KELLY SERVICES INC

(In millions, except share and per share data)

1. Summary of Significant Accounting Policies

Nature of Operations Kelly Services, Inc. (the “Company”) is a specialty talent and workforce solutions provider operating throughout the world.

Fiscal Year The Company’s fiscal year ends on the Sunday nearest to December 31. The three most recent years ended on December 28, 2025 (2025), December 29, 2024 (2024) and December 31, 2023 (2023), all of which contained 52 weeks. Period costs included in selling, general and administrative (“SG&A”) expenses are recorded on a calendar-year basis.

Principles of Consolidation The consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current presentation. Specifically, as discussed in the Segment Disclosures footnote, the Company has made a change to its reportable segments during the first quarter of 2025.

Foreign Currency Translation All of the Company’s international subsidiaries use their local currency as their functional currency, which is the currency in which they transact the majority of their activities. Revenue and expense accounts of foreign subsidiaries are translated to U.S. dollars at average exchange rates, while assets and liabilities are translated to U.S. dollars at year-end exchange rates. Resulting translation adjustments, net of tax, where applicable, are reported as accumulated foreign currency translation adjustments in stockholders’ equity and are recorded as a component of accumulated other comprehensive income (loss).

Foreign Currency Forward Contracts The Company is exposed to foreign currency fluctuations and enters into foreign currency forward contracts to manage foreign currency risk. Forward contracts may be designated as a fair value hedge, while other forward contracts are not designated as hedging instruments. Both are used to reduce the exposure to variability in certain expected future cash flows. The Company records designated and non-designated derivatives at mark-to-market with gains and losses recognized in earnings according to their designation on the consolidated statements of earnings. See the Fair Value Measurements footnote for further detail on specific forward contracts including each respective line item in which gains and losses are recorded. The Company is permitted to net the fair values of derivative assets and liabilities for financial reporting purposes, if such assets and liabilities are with the same counterparty and subject to a master netting arrangement. Since these conditions have been met, the Company elected to employ net presentation of derivative assets and liabilities.

Interest Rate Swap Contract The Company is exposed to interest rate fluctuation and enters into interest rate swap contracts that are not designated as hedging instruments to manage fluctuations on the Company's securitization facility due to Secured Overnight Financing Rate (“SOFR”) variances (see Fair Value Measurements footnote). The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in other income (expense), net on the consolidated statements of earnings. The Company is permitted to net the fair values of derivative assets and liabilities for financial reporting purposes, if such assets and liabilities are with the same counterparty and subject to a master netting arrangement. Since these conditions have been met, the Company elected to employ net presentation of derivative assets and liabilities.

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

The Company records revenues from sales of services and the related direct costs in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent. When Kelly is the principal, the Company demonstrates control over the service by being primarily responsible to the Company's customers for fulfilling the contractual promise to provide the service. When Kelly does not demonstrate control over the service, which may be evident through the arrangement of other contingent labor suppliers and/or service providers to perform services for the customer or by Kelly not holding primary responsibility for the fulfillment of the contractual promise to provide services to the customer, the amounts billed to the Company's customers are net of the amounts paid to the secondary suppliers/service providers and the net amount is recorded as revenues.

Staffing Services Revenue

Staffing services contracts are generally negotiated and invoiced on a per-hour or per-unit basis as the temporary staffing services are transferred to the customer. Revenue from the majority of the Company's staffing services continues to be recognized over time as the customer simultaneously receives and consumes the services the Company provides. The Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Permanent Placement Revenue

Permanent placement revenue is recorded at the point in time 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. The Company considers this the point the control transfers to the customer.

Outcome-Based Services Revenue

Billings are generally negotiated and invoiced on a measure of time (hours, weeks, months) or per-unit basis for the Company's services performed. The Company recognizes revenue from the majority of the Company's outcome-based services over time as the customer simultaneously receives and consumes the services the Company provides. For the majority of the Company's outcome-based services, the Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Talent Solutions Revenue

Talent Solutions services include: overall program management of the Company's customer’s contingent workforce, external vendors and/or independent contractors, end-to-end talent acquisition and payroll outsourcing. Billings are generally negotiated and invoiced as a fee-based commission contingent on the amount of services managed through the program, a monthly management fee, measure of time (hours), or a per-unit basis for the Company's services performed. The Company continues to recognize revenue for talent solution services over time as the customer simultaneously receives and consumes the services the Company provides. The Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Variable Consideration

Certain customers may receive cash-based incentives or credits, which are accounted for as a form of variable consideration. The Company estimates these amounts based on the expected or likely amount to be provided to customers and reduce revenues recognized to the extent that it is probable that a significant reversal of such adjustment will not occur. Provisions for sales allowances (billing adjustments related to errors, service issues and compromises on billing disputes), based on historical experience, are recognized at the time the related sale is recognized as a reduction in revenue from services.

Payment Terms

Customer payments are typically due within 60 days of invoicing, but may be shorter or longer depending on contract terms. Management does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the services to the customer will be less than one year. The Company does not have any significant financing components or extended payment terms.

Deferred Revenue

Items which are billed to the customer at a point in time, rather than billed over time as the services are delivered to the customer, are assessed for potential revenue deferral. At this time, the balance of the contract liability as well as the amount of revenue recognized in the reporting period that was included in the deferred revenue balance at the beginning of the period is not material.

Deferred Costs

Occasionally, fulfillment costs are incurred after obtaining a contract in order to generate a resource that will be used to provide the Company's services. These costs are considered incremental and recoverable costs to fulfill the Company's contract with the customer. These costs to fulfill a contract are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be the average length of assignment of the employees. The Company determined the period of benefit by taking into consideration the Company's customer contracts, attrition rates and other relevant factors. Amortization expense is included in SG&A expenses in the consolidated statements of earnings.

Unsatisfied Performance Obligations

In accordance with the applicable guidance, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Allowance for Credit Losses - Trade 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 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.

The Company is exposed to credit losses primarily through the Company's sales of workforce solution services to customers. The Company established an allowance for estimated credit losses in the current period resulting from the failure of the Company's customers to make required payments on their trade accounts receivable in future periods. The Company pools 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. The Company monitors 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. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

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.

Cost of Services Cost of services are those costs directly associated with the earning of revenue. The primary examples of these types of costs are temporary employee wages, along with other employee related costs, including associated payroll taxes, temporary employee benefits, such as service bonus and holiday pay and health insurance and workers’ compensation costs. These costs differ fundamentally from SG&A expenses in that they arise specifically from the action of providing the Company's services to customers whereas SG&A costs are incurred regardless of whether or not the Company places temporary employees with the Company's customers.

Advertising Expenses Advertising expenses, which are expensed as incurred and are included in SG&A expenses, were $6.5 million, $9.6 million, and $7.8 million in 2025, 2024 and 2023, respectively.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for uncollectible accounts receivable and credit losses, workers’ compensation, goodwill and long-lived asset impairment, valuation of acquired intangibles, litigation costs and income taxes. Actual results could differ materially from those estimates.

Cash and Equivalents Cash and equivalents are stated at fair value. The Company considers securities with original maturities of three months or less to be cash and equivalents.

Property and Equipment Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives ranging from 5 to 30 years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms. The Company capitalizes external costs and internal payroll costs directly incurred in the development of software for internal use and amortizes these costs on a straight-line basis over the software’s estimated useful life 3 to 12 years. Upon sale or disposition of property and equipment, the difference between the unamortized cost and the proceeds is recorded as either a gain or a loss and is included in the Company's consolidated statements of earnings. Long-lived assets are evaluated for impairment in accordance with the provisions of the accounting guidance on the impairment or disposal of long-lived assets (see the Property and Equipment footnote).

Cloud Computing Arrangements The Company has cloud computing arrangements that are comprised of internal-use software platforms that are 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. Implementation costs associated with these cloud computing arrangements are capitalized when incurred during the application development phase. Amortization is calculated on a straight-line basis over the life of the contract and is a component of SG&A expenses in the Company's consolidated statements of earnings.

Amortization expense was $9.1 million for 2025, $11.6 million for 2024 and $6.9 million for 2023. The related accumulated amortization totaled $31.0 million in 2025 and $23.5 million in 2024. Capitalized amounts related to such arrangements are recorded within prepaid and other current assets and non-current other assets in the consolidated balance sheet. The Company had $5.2 million as of year-end 2025 and $4.5 million as of year-end 2024 recorded in prepaid expenses and other current assets in the consolidated balance sheet. The Company had $49.5 million as of year-end 2025 and $41.4 million as of year-end 2024 recorded in non-current other assets in the consolidated balance sheet related to capitalized cloud computing arrangements.

Leases Right-of-use (“ROU”) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Since most of the Company’s leases do not have an implicit borrowing rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's leases may include options that allow, at the Company's sole discretion, for the lease to be extended or terminated, and when it is reasonably certain that the Company will exercise those options, the Company will include those periods in the lease term. Variable costs, such as payments for insurance and tax payments, are expensed when the obligation for those payments is incurred (see the Leases footnote).

Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the acquisition date fair value of net assets acquired. Purchased intangible assets are primarily comprised of acquired trade names and customer relationships that are recorded at fair value at the date of acquisition. The fair value of trade name intangibles is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about expected future revenue growth rates, royalty rates and discount rates. The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about expected future revenue growth rates, customer attrition rates, profit margins and discount rates.

Purchased intangible assets with definite lives are amortized over their respective useful lives (from 5 to 15 years) on a straight-line basis.

Impairment of Long-Lived Assets, Intangible Assets, Goodwill, Equity Method Investments and Equity Securities The Company evaluates long-lived assets and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When estimated undiscounted future cash flows will not be sufficient to recover the carrying amount of the asset group, in which the long-lived asset being tested for impairment resides, the asset is written down to its estimated fair value. Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or estimated fair value less cost to sell.

The Company tests goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. Generally accepted accounting principles require that goodwill be tested for impairment at a reporting unit level. For segments with a goodwill balance, the Company has determined that the Company's reporting units are the same as the Company's operating and reportable segments based on the Company's organizational structure or one level below the Company's operating segments (the component level).

The Company may first use a qualitative assessment (“step zero”) for the annual impairment test if the Company has determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value. The step zero analysis includes making judgments and assessments to determine whether any events or circumstances have occurred that makes it more likely than not that the fair value of a reporting unit is less than its carrying amount. In conducting the qualitative assessment, the Company assesses the totality of relevant events and circumstances that affect the fair value or carrying value of the reporting unit. Such events and circumstances may include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, entity-specific events and events affecting a reporting unit.

If the Company elects to forgo the qualitative assessment for a reporting unit, goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value (“step one”). If the estimated fair value of a reporting unit exceeds the carrying value of the net assets assigned to a reporting unit, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference.

For the step one quantitative test, the Company determines the fair value of the Company's reporting units primarily using the income approach combined with a market approach. Under the income approach, estimated fair value is determined based on estimated future cash flows discounted by an estimated market participant weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit being measured. Estimated future cash flows are based on our internal projection model and reflects management’s outlook for the reporting units. Our income approach analysis used significant assumptions by reporting unit, including, expected future revenue growth rates, profit margins and discount rates. Under the market approach, the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of each reporting unit was used. The assumptions under both the income approach and market approach can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in our business strategy and our internal forecasts.

Prior to the sale of the majority of the Company's investment in the Company's equity affiliate, the Company evaluated the Company's equity method investment on a quarterly basis or whenever events or circumstances indicated the carrying amount may be other-than-temporarily impaired. If the Company had concluded that there was an other-than-temporary impairment of the Company's equity method investment, the Company would have adjusted the Company's carrying amount of the Company's investment to the adjusted fair value.

The Company evaluates equity securities measured under the measurement alternative for indicators of impairment on a quarterly basis and whenever observable price changes occur. The measurement alternative represents cost, less impairment, plus or minus observable price changes. Quarterly, the Company also confirm the securities still qualify to be measured in accordance with the measurement alternative. The value of the securities will be adjusted for any increases or decreases as a result of an observable price change.

Accounts Payable Included in accounts payable balances are book overdrafts, which are outstanding checks in excess of funds on deposit. Such amounts totaled $4.6 million and $5.1 million at year-end 2025 and 2024, respectively.

Accrued Payroll and Related Taxes Included in current accrued payroll and related taxes are book overdrafts, which are outstanding checks in excess of funds on deposit. Such amounts totaled $0.6 million and $11.4 million at year-end 2025 and 2024, respectively.

Income Taxes The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The U.S. work opportunity credit is allowed for wages earned by employees in certain targeted groups. The actual amount of creditable wages in a particular period is estimated, since the credit is only available once an employee reaches a minimum employment period and the employee’s inclusion in a targeted group is certified by the applicable state. As these events often occur after the period the wages are earned, judgment is required in determining the amount of work opportunity credits accrued for in each period. The Company evaluates the accrual regularly throughout the year and make adjustments as needed.

Uncertain tax positions that are taken or expected to be taken in a tax return are recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

Interest and penalties related to income taxes are classified as income tax expense. U.S. taxes on global intangible low-taxed income (“GILTI”) are accounted for as incurred.

Stock-Based Compensation The Company may grant restricted stock awards and units (collectively, “restricted stock”) and performance awards of the Company's Class A stock to key employees. The Company utilizes the market price on the date of grant as the fair value for restricted stock and the market price on the date of grant less the present value of the expected dividends not received during the vesting period for performance awards. The value of awards is recognized as expense, net of forfeitures as they occur, over the requisite service periods in SG&A expenses in the Company’s consolidated statements of earnings.

Earnings Per Share Restricted stock that entitle their holders to receive nonforfeitable dividends before vesting are considered participating securities and, therefore, are included in the calculation of earnings per share using the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Under this method, earnings from continuing operations (or net earnings) is reduced by the amount of dividends declared and the remaining undistributed earnings is allocated to common stock and participating securities based on the proportion of each class’s weighted average shares outstanding to the total weighted average shares outstanding. The calculation of diluted earnings per share includes the effect of potential common shares outstanding in the average weighted shares outstanding.

Workers’ Compensation In the U.S., the Company has a combination of insurance and self-insurance contracts under which the Company effectively bears the first $1.0 million of risk per single accident. The Company establishes accruals for workers’ compensation claims utilizing actuarial methods to estimate the undiscounted future cash payments that will be made to satisfy the claims, including an allowance for incurred-but-not-reported claims. The Company retains an independent consulting actuary to establish loss development factors and loss rates, based on historical claims experience as well as industry experience and applies those factors to current claims information to derive an estimate of the ultimate claims liability.

In preparing the estimates, the consulting actuary considers a number of assumptions and multiple generally accepted actuarial methods in the course of preparing the loss forecast for claims. When claims exceed the applicable loss limit or self-insured retention and realization of recovery of the claim from existing insurance policies is deemed probable, the Company records a receivable from the insurance company for the excess amount. The receivable is included in prepaid expenses and other current assets and other assets in the consolidated balance sheet at year end. The Company evaluates the accrual quarterly throughout the year and makes adjustments as needed and the ultimate cost of these claims may be greater than or less than the established accrual.

2. Revenue

Revenue Disaggregated by Service Type

Kelly hasthree operating segments: Enterprise Talent Management (“ETM”), Science, Engineering & Technology (“SET”) and Education. The ETM segment combines two former reportable segments, Professional & Industrial (“P&I”) and Outsourcing & Consulting Group (“OCG”), along with the transfer of certain customers from the SET segment to better align delivery models and improve go-to-market strategies (see Segment Disclosures footnote). In the first quarter of 2025, the Company also integrated the Sevenstep business—acquired as part of the Motion Recruitment Partners, LLC (“MRP”) acquisition and which had previously been included in the SET segment—into the ETM segment as part of the broader MRP integration strategy. Prior to 2024, the Company also had an International operating segment (see Segment Disclosures footnote). The Company's segments deliver talent through staffing services, permanent placement or outcome-based services. The Company's ETM segment also delivers talent solutions including managed service provider (“MSP”), payroll process outsourcing (“PPO”) and recruitment process outsourcing (“RPO”). The 2023 and 2024 ETM and SET segment information has been recast to conform to the new structure.

The following table presents the Company's segment revenues disaggregated by service type:

Revenue Disaggregated by Geography

The Company's operations are subject to different economic and regulatory environments depending on geographic location. The Company's Education segment operates in the Americas region, the SET segment operates in the Americas and Europe regions and the ETM segment operates in the Americas, Europe and Asia-Pacific regions. In 2023, the Company's International segment included the Company's staffing operations in Europe as well as Mexico, which is included in the Americas region.

The below table presents the Company's revenues disaggregated by geography:

Deferred Costs

Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were zero as of year-end 2025 and $1.8 million as of 2024. Amortization expense for the deferred costs was $1.9 million for 2025, $6.7 million for 2024 and $7.7 million for 2023. As of year-end 2025, there was no impairment loss in relation to the costs capitalized.

3. Credit Losses

The rollforward of the Company's allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowances in the consolidated balance sheet, is as follows:

Write-offs are presented net of recoveries, which were not material, for December year-to-date 2025, 2024 and 2023. As of year-end 2024, the Company had a receivable of $16.4 million related to the sale of the Company's EMEA staffing operations. The receivable was settled in the second quarter of 2025 (see the Acquisitions and Dispositions footnote). There were no long-term customer receivables in 2025, 2024 and 2023. No allowances related to other receivables were material for December year-to-date 2025, 2024 and 2023.

4. Acquisitions and Dispositions

Acquisitions

Children's Therapy Center

On November 13, 2024, Kelly Services USA, LLC (“KSU”), a wholly owned subsidiary of the Company, acquired 100% of the issued and outstanding limited liability company interests of Children's Therapy Center (“CTC”). CTC specializes in occupational, physical and speech therapy for children and will expand the Company's growth opportunities in therapeutic services. Under terms of the purchase agreement, the purchase price of $3.3 million was adjusted for cash held by CTC at the closing date and estimated working capital adjustments, resulting in the company paying cash of $3.1 million. In the first quarter of 2025, the Company received a post-close net working capital adjustment of $0.1 million. Goodwill generated from the acquisition of $2.9 million, net of the net working capital adjustment, was primarily attributable to expanding market potential and was assigned to the Education operating segment (see the Goodwill and Intangible Assets footnote). CTC's results of operations are included in the Education segment. As of November 2025, the purchase price allocation for this acquisition is final.

Motion Recruitment Partners

On May 31, 2024, the Company indirectly acquired 100% of the equity interests in Motion Recruitment Partners, LLC (“MRP”) by way of a merger with MRP Merger Sub, Inc. (“Merger Sub”), a newly-formed, wholly owned subsidiary of the Company, with and into MRP Topco (“Topco”), the indirect parent company of MRP and Littlejohn Fund V, L.P. (“Littlejohn”), with Topco surviving the merger (the “Merger”). MRP is a parent company to a group of leading global talent solutions providers and the acquisition is expected to strengthen the scale and capabilities of Kelly's solutions portfolio. Under terms of the merger agreement, the $425.0 million purchase price was adjusted for estimated cash held by MRP at the closing date and estimated working capital adjustments, resulting in the Company paying cash of $440.0 million. The acquisition was funded with cash on hand and available credit facilities (see the Debt footnote). Total consideration included $3.4 million of contingent consideration related to an earnout payment with a maximum potential cash payment of $60.0 million in the event certain financial metrics are met per the terms of the agreement. The earnout period concluded in the first quarter of 2025 and no further liability was recognized. In the fourth quarter of 2024, the Company paid a post-close net working capital adjustment of $1.4 million. The merger agreement contains representations and warranties and covenants customary for a transaction of this nature. The total consideration was as follows:

As of May 2025, the purchase price allocation for this acquisition is final. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition:

The fair value of the acquired receivables represents the contractual value net of the allowance for potentially uncollectible accounts. Included in the assets purchased in the MRP acquisition was $145.9 million of intangible assets, made up of $88.1 million in customer relationships, $56.5 million in trade names and $1.3 million for non-compete agreements. The customer relationships are amortized over 15 years with no residual value, the trade names are amortized over 10-15 years with no residual value and the non-compete agreements are amortized over four years with no residual value. Goodwill generated from the acquisition was primarily attributable to expanding market potential and the expected revenue and operational synergies and was assigned to the SET operating segment (see the Goodwill and Intangible Assets footnote). None of the goodwill generated from the acquisition is expected to be deductible for tax purposes.

MRP's results of operations are included in the ETM and SET segments, with MRP’s Sevenstep business included in ETM and the remaining operations in SET. For year-end 2024, the Company's consolidated revenues and net earnings (loss) include $285.8 million and $4.2 million of earnings from MRP, respectively.

Pro Forma Information

The following unaudited pro forma information presents a summary of the operating results as if the MRP acquisition had been completed as of January 2, 2023:

The pro forma results for the periods above include adjustments to amortization expense for the intangible assets, reversal of MRP's interest expense on credit facilities that were settled upon completion of the acquisition, interest expense and associated amortization of debt issuance costs for financing the acquisition, reclassification of transaction expenses to the appropriate period and applicable taxes. 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 acquisition occurred on the assumed date, nor is it necessarily an indication of future operating results.

Dispositions

Disposition of EMEA Staffing Operations

On January 2, 2024, the Company completed the sale of its EMEA staffing operations (“disposal group”), which was included in the Company's International operating segment, to Gi Group Holdings S.P.A. (“Gi”). Upon closing, the Company received cash proceeds of $110.6 million, or $77.1 million net of cash disposed, which is included in investing activities in the consolidated statements of cash flows. The Company will not receive any proceeds from the contingent consideration opportunity associated with the transaction.

In the first quarter of 2024, the Company recorded a euro-denominated receivable from Gi of $26.9 million representing the adjustments that were determinable and expected to be received. In the second quarter of 2024, the Company recorded negative working capital and other adjustments of $10.1 million, which reduced the net receivable from Gi to $16.8 million. In the second quarter of 2025, the Company received proceeds of $21.8 million in connection with this receivable. The proceeds exceeded the amount previously recorded due to favorable resolution of certain reconciliations under the terms of the purchase agreement. As a result, $4.8 million was recognized in the consolidated statements of earnings in the second quarter of 2025, with $4.0 million recorded in gain on sale of EMEA staffing operations and $0.8 million recorded in other income (expense), net reflecting foreign currency remeasurements up to the date of settlement. The proceeds are included in investing activities in the consolidated statements of cash flows. The receivable from Gi was fully settled and there was no remaining receivable as of the second quarter-end 2025.

The disposal group did not meet the requirements to be classified as discontinued operations as the sale did not have a material effect on the Company's operations and did not represent a strategic shift in the Company's strategy. As of December 31, 2023, the disposal group was classified as held for sale and held at its carrying value. The Company's consolidated earnings from operations in 2023 included earnings of $4.3 million from the EMEA staffing operations.

The major classes of divested assets and liabilities were as follows:

5. 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. Long-term debt is related to revolving credit agreements and their carrying values approximate fair value as the interest rates are variable and reflect current market rates.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities measured at fair value on a recurring basis as of year-end 2025 and 2024 in the consolidated balance sheet 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. There were no transfers between Level 1, Level 2 and Level 3 assets or liabilities in 2025 or 2024.

Money market funds

Money market funds represent investments in money market funds that hold government securities, all of which are restricted as of year-end 2025 and year-end 2024 and are included in other assets in the consolidated balance sheet. These restricted funds represent cash balances that are required to be maintained to fund disability claims in California. The valuations of money market funds are based on quoted market prices of those accounts as of the respective period end.

Forward contracts

In fiscal 2024 and 2023, the Company entered into and settled a €17.0 million and €90.0 million, respectively, foreign currency forward contracts related to the sale of the Company’s EMEA staffing operations. The settlements resulted in a net gain of $1.2 million and net loss of $3.6 million for 2024 and 2023, respectively. There wereno forward contracts outstanding as of fiscal year-end 2025.

Interest rate swaps

On July 17, 2024, the Company entered into a $50.0 million 12-month interest rate swap and a $50.0 million 18-month interest rate swap to manage interest risk exposure on the Company’s securitization facility. The swaps were not designated as hedges and are marked to market through earnings. The swaps are valued using observable market inputs and are classified as level 2 liabilities. As of year-end 2024, the Company recorded a liability $0.4 million liability in accounts payable and accrued liabilities and recognized a net loss of $0.2 million in other income (expense), net in the consolidated statements of earnings during 2024. The 12-month contract matured in the second quarter of 2025 and the results to the consolidated balance sheet and statements of earnings were not significant. As of year-end 2025, the liability related to the 18-month interest rate swap was not significant.

Indemnification liabilities

As of year-end 2025, the Company recorded indemnification liabilities totaling $2.3 million, consisting of $1.4 million related to the January 2024 sale of the EMEA staffing operations, with $0.1 million in accounts payable and accrued liabilities and $1.3 million in other long-term liabilities, and $0.9 million related to the 2020 sale of the Brazil operations included in other long-term liabilities in the consolidated balance sheet. As of year-end 2024, the indemnification liability totaled $2.0 million for the EMEA staffing operations and $1.7 million for the Brazil sale.

For the EMEA staffing sale, the Company agreed to indemnify the buyer for certain losses and costs for an indefinite term. The maximum exposure is not estimable due to uncertainties in potential outcomes; however, the Company believes the risk of exposure is remote. During 2025, the Company made payments of $0.5 million and recorded a $0.1 million remeasurement adjustment to the liability in gain on sale of EMEA staffing operations in the consolidated statements of earnings. Exchange rate impacts recorded in other income (expense), net in the consolidated statements of earnings were not significant.

For the Brazil sale, indemnification claims may be initiated withinsix years after closing, with aggregate losses capped at $8.8 million. During 2025, the Company made a $0.9 million payment, with the remaining change in the liability primarily attributable to exchange rate fluctuations recorded in other income (expense), net in the consolidated statements of earnings.

The indemnification liabilities were initially measured at fair value using discounted probability-weighted cash flows and are classified as Level 3 liabilities, remeasured on a recurring basis. Changes in fair value related to reassessments and foreign currency movements are recognized in earnings.

Earnout liabilities

In the second quarter of 2024, the Company recorded an earnout liability relating to the 2024 acquisition of MRP totaling $3.4 million in accounts payable and accrued liabilities in the consolidated balance sheet (see the Acquisitions and Dispositions footnote). The valuation of the earnout liability was initially established using the Monte Carlo simulation model and represented the fair value and is considered a level 3 liability. The maximum total cash payment which may be due related to the earnout liability is $60.0 million. In the fourth quarter 2024, the liability was reassessed and the fair value was determined to bezero. The earnout period concluded in the first quarter of 2025 and no further liability will be recognized.

Equity Investments Without Readily Determinable Fair Value

The Company previously held a 49% ownership interest in PersolKelly Pte. Ltd., which was accounted for under the equity method until the Company sold a majority interest in the first quarter of 2022. The remaining 2.5% interest was subsequently accounted for as an equity investment without readily determinable fair value using the measurement alternative (cost, less impairment, plus or minus observable price changes) in other assets in the consolidated balance sheet. In the first quarter of 2025, the Company sold its remaining interest in PersolKelly Pte. Ltd. for cash proceeds of $6.4 million. The investment had a carrying value of $6.4 million as of year-end 2024 and at the time of the sale, and therefore no gain or loss was recognized.

In 2022, the Company invested in equity securities with an initial investment of $0.4 million, classified in other assets in the consolidated balance sheet and measured using the measurement alternative. In fiscal year 2024, the Company sold a portion of this investment with a carrying value of $0.1 million and recognized a $0.6 million gain in other income (expense), net in the consolidated statements of earnings. The investment was remeasured using the observable prices to $3.5 million, resulting in an unrealized gain of $3.2 million recorded in other income (expense), net in the consolidated statements of earnings. As of year-end 2025, the carrying value of the investment was $3.5 million.

Assets Measured at Fair Value on a Nonrecurring Basis

In addition to assets that are recorded at fair value on a recurring basis, annual and interim impairment tests may subject the Company's reporting units with goodwill and long-lived assets to nonrecurring fair value measurement. The Company performs the annual impairment test for goodwill in the fourth quarter of each year and for long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

During the third quarter of 2025, the Company concluded that there was a triggering event due to declines in the business performance related to the MRP and Softworld reporting units as a result of dynamic macroeconomic conditions and projected growth rates were revised accordingly. As a result of the MRP and Softworld quantitative assessments, the Company determined that both MRP and Softworld’s estimated fair value of the reporting units no longer exceeded the carrying value. The Company recorded goodwill impairment charges of $102.0 million.

These changes in circumstances were also indicators that the respective long-lived assets may not be recoverable. The Company performed long-lived asset recoverability test for MRP and Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset groups and were recoverable.

The various inputs to the fair value models are considered level 3. The Company engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management. Refer to the Summary of Significant Accounting Policies footnote for additional details on the valuation methodologies and inputs used to measure fair value.

Refer to the Goodwill and Intangible Assets footnote for additional details on impairment charges related to years-ended 2025 and 2024 as well as the valuation methodologies and inputs used to measure fair value. There wereno goodwill or intangible asset impairment charges recorded in 2023.

6. Integration, Realignment and Restructuring

2025 Actions

In the first quarter of 2025, the Company put in place various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments and further aligning processes and technology across the Company. The costs incurred related to these integration and realignment initiatives totaled $28.7 million for the year-ended 2025. The integration and realignment costs consisted of $10.1 million of severance, $11.5 million of IT-related charges and $7.1 million of fees and other costs to execute the initiatives. The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits. The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings.

2024 Actions

Restructuring and transformation charges for the year-ended 2024 were $6.1 million as a continuation of the actions that were announced in the second quarter of 2023 as part of the comprehensive transformation initiative. The transformation activities consisted of $3.0 million of severance charges and $3.1 million of costs to execute the transformation. The severance and transformation costs are recorded in SG&A expenses in the consolidated statements of earnings.

Additionally, in 2024, the Company recognized an impairment charge of $13.5 million primarily for certain ROU assets related to the Company's leased headquarters facility reflecting adjustments as to how the Company is utilizing the building as a part of the Company's ongoing transformation efforts. The impairment charges related to the ROU assets are recorded in the asset impairment charge in the consolidated statements of earnings.

The 2024 table was restated to include integration and realignment costs incurred in 2024 of $10.0 million. These costs are associated with various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments and further aligning processes and technology across the Company that were initiated in the fourth quarter of 2024.

2023 Actions

In 2023, the Company undertook restructuring actions to further the Company's cost management efforts in response to the demand levels and to reflect a repositioning of the Company's ETM staffing business to better capitalize on opportunities in local markets. Restructuring costs incurred in the first quarter of 2023 related to these efforts totaled $5.7 million, which included $4.6 million of severance and $1.1 million of lease termination and other expenses and were recorded in SG&A expenses in the consolidated statements of earnings.

In the second quarter of 2023, the Company announced a comprehensive transformation initiative that included actions to further streamline the Company's operating model to enhance organizational efficiency and effectiveness. The total costs incurred related to these transformation activities in 2023 totaled $32.2 million. The transformation activities included $17.7 million of costs to execute the transformation initiatives through the use of an external consultant, severance of $11.6 million, a $2.4 million impairment charge for ROU assets related to an unoccupied office space lease and $0.5 million of lease termination costs. The impairment charge related to the ROU assets was recorded in the asset impairment charge in the consolidated statements of earnings. The costs to execute, the severance and lease termination costs were recorded in SG&A expenses in the consolidated statements of earnings, as detailed further below.

In connection with the sale of the Company's EMEA staffing operations in the first quarter of 2024 (see the Acquisitions and Dispositions footnote), there was an additional amount of severance costs for $3.1 million incurred in the fourth quarter of 2023 that was related to the sale and recorded in SG&A expenses in the consolidated statements of earnings and included in the table below.

Accrual Summary

A summary of the Company's 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:

There wasno remaining liability for global restructuring and no material adjustments were recorded as of year-end 2025. The balance of $0.3 million as of year-end 2024 primarily represented severance costs which were paid in the first quarter of 2025.

7. Property and Equipment

A summary of property and equipment, at cost, including the related estimated useful lives is as follows:

(1) For leasehold improvements within the Company’s headquarters, the estimated useful life is 15 years. The estimated useful life for branches is the lesser of the life of the lease or 5 years.

(2) Work in process represents capitalized costs for internal-use software not yet in service. Depreciation expense was $11.9 million for 2025, $12.5 million for 2024 and $12.4 million for 2023.

8. Leases

The Company has operating leases for headquarters and field offices and various equipment. The Company's leases generally have remaining lease terms ofone year to 10 years. The Company determines if an arrangement is a lease at inception.

The components of lease expense are recorded in SG&A expenses and were as follows:

Supplemental consolidated balance sheet information related to leases is as follows:

(1)2024 ROU operating assets reflect an impairment charge of $12.1 million, related to the Company's leased headquarters facility reflecting adjustments as to how the Company is utilizing the building as a part of the Company's transformation efforts. The impairment charges related to the ROU assets are recorded in asset impairment charge in the consolidated statements of earnings (see the Integration, Realignment and Restructuring footnote).

Weighted average remaining lease terms and discount rates for operating leases are as follows:

Other information related to leases were as follows:

Maturities of operating lease liabilities as of year-end 2025 are as follows:

9. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by operating segment were as follows:

(1) Gross amounts of $376.9 million and $377.0 million are net of impairment losses of $174.8 million and $72.8 million as of year-end of 2025 and 2024, respectively.

Our SET reportable segment contains goodwill from the 2024 acquisition of MRP which has a remaining balance of $137.1 million as of the year ended 2025. During the first quarter 2025 the company reallocated $22.3 million of goodwill related to the Sevenstep business from SET to the ETM reportable segment using a relative fair value approach. The Education reportable segment is comprised of goodwill related to the 2020 acquisition of Greenwood/Asher & Associates, $3.5 million; the 2022 acquisition of Pediatric Therapeutic Services (“PTS”), $36.3 million, and the 2024 acquisition of CTC of $3.0 million.

During the third quarter of 2025, the Company assessed the ongoing integration of the MRP and Softworld reporting units, noting that the discrete financial data regularly reviewed by management had changed. As such, the Company combined the MRP and Softworld reporting units with the other legacy SET operations into one SET reporting unit. During the assessment, but before the combination, we concluded that there was a triggering event due to declines in the business performance and revised projected growth rates as a result of dynamic macroeconomic conditions. Therefore, it was necessary to perform step one quantitative tests utilizing the income approach for both the MRP and Softworld reporting units that comprised the total goodwill balance in the SET reportable segment. As a result of the MRP and Softworld quantitative assessments, the Company determined that both MRP and Softworld’s estimated fair value of the reporting units no longer exceeded the carrying value. The Company recorded an impairment charge of $63.5 million and $38.5 million for MRP and Softworld, respectively, for a total goodwill impairment charge of $102.0 million, which was included in goodwill impairment charge in the consolidated statements of earnings at third quarter-end 2025. Included in the impairment charges were $8.6 million and $9.8 million of tax benefits for MRP and Softworld, respectively, associated with the impairment.

The changes in circumstances were also indicators that the respective long-lived assets may not be recoverable. MRP and Softworld have definite-lived intangible assets, consisting of trade names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives. The Company performed long-lived asset recoverability tests for MRP and Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset groups and were recoverable. As of the third quarter 2025, following the interim triggering event and post-combination of MRP and Softworld reporting units with the legacy SET operations, the Company performed a step one quantitative test for the combined SET reporting unit and noted no goodwill adjustments were needed as the estimated fair value of the SET reporting unit exceeded the carrying value with a headroom greater than 10%.

The Company performs its annual goodwill impairment testing in the fourth quarter each year and regularly assesses whenever events or circumstances make it more likely than not that an impairment may have occurred. The Company also performs a qualitative review on a quarterly basis of the Company's long-lived assets, comprised of net property and equipment and definite-lived intangible assets, to determine whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

2025 Goodwill Impairment Assessment

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter of 2025. Pursuant to the segment changes in first quarter of 2025 (see the Segment Disclosures footnote), the goodwill reporting units were reassessed. As of year-end 2025, the Company determined that there arefour reporting units for goodwill impairment testing purposes, three of which have associated goodwill. Our annual goodwill impairment testing included a step one quantitative analysis for each reporting unit prepared by a third party valuation specialist. As a result of the quantitative assessments, we determined that the estimated fair value of the each reporting unit exceeded its carrying value with headroom greater than 10%; therefore, goodwill was not impaired as of year-end 2025. If current expectations of future revenue and profit margins are not met, or if market factors outside of the Company's control change significantly, including discount rate, then the goodwill of our reporting units may be impaired in the future, resulting in goodwill impairment charges. As a measure of sensitivity of the fair value for the three reporting units tested in 2025, while holding all other assumptions constant, an increase in the discount rate of 100 basis points or a decrease of 100 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.

2024 Goodwill Impairment Assessment

In the fourth quarter of 2024, the Company performed the annual goodwill impairment testing. For the PTS and Education reporting units, the Company performed step zero qualitative analyses and have concluded that there are no indications that the fair values of the PTS and Education reporting units are less than their respective carrying values and therefore no further testing was required. For the Softworld and MRP reporting units, the Company's annual goodwill impairment testing included step one quantitative tests. As a result of the MRP quantitative assessment, the Company determined that the estimated fair value of the MRP reporting unit was more than its carrying value. The estimated fair value of the MRP reporting unit exceeded the carrying value by less than 10%.

As a result of the Softworld quantitative assessment, the Company determined that Softworld's estimated fair value of the reporting unit no longer exceeded the carrying value. Softworld's 2024 financial performance was lower than internal projections due to continued challenging market conditions. As a result, management’s expectation for near-term financial performance and projected long-term growth rates were revised accordingly. These changes in circumstances were also indicators that the respective long-lived assets may not be recoverable. Softworld has definite-lived intangible assets, consisting of trade names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives. The Company performed a long-lived asset recoverability test for Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable. Based on the result of the Company's annual goodwill impairment test, the Company recorded an impairment charge of $72.8 million, which was included in goodwill impairment charge in the consolidated statements of earnings for the year ended 2024, to write-off a portion of Softworld's goodwill balance. Included in the impairment charge was an $18.4 million tax benefit associated with the impairment. The remaining goodwill balance for the Softworld reporting unit was $38.5 million as of year-end 2024.

Intangible Assets

Intangible assets, excluding fully-amortized intangibles, are included in intangibles, net on the Company's consolidated balance sheet and consist of the following:

Intangible amortization expense, which is included in SG&A expenses in the consolidated statements of earnings, was $30.1 million, $27.3 million and $20.9 million in 2025, 2024 and 2023, respectively. The amortization expense is expected to be $29.4 million in 2026, $28.8 million in 2027, $27.4 million in 2028, $24.8 million in 2029, and $23.3 million in 2030.

10. Debt

Revolving Credit Facility

The Company has a $150.0 million, five-year revolving credit facility (the “Facility”), with a termination date of May 29, 2029. The Facility is available to be used to fund working capital, acquisitions and general corporate needs. The Facility is secured by certain assets of the Company, excluding U.S. trade accounts receivable.

At year-end 2025, there wereno long-term borrowings under the Facility and a remaining borrowing capacity of $150.0 million. The rates for the Facility, which vary based on the Company's leverage ratio as defined in the agreement, include either (i) the Prime rate plus the applicable margin for the floating line or (ii) a term Secured Overnight Financing Rate (“SOFR”) for 1-, 3-, or 6-months dependent on the interest election plus a 0.10% margin and the applicable margin for the term benchmark line. At year-end 2024, there were $40.0 million of long-term borrowings on the term benchmark line under the Facility and a remaining borrowing capacity of $110.0 million. To maintain availability of the funds, the Company pays a facility fee on the full amount of the Facility, regardless of usage. The facility fee varies based on the Company’s leverage ratio as defined in the agreement. The Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, had a facility fee of 15.0 basis points at year-end 2025 and 20.0 basis points at year-end 2024. The Facility’s financial covenants and restrictions are described below, all of which were met at year-end 2025:

•The Company must maintain a certain minimum interest coverage ratio of earnings before interest, taxes, depreciation, amortization (“EBITDA”) and certain cash and non-cash charges that are non-recurring in nature to interest expense as of the end of any fiscal quarter.

•The Company must maintain a certain maximum ratio of total indebtedness to the sum of net worth and total indebtedness at all times.

•Dividends, stock buybacks and similar transactions are limited to certain maximum amounts.

•The Company must adhere to other operating restrictions relating to the conduct of business, such as certain limitations on asset sales and the type and scope of investments.

Securitization Facility

The Company has a Receivables Purchase Agreement with Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company (the “Receivables Entity”), related to its $250.0 million, three-year, securitization facility (the “Securitization Facility”). The Receivables Purchase Agreement will terminate May 28, 2027, unless terminated earlier pursuant to its terms.

Under the Securitization Facility, the Company will sell certain trade receivables and related rights (“Receivables”), on a revolving basis, to the Receivables Entity. The Receivables Entity may from time to time sell an undivided variable percentage ownership interest in the Receivables. The Securitization Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, also allows for the issuance of standby letters of credit (“SBLC”) and contains certain restrictions based on the performance of the Receivables.

At year-end 2025, the Securitization Facility had $101.9 million of long-term borrowings, SBLCs of $42.6 million related to workers’ compensation and a remaining capacity of $105.5 million. The rate for these borrowings includes the adjusted daily SOFR plus a 0.10% margin and a 1.10% utilization rate on the amount of the Company's borrowings. The rate for the SBLCs of 1.10% represents a utilization rate on the outstanding balance. In addition, the Company pays a commitment fee of 40.0 basis points on the unused capacity. At year-end 2024, the Securitization Facility had 199.4 million of long-term borrowings, SBLCs of $46.1 million related to workers’ compensation and a remaining capacity of $4.5 million.

The Receivables Entity’s sole business consists of the purchase or acceptance through capital contributions of trade accounts receivable and related rights from the Company. As described above, the Receivables Entity may retransfer these receivables or grant a security interest in those receivables under the terms and conditions of the Receivables Purchase Agreement. The Receivables Entity is a separate legal entity with its own creditors who would be entitled, if it were ever liquidated, to be satisfied out of its assets prior to any assets or value in the Receivables Entity becoming available to its equity holders, the Company. The assets of the Receivables Entity are not available to pay creditors of the Company or any of its other subsidiaries, until the creditors of the Receivables Entity have been satisfied. The assets and liabilities of the Receivables Entity are included in the consolidated financial statements of the Company.

Local Credit Facilities

The Company had total unsecured, uncommitted short-term local credit facilities of $3.2 million as of year-end 2025. The Company hadno borrowings under these lines at year-end 2025 and 2024.

11. Retirement Benefits

U.S. Defined Contribution Plans

The Company provides a qualified defined contribution plan covering substantially all U.S.-based full-time employees, except officers and certain other employees. The plan offers a savings feature with Company matching contributions. Assets of this plan are held by an independent trustee for the sole benefit of participating employees.

A nonqualified plan is provided for officers and certain other employees. This plan includes provisions for salary deferrals and Company matching contributions.

In addition to the plans above, the Company also provides a qualified plan and a nonqualified plan to certain U.S.-based temporary employees.

The liability for the nonqualified plans was $289.3 million and $260.5 million as of year-end 2025 and 2024, respectively, and is included in current accrued payroll and related taxes and noncurrent accrued retirement benefits in the consolidated balance sheet. The cost of participants’ earnings or loss on this liability, which were included in SG&A expenses in the consolidated statements of earnings, was earnings of $36.4 million, $29.8 million, and $32.9 million for fiscal year-end 2025, 2024 and 2023, respectively.

In connection with the administration of these plans, the Company has purchased company-owned variable universal life insurance policies insuring the lives of certain current and former officers and key employees. The cash surrender value of these policies, which is based primarily on investments in mutual funds and can only be used for payment of the Company’s obligations related to the nonqualified deferred compensation plan noted above, was $289.7 million and $258.1 million at year-end 2025 and 2024, respectively and is reflected as a discrete line item in the consolidated balance sheet. During 2025, there were proceeds of $2.7 million in connection with these policies. In 2024, there were $1.7 million proceeds in connection with these policies. In 2023, there were no proceeds in connection with these policies. Tax-free earnings or loss on these assets, which were included in SG&A expenses in the consolidated statements of earnings and which offset the related earnings or loss on the liability, were earnings of $35.7 million in 2025, earnings of $30.9 million in 2024 and earnings of $32.2 million in 2023.

The net expense for retirement benefits for the qualified and nonqualified plans, including Company-matching contributions for full-time employees, totaled $10.4 million in 2025, $8.6 million in 2024 and $10.9 million in 2023 and is included in total SG&A expenses in the consolidated statements of earnings. The expense related to retirement plan contributions for temporary employees is included in cost of services in the consolidated statements of earnings.

International Defined Benefit Plans

The Company had several defined benefit pension plans in locations outside of the United States. Total pension expense for these plans was $0.2 million in 2023. These plans are no longer effective following the sale of our EMEA staffing operations in 2024.

12. Stockholders’ Equity

Common Stock

The authorized capital stock of the Company is 100,000,000 shares of Class A common stock and 10,000,000 shares of Class B common stock. Class A shares have no voting rights and are not convertible. Class B shares have voting rights and are convertible by the holder into Class A shares on a share-for-share basis at any time. Both classes of stock have identical rights in the event of liquidation. The voting rights of Class B shares are perpetual and Class B shares are not subject to transfer restrictions or mandatory conversion obligations under the Company's certificate of incorporation or bylaws.

Class A shares and Class B shares are both entitled to receive dividends, subject to the limitation that no cash dividend on the Class B shares may be declared unless the board of directors declares an equal or larger cash dividend on the Class A shares. As a result, a cash dividend may be declared on the Class A shares without declaring a cash dividend on the Class B shares.

Share Repurchase Programs

In November 2024, the Company's board of directors authorized a $50.0 million Class A share repurchase program that expires on December 2, 2026. During 2025 and 2024, the Company repurchased 1,158,628 Class A shares for $10.0 million and 742,163 Class A shares for $10.0 million, respectively. At year-end 2025, $30.0 million of share repurchases remained authorized under the program as compared to $40.0 million at year-end 2024. A total of 1,900,791 shares have been repurchased under the share repurchase program at an average price of $10.54 per share.

In November 2022, the Company's board of directors authorized a $50.0 million Class A share repurchase program, which was completed in August 2023. During 2023 and 2022, the Company repurchased 2,496,827 Class A shares for $42.2 million and 474,644 Class A shares for $7.8 million, respectively. There wereno authorized share repurchases remaining as of year-end 2023 as compared to $42.2 million of share repurchases that remained authorized under the program as of year-end 2022. A total of 2,971,471 shares were repurchased under the share repurchase program at an average price of $16.83 per share.

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component, net of tax, during 2025, 2024 and 2023 are included in the table below. Amounts in parentheses indicate debits.

(1) Amount was recorded in other income (expense), net in the consolidated statements of earnings.

(2)Amount was recorded in SG&A expenses in the consolidated statements of earnings.

13. Earnings (Loss) Per Share

The reconciliation of basic earnings (loss) per share on common stock for 2025, 2024 and 2023 follows:

Due to the Company's net loss in 2025 and 2024, potentially dilutive shares outstanding, primarily related to deferred common stock associated with the non-employee directors deferred compensation plan and performance shares, of 0.5 million shares and 0.4 million shares in 2025 and 2024, respectively, had an anti-dilutive effect on diluted earnings per share and were excluded from the computation. Potentially dilutive shares outstanding for 2023 are primarily related to deferred common stock associated with the non-employee directors deferred compensation plan and performance shares (see Stock-Based Compensation footnote for a description of performance shares).

The Company presents earnings per share for the Company's two classes of common stock on a combined basis. This presentation is consistent with the earnings per share computations that result for each class of common stock utilizing the two- class method, which is an earnings allocation formula that determines earnings per share for each class of common stock according to the dividends declared (or accumulated) and participation rights in the undistributed earnings. In applying the two-class method, the Company has determined that the undistributed earnings should be allocated to each class on a pro rata basis after consideration of all of the participation rights of the Class B shares (including voting and conversion rights) and the Company's history of paying dividends equally to each class of common stock on a per share basis.

The Company’s certificate of incorporation allows the board of directors to declare a cash dividend to Class A shares without declaring equal dividends to the Class B shares. However, the board of directors has historically declared and the Company has historically paid equal per share dividends on both the Class A and Class B shares. Each class has participated equally in all dividends declared since 1987.

Class B shares are the only shares with voting rights and are convertible, at the option of the holder, into Class A shares on a one-for-one basis. Class B shareholders are therefore able to exercise voting control with respect to all matters requiring stockholder approval, including the election of or removal of directors. As a result of Class B shares’ voting and conversion rights, Class B shares can participate equally in any dividends declared on Class A shares by exercising their conversion rights.

Dividends paid per share for Class A and Class B common stock were $0.30 for 2025, 2024 and 2023.

14. Stock-Based Compensation

On May 8, 2025 (the “Effective Date”), the Company’s stockholders approved the Kelly Services, Inc. 2025 Equity Incentive Plan (the “EIP”). Upon approval of the EIP, the Company’s Equity Incentive Plan, as amended and restated February 15, 2017, (the “Prior Plan”) terminated in its entirety and no further awards may be granted under the Prior Plan. All outstanding awards under the Prior Plan as of the Effective Date, shall remain outstanding and shall be administered and settled in accordance with their terms and the provisions of the Prior Plan. Under the EIP, the Company may grant key employees restricted stock and performance awards associated with the Company’s Class A stock. The EIP provides that the maximum number of shares available for grants is 4.0 million, plus 0.8 million shares that were available to be granted under the Prior Plan immediately prior to the Effective Date. Shares available for future grants at year-end 2025 are 4.6 million. The Company issues shares out of treasury stock to satisfy stock-based awards, if available; otherwise new shares of common stock are issued from authorized shares. The Company presently has no intent to repurchase additional shares for the purpose of satisfying stock-based awards.

The Company recognized stock-based compensation cost of $12.3 million in 2025, $11.8 million in 2024 and $9.7 million in 2023, as well as related tax benefits of $2.0 million in 2025, $2.6 million in 2024 and $1.7 million in 2023.

Restricted Stock

Restricted stock, which typically vests pro-rata over three years, is issued to certain key employees and is subject to forfeiture until the end of an established restriction period. The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.

A summary of the status of nonvested restricted stock as of year-end 2025 and changes during this period is presented as follows below (in thousands of shares except per share data):

As of year-end 2025, unrecognized compensation cost related to unvested restricted stock totaled $14.1 million. The weighted average period over which this cost is expected to be recognized is approximately 1.5 years. The weighted average grant date fair value per share of restricted stock granted during 2025, 2024 and 2023 was $13.50, $20.70 and $17.33, respectively. The total fair value of restricted stock, which vested during 2025, 2024 and 2023, was $6.4 million, $6.5 million and $3.3 million, respectively.

Performance Shares

During 2025, 2024 and 2023, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers, which are contingent upon achievement of specific revenue growth and EBITDA margin performance goals over a stated period of time (“performance awards”). The maximum number of performance shares that may be earned is 200% of the target shares originally granted. These awards have three one-year performance periods with the payout for each performance period based on separate financial measure goals that are set in February of each of thethree performance periods. Earned shares during each performance period will cliff vest in February subsequent to the third performance period, after approval of the financial results by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares.

On February 10, 2026, the Compensation Committee approved the actual performance achievement of 54% of target for the 2025 performance period of the annual 2025, 2024 and 2023 annual grants. All of the shares earned for the 2025 performance period will cliff vest in February 2028, 2027 and 2026, respectively, if not forfeited by the recipient.

The 2025, 2024 and 2023 performance awards have a weighted average grant date fair value of $12.59, $17.60 and $16.20, respectively, which was determined by the market price on the date of grant less the present value of the expected dividends not received during the vesting period.

The total nonvested shares related to 2025, 2024 and 2023 performance awards at year-end 2025 is 262,000,157,000 and 198,000, respectively.

A summary of the status of nonvested performance shares at target as of year-end 2025 and changes during this period is presented as follows below (in thousands of shares except per share data). The vesting adjustment in the table below represents a portion of the 2022 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.

As of year-end 2025, unrecognized compensation cost related to all unvested performance shares totaled $3.2 million. The weighted average period over which the costs are expected to be recognized is approximately 1.3 years for performance shares. The total fair value of performance shares, which vested during 2025, 2024 and 2023, was $1.8 million, $2.6 million and $3.4 million, respectively.

15. Sale of Assets

In December 2025, Kelly Services sold a property, receiving cash proceeds in the fourth quarter and recognizing a gain of $1.0 million on the sale, as the property had an immaterial carrying value. Additionally, on June 10, 2024, the Company sold Ayers Group, a division of its ETM segment, and received cash proceeds, recording a gain of $5.4 million in the 2024 consolidated statements of earnings after final working capital adjustments. Both asset sales were part of Kelly’s ongoing strategy to further optimize its operating model.

16. Other Income (Expense), Net

Included in other income (expense), net are the following:

Included in interest income is interest from the Company's money market investments of $3.0 million in 2024 and 2023. The increase in interest expense for 2025 and 2024 reflects the increase in the Company's long-term debt (see Debt footnote).

Included in Other for 2024 is $8.6 million of transaction costs primarily related to the acquisition of MRP and net of the $3.4 million MRP earnout liability write-off, partially offset by a $3.8 million gain on equity securities and a $0.7 million reduction in the Brazil indemnification liability (see Fair Value Measurements footnote). Included in Other for 2023 was a gain of $2.0 million for the receipt of final proceeds in connection with the Company's investment in Business Talent Group, LLC that was sold in 2021.

17. Income Taxes

Earnings (loss) before taxes and equity in net earnings of affiliate for the years 2025, 2024 and 2023 were taxed under the following jurisdictions:

The provision for income taxes was as follows:

Deferred income taxes reflect the temporary differences between the asset and liability basis for financial reporting purposes and the amounts used for income tax purposes, at the relevant tax rate. The deferred tax assets and liabilities are comprised of the following:

The Company has U.S. work opportunity credit and other general business credit carryforwards of $207.3 million which will expire from 2034 to 2045, foreign tax credit carryforwards of $32.7 million which will expire from 2026 to 2035 and minimal state and foreign credit carryforwards which are either indefinite or will expire from 2026 to 2043. The net tax effect of federal, state and foreign loss carryforwards at year-end 2025 totaled $28.5 million, comprised of $18.2 million of capital loss carryforwards that expire in 2029 and $10.3 million of net operating loss carryforwards of which $8.3 million have no expiration and $2.0 million expire between 2026 and 2045.

The valuation allowance is determined in accordance with the provisions of ASC 740, “Income Taxes,” which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. During 2025, the Company recorded a charge of $197.6 million to establish a valuation allowance for its U.S. general business credit carryforwards and to increase the allowance for its foreign tax credit carryforwards, certain state loss carryforwards, and future deductible items. The allowance on attributes with a limited life was principally due to cumulative losses in recent years, which were driven by goodwill impairment charges. Cumulative losses are a significant piece of negative evidence that limits the ability to consider other evidence, such as projections for future growth. The valuation allowance against U.S. general business credit carryforwards at year-end 2025 is $161.8 million after considering the future deductibility of the credits upon expiration. The foreign tax credit carryforward valuation allowance is $32.7 million at year-end 2025 and $15.0 million at year-end 2024. During 2024, the Company generated a capital loss carryforward as a result of the sale of its EMEA staffing operations. A valuation allowance of $18.2 million is recorded against the capital loss carryforward at year-end 2025 and $19.2 million is recorded at year-end 2024. As of year-end 2024, the Company’s uncertainty in the ability to create future capital gains and its lack of adequate U.S. foreign source income to fully utilize foreign tax credit carryforwards, represented sufficient negative evidence to require a partial valuation allowance under ASC 740. The Company will continue to evaluate the need for valuation allowances against deferred tax assets on a quarterly basis and may adjust the allowance as circumstances change. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support realization of the deferred tax assets.

At year-end 2025, we adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis. As required by the ASU, the following table presents the differences between income taxes from continuing operations for financial reporting purposes and the U.S. statutory rate of 21% in 2025:

For 2025, the majority of the effect of the state and local income tax category was attributable to California, Michigan, New Jersey and Pennsylvania.

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the differences between income taxes from continuing operations for financial reporting purposes and the U.S. statutory rate of 21% in 2024 and 2023:

The Company's tax benefit or expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of non-taxable investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes or changes in judgment regarding the realizability of deferred tax assets.

As noted in the rate reconciliation tables above, several items have contributed to the variance in the Company's income tax expense/benefit over the last three years. 2025 was impacted by $197.6 million of federal and state valuation allowances against U.S. general business credit carryforwards and other deferred tax assets, and a $6.2 million impact from a non-tax deductible goodwill impairment charge. This was offset by a pretax loss, which included an $18.4 million benefit from the impairment of tax-deductible goodwill and a $7.2 million benefit from tax-exempt life insurance cash surrender value gains. 2024 benefited from a pretax loss, which included an $18.4 million benefit from the impairment of tax-deductible goodwill and a $6.2 million benefit from tax-exempt life insurance cash surrender value gains. 2023 benefited from recording a $15.0 million federal and state benefit on the outside basis difference in held for sale assets and a $6.5 million benefit from tax-exempt life insurance cash surrender value gains.

In 2024 and 2023, Foreign items include foreign tax credits, foreign non-deductible expenses and non-taxable income. Foreign business taxes include the French business tax and other taxes based on revenue less certain expenses and are classified as income taxes under ASC 740.

A provision has not been made for additional income taxes on foreign subsidiary undistributed earnings which are indefinitely reinvested. If these earnings were to be repatriated, the Company could be subject to foreign withholding tax, federal and state income tax, net of federal benefit and income taxes on foreign exchange gains or losses, of $5.1 million.

The U.S. work opportunity tax credit program is a temporary provision in the U.S. tax law and expires for employees hired after 2025. While the credit has routinely been extended, it is uncertain whether it will again be extended. In the event the program is not renewed, we will continue to receive credits for qualified employees hired prior to 2026.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing multiple changes to the U.S. tax code. The OBBBA did not have any material impact on the Company’s consolidated financial statements and related disclosures.

The new Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules became effective in 2024 in several jurisdictions in which the Company does business. This did not have a material impact to the Company in 2025 or 2024.

The unrecognized tax benefit is $0.5 million in 2025, $0.5 million in 2024 and $0.6 million in 2023 with immaterial additions and reductions during each period. If recognized, they would have a favorable effect of $0.4 million in 2025, $0.4 million in 2024 and $0.5 million in 2023 on income tax expense.

The Company recognizes both interest and penalties as part of the income tax provision. The Company recognized $0.1 million of expense in 2023, no significant expenses or benefits in 2024, and $0.1 million of expense in 2025 for interest and penalties. Accrued interest and penalties were $0.3 million at year-end 2025 and $0.2 million at year-end 2024.

The Company files income tax returns in the U.S. and in various states and foreign countries. The tax periods open to examination by the major taxing jurisdictions to which the Company is subject include the U.S. for fiscal years 2022 forward, Canada for fiscal years 2018 forward, Puerto Rico for fiscal years 2021 forward, Mexico for fiscal years 2020 forward, and Germany for fiscal years 2010 forward.

The Company and its subsidiaries have various income tax returns in the process of examination. The unrecognized tax benefit and related interest and penalty balances include an insignificant amount for 2025, related to tax positions which are reasonably possible to change within the next twelve months due to income tax audits, settlements and statute expirations.

Income taxes paid (net of refunds received) for the years 2025, 2024 and 2023 were $4.5 million, $10.9 million and $8.9 million, respectively. For 2025, the specific cash taxes paid are as follows, with each state, local and foreign jurisdiction being immaterial:

18. Contingencies

The Company is continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of its business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes and tax-related matters which could result in a material adverse outcome.

The Company records accruals for loss contingencies when the Company believes it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet. At year-end 2025 and 2024, the gross accrual for litigation costs amounted to $2.8 million and $1.5 million, respectively.

The Company maintains insurance coverage which may cover certain losses. When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet. At year-end 2025 and 2024, there wereno related insurance receivables.

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, iszero to $1.8 million. This range includes matters where a liability has been accrued but it is reasonably possible that the ultimate loss may exceed the amount accrued and for matters where a loss is believed to be reasonably possible, but a liability has not been accrued. The aggregate range only represents matters in which the Company is currently able to estimate a range of loss and does not represent the Company's maximum loss exposure. The estimated range is subject to significant judgment and a variety of assumptions and only based upon currently available information. For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss.

While the ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of any such proceedings will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.

19. Segment Disclosures

The Company’s operating segments, which also represent its reportable segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker (“CODM”, the Company’s CEO) to determine resource allocation and assess performance. In the first quarter of 2025, the Company modified its reportable segments. The Company’sthree reportable segments: (1) ETM, (2) SET and (3) Education, reflect the specialty services the Company provides to customers and represent how the business is organized internally. Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.

The Company combined its former P&I and OCG segments into the ETM segment in the first quarter of 2025, responding to a shift in customer demand toward integrated workforce solutions and enabling a more streamlined and efficient go-to-market approach. The Company also realigned certain customers from the SET segment to the ETM segment to support this integrated strategy. Also in the first quarter of 2025, the Company moved MRP's Sevenstep business from the SET segment to the ETM segment as part of the broader integration of MRP. The 2024 and 2023 ETM and SET segment information has been recast to conform to the new structure.

Prior to 2024, the Company also had an International operating segment. Beginning in the first quarter of 2024, the Company's organizational structure no longer includes the International segment following the sale of the EMEA staffing operations in January 2024. The Company's Mexico operations, which were previously in the Company's International segment, were included in P&I before the first quarter of 2025 and are now included in the ETM segment.

ETM delivers staffing, outcome-based and permanent placement services, providing administrative, accounting and finance, light industrial and contact center staffing and other workforce solutions in the U.S. and Canada, including the Company's KellyConnect and Skilled Professional Solutions products. ETM also provides global talent supply chain and workforce solutions, including MSP, RPO, PPO and executive coaching programs to customers on a global basis and includes the Company's RocketPower and Sevenstep brands. SET provides highly specialized skills to a variety of industries through staffing, outcome-based and permanent placement services. SET is focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S. and Canada and includes MRP, Softworld, NextGen and Global Technology Associates brands. Education delivers high quality education and therapy services talent through staffing, permanent placement and executive search services to Pre-K-12 school districts and education organizations across the U.S. and includes Teachers On Call, Greenwood/Asher and PTS brands.

The Company utilizes a shared services approach for certain enterprise functions including IT, human resources, legal and finance support in the US and Canada. Expenses incurred to directly support the operating units have been allocated to ETM, SET and Education based on work effort, volume or, in the absence of a readily available measurement process, proportionately based on gross profit realized. Certain expenses related to incentive compensation, law and risk management, certain finance and accounting functions, executive management and corporate campus facilities do not directly benefit a specific operating segmentand are not included in the segment results. These costs, as well as costs related to acquisition integration and transformation activities and disposition transition expenses, are included in Corporate expenses in the following tables. In addition to the change in the Company's segment structure in the first quarter of 2025, the Company reassessed the allocation of corporate expenses to the operating segments and allocated additional costs which are attributable to the business from corporate.

In the first quarter of 2024, the Company changed the segment profitability measure from earnings from operations to a business unit profit measure that excludes depreciation and amortization. This change provides management with greater visibility into the financial performance of the segments and how they contribute to the Company's overall performance. The CODM leverages the business unit profit measure during the annual budgeting and forecasting processes, as well as to assess segment profitability, guide resource allocation and evaluate the alignment of compensation plans with strategic goals.

The following tables present information about the reported revenue from services of the Company by reportable segment, along with a reconciliation to earnings (loss) before taxes, for 2025, 2024 and 2023. Asset information by reportable segment is not presented, since the Company does not produce such information internally nor does it use such information to manage its business.

(1) Cost of services are those costs directly associated with the earning of revenue. The primary examples of these types of costs are temporary employee wages, along with other employee related costs, including associated payroll taxes, temporary employee benefits, such as service bonus, holiday pay, health insurance and workers’ compensation costs. These costs differ fundamentally from SG&A expenses in that they arise specifically from the action of providing the Company's services to customers whereas SG&A costs are incurred regardless of whether or not the Company places temporary employees with the Company's customers.

(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery. These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees. In the International segment, this includes costs related to IT, human resources, legal and finance costs incurred in the foreign subsidiaries.

(3) Other segment expenses includes shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs and operational software licenses.

(4) Represents total company depreciation and amortization of intangibles, including the amortization of hosted software.

Depreciation and amortization expense is included in SG&A expenses in the Company's consolidated statements of earnings. Depreciation and amortization expense amounts below include amortization of hosted software, which are excluded in the presentation of depreciation and amortization in the Company's consolidated statements of cash flows. The depreciation and amortization amounts by segment are as follows:

A summary of revenue from services by geographic area was as follows:

Foreign revenue is based on the country in which the legal subsidiary is domiciled. No single foreign country’s revenue represented more than 10% of the consolidated revenues of the Company. No single customer represented more than 10% of the consolidated revenues of the Company.

A summary of long-lived assets information by geographic area was as follows:

Long-lived assets represent property and equipment and ROU assets. No single foreign country’s long-lived assets represented more than 10% of the consolidated long-lived assets of the Company.

20. New Accounting Pronouncements

Recently Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments to enhance income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this guidance for fiscal year 2025 and the adoption did not have a material impact to the Company's consolidated financial statements.

Not Yet Adopted

In December 2025, the FASB issued ASU 2025-11, Interim Reporting, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendment specifies when an entity is subject to ASC 270, and addresses the form and content of financial statements and interim disclosures requirements. The ASU clarifies that an entity must disclose events since the end of the last annual reporting period that have a material impact. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company does not expect this update to have a material impact to the Company's consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This ASU simplifies and modernizes guidance for internal-use software by clarifying capitalization thresholds, improving comparability and reducing judgment diversity across all software development methodologies. This ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU allows for a practical expedient to be used when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606. The new guidance will be effective for annual periods beginning after December 15, 2025, with early adoption permitted. This ASU applies to trade accounts receivable and may have an impact on the calculation of the allowance for uncollectible accounts receivable. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Comprehensive income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires additional information about certain expense categories in the notes to financial statements. The new guidance will be effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the Company's consolidated financial statements and related disclosures.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies several disclosure and presentation requirements in the FASB accounting standard codification to align them with the SEC regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption permitted, by June 30, 2027. For any amendments in which the SEC has not yet removed the applicable requirement from their regulations by June 30, 2027, the pending content of the related amendment in the FASB codification will not be effective. The Company does not expect this update to have a material impact to the Company's consolidated financial statements.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company's consolidated financial statements and related disclosures.

21. Related Party Transactions

The Terence E. Adderley Revocable Trust K (“Trust K”), which became irrevocable upon the death of Terence E. Adderley (the former Chairman of the Company's board of directors) on October 9, 2018, controls approximately 92.2% of the outstanding shares of Kelly Class B common stock as of December 28, 2025. There were no material transactions between the Company and Trust K or its trustees in 2025, 2024 or 2023.

22. Subsequent Event

On January 9, 2026, Trust K notified the Board that it has entered into a definitive share purchase agreement (“Purchase Agreement”) to sell its entire holding, which constitutes 92.2% of the voting Class B common stock, to Hunt Equity Opportunities, LLC (“Hunt Equity”) for a purchase price of $106.0 million. This Purchase Agreement also includes an additional cash payment, by Hunt Equity, of $15.2 million if the Company achieves a market capitalization of at least $1.2 billion within the 48-month period following the closing. The Company's Class B common stock is the only class of stock entitled to voting rights. As of December 28, 2025, Trust K represented voting control of the Company. Upon completion of the transaction, Hunt Equity will acquire voting control of the Company.

On January 11, 2026, the Board of Directors (“Board”) of the Company approved the adoption of a shareholders rights plan (“Rights Plan”). The Rights Plan was adopted to provide the Board sufficient time to evaluate the terms of the proposed transaction and the plans or proposals of the purchaser, and to consider the best interests of all stockholders.

On January 29, 2026, the Board approved Amendment No. 1 to the Rights Plan, effective January 30, 2026. The Amendment, among other things, exempts the Hunt Equity purchase of shares from Trust K as a triggering event under the Rights Plan and provides that the Rights Plan expires immediately prior to the close of the transaction.

On January 30, 2026, the Company entered into a letter agreement (the “Agreement”) with Hunt Equity to provide for the amendment and expiration of the previously announced Rights Plan, and for certain conduct and approval covenants related to Kelly’s governance and transaction evaluation processes. Thereafter, Trust K closed a transaction with Hunt Equity, pursuant to which Hunt Equity acquired 3,039,940 shares of Class B Common Stock of the Company from Trust K, causing Hunt Equity to become the controlling stockholder of the Company with 92.2% of the Class B Common Stock.

Also pursuant to the Agreement, the Company announced changes to the composition of the Board. Effective January 30, 2026, and until the Company’s 2026 Annual Meeting of Stockholders, the Board is composed of four designees from Hunt Equity, Chris Hunt, Angela Brock-Kyle, Edward Escudero, and James K. Hunt; Chris Layden, the Company’s Chief Executive Officer; and three directors serving on the Board as of the Agreement date, Robert S. Cubbin, Amala Duggirala, and Leslie A. Murphy. Chris Hunt serves as Chairman of the Board. In connection with these changes, Terrence B. Larkin, Gerald S. Adolph, George S. Corona, InaMarie F. Johnson, and Peter W. Quigley resigned from the Board, effective January 30, 2026.

In connection with the transaction above, on January 27, 2026, the Company entered into an agreement with its lenders to amend and restate the Facility. Additionally, the Company and the Receivables Entity amended the Receivables Purchase Agreement related to the Securitization Facility. Both amendments modified the credit agreements so that the closing of the transaction pursuant to the Purchase Agreement will not, in and of itself, constitute a Change in Control under the Credit Agreement. Except as expressly modified by the amendments, the terms of the credit agreements remain unchanged and in full force and effect.

On February 10, 2026, the Company’s Board declared a dividend of $0.075 per share. The dividend is payable on March 11, 2026, to stockholders of record as of the close of business on February 25, 2026.