SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 29, 2019~~June 28, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-1088

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENTS OF EARNINGS


	13 Weeks Ended						26 Weeks Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Revenue from services	$	975.3	$	1,367.5	$	2,236.4	$	2,750.1

Cost of services	786.1		1,123.5		1,823.9		2,254.5

Gross profit	189.2		244.0		412.5		495.6

Selling, general and administrative expenses	178.1		221.5		397.6		456.3

Goodwill impairment charge	—		—		147.7		—

Gain on sale of assets	—		(12.3)		(32.1)		(12.3)

Earnings (loss) from operations	11.1		34.8		(100.7)		51.6

Gain (loss) on investment in Persol Holdings	29.6		61.2		(48.2)		74.4

Other income (expense), net	2.6		0.2		4.3		(0.9)

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate	43.3		96.2		(144.6)		125.1

Income tax expense (benefit)	0.9		12.7		(35.3)		19.1

Net earnings (loss) before equity in net earnings (loss) of affiliate	42.4		83.5		(109.3)		106.0

Equity in net earnings (loss) of affiliate	(1.3)		0.3		(2.8)		(0.1)

Net earnings (loss)	$	41.1	$	83.8	$	(112.1)	$	105.9

Basic earnings (loss) per share	$	1.04	$	2.12	$	(2.86)	$	2.69
Diluted earnings (loss) per share	$	1.04	$	2.12	$	(2.86)	$	2.68

Average shares outstanding (millions):
Basic	39.3		39.1		39.2		39.0
Diluted	39.4		39.2		39.2		39.2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	13 Weeks Ended						26 Weeks Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Net earnings (loss)	$	41.1	$	83.8	$	(112.1)	$	105.9

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax benefit of $0.5, tax expense of $0.0, tax benefit of $0.4 and tax expense of $0.1, respectively	2.7		6.9		(4.7)		5.4
Less: Reclassification adjustments included in net earnings	—		—		—		—
Foreign currency translation adjustments	2.7		6.9		(4.7)		5.4



Other comprehensive income (loss)	2.7		6.9		(4.7)		5.4

Comprehensive income (loss)	$	43.8	$	90.7	$	(116.8)	$	111.3

13 Weeks Ended 39 Weeks Ended
September 29,
2019 September 30,
2018 September 29,
2019 September 30,
2018
Net earnings (loss) $ (10.5 ) $ 33.1
$ 95.4
$ 46.8

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax benefit of $0.2, $0.9, $0.1 and $0.3, respectively (6.2 ) (7.0 ) (0.8 ) (7.8 )
Less: Reclassification adjustments included in net earnings —
—
—
—
Foreign currency translation adjustments (6.2 ) (7.0 ) (0.8 ) (7.8 )

Other comprehensive income (loss) (6.2 ) (7.0 ) (0.8 ) (7.8 )

Comprehensive income (loss) $ (16.7 ) $ 26.1
$ 94.6
$ 39.0

CONSOLIDATED BALANCE SHEETS


	June 28, 2020		December 29, 2019
Assets
Current Assets
Cash and equivalents	$	216.2	$	25.8
Trade accounts receivable, less allowances of $11.2 and $12.9, respectively	1,085.0		1,282.2
Prepaid expenses and other current assets	76.0		76.5
Properties held for sale	—		21.2
Total current assets	1,377.2		1,405.7

Noncurrent Assets
Property and equipment:
Property and equipment	219.2		225.8
Accumulated depreciation	(177.6)		(182.7)
Net property and equipment	41.6		43.1
Operating lease right-of-use assets	85.8		60.4
Deferred taxes	265.9		229.1
Goodwill, net	—		127.8
Investment in Persol Holdings	127.2		173.2
Investment in equity affiliate	113.6		117.2
Other assets	307.4		324.1
Total noncurrent assets	941.5		1,074.9

Total Assets	$	2,318.7	$	2,480.6

September 29,
2019 December 30,
2018
Assets
Current Assets
Cash and equivalents $ 22.8
$ 35.3
Trade accounts receivable, less allowances of $12.2 and $13.2, respectively 1,262.3
1,293.3
Prepaid expenses and other current assets 80.7
71.9
Total current assets 1,365.8
1,400.5

Noncurrent Assets
Property and equipment:
Property and equipment 297.3
294.7
Accumulated depreciation (214.6 ) (208.4 )
Net property and equipment 82.7
86.3
Operating lease right-of-use assets 62.2
—
Deferred taxes 221.0
198.7
Goodwill 127.8
107.3
Investment in Persol Holdings 174.9
135.1
Investment in equity affiliate 120.4
121.3
Other assets 321.5
265.2
Total noncurrent assets 1,110.5
913.9

Total Assets $ 2,476.3
$ 2,314.4

CONSOLIDATED BALANCE SHEETS


	June 28, 2020		December 29, 2019
Liabilities and Stockholders’ Equity
Current Liabilities
Short-term borrowings	$	0.3	$	1.9
Accounts payable and accrued liabilities	463.6		503.6
Operating lease liabilities	19.5		20.1
Accrued payroll and related taxes	210.7		267.6
Accrued workers’ compensation and other claims	25.6		25.7
Income and other taxes	71.7		65.2

Total current liabilities	791.4		884.1

Noncurrent Liabilities
Operating lease liabilities	69.9		43.3
Accrued payroll and related taxes	38.4		—
Accrued workers’ compensation and other claims	45.6		45.8
Accrued retirement benefits	180.8		187.4
Other long-term liabilities	47.0		55.5
Total noncurrent liabilities	381.7		332.0

Commitments and contingencies (see Contingencies footnote)

Stockholders’ Equity
Capital stock, $1.00 par value
Class A common stock, 100.0 shares authorized; 36.6 shares issued at 2020 and 2019	36.6		36.6
Class B common stock, 10.0 shares authorized; 3.5 shares issued at 2020 and 2019	3.5		3.5
Treasury stock, at cost
Class A common stock, 0.8 shares at 2020 and 1.0 shares at 2019	(16.7)		(20.3)
Class B common stock	(0.6)		(0.6)
Paid-in capital	20.5		22.5
Earnings invested in the business	1,122.8		1,238.6
Accumulated other comprehensive income (loss)	(20.5)		(15.8)
Total stockholders’ equity	1,145.6		1,264.5

Total Liabilities and Stockholders’ Equity	$	2,318.7	$	2,480.6

September 29,
2019 December 30,
2018
Liabilities and Stockholders’ Equity
Current Liabilities
Short-term borrowings $ 17.5
$ 2.2
Accounts payable and accrued liabilities 484.6
540.6
Operating lease liabilities 19.8
—
Accrued payroll and related taxes 285.3
266.0
Accrued workers’ compensation and other claims 25.1
26.0
Income and other taxes 67.7
62.7
Total current liabilities 900.0
897.5

Noncurrent Liabilities
Operating lease liabilities 45.3
—
Accrued workers’ compensation and other claims 48.7
50.5
Accrued retirement benefits 179.0
162.9
Other long-term liabilities 55.5
44.0
Total noncurrent liabilities 328.5
257.4

Commitments and contingencies (see Contingencies footnote)

Stockholders’ Equity
Capital stock, $1.00 par value
Class A common stock, 100.0 shares authorized; 36.6 shares issued at 2019 and 2018 36.6
36.6
Class B common stock, 10.0 shares authorized; 3.5 shares issued at 2019 and 2018 3.5
3.5
Treasury stock, at cost
Class A common stock, 1.0 shares at 2019 and 1.2 shares at 2018 (20.7 ) (25.4 )
Class B common stock (0.6 ) (0.6 )
Paid-in capital 22.3
24.4
Earnings invested in the business 1,224.6
1,138.1
Accumulated other comprehensive income (loss) (17.9 ) (17.1 )
Total stockholders’ equity 1,247.8
1,159.5

Total Liabilities and Stockholders’ Equity $ 2,476.3
$ 2,314.4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash, cash equivalents and restricted cash at end of period ⁽¹⁾

39 Weeks Ended
September 29,
2019 September 30,
2018
Cash flows from operating activities:
Net earnings $ 95.4
$ 46.8
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization 23.8
19.5
Operating lease asset amortization 16.9
—
Provision for bad debts 3.2
1.3
Stock-based compensation 4.7
6.7
(Gain) loss on investment in Persol Holdings (35.1 ) 13.0
(Gain) loss on sale of assets (12.3 ) —
Equity in net (earnings) loss of PersolKelly Asia Pacific 1.0
(4.0 )
Other, net (1.0 ) (1.0 )
Changes in operating assets and liabilities, net of acquisitions (22.4 ) (49.0 )

Net cash from operating activities 74.2
33.3

Cash flows from investing activities:
Capital expenditures (13.8 ) (17.9 )
Acquisition of companies, net of cash received (86.4 ) —
Investment in equity securities (1.0 ) (5.0 )
Loans to equity affiliate (4.4 ) (2.9 )
Proceeds from sale of assets 13.8
—
Proceeds from company-owned life insurance 3.0
—
Other investing activities —
(0.8 )

Net cash used in investing activities (88.8 ) (26.6 )

Cash flows from financing activities:
Net change in short-term borrowings 15.2
(1.9 )
Financing lease payments (0.4 ) —
Dividend payments (8.9 ) (8.8 )
Payments of tax withholding for stock awards (2.3 ) (6.3 )

Net cash from (used in) financing activities 3.6
(17.0 )

Effect of exchange rates on cash, cash equivalents and restricted cash (0.5 ) (0.7 )

Net change in cash, cash equivalents and restricted cash (11.5 ) (11.0 )
Cash, cash equivalents and restricted cash at beginning of period 40.1
36.9

Cash, cash equivalents and restricted cash at end of period ⁽¹⁾
$ 28.6
$ 25.9

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

⁽¹⁾ The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported in our consolidated balance sheets:


	26 Weeks Ended
	June 28, 2020		June 30, 2019
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents	$	216.2	$	37.2
Restricted cash included in prepaid expenses and other current assets	0.5		0.4
Noncurrent assets:
Restricted cash included in other assets	5.2		4.9
Cash, cash equivalents and restricted cash at end of period	$	221.9	$	42.5

39 Weeks Ended
September 29,
2019 September 30,
2018
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents $ 22.8
$ 20.8
Restricted cash included in prepaid expenses and other current assets 0.8
0.5
Noncurrent assets:
Restricted cash included in other assets 5.0
4.6
Cash, cash equivalents and restricted cash at end of period $ 28.6
$ 25.9

See accompanying unaudited Notes to Consolidated Financial Statements.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. 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 (“GAAP”) 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 December ~~30, 2018,~~29, 2019, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~14,~~13, 2020 (the 2019 ~~(the 2018~~ consolidated financial statements). The Company’s ~~third~~second fiscal quarter ended on ~~September 29,~~June 28, 2020 (2020) and June 30, 2019 (2019) ~~and September 30, 2018 (2018)~~, each of which contained 13 weeks. The corresponding ~~September~~June year to date periods for ~~2019~~2020 and ~~2018~~2019 each contained 3926 weeks.

~~Certain reclassifications have been made to~~Noncurrent accrued payroll and related taxes of $38.4 million on the ~~prior year’s~~ consolidated ~~financial statements to conform to the current year’s presentation.~~balance sheet as of second quarter-end 2020 represent deferred U.S. tax payments as allowed by COVID-19 economic relief legislation.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

2. Revenue

~~Adoption of ASC Topic 606,~~ Revenue ~~from Contracts with Customers~~Disaggregated by Service Type

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605.

We recorded a net increase to opening earnings invested in the business of $3.4 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606. The impact is primarily driven by the deferral of contract costs related to our customer contracts of $5.2 million, partially offset by deferring revenue billed at a point in time for services performed over time of $0.6 million and a deferred tax liability of $1.2 million. As of and for year to date 2018, the consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.

~~Revenue Recognition~~

Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Our revenues are recorded net of any sales, value added, or similar taxes collected from our customers. We generate revenue from: the hourly sales of services by our temporary employees to customers (“staffing solutions” revenue), the recruiting of permanent employees for our customers (“permanent placement” revenue), and through our talent fulfillment and outcome-based activities (“talent solutions” and “outcome-based services” revenue).

~~Staffing Solutions Revenue~~

Staffing solutions can be branch-delivered (Americas and EMEA regions) or centrally delivered (within Global Talent Solutions ~~“GTS”~~("GTS")). Our Americas Staffing segment is organized to deliver services in a number of specialty staffing solutions, which are summarized as: commercial, specialized professional/technical ~~“PT”~~("PT") and educational staffing.

~~Permanent Placement Revenue~~

Permanent placement solutions can be branch-delivered (Americas and EMEA regions) or centrally delivered (within GTS). Our permanent placement revenue is recorded when the permanent placement candidate begins full-time employment. On the candidate start date, the customer accepts the candidate and can direct the use of the candidate as well as obtains the significant risk and rewards of the candidate. As such, we consider this the point the control transfers to the customer.

~~Talent Solutions and Outcome-Based Services Revenue~~

In addition to centrally delivered staffing services, our GTS segment also includes talent solutions (contingent workforce outsourcing ~~“CWO”,~~"CWO," payroll process outsourcing ~~“PPO”~~"PPO," and recruitment process outsourcing ~~“RPO”~~"RPO,") and outcome-based services (business process outsourcing ~~“BPO”,~~"BPO," KellyConnect, career transition/outplacement services and talent advisory services).

The following table presents our segment revenues disaggregated by service type (in millions):


	Second Quarter						June Year to Date
	2020		2019		2020		2019
Branch-Delivered Staffing
Americas Staffing
Staffing Solutions
Commercial	$	233.6	$	384.1	$	542.1	$	776.6
Education	25.2		117.4		168.3		257.0
Professional/Technical	63.8		87.3		139.2		172.8
Permanent Placement	4.1		8.8		10.5		17.7
Total Americas Staffing	326.7		597.6		860.1		1,224.1

International Staffing
Staffing Solutions	181.4		261.7		403.3		513.9
Permanent Placement	3.2		6.4		8.9		13.1
Total International Staffing	184.6		268.1		412.2		527.0

Global Talent Solutions
Talent Fulfillment
Staffing Solutions	216.5		258.2		461.0		513.8
Permanent Placement	0.3		0.5		0.6		0.8
Talent Solutions	80.3		93.3		166.5		183.0
Total Talent Fulfillment	297.1		352.0		628.1		697.6

Outcome-Based Services	169.8		153.9		342.0		309.3
Total Global Talent Solutions	466.9		505.9		970.1		1,006.9

Total Intersegment	(2.9)		(4.1)		(6.0)		(7.9)

Total Revenue from Services	$	975.3	$	1,367.5	$	2,236.4	$	2,750.1

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Revenue Disaggregated by Geography

~~The following table presents our segment revenues disaggregated by service type (in millions):~~

Third Quarter September Year to Date
2019 2018 2019 2018
Branch-Delivered Staffing
Americas Staffing
Staffing Solutions
Commercial $ 366.8
$ 424.3
$ 1,143.4
$ 1,237.2
Educational Staffing 57.5
57.7
314.5
297.8
Professional/Technical 83.2
68.8
256.0
206.3
Permanent Placement 8.5
11.0
26.2
28.8
Total Americas Staffing 516.0
561.8
1,740.1
1,770.1

International Staffing
Staffing Solutions 246.8
270.4
760.7
826.4
Permanent Placement 6.1
6.8
19.2
22.1
Total International Staffing 252.9
277.2
779.9
848.5

Global Talent Solutions
Talent Fulfillment
Staffing Solutions 251.2
279.0
765.0
851.5
Permanent Placement 0.5
0.6
1.3
1.4
Talent Solutions 91.2
94.0
274.2
267.9
Total Talent Fulfillment 342.9
373.6
1,040.5
1,120.8

Outcome-Based Services 159.6
134.0
468.9
373.3
Total Global Talent Solutions 502.5
507.6
1,509.4
1,494.1

Total Intersegment (3.7 ) (4.2 ) (11.6 ) (13.5 )

Total Revenue from Services $ 1,267.7
$ 1,342.4
$ 4,017.8
$ 4,099.2

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

Our operations are subject to different economic and regulatory environments depending on geographic location. Our GTS segment operates in the Americas, EMEA and APAC regions. In the ~~third~~second quarter of ~~2019~~2020 and ~~2018,~~2019, GTS made up ~~$485.0~~$450.5 million and ~~$490.4~~$488.4 million in total Americas, respectively, ~~$10.0~~$9.5 million and ~~$11.0~~$10.9 million in total EMEA, respectively, and the entire balance in APAC. For ~~September~~June year to date in ~~2019~~2020 and ~~2018,~~2019, GTS made up ~~$1,457.8~~$937.0 million and ~~$1,442.9~~$972.8 million in total Americas, respectively, ~~$32.0~~$19.5 million and ~~$34.3~~$22.0 million in total EMEA, respectively, and the entire balance in APAC.

The below table presents our revenues disaggregated by geography (in millions):

Third Quarter September Year to Date
2019 2018 2019 2018
Americas
United States $ 903.2
$ 942.5
$ 2,913.4
$ 2,898.4
Canada 34.6
37.0
100.8
107.6
Mexico 32.4
32.3
89.6
92.7
Puerto Rico 18.8
28.2
57.6
74.2
Brazil 8.4
8.1
25.1
26.6
Total Americas 997.4
1,048.1
3,186.5
3,199.5

EMEA
France 59.7
68.8
188.6
212.7
Switzerland 50.6
53.8
150.0
156.3
Portugal 44.0
48.2
135.5
150.5
Russia 29.9
24.0
84.1
75.7
United Kingdom 24.9
28.1
81.6
85.6
Italy 18.5
18.3
59.8
58.1
Germany 11.5
13.8
32.5
45.0
Ireland 7.1
11.3
28.1
34.3
Other 16.6
21.8
51.5
64.6
Total EMEA 262.8
288.1
811.7
882.8

Total APAC 7.5
6.2
19.6
16.9

Total Kelly Services, Inc. $ 1,267.7
$ 1,342.4
$ 4,017.8
$ 4,099.2


	Second Quarter						June Year to Date
	2020		2019		2020		2019
Americas
United States	$	700.1	$	991.3	$	1,628.6	$	2,010.2
Canada	25.6		33.2		58.4		66.2
Mexico	22.5		29.7		51.2		57.2
Puerto Rico	20.0		19.6		37.7		38.8
Brazil	6.1		8.2		15.2		16.7
Total Americas	774.3		1,082.0		1,791.1		2,189.1

EMEA
Switzerland	47.4		49.9		91.6		99.4
France	39.9		64.6		92.4		128.9
Russia	29.3		28.8		61.4		54.2
Portugal	23.8		46.7		67.4		91.5
United Kingdom	17.8		30.5		40.1		56.7
Italy	13.3		20.7		28.0		41.3
Germany	7.1		9.9		15.1		21.0
Ireland	4.1		10.9		9.1		21.0

Other	11.5		16.9		26.7		34.9
Total EMEA	194.2		278.9		431.8		548.9







Total APAC	6.8		6.6		13.5		12.1

Total Kelly Services, Inc.	$	975.3	$	1,367.5	$	2,236.4	$	2,750.1

Deferred Costs

~~Deferred sales commissions are paid at initial contract inception and upon contract renewal by our sales team.~~ Deferred sales commissions, which are included in other assets in the consolidated balance sheet, were ~~$1.6~~$1.1 million as of ~~third~~second quarter-end ~~2019~~2020 and ~~$2.3~~$1.5 million as of year-end ~~2018.~~2019. Amortization expense for the deferred costs for the ~~third~~second quarter and ~~September~~June year to date ~~2019~~2020 was ~~$0.4~~$0.3 million and ~~$1.3~~$0.6 million, respectively. Amortization expense for the deferred costs for the ~~third~~second quarter and ~~September~~June year to date ~~2018~~2019 was $0.4 million and ~~$1.2~~$0.9 million, respectively.

~~Deferred fulfillment costs are incurred after obtaining a contract in order to generate a resource that will be used to provide our services.~~ Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were $3.4 million as of second quarter-end 2020 and $3.6 million as of ~~third quarter-end 2019 and $3.0 million as of~~ year-end ~~2018.~~2019. Amortization expense for the deferred costs for the ~~third~~second quarter and ~~September~~June year to date ~~2019~~2020 was ~~$3.8~~$4.8 million and ~~$10.3~~$9.6 million, respectively. Amortization expense for the deferred costs for the ~~third~~second quarter and ~~September~~June year to date ~~2018~~2019 was ~~$4.1~~$3.1 million and ~~$8.7~~$6.5 million, respectively.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

3. Credit Losses

On December 30, 2019, we adopted Accounting Standards Codification ("ASC") Topic 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures, as applicable. Results for reporting periods beginning after December 30, 2019 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. As a result of adopting this guidance, we have updated our accounting policies as follows.

Allowance for Uncollectible Accounts Receivable The Company records an allowance for uncollectible accounts receivable, billed and unbilled, based on historical loss experience, customer payment patterns, current economic trends, and reasonable and supportable forecasts, as applicable. The reserve for sales allowances is also included in the allowance for uncollectible accounts receivable. The Company estimates the current expected credit losses by applying internally developed loss rates to all outstanding receivable balances by aging category. Accounts receivable are written-off against the allowance when they are deemed uncollectible. The Company reviews the adequacy of the allowance for uncollectible accounts receivable on a quarterly basis and, if necessary, increases or decreases the balance by recording a charge or credit to selling, general and administrative ("SG&A") expenses for the portion of the adjustment relating to uncollectible accounts receivable, and a charge or credit to revenue from services for the portion of the adjustment relating to sales allowances.

Allowance for Credit Losses - Other Financial Assets The Company measures expected credit losses on qualified financial assets that do not result from revenue transactions using a probability of default method by type of financing receivable. The estimate of expected credit losses considers credit ratings, financial data, historical write-off experience, current conditions, and reasonable and supportable forecasts, as applicable, to estimate the risk of loss.

We are exposed to credit losses primarily through our sales of workforce solution services to customers. We establish an allowance for estimated credit losses in the current period resulting from the failure of our customers to make required payments on their trade accounts receivable in future periods. We pool such assets by geography and other similar risk characteristics, such as accounts in collection, and apply an aging method to estimate future credit losses utilizing inputs such as historical write-off experience, customer payment patterns, current collection data, and reasonable and supportable forecasts, as applicable. Credit risk with respect to accounts receivable is limited due to short payment terms. The Company also performs ongoing credit evaluations using applicable credit ratings of its customers to help analyze credit risk. We monitor ongoing credit exposure through frequent review of past due accounts (based on the payment terms of the contract) and follow-up with customers, as appropriate.We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

We are also exposed to credit losses from our loan to PersolKelly Pte. Ltd. and other receivables measured at amortized cost. The allowances were not material for the second-quarter end 2020.See Investment in PersolKelly Pte. Ltd. footnote for more information on the loan to PersolKelly Pte. Ltd.

The rollforward of our allowance for credit losses is as follows (in millions):


	June Year to Date
	2020
Allowance for bad debt:
Beginning balance	$	9.7
Impact of adopting ASC 326	0.3
Current period provision	0.4
Currency exchange effects	(0.4)
Write-offs	(0.7)
Ending balance	$	9.3

Write-offs are presented net of recoveries, which were not material for second quarter-end 2020.

Allowances for credit losses are recorded in trade accounts receivable, less allowances and other assets in the consolidated balance sheet.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

4. Acquisitions

In the first quarter of 2020, Kelly Services USA, LLC, a wholly owned subsidiary of the Company, acquired Insight Workforce Solutions LLC and its affiliate, Insight EDU LLC (collectively, "Insight"), as detailed below. In the first quarter of 2019, the Company acquired NextGen Global Resources LLC (“NextGen”) and Global Technology Associates, LLC (“GTA”), as detailed below. We have accounted for these acquisitions under ~~Accounting Standards Update (“ASU”) 2017-01,~~ASC 805, Business Combinations.

Insight

On January 14, 2020, Kelly Services USA, LLC acquired 100% of the membership interests of Insight, an educational staffing company in the U.S, for a purchase price of $34.5 million. Under terms of the purchase agreement, the purchase price was adjusted for cash held by Insight at the closing date and estimated working capital adjustments resulting in the Company paying cash of $38.1 million. The purchase price of the acquisition also includes contingent consideration with an estimated fair value of $1.6 million related to an earnout payment in the event certain conditions are met per the terms of the agreement. The fair value of the earnout was established using a Monte Carlo simulation and the liability is recorded in other long-term liabilities in the consolidated balance sheet. In the second quarter of 2020, the Company paid a working capital adjustment of $0.1 million. The purchase price allocation for this acquisition is preliminary and could change.

This acquisition will increase our market share in the education staffing market in the U.S. Insight's results of operations are included in the Americas Staffing segment. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated statements of earnings.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition (in millions of dollars):


Cash	$	1.8
Trade accounts receivable	9.6
Other current assets	0.2
Property and equipment	0.2
Goodwill	19.9
Intangibles	10.6
Other noncurrent assets	0.2
Current liabilities	(2.6)
Noncurrent liabilities	(0.1)
Assets acquired net of liabilities assumed	$	39.8

The fair value of the acquired receivables represents the contractual value. Included in the assets purchased in the Insight acquisition was approximately $10.6 million of intangible assets, made up entirely of customer relationships. The fair value of the customer relationships was determined using the multi-period excess earnings method. The customer relationships will be amortized over 10 years with no residual value. Goodwill generated from the acquisition is primarily attributable to the expected synergies from combining operations and expanding market potential, and is assigned to the Americas Staffing reporting unit (see Goodwill footnote). The amount of goodwill expected to be deductible for tax purposes is approximately $18.6 million.

NextGen Global Resources

On January 2, 2019, the Company acquired 100% of the membership interests of NextGen, a leading provider of telecommunications staffing solutions, for a purchase price of $51.0 million. Under terms of the purchase agreement, the purchase price was adjusted for cash held by NextGen at the closing date and estimated working capital adjustments resulting in the Company paying cash of $54.3 million. Due to the ~~limited amount of time that has passed since acquiring NextGen, the purchase price allocation for this acquisition is preliminary and could change.~~

This acquisition will increase our presence and market share in the telecommunications industry within the engineering staffing solutions market. NextGen’s results of operations are included in the Americas Staffing segment for the 2019 third quarter and September year-to-date periods.

~~The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the~~ date of the acquisition, ~~(in millions of dollars):~~the second quarter and June year to date 2019 actual results represent the second quarter and June year to date 2019 pro forma results.

Cash $ 3.5
Trade accounts receivable 19.7
Other current assets 0.3
Goodwill 13.7
Intangibles 21.5
Other noncurrent assets 0.5
Current liabilities (4.9 )
Purchase price paid, including working capital adjustments $ 54.3

KELLY SERVICES, INC. AND SUBSIDIARIES

Included in the assets purchased in the NextGen acquisition was approximately $21.5 million of intangible assets, made up of $12.9 million in customer relationships, $8.1 million associated with NextGen’s trade name and $0.5 million for non-compete agreements. The customer relationships will be amortized over 10 years with no residual value, the trade name will be amortized over 15 years with no residual value and the non-compete agreements will be amortized over five years with no residual value. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Goodwill generated from this acquisition is primarily attributable to the market potential as a staffing solutions provider to the expanding telecommunications industry, and is assigned to the Americas Staffing reporting unit (see Goodwill footnote). ~~All of the goodwill is expected to be deductible for tax purposes.~~

Global Technology Associates

On January 2, 2019, in a separate transaction, the Company acquired 100% of the membership interests of GTA, a leading provider of engineering, technology and business consulting solutions in the telecommunications industry, for a purchase price of $34.0 million. Under terms of the purchase agreement, the purchase price was adjusted for cash held by GTA at the closing date and estimated working capital adjustments resulting in the Company paying cash of $35.7 million. Due to the ~~limited amount of time that has passed since acquiring GTA, the purchase price allocation for this acquisition is preliminary and could change.~~

This acquisition will increase our presence and market share in the telecommunications industry within the engineering outcome-based solutions market. GTA’s results of operations are included in the GTS segment for the 2019 third quarter and September year-to-date periods.

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

Cash $ 0.1
Trade accounts receivable 13.9
Other current assets 0.1
Goodwill 6.8
Intangibles 17.3
Other noncurrent assets 0.4
Current liabilities (2.9 )
Purchase price paid, including working capital adjustments $ 35.7

Included in the assets purchased in the GTA acquisition was approximately $17.3 million of intangible assets, made up of $12.1 million in customer relationships, $4.0 million associated with GTA’s trade name and $1.2 million for non-compete agreements. The customer relationships will be amortized over 10 years with no residual value, the trade name will be amortized over 15 years with no residual value and the non-compete agreements will be amortized over five years with no residual value. Goodwill generated from this acquisition is primarily attributable to the market potential as a solutions provider to the expanding telecommunications industry, and is assigned to the GTS reporting unit (see Goodwill footnote). ~~All of~~

As noted above, goodwill related to these acquisitions was assigned to the Americas Staffing and GTS reporting units and was included in the goodwill ~~is expected~~impairment charge taken in the first quarter of 2020. The goodwill impairment charge resulted from an interim goodwill impairment test triggered by declines in our common stock price as a result of negative market reaction to ~~be deductible for tax purposes.~~the COVID-19 crisis (see Goodwill footnote).

~~Pro Forma Information~~

Our consolidated revenues and net earnings for the third quarter 2019 included $20.0 million and $1.3 million, respectively, from NextGen and $15.8 million and $0.9 million, respectively, from GTA. Our consolidated revenues and net earnings for September year to date 2019 included $62.9 million and $3.7 million, respectively, from NextGen and $48.2 million and $3.4 million, respectively, from GTA. The following unaudited pro forma information presents a summary of the operating results as if the NextGen and GTA acquisitions had been completed as of January 1, 2018 (in millions of dollars, except per share data):

Third Quarter September Year to Date
2019 2018 2019 2018
Pro forma revenues $ 1,267.7
$ 1,373.6
$ 4,017.8
$ 4,174.9
Pro forma net earnings (loss) (10.5 ) 35.6
95.4
50.6
Pro forma basic earnings (loss) per share (0.27 ) 0.91
2.42
1.29
Pro forma diluted earnings (loss) per share (0.27 ) 0.90
2.41
1.29

Due to the date of the acquisitions, there were no adjustments for the third quarter and September year to date 2019 pro forma results. For the third quarter of 2018, NextGen pro forma revenues and net earnings were $19.3 million and $1.4 million, respectively, and GTA pro forma revenues and net earnings were $11.9 million and $1.1 million, respectively. For September year to date 2018, NextGen pro forma revenues and net earnings were $47.5 million and $2.0 million, respectively, and GTA pro forma revenues and net earnings were $28.2 million and $1.8 million, respectively.

The pro forma results for the third quarter and September year to date 2018 reflect amortization of the intangible assets, applicable taxes and adjustments for the accounting for revenue under ASC 606, none of which had a material impact on the pro forma results. The unaudited pro forma information presented has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results.

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

4.5. Investment in Persol Holdings

The Company has a yen-denominated investment through the Company's subsidiary, Kelly Services Japan, Inc., in the common stock of Persol Holdings ~~a leading integrated human resource company in Japan and~~Co., Ltd. ("Persol Holdings"), the Company’s joint venture partner in PersolKelly ~~Asia Pacific.~~Pte. Ltd. (the "JV"). As our investment is a noncontrolling interest in Persol Holdings, this investment is recorded at fair value based on the quoted market price of Persol Holdings stock on the Tokyo Stock Exchange as of the period end (see Fair Value Measurements footnote). The Company adopted ASU 2016-01 and as a result, effective January 1, 2018, all changes in fair value on the investment are recognized in net earnings which previously were recorded in other comprehensive income (loss). A cumulative catch-up adjustment of the prior net unrealized gains previously recorded in other comprehensive income (loss), and in accumulated other comprehensive income (loss), a component of stockholders’ equity, was recorded in earnings invested in the business as of January 1, 2018 for $140.0 million, net of $69.9 million of taxes.

~~For the third quarter and September year to date 2019, a loss on the investment of $39.3 million and a~~ gain on the investment of $35.1 million, respectively, were recorded in gain (loss) on investment in Persol Holdings in the consolidated statements of earnings. For the third quarter and September year to date 2018, a gain on the investment of $15.8$29.6 million and a loss on the investment of ~~$13.0~~$48.2 million in the second quarter and June year to date 2020, respectively, and a gain on the investment of $61.2 million and $74.4 million in the second quarter and June year to date 2019, respectively, was recorded in gain (loss) on investment in Persol Holdings in the consolidated statements of earnings.

5.6. Investment in PersolKelly ~~Asia Pacific~~Pte. Ltd.

The Company has a 49% ownership interest in ~~PersolKelly Asia Pacific,~~the JV (see Investment in Persol Holdings footnote above), a staffing solutions business operating in ~~more than 10 countries~~eight geographies in the Asia-Pacific region. The operating results of the Company’s interest in ~~PersolKelly Asia Pacific~~the JV are accounted for on a one-quarter lag under the equity method and are reported in equity in net earnings (loss) of affiliate in the consolidated statements of ~~earnings.~~earnings, which amounted to a loss of $1.3 million and $2.8 million in the second quarter and June year to date of 2020, respectively, and a gain of $0.3 million and a loss of $0.1 million in the second quarter and June year to date of 2019. This investment is evaluated for indicators of impairment on a periodic basis or whenever events or circumstances indicate the carrying amount may be other-than-temporarily impaired. If we conclude that there is an other-than-temporary impairment of this equity investment, we will adjust the carrying amount of the investment to the current fair value.

The investment in equity affiliate on the Company’s consolidated balance sheet totaled ~~$120.4~~$113.6 million as of ~~third~~second quarter-end ~~2019~~2020 and ~~$121.3~~$117.2 million as of year-end ~~2018.~~2019. The net amount due from ~~PersolKelly Asia Pacific,~~the JV, a related party, was ~~$10.3~~$10.5 million as of the ~~third~~second quarter-end ~~2019~~2020 and ~~$10.2~~$10.9 million as of year-end ~~2018.~~2019. The Company made loans, proportionate to its 49% ownership, to ~~PersolKelly Asia Pacific~~the JV for $7.0 million in 2018 and an additional $4.4 million in ~~the third quarter of~~ 2019 to fund working capital requirements as a result of their sustained revenue growth. The loans, which are outstanding as of ~~third~~second quarter-end ~~2019,~~2020, are included in other assets in the consolidated balance sheet and included in the net amounts due from ~~PersolKelly Asia Pacific.~~the JV. The carrying value of the loans approximates the fair value based on market interest rates. Accrued interest receivable totaled $0.1 million at second-quarter end 2020 and $0.2 million at year-end 2019 and is included in prepaid expenses and other current assets in the consolidated balance sheet. The amount included in trade accounts payable for staffing services provided by ~~PersolKelly Asia Pacific~~the JV as a supplier to the Company’s CWO programs was ~~$0.5~~$0.1 million as of ~~third~~second quarter-end ~~2019~~2020 and $0.2 million as of year-end ~~2018.~~2019.

Expected credit losses are estimated over the contractual term of the loans. The required allowance is based on current and projected financial information from the JV, market-specific information and other relevant data available to the Company, as applicable. The allowance was not material for the second quarter-end 2020.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

The Company has accrued interest receivable from our loan to the JV. If applicable, we write off the uncollectible accrued interest receivable balance related to our loan to the JV within the same quarter the interest is determined to be uncollectible, which is considered timely. As such, an allowance for credit losses is not deemed necessary. Any write offs, if necessary, are recorded by reversing interest income.

On April 1, 2020, 100% of the shares of Kelly Services Australia Pty Ltd and Kelly Services (New Zealand) Limited, both subsidiaries of the JV, were sold to an affiliate of Persol Holdings. The JV received proceeds of $17.5 million upon the sale and the Company received a direct royalty payment of $0.7 million.

7. Fair Value Measurements

Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes 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 as of second quarter-end 2020 and year-end 2019 in the consolidated balance sheet ~~as of third quarter-end 2019 and year-end 2018~~ 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.

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~


	As of Second Quarter-End 2020
Description	Total		Level 1		Level 2		Level 3
	(In millions of dollars)
Money market funds	$	121.5	$	121.5	$	—	$	—
Investment in Persol Holdings	127.2		127.2		—		—

Total assets at fair value	$	248.7	$	248.7	$	—	$	—

~~(UNAUDITED)~~


	As of Year-End 2019
Description	Total		Level 1		Level 2		Level 3
	(In millions of dollars)
Money market funds	$	4.9	$	4.9	$	—	$	—
Investment in Persol Holdings	173.2		173.2		—		—

Total assets at fair value	$	178.1	$	178.1	$	—	$	—

Fair Value Measurements on a Recurring Basis
As of Third Quarter-End 2019
Description Total Level 1 Level 2 Level 3
(In millions of dollars)
Money market funds $ 4.9
$ 4.9
$ —
$ —
Investment in Persol Holdings 174.9
174.9
—
—

Total assets at fair value $ 179.8
$ 179.8
$ —
$ —

Fair Value Measurements on a Recurring Basis
As of Year-End 2018
Description Total Level 1 Level 2 Level 3
(In millions of dollars)
Money market funds $ 4.6
$ 4.6
$ —
$ —
Investment in Persol Holdings 135.1
135.1
—
—

Total assets at fair value $ 139.7
$ 139.7
$ —
$ —

Money market funds as of ~~third~~second quarter-end ~~2019~~2020 and year-end ~~2018~~2019 represent investments in money market accounts, ~~all~~ of which $5.1 million and $4.9 million, respectively, are restricted as to use and included in other assets in the consolidated balance sheet. The money market funds that are restricted as to use account for the majority of our restricted cash balance and represents cash balances that are required to be maintained to fund disability claims in California. The valuations of money market funds ~~were~~are based on quoted market prices of those accounts as of the respective period end. The increase in money market funds from year-end 2019 was the result of higher cash and cash equivalent balances as of the end of the second quarter from an increase in cash flows from operations.

The valuation of the investment in Persol Holdings is based on the quoted market price of Persol Holdings stock on the Tokyo Stock Exchange as of the period end, and the related changes in fair value are recorded in the consolidated statements of earnings (see Investment in Persol Holdings footnote). The cost of this yen-denominated investment, which fluctuates based on foreign exchange rates, was ~~$19.2~~$19.3 million as of the ~~third~~second quarter-end ~~2019~~2020 and ~~$18.8~~$18.9 million at year-end ~~2018.~~2019.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Equity Investment Without Readily Determinable Fair Value

The Company has a minority investment in Business Talent Group, LLC, which is included in other assets in the consolidated balance sheet. This investment is measured using the measurement alternative for equity investments without a readily determinable fair value. The measurement alternative represents cost, less impairment, plus or minus observable price changes. The carrying amount of $5.0 million as of the ~~third~~second quarter-end ~~2019~~2020 and year-end ~~2018~~2019 represents the purchase price. There have been no observable price changes to the carrying amount or impairments.

~~During second quarter of 2019, the~~The Company ~~made an additional $1.0 million~~also has a minority investment in Kenzie Academy Inc., which is included in other assets in the consolidated balance sheet. This investment is also measured using the measurement alternative for equity investments without a readily determinable fair value as described above. AsThe investment totaled $1.4 million as of the ~~third~~second quarter-end ~~2019, the investment totaled~~2020 and $1.3 million at year-end 2019, representing total cost plus observable price changes to date.

Assets Measured at Fair Value on a Nonrecurring Basis

Due to the negative market reaction to the COVID-19 crisis, including declines in our common stock price, management determined that a triggering event occurred during the first quarter of 2020. We therefore performed an interim step one quantitative impairment test for both of our reporting units with goodwill, Americas Staffing and GTS. As a result of this quantitative assessment, we determined that the estimated fair value of the reporting units no longer exceeded the carrying value, and recorded a goodwill impairment charge of $147.7 million in the first quarter of 2020 (see Goodwill footnote).

8. Restructuring

In the first quarter of ~~2019,~~2020, the Company took restructuring actions to ~~transform operations~~align costs with expected revenues, position the organization to adopt a new operating model later in ~~order~~2020 and to ~~drive growth and operational effectiveness primarily in~~align the U.S. ~~branch-based staffing operations.~~branch network facilities footprint with a more technology-enabled service delivery methodology.

Restructuring costs incurred in ~~2019~~2020 totaled ~~$5.6~~$8.5 million ~~all of which is within the Americas Staffing segment. The restructuring costs, which~~and are ~~all severance related, were~~ recorded entirely in ~~selling, general and administrative (“~~SG~~&A”)~~&A expenses in the consolidated statements of ~~earnings.~~earnings, as detailed below (in millions of dollars).


	Lease Termination Costs		Severance Costs		Total

Americas Staffing	$	4.1	$	1.4	$	5.5
Global Talent Solutions	—		0.8		0.8
International Staffing	0.7		0.4		1.1
Corporate	—		1.1		1.1

Total	$	4.8	$	3.7	$	8.5

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

A summary of the global restructuring balance sheet accrual, included in accrued payroll and related taxes and accounts payable and accrued liabilities in the consolidated balance sheet, is detailed below (in millions of dollars).

Balance as of year-end 2018 $ —
Additions charged to Americas Staffing 6.3
Reductions for cash payments (0.2 )
Balance as of first quarter-end 2019 6.1
Reductions for cash payments (3.1 )
Accrual adjustments (0.6 )
Balance as of second quarter-end 2019 2.4
Reductions for cash payments (1.4 )
Accrual adjustments (0.1 )
Balance as of third quarter-end 2019 $ 0.9


Balance as of year-end 2019	$	0.3
Additions charged to Americas Staffing	5.6
Additions charged to Global Talent Solutions	0.9
Additions charged to International Staffing	1.1
Additions charged to Corporate	1.1
Reductions for lease termination costs related to fixed assets	(0.6)
Reductions for cash payments related to all restructuring activities	(4.5)
Balance as of first quarter-end 2020	3.9
Reductions for cash payments related to all restructuring activities	(2.1)
Accrual adjustments	(0.2)
Balance as of second quarter-end 2020	$	1.6

As of Year-End 2018 Additions to Goodwill As of Third Quarter-End 2019
(In millions of dollars)
Americas Staffing $ 44.8
$ 13.7
$ 58.5
Global Talent Solutions 62.5
6.8
69.3
$ 107.3
$ 20.5
$ 127.8


	As of Year-End 2019		Additions to Goodwill		Impairment Adjustments		As of Second Quarter-End 2020

	(In millions of dollars)








Americas Staffing	$	58.5	$	19.9	$	(78.4)	$	—
Global Talent Solutions	69.3		—		(69.3)		—
Total	$	127.8	$	19.9	$	(147.7)	$	—

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

9.10. Accumulated Other Comprehensive Income (Loss)

Third Quarter September Year to Date
2019 2018 2019 2018
(In millions of dollars)
Foreign currency translation adjustments:
Beginning balance $ (10.3 ) $ (7.7 ) $ (15.7 ) $ (6.9 )
Other comprehensive income (loss) before reclassifications (6.2 ) (7.0 ) (0.8 ) (7.8 )
Amounts reclassified from accumulated other comprehensive income (loss) —
—
—
—
Net current-period other comprehensive income (loss) (6.2 ) (7.0 ) (0.8 ) (7.8 )
Ending balance (16.5 ) (14.7 ) (16.5 ) (14.7 )

Unrealized gains and losses on investment:
Beginning balance —
—
—
140.0
Cumulative-effect adjustment from adoption of ASU 2016-01, Financial Instruments —
—
—
(140.0 )
Other comprehensive income (loss) before reclassifications —
—
—
—
Amounts reclassified from accumulated other comprehensive income (loss) —
—
—
—
Net current-period other comprehensive income (loss) —
—
—
(140.0 )
Ending balance —
—
—
—

Pension liability adjustments:
Beginning balance (1.4 ) (2.3 ) (1.4 ) (2.3 )
Other comprehensive income (loss) before reclassifications —
—
—
—
Amounts reclassified from accumulated other comprehensive income (loss) —
—
—
—
Net current-period other comprehensive income (loss) —
—
—
—
Ending balance (1.4 ) (2.3 ) (1.4 ) (2.3 )

Total accumulated other comprehensive income (loss) $ (17.9 ) $ (17.0 ) $ (17.9 ) $ (17.0 )

11. Earnings (Loss) Per Share

The reconciliation of basic and diluted earnings (loss) per share on common stock for the second quarter and June year to date 2020 and 2019 follows (in millions of dollars except per share data):

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

~~10. Earnings Per Share~~

~~The reconciliation of basic and diluted earnings (loss) per share on common stock for the third quarter and September year to date 2019 and 2018 follows (in millions of dollars except per share data):~~

Third Quarter September Year to Date
2019 2018 2019 2018
Net earnings (loss) $ (10.5 ) $ 33.1
$ 95.4
$ 46.8
Less: earnings allocated to participating securities —
(0.4 ) (1.0 ) (0.5 )
Net earnings (loss) available to common shareholders $ (10.5 ) $ 32.7
$ 94.4
$ 46.3

Average shares outstanding (millions):
Basic 39.1
38.8
39.0
38.7
Dilutive share awards —
0.1
0.2
0.1
Diluted 39.1
38.9
39.2
38.8

Basic earnings (loss) per share $ (0.27 ) $ 0.84
$ 2.42
$ 1.20
Diluted earnings (loss) per share $ (0.27 ) $ 0.84
$ 2.41
$ 1.19

~~11.~~12. Stock-Based Compensation

For the ~~third~~second quarter of ~~2019,~~2020, the Company recognized stock compensation ~~benefit~~expense of ~~$0.5~~$1.2 million, and related tax benefit of ~~$0.4~~$0.2 million. For the ~~third~~second quarter of ~~2018,~~2019, the Company recognized stock compensation expense of $2.0 million, and related tax benefit of ~~$0.8~~$0.3 million. For ~~September~~June year to date 2020, the Company recognized stock compensation expense of $2.4 million, and related tax benefit of $0.0 million. For June year to date 2019, the Company recognized stock compensation expense of ~~$4.7~~$5.2 million, and related tax benefit of ~~$1.1 million. For September year to date 2018, the Company recognized stock compensation expense of $6.7 million, and related tax benefit of $4.0~~$0.7 million.

~~During 2019,~~A summary of the ~~Company granted performance awards associated with the Company’s Class A common stock to certain senior officers. The payment~~status of ~~these~~all nonvested performance shares ~~(“financial measure performance awards”), which will be satisfied with the issuance~~at target as of second quarter-end 2020 and year-to-date changes is presented as follows below (in thousands of shares ~~out~~except per share data). The majority of ~~treasury stock,~~the vested shares below is ~~contingent upon~~related to the ~~achievement of two financial goals at the end of a three-year~~2017 performance ~~period. These awards will cliff vest~~share grant, which cliff-vested after ~~the~~ approval byfrom the Compensation Committee ~~if not forfeited by~~during the ~~recipient. No dividends are paid on these~~first quarter of 2020. There has been no grant of performance ~~shares.~~

shares since year-end 2019. The ~~2019 financial measure performance awards were granted with a market condition~~vesting adjustment in the ~~form of a relative~~table below represents the 2017 Total Shareholder Return ~~(“TSR”~~("TSR") modifier, which could impact the number of shares earned as determined at the end of the performance period. The number of shares earned based on financial measures’ results will be reduced, increased or remain the same based on the Company’s TSR relative to the S&P SmallCap 600 Index. The maximum number of performance shares that ~~may be earned is 200% of~~did not vest because actual achievement was below the ~~target shares originally granted~~threshold level and ~~the TSR modifier will not increase payouts above the maximum.~~resulted in no payout.

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

The 2019 grant also included single financial measure performance shares, which have one financial goal with a one-year performance period. These awards vest over four years and earn dividends, which are not paid until the awards vest. The single financial measure performance shares have a weighted average grant date fair value of $24.61.

2018 ~~and 2017 Grants~~Grant Update

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Financial Measure
Performance Shares TSR
Performance Shares
Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
Nonvested at year-end 2018 481
$ 23.58
173
$ 23.56
Granted 250
25.38
—
—
Vested (188 ) 28.05
(55 ) 19.73
Forfeited —
—
—
—
Nonvested at third quarter-end 2019 543
$ 24.66
118
$ 25.35

~~Restricted Stock~~

~~A summary of the status of nonvested restricted stock as of third quarter-end 2019 and year-to-date changes is presented as follows below (in thousands of shares except per share data).~~

Shares Weighted Average Grant Date Fair Value
Nonvested at year-end 2018 356
$ 23.44
Granted 183
24.79
Vested (109 ) 22.61
Forfeited (38 ) 23.80
Nonvested at third quarter-end 2019 392
$ 24.27

~~12.~~13. Sale of Assets

In the second quarter of 2020, the Company monetized wage subsidy receivables outside the U.S. for $16.9 million, net of fees and ~~June year~~5% retainer. The sale of these receivables was accounted for as a sale of financial assets with certain recourse provisions in which we derecognized the receivables. Although the sale of receivables is with recourse, the Company did not record a recourse obligation as of the second quarter 2020 as the Company has concluded the receivables are collectible. The net cash proceeds related to ~~date~~the sale are included in operating activities in the consolidated statements of cash flows and the fees related to the sale are included in SG&A expenses in the consolidated statements of earnings.

Gain on sale of assets of $12.3 million in the second quarter of 2019 primarily represents the sale of unused land located near the Company headquarters, and includes the excess of the $11.7 million sale proceeds over the cost of the parcel. The gain on sale of assets also includes proceeds of $2.1 million from the transfer of customer contracts related to the ~~Company’s~~Company's legal specialty operations to a third party during the second quarter of 2019. ~~There were no material sales of assets during the third quarter of 2019.~~

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

14. Other Income (Expense), Net

Included in other income (expense), net for the ~~third~~second quarter and ~~September~~June year to date ~~2019~~2020 and ~~2018~~2019 are the following:

Third Quarter September Year to Date
2019 2018 2019 2018
(In millions of dollars)
Interest income $ 0.4
$ 0.2
$ 0.8
$ 0.6
Interest expense (0.9 ) (0.7 ) (3.2 ) (2.3 )
Dividend income —
—
1.3
0.8
Foreign exchange gain (loss) 0.3
(0.2 ) (0.4 ) (0.9 )
Other —
—
0.4
—

Other income (expense), net $ (0.2 ) $ (0.7 ) $ (1.1 ) $ (1.8 )

KELLY SERVICES, INC. AND SUBSIDIARIES

~~14.~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

Description Balance Sheet Location As of Third Quarter-End 2019
ROU Assets:
Operating Operating lease right-of-use assets $ 62.2
Financing Property and equipment 2.8
Total lease assets $ 65.0

ROU Liabilities:
Operating - current Operating lease liabilities, current $ 19.8
Financing - current Accounts payable and accrued liabilities 0.9
Operating - noncurrent Operating lease liabilities, noncurrent 45.3
Financing - noncurrent Other long-term liabilities 1.5
Total lease liabilities $ 67.5

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~



	~~September Year to Date~~
	~~2019~~
~~Weighted average remaining lease term (years):~~
~~Operating leases~~	~~3.9~~
~~Financing leases~~	~~3.7~~
~~Weighted average discount rate:~~
~~Operating leases~~	~~5.8~~	%
~~Financing leases~~	~~5.1~~	%

Third Quarter September Year to Date
2019 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 6.3
$ 19.8
Financing cash flows from financing leases 0.2
0.4

ROU assets obtained in exchange for new lease obligations:
Operating leases $ 2.2
$ 6.2
Financing leases 1.1
2.8

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

Fiscal year:
2019 $ 26.7
2020 20.4
2021 15.2
2022 9.8
2023 4.7
Later years 4.9

Total $ 81.7

~~16.~~17. Contingencies

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

~~KELLY SERVICES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(UNAUDITED)~~

~~17.~~18. 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-maker ~~(the~~("CODM", the Company’s CEO) to determine resource allocation and assess performance. The Company’s 3 reportable segments, (1) Americas Staffing, (2) GTS and (3) International Staffing, reflect how the Company delivers services to customers and how its business is organized internally. Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.

Americas Staffing represents the Company’s branch-delivered staffing business in the U.S., Canada, Puerto Rico, Mexico and Brazil. International Staffing represents the EMEA region branch-delivered staffing business. Americas Staffing and International Staffing both deliver temporary staffing, as well as direct-hire placement services, in office-clerical, light industrial, and professional/technical specialties within their geographic regions. Americas Staffing also includes educational staffing in the U.S.

GTS combines the delivery structure of the Company’s outsourcing and consulting group and centrally delivered staffing business. It reflects the trend of customers towards the adoption of holistic talent solutions which combine contingent labor, full-time hiring and outsourced services. GTS includes centrally delivered staffing, RPO, CWO, BPO, PPO, KellyConnect, career transition/outplacement services and talent advisory services.

Corporate expenses that directly support the operating units have been allocated to Americas Staffing, GTS and International Staffing based on work effort, volume or, in the absence of a readily available measurement process, proportionately based on gross profit realized. Unallocated corporate expenses include those related to incentive compensation, law and risk management, certain finance and accounting functions, executive management, corporate campus facilities, IT production support, certain legal costs and expenses related to corporate initiatives that do not directly benefit a specific operating segment. Consistent with the information provided to and evaluated by the CODM, the goodwill impairment charge in the first quarter of 2020 is included in Corporate expenses.

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 (loss) before taxes and equity in net earnings (loss) of affiliate, for the ~~third~~second quarter and ~~September~~June year to date ~~2019~~2020 and ~~2018.~~2019. 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.

Third Quarter September Year to Date
2019 2018 2019 2018
(In millions of dollars)
Revenue from Services:

Americas Staffing $ 516.0
$ 561.8
$ 1,740.1
$ 1,770.1
Global Talent Solutions 502.5
507.6
1,509.4
1,494.1
International Staffing 252.9
277.2
779.9
848.5

Less: Intersegment revenue (3.7 ) (4.2 ) (11.6 ) (13.5 )

Consolidated Total $ 1,267.7
$ 1,342.4
$ 4,017.8
$ 4,099.2

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Beginning in the third quarter of 2020, in connection with the adoption of a new operating model reflecting the Company's focus on delivering specialty talent solutions, the Company will be revising the reportable segments and recasting prior year reportable segment results.


	Second Quarter						June Year to Date
	2020		2019		2020		2019
	(In millions of dollars)
Revenue from Services:

Americas Staffing	$	326.7	$	597.6	$	860.1	$	1,224.1
Global Talent Solutions	466.9		505.9		970.1		1,006.9
International Staffing	184.6		268.1		412.2		527.0

Less: Intersegment revenue	(2.9)		(4.1)		(6.0)		(7.9)

Consolidated Total	$	975.3	$	1,367.5	$	2,236.4	$	2,750.1

Third Quarter September Year to Date
2019 2018 2019 2018
(In millions of dollars)
Earnings from Operations:

Americas Staffing gross profit $ 93.9
$ 106.0
$ 319.9
$ 322.5
Americas Staffing SG&A expenses (89.8 ) (91.2 ) (284.2 ) (273.8 )
Americas Staffing Earnings from Operations 4.1
14.8
35.7
48.7

Global Talent Solutions gross profit 99.6
97.3
299.7
281.8
Global Talent Solutions SG&A expenses (71.2 ) (73.2 ) (220.2 ) (224.0 )
Global Talent Solutions Earnings from Operations 28.4
24.1
79.5
57.8

International Staffing gross profit 34.7
36.4
105.4
115.4
International Staffing SG&A expenses (31.2 ) (31.6 ) (95.1 ) (99.2 )
International Staffing Earnings from Operations 3.5
4.8
10.3
16.2

Less: Intersegment gross profit (0.5 ) (0.6 ) (1.7 ) (1.9 )
Less: Intersegment SG&A expenses 0.5
0.6
1.7
1.9
Net Intersegment Activity —
—
—
—

Corporate (18.9 ) (21.8 ) (56.8 ) (68.4 )
Consolidated Total 17.1
21.9
68.7
54.3
Gain (loss) on investment in Persol Holdings (39.3 ) 15.8
35.1
(13.0 )
Other expense, net (0.2 ) (0.7 ) (1.1 ) (1.8 )

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate $ (22.4 ) $ 37.0
$ 102.7
$ 39.5

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

~~18.~~19. New Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04 simplifying the accounting for goodwill impairment for all entities. The new guidance eliminates the requirement to calculate the implied fair value of goodwill (Step 2 of the current two-step goodwill impairment test under ASC 350). Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (Step 1 of the current two-step goodwill impairment test). The ASU is effective prospectively for reporting periods beginning after December 15, 2019, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. We elected to early adopt ASU 2017-04 as of year-end 2018 and the adoption of this ASU did not have an impact on our goodwill impairment testing process or our consolidated financial statements.

~~In August 2018,~~balance sheet. This presentation is consistent with the ~~FASB issued ASU 2018-13 which eliminates, adds and modifies certain fair value measurement disclosures. The ASU is effective~~presentation of the prepayment of fees for ~~annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual periods, with early adoption permitted.~~the hosting arrangement. We ~~do not expect the adoption~~recognized $0.2 million of ~~this standard~~amortization expense for capitalized implementation costs incurred in hosting arrangements June year to ~~have~~date 2020 as a ~~material impact to~~component of SG&A expenses in our consolidated ~~financial statements.~~statements of earnings. We recognized $2.0 million of payments for capitalized implementation costs June year to date 2020 in the same manner as payments made for fees associated with the related hosting arrangements as a component of net cash from operating activities in our consolidated statements of cash flows. The Company's cloud computing arrangements are comprised of internal-use software platforms accounted for as service contracts. The Company does not have the ability to take possession of the software without significant penalty nor can the Company run the software on its own hardware or contract with another party unrelated to the vendor to host the software.

KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

~~ASU applies to trade accounts receivable and may have an~~periods within those annual periods, with early adoption permitted. We are currently evaluating the impact of the new guidance on our ~~calculation of the allowance for uncollectible accounts receivable.~~consolidated financial statements and related disclosures.

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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•Employ a talent-first mentality

•Relentlessly deliver for customers

•Grow through discipline and focus

•Deliver efficiency and effectiveness in everything we do

The Talent Solutions Industry

In addition, today’s companies are elevating their commitment to talent, with the growing realization that meeting the changing needs and requirements of talent is essential to remain competitive. The ways in which people view, find and conduct work are undergoing fundamental shifts. And as the demand for skilled talent continues to climb, workers’ changing ideas about the integration of work into life are becoming more important. In this increasingly talent-driven market, a diverse set of workers, empowered by technology, is seeking to take greater control over their career ~~trajectories.~~trajectories andKelly’s Talent Promise confirms our responsibility to workers in search of a better way to work.

Our ~~Strategic Intent and Outlook~~Perspective

~~Kelly is committed to being a leading~~Short Term

While far from certain, the impacts ofCOVID-19 on the global economy, the talent solutions ~~provider~~industry, our customers and our talent have become more clear since the beginning of the pandemic.Revenue declines have been substantial, and while recently trends have pointed to a slow recovery in demand, revenue declines are likely to continue for the next several quarters. In response to the crisis, in April 2020 we took a series of proactive actions. These actions were designed to reduce spending, minimize layoffs, and bolster the strength and flexibility of Kelly’s finances. These actions include:

•a 10% pay cut for full-time salaried employees in the U.S., Puerto Rico and Canada, in addition to certain actions in EMEA and APAC;

•substantially reduced CEO compensation and reduced compensation of 10% or more for senior leaders;

•temporary furloughing and/or redeployment of some employees until business conditions improve;

•suspension of the Company match to certain retirement accounts in the U.S. and Puerto Rico;

•reduction of discretionary expenses and projects, including capital expenditures; and

•a hiring freeze with the exception of critical revenue-generating positions.

The impact of the pandemic began in March 2020 with the limitations on public life in the U.S. and the European markets we serve and have continued in the second quarter as the effect of the pandemic response has slowed global economic activity. We do expect that there will be a material decline in our revenues during the period of time in which ~~we choose~~demand for our services is dampened by reaction to ~~compete, which is~~ the ~~foundation~~economic slowdown and by companies and talent concerns related to operating safely during a pandemic. The impact on the revenues of each segment will vary given the differences in pandemic-related measures enacted in each geography, the customer industries served and the skill sets of the talent provided to our ~~strategy in 2019~~customers and ~~beyond. This strategic intent is underpinned by our Noble Purpose, “We connect people~~their ability to work remotely. We currently expect a gradual return to pre-crisis levels of customer demand over the next several quarters, however, the pace of such a return may be further delayed by repeated cycles of increased economic activity and a resurgence in ~~ways~~infection leading to additional containment measures. While our cost reduction efforts are expected to reduce year-over-year expenses significantly in the third quarter, they will not be enough to completely offset declines in revenue and gross profit. As a result, we expect our third quarter and full year earnings to decline year-over-year.

In addition, negative market reaction to the COVID-19 crisis in March 2020, including declines in our common stock price, caused our market capitalization to decline significantly.This triggered an interim goodwill impairment test and resulted in a $147.7 million non-cash goodwill impairment charge in the first quarter of 2020.

While the severity of the economic impacts and the duration of these impacts cannot be precisely measured at this time, we do believe that ~~enrich their lives,”~~the mid-term impacts on how people view, find and ~~by our strategic pillars:~~

In the first quarter of ~~2019,~~2020, we completed ~~our~~a review of ~~our commercial staffing operations delivered by our~~the U.S. branch network of physical locations and ~~reorganized our operations to improve geographic coverage and operational efficiency. The new structure will allow us to refine our focus~~reduced the number of branch locations utilized.In addition, we took similar actions on ~~specialties within the commercial staffing portfolio, including light industrial, electronic assembly, office professionals and contact center staffing.~~ branch locations in International Staffing.During the first ~~nine~~six months of ~~2019,~~2020, we recorded ~~total restructuring charges~~$4.8 million of ~~$5.6~~lease termination costs and fixed asset write-offs related to those actions.In addition, we took cost reduction actions in Americas Staffing, GTS, International Staffing and corporate support functions which resulted in $3.7 million ~~as a result~~ of ~~these actions. While we have already gained efficiency~~severance costs and eliminated 123 positions.We expect that the expense savings from the ~~restructure,~~first quarter of 2020 actions will be approximately $20 million on an annual basis.

•Revenue growth (both organic and ~~gross~~inorganic);

•Gross profit ~~growth, as well as earnings~~rate improvement; and ~~conversion rate. We expect:~~

~~To grow higher-margin specialty~~•Conversion rate and ~~outsourced solutions, creating a more balanced portfolio that yields benefits from improved mix;~~EBITDA margin.

The constant currency (“CC”) change amounts in the following tables refer to the year-over-year percentage changes resulting from translating ~~2019~~2020 financial data into U.S. dollars using the same foreign currency exchange rates used to translate financial data for ~~2018.~~2019. We believe that CC measurements are a useful measure, indicating the actual trends of our operations without distortion due to currency fluctuations. We use CC results when analyzing the performance of our segments and measuring our results against those of our competitors. Additionally, substantially all of our foreign subsidiaries derive revenues and incur cost of services and selling, general and administrative (“SG&A”) expenses within a single country and currency which, as a result, provides a natural hedge against currency risks in connection with their normal business operations.

CC measures are non-GAAP (Generally Accepted Accounting Principles) measures and are used to supplement measures in accordance with GAAP. Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Reported and CC percentage changes in the following tables were computed based on actual amounts in thousands of dollars.

Return on sales (earnings from operations divided by revenue from services) and conversion rate (earnings from operations divided by gross profit) ~~in the following tables~~ are ratios used to measure the Company’s operating efficiency.

Days sales outstanding (“DSO”) represents the number of days that sales remain unpaid for the period being reported. DSO is calculated by dividing average net sales per day (based on a rolling three-month period) into trade accounts receivable, net of allowances at the period end. Although secondary supplier revenues are recorded on a net basis (net of secondary supplier expense), secondary supplier revenue is included in the daily sales calculation in order to properly reflect the gross revenue amounts billed to the customer.

Results of Operations

Total Company - ~~Third~~Second Quarter

Total SG&A expenses decreased 3.0% on a reported basis (2.4% on a CC basis) due primarily to the decrease in performance-based compensation, combined with the effect of cost management efforts to align resources with revenue trends. These decreases were partially offset by the addition of SG&A expenses from the NextGen and GTA acquisitions.

Diluted loss per share for the third quarter of 2019 were $0.27, as compared to diluted earnings per share of $0.84 for the third quarter of 2018. The 2019 third quarter diluted loss per share was impacted by a loss, net of tax, of approximately $0.70 per share related to the investment in Persol Holdings. The 2018 third quarter diluted earnings per share were impacted by a gain, net of tax, of approximately $0.28 per share related to the gain on the investment in Persol Holdings.

~~Americas Staffing - Third Quarter~~

~~(Dollars in millions)~~

The change in Americas Staffing revenue from services reflects an 11% decrease in hours volume, partially offset by the impact of the January 2019 acquisition of NextGen. The decrease in hours volume was primarily due to the disruption resulting from the restructure of the U.S. branch-based staffing in the first quarter of 2019 and slower achievement of the related benefits. Additionally, the decline reflects the more challenging market conditions we are experiencing, especially in manufacturing. Average bill rates increased 2.9% compared to the prior year (3.1% on a CC basis). The increase in average bill rates was the result of wage increases and stronger revenue growth in our service lines with higher pay rates. Americas Staffing represented 41% of total Company revenue in the third quarter of 2019 and 42% in the third quarter of 2018.

From a product perspective, the change in revenue reflects lower volume in commercial, including light industrial and office services. These decreases were partially offset by growth in professional/technical revenue, including engineering (due primarily to the NextGen acquisition) and science products.

The Americas Staffing gross profit rate decreased in comparison to the prior year. The gross profit rate was negatively impacted by higher payroll taxes, workers’ compensation costs and lower permanent placement income. Permanent placement income, which is included in revenue from services and has very low direct costs of services, has a disproportionate impact on gross profit rates.

Total SG&A expenses decreased 1.4% from the prior year, due primarily to lower performance-based compensation and lower salaries, as a result of the restructuring actions taken in the first quarter of 2019. These decreases were partially offset by the addition of NextGen SG&A expenses.

~~GTS - Third Quarter~~

~~(Dollars in millions)~~

Revenue from services decreased 1.0% compared to last year, due primarily to lower demand from a number of customers in centrally delivered staffing and PPO products. This decrease was partially offset by the increase in revenue from the GTA acquisition, combined with program expansion in our BPO and KellyConnect products. GTS revenue represented 40% of total Company revenue in the third quarter of 2019 and 38% in the third quarter of 2018.

~~The increase in the GTS gross profit rate was due to improving product mix coupled with lower employee-related costs.~~

Total SG&A expenses decreased 2.8% from the prior year, due to effective cost management, as we continue to align our resources and spending levels with volumes and gross profit in our products. These decreases were partially offset by the addition of GTA SG&A expenses.

~~International Staffing - Third Quarter~~

~~(Dollars in millions)~~

The International Staffing gross profit rate increased primarily due to the favorable year-over-year impact related to a 2018 one-time French payroll tax adjustment, partially offset by unfavorable country mix.

~~Total SG&A expenses decreased 0.9% due to the effect of currency exchange rates. On a CC basis,~~ total SG&A expenses ~~increased 2.1% due~~are adjustments to ~~one-time expenses incurred to accelerate our initiatives to drive efficiencies.~~

~~Results of Operations~~

~~Total Company - September Year to Date~~

~~(Dollars in millions)~~

Total Company revenue from services for the first nine months of 2019 declined 2.0% in comparison to the prior year and 0.7% on a CC basis. As noted in the following discussions, revenue decreases in Americas Staffing and International Staffing were partially offset by an increase in GTS revenue. Revenue from services for the first nine months of 2019 includes the results of NextGen and GTA acquisitions, which added approximately 270 basis points to the total revenue growth rate.

The gross profit rate increased by 50 basis points from the prior year. As noted in the following discussions, increases in the gross profit rate in Americas Staffing and GTS were partially offset by a decrease in the International Staffing gross profit rate. The NextGen and GTA acquisitions accounted for approximately 30 basis points of the gross profit rate growth.

Total SG&A expenses increased 0.5% on a reported basis (1.6% on a CC basis), due primarily to the addition of SG&A expenses from the NextGen and GTA acquisitions. Also included in SG&A expenses for the first nine months of 2019 arepreviously recorded restructuring charges of ~~$5.6~~$0.2 million ~~related primarily to~~in the ~~U.S. branch-based staffing operations.~~second quarter of 2020 and $0.6 million in the second quarter of 2019.

Gain on sale of assets of $12.3 million primarily represents the excess of the proceeds over the cost of an unused parcel of land located near the Company headquarters sold during the second quarter of 2019.

Diluted earnings per share for the ~~first nine months~~second quarter of ~~2019 were $2.41,~~2020 was $1.04, as compared to diluted earnings per share of ~~$1.19~~$2.12 for the ~~first nine months~~second quarter of ~~2018. Diluted~~2019. The 2020 second quarter diluted earnings per share ~~for~~was impacted by a gain, net of tax, of approximately $0.52 per share related to the ~~first nine months of~~investment in Persol Holdings. The 2019 second quarter diluted earnings per share were impacted by a gain, net of tax, of approximately ~~$0.62~~$1.07 per share related to the gain on the investment in Persol ~~Holdings. Diluted earnings per share for the first nine months of 2018 were impacted by~~Holdings, a ~~loss,~~gain, net of tax, of approximately $0.23 related to a gain on sale of an unused parcel of land and approximately $0.01 per share, net of tax, related to adjustments to restructuring charges.

Beginning in the ~~investment~~third quarter of 2020, in ~~Persol Holdings.~~connection with the adoption of a new operating model reflecting the Company's focus on delivering specialty talent solutions, the Company will be revising the reportable segments and recasting prior year reportable segment results.

Americas Staffing - ~~September Year to Date~~Second Quarter

2019 2018 Change
CC
Change
Revenue from services $ 1,740.1
$ 1,770.1
(1.7 )% (1.4 )%
Gross profit 319.9
322.5
(0.8 ) (0.6 )
SG&A expenses excluding restructuring charges 278.6
273.8
1.7
2.0
Restructuring charges 5.6
—
NM
NM
Total SG&A expenses 284.2
273.8
3.8
4.1
Earnings from operations 35.7
48.7
(26.7 )
Earnings from operations excluding restructuring charges 41.3
48.7
(15.1 )

Gross profit rate 18.4 % 18.2 % 0.2
pts.
Conversion rate 11.2
15.1
(3.9 )
Conversion rate excluding restructuring charges 12.9
15.1
(2.2 )
Return on sales 2.1
2.8
(0.7 )
Return on sales excluding restructuring charges 2.4
2.8
(0.4 )

Total SG&A expenses ~~increased 3.8%~~decreased 25.1% from the prior year, due primarily to ~~the addition of NextGen SG&A expenses during 2019. Also included~~lower administrative salaries and performance-based compensation, including additional short-term cost reductions implemented to further align costs with current revenue volume trends. Included in total SG&A expenses ~~for~~in the ~~first nine months~~second quarter of 2020 and 2019 are ~~restructuring~~credits of $0.1 million and $0.6 million, respectively, related primarily to the adjustments of previously accrued severance charges ~~of $5.6 million, representing severance costs primarily related to~~for U.S. branch-based staffing operations.

GTS - ~~September Year to Date~~Second Quarter

2019 2018 Change
CC
Change
Revenue from services $ 1,509.4
$ 1,494.1
1.0 % 1.4 %
Gross profit 299.7
281.8
6.3
7.0
Total SG&A expenses 220.2
224.0
(1.7 ) (1.0 )
Earnings from operations 79.5
57.8
37.5

Gross profit rate 19.9 % 18.9 % 1.0
pts.
Conversion rate 26.5
20.5
6.0

Return on sales 5.3
3.9
1.4

International Staffing - ~~September Year to Date~~Second Quarter

2019 2018 Change
CC
Change
Revenue from services $ 779.9
$ 848.5
(8.1 )% (3.0 )%
Gross profit 105.4
115.4
(8.7 ) (3.6 )
Total SG&A expenses 95.1
99.2
(4.0 ) 1.0
Earnings from operations 10.3
16.2
(36.9 )

Gross profit rate 13.5 % 13.6 % (0.1 ) pts.
Conversion rate 9.7
14.1
(4.4 )
Return on sales 1.3
1.9
(0.6 )

Total SG&A expenses decreased ~~4.0%~~23.2% due to cost management to mitigate the ~~effect~~impact of ~~currency exchange rates. On~~the COVID-19 disruption.

Results of Operations

Total Company - June Year to Date

Total Company revenue from services for the first six months of 2020 declined 18.7% in comparison to the prior year and declined 18.0% on a CC basis. As noted in the following discussions, revenue decreased in all three segments, due primarily to the impact of COVID-19, which began in mid-March of this year. Revenue from services for the first six months of 2020 includes the results of the Insight acquisition, which added approximately 70 basis points to the total revenue growth rate.

Total SG&A expenses decreased 12.9% on a reported basis and 12.4% on a CC basis. This decrease was due primarily to lower administrative salaries and performance-based compensation, including additional short-term cost reductions implemented to further align costs with current revenue volume trends. Included in total SG&A expenses ~~increased 1.0%~~are restructuring charges of $8.5 million in the first six months of 2020. This is related to actions taken to position the Company to adopt a new operating model later in 2020 and to align the U.S. branch network facilities footprint with a more technology-enabled service delivery methodology. Restructuring charges of $5.7 million in the first six months of 2019 represent severance costs primarily related to U.S. branch-based staffing operations.

During the first six months of 2020, the negative reaction to the pandemic by the global equity markets also resulted in a decline in the Company's common stock price. This triggered an interim goodwill impairment test, resulting in a $147.7 million goodwill impairment charge in the first quarter of 2020.

Gain on sale of assets of $32.1 million represents the excess of the proceeds over the cost of the headquarters properties sold in the first quarter of 2020. The main headquarters building was subsequently leased back to the Company during the first quarter of 2020. Gain on sale of assets of $12.3 million primarily represents the excess of the proceeds over the cost of an unused parcel of land located near the Company headquarters sold during the second quarter of 2019.

Diluted loss per share for the first six months of 2020 was $2.86, as compared to diluted earnings per share of $2.68 for the first six months of 2019. The 2020 diluted loss per share was impacted by the goodwill impairment charge, net of tax, of approximately $3.18 per share, a loss, net of tax, of approximately $0.85 per share related to the investment in Persol Holdings, gain on sale of assets, net of tax, of approximately $0.61 per share and restructuring charges, net of tax, of approximately $0.16 per share. The 2019 diluted earnings per share were impacted by a gain, net of tax, of approximately $1.31 per share related to the gain on the investment in Persol Holdings, gain on sale of assets, net of tax, of approximately $0.23 per share and restructuring charges, net of tax, of approximately $0.11 per share.

Americas Staffing - June Year to Date

GTS - June Year to Date

International Staffing - June Year to Date

Total SG&A expenses decreased 14.9% due to cost management to mitigate the impact of the COVID-19 disruption and a continued focus on increased productivity in our ~~initiatives~~branch network. Included in total SG&A are $1.1 million of restructuring charges, which primarily related to ~~drive efficiencies.~~France staffing operations to reposition our operating model to pursue growth through specialized staffing business.

Historically, we have financed our operations through cash generated by operating activities and access to credit markets. Our working capital requirements are primarily generated from temporary employee payroll and customer accounts receivable. Since receipts from customers generally lag payroll to temporary employees, working capital requirements increase substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease. This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period. The impact of the current economic slow-down resulting from the COVID-19 crisis began in March 2020 and continued during the second quarter. Consistent with our historical results, the impact of the current economic conditions resulted in declines in working capital requirements, primarily Accounts Receivable, and increases in cash flows from operations as revenues slowed.

As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash, cash equivalents and restricted cash, operating activities, investing activities and financing activities.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash totaled ~~$28.6~~$221.9 million at the end of the ~~third~~second quarter of ~~2019~~2020 and ~~$40.1~~$31.0 million at year-end ~~2018.~~2019. As further described below, we generated ~~$74.2~~$178.1 million of cash from operating activities, ~~used $88.8~~generated $13.3 million of cash ~~for~~from investing activities and ~~generated $3.6~~used $6.2 million of cash ~~from~~for financing activities.

Operating Activities

In the first ~~nine~~six months of ~~2019,~~2020, we generated ~~$74.2~~$178.1 million of net cash from operating activities, as compared to generating ~~$33.3~~$73.5 million in the first ~~nine~~six months of ~~2018, representing recurring~~2019. This change was due to reduced working capital ~~changes.~~requirements as revenues slowed. In addition, the Company deferred $48.2 million of tax payments as allowed by COVID-19 economic relief in several jurisdictions. In the second quarter of 2020, the Company also monetized wage subsidy receivables outside the U.S. for $16.9 million in cash.

Trade accounts receivable totaled ~~$1.3~~$1.1 billion at the end of the ~~third~~second quarter of ~~2019.~~2020. Global DSO was 5961 days at the end of the ~~third~~second quarter of ~~2019~~2020 and 5857 days at the end of the ~~third~~second quarter of ~~2018.~~2019.

Our working capital position (total current assets less total current liabilities) was ~~$465.8~~$585.8 million at the end of the ~~third~~second quarter of ~~2019, a decrease~~2020, an increase of ~~$37.2~~$64.2 million from year-end ~~2018. The decrease in~~2019. Excluding additional cash, working capital ~~is driven by lower trade accounts receivable as a result of the decrease in revenue.~~declined $126.2 million from year-end 2019. The current ratio (total current assets divided by total current liabilities) was ~~1.5~~1.7 at the end of the ~~third~~second quarter of ~~2019~~2020 and 1.6 at year-end ~~2018. Both ratios were impacted by our acquisitions described within investing activities.~~2019.

Investing Activities

In the first ~~nine~~six months of ~~2019,~~2020, we ~~used $88.8~~generated $13.3 million of cash ~~for~~from investing activities, as compared to using ~~$26.6~~$79.6 million in the first ~~nine~~six months of ~~2018. The year-over-year increase~~2019. Included in cash from investing activities in the first six months of 2020 is $55.5 million of proceeds representing the cash received, net of transaction expenses, for the sale of three headquarters properties as a part of a sale and leaseback transaction. This was partially offset by $36.4 million of cash used for the acquisition of Insight in January 2020, net of the cash received and including working capital adjustments. Included in cash used for investing activities ~~was primarily due to~~in the first six months of 2019 is $50.8 million for the acquisition of NextGen in January 2019, net of the cash received, and $35.6 million for the acquisition of GTA in January 2019, net of the cash ~~received,~~received. These amounts were partially offset by proceeds of $13.8 million primarily from ~~primarily~~ the sale of unused ~~land during the second quarter of 2019.~~land.

Financing Activities

In the first ~~nine~~six months of ~~2019,~~2020, we ~~generated $3.6~~used $6.2 million of cash ~~from~~for financing activities, as compared to ~~using $17.0~~generating $8.6 million in the first ~~nine~~six months of ~~2018.~~2019. The change in cash used in financing activities was primarily related to the year-over-year change in short-term borrowing activities. Debt totaled ~~$17.5~~$0.3 million at the end of the ~~third~~second quarter of ~~2019~~2020 and was ~~$2.2~~$1.9 million at year-end ~~2018.~~2019. Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was ~~1.4%~~0.0% at the end of the ~~third~~second quarter of ~~2019~~2020 and ~~0.2%~~0.1% at year-end ~~2018.~~2019.

The change in short-term borrowings in the first ~~nine~~six months of 2020 was primarily due to payments on local lines of credit. The change in short-term borrowings in the first six months of 2019 was primarily due to borrowings on our securitization facility. ~~The change in short-term borrowings in the first nine months of 2018 was primarily due to payments on our revolving credit facility.~~

We made dividend payments of ~~$8.9~~$3.0 million in the first ~~nine~~six months of ~~2019~~2020 and ~~$8.8~~$5.9 million in the first ~~nine~~six months of ~~2018.~~2019.

New Accounting Pronouncements

See New Accounting Pronouncements footnote in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a description of new accounting pronouncements.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Form 10-K. For a discussion of the goodwill impairment charge recognized during the first quarter of 2020, see the Goodwill footnote in the Notes to our Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more information.

Contractual Obligations and Commercial Commitments



Delaware						38-1510762
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



Title of each class	Trading Symbols	Name of each exchange on which registered
Class A Common	KELYA	NASDAQ Global Market
Class B Common	KELYB	NASDAQ Global Market


		Page Number

		~~Page Number~~

PART I. FINANCIAL INFORMATION	4

Item 1. Financial Statements (unaudited).		4

Consolidated Statements of Earnings		4

Consolidated Statements of Comprehensive Income (Loss)		5

Consolidated Balance Sheets		6

Consolidated Statements of Stockholders' Equity		8

Consolidated Statements of Cash Flows		9

Notes to Consolidated Financial Statements		11

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		3028

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		43

Item 4. Controls and Procedures.		4443

PART II. OTHER INFORMATION		4443

Item 1. Legal Proceedings.		4443

Item 1A. Risk Factors.		44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		45

Item 3. Defaults Upon Senior Securities.		45

Item 4. Mine Safety Disclosures.		45

Item 5. Other Information.		45

Item 6. Exhibits.		45

SIGNATURES		4647


	Shares	Weighted Average Grant Date Fair Value
Nonvested at year-end 2019	360	$	24.92
Granted	65	14.69
Vested	(108)	24.17
Forfeited	(20)	24.46
Nonvested at second quarter-end 2020	297	$	22.98



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company	☐
Emerging growth company	☐



	13 Weeks Ended						39 Weeks Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Revenue from services	$	1,267.7		$	1,342.4		$	4,017.8		$	4,099.2

Cost of services	1,040.0			1,103.3			3,294.5			3,381.4

Gross profit	227.7			239.1			723.3			717.8

Selling, general and administrative expenses	210.6			217.2			666.9			663.5

Gain on sale of assets	—			—			12.3			—

Earnings from operations	17.1			21.9			68.7			54.3

Gain (loss) on investment in Persol Holdings	(39.3		)	15.8			35.1			(13.0		)

Other income (expense), net	(0.2		)	(0.7		)	(1.1		)	(1.8		)

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate	(22.4		)	37.0			102.7			39.5

Income tax expense (benefit)	(12.8		)	5.9			6.3			(3.3		)

Net earnings (loss) before equity in net earnings (loss) of affiliate	(9.6		)	31.1			96.4			42.8

Equity in net earnings (loss) of affiliate	(0.9		)	2.0			(1.0		)	4.0

Net earnings (loss)	$	(10.5	)	$	33.1		$	95.4		$	46.8

Basic earnings (loss) per share	$	(0.27	)	$	0.84		$	2.42		$	1.20
Diluted earnings (loss) per share	$	(0.27	)	$	0.84		$	2.41		$	1.19

Average shares outstanding (millions):
Basic	39.1			38.8			39.0			38.7
Diluted	39.1			38.9			39.2			38.8



	September 29, 2019			December 30, 2018
Assets
Current Assets
Cash and equivalents	$	22.8		$	35.3
Trade accounts receivable, less allowances of $12.2 and $13.2, respectively	1,262.3			1,293.3
Prepaid expenses and other current assets	80.7			71.9
Total current assets	1,365.8			1,400.5

Noncurrent Assets
Property and equipment:
Property and equipment	297.3			294.7
Accumulated depreciation	(214.6		)	(208.4		)
Net property and equipment	82.7			86.3
Operating lease right-of-use assets	62.2			—
Deferred taxes	221.0			198.7
Goodwill	127.8			107.3
Investment in Persol Holdings	174.9			135.1
Investment in equity affiliate	120.4			121.3
Other assets	321.5			265.2
Total noncurrent assets	1,110.5			913.9

Total Assets	$	2,476.3		$	2,314.4



	Third Quarter						September Year to Date
	2019			2018			2019			2018
Branch-Delivered Staffing
Americas Staffing
Staffing Solutions
Commercial	$	366.8		$	424.3		$	1,143.4		$	1,237.2
Educational Staffing	57.5			57.7			314.5			297.8
Professional/Technical	83.2			68.8			256.0			206.3
Permanent Placement	8.5			11.0			26.2			28.8
Total Americas Staffing	516.0			561.8			1,740.1			1,770.1

International Staffing
Staffing Solutions	246.8			270.4			760.7			826.4
Permanent Placement	6.1			6.8			19.2			22.1
Total International Staffing	252.9			277.2			779.9			848.5

Global Talent Solutions
Talent Fulfillment
Staffing Solutions	251.2			279.0			765.0			851.5
Permanent Placement	0.5			0.6			1.3			1.4
Talent Solutions	91.2			94.0			274.2			267.9
Total Talent Fulfillment	342.9			373.6			1,040.5			1,120.8

Outcome-Based Services	159.6			134.0			468.9			373.3
Total Global Talent Solutions	502.5			507.6			1,509.4			1,494.1

Total Intersegment	(3.7		)	(4.2		)	(11.6		)	(13.5		)

Total Revenue from Services	$	1,267.7		$	1,342.4		$	4,017.8		$	4,099.2



Cash	$	3.5
Trade accounts receivable	19.7
Other current assets	0.3
Goodwill	13.7
Intangibles	21.5
Other noncurrent assets	0.5
Current liabilities	(4.9		)
Purchase price paid, including working capital adjustments	$	54.3



Cash	$	0.1
Trade accounts receivable	13.9
Other current assets	0.1
Goodwill	6.8
Intangibles	17.3
Other noncurrent assets	0.4
Current liabilities	(2.9		)
Purchase price paid, including working capital adjustments	$	35.7



Balance as of year-end 2018	$	—
Additions charged to Americas Staffing	6.3
Reductions for cash payments	(0.2		)
Balance as of first quarter-end 2019	6.1
Reductions for cash payments	(3.1		)
Accrual adjustments	(0.6		)
Balance as of second quarter-end 2019	2.4
Reductions for cash payments	(1.4		)
Accrual adjustments	(0.1		)
Balance as of third quarter-end 2019	$	0.9



	As of Year-End 2018		Additions to Goodwill		As of Third Quarter-End 2019
	(In millions of dollars)
Americas Staffing	$	44.8	$	13.7	$	58.5
Global Talent Solutions	62.5		6.8		69.3
	$	107.3	$	20.5	$	127.8


	Financial Measure Performance Shares				TSR Performance Shares
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Nonvested at year-end 2019	502	$	24.21	114	$	25.24
Granted	—	—		—	—
Vested	(155)	24.02		—	—
Forfeited	(19)	25.07		(2)	31.38
Vesting adjustment	—	—		(62)	20.15
Nonvested at second quarter-end 2020	328	$	22.90	50	$	31.38



	Shares		Weighted Average Grant Date Fair Value
Nonvested at year-end 2018	356		$	23.44
Granted	183		24.79
Vested	(109	)	22.61
Forfeited	(38	)	23.80
Nonvested at third quarter-end 2019	392		$	24.27



Description	Balance Sheet Location	As of Third Quarter-End 2019
ROU Assets:
Operating	Operating lease right-of-use assets	$	62.2
Financing	Property and equipment	2.8
Total lease assets		$	65.0

ROU Liabilities:
Operating - current	Operating lease liabilities, current	$	19.8
Financing - current	Accounts payable and accrued liabilities	0.9
Operating - noncurrent	Operating lease liabilities, noncurrent	45.3
Financing - noncurrent	Other long-term liabilities	1.5
Total lease liabilities		$	67.5



	Operating Leases		Financing Leases
2019, remaining	$	6.1	$	0.3
2020	21.9		0.8
2021	17.5		0.8
2022	12.3		0.8
2023	7.0		—
2024	3.9		—
Thereafter	4.2		—
Total future lease payments	72.9		2.7
Less: Imputed interest	7.8		0.3
Total	$	65.1	$	2.4



Fiscal year:
2019	$	26.7
2020	20.4
2021	15.2
2022	9.8
2023	4.7
Later years	4.9

Total	$	81.7


	2020					2019			Change			CC Change
Revenue from services	$	975.3		$	1,367.5		(28.7)	%		(27.7)	%
Gross profit	189.2			244.0			(22.5)			(21.7)
SG&A expenses excluding restructuring charges	178.3			222.1			(19.7)			(19.0)
Restructuring charges	(0.2)			(0.6)			(66.5)			(66.5)
Total SG&A expenses	178.1			221.5			(19.6)			(18.9)

Gain on sale of assets	—			12.3			NM
Earnings from operations	11.1			34.8			(68.2)
Earnings from operations excluding restructuring charges	10.9			34.2			(68.2)
Diluted earnings per share	1.04			2.12			(50.9)

Permanent placement income (included in revenue from services)	7.6			15.7			(51.5)			(50.5)
Gross profit rate	19.4		%	17.8		%	1.6	pts.



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)
July 1, 2019 through August 4, 2019	306	$	26.21	—	$	—

August 5, 2019 through September 1, 2019	2,052	27.19		—	$	—

September 2, 2019 through September 29, 2019	61	24.58		—	$	—

Total	2,419	$	27.00	—


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.

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101.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


		KELLY SERVICES, INC.

Date: August 6, 2020

		/s/ Olivier G. Thirot
		Olivier G. Thirot

		~~KELLY SERVICES, INC.~~

~~Date: November 6, 2019~~

	~~/s/ Olivier G. Thirot~~
	~~Olivier G. Thirot~~

	Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)


Date: August 6, 2020

		/s/ Laura S. Lockhart
		Laura S. Lockhart

~~Date: November 6, 2019~~

	~~/s/ Laura S. Lockhart~~
	~~Laura S. Lockhart~~

	Vice President, Corporate Controller
		and Chief Accounting Officer
		(Principal Accounting Officer)



~~Exhibit No.~~		~~Description~~
14		~~Code of Business Conduct and Ethics, revised August 2019.~~

~~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~~		~~Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.~~

~~101.SCH~~		~~Inline XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.DEF~~		~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~

~~101.LAB~~		~~Inline XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document.~~