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    Kelly Services(R) Reports Third Quarter 2016 Earnings and Announces EPS

    TROY, MI--(Marketwired - November 07, 2016) -

    Third Quarter Highlights

    • APAC Joint Venture completed
    • Total Revenue declines 8%; down 1% adjusted for APAC JV transaction
    • Operating earnings increase 13%; up 29% adjusted for APAC JV transaction
    • Earnings per share of $2.06 (Adjusted EPS of $0.44) versus $0.23 (Adjusted EPS of $0.19), a 132% increase on an adjusted basis

    Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the third quarter of 2016.

    Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2016 totaled $1.2 billion, a 7.6% decrease (a 7.1% decrease on a constant currency basis) compared to the corresponding quarter of 2015. During the third quarter of 2016, Kelly transferred its APAC staffing operations to the TS Kelly Asia Pacific joint venture and recorded a gain of $87.2 million. Kelly retains a 49% ownership interest in the newly formed joint venture. Excluding the APAC staffing operations from the third quarter of 2015, adjusted 2016 third quarter revenue was down 0.7% year over year (a 0.1% decrease on a constant currency basis).

    Earnings from operations for the third quarter of 2016 totaled $18.8 million, compared to $16.6 million reported for the third quarter of 2015. Excluding the APAC staffing operations from the third quarter of 2015, adjusted earnings from operations were $14.5 million; therefore, Kelly's third quarter 2016 earnings increased 29% year-over-year on an adjusted basis.

    Diluted earnings per share in the third quarter of 2016 were $2.06 compared to $0.23 per share in the third quarter of 2015. Excluding the gain from 2016 third quarter results and APAC staffing operations from 2015 third quarter results, adjusted earnings per share were $0.44 in the third quarter of 2016 and $0.19 in the third quarter of 2015.

    Commenting on the third quarter, Camden stated, "Sorting through the financial complexity around the JV transaction, Kelly's third quarter performance reflects good operating leverage on basically flat revenue. We increased our gross profit rate, reduced expenses, and turned in healthy operating earnings and solid returns for our shareholders. Our U.S. Staffing segment showed competitive strength and agility in an uncertain economic environment, and our OCG business delivered year-over-year GP improvement. With the APAC JV now firmly in place, we are operating as a more focused, disciplined company relentlessly committed to profitability."

    In conjunction with its third 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 November 7 to review the results and answer questions. The call may be accessed in one of the following ways:

    Via the Internet:
    www.kellyservices.com

    Via the Telephone:
    U.S. 1 800 288-9626
    International 1 651 291-5254
    The pass code is Kelly Services

    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 including TS Kelly Asia Pacific, 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.

    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. In 2016, the Company is commemorating 70 years of industry leadership. Kelly® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. Revenue in 2015 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

    KLYA-FIN

       
    KELLY SERVICES, INC. AND SUBSIDIARIES  
    CONSOLIDATED STATEMENTS OF EARNINGS  
    FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
    (UNAUDITED)  
    (In millions of dollars except per share data)  
                     %  CC %  
       2016   2015   Change     Change  Change  
                              
    Revenue from services  $1,247.8   $1,351.0   $(103.2 )   (7.6 )%(7.1 )%
                              
    Cost of services   1,032.7    1,122.8    (90.1 )   (8.0 )   
                              
    Gross profit   215.1    228.2    (13.1 )   (5.8 )(5.3 )
                              
    Selling, general and administrative expenses   196.3    211.6    (15.3 )   (7.3 )(6.9 )
                              
    Earnings from operations   18.8    16.6    2.2     13.1     
                              
    Gain on investment in TS Kelly Asia Pacific   87.2    -    87.2     NM     
                              
    Other expense, net   (0.4 )  -    (0.4 )   NM     
                              
    Earnings before taxes   105.6    16.6    89.0     NM     
                              
    Income tax expense   24.7    7.5    17.2     230.6     
                              
    Net earnings  $80.9   $9.1   $71.8     NM %   
                              
    Basic earnings per share  $2.08   $0.23   $1.85     NM %   
    Diluted earnings per share  $2.06   $0.23   $1.83     NM %   
                              
                              
    STATISTICS:                         
                              
    Gross profit rate   17.2 %  16.9 %  0.3   pts.       
                              
    Selling, general and administrative expenses:                         
      % of revenue   15.7    15.7    -           
      % of gross profit   91.3    92.7    (1.4 )         
                              
    % Return:                         
     Earnings from operations   1.5    1.2    0.3           
     Earnings before taxes   8.5    1.2    7.3           
     Net earnings   6.5    0.7    5.8           
                              
    Effective income tax rate   23.4 %  45.2 %  (21.8 ) pts.       
                              
    Average number of shares outstanding (millions):                         
      Basic   38.1    37.9                
      Diluted   38.4    37.9                
                              
    Shares adjusted for nonvested restricted awards (millions):                         
      Basic   39.0    38.8                
      Diluted   39.2    38.8                
                       
      
    KELLY SERVICES, INC. AND SUBSIDIARIES  
    CONSOLIDATED STATEMENTS OF EARNINGS  
    FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
    (UNAUDITED)  
    (In millions of dollars except per share data)  
                     %  CC %  
       2016   2015   Change     Change  Change  
                              
    Revenue from services  $3,972.4   $4,056.6   $(84.2 )   (2.1 )%(0.7 )%
                              
    Cost of services   3,294.1    3,385.8    (91.7 )   (2.7 )   
                              
    Gross profit   678.3    670.8    7.5     1.1  2.3  
                              
    Selling, general and administrative expenses   634.9    630.6    4.3     0.7  1.8  
                              
    Earnings from operations   43.4    40.2    3.2     7.9     
                              
    Gain on investment in TS Kelly Asia Pacific   87.2    -    87.2     NM     
                              
    Other expense, net   (1.4 )  (3.5 )  2.1     61.2     
                              
    Earnings before taxes   129.2    36.7    92.5     252.3     
                              
    Income tax expense   28.2    17.1    11.1     65.4     
                              
    Net earnings  $101.0   $19.6   $81.4     414.7 %   
                              
    Basic earnings per share  $2.59   $0.51   $2.08     NM %   
    Diluted earnings per share  $2.58   $0.51   $2.07     NM %   
                              
                              
    STATISTICS:                         
                              
    Gross profit rate   17.1 %  16.5 %  0.6   pts.       
                              
    Selling, general and administrative expenses:                         
      % of revenue   16.0    15.5    0.5           
      % of gross profit   93.6    94.0    (0.4 )         
                              
    % Return:                         
     Earnings from operations   1.1    1.0    0.1           
     Earnings before taxes   3.3    0.9    2.4           
     Net earnings   2.5    0.5    2.0           
                              
    Effective income tax rate   21.8 %  46.5 %  (24.7 ) pts.       
                              
    Average number of shares outstanding (millions):                         
      Basic   38.0    37.8                
      Diluted   38.3    37.8                
                              
    Shares adjusted for nonvested restricted awards (millions):                         
      Basic   39.0    38.8                
      Diluted   39.2    38.8                
                         
       
    KELLY SERVICES, INC. AND SUBSIDIARIES  
    RESULTS OF OPERATIONS BY SEGMENT  
    (UNAUDITED)  
    (In millions of dollars)  
                        
       Third Quarter  
                        
               %     CC %  
       2016   2015   Change     Change  
    AMERICAS                     
     Commercial                     
      Revenue from services  $603.7   $615.5   (1.9 )%   (1.3 )%
      Staffing fee-based income included in revenue from services   4.2    3.8   10.0     10.1  
      Gross profit   94.9    96.6   (1.8 )   (1.3 )
      Gross profit rate   15.7 %  15.7 % -   pts.    
     PT                     
      Revenue from services  $239.6   $242.8   (1.3 )%   (1.3 )%
      Staffing fee-based income included in revenue from services   4.4    4.7   (6.9 )   (6.9 )
      Gross profit   41.4    41.0   1.0     1.0  
      Gross profit rate   17.3 %  16.9 % 0.4   pts.    
     Total Americas                     
      Revenue from services  $843.3   $858.3   (1.8 )%   (1.3 )%
      Staffing fee-based income included in revenue from services   8.6    8.5   0.6     0.7  
      Gross profit   136.3    137.6   (1.0 )   (0.6 )
      Total SG&A expenses   112.2    113.7   (1.4 )   (1.2 )
      Earnings from operations   24.1    23.9   1.0        
                           
      Gross profit rate   16.2 %  16.0 % 0.2   pts.    
      Expense rates:                     
       % of revenue   13.3    13.2   0.1        
       % of gross profit   82.3    82.7   (0.4 )      
      Return on sales   2.9    2.8   0.1        
                          
    EMEA                     
     Commercial                     
      Revenue from services  $197.6   $199.0   (0.8 )%   1.0 %
      Staffing fee-based income included in revenue from services   3.3    3.2   5.0     6.7  
      Gross profit   26.8    27.7   (3.5 )   (2.5 )
      Gross profit rate   13.6 %  13.9 % (0.3 ) pts.    
     PT                     
      Revenue from services  $41.7   $43.6   (4.3 )%   (2.9 )%
      Staffing fee-based income included in revenue from services