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Kelly Services(R) Reports 4th Quarter and Full Year 2012 Results

TROY, MI--(Marketwire - Jan 31, 2013) - Kelly Services, Inc. ( NASDAQ : KELYA ) ( NASDAQ : KELYB ), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2012. 

Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2012 totaled $1.4 billion, a 2% decrease compared to the corresponding quarter of 2011. Revenue for the full year totaled $5.5 billion, a 2% decrease compared to the prior year. 

Earnings from operations for the fourth quarter of 2012 totaled $9.8 million, compared to $12.7 million reported for the fourth quarter of 2011. Included in the results from operations for the fourth quarter of 2012 are asset impairment charges of $3.1 million and restructuring charges of $1.3 million. Excluding these charges, earnings from operations were $14.2 million in the fourth quarter of 2012 compared to $12.7 million in 2011.

Earnings from operations for the full year of 2012 totaled $72.3 million compared to $57.7 million in 2011. Included in the results from operations for 2012 are asset impairment charges of $3.1 million and a restructuring benefit of $900 thousand. Included in the results from operations for 2011 are restructuring charges of $2.8 million. Excluding these items from both years, earnings from operations were $74.5 million in 2012 compared to $60.5 million in 2011.

Diluted earnings per share from continuing operations in the fourth quarter of 2012 were $0.23 compared to $0.64 per share in the fourth quarter of 2011. Included in diluted earnings per share from continuing operations for the fourth quarter of 2012 are asset impairment charges of $0.05 per share, restructuring charges of $0.02 per share and a loss on the North Asia joint venture of $0.03 per share. Excluding these charges, diluted earnings per share from continuing operations for the fourth quarter of 2012 were $0.33 per share compared to $0.64 in 2011.

Diluted earnings per share from continuing operations for the full year of 2012 were $1.31 compared to $1.72 per share in 2011. Included in diluted earnings per share from continuing operations for 2012 are asset impairment charges of $0.05 per share, a restructuring benefit of $0.04 per share and a loss on the North Asia joint venture of $0.03 per share. Included in diluted earnings per share from continuing operations for 2011 are restructuring charges of $0.07 per share. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2012 were $1.34 per share compared to $1.80 in 2011.

Commenting on the fourth quarter and full year results, Camden stated, "Given the challenging fourth quarter and anemic economic growth throughout the year, we're pleased with our performance. Our strategy is clearly yielding results. We kept expenses under control, grew our higher-margin professional and technical business, and delivered four straight quarters of positive earnings in our outsourcing and consulting group." 

Camden expects persistent headwinds and mediocre job growth in the months ahead, but feels Kelly is well-positioned. "We're operating more efficiently, and we're investing in flexible solutions that meet the fastest-growing demands in the market. Skilled workers will continue to be in short supply in 2013, and companies will continue to look for ways to better manage their workforce. Kelly's professional and technical staffing capabilities, along with our expertise in talent supply chain management, provide the solution." 

In conjunction with its fourth quarter and full year earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 31, 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 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.

   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED DECEMBER 30, 2012 AND JANUARY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2012     2011     Change     % Change  
                               
Revenue from services   $ 1,375.4     $ 1,396.3     $ (20.9 )   (1.5 )%
                               
Cost of services     1,153.2       1,172.0       (18.8 )   (1.6 )
                               
Gross profit     222.2       224.3       (2.1 )   (0.9 )
                               
Selling, general and administrative                              
expenses     209.3       211.6       (2.3 )   (1.1 )
                               
Asset impairments     3.1       -       3.1     NM  
                               
Earnings from operations     9.8       12.7       (2.9 )   (22.8 )
                               
Other expense, net     (1.7 )     -       (1.7 )   NM  
                               
Earnings from continuing operations before taxes     8.1       12.7       (4.6 )   (36.2 )
                               
Income taxes     (0.8 )     (11.4 )     10.6     93.7  
                               
Earnings from continuing operations     8.9       24.1       (15.2 )   (63.3 )
                               
Earnings from discontinued operations, net of tax     -       -       -     NM  
                               
Net earnings   $ 8.9     $ 24.1     $ (15.2 )   (63.2 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.23     $ 0.64     $ (0.41 )   (64.1 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.23       0.64       (0.41 )   (64.1 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.23     $ 0.64     $ (0.41 )   (64.1 )%
  Earnings from discontinued operations     -       -       -     NM  
  Net earnings     0.23       0.64       (0.41 )   (64.1 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.2 %     16.1 %     0.1pts.        
                               
Selling, general and administrative expenses:                              
  % of revenue     15.2       15.2       0.0        
  % of gross profit     94.2       94.3       (0.1 )      
                               
% Return:                              
  Earnings from operations     0.7       0.9       (0.2 )      
  Earnings from continuing operations before taxes     0.6       0.9       (0.3 )      
  Earnings from continuing operations     0.6       1.7       (1.1 )      
  Net earnings     0.6       1.7       (1.1 )      
                               
Effective income tax rate     (8.9 )%     (89.2 )%     80.3pts.        
                               
Average number of shares outstanding                              
(millions):                              
  Basic     37.1       36.8                
  Diluted     37.1       36.8                
                               
Shares adjusted for nonvested restricted awards                              
(millions):                              
  Basic     38.3       37.8                
  Diluted     38.3       37.8                
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 52 WEEKS ENDED DECEMBER 30, 2012 AND JANUARY 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2012     2011     Change     % Change  
                               
Revenue from services   $ 5,450.5     $ 5,551.0     $ (100.5 )   (1.8 )%
                               
Cost of services     4,553.9       4,667.7       (113.8 )   (2.4 )
                               
Gross profit     896.6       883.3       13.3     1.5  
                               
Selling, general and administrative expenses     821.2       825.6       (4.4 )   (0.6 )
                               
Asset impairments     3.1       -       3.1     NM  
                               
Earnings from operations     72.3       57.7       14.6     25.3  
                               
Other expense, net     (3.5 )     (0.1 )     (3.4 )   NM  
                               
Earnings from continuing operations before taxes     68.8       57.6       11.2     19.4  
                               
Income taxes     19.1       (7.3 )     26.4     363.5  
                               
Earnings from continuing operations     49.7       64.9       (15.2 )   (23.5 )
                               
Earnings (loss) from discontinued operations, net of tax     0.4       (1.2 )     1.6     NM  
                               
Net earnings   $ 50.1     $ 63.7     $ (13.6 )   (21.4 )%
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 1.31     $ 1.72     $ (0.41 )   (23.8 )%
  Earnings (loss) from discontinued operations     0.01       (0.03 )     0.04     NM  
  Net earnings     1.32       1.69       (0.37 )   (21.9 )
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 1.31     $ 1.72     $ (0.41 )   (23.8 )%
  Earnings (loss) from discontinued operations     0.01       (0.03 )     0.04     NM  
  Net earnings     1.32       1.69       (0.37 )   (21.9 )
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.5 %     15.9 %     0.6pts.        
                               
Selling, general and administrative expenses:                              
  % of revenue     15.1       14.9       0.2        
  % of gross profit     91.6       93.5       (1.9 )      
                               
% Return:                              
  Earnings from operations     1.3       1.0       0.3        
  Earnings from continuing operations before taxes     1.3       1.0       0.3        
  Earnings from continuing operations     0.9       1.2       (0.3 )      
  Net earnings     0.9       1.1       (0.2 )      
                               
Effective income tax rate     27.8 %     (12.6 )%     40.4pts.        
                               
Average number of shares outstanding                              
(millions):                              
  Basic     37.0       36.8                
  Diluted     37.0       36.8                
                               
Shares adjusted for nonvested restricted awards                              
(millions):                              
  Basic     38.0       37.6                
  Diluted     38.1       37.6                
...
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    Fourth Quarter  
                      Constant  
                      Currency  
    2012     2011     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 662.3     $ 675.6     (2.0 )%   (2.1 )%
    Fee-based income     3.6       3.2     13.5     13.9  
    Gross profit     96.1