What changed in this filing

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Item 1A. Risk Factors

2022-02-17 compared with 2021-02-18 · 36 added, 44 removed, 276 unchanged (22% of the section changed)

5 unchanged sentences

As economic activity slows, however, many companies reduce their use of temporary employees before laying off full-time employees.

Customer responses to real or perceived economic conditions, including perceptions related to market conditions, labor supply and inflation, could negatively impact customer behavior.

Significant swings in economic activity historically have had a disproportionate impact on staffing industry volumes.

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Any significant economic downturn in the United States or certain other countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

Our business has been adversely impacted by the recent novel coronavirus (COVID-19) outbreak and we expect adverse business and economic conditions will continue in the future.

The outbreak of the novel coronavirus across the globe continues to negatively impact the economies and general welfare in the countries in which we operate, as well as in the countries in which demand for our customers' goods and services are created.

As the pandemic continues, we have maintained our focus on the health and safety of our employees, contractors, customers, and suppliers around the world.

Our emergency management team continues to track the impact of COVID-19, including the deployment of vaccines, implementation of health and safety measures across our various business segments, and development of plans for safely continuing operations during the pandemic.

The demand for staffing services is significantly affected by general economic conditions.

The economic downturn and uncertainties related to the duration of the COVID-19 pandemic have had and are expected to have an adverse impact on the staffing industry and the Company’s ability to forecast its financial performance.

Containment and mitigation measures taken to combat the spread of COVID-19, including travel bans, quarantines, shelter-in-place orders, temporary shutdowns, social distancing, and other health and safety precautions have decreased customer demand for staffing services, especially in our Education segment where many school districts have remained closed or partially closed for physical instruction since March 2020.

The disruptions in on-site instruction and the uncertainties related to the deployment of services via virtual and hybrid education models and the timing of vaccine availability, may continue to materially impact the Company’s financial performance.

We continue to assess and address the impact of COVID-19 on the financial viability of third parties on which we rely to provide staffing services or manage critical business functions.

The COVID-19 outbreak and related containment and mitigation efforts resulted in a substantial decline in our revenues.

We expect that the revenue decline will continue in the future until demand for our services recovers.

We are not able to predict the timing or the extent of the recovery.

Business decisions by customers made in response to the COVID-19 pandemic, including automation, social distancing, and remote work, if sustained in a post-pandemic business environment, could negatively impact customer demand for our services.

In the second quarter, we took a number of cost management actions to address declines in our revenues and adverse business conditions.

Certain actions, such as reducing officer and employee compensation and furloughing and redeploying employees, ended in the fourth quarter.

Other actions taken, including reducing full-time employee staffing levels, reducing discretionary expenses and projects, enacting certain hiring freezes and suspending dividends payable on our common stock, continue.

There can be no assurance that these actions will be adequate, and further actions may be required in the future.

Due to uncertainty regarding the sufficiency of the containment and mitigation measures to combat the COVID-19 outbreak and the duration of their implementation, coupled with the unknown timeline for effective deployment of COVID-19 vaccines to a large portion of the workforce, the extent or the duration of the impact on our business, financial condition, ability to meet financial covenants

and restrictions in our debt facilities, and results of operations cannot be predicted with certainty, however, such impacts could be material.

Our business has been adversely impacted by the novel coronavirus (COVID-19) outbreak and could be impacted by future outbreaks.

The COVID-19 outbreak and related containment and mitigation efforts negatively impacted the economies and general welfare in the countries in which we operate, as well as in the countries where our customers provide goods and services.

This resulted in a decline in demand for our services.

The overall threat of COVID-19 in the countries in which we operate has been reduced with the advent of health and safety measures, effective vaccines, and treatment regimens to combat current known strains of COVID-19 and demand for our services has increased.

The emergence of new strain(s) of COVID-19 that are more deadly, contagious, or vaccine resistant, or a decline in the effectiveness of vaccines or treatment regimens could result in another economic downtown or a decline in demand for our services.

Likewise, the financial viability of third parties on which we rely to provide staffing services or manage critical business functions could also be impacted by further negative COVID-19 developments.

Future government actions or business decisions by customers made in response to the COVID-19 pandemic, including automation, social distancing and remote work, and vaccination and testing programs could negatively impact customer demand for our services.

Our stock price may be subject to significant volatility and could suffer a decline in value.

32 unchanged sentences

As technology continues to evolve, more tasks currently performed by people may be replaced by automation, robotics, machine learning, artificial intelligence, and other technological advances outside of our control.

This trend poses a risk to the staffing industry, particularly in lower-skill job

categories that may be more susceptible to such replacement.

This trend poses a risk to the staffing industry, particularly in lower-skill job categories that may be more susceptible to such replacement.

If we are unsuccessful in responding to this potential shift in customer demand due to advancing technology it could have a material adverse effect on our results of operations and financial condition.

4 unchanged sentences

Some jurisdictions also allow competitors or consumers to assert claims of anti-competitive conduct.

The European Commission and its various competition authorities have targeted industry trade associations in which we participate.

Any government regulatory actions may hamper our ability to provide the cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them.

The European Commission and its various competition authorities have targeted industry trade associations in which we participate, resulting in the assessment of fines against our business in the past.

Although we have safeguards in place to comply with competition laws, there can be no guarantee that such safeguards will be successful.

Any government regulatory actions may result in fines and penalties or hamper our ability to provide the cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them.

New competition law actions could be initiated.

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In particular, we are subject to state unemployment taxes in the U.S., which typically increase during periods of increased levels of unemployment.

We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire and may not be reinstated.

We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire

and may not be reinstated.

There can be no assurance that we will be able to increase the fees charged to our customers in a timely manner and in a sufficient amount to fully cover increased costs as a result of any changes in laws or government regulations.

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If we fail to accurately anticipate and meet our customers’ needs through the development of new service offerings or do not successfully deliver new service offerings, our competitive position could weaken, causing a material adverse effect on our results of operations and financial condition.

A loss of major customers or a change in such customers’ buying behavior could have a material adverse effect on our business.

We serve many large corporate customers through high volume global service agreements.

A loss of major customers or a change in such customers’ buying behavior or economic strength could have a material adverse effect on our business.

We serve many large corporate customers through high volume service agreements.

While we intend to maintain or increase our revenues and earnings from our major corporate customers, we are exposed to risks arising from the possible loss of major customer accounts.

The deterioration of the financial condition or business prospects of these customers could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from these customers.

A change in labor strategy or the deterioration of the financial condition or business prospects of these customers could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from these customers.

Such change could occur due to factors in our customers' control but also could occur due to economic,

social, climate, or political factors outside of our customers' control.

Our customers are also exposed to third-party risk through their use of vendors and suppliers which, in the event of a third-party incident at a customer, could result in a deterioration in their financial condition.

Continuing merger and acquisition activity involving our large corporate customers could put existing business at risk or impose additional pricing pressures.

4 unchanged sentences

The movement from single-sourced to competitively sourced staffing contracts may also substantially reduce our future revenues from such customers.

While Kelly has sought to address this trend, including providing Contingent Workforce Outsourcing ("CWO") services within our Outsourcing & Consulting ("OCG") segment, we may not be selected or retained as the CWO service provider by our large customers.

While Kelly has sought to address this trend, including providing Managed Service Provider ("MSP") services within our Outsourcing & Consulting ("OCG") segment, we may not be selected or retained as the MSP by our large customers.

This may result in a material decrease in the revenue we derive from providing staffing services to such customers.

25 unchanged sentences

If our suppliers fail to meet our standards and expectations or are unfavorably regarded by our customers, our ability to discontinue the relationship may be limited and could result in reputational damage, customer loss, and adversely affect our results of operations.

For example, in the Asia-Pacific region, we rely on third parties and partners to provide certain back office and administrative services to our operations in that region.

For example, in the Asia-Pacific region, we rely on third parties and partners to provide certain back office and administrative services to our operations

in that region.

The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs.

5 unchanged sentences

Some of the initiatives are dependent on the products and services of third party vendors.

If our vendors are unable

to provide these services, or fail to meet our standards and expectations, we could experience business interruptions or data loss which could have a material adverse effect on our business, financial condition and results of operations.

If our vendors are unable to provide these services, or fail to meet our standards and expectations, we could experience business interruptions or data loss which could have a material adverse effect on our business, financial condition and results of operations.

Past and future acquisitions may not be successful.

8 unchanged sentences

Additionally, improper, illegal or unethical actions by the venture management could have a negative impact on the reputation of the venture and our Company.

Further, equity method investments, including our investment in PersolKelly Pte.

Ltd., are reviewed for indicators of impairment on a quarterly basis or whenever events or circumstances indicate the carrying amount may be other-than-temporarily impaired.

Changes in economic or operating conditions impacting our estimates and assumptions could result in the impairment of equity method investments.

In the event that we determine that there is an impairment, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.

Risks Related to Operating a Global Enterprise

32 unchanged sentences

As we aim to expand the number of clients utilizing our higher margin specialty solutions in support of our growth strategy, we are highly reliant on individuals who possess specialized knowledge and skills to lead related specialty solutions and operations.

There can be no assurance that qualified personnel will continue to be available.

Social, political and financial conditions can negatively impact the availability of qualified personnel.

Competition for individuals with proven specialized knowledge and skills is intense, and demand for these individuals is expected to remain strong in the foreseeable future.

4 unchanged sentences

Competition for individuals with proven professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future.

Social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the staffing requirements of our customers.

There can be no assurance that qualified personnel will continue to be available in sufficient numbers and on terms of employment acceptable to us and our customers.

32 unchanged sentences

The legal and regulatory environment concerning data privacy is becoming more complex and challenging, and the potential consequences of non-compliance have become more severe.

Changes in the regulatory environment, such as the European Union’s General Data Protection Regulation and the California Consumer Privacy Act, impose additional compliance requirements related to the collection, use, processing, transfer, disclosure, and retention of personal information, which can increase operating costs and resources to accomplish.

The European Union’s General Data Protection Regulation, the California Consumer Privacy Act and similar laws impose additional compliance requirements related to the collection, use, processing, transfer, disclosure, and retention of personal information, which can increase operating costs and resources to accomplish.

Any failure to abide by these regulations or to protect such personal information from inappropriate access or disclosure, whether through social engineering or by accident or other cause, could have severe consequences including fines, litigation, regulatory sanctions, reputational damage, and loss of customers or employees.

Although we have a program designed to preserve the privacy of the personal data that we control or process, as well as personal data that we entrust to third parties, there can be no assurance that our program will meet all current and future regulatory requirements, anticipate all potential methods of unauthorized access, or prevent all inappropriate disclosures.

Our insurance coverage may not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms.

Although we have a program designed to preserve the privacy rights of the personal data that we control or process, as well as personal data that we entrust to third parties, there can be no assurance that our program will meet all current and future regulatory requirements, anticipate all potential methods of unauthorized access, or prevent all inappropriate disclosures.

Our insurance coverage may

not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms.

Cyberattacks or other breaches of network or information technology security could have an adverse effect on our systems, services, reputation and financial results.

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Adderley Revocable Trust K (“Trust K”) which became irrevocable upon the death of Terence E.

Adderley on October 9, 2018, is the controlling stockholder.

Adderley on October 9, 2018, is our controlling stockholder.

In accordance with the provisions of Trust K, William U.

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Under the listing standards of the NASDAQ Global Market, we are deemed to be a “controlled company” due to Trust K having voting power with respect to more than fifty percent of our outstanding voting stock.

A controlled company is not required to have a majority of its board of

directors comprised of independent directors.

Director nominees are not required to be selected or recommended for the board’s selection by a majority of independent directors or a nominations committee comprised solely of independent directors, nor do the NASDAQ Global Market listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process.

A controlled company is not required to have a majority of its board of directors comprised of independent directors.

nor do the NASDAQ Global Market listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process.

A controlled company is also exempt from NASDAQ Global Market’s requirements regarding the determination of officer compensation by a majority of independent directors or a compensation committee comprised solely of independent directors.

27 unchanged sentences

Our ability to continue to meet these financial covenants, particularly with respect to interest coverage (see Debt footnote in the notes to our consolidated financial statements), cannot be assured.

If we default under this or any other of these requirements, the lenders could declare all outstanding borrowings, accrued interest and fees to be due and payable or significantly increase the cost of the facility.

If we default under this or any other of these requirements, the lenders could declare all outstanding borrowings,

accrued interest and fees to be due and payable or significantly increase the cost of the facility.

Additionally, our credit facilities contain cross-default provisions.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors