DELAWARE | 38-1510762 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer [ ] | Accelerated filer [X] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Page Number | |
13 Weeks Ended | |||||||
April 3, 2016 | March 29, 2015 | ||||||
Revenue from services | $ | 1,349.1 | $ | 1,320.6 | |||
Cost of services | 1,116.4 | 1,100.3 | |||||
Gross profit | 232.7 | 220.3 | |||||
Selling, general and administrative expenses | 218.0 | 208.2 | |||||
Earnings from operations | 14.7 | 12.1 | |||||
Other expense, net | 0.8 | 2.5 | |||||
Earnings before taxes | 13.9 | 9.6 | |||||
Income tax expense | 2.7 | 5.9 | |||||
Net earnings | $ | 11.2 | $ | 3.7 | |||
Basic earnings per share | $ | 0.29 | $ | 0.10 | |||
Diluted earnings per share | $ | 0.29 | $ | 0.10 | |||
Dividends per share | $ | 0.05 | $ | 0.05 | |||
Average shares outstanding (millions): | |||||||
Basic | 38.0 | 37.7 | |||||
Diluted | 38.2 | 37.8 |
13 Weeks Ended | |||||||
April 3, 2016 | March 29, 2015 | ||||||
Net earnings | $ | 11.2 | $ | 3.7 | |||
Other comprehensive income, net of tax: | |||||||
Foreign currency translation adjustments, net of tax expense of $0.2 million in 2016 and benefit of $0.3 million in 2015 | 11.9 | (8.4 | ) | ||||
Less: Reclassification adjustments included in net earnings | (0.3 | ) | (0.2 | ) | |||
Foreign currency translation adjustments | 11.6 | (8.6 | ) | ||||
Unrealized (losses) gains on investment, net of tax benefit of $4.0 million in 2016 and tax expense of $1.7 million in 2015 | (8.1 | ) | 3.1 | ||||
Other comprehensive income (loss) | 3.5 | (5.5 | ) | ||||
Comprehensive income (loss) | $ | 14.7 | $ | (1.8 | ) |
ASSETS | April 3, 2016 | January 3, 2016 | |||||
CURRENT ASSETS: | |||||||
Cash and equivalents | $ | 46.4 | $ | 42.2 | |||
Trade accounts receivable, less allowances of $11.6 and $10.5, respectively | 1,168.8 | 1,139.1 | |||||
Prepaid expenses and other current assets | 53.0 | 45.8 | |||||
Total current assets | 1,268.2 | 1,227.1 | |||||
PROPERTY AND EQUIPMENT: | |||||||
Property and equipment | 363.0 | 361.8 | |||||
Accumulated depreciation | (277.3 | ) | (272.9 | ) | |||
Net property and equipment | 85.7 | 88.9 | |||||
NONCURRENT DEFERRED TAXES | 193.6 | 189.3 | |||||
GOODWILL, NET | 90.3 | 90.3 | |||||
OTHER ASSETS | 340.6 | 344.0 | |||||
TOTAL ASSETS | $ | 1,978.4 | $ | 1,939.6 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Short-term borrowings | $ | 39.3 | $ | 55.5 | |||
Accounts payable and accrued liabilities | 437.4 | 405.5 | |||||
Accrued payroll and related taxes | 277.6 | 268.1 | |||||
Accrued insurance | 27.0 | 26.7 | |||||
Income and other taxes | 57.8 | 60.0 | |||||
Total current liabilities | 839.1 | 815.8 | |||||
NONCURRENT LIABILITIES: | |||||||
Accrued insurance | 40.5 | 40.0 | |||||
Accrued retirement benefits | 145.2 | 141.0 | |||||
Other long-term liabilities | 42.8 | 47.4 | |||||
Total noncurrent liabilities | 228.5 | 228.4 | |||||
Commitments and contingencies (see contingencies footnote) | |||||||
STOCKHOLDERS’ EQUITY: | |||||||
Capital stock, $1.00 par value | |||||||
Class A common stock, shares issued 36.6 at 2016 and 2015 | 36.6 | 36.6 | |||||
Class B common stock, shares issued 3.5 at 2016 and 2015 | 3.5 | 3.5 | |||||
Treasury stock, at cost | |||||||
Class A common stock, 2.1 shares at 2016 and 2015 | (43.1 | ) | (43.7 | ) | |||
Class B common stock | (0.6 | ) | (0.6 | ) | |||
Paid-in capital | 27.4 | 25.4 | |||||
Earnings invested in the business | 822.8 | 813.5 | |||||
Accumulated other comprehensive income | 64.2 | 60.7 | |||||
Total stockholders’ equity | 910.8 | 895.4 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,978.4 | $ | 1,939.6 |
13 Weeks Ended | |||||||
April 3, 2016 | March 29, 2015 | ||||||
Capital Stock | |||||||
Class A common stock | |||||||
Balance at beginning of period | $ | 36.6 | $ | 36.6 | |||
Conversions from Class B | — | — | |||||
Balance at end of period | 36.6 | 36.6 | |||||
Class B common stock | |||||||
Balance at beginning of period | 3.5 | 3.5 | |||||
Conversions to Class A | — | — | |||||
Balance at end of period | 3.5 | 3.5 | |||||
Treasury Stock | |||||||
Class A common stock | |||||||
Balance at beginning of period | (43.7 | ) | (49.2 | ) | |||
Issuance of restricted stock and other | 0.6 | 0.1 | |||||
Balance at end of period | (43.1 | ) | (49.1 | ) | |||
Class B common stock | |||||||
Balance at beginning of period | (0.6 | ) | (0.6 | ) | |||
Issuance of restricted stock and other | — | — | |||||
Balance at end of period | (0.6 | ) | (0.6 | ) | |||
Paid-in Capital | |||||||
Balance at beginning of period | 25.4 | 24.9 | |||||
Issuance of restricted stock and other | 2.0 | 1.0 | |||||
Balance at end of period | 27.4 | 25.9 | |||||
Earnings Invested in the Business | |||||||
Balance at beginning of period | 813.5 | 767.4 | |||||
Net earnings | 11.2 | 3.7 | |||||
Dividends | (1.9 | ) | (1.9 | ) | |||
Balance at end of period | 822.8 | 769.2 | |||||
Accumulated Other Comprehensive Income | |||||||
Balance at beginning of period | 60.7 | 51.1 | |||||
Other comprehensive income (loss), net of tax | 3.5 | (5.5 | ) | ||||
Balance at end of period | 64.2 | 45.6 | |||||
Stockholders’ Equity at end of period | $ | 910.8 | $ | 831.1 |
13 Weeks Ended | |||||||
April 3, 2016 | March 29, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 11.2 | $ | 3.7 | |||
Noncash adjustments: | |||||||
Depreciation and amortization | 5.6 | 5.5 | |||||
Provision for bad debts | 1.7 | 1.2 | |||||
Stock-based compensation | 2.7 | 1.2 | |||||
Other, net | (0.1 | ) | (0.6 | ) | |||
Changes in operating assets and liabilities | (0.9 | ) | (27.4 | ) | |||
Net cash from (used in) operating activities | 20.2 | (16.4 | ) | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (1.5 | ) | (2.6 | ) | |||
Other investing activities | (0.3 | ) | (0.2 | ) | |||
Net cash used in investing activities | (1.8 | ) | (2.8 | ) | |||
Cash flows from financing activities: | |||||||
Net change in short-term borrowings | (16.4 | ) | (11.0 | ) | |||
Dividend payments | (1.9 | ) | (1.9 | ) | |||
Net cash used in financing activities | (18.3 | ) | (12.9 | ) | |||
Effect of exchange rates on cash and equivalents | 4.1 | (1.6 | ) | ||||
Net change in cash and equivalents | 4.2 | (33.7 | ) | ||||
Cash and equivalents at beginning of period | 42.2 | 83.1 | |||||
Cash and equivalents at end of period | $ | 46.4 | $ | 49.4 |
Fair Value Measurements on a Recurring Basis As of First Quarter-End 2016 | ||||||||||||||||
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In millions of dollars) | ||||||||||||||||
Money market funds | $ | 3.9 | $ | 3.9 | $ | — | $ | — | ||||||||
Available-for-sale investment | 131.6 | 131.6 | — | — | ||||||||||||
Total assets at fair value | $ | 135.5 | $ | 135.5 | $ | — | $ | — |
Fair Value Measurements on a Recurring Basis As of Year-End 2015 | ||||||||||||||||
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In millions of dollars) | ||||||||||||||||
Money market funds | $ | 3.7 | $ | 3.7 | $ | — | $ | — | ||||||||
Available-for-sale investment | 142.3 | 142.3 | — | — | ||||||||||||
Total assets at fair value | $ | 146.0 | $ | 146.0 | $ | — | $ | — |
First Quarter 2016 | |||||||||||||||
Foreign Currency Translation Adjustments | Unrealized Gains and Losses on Investment | Pension Liability Adjustments | Total | ||||||||||||
(In millions of dollars) | |||||||||||||||
Beginning balance | $ | (22.6 | ) | $ | 84.9 | $ | (1.6 | ) | $ | 60.7 | |||||
Other comprehensive income (loss) before reclassifications | 11.9 | (8.1 | ) | — | 3.8 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (0.3 | ) | — | — | (0.3 | ) | |||||||||
Net current-period other comprehensive income (loss) | 11.6 | (8.1 | ) | — | 3.5 | ||||||||||
Ending balance | $ | (11.0 | ) | $ | 76.8 | $ | (1.6 | ) | $ | 64.2 |
First Quarter 2015 | |||||||||||||||
Foreign Currency Translation Adjustments | Unrealized Gains and Losses on Investment | Pension Liability Adjustments | Total | ||||||||||||
(In millions of dollars) | |||||||||||||||
Beginning balance | $ | (3.0 | ) | $ | 56.3 | $ | (2.2 | ) | $ | 51.1 | |||||
Other comprehensive income (loss) before reclassifications | (8.4 | ) | 3.1 | — | (5.3 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | (0.2 | ) | — | — | (0.2 | ) | |||||||||
Net current-period other comprehensive income (loss) | (8.6 | ) | 3.1 | — | (5.5 | ) | |||||||||
Ending balance | $ | (11.6 | ) | $ | 59.4 | $ | (2.2 | ) | $ | 45.6 |
First Quarter | |||||||
2016 | 2015 | ||||||
Net earnings | $ | 11.2 | $ | 3.7 | |||
Less: earnings allocated to participating securities | (0.3 | ) | (0.1 | ) | |||
Net earnings available to common shareholders | $ | 10.9 | $ | 3.6 | |||
Basic earnings per share on common stock | $ | 0.29 | $ | 0.10 | |||
Diluted earnings per share on common stock | $ | 0.29 | $ | 0.10 | |||
Average common shares outstanding (millions): | |||||||
Basic | 38.0 | 37.7 | |||||
Diluted | 38.2 | 37.8 |
First Quarter | |||||||
2016 | 2015 | ||||||
(In millions of dollars) | |||||||
Interest income | $ | 0.1 | $ | 0.1 | |||
Interest expense | (0.9 | ) | (0.9 | ) | |||
Net gain (loss) on equity investment | 0.1 | (0.1 | ) | ||||
Foreign exchange losses | (0.1 | ) | (1.6 | ) | |||
Other expense, net | $ | (0.8 | ) | $ | (2.5 | ) |
First Quarter | |||||||
2016 | 2015 | ||||||
(In millions of dollars) | |||||||
Revenue from Services: | |||||||
Americas Commercial | $ | 648.6 | $ | 641.4 | |||
Americas PT | 237.1 | 232.8 | |||||
Total Americas Commercial and PT | 885.7 | 874.2 | |||||
EMEA Commercial | 175.5 | 178.3 | |||||
EMEA PT | 41.6 | 40.3 | |||||
Total EMEA Commercial and PT | 217.1 | 218.6 | |||||
APAC Commercial | 82.8 | 85.6 | |||||
APAC PT | 9.1 | 10.5 | |||||
Total APAC Commercial and PT | 91.9 | 96.1 | |||||
OCG | 168.2 | 149.5 | |||||
Less: Intersegment revenue | (13.8 | ) | (17.8 | ) | |||
Consolidated Total | $ | 1,349.1 | $ | 1,320.6 |
First Quarter | |||||||
2016 | 2015 | ||||||
(In millions of dollars) | |||||||
Earnings from Operations: | |||||||
Americas Commercial gross profit | $ | 102.1 | $ | 97.8 | |||
Americas PT gross profit | 41.6 | 38.9 | |||||
Americas Region gross profit | 143.7 | 136.7 | |||||
Americas Region SG&A expenses | (116.6 | ) | (113.5 | ) | |||
Americas Region Earnings from Operations | 27.1 | 23.2 | |||||
EMEA Commercial gross profit | 23.6 | 24.6 | |||||
EMEA PT gross profit | 8.7 | 8.7 | |||||
EMEA Region gross profit | 32.3 | 33.3 | |||||
EMEA Region SG&A expenses | (30.3 | ) | (33.5 | ) | |||
EMEA Region Earnings from Operations | 2.0 | (0.2 | ) | ||||
APAC Commercial gross profit | 13.0 | 13.0 | |||||
APAC PT gross profit | 2.5 | 2.9 | |||||
APAC Region gross profit | 15.5 | 15.9 | |||||
APAC Region SG&A expenses | (11.1 | ) | (12.1 | ) | |||
APAC Region Earnings from Operations | 4.4 | 3.8 | |||||
OCG gross profit | 42.3 | 35.5 | |||||
OCG SG&A expenses | (36.9 | ) | (32.7 | ) | |||
OCG Earnings from Operations | 5.4 | 2.8 | |||||
Less: Intersegment gross profit | (1.1 | ) | (1.1 | ) | |||
Less: Intersegment SG&A expenses | 1.1 | 1.1 | |||||
Net Intersegment Activity | — | — | |||||
Corporate | (24.2 | ) | (17.5 | ) | |||
Consolidated Total | 14.7 | 12.1 | |||||
Other Expense, Net | 0.8 | 2.5 | |||||
Earnings Before Taxes | $ | 13.9 | $ | 9.6 |
• | Maintain our core strengths in commercial staffing in key markets; |
• | Grow our professional and technical solutions; |
• | Enhance our position as a market-leading provider of talent supply chain management in our OCG segment; and |
• | Lower our costs through deployment of efficient service delivery models. |
• | Earnings from operations for the first quarter of 2016 totaled $14.7 million compared to $12.1 million in the first quarter of 2015. Conversion rate for the first quarter was 6.3%, up from 5.5% in the same period last year. |
• | In the OCG segment, earnings from operations totaled $5.4 million, a 90% increase compared to the same period last year. OCG delivered good bottom-line leverage as top-line revenue growth continues to confirm the increased market demand for outsourced solutions. Growth was particularly strong in BPO and CWO, which continue to be key drivers of our strategic and financial progress. |
• | Though overall Americas PT revenue continues to grow 2% year-over-year in both reported and constant currency, accounts serviced through our U.S. branch network delivered strong growth of 11% in our PT specialties. Our expanded salesforce is pursuing and winning new business, while our PT recruiting centers are efficiently connecting U.S. clients with specialized talent. We will need to continue to accelerate PT growth, particularly within accounts serviced through our centralized delivery model, to fully realize the expected benefit of our investments. |
• | Despite foreign currency exchange rates negatively impacting the total year-over-year change in gross profit, on a constant currency basis, Kelly continues to deliver strong operating results. For the quarter, EMEA delivered $2.0 million of earnings from operations and APAC contributed $4.4 million. |
• | We expect to grow PT and OCG revenue, creating a more balanced portfolio that yields benefits from an improved mix. |
• | We expect Commercial to remain a core component of our strategy. |
• | We expect to exercise strict control over our cost base, delivering structural improvements that create strong operating leverage. |
• | And, as a result, we expect our conversion rate to continue to improve. |
2016 | 2015 | Change | CC Change | |||||||||||
Revenue from services | $ | 1,349.1 | $ | 1,320.6 | 2.2 | % | 4.6 | % | ||||||
Staffing fee-based income | 16.5 | 16.2 | 2.6 | 6.9 | ||||||||||
Gross profit | 232.7 | 220.3 | 5.6 | 7.7 | ||||||||||
SG&A expenses | 218.0 | 208.2 | 4.7 | 6.7 | ||||||||||
Earnings from operations | 14.7 | 12.1 | 21.5 | |||||||||||
Gross profit rate | 17.3 | % | 16.7 | % | 0.6 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 16.2 | 15.8 | 0.4 | |||||||||||
% of gross profit | 93.7 | 94.5 | (0.8 | ) | ||||||||||
Return on sales | 1.1 | 0.9 | 0.2 | |||||||||||
Conversion rate | 6.3 | 5.5 | 0.8 |
2016 | 2015 | Change | CC Change | ||||||||||
Revenue from services | $ | 885.7 | $ | 874.2 | 1.3 | % | 2.9% | ||||||
Staffing fee-based income | 8.6 | 7.0 | 22.1 | 23.9 | |||||||||
Gross profit | 143.7 | 136.7 | 5.1 | 6.3 | |||||||||
SG&A expenses | 116.6 | 113.5 | 2.7 | 3.9 | |||||||||
Earnings from operations | 27.1 | 23.2 | 16.8 | ||||||||||
Gross profit rate | 16.2 | % | 15.6 | % | 0.6 | pts. | |||||||
Expense rates: | |||||||||||||
% of revenue | 13.2 | 13.0 | 0.2 | ||||||||||
% of gross profit | 81.2 | 83.0 | (1.8 | ) | |||||||||
Return on sales | 3.1 | 2.7 | 0.4 |
2016 | 2015 | Change | CC Change | ||||||||||
Revenue from services | $ | 217.1 | $ | 218.6 | (0.7 | )% | 3.7% | ||||||
Staffing fee-based income | 6.0 | 6.1 | (0.2 | ) | 5.4 | ||||||||
Gross profit | 32.3 | 33.3 | (3.0 | ) | 1.4 | ||||||||
SG&A expenses | 30.3 | 33.5 | (9.4 | ) | (5.4) | ||||||||
Earnings from operations | 2.0 | (0.2 | ) | NM | |||||||||
Gross profit rate | 14.9 | % | 15.2 | % | (0.3 | ) | pts. | ||||||
Expense rates: | |||||||||||||
% of revenue | 14.0 | 15.3 | (1.3 | ) | |||||||||
% of gross profit | 93.8 | 100.5 | (6.7 | ) | |||||||||
Return on sales | 0.9 | (0.1 | ) | 1.0 |
2016 | 2015 | Change | CC Change | ||||||||||
Revenue from services | $ | 91.9 | $ | 96.1 | (4.4 | )% | 3.6% | ||||||
Staffing fee-based income | 2.6 | 3.1 | (15.4 | ) | (8.2) | ||||||||
Gross profit | 15.5 | 15.9 | (2.0 | ) | 4.0 | ||||||||
SG&A expenses | 11.1 | 12.1 | (8.6 | ) | (1.4) | ||||||||
Earnings from operations | 4.4 | 3.8 | 19.2 | ||||||||||
Gross profit rate | 16.9 | % | 16.5 | % | 0.4 | pts. | |||||||
Expense rates: | |||||||||||||
% of revenue | 12.1 | 12.6 | (0.5 | ) | |||||||||
% of gross profit | 71.3 | 76.4 | (5.1 | ) | |||||||||
Return on sales | 4.9 | 3.9 | 1.0 |
2016 | 2015 | Change | CC Change | ||||||||||
Revenue from services | $ | 168.2 | $ | 149.5 | 12.5 | % | 13.4% | ||||||
Gross profit | 42.3 | 35.5 | 19.1 | 20.3 | |||||||||
SG&A expenses | 36.9 | 32.7 | 12.9 | 14.4 | |||||||||
Earnings from operations | 5.4 | 2.8 | 89.6 | ||||||||||
Gross profit rate | 25.1 | % | 23.8 | % | 1.3 | pts. | |||||||
Expense rates: | |||||||||||||
% of revenue | 21.9 | 21.9 | — | ||||||||||
% of gross profit | 87.2 | 92.0 | (4.8 | ) | |||||||||
Return on sales | 3.2 | 1.9 | 1.3 |
Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions of dollars) | ||||||||||
January 4, 2016 through February 7, 2016 | 1,035 | $ | 15.73 | — | $ | — | ||||||||
February 8, 2016 through March 6, 2016 | 10,485 | 16.13 | — | $ | — | |||||||||
March 7, 2016 through April 3, 2016 | 951 | 18.68 | — | $ | — | |||||||||
Total | 12,471 | $ | 16.29 | — |
KELLY SERVICES, INC. | |
Date: May 11, 2016 | |
/s/ Olivier G. Thirot | |
Olivier G. Thirot | |
Senior Vice President and | |
Chief Financial Officer | |
(Principal Financial Officer) |
Date: May 11, 2016 | |
/s/ Laura S. Lockhart | |
Laura S. Lockhart | |
Vice President, Corporate Controller | |
and Chief Accounting Officer | |
(Principal Accounting Officer) |
Exhibit No. | Description | |
31.1 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | |
31.2 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | |
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
1. | I have reviewed this quarterly report on Form 10-Q of Kelly Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 11, 2016 | ||||
/s/ Carl T. Camden | ||||
Carl T. Camden | ||||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kelly Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 11, 2016 | ||||
/s/ Olivier G. Thirot | ||||
Olivier G. Thirot | ||||
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 11, 2016 | ||||
/s/ Carl T. Camden | ||||
Carl T. Camden | ||||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 11, 2016 | ||||
/s/ Olivier G. Thirot | ||||
Olivier G. Thirot | ||||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Apr. 03, 2016 |
Apr. 29, 2016 |
|
Document Information [Line Items] | ||
Entity Registrant Name | KELLY SERVICES INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --01-01 | |
Amendment Flag | false | |
Entity Central Index Key | 0000055135 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Period End Date | Apr. 03, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in Shares) | 34,579,935 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in Shares) | 3,437,643 |
Consolidated Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 03, 2016 |
Mar. 29, 2015 |
|
Income Statement [Abstract] | ||
Revenue from services | $ 1,349.1 | $ 1,320.6 |
Cost of services | 1,116.4 | 1,100.3 |
Gross profit | 232.7 | 220.3 |
Selling, general and administrative expenses | 218.0 | 208.2 |
Earnings from operations | 14.7 | 12.1 |
Other expense, net | 0.8 | 2.5 |
Earnings before taxes | 13.9 | 9.6 |
Income tax expense | 2.7 | 5.9 |
Net earnings | $ 11.2 | $ 3.7 |
Basic earnings per share (in dollars per share) | $ 0.29 | $ 0.10 |
Diluted earnings per share (in dollars per share) | 0.29 | 0.10 |
Dividends per share (in dollars per share) | $ 0.05 | $ 0.05 |
Average shares outstanding (millions): | ||
Basic (in shares) | 38.0 | 37.7 |
Diluted (in shares) | 38.2 | 37.8 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 03, 2016 |
Mar. 29, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 11.2 | $ 3.7 |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustments, net of tax expense of $0.2 million in 2016 and benefit of $0.3 million in 2015 | 11.9 | (8.4) |
Less: Reclassification adjustments included in net earnings | (0.3) | (0.2) |
Foreign currency translation adjustments | 11.6 | (8.6) |
Unrealized (losses) gains on investment, net of tax benefit of $4.0 million in 2016 and tax expense of $1.7 million in 2015 | (8.1) | 3.1 |
Other comprehensive income (loss) | 3.5 | (5.5) |
Comprehensive income (loss) | $ 14.7 | $ (1.8) |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 03, 2016 |
Mar. 29, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustments, tax expense (benefit) | $ 0.2 | $ (0.3) |
Unrealized gains (losses) on investments, tax expense (benefit) | $ (4.0) | $ 1.7 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Apr. 03, 2016 |
Jan. 03, 2016 |
---|---|---|
Allowance for trade accounts receivables | $ 11.6 | $ 10.5 |
Class A Common Stock | ||
Capital stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common stock, shares issued (in shares) | 36.6 | 36.6 |
Treasury stock, common stock (in shares) | 2.1 | 2.1 |
Class B Common Stock | ||
Capital stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common stock, shares issued (in shares) | 3.5 | 3.5 |
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Millions |
Total |
Common Stock
Capital Stock, Class A common stock
|
Common Stock
Capital Stock, Class B common stock
|
Treasury Stock
Treasury Stock, Class A common stock
|
Treasury Stock
Treasury Stock, Class B common stock
|
Paid-in Capital |
Earnings Invested in the Business |
Accumulated Other Comprehensive Income |
---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 28, 2014 | $ 36.6 | $ 3.5 | $ (49.2) | $ (0.6) | $ 24.9 | $ 767.4 | $ 51.1 | |
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of restricted stock and other | 0.1 | 0.0 | 1.0 | |||||
Net earnings | $ 3.7 | 3.7 | ||||||
Dividends | (1.9) | |||||||
Other comprehensive income (loss), net of tax | (5.5) | (5.5) | ||||||
Ending balance at Mar. 29, 2015 | 831.1 | 36.6 | 3.5 | (49.1) | (0.6) | 25.9 | 769.2 | 45.6 |
Beginning balance at Jan. 03, 2016 | 895.4 | 36.6 | 3.5 | (43.7) | (0.6) | 25.4 | 813.5 | 60.7 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Issuance of restricted stock and other | 0.6 | 0.0 | 2.0 | |||||
Net earnings | 11.2 | 11.2 | ||||||
Dividends | (1.9) | |||||||
Other comprehensive income (loss), net of tax | 3.5 | 3.5 | ||||||
Ending balance at Apr. 03, 2016 | $ 910.8 | $ 36.6 | $ 3.5 | $ (43.1) | $ (0.6) | $ 27.4 | $ 822.8 | $ 64.2 |
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 03, 2016 |
Mar. 29, 2015 |
|
Cash flows from operating activities: | ||
Net earnings | $ 11.2 | $ 3.7 |
Noncash adjustments: | ||
Depreciation and amortization | 5.6 | 5.5 |
Provision for bad debts | 1.7 | 1.2 |
Stock-based compensation | 2.7 | 1.2 |
Other, net | (0.1) | (0.6) |
Changes in operating assets and liabilities | (0.9) | (27.4) |
Net cash from (used in) operating activities | 20.2 | (16.4) |
Cash flows from investing activities: | ||
Capital expenditures | (1.5) | (2.6) |
Other investing activities | (0.3) | (0.2) |
Net cash used in investing activities | (1.8) | (2.8) |
Cash flows from financing activities: | ||
Net change in short-term borrowings | (16.4) | (11.0) |
Dividend payments | (1.9) | (1.9) |
Net cash used in financing activities | (18.3) | (12.9) |
Effect of exchange rates on cash and equivalents | 4.1 | (1.6) |
Net change in cash and equivalents | 4.2 | (33.7) |
Cash and equivalents at beginning of period | 42.2 | 83.1 |
Cash and equivalents at end of period | $ 46.4 | $ 49.4 |
Basis of Presentation |
3 Months Ended |
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Apr. 03, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the “Company,” “Kelly,” “we” or “us”) have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended January 3, 2016, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2016 (the 2015 consolidated financial statements). The Company’s first fiscal quarter ended on April 3, 2016 (2016) and March 29, 2015 (2015), each of which contained 13 weeks. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Trade accounts receivable, accounts payable, accrued liabilities, accrued payroll and related taxes and short-term borrowings approximate their fair values due to the short-term maturities of these assets and liabilities. Assets Measured at Fair Value on a Recurring Basis The following tables present assets measured at fair value on a recurring basis on the consolidated balance sheet as of first quarter-end 2016 and year-end 2015 by fair value hierarchy level, as described below. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs.
Money market funds as of first quarter-end 2016 and as of year-end 2015 represent investments in money market accounts, all of which are restricted as to use and are included in other assets on the consolidated balance sheet. The valuations were based on quoted market prices of those accounts as of the respective period end. Available-for-sale investment represents the Company’s investment in Temp Holdings Co., Ltd. (“Temp Holdings”), a leading integrated human resources company in Japan, and is included in other assets on the consolidated balance sheet. The valuation is based on the quoted market price of Temp Holdings stock on the Tokyo Stock Exchange as of the period end. The unrealized loss, net of tax, of $8.1 million for the first quarter of 2016 and unrealized gain, net of tax, of $3.1 million for the first quarter of 2015 was recorded in other comprehensive income, and in accumulated other comprehensive income, a component of stockholders’ equity. The cost of this yen-denominated investment, which fluctuates based on foreign exchange rates, was $18.5 million as of the first quarter-end 2016 and $17.2 million at year-end 2015. |
Accumulated Other Comprehensive Income |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The changes in accumulated other comprehensive income by component, net of tax, for the first quarter 2016 and 2015 are included in the tables below. Amounts in parentheses indicate debits. Reclassification adjustments out of accumulated other comprehensive income, as shown in the tables below, were recorded in the other expense, net line item in the consolidated statement of earnings.
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Earnings Per Share |
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Earnings Per Share | Earnings Per Share The reconciliation of basic and diluted earnings per share on common stock for the first quarter 2016 and 2015 follows (in millions of dollars except per share data):
Stock options excluded from the computation of diluted earnings per share due to their anti-dilutive effect for the first quarter 2016 and 2015 were not significant. |
Stock-Based Compensation |
3 Months Ended |
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Apr. 03, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Performance Shares On February 17, 2016, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers. The payment of performance shares, which will be satisfied with the issuance of shares out of treasury stock, is contingent upon the achievement of specific performance goals over a stated period of time. For the 2016 performance share grant, the total target number of performance shares granted is 331,500, and the maximum number of performance shares that may be earned is 663,000, which assumes 200% of the target shares originally granted. Target shares of 248,625 may be earned upon the achievement of three financial goals (“financial measure performance shares”) and target shares of 82,875 may be earned based on the Company’s total shareholder return relative to the S&P SmallCap 600 Index (“TSR performance shares”). No dividends are paid on these performance shares. The financial measure performance shares, which have a weighted average grant date fair value of $15.85, have a three-year performance period through December 31, 2018. These shares will cliff-vest after approval by the Compensation Committee, which will be no later than March 15, 2019, if not forfeited by the recipient. For each of the three financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2016, 2017, and 2018 goals. Accordingly, the Company will remeasure the fair value of the 2016 financial measure performance shares each reporting period until the 2018 goals are set, after which the fair value will be fixed for the remaining performance period. As of first quarter 2016, the current fair value for financial measure performance shares is $18.63. The TSR performance shares also have a three-year performance period through December, 31 2018 and have an estimated fair value of $19.73, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk free interest rate. These shares will cliff-vest after approval by the Compensation Committee, which will be no later than March 15, 2019, if not forfeited by the recipient. For the first quarter 2016, total compensation expense related to all performance shares totaled $1.3 million and the related tax benefit was $0.5 million. There was no compensation expense related to performance shares in the first quarter 2015 since the 2015 awards were not granted until the second quarter of 2015. |
Other Expense, Net |
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Other Expense, Net | Other Expense, Net Included in other expense, net for the first quarter 2016 and 2015 are the following:
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Contingencies |
3 Months Ended |
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Apr. 03, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is a party to a pending nationwide class action lawsuit entitled Hillson et.al. v Kelly Services. The suit alleges that current and former temporary employees of Kelly Services are entitled to monetary damages for violation of the Fair Credit Reporting Act requirement that the notice and disclosure form provided to employees for purposes of conducting a background screening be a standalone document. On April 20, 2016, the parties entered into a formal settlement agreement. The parties still must secure court approval of the settlement. In light of amounts previously expensed and anticipated recoveries from third parties, Kelly recorded an accrual in the fourth quarter of 2015 of $4.1 million (in accounts payable and accrued liabilities in the consolidated balance sheet) to reflect the expected cost of the tentative settlement. The Company is continuously engaged in litigation arising in the ordinary course of its business, such as matters alleging employment discrimination, alleging wage and hour violations or enforcing the restrictive covenants in the Company’s employment agreements. While there is no expectation that any of these matters will have a material adverse effect on the Company’s results of operations, financial position or cash flows, litigation is always subject to inherent uncertainty and the Company is not able to reasonably predict if any matter will be resolved in a manner that is materially adverse to the Company. |
Segment Disclosures |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosures | Segment Disclosures The Company’s segments are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision makers (“CODM”), the Company’s Chief Executive Officer and Chief Operating Officer, to determine resource allocation and assess performance. The Company’s seven reporting segments are: (1) Americas Commercial, (2) Americas Professional and Technical (“Americas PT”), (3) Europe, Middle East and Africa Commercial (“EMEA Commercial”), (4) Europe, Middle East and Africa Professional and Technical (“EMEA PT”), (5) Asia Pacific Commercial (“APAC Commercial”), (6) Asia Pacific Professional and Technical (“APAC PT”) and (7) Outsourcing and Consulting Group (“OCG”). The Commercial business segments within the Americas, EMEA and APAC regions represent traditional office services, contact-center staffing, marketing, electronic assembly, light industrial and, in the Americas, substitute teachers. The PT segments encompass a wide range of highly skilled temporary employees, including scientists, financial professionals, attorneys, engineers, IT specialists and healthcare workers. OCG includes recruitment process outsourcing (“RPO”), contingent workforce outsourcing (“CWO”), business process outsourcing (“BPO”), payroll process outsourcing (“PPO”), executive placement and career transition/outplacement services. Corporate expenses that directly support the operating units have been allocated to the Americas, EMEA and APAC regions and OCG based on a work effort, volume or, in the absence of a readily available measurement process, proportionately based on revenue from services. The Company regularly assesses its organizational structure, product/service offerings and information evaluated by the CODM to determine whether any changes have occurred that would impact its segment reporting structure. The following tables present information about the reported revenue from services and gross profit of the Company by segment, along with a reconciliation to consolidated earnings before taxes, for the first quarter 2016 and 2015. Asset information by reportable segment is not presented, since the Company does not produce such information internally nor does it use such data to manage its business.
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New Accounting Pronouncements |
3 Months Ended |
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Apr. 03, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 amending several aspects of share-based payment accounting. This guidance requires all excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the statement of cash flows from a financing activity to an operating activity, with retrospective or prospective application allowed. Additionally, the guidance requires the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes as a financing activity on the statement of cash flows, with retrospective application required. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02 amending the existing accounting standards for lease accounting and requiring lessees to recognize lease assets and lease liabilities for all leases with lease terms of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S. Generally Accepted Accounting Principles (“GAAP”), the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01 amending the current guidance for how entities measure certain equity investments, the accounting for financial liabilities under the fair value option, and the presentation and disclosure requirements relating to financial instruments. The new guidance requires entities to use fair value measurement for equity investments in unconsolidated entities, excluding equity method investments, and to recognize the changes in fair value in net income at the end of each reporting period. Under the new standard, for any financial liabilities in which the fair value option has been elected, the changes in fair value due to instrument-specific credit risk must be recognized separately in other comprehensive income. Presentation and disclosure requirements under the new guidance require public business entities to use the exit price when measuring the fair value of financial instruments measured at amortized cost. In addition, financial assets and liabilities must now be presented separately in the notes to the financial statements and grouped by measurement category and form of financial asset. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is only permitted for the financial liability provision. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In May 2014, the FASB issued new revenue recognition guidance under ASU 2014-09 that will supersede the existing revenue recognition guidance under U.S. GAAP. The new standard focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB deferred the effective date by one year. This ASU will now be effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017. Early adoption is permitted, but not before the original effective date of December 15, 2016. The new standard will be effective for us beginning January 1, 2018 and we expect to implement the standard with the modified retrospective approach, which recognizes the cumulative effect of application recognized on that date. We are evaluating the impact of adoption on our consolidated results of operations, consolidated financial position and cash flows. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Subsequent Event |
3 Months Ended |
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Apr. 03, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On April 7, 2016, the board of directors of the Company authorized an agreement with Temp Holdings to expand their existing North Asia joint venture, TS Kelly Workforce Solutions (formed in 2012). The new joint venture, TS Kelly Asia Pacific, will be formed by the transfer of the Company’s Asia Pacific staffing operations, which will be subsequently deconsolidated. This joint venture will be headquartered in Singapore and is expected to be the largest workforce solutions company in the Asia Pacific region. The joint venture is projected to be finalized by the end of 2016 and combines the resources and expertise of Kelly’s staffing operations across Asia Pacific with Temp Holding’s businesses including Capita, with offices in Singapore and Malaysia; First Alliances, with offices in Vietnam; and Intelligence, with a presence in Indonesia, Vietnam, Singapore and Malaysia. Upon the completion of all proposed transactions, Temp Holdings will own 51% of the expanded joint venture and the Company will continue to own the remaining 49%. The current chief executive officer of TS Kelly Workforce Solutions and executive officer of Temp Holdings will serve as CEO of TS Kelly Asia Pacific. The joint venture will include staffing businesses from the Company and Temp Holdings, and the Company is expected to receive a cash payment. Once the Company has transferred its Asia Pacific staffing operations to the joint venture, it expects to record its interest in the joint venture as an equity method investment on the consolidated balance sheet and to include its share of earnings prospectively within the consolidated statement of earnings on a one-quarter lag. The Company also anticipates recording a gain on the deconsolidated assets of its Asia Pacific staffing operations. At this time, the Company does not expect the disposition to qualify for discontinued operations presentation. |
New Accounting Pronouncements (Policies) |
3 Months Ended |
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Apr. 03, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 amending several aspects of share-based payment accounting. This guidance requires all excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the statement of cash flows from a financing activity to an operating activity, with retrospective or prospective application allowed. Additionally, the guidance requires the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes as a financing activity on the statement of cash flows, with retrospective application required. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02 amending the existing accounting standards for lease accounting and requiring lessees to recognize lease assets and lease liabilities for all leases with lease terms of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S. Generally Accepted Accounting Principles (“GAAP”), the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01 amending the current guidance for how entities measure certain equity investments, the accounting for financial liabilities under the fair value option, and the presentation and disclosure requirements relating to financial instruments. The new guidance requires entities to use fair value measurement for equity investments in unconsolidated entities, excluding equity method investments, and to recognize the changes in fair value in net income at the end of each reporting period. Under the new standard, for any financial liabilities in which the fair value option has been elected, the changes in fair value due to instrument-specific credit risk must be recognized separately in other comprehensive income. Presentation and disclosure requirements under the new guidance require public business entities to use the exit price when measuring the fair value of financial instruments measured at amortized cost. In addition, financial assets and liabilities must now be presented separately in the notes to the financial statements and grouped by measurement category and form of financial asset. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is only permitted for the financial liability provision. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In May 2014, the FASB issued new revenue recognition guidance under ASU 2014-09 that will supersede the existing revenue recognition guidance under U.S. GAAP. The new standard focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB deferred the effective date by one year. This ASU will now be effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017. Early adoption is permitted, but not before the original effective date of December 15, 2016. The new standard will be effective for us beginning January 1, 2018 and we expect to implement the standard with the modified retrospective approach, which recognizes the cumulative effect of application recognized on that date. We are evaluating the impact of adoption on our consolidated results of operations, consolidated financial position and cash flows. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets Measured on Recurring Basis |
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Accumulated Other Comprehensive Income (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income by Component, Net of Tax | The changes in accumulated other comprehensive income by component, net of tax, for the first quarter 2016 and 2015 are included in the tables below. Amounts in parentheses indicate debits. Reclassification adjustments out of accumulated other comprehensive income, as shown in the tables below, were recorded in the other expense, net line item in the consolidated statement of earnings.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share | The reconciliation of basic and diluted earnings per share on common stock for the first quarter 2016 and 2015 follows (in millions of dollars except per share data):
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Other Expense, Net (Tables) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Nonoperating Income (Expense) | Included in other expense, net for the first quarter 2016 and 2015 are the following:
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Segment Disclosures (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Revenue Per Service |
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Segment Earnings From Operations |
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Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
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Apr. 03, 2016 |
Mar. 29, 2015 |
Jan. 03, 2016 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unrealized gain (loss) on available-for-sale investments, net of tax | $ (8.1) | $ 3.1 | |
Temp Holdings Investment | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unrealized gain (loss) on available-for-sale investments, net of tax | (8.1) | $ 3.1 | |
Cost of available-for-sale investments | $ 18.5 | $ 17.2 |
Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
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Apr. 03, 2016 |
Mar. 29, 2015 |
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Earnings Per Share [Abstract] | ||
Net earnings | $ 11.2 | $ 3.7 |
Less: earnings allocated to participating securities | (0.3) | (0.1) |
Net earnings available to common shareholders | $ 10.9 | $ 3.6 |
Basic earnings per share on common stock (in dollars per share) | $ 0.29 | $ 0.10 |
Diluted earnings per share on common stock (in dollars per share) | $ 0.29 | $ 0.10 |
Average common shares outstanding (millions): | ||
Basic (in shares) | 38.0 | 37.7 |
Diluted (in shares) | 38.2 | 37.8 |
Other Expense, Net - Schedule of Other Nonoperating Income (Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 03, 2016 |
Mar. 29, 2015 |
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Other Income and Expenses [Abstract] | ||
Interest income | $ 0.1 | $ 0.1 |
Interest expense | (0.9) | (0.9) |
Net gain (loss) on equity investment | 0.1 | (0.1) |
Foreign exchange losses | (0.1) | (1.6) |
Other expense, net | $ (0.8) | $ (2.5) |
Contingencies Contingencies - Narrative (Details) $ in Millions |
Jan. 03, 2016
USD ($)
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Hillson et. al. Case | |
Loss Contingencies [Line Items] | |
Accrual for litigation costs | $ 4.1 |
Segment Disclosures - Narrative (Details) |
3 Months Ended |
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Apr. 03, 2016
segment
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Segment Reporting [Abstract] | |
Number of reporting segments | 7 |
Subsequent Event (Details) - Scenario, Forecast [Member] |
Jan. 01, 2017 |
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Subsequent Event [Line Items] | |
Ownership percentage | 49.00% |
Temp Holdings [Member] | |
Subsequent Event [Line Items] | |
Percentage of equity method investment held by other party | 51.00% |
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