Kelly Services® Reports Fourth Quarter Earnings

Feb 13, 2019

Financial Highlights

  • Q4 revenue down 0.5%; up 0.6% in constant currency
  • Q4 operating earnings up 17% from last year
  • Q4 earnings (loss) per share of $(0.62), compared to $0.45 last year or $0.87 compared to $0.80 on an adjusted basis
  • Full year 2018 earnings from operations up 5% to $87 million

TROY, Mich., Feb. 13, 2019 (GLOBE NEWSWIRE) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter of 2018.

George S. Corona, President and Chief Executive Officer, announced revenue for the fourth quarter of 2018 totaled $1.4 billion, a 0.5% decrease, or an increase of 0.6% in constant currency, compared to the corresponding quarter of 2017.
               
Earnings from operations for the fourth quarter of 2018 totaled $33.1 million, compared to the $28.4 million reported for the fourth quarter of 2017.

Diluted losses per share in the fourth quarter of 2018 were $0.62 compared to earnings per share of $0.45 in the fourth quarter of 2017.  Included in the loss per share in the fourth quarter of 2018 is the unfavorable impact of $1.49 due to the non-cash after-tax loss on our investment in Persol Holdings common stock.  Effective in 2018, changes in the fair value of our investment in Persol Holdings common stock are reflected as gains or losses on our Consolidated Statement of Earnings below earnings from operations.  Adjusted for the non-cash after-tax loss on Persol Holdings common stock, diluted earnings per share for the quarter were $0.87.  Earnings per share in the fourth quarter of 2017 were unfavorably impacted by the $0.35 non-cash, tax charge resulting from the Tax Cuts and Job Act and were $0.80 on an adjusted basis.

Diluted earnings per share for the full year of 2018 were $0.58 compared to $1.81 for 2017.  Full-year earnings per share for 2018 were unfavorably impacted by the $1.69 non-cash after tax loss on Persol Holdings common stock.  2017 earnings per share were unfavorably impacted by the $0.35 non-cash income tax charge resulting from the Tax Cuts and Jobs Act and by the $0.04 restructuring charge, net of tax.  On an adjusted basis, diluted earnings per share were $2.27 in 2018 compared to $2.20 in 2017.  The impact of these adjustments are more fully described in our included reconciliation of non-GAAP measures.

“The company delivered a good quarter and a solid year in a challenging labor market,” said Kelly Services President and Chief Executive Officer George S. Corona. “We are pleased with the flexibility and resourcefulness of our Kelly team members, and with the strategic investments we made in people, products and technology.  We are optimistic about 2019, knowing these strategic investments will help us capitalize on the expanding specialty talent solutions markets, where there are abundant opportunities for growth and increased profitability.”

In conjunction with its fourth 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 February 13 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
Kellyservices.com

Via the Telephone:
U.S.
International
1 800 288-9626
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 and disruptions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual property 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 PersolKelly Asia Pacific, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with the government or government contractors, risks associated with conducting business in foreign countries, including foreign currency fluctuations, the exposure to potential market and currency exchange risks relating to our investment in Persol Holdings, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyber attacks or other breaches of network or information technology security, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology projects, our ability to maintain adequate financial and management processes and controls, risk of potential impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, the impact of changes in laws and regulations (including federal, state and international tax laws), competition law risks, the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to realize value from our tax credit and net operating loss carryforwards, 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. Kelly® directly employs more than 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2018 was $5.5 billion.  Visit kellyservices.com and connect with us on Facebook, LinkedIn, and Twitter.

KLYA-FIN

ANALYST CONTACT:
James Polehna 
(248) 244-4586 
james_polehna@kellyservices.com
  MEDIA CONTACT:
Jane Stehney 
(248) 574-9800
jane_stehney@kellyservices.com


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
                %   CC %  
    2018   2017   Change   Change   Change  
                       
Revenue from services $ 1,414.7   $ 1,422.3   $ (7.6 )   (0.5 ) % 0.6   %
                       
Cost of services   1,160.3     1,159.3     1.0     0.1        
                       
Gross profit   254.4     263.0     (8.6 )   (3.3 )   (2.3 )  
                       
Selling, general and administrative expenses   221.3     234.6     (13.3 )   (5.7 )   (4.8 )  
                       
Earnings from operations   33.1     28.4     4.7     16.7        
                       
Loss on investment in Persol Holdings   (83.2 )       (83.2 )   (100.0 )      
                       
Other income, net   1.2     0.9     0.3     20.1        
                       
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate   (48.9 )   29.3     (78.2 )   NM      
                       
Income tax (benefit) expense   (23.8 )   12.7     (36.5 )   (288.6 )      
                       
Net earnings (loss) before equity in net earnings (loss) of affiliate   (25.1 )   16.6     (41.7 )   NM      
                       
Equity in net earnings (loss) of affiliate   1.2     1.1     0.1     10.8        
                       
Net earnings (loss) $ (23.9 ) $ 17.7   $ (41.6 )   NM %    
                       
Basic earnings (loss) per share $ (0.62 ) $ 0.46   $ (1.08 )   NM %    
Diluted earnings (loss) per share $ (0.62 ) $ 0.45   $ (1.07 )   NM %    
                       
                       
STATISTICS:                      
                       
Staffing fee-based income (included in revenue from services) $ 16.3   $ 15.9   $ 0.4     2.0   % 4.4   %
                       
Gross profit rate   18.0   % 18.5   % (0.5 ) pts.        
                       
Conversion rate   13.0     10.8     2.2            
                       
% Return:                      
Earnings from operations   2.3     2.0     0.3            
Net earnings (loss)   (1.7 )   1.2     (2.9 )          
                       
Effective income tax rate   48.8   % 43.2   % 5.6   pts.        
                       
Average number of shares outstanding (millions):                      
  Basic   38.9     38.4                
  Diluted   38.9     39.2                


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
                %   CC %  
    2018   2017   Change   Change   Change  
                       
Revenue from services $ 5,513.9   $ 5,374.4   $ 139.5     2.6   % 2.2   %
                       
Cost of services   4,541.7     4,420.3     121.4     2.7        
                       
Gross profit   972.2     954.1     18.1     1.9     1.6    
                       
Selling, general and administrative expenses   884.8     870.8     14.0     1.6     1.4    
                       
Earnings from operations   87.4     83.3     4.1     5.0        
                       
Loss on investment in Persol Holdings   (96.2 )       (96.2 )   (100.0 )      
                       
Other expense, net   (0.6 )   (1.6 )   1.0     58.7        
                       
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate   (9.4 )   81.7     (91.1 )   NM      
                       
Income tax (benefit) expense   (27.1 )   12.8     (39.9 )   (312.1 )      
                       
Net earnings before equity in net earnings (loss) of affiliate   17.7     68.9     (51.2 )   (74.2 )      
                       
Equity in net earnings (loss) of affiliate   5.2     2.7     2.5     92.1        
                       
Net earnings $ 22.9   $ 71.6   $ (48.7 )   (68.0 ) %    
                       
Basic earnings per share $ 0.59   $ 1.84   $ (1.25 )   (67.9 ) %    
Diluted earnings per share $ 0.58   $ 1.81   $ (1.23 )   (68.0 ) %    
                       
                       
STATISTICS:                      
                       
Staffing fee-based income (included in revenue from services) $ 68.6   $ 57.3   $ 11.3     19.6   % 19.0   %
                       
Gross profit rate   17.6   % 17.8   % (0.2 ) pts.        
                       
Conversion rate   9.0     8.7     0.3            
                       
% Return:                      
Earnings from operations   1.6     1.5     0.1            
Net earnings   0.4     1.3     (0.9 )          
                       
Effective income tax rate   289.2   % 15.7   % 273.5   pts.        
                       
Average number of shares outstanding (millions):                      
  Basic   38.8     38.3                
  Diluted   39.1     39.0                


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                     
    Fourth Quarter
                     
              %   CC %  
    2018     2017   Change   Change  
Americas Staffing                    
Revenue from services $ 647.6     $ 642.4     0.8   % 1.4   %
Gross profit   118.8       121.2     (2.0 )   (1.5 )  
Total SG&A expenses   90.4       93.4     (3.3 )   (2.8 )  
Earnings from operations   28.4       27.8     2.7        
                     
Gross profit rate   18.3   %   18.9   % (0.6 )  pts.    
Conversion rate   23.9       22.8     1.1        
Return on sales   4.4       4.3     0.1        
                     
Global Talent Solutions                    
Revenue from services $ 503.3     $ 503.1       % 0.3   %
Gross profit   99.3       101.5     (2.2 )   (1.7 )  
Total SG&A expenses   72.5       75.9     (4.4 )   (3.9 )  
Earnings from operations   26.8       25.6     4.4        
                     
Gross profit rate   19.7   %   20.2   % (0.5 )  pts.    
Conversion rate   27.0       25.3     1.7        
Return on sales   5.3       5.1     0.2        
                     
International Staffing                    
Revenue from services $ 268.1     $ 282.2     (5.0 ) % (1.4 ) %
Gross profit   36.9       41.0     (9.8 )   (6.3 )  
Total SG&A expenses   33.1       35.4     (6.1 )   (2.7 )  
Earnings from operations   3.8       5.6     (33.1 )      
                     
Gross profit rate   13.8   %   14.5   % (0.7 )  pts.    
Conversion rate   10.2       13.8     (3.6 )      
Return on sales   1.4       2.0     (0.6 )      


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                     
    December Year to Date
                     
              %   CC %  
    2018     2017   Change   Change  
Americas Staffing                    
Revenue from services $ 2,417.7     $ 2,345.9     3.1   % 3.4   %
Gross profit   441.3       429.1     2.9     3.1    
SG&A expenses excluding restructuring charges   364.2       346.0     5.2     5.5    
Restructuring charges         0.4     (100.0 )   (100.0 )  
Total SG&A expenses   364.2       346.4     5.1     5.4    
Earnings from operations   77.1       82.7     (6.7 )      
Earnings from operations excluding restructuring charges   77.1       83.1     (7.1 )      
                     
Gross profit rate   18.3   %   18.3   %    pts.    
Conversion rate   17.5       19.3     (1.8 )      
Conversion rate excluding restructuring charges   17.5       19.3     (1.8 )      
Return on sales   3.2       3.5     (0.3 )      
Return on sales excluding restructuring charges   3.2       3.5     (0.3 )      
                     
Global Talent Solutions                    
Revenue from services $ 1,997.4     $ 1,998.9     (0.1 ) % (0.1 ) %
Gross profit   381.1       373.7     2.0     1.8    
SG&A expenses excluding restructuring charges   296.5       294.7     0.6     0.4    
Restructuring charges         2.0     (100.0 )   (100.0 )  
Total SG&A expenses   296.5       296.7         (0.2 )  
Earnings from operations   84.6       77.0     9.8        
Earnings from operations excluding restructuring charges   84.6       79.0     7.1        
                     
Gross profit rate   19.1   %   18.7   % 0.4    pts.    
Conversion rate   22.2       20.6     1.6        
Conversion rate excluding restructuring charges   22.2       21.1     1.1        
Return on sales   4.2       3.9     0.3        
Return on sales excluding restructuring charges   4.2       4.0     0.2        
                     
International Staffing                    
Revenue from services $ 1,116.6     $ 1,048.2     6.5   % 4.0   %
Gross profit   152.3       153.7     (0.9 )   (3.2 )  
Total SG&A expenses   132.3       131.6     0.5     (1.4 )  
Earnings from operations   20.0       22.1     (9.5 )      
                     
Gross profit rate   13.6   %   14.7   % (1.1 )  pts.    
Conversion rate   13.2       14.4     (1.2 )      
Return on sales   1.8       2.1     (0.3 )      


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
           
    Dec. 30, 2018   Dec. 31, 2017  
Current Assets          
  Cash and equivalents $ 35.3   $ 32.5    
  Trade accounts receivable, less allowances of          
  $13.2 and $12.9, respectively   1,293.3     1,286.7    
  Prepaid expenses and other current assets   71.9     65.1    
Total current assets   1,400.5     1,384.3    
           
Noncurrent Assets          
Property and equipment, net   86.3     86.1    
Deferred taxes   198.7     183.4    
Goodwill, net   107.3     107.1    
Investment in Persol Holdings   135.1     228.1    
Investment in equity affiliate   121.3     117.4    
Other assets   265.2     271.8    
Total noncurrent assets   913.9     993.9    
           
Total Assets $ 2,314.4   $ 2,378.2    
           
Current Liabilities          
  Short-term borrowings $ 2.2   $ 10.2    
  Accounts payable and accrued liabilities   540.6     537.7    
  Accrued payroll and related taxes   266.0     287.4    
  Accrued workers' compensation and other claims   26.0     25.7    
  Income and other taxes   62.7     65.2    
Total current liabilities   897.5     926.2    
           
Noncurrent Liabilities          
  Accrued workers' compensation and other claims   50.5     49.9    
  Accrued retirement benefits   162.9     178.1    
  Other long-term liabilities   44.0     72.5    
Total noncurrent liabilities   257.4     300.5    
           
Stockholders' Equity          
  Common stock   40.1     40.1    
  Treasury stock   (26.0 )   (35.2 )  
  Paid-in capital   24.4     32.2    
  Earnings invested in the business   1,138.1     983.6    
  Accumulated other comprehensive income (loss)   (17.1 )   130.8    
           
Total stockholders' equity   1,159.5     1,151.5    
           
Total Liabilities and Stockholders' Equity $ 2,314.4   $ 2,378.2    
           
           
Statistics:          
 Working Capital $ 503.0   $ 458.1    
 Current Ratio   1.6     1.5    
 Debt-to-capital %   0.2   % 0.9   %
 Global Days Sales Outstanding   55     55    
 Year-to-Date Free Cash Flow  $ 35.8   $ 46.2    


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars)
     
    2018   2017
Cash flows from operating activities:        
Net earnings $ 22.9   $ 71.6  
Adjustments to reconcile net earnings to net cash from operating activities:        
Depreciation and amortization   26.2     22.7  
Provision for bad debts   3.0     5.6  
Stock-based compensation   8.1     9.1  
Loss on investment in Persol Holdings   96.2      
Equity in net earnings of PersolKelly Asia Pacific   (5.2 )   (2.7 )
Other, net   (0.8 )   0.2  
Changes in operating assets and liabilities, net of acquisition   (89.0 )   (35.7 )
         
Net cash from operating activities   61.4     70.8  
         
Cash flows from investing activities:        
Capital expenditures   (25.6 )   (24.6 )
Acquisition of company, net of cash received       (37.2 )
Investment in equity securities   (5.0 )    
(Loan to) proceeds from repayment of loan to equity affiliate   (7.0 )   0.6  
Proceeds from company-owned life insurance   7.9      
Other investing activities   (0.1 )   0.2  
         
Net cash used in investing activities   (29.8 )   (61.0 )
         
Cash flows from financing activities:        
Net change in short-term borrowings   (7.8 )   10.1  
Dividend payments   (11.8 )   (11.6 )
Payments of tax withholding for restricted shares   (6.9 )   (1.8 )
Other financing activities       (0.1 )
         
Net cash used in financing activities   (26.5 )   (3.4 )
         
Effect of exchange rates on cash, cash equivalents and restricted cash   (1.9 )   (3.8 )
         
Net change in cash, cash equivalents and restricted cash   3.2     2.6  
Cash, cash equivalents and restricted cash at beginning of year   36.9     34.3  
         
         
Cash, cash equivalents and restricted cash at end of year $ 40.1   $ 36.9  
         


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                   
    Fourth Quarter (Americas, International and GTS)  
                   
            %   CC %  
    2018   2017   Change   Change  
                   
Americas                  
United States $ 1,031.6   $ 1,027.8     0.4   % 0.4   %
Canada   34.8     34.5     1.2     5.1    
Mexico   32.3     33.8     (4.4 )   (0.1 )  
Puerto Rico   22.4     17.1     31.0     31.0    
Brazil   8.6     10.3     (16.4 )   1.5    
Total Americas   1,129.7     1,123.5     0.6     1.0    
                   
EMEA                  
France   66.2     75.0     (11.8 )   (8.9 )  
Switzerland   56.4     55.6     1.2     2.2    
Portugal   46.4     52.0     (10.7 )   (7.8 )  
Russia   24.7     23.9     2.9     17.2    
United Kingdom   23.2     24.4     (4.9 )   (1.9 )  
Italy   19.4     16.6     16.6     20.4    
Germany   12.1     16.6     (27.3 )   (25.0 )  
Ireland   10.3     8.6     20.5     24.3    
Norway   8.0     8.4     (4.0 )   (0.7 )  
Other   13.0     13.0     0.4     4.5    
Total EMEA   279.7     294.1     (4.9 )   (1.4 )  
                   
Total APAC   5.3     4.7     12.4     20.7    
                   
Total Kelly Services, Inc. $ 1,414.7   $ 1,422.3     (0.5 ) % 0.6   %
                   


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
                   
    December Year to Date (Americas, International and GTS)  
                   
            %   CC %  
    2018   2017   Change   Change  
                   
Americas                  
United States $ 3,930.0   $ 3,894.6     0.9   % 0.9   %
Canada   142.4     140.3     1.6     1.5    
Mexico   125.0     118.8     5.2     7.5    
Puerto Rico   96.6     68.3     41.5     41.5    
Brazil   35.2     48.6     (27.6 )   (18.6 )  
Total Americas   4,329.2     4,270.6     1.4     1.5    
                   
EMEA                  
France   278.9     277.1     0.6     (3.7 )  
Switzerland   212.7     216.9     (2.0 )   (2.4 )  
Portugal   196.9     176.0     11.9     6.9    
United Kingdom   108.8     88.7     22.6     18.1    
Russia   100.4     93.2     7.7     15.8    
Italy   77.5     61.9     25.2     20.0    
Germany   57.1     59.9     (4.7 )   (9.3 )  
Ireland   44.6     32.0     39.5     33.4    
Norway   34.4     33.3     3.3     1.8    
Other   51.2     46.5     10.1     6.4    
Total EMEA   1,162.5     1,085.5     7.1     4.5    
                   
Total APAC   22.2     18.3     21.4     24.3    
                   
Total Kelly Services, Inc. $ 5,513.9   $ 5,374.4     2.6   % 2.2   %
                   


KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 AND 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
     
    Fourth Quarter   December Year to Date
    2018   2017   2018   2017
                 
Earnings from operations   $ 33.1     $ 28.4     $ 87.4     $ 83.3  
Restructuring charges (Note 3)               2.4  
Adjusted earnings from operations   $ 33.1     $ 28.4     $ 87.4     $ 85.7  
                 
    Fourth Quarter   December Year to Date
    2018   2017   2018   2017
                 
Income tax (benefit) expense   $ (23.8 )   $ 12.7     $ (27.1 )   $ 12.8  
Tax benefit on investment in Persol Holdings (Note 1)   25.4         29.4      
2017 U.S. tax law change (Note 2)       (13.9 )       (13.9 )
Tax expense on restructuring charges (Note 3)               0.7  
Adjusted income tax expense (benefit)   $ 1.6     $ (1.2 )   $ 2.3     $ (0.4 )
                 
    Fourth Quarter   December Year to Date
    2018   2017   2018   2017
Net earnings (loss)   $ (23.9 )   $ 17.7     $ 22.9     $ 71.6  
Loss on investment in Persol Holdings, net of taxes (Note 1)   57.8         66.8      
2017 U.S. tax law change (Note 2)       13.9         13.9  
Restructuring charges, net of taxes (Note 3)               1.7  
Adjusted net earnings   $ 33.9     $ 31.6     $ 89.7     $ 87.2  
                 
    Fourth Quarter   December Year to Date
    2018   2017   2018   2017
    Per Share   Per Share
Net earnings (loss)   $ (0.62 )   $ 0.45     $ 0.58     $ 1.81  
Loss on investment in Persol Holdings, net of taxes (Note 1)   1.49         1.69      
2017 U.S. tax law change (Note 2)       0.35         0.35  
Restructuring charges, net of taxes (Note 3)               0.04  
Adjusted net earnings   $ 0.87     $ 0.80     $ 2.27     $ 2.20  

Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.


KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2018 loss on investment in Persol Holdings, the effect of the 2017 U.S. tax law change and the 2017 restructuring charges is useful to understand the Company's fiscal 2018 financial performance and increases comparability.  Specifically, Management believes that removing the impact of 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)  The loss on the investment in Persol Holdings in 2018 represents the change in fair value of the investment during the period presented and the related tax benefit.

(2)  2017 U.S. tax law change represents the impact of revaluing net deferred tax assets as a result of the U.S. Tax Cuts and Jobs Act.

(3)  Restructuring charges in 2017 represent costs related primarily to optimizing our GTS service delivery models to deliver expected cost savings.

Source: Kelly Services, Inc.