CONSOLIDATED STATEMENTS OF EARNINGS Kelly Services, Inc. and Subsidiaries 2010 2009(1) 2008 (In millions of dollars except per share items) Revenue from services $4,950.3 $4,314.8 $5,517.3 Cost of services 4,155.8 3,613.1 4,539.7 Gross profit 794.5 701.7 977.6 Selling, general and administrative expenses 754.4 794.7 967.4 Asset impairments 2.0 53.1 80.5 Earnings (loss) from operations 38.1 (146.1) (70.3) Other expense, net (5.4) (2.2) (3.4) Earnings (loss) from continuing operations before taxes 32.7 (148.3) (73.7) Income taxes 6.6 (43.2) 8.0 Earnings (loss) from continuing operations 26.1 (105.1) (81.7) Earnings (loss) from discontinued operations, net of tax 0.6 (0.5) Net earnings (loss) $ 26.1 $ (104.5) $ (82.2) Basic earnings (loss) per share Earnings (loss) from continuing operations $ 0.71 $ (3.01) $ (2.35) Earnings (loss) from discontinued operations 0.02 (0.02) Net earnings (loss) $ 0.71 $ (3.00) $ (2.37) Diluted (loss) earnings per share Earnings (loss) from continuing operations $ 0.71 $ (3.01) $ (2.35) Earnings (loss) from discontinued operations 0.02 (0.02) Net (loss) earnings $ 0.71 $ (3.00) $ (2.37) Dividends per share $ $ $ 0.54 Average shares outstanding (millions): Basic 36.1 34.9 34.8 Diluted 36.1 34.9 34.

additional information

principal asset is inventory, which consists of merchandise inventories. For some merchandising firms, a large amount of sales may be for cash. In such cases, the receivables balance will be relatively low. Other merchandising firms have a large amount of sales charged but also accept credit cards such as VISA, so they also have a relatively low balance in receivables. Other firms extend credit and carry the accounts receivable and thus have a relatively large receivables balance. Because of the competitive nature of the industry, profit ratios on the income statement are often quite low, with the cost of sales and operating expenses constituting a large portion of expenses. Refer to Exhibit 5-3, Best Buy Co., Inc. A service firm generates its revenue from the service provided. Because service cannot typically be stored, inventory is low or nonexistent. In people-intensive services, such as advertising, investment in property and equipment is also low compared with that of manufacturing firms. Refer to Exhibit 5-4, Kelly Services, Inc., and Subsidiaries. A manufacturing firm will usually have large inventories composed of raw materials, work in process, and finished goods, as well as a material investment in property, plant, and equipment. Notes and accounts receivable may also be material, depending on the terms of sale. The cost of sales often represents the major expense. Refer to Exhibit 5-5, Cooper Tire & Rubber Company

required

P 5-3 The Kelly Services, Inc., and Subsidiaries balance sheets from its 2010 annual report are presented in Exhibit 5-4. Required a. Using the balance sheets, prepare a vertical common-size analysis for 2010 and 2009. Use total assets as a base. b. Using the balance sheets, prepare a horizontal common-size analysis for 2010 and 2009. Use 2009 as the base. c. Comment on significant trends that appear in (a) and (b)

The Kelly Services, Inc., and Subsidiaries statements of earnings from its 2010 annual report are presented in Exhibit 5-4. Required a. Using the statements of earnings, prepare a vertical common-size analysis for 2010, 2009, and 2008. Use revenues as the base. b. Using the statements of earnings, prepare a horizontal common-size analysis for 2010, 2009, and 2008. Use 2008 as the base. c. Comment on significant trends that appear in (a) and (b