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

TROY, MI -- (Marketwire) -- 01/31/13 -- 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       96.4       (0.3)      (0.4)

    Gross profit rate                14.5%      14.3%   0.2pts.

  PT
    Revenue from services
     (including fee-based
     income)                    $   255.6  $   243.7        4.9%       4.6%
    Fee-based income                  3.2        3.6      (12.3)     (12.4)
    Gross profit                     38.9       38.0        2.4        2.2

    Gross profit rate                15.2%      15.6% (0.4)pts.

  Total Americas
    Revenue from services
     (including fee-based
     income)                    $   917.9  $   919.3       (0.2)%     (0.4)%
    Fee-based income                  6.8        6.8       (0.2)      (0.1)
    Gross profit                    135.0      134.4        0.5        0.4
    Total SG&A expenses             102.4      100.1        2.3        2.3
    Earnings from operations         32.6       34.3       (4.8)

    Gross profit rate                14.7%      14.6%   0.1pts.
    Expense rates:
      % of revenue                   11.2       10.9        0.3
      % of gross profit              75.8       74.5        1.3
    Operating margin                  3.6        3.7       (0.1)

EMEA
  Commercial
    Revenue from services
     (including fee-based
     income)                    $   213.4  $   238.8      (10.6)%     (8.9)%
    Fee-based income                  4.9        6.0      (18.3)     (17.3)
    Gross profit                     32.7       38.7      (15.6)     (14.0)

    Gross profit rate                15.3%      16.2% (0.9)pts.

  PT
    Revenue from services
     (including fee-based
     income)                    $    43.0  $    44.9       (4.2)%     (2.1)%
    Fee-based income                  3.7        4.2      (12.7)     (11.3)
    Gross profit                     10.3       11.3       (9.6)      (7.8)

    Gross profit rate                23.9%      25.3% (1.4)pts.

  Total EMEA
    Revenue from services
     (including fee-based
     income)                    $   256.4  $   283.7       (9.6)%     (7.8)%
    Fee-based income                  8.6       10.2      (16.0)     (14.8)
    Gross profit                     43.0       50.0      (14.3)     (12.6)
    SG&A expenses excluding
     restructuring charges           42.6       46.4       (8.3)
    Restructuring charges             1.3          -         NM
    Total SG&A expenses              43.9       46.4       (5.6)      (4.1)
    Earnings from operations         (0.9)       3.6         NM
    Earnings from operations
     excluding restructuring
     charges                          0.4        3.6      (91.7)

    Gross profit rate                16.7%      17.7% (1.0)pts.
    Expense rates (excluding
     restructuring charges):
      % of revenue                   16.6       16.4        0.2
      % of gross profit              99.3       92.8        6.5
    Operating margin (excluding
     restructuring charges)           0.1        1.3       (1.2)


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                     RESULTS OF OPERATIONS BY SEGMENT
                                (UNAUDITED)
                         (In millions of dollars)

                                              Fourth Quarter
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                   2012       2011      Change     Change
                                ---------  ---------  ---------   --------
APAC
  Commercial
    Revenue from services
     (including fee-based
     income)                    $    84.9  $    93.8       (9.5)%    (12.4)%
    Fee-based income                  2.4        2.9      (18.5)     (19.2)
    Gross profit                     11.7       13.2      (11.2)     (13.6)

    Gross profit rate                13.8%      14.1% (0.3)pts.

  PT
    Revenue from services
     (including fee-based
     income)                    $    11.7  $    12.3       (4.6)%     (6.8)%
    Fee-based income                  2.9        3.1       (5.6)      (8.0)
    Gross profit                      4.3        4.4       (1.5)      (4.0)

    Gross profit rate                36.7%      35.5%   1.2pts.

  Total APAC
    Revenue from services
     (including fee-based
     income)                    $    96.6  $   106.1       (9.0)%    (11.7)%
    Fee-based income                  5.3        6.0      (11.9)     (13.4)
    Gross profit                     16.0       17.6       (8.8)     (11.2)
    Total SG&A expenses              15.9       17.9      (11.0)     (13.3)
    Earnings from operations          0.1       (0.3)        NM

    Gross profit rate                16.6%      16.6%    - pts.
    Expense rates:
      % of revenue                   16.5       16.9       (0.4)
      % of gross profit              99.3      101.7       (2.4)
    Operating margin                  0.1       (0.3)       0.4

OCG
    Revenue from services
     (including fee-based
     income)                    $   113.3  $    94.4       20.1%      20.0%
    Fee-based income                 13.8       10.8       26.9       27.1
    Gross profit                     29.0       23.0       26.3       26.3
    Total SG&A expenses              25.8       22.2       16.1       16.2
    Earnings from operations          3.2        0.8      302.0

    Gross profit rate                25.6%      24.3%   1.3pts.
    Expense rates:
      % of revenue                   22.7       23.5       (0.8)
      % of gross profit              88.7       96.4       (7.7)
    Operating margin                  2.9        0.9        2.0


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                     RESULTS OF OPERATIONS BY SEGMENT
                                (UNAUDITED)
                         (In millions of dollars)

                                           December Year to Date
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                   2012       2011      Change     Change
                                ---------  ---------  ---------   --------
AMERICAS
  Commercial
    Revenue from services
     (including fee-based
     income)                    $ 2,642.4  $ 2,660.9       (0.7)%        -%
    Fee-based income                 15.7       12.0       30.7       33.3
    Gross profit                    388.2      375.3        3.4        4.1

    Gross profit rate                14.7%      14.1%   0.6pts.

  PT
    Revenue from services
     (including fee-based
     income)                    $ 1,029.7  $   982.8        4.8%       4.8%
    Fee-based income                 14.5       13.3        8.5        8.6
    Gross profit                    159.7      147.8        8.0        8.1

    Gross profit rate                15.5%      15.0%   0.5pts.

  Total Americas
    Revenue from services
     (including fee-based
     income)                    $ 3,672.1  $ 3,643.7        0.8%       1.3%
    Fee-based income                 30.2       25.3       19.0       20.3
    Gross profit                    547.9      523.1        4.7        5.2
    Total SG&A expenses             405.8      396.4        2.4        3.0
    Earnings from operations        142.1      126.7       12.0

    Gross profit rate                14.9%      14.4%   0.5pts.
    Expense rates:
      % of revenue                   11.1       10.9        0.2
      % of gross profit              74.1       75.8       (1.7)
    Operating margin                  3.9        3.5        0.4

EMEA
  Commercial
    Revenue from services
     (including fee-based
     income)                    $   854.6  $   990.1      (13.7)%     (8.0)%
    Fee-based income                 22.4       24.9      (10.1)      (4.2)
    Gross profit                    133.8      160.3      (16.6)     (10.9)

    Gross profit rate                15.7%      16.2% (0.5)pts.

  PT
    Revenue from services
     (including fee-based
     income)                    $   168.3  $   178.9       (5.9)%      0.4%
    Fee-based income                 16.8       19.2      (12.7)      (7.3)
    Gross profit                     43.0       47.4       (9.4)      (3.4)

    Gross profit rate                25.5%      26.5% (1.0)pts.

  Total EMEA
    Revenue from services
     (including fee-based
     income)                    $ 1,022.9  $ 1,169.0      (12.5)%     (6.7)%
    Fee-based income                 39.2       44.1      (11.2)      (5.5)
    Gross profit                    176.8      207.7      (14.9)      (9.2)
    SG&A expenses excluding
     restructuring charges          169.0      186.9       (9.7)
    Restructuring charges            (0.9)       2.8     (132.3)
    Total SG&A expenses             168.1      189.7      (11.5)      (6.0)
    Earnings from operations          8.7       18.0      (51.6)
    Earnings from operations
     excluding restructuring
     charges                          7.8       20.8      (62.5)

    Gross profit rate                17.3%      17.8% (0.5)pts.
    Expense rates (excluding
     restructuring charges):
      % of revenue                   16.5       16.0        0.5
      % of gross profit              95.6       90.1        5.5
    Operating margin (excluding
     restructuring charges)           0.8        1.8       (1.0)


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                     RESULTS OF OPERATIONS BY SEGMENT
                                (UNAUDITED)
                         (In millions of dollars)

                                           December Year to Date
                                ------------------------------------------
                                                                  Constant
                                                                  Currency
                                   2012       2011      Change     Change
                                ---------  ---------  ---------   --------
APAC
  Commercial
    Revenue from services
     (including fee-based
     income)                    $   343.2  $   397.6      (13.7)%    (13.2)%
    Fee-based income                 11.7       13.9      (15.7)     (13.4)
    Gross profit                     50.1       55.7      (10.0)      (9.3)

    Gross profit rate                14.6%      14.0%   0.6pts.

  PT
  Revenue from services
   (including fee-based income) $    51.6  $    51.4        0.5%       1.2%
    Fee-based income                 15.8       15.3        3.1        2.9
    Gross profit                     21.0       20.6        1.9        2.0

    Gross profit rate                40.6%      40.1%   0.5pts.

  Total APAC
    Revenue from services
     (including fee-based
     income)                    $   394.8  $   449.0      (12.1)%    (11.5)%
    Fee-based income                 27.5       29.2       (5.8)      (4.8)
    Gross profit                     71.1       76.3       (6.8)      (6.3)
    Total SG&A expenses              73.4       77.0       (4.7)      (4.1)
    Earnings from operations         (2.3)      (0.7)    (207.4)

    Gross profit rate                18.0%      17.0%   1.0pts.
    Expense rates:
      % of revenue                   18.6       17.2        1.4
      % of gross profit             103.3      101.0        2.3
    Operating margin                 (0.6)      (0.2)      (0.4)

OCG
    Revenue from services
     (including fee-based
     income)                    $   396.1  $   317.3       24.8%      25.5%
    Fee-based income                 51.4       39.5       30.0       32.1
    Gross profit                    104.0       78.8       32.0       33.5
    Total SG&A expenses              95.4       81.4       17.0       18.6
    Earnings from operations          8.6       (2.6)        NM

    Gross profit rate                26.3%      24.8%   1.5pts.
    Expense rates:
      % of revenue                   24.1       25.7       (1.6)
      % of gross profit              91.6      103.4      (11.8)
    Operating margin                  2.2       (0.8)       3.0


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
                          (In millions of dollars)

                                                     Dec. 30,     Jan. 1,
                                                       2012         2012
                                                   -----------  -----------
Current Assets
  Cash and equivalents                             $      76.3  $      81.0
  Trade accounts receivable, less allowances of
   $10.4 and $13.4, respectively                       1,013.9        944.9
  Prepaid expenses and other current assets               57.5         50.6
  Deferred taxes                                          44.9         38.2
                                                   -----------  -----------

    Total current assets                               1,192.6      1,114.7

Property and Equipment, Net                               89.9         90.6

Noncurrent Deferred Taxes                                 82.8         94.1

Goodwill, Net                                             89.5         90.2

Other Assets                                             180.9        152.1
                                                   -----------  -----------

Total Assets                                       $   1,635.7  $   1,541.7
                                                   ===========  ===========

Current Liabilities
  Short-term borrowings                            $      64.1  $      96.3
  Accounts payable and accrued liabilities               295.6        237.2
  Accrued payroll and related taxes                      264.5        271.4
  Accrued insurance                                       32.8         31.5
  Income and other taxes                                  65.3         61.3
                                                   -----------  -----------

    Total current liabilities                            722.3        697.7

Noncurrent Liabilities
  Accrued insurance                                       43.5         53.5
  Accrued retirement benefits                            111.0         91.1
  Other long-term liabilities                             17.9         23.7
                                                   -----------  -----------

    Total noncurrent liabilities                         172.4        168.3

Stockholders' Equity
  Common stock                                            40.1         40.1
  Treasury stock                                         (61.6)       (66.9)
  Paid-in capital                                         27.1         28.8
  Earnings invested in the business                      700.0        657.5
  Accumulated other comprehensive income                  35.4         16.2
                                                   -----------  -----------

    Total stockholders' equity                           741.0        675.7
                                                   -----------  -----------

Total Liabilities and Stockholders' Equity         $   1,635.7  $   1,541.7
                                                   ===========  ===========


STATISTICS:
  Working Capital                                  $     470.3  $     417.0
  Current Ratio                                            1.7          1.6
  Debt-to-capital %                                        8.0%        12.5%
  Global Days Sales Outstanding                             53           52


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE 52 WEEKS ENDED DECEMBER 30, 2012 AND JANUARY 1, 2012
                                (UNAUDITED)
                          (In millions of dollars)

                                                          2012       2011
                                                       ---------  ---------

Cash flows from operating activities
  Net earnings                                         $    50.1  $    63.7
  Noncash adjustments:
    Impairment of assets                                     3.1          -
    Depreciation and amortization                           22.3       31.4
    Provision for bad debts                                  1.1        4.3
    Stock-based compensation                                 4.8        4.6
    Other, net                                               1.3       (2.6)
  Changes in operating assets and liabilities              (21.6)     (82.3)
                                                       ---------  ---------

      Net cash from operating activities                    61.1       19.1
                                                       ---------  ---------

Cash flows from investing activities
  Capital expenditures                                     (21.5)     (15.4)
  Investment in equity affiliate                            (6.6)         -
  Acquisition of companies, net of cash received               -       (6.5)
  Other investing activities                                   -        1.2
                                                       ---------  ---------

      Net cash from investing activities                   (28.1)     (20.7)
                                                       ---------  ---------

Cash flows from financing activities
  Net change in short-term borrowings                      (31.9)      79.2
  Repayment of debt                                            -      (68.3)
  Dividend payments                                         (7.6)      (3.8)
  Other financing activities                                 0.1       (1.0)
                                                       ---------  ---------

      Net cash from financing activities                   (39.4)       6.1
                                                       ---------  ---------

Effect of exchange rates on cash and equivalents             1.7       (4.0)
                                                       ---------  ---------

Net change in cash and equivalents                          (4.7)       0.5
Cash and equivalents at beginning of period                 81.0       80.5
                                                       ---------  ---------


Cash and equivalents at end of period                  $    76.3  $    81.0
                                                       =========  =========


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                           REVENUE FROM SERVICES
                                (UNAUDITED)
                         (In millions of dollars)

                                   Fourth Quarter (Commercial, PT and OCG)
                                   ---------------------------------------
                                                             % Change
                                                                  Constant
                                      2012      2011      US$     Currency
                                   --------- --------- --------   --------

Americas
  United States                    $   877.9 $   883.8     (0.7)%     (0.7)%
  Canada                                60.5      60.9     (0.8)      (3.9)
  Mexico                                35.3      26.2     34.8       27.7
  Puerto Rico                           23.4      25.9     (9.6)      (9.6)
  Brazil                                14.0         -       NM         NM
                                   --------- ---------
Total Americas                       1,011.1     996.8      1.4        1.3

EMEA
  France                                58.8      71.2    (17.3)     (14.1)
  Switzerland                           61.2      62.0     (1.4)       0.9
  Russia                                33.9      33.4      1.7        1.2
  United Kingdom                        25.6      29.1    (11.9)     (13.8)
  Portugal                              19.0      21.6    (12.2)      (8.8)
  Germany                               16.4      20.1    (18.5)     (15.2)
  Norway                                15.5      17.8    (12.9)     (13.9)
  Italy                                 14.6      17.7    (17.6)     (14.3)
  Other                                 19.0      17.7      7.1        9.3
                                   --------- ---------
Total EMEA                             264.0     290.6     (9.2)      (7.4)

APAC
  Australia                             33.9      35.1     (3.4)      (5.8)
  Singapore                             26.5      24.4      8.4        2.9
  Malaysia                              18.0      17.6      2.6       (0.5)
  New Zealand                           12.9      13.0     (0.4)      (6.0)
  Other                                  9.0      18.8    (52.6)     (50.3)
                                   --------- ---------
Total APAC                             100.3     108.9     (7.9)     (10.7)

Total Kelly Services, Inc.         $ 1,375.4 $ 1,396.3     (1.5)%     (1.5)%
                                   ========= =========


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                           REVENUE FROM SERVICES
                                (UNAUDITED)
                         (In millions of dollars)

                                    December Year to Date (Commercial, PT
                                                   and OCG)
                                   ---------------------------------------
                                                             % Change
                                                                  Constant
                                      2012      2011      US$     Currency
                                   --------- --------- --------   --------

Americas
  United States                    $ 3,464.2 $ 3,445.4      0.5%       0.5%
  Canada                               243.9     247.7     (1.6)      (0.5)
  Mexico                               117.7     106.0     11.0       16.7
  Puerto Rico                           99.7      96.6      3.3        3.3
  Brazil                                60.7         -       NM         NM
                                   --------- ---------
Total Americas                       3,986.2   3,895.7      2.3        2.8

EMEA
  France                               243.0     295.9    (17.9)     (11.0)
  Switzerland                          235.6     239.8     (1.8)       4.7
  Russia                               131.0     141.8     (7.6)      (2.4)
  United Kingdom                       104.9     121.6    (13.8)     (12.7)
  Portugal                              75.0      87.7    (14.5)      (7.3)
  Germany                               70.3      82.8    (15.1)      (7.9)
  Norway                                66.3      68.7     (3.5)       0.5
  Italy                                 59.1      71.0    (16.7)      (9.9)
  Other                                 67.4      85.1    (20.8)     (14.5)
                                   --------- ---------
Total EMEA                           1,052.6   1,194.4    (11.9)      (6.0)

APAC
  Australia                            135.5     145.4     (6.9)      (7.2)
  Singapore                            101.6     103.0     (1.4)      (2.0)
  Malaysia                              72.9      72.1      1.2        2.1
  New Zealand                           52.4      50.8      3.2        1.0
  Other                                 49.3      89.6    (45.0)     (40.2)
                                   --------- ---------
Total APAC                             411.7     460.9    (10.7)     (10.1)

Total Kelly Services, Inc.         $ 5,450.5 $ 5,551.0     (1.8)%     (0.2)%
                                   ========= =========


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                     RECONCILIATION OF NON-GAAP MEASURES
        FOR THE 13 WEEKS ENDED DECEMBER 30, 2012 AND JANUARY 1, 2012
                                 (UNAUDITED)
               (In millions of dollars except per share data)


                                  2012                       2011
              -------------------------------------------- --------
                                         Loss on
                       Restruc-  Asset   Equity
                        turing   Impair- Invest-
                 As    Charges    ments   ment    Adjusted             %
              reported (Note 1) (Note 2) (Note 3) Earnings Earnings Change
              -------- -------- -------- -------- -------- -------- ------

Revenue from
 services     $1,375.4 $      - $      - $      - $1,375.4 $1,396.3   (1.5)%

Cost of
 services      1,153.2        -        -        -  1,153.2  1,172.0   (1.6)
              -------- -------- -------- -------- -------- -------- ------

Gross profit     222.2        -        -        -    222.2    224.3   (0.9)

Selling,
 general and
 administrative
 expenses        209.3     (1.3)       -        -    208.0    211.6   (1.7)

Asset
 impairments       3.1        -     (3.1)       -        -        -      -
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 operations        9.8      1.3      3.1        -     14.2     12.7   11.8

Other expense,
 net              (1.7)       -        -      0.7     (1.0)       -     NM
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 continuing
 operations
 before taxes      8.1      1.3      3.1      0.7     13.2     12.7    4.1

Income taxes      (0.8)     0.5      1.2     (0.3)     0.6    (11.4)(106.5)
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 continuing
 operations   $    8.9 $    0.8 $    1.9 $    1.0 $   12.6 $   24.1  (48.1)%
              ======== ======== ======== ======== ======== ======== ======


Earnings per
 share from
 continuing
 operations:
 Basic        $   0.23 $   0.02 $   0.05 $   0.03 $   0.33 $   0.64  (48.4)%
 Diluted      $   0.23 $   0.02 $   0.05 $   0.03 $   0.33 $   0.64  (48.4)%


                   KELLY SERVICES, INC. AND SUBSIDIARIES
                    RECONCILIATION OF NON-GAAP MEASURES
       FOR THE 52 WEEKS ENDED DECEMBER 30, 2012 AND JANUARY 1, 2012
                                (UNAUDITED)
              (In millions of dollars except per share data)

                                  2012                       2011
              -------------------------------------------- --------
                                         Loss on
                       Restruc-  Asset   Equity
                        turing   Impair- Invest-
                 As    Charges    ments   ment    Adjusted Adjusted    %
              reported (Note 1) (Note 2) (Note 3) Earnings Earnings Change
              -------- -------- -------- -------- -------- -------- ------

Revenue from
 services     $5,450.5 $      - $      - $      - $5,450.5 $5,551.0   (1.8)%

Cost of
 services      4,553.9        -        -        -  4,553.9  4,667.7   (2.4)
              -------- -------- -------- -------- -------- -------- ------

Gross profit     896.6        -        -        -    896.6    883.3    1.5

Selling,
 general and
 administrative
 expenses        821.2      0.9        -        -    822.1    822.8   (0.1)

Asset
 impairments       3.1        -     (3.1)       -        -        -      -
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 operations       72.3     (0.9)     3.1        -     74.5     60.5   23.2

Other expense,
 net              (3.5)       -        -      0.7     (2.8)    (0.1)    NM
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 continuing
 operations
 before taxes     68.8     (0.9)     3.1      0.7     71.7     60.4   18.8

Income taxes      19.1      0.5      1.2     (0.3)    20.5     (7.3)(383.6)
              -------- -------- -------- -------- -------- -------- ------

Earnings from
 continuing
 operations   $   49.7 $   (1.4)$    1.9 $    1.0 $   51.2 $   67.7  (24.4)%
              ======== ======== ======== ======== ======== ======== ======


Earnings per
 share from
 continuing
 operations:
 Basic        $   1.31 $  (0.04)$   0.05 $   0.03 $   1.34 $   1.80  (25.6)%
 Diluted      $   1.31 $  (0.04)$   0.05 $   0.03 $   1.34 $   1.80  (25.6)%


                                                         2011
                                          ---------------------------------
                                                    Restructuring
                                             As        Charges     Adjusted
                                          reported     (Note 1)    Earnings
                                          --------  -------------  --------

Revenue from services                     $5,551.0  $           -  $5,551.0

Cost of services                           4,667.7              -   4,667.7
                                          --------  -------------  --------

Gross profit                                 883.3              -     883.3

Selling, general and administrative
expenses                                     825.6           (2.8)    822.8

Asset impairments                                -              -         -
                                          --------  -------------  --------

Earnings from operations                      57.7            2.8      60.5

Other expense, net                            (0.1)             -      (0.1)
                                          --------  -------------  --------

Earnings from continuing operations
 before taxes                                 57.6            2.8      60.4

Income taxes                                  (7.3)             -      (7.3)
                                          --------  -------------  --------

Earnings from continuing operations       $   64.9  $         2.8  $   67.7
                                          ========  =============  ========

Earnings per share from continuing
 operations:
  Basic                                   $   1.72  $        0.07  $   1.80
  Diluted                                 $   1.72  $        0.07  $   1.80


                    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, asset
impairment charges and loss on equity investment is useful to understand the
Company's fiscal 2012 financial performance and increases comparability.
Specifically, Management believes that excluding these items 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) In 2012, restructuring charges relate to severance and lease termination
costs for EMEA Commercial branches which are in the process of closing,
along with revisions of the estimated lease termination costs for EMEA
Commercial branches that closed in prior years. In 2011, restructuring costs
relate primarily to revisions of the estimated lease termination costs for
EMEA Commercial branches that closed in prior years.

(2) Asset impairment charges relate to the write-off of previously
capitalized costs associated with the PeopleSoft billing system.

(3) Loss on equity investment represents the difference between the fair
value and book value of the North Asia entities contributed by the Company
to the investment in TS Kelly Workforce Solutions.

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