		(32.7	)		(29.0	)

Total EMEA		263.0		278.3		(5.5	)		(3.1	)

APAC
Australia		33.9		36.4		(7.1	)		(11.4	)
Singapore		24.2		26.1		(7.2	)		(8.1	)
Malaysia		17.8		17.6		1.3			1.7
New Zealand		13.1		11.5		15.0			6.2
India		9.5		17.6		(46.1	)		(40.2	)
Other		5.9		5.3		11.3			11.1

Total APAC		104.4		114.5		(8.7	)		(10.3	)

Total Kelly Services, Inc.	$	1,354.8	$	1,339.1		1.2	%		1.9	%

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

(In millions of dollars except per share data)


	First Quarter
	2012		2011
Pretax earnings from operations	$	14.7	$	1.6

Restructuring charges (Note 1)		—		4.0

Earnings from operations excluding restructuring charges	$	14.7	$	5.6


	First Quarter
	2012				2011
	Amount		Per Share		Amount		Per Share
Earnings from continuing operations	$	9.2	$	0.24	$	1.1	$	0.03

Restructuring charges, net of taxes (Note 1)		—		—		4.0		0.11

Earnings from continuing operations excluding restructuring charges, net of taxes	$	9.2	$	0.24	$	5.1	$	0.14

KELLY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges is useful to understand the Company's fiscal 2012 financial performance and increases comparability. Specifically, Management believes that excluding this item 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 costs relate primarily to revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.

KELLY SERVICES INC - FORM 8-K - EX-99.1 - May 9, 2012

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