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Kelly Services(R) Reports 2nd Quarter Results

TROY, MI--(Marketwired - Aug 7, 2013) - Kelly Services, Inc. ( NASDAQ : KELYA ) ( NASDAQ : KELYB ), a leader in providing workforce solutions, today announced results for the second quarter of 2013.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2013 totaled $1.4 billion, a 0.1% increase compared to the corresponding quarter of 2012.

Earnings from operations for the second quarter of 2013 totaled $16.4 million, compared to $23.8 million reported for the second quarter of 2012. Included in the results of operations in the second quarter of 2013 are impairment charges of $1.7 million and restructuring charges of $0.8 million. The results of operations in the second quarter of 2012 included a benefit due to changes in the estimated cost of restructuring of $2.2 million. Excluding the impairment and restructuring charges, earnings from operations were $18.9 million in the second quarter of 2013, compared to adjusted earnings of $21.6 million last year.

Diluted earnings per share from continuing operations in the second quarter of 2013 were $0.26 compared to $0.40 per share in the second quarter of 2012. Adjusted earnings per share were $0.33 in the second quarter of 2013 compared to $0.34 in the second quarter of 2012.

"We're pleased with our second quarter performance in each operating segment, given the uneven and generally subpar global economic growth," said Camden. "The Americas delivered solid results that were in line with our expectations, considering both our investment strategy and the lower volume we're experiencing. In EMEA and APAC, we're proud of our efforts in recalibrating our operations to bring costs in line with revenue in a tough environment. In addition, the growth we are seeing in KellyOCG's revenue and fees confirms that our solutions are meeting market demand for outsourced talent management programs, and we believe the investments we're making will support our long-term growth in that segment."

Kelly also reported that on August 6, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 9 to shareholders of record as of the close of business on August 19.

In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 7, 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:
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, 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), the net financial impact of the Patient Protection and Affordable Care Act 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 ) ( NASDAQ : KELYB ) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, and Twitter. Download The Talent Project, a free iPad app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 1,366.9     $ 1,366.1     $ 0.8     0.1 %
                               
Cost of services     1,146.2       1,142.9       3.3     0.3  
                               
Gross profit     220.7       223.2       (2.5 )   (1.1 )
                               
Selling, general and administrative expenses     202.6       199.4       3.2      1.6  
                               
Asset impairments     1.7       -       1.7     NM  
                               
Earnings from operations     16.4       23.8       (7.4 )   (30.9 )
                               
Other expense, net     1.6       0.5       1.1     234.2  
                               
Earnings from continuing operations before taxes     14.8       23.3       (8.5 )   (36.5 )
                               
Income tax expense     4.8       8.3       (3.5 )   (42.4 )
                               
Earnings from continuing operations     10.0       15.0       (5.0 )   (33.2 )
                               
Earnings from discontinued operations, net of tax     -       -       -     NM  
                               
Net earnings   $ 10.0     $ 15.0     $ (5.0 )   (33.2 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.26     $ 0.40     $ (0.14 )   (35.0 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.26       0.40       (0.14 )   (35.0 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.26     $ 0.40     $ (0.14 )   (35.0 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.26       0.40       (0.14 )   (35.0 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.1 %     16.3 %     (0.2 ) pts.    
                           
Selling, general and administrative expenses:                          
  % of revenue     14.8       14.6       0.2    
  % of gross profit     91.8       89.4       2.4    
                           
% Return:                          
  Earnings from operations     1.2       1.7       (0.5 )    
  Earnings from continuing operations before taxes     1.1       1.7       (0.6 )    
  Earnings from continuing operations     0.7       1.1       (0.4 )    
  Net earnings     0.7       1.1       (0.4 )    
                           
Effective income tax rate     32.2 %     35.5 %     (3.3 ) pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.2       37.0                
  Diluted     37.2       37.0                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.2       37.8                
  Diluted     38.2       37.8                
                               
                               
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 26 WEEKS ENDED JUNE 30, 2013 AND JULY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 2,681.7     $ 2,720.9     $ (39.2 )   (1.4 )%
                               
Cost of services     2,244.1       2,274.0       (29.9 )   (1.3 )
                               
Gross profit     437.6       446.9       (9.3 )   (2.1 )
                               
Selling, general and administrative expenses     412.4       408.4       4.0     1.0  
                               
Asset impairments     1.7       -       1.7     NM  
                               
Earnings from operations     23.5       38.5       (15.0 )   (38.9 )
                               
Other expense, net     2.6       1.1       1.5     137.7  
                               
Earnings from continuing operations before taxes     20.9       37.4       (16.5 )   (44.0 )
                               
Income tax (benefit) expense     (2.0 )     13.2       (15.2 )   (115.4 )
                               
Earnings from continuing operations     22.9       24.2       (1.3 )   (5.3 )
                               
Earnings from discontinued operations, net of tax     -       0.4       (0.4 )   (99.8 )
                               
Net earnings   $ 22.9     $ 24.6     $ (1.7 )   (7.0 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.60     $ 0.64     $ (0.04 )   (6.3 )%
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.60       0.65       (0.05 )   (7.7 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.60     $ 0.64     $ (0.04 )   (6.3 )%
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.60       0.65       (0.05 )   (7.7 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.3 %     16.4 %     (0.1 ) pts.     
                           
Selling, general and administrative expenses:                          
  % of revenue     15.4       15.0       0.4    
  % of gross profit     94.3       91.4       2.9    
                           
% Return:                          
  Earnings from operations     0.9       1.4       (0.5 )    
  Earnings from continuing operations before taxes     0.8       1.4       (0.6 )    
  Earnings from continuing operations     0.9       0.9       0.0    
  Net earnings     0.9       0.9       0.0    
                           
Effective income tax rate     (9.7 )%     35.2 %     (44.9 ) pts.    
                               
Average number of shares outstanding (millions):                              
  Basic     37.2       36.9                
  Diluted     37.2       37.0                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.2       37.8                
  Diluted     38.2       37.8                
                               
                               
...
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Second Quarter  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 648.8     $ 668.6     (3.0 )%   (3.1 )%
    Fee-based income     4.0       4.2     (4.9 )   (4.5 )
    Gross profit     94.2       97.7     (3.6 )   (3.7 )
                             
    Gross profit rate     14.5 %     14.6 %   (0.1 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 259.6     $ 262.4     (1.1 )%   (1.2 )%
    Fee-based income     4.1       4.2     (3.5 )   (3.4 )
    Gross profit     41.1       39.7     3.5     3.4  
                             
    Gross profit rate     15.8 %     15.1 %   0.7  pts.      
                             
  Total Americas                            
    Revenue from services (including fee-based income)   $ 908.4     $ 931.0     (2.4 )%   (2.6 )%
    Fee-based income     8.1       8.4     (4.2 )   (4.0 )
    Gross profit     135.3       137.4     (1.6 )   (1.6 )
    Total SG&A expenses     103.8       99.0     4.8     4.8  
    Earnings from operations     31.5       38.4     (18.0 )      
                             
    Gross profit rate     14.9 %     14.8 %   0.1  pts.      
    Expense rates:                            
      % of revenue     11.4       10.6     0.8        
      % of gross profit     76.7       72.0     4.7        
    Operating margin     3.5       4.1     (0.6 )