What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-20 compared with 2023-02-16 · 435 added, 439 removed, 1494 unchanged (37% of the section changed)

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Attestation Report of Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of January 1, 2023, as stated in their report which appears herein.

PricewaterhouseCoopers LLP, independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report which appears herein.

Changes in Internal Control Over Financial Reporting

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OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

During the fourth quarter ended December 31, 2023, none of the Company's directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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EXECUTIVE OFFICERS OF THE REGISTRANT.

The following individuals serve as executive officers of the Company as of January 1, 2023:

The following individuals serve as executive officers of the Company as of December 31, 2023:

Name/Office Age Served as an Officer Since Business Experience During Last 5 Years

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Senior Vice President

Chief Marketing Officer

58 2018 January 2018 - Present

Served as officer of the Company.

Senior Vice President

Chief People Officer 54 2020 September 2020 - Present

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54 2008 Served as officer of the Company.

(1) In conjunction with the completion of the sale of our EMEA staffing operations and a transition period, Ms.

Koolhaas will depart the Company on March 31, 2024.

EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

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President, Commercial Business -

Senior Vice President and Chief

Digital Officer 52 2021 July 2021 - Present

Served as officer of the Company.

July 2020 - July 2021

President - RDI Global Solutions

May 2019 - July 2020

President - Cielo

May 2014 - April 2019

SVP and President - CDI

Senior Vice President

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General Counsel

Assistant Secretary

Corporate Secretary

52 2020 October 2020 - Present

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Transportation - IHS Markit

Vice President, Corporate Controller

and Chief Accounting Officer

53 2008 Served as officer of the Company.

CODE OF BUSINESS CONDUCT AND ETHICS.

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performance shares that have been earned but not yet vested totaling 115,182 financial measure performance awards, and 47,752 single financial measure performance awards;

and performance shares granted to employees and not yet earned or vested totaling 893,573 shares of financial measure performance awards, calculated using an assumed maximum award performance level of 200%, where applicable, at January 1, 2023.

and performance shares granted to employees and not yet earned or vested totaling 876,363 shares of financial measure performance awards, calculated using an assumed maximum award performance level of 200%, where applicable, at December 31, 2023.

(3) The Non-Employee Directors Deferred Compensation Plan is an equity compensation plan that has not been approved by our stockholders.

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Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Statements of Earnings for the three fiscal years ended January 1, 2023

Consolidated Statements of Comprehensive Income for the three fiscal years ended January 1, 2023

Consolidated Balance Sheets at January 1, 2023 and January 2, 2022

Consolidated Statements of Stockholders’ Equity for the three fiscal years ended January 1, 2023

Consolidated Statements of Cash Flows for the three fiscal years ended January 1, 2023

Consolidated Statements of Earnings for the three fiscal years ended December 31, 2023

Consolidated Statements of Comprehensive Income for the three fiscal years ended December 31, 2023

Consolidated Balance Sheets at December 31, 2023 and January 1, 2023

Consolidated Statements of Stockholders’ Equity for the three fiscal years ended December 31, 2023

Consolidated Statements of Cash Flows for the three fiscal years ended December 31, 2023

Notes to Consolidated Financial Statements

(ii) Financial Statement Schedule -

For the three fiscal years ended January 1, 2023:

For the three fiscal years ended December 31, 2023:

Schedule II - Valuation Reserves

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Report of Independent Registered Public Accounting Firm

Consolidated Statements of Earnings for the three fiscal years ended January 1, 2023

Consolidated Statements of Comprehensive Income for the three fiscal years ended January 1, 2023

Consolidated Balance Sheets at January 1 , 202 3 and January 2 , 20 2 2

Consolidated Statements of Stockholders' Equity for the three fiscal years ended January 1, 2023

Consolidated Statements of Cash Flows for the three fiscal years ended January 1, 2023

Consolidated Statements of Earnings for the three fiscal years ended December 31, 2023

Consolidated Statements of Comprehensive Income for the three fiscal years ended December 31, 2023

Consolidated Balance Sheets at December 3 1, 2023 and January 1 , 202 3

Consolidated Statements of Stockholders' Equity for the three fiscal years ended December 31, 2023

Consolidated Statements of Cash Flows for the three fiscal years ended December 31, 2023

Notes to Consolidated Financial Statements

Financial Statement Schedule - Schedule II - Valuation Reserves at January 1 , 202 3 , January 2 , 202 2 and January 3 , 2 021

Financial Statement Schedule - Schedule II - Valuation Reserves at December 31 , 2023, January 1 , 202 3 and January 2 , 202 2

Management’s Report on Internal Control Over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may change.

The Company completed the acquisition of RocketPower on March 7, 2022 and the acquisition of PTS on May 2, 2022.

Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company.

Accordingly, we have excluded the acquired RocketPower and PTS businesses from our assessment and report on internal control over financial reporting for the year ending January 1, 2023.

We are in the process of integrating RocketPower and PTS into our system of internal control over financial reporting.

RocketPower and PTS both individually accounted for less than 1% of the Company's total assets as of January 1, 2023 and less than 1% of the Company's total revenue for the year ended 2022.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of January 1, 2023.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on our assessment, management determined that, as of January 1, 2023, the Company’s internal control over financial reporting was effective based on those criteria.

The effectiveness of the Company’s internal control over financial reporting as of January 1, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on pages 44-46.

Based on our assessment, management determined that, as of December 31, 2023, the Company’s internal control over financial reporting was effective based on those criteria.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on pages 45-47.

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Kelly Services, Inc.

and its subsidiaries (the “Company”) as of January 1, 2023 and January 2, 2022, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for the years ended January 1, 2023, January 2, 2022, and January 3, 2021, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of January 1, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 1, 2023 and January 2, 2022, and the results of its operations and its cash flows for the years ended January 1, 2023, January 2, 2022, and January 3, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 1, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

and its subsidiaries (the “Company”) as of December 31, 2023 and January 1, 2023, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for the years ended December 31, 2023, January 1, 2023, and January 2, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and January 1, 2023, and the results of its operations and its cash flows for the years ended December 31, 2023, January 1, 2023, and January 2, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Rocket Power Holdings LLC and Rocket Power Ops LLC (collectively, RocketPower) and Pediatric Therapeutic Services (PTS) from its assessment of internal control over financial reporting as of January 1, 2023, because they were acquired by the Company in purchase business combinations during 2022.

We have also excluded RocketPower and PTS from our audit of internal control over financial reporting.

RocketPower and PTS are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting both individually represented less than 1% of the related consolidated financial statement amounts as of and for the year ended January 1, 2023.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures

that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Interim Impairment Assessment – RocketPower Reporting Unit

As described in Notes 1, 4, and 9 to the consolidated financial statements, the Company’s goodwill balance was $151.1 million as of January 1, 2023, and the goodwill allocated to the RocketPower reporting unit was $41.0 million upon its March 2022 acquisition and $0 as of January 1, 2023.

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.

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.

During the third quarter of 2022, customers within the high-tech industry vertical in which RocketPower specializes reduced or eliminated their full-time hiring, reducing demand for RocketPower’s services, and on-going economic uncertainty has more broadly impacted the growth in demand for Recruitment Process Outsourcing (RPO) in the near-term.

These changes in market conditions therefore caused a triggering event requiring an interim impairment test for goodwill.

Based on the result of management’s interim goodwill impairment test as of third quarter 2022, management recorded a goodwill impairment charge of $30.7 million to write off a portion of RocketPower’s goodwill.

Management determined the fair value of the RocketPower reporting unit using an income 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.

Management’s analysis used the following significant assumptions:

expected future revenue growth rates, profit margins and discount rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the RocketPower reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;

Goodwill Impairment Assessment – Softworld Reporting Unit

As described in Notes 1 and 9 to the consolidated financial statements, the Company’s goodwill balance was $151.1 million as of December 31, 2023, of which a majority of the goodwill related to the Softworld reporting unit.

Management performs the 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.

In the fourth quarter of 2023, management performed the annual goodwill impairment testing, which included a step one quantitative test for the Softworld reporting unit.

As part of the quantitative test, the estimated fair value of a reporting unit is compared to its carrying value and 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.

Fair value of the reporting units is estimated by management using the income approach whereby the estimated fair value is determined based on estimated future cash flows discounted by an estimated market participant weighted-average cost of capital.

Management’s estimated future cash flows included significant assumptions related to expected future revenue growth rates, profit margins, and discount rate.

As a result of the quantitative assessment, management determined that the estimated fair value of the Softworld reporting unit was more than its carrying value.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Softworld reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Softworld reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to expected future revenue growth rates, profit margins, and discount rate;

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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the RocketPower reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting unit;

(ii) evaluating the appropriateness of the income approach;

(iii) testing the completeness and accuracy of underlying data used in the model;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Softworld reporting unit;

(ii) evaluating the appropriateness of the income approach used by management;

(iii) testing the completeness and accuracy of underlying data used in the income approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to expected future revenue growth rates, profit margins, and discount rate.

Evaluating management’s assumptions related to expected future revenue growth rates and profit margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s income approach and the discount rate significant assumption.

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income approach and (ii) the reasonableness of the discount rate assumption.

Workers’ Compensation

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Management establishes the accrual 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.

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.

Management 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.

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Management evaluates the accrual quarterly throughout the year and makes adjustments as needed.

As disclosed by management, as of January 1, 2023, the accrual for accrued workers’ compensation, net of related receivables, is $43.3 million.

As disclosed by management, as of December 31, 2023, the accrual for accrued workers’ compensation, net of related receivables, is $43.6 million.

The principal considerations for our determination that performing procedures relating to workers’ compensation is a critical audit matter are (i) the significant judgment by management when determining the actuarial methods and the significant assumptions to use in establishing the accrual for workers’ compensation claims;

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These procedures also included, among others (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate for the accrual for workers’ compensation claims and (ii) comparing the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate.

Developing the independent estimate involved (i) testing the completeness and accuracy of underlying data provided by management;

(ii) evaluating management’s actuarial methods and significant assumptions related to the loss development factors and loss rates;

and (iii) independently developing the loss development factors and loss rates and actuarial methods used.

Developing the independent estimate involved (i) testing the completeness and accuracy of underlying data provided by management and (ii) evaluating the appropriateness of management’s actuarial methods and the reasonableness of the significant assumptions related to the loss development factors and loss rates by independently developing the loss development factors and loss rates.

/s/ PricewaterhouseCoopers LLP

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Selling, general and administrative expenses 934.7 943.5 870.6

Asset impairment charge 2.4 — —

Goodwill impairment charge — 41.0 —

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Loss on disposal — 18.7 —

Earnings (loss) from operations 14.8 48.6 ( 93.6 )

Earnings from operations 24.3 14.8 48.6

Gain (loss) on investment in Persol Holdings — ( 67.2 ) 121.8

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Loss on currency translation from liquidation of subsidiary — ( 20.4 ) —

Unrealized loss on forward contract ( 3.6 ) — —

Other income (expense), net 4.2 1.6 ( 3.6 )

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate ( 71.2 ) 185.8 ( 106.8 )

Earnings (loss) before taxes and equity in net earnings of affiliate 24.9 ( 71.2 ) 185.8

Income tax expense (benefit) ( 11.5 ) ( 7.9 ) 35.1

Net earnings (loss) before equity in net earnings (loss) of affiliate ( 63.3 ) 150.7 ( 72.8 )

Equity in net earnings (loss) of affiliate 0.8 5.4 0.8

Net earnings (loss) before equity in net earnings of affiliate 36.4 ( 63.3 ) 150.7

Equity in net earnings of affiliate — 0.8 5.4

Net earnings (loss) $ 36.4 $ ( 62.5 ) $ 156.1

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Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax benefit of $0.2 million and tax expense of $0.1 million and $0.2 million, respectively ( 7.5 ) ( 24.2 ) 13.9

Foreign currency translation adjustments, net of tax benefit of $0.0 million, and $0.2 million and tax expense of $0.1 million, respectively 8.0 ( 7.5 ) ( 24.2 )

Reclassification adjustments included in net earnings (loss) - liquidation of Japan subsidiary — 20.4 —

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Foreign currency translation adjustments 8.0 17.6 ( 24.2 )

Pension liability adjustments, net of tax expense of $0.5 million and $0.2 million, respectively and tax benefit of $0.1 million 1.5 0.5 ( 0.9 )

Pension liability adjustments, net of tax expense of $0.2 million, $0.5 million and $0.2 million, respectively 0.6 1.5 0.5

Reclassification adjustments included in net earnings 0.1 0.1 0.2

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Prepaid expenses and other current assets 48.9 69.9

Assets held for sale 291.3 —

Total current assets 1,626.6 1,715.2

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Goodwill, net 151.1 151.1

Investment in Persol Holdings — 264.3

Investment in equity affiliate — 123.4

Other assets 411.1 403.2

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Income and other taxes 17.2 51.4

Liabilities held for sale 169.9 —

Total current liabilities 1,019.9 1,128.8

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Operating lease liabilities 42.9 55.0

Accrued payroll and related taxes — 57.6

Accrued workers' compensation and other claims 40.9 40.7

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Class B common stock, 10.0 million shares authorized;

3.4 million shares issued at 2022 and 2021 3.4 3.4

3.3 million shares issued at 2023 and 3.4 million shares issued at 2022 3.3 3.4

Treasury stock, at cost

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Balance at beginning of year ( 19.5 ) ( 14.5 ) ( 16.5 )

Net issuance of stock awards 2.8 2.0 3.8

Net issuance of stock awards and other 5.0 2.8 2.0

Purchase of treasury stock ( 42.2 ) ( 7.8 ) —

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Balance at beginning of year 1,216.3 1,315.0 1,162.9

Cumulative-effect adjustment from adoption of ASU 2016-13, Credit Losses — — ( 0.7 )

Net earnings (loss) 36.4 ( 62.5 ) 156.1

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Adjustments to reconcile net earnings to net cash from operating activities:

Asset impairment charge 2.4 — —

Goodwill impairment charge — 41.0 —

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Stock-based compensation 9.7 7.8 5.1

Gain on sale of equity securities ( 2.0 ) — —

Unrealized loss on forward contract 3.6 — —

(Gain) loss on investment in Persol Holdings — 67.2 ( 121.8 )

Loss on cumulative translation adjustment reversal 20.4 — —

Loss on currency translation from liquidation of subsidiary — 20.4 —

Gain on foreign currency remeasurement — ( 5.5 ) —

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Gain on sale of assets — ( 6.2 ) —

Equity in net (earnings) loss of PersolKelly Pte.

Equity in net earnings of PersolKelly Pte.

— ( 0.8 ) ( 5.4 )

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Changes in operating assets and liabilities, net of acquisitions ( 2.0 ) ( 141.0 ) ( 10.2 )

Net cash (used in) from operating activities ( 76.3 ) 85.0 186.0

Net cash from (used in) operating activities 76.7 ( 76.3 ) 85.0

Cash flows from investing activities:

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Proceeds from insurance settlement — — 19.0

Proceeds from sale of Brazil, net of cash disposed — — 1.2

Proceeds (payments) related to loans to equity affiliate — 5.9 5.6

Proceeds from (investment in) equity securities — 5.0 ( 0.2 )

Proceeds from loans to equity affiliate — — 5.9

Proceeds from equity securities 2.0 — 5.0

Other investing activities ( 0.8 ) 0.6 1.4

Net cash from (used in) investing activities 167.5 ( 180.7 ) 9.8

Net cash (used in) from investing activities ( 14.1 ) 167.5 ( 180.7 )

Cash flows from financing activities:

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Cash and equivalents $ 125.8 $ 153.7 $ 112.7

Cash included in assets held for sale 33.5 — —

Restricted cash included in prepaid expenses and other current assets 0.3 0.1 0.2

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Fiscal Year The Company’s fiscal year ends on the Sunday nearest to December 31.

The three most recent years ended on January 1, 2023 (2022, which contained 52 weeks), January 2, 2022 (2021, which contained 52 weeks) and January 3, 2021 (2020, which contained 53 weeks).

The three most recent years ended on December 31, 2023 (2023), January 1, 2023 (2022) and January 2, 2022 (2021), all of which contained 52 weeks.

Period costs included in selling, general and administrative (“SG&A”) expenses are recorded on a calendar-year basis.

The Company’s operations in Brazil were accounted for on a one-month lag, until the Company sold the Brazil operations in the third quarter of 2020.

The Company’s equity method investment in PersolKelly Pte.

was accounted for on a one-quarter lag prior to the sale of the majority of the investment in the first quarter of 2022 (see Investment in PersolKelly Pte.

Any material transactions in the intervening period are disclosed or accounted for in the current reporting period.

Any material transactions in the intervening period were disclosed or accounted for in the current reporting period.

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.

All intercompany accounts and transactions have been eliminated with the exception of certain amounts owed between entities within the Company that will be considered third-party receivables and payables after the completion of the sale of our EMEA staffing operations.

Certain prior period amounts have been reclassified to conform to the current presentation.

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Ltd., which was accounted for under the equity method.

The operating results of the equity affiliate were recorded on a one-quarter lag and included in equity in net earnings (loss) of affiliate in the consolidated statements of earnings, until the Company sold the majority of the investment in the first quarter of 2022 (see Investment in PersolKelly Pte.

The operating results of the equity affiliate were recorded on a one-quarter lag and included in equity in net earnings of affiliate in the consolidated statements of earnings, until the Company sold the majority of the investment in the first quarter of 2022 (see Investment in PersolKelly Pte.

The remaining investment is accounted for as an equity investment without a readily determinable fair value (see Fair Value Measurements footnote).

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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 Contract The Company is exposed to foreign currency fluctuations and enters into foreign currency forward contracts that are not designated as hedging instruments to reduce the exposure to variability in certain expected future cash flows (see Fair Value Measurements footnote).

The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in unrealized loss on forward contract on the consolidated statements of earnings.

We are 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 we elected to employ net presentation of derivative assets and liabilities.

Revenue Recognition Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

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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 our customers are net of the amounts paid to the secondary suppliers/service providers and the net amount is recorded as revenues.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Staffing Services Revenue

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We have applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount we have the right to invoice the customer.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Permanent Placement Revenue

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Amortization expense is included in SG&A expenses in the consolidated statements of earnings.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Unsatisfied Performance Obligations

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Accounts receivable are written-off against the allowance when they are deemed uncollectible.

The Company reviews the adequacy of the allowance for uncollectible accounts

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 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.

We are exposed to credit losses primarily through our sales of workforce solution services to customers.

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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 workers’ compensation costs.

These costs differ fundamentally from SG&A expenses in that they arise specifically from the action of providing our services to customers whereas SG&A costs are incurred regardless of whether or not we place temporary employees with our customers.

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The Company considers securities with original maturities of three months or less to be cash and equivalents.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property and Equipment Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives.

Cost and estimated useful lives of property and equipment by function are as follows:

Cost and estimated useful lives of property and equipment by function are as follows (in millions of dollars):

Category 2023 2022 Useful Life

(In millions of dollars)

Land $ — $ — —

Work in process 6.7 3.0 —

Buildings and improvements 0.4 12.9 15 to 40 years

Buildings and improvements 0.4 0.4 30 years

Computer hardware and software 123.1 126.8 3 to 12 years

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Total property and equipment $ 165.9 $ 166.8

The property and equipment at cost in the table above includes $ 27.8 million of assets held for sale (see Held for Sale footnote).

The Company capitalizes external costs and internal payroll costs directly incurred in the development of software for internal use as required by the Internal-Use Software Subtopic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).

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Depreciation expense was $ 12.4 million for 2023, $ 13.6 million for 2022 and $ 16.4 million for 2021.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Cloud Computing Arrangements The Company has cloud computing arrangements that are comprised of internal-use software platforms that are accounted for as service contracts.

4 unchanged sentences

The related accumulated amortization totaled $ 14.2 million in 2023 and $ 7.3 million in 2022.

As of year-end 2023, $ 2.3 million of the $ 14.2 million of accumulated amortization is held for sale.

Capitalized amounts related to such arrangements are recorded within prepaid and other current assets and non-current other assets in the consolidated balance sheet.

As of year-end 2022 and 2021, the Company had $ 2.7 million recorded in prepaid expenses and other current assets in the consolidated balance sheet and $ 21.0 million and $ 13.9 million, respectively, recorded in non-current other assets in the consolidated balance sheet related to capitalized cloud computing arrangements (see Other Assets footnote).

As of year-end 2023 and 2022, the Company had $ 4.9 million, of which $ 0.1 million is held for sale, and $ 2.7 million, respectively, recorded in prepaid expenses and other current assets in the consolidated balance sheet and $ 27.3 million, of which $ 3.4 million is held for sale, and $ 21.0 million, respectively, recorded in non-current other assets in the consolidated balance sheet related to capitalized cloud computing arrangements (see Other Assets and Held for Sale footnotes).

Leases Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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If we elect 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 test").

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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Payroll taxes for temporary employees are recognized proportionately to direct wages for interim periods based on expected full-year amounts.

Included in 2021 current and noncurrent accrued payroll and related taxes are deferred U.S.

payroll tax payments as allowed by COVID-19 economic relief legislation.

Income Taxes The Company accounts for income taxes using the liability method.

1 unchanged sentence

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.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

work opportunity credit is allowed for wages earned by employees in certain targeted groups.

9 unchanged sentences

The value of awards is recognized as expense, net of forfeitures as they occur, over the requisite service periods in SG&A expense in the Company’s consolidated statements of earnings.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

50 unchanged sentences

Our P&I and Education segments operate in the Americas region, our SET segment operates in the Americas and Europe regions, and OCG operates in the Americas, Europe and Asia-Pacific regions.

The International segment includes Europe and our Brazil and Mexico operations, which are included in the Americas region.

Our Russian operations were sold in the third quarter of 2022 and our Brazil operations were sold in August 2020 (see Acquisitions and Dispositions footnote).

The International segment includes Europe and Mexico operations, which are included in the Americas region.

Our Russian operations were sold in the third quarter of 2022 (see Acquisitions and Dispositions footnote).

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

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Mexico 75.7 46.5 92.7

Brazil — — 17.0

Total Americas Region 3,928.3 3,998.6 3,863.2

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Russia — 63.4 132.2

United Kingdom 57.1 68.3 73.7

Other 191.8 200.3 197.1

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Beginning balance $ 7.7 $ 9.4 $ 9.8

Impact of adopting ASC 326 — — 0.3

Current period provision 2.1 1.3 1.3

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We were engaged in litigation with a customer over a disputed accounts receivable balance for certain services rendered more than five years ago, which had been recorded as a long-term receivable in other assets in the consolidated balance sheet.

In September 2020, a ruling was issued in favor of the customer, which we appealed.

Upon receiving the ruling, we increased our allowance for credit losses by $ 9.2 million in the third quarter of 2020 to reflect the likelihood of collection, which was recorded in other assets in the consolidated balance sheet.

The related allowance for credit losses on this long-term customer receivable was $ 10.9 million as of year-end 2020 and represented the likelihood of collection.

In September 2021, a final

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

ruling in the case was entered in favor of the customer.

In September 2021, a final ruling in the case was entered in favor of the customer.

As a result, in the third quarter of 2021, we wrote off the entire receivable balance with this customer, including $ 0.6 million not previously reserved.

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The rollforward of our allowance for credit losses related to the long-term customer receivable, which was recorded in other assets in the consolidated balance sheet, is as follows (in millions of dollars):

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December Year to Date

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Beginning balance $ 10.9

Impact of adopting ASC 326 — 0.7

Current period provision 0.6

Currency exchange effects — ( 0.3 )

Write-offs ( 11.5 )

Ending Balance $ —

There were no long-term customer receivables in 2022.

There were no long-term customer receivables in 2023 or 2022.

No allowances related to other receivables were material for December year to date 2023, 2022 and 2021.

Acquisitions and Dispositions

Acquisitions and Disposition

In the second quarter of 2022, Kelly Services USA, LLC ("KSU"), a wholly owned subsidiary of the Company, acquired Pediatric Therapeutic Services ("PTS"), as detailed below.

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("Softworld"), as detailed below.

In the fourth quarter of 2020, KSU acquired Greenwood/Asher & Associates, LLC ("Greenwood/Asher"), as detailed below.

In the first quarter of 2020, KSU acquired Insight Workforce Solutions LLC and its affiliate, Insight EDU LLC (collectively, "Insight"), as detailed below.

Pediatric Therapeutic Services

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Under terms of the purchase agreement, the purchase price was adjusted for cash held by PTS at the closing date and estimated working capital adjustments resulting in the Company paying cash of $ 85.7 million.

Total consideration includes $ 1.1 million of additional consideration that is payable to the seller related to employee retention credits and is recorded in accounts payable and accrued liabilities in the consolidated balance sheet.

In the third quarter of 2022, the Company paid $ 0.1 million of the employee retention credits and the remainder is expected to be paid in the first quarter of 2023.

The total consideration is as follows (in millions of dollars):

Total consideration included $ 1.1 million of additional consideration that was payable to the seller related to employee retention credits and was recorded in accounts payable and accrued liabilities in the consolidated balance sheet.

In the third quarter of 2022, the Company paid $ 0.1 million of the employee retention credits and the remaining $ 1.0 million was paid in the second quarter of 2023.

There is no remaining liability related to the additional consideration as of year-end 2023.

The total consideration was as follows (in millions of dollars):

Cash consideration paid $ 85.7

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Total consideration $ 86.8

Due to the limited amount of time that has passed since acquiring PTS, the purchase price allocation for this acquisition is preliminary and could change.

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

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of May 2023, the purchase price allocation for this acquisition was final.

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

Trade accounts receivable 10.0

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Included in the assets purchased in the PTS acquisition was $ 40.3 million of intangibles, made up of $ 29.8 million in customer relationships, $ 9.3 million associated with PTS's trade names and $ 1.2 million for non-compete agreements.

Customer relationships will be amortized over 15 years with no residual value, trade names will be amortized over 15 years with no residual value, and the non-compete agreements will be amortized over five years with no residual value.

Customer relationships are amortized over 15 years with no residual value, trade names are amortized over 15 years with no residual value, and the non-compete agreements are amortized over five years with no residual value.

Goodwill generated from the acquisition was primarily attributable to expected synergies from combining operations and expanding market potential and was assigned to the Education operating segment (see Goodwill and Intangible Assets footnote).

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Our consolidated revenues and earnings from operations for the year ended 2023 included $ 52.3 million and $ 7.7 million, respectively, from PTS.

Our consolidated revenues and earnings from operations for the year ended 2022 included $ 28.5 million and $ 3.8 million, respectively, from PTS.

Pro forma results of operations for this acquisition have not been presented as the acquisition does not have a material impact to the consolidated statements of earnings.

On March 7, 2022, the Company acquired 100 % of the issued and outstanding membership interests of RocketPower for a purchase price of $ 59.3 million.

RocketPower is a leading provider of RPO and other outsourced talent solutions to U.S.

RocketPower is a provider of RPO solutions to U.S.

high-tech companies.

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Under terms of the purchase agreement, the purchase price was adjusted for cash held by RocketPower at the closing date and estimated working capital adjustments resulting in the Company paying cash of $ 61.8 million.

Total consideration includes $ 1.1 million of additional consideration that is payable to the seller in 2023 related to employee retention credits and contingent consideration with an initial estimated fair value of $ 0.6 million related to an earnout payment with a maximum potential cash payment of $ 31.8 million in the event certain financial metrics are met per the terms of the agreement.

The initial fair value of the earnout was established using a Black Scholes model and it was reassessed throughout 2022 (see Fair Value Measurements footnote).

The total consideration is as follows (in millions of dollars):

Total consideration included $ 1.1 million of additional consideration that was payable to the seller in 2023 related to employee retention credits and was settled in the second quarter of 2023 and there is no remaining liability.

The total consideration also included contingent consideration with an initial estimated fair value of $ 0.6 million related to an earnout payment with a maximum potential cash payment of $ 31.8 million in the event certain financial metrics are met per the terms of the agreement.

The initial fair value of the earnout was established using a Black Scholes model, see the Fair Value Measurements footnote for information regarding subsequent reassessments.

The total consideration was as follows (in millions of dollars):

Cash consideration paid $ 61.8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Due to the limited amount of time that has passed since acquiring RocketPower, the purchase price allocation for this acquisition is preliminary and could change.

As of first-quarter end 2023, the purchase price allocation for this acquisition was final.

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

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Included in the assets purchased in the RocketPower acquisition was $ 15.8 million of intangible assets, made up of $ 7.5 million in customer relationships, $ 6.6 million associated with RocketPower's trade names and $ 1.7 million for non-compete agreements.

Customer relationships will be amortized over three years with no residual value, trade names will be amortized over 10 years with no residual value, and the non-compete agreements will be amortized over six years with no residual value.

Customer relationships are amortized over three years with no residual value, trade names are amortized over 10 years with no residual value, and the non-compete agreements are amortized over six years with no residual value.

Goodwill generated from the acquisition was primarily attributable to expected synergies from combining operations and expanding market potential and was assigned to the OCG operating segment.

1 unchanged sentence

In the third and fourth quarters of 2022, changes in market conditions triggered interim impairment tests for both long-lived assets and goodwill, resulting in the Company recording a goodwill impairment charge of $ 41.0 million (see Goodwill and Intangible Assets footnote).

RocketPower's results of operations are included in the OCG segment in 2022.

RocketPower's results of operations are included in the OCG segment.

Our consolidated revenues and earnings from operations for the year ended 2023 included $ 7.1 million and a loss of $ 5.3 million, respectively, from RocketPower.

Our consolidated revenues and earnings from operations for the year ended 2022 included $ 24.3 million and a loss of $ 43.5 million, which includes the $ 41.0 million goodwill impairment charge, respectively, from RocketPower.

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On April 5, 2021, the Company acquired 100 % of the shares of Softworld for a purchase price of $ 215.0 million.

Softworld is a leading technology staffing and workforce solutions firm that serves clients across several end-markets, including financial services, life sciences, aerospace, defense, insurance, retail and IT consulting.

This acquisition is intended to expand our capabilities, scale and solution set in our technology specialty.

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Included in the assets purchased in the Softworld acquisition was $ 79.4 million of intangible assets, made up of $ 54.9 million in customer relationships, $ 23.1 million associated with Softworld's trade name, and $ 1.4 million for non-compete agreements.

The customer relationships and trade name will be amortized over 10 years with no residual value and the non-compete agreements will be amortized over five years with no residual value.

The customer relationships and trade name are amortized over 10 years with no residual value and the non-compete agreements are amortized over five years with no residual value.

Goodwill generated from the acquisition was primarily attributable to expanding market potential and the expected revenue synergies and was assigned to the SET operating segment (see Goodwill footnote).

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Pro forma revenues $ 4,940.9

Pro forma net earnings (loss) $ 157.7 $ ( 70.8 )

The pro forma results for 2021 and 2020 reflects amortization of the intangible assets of $ 2.0 million per quarter, a non-recurring adjustment to reclassify $ 1.3 million of transaction expenses from 2021 to 2020, deferred compensation from 2020 and applicable taxes.

The unaudited pro forma information presented has been prepared for comparative purposes only and is

Pro forma net earnings $ 157.7

The pro forma results for 2021 reflects amortization of the intangible assets of $ 2.0 million per quarter and applicable taxes.

The unaudited pro forma information presented has been prepared for comparative purposes only and is not necessarily

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed date, nor is it necessarily an indication of future operating results.

Greenwood/Asher

On November 18, 2020, KSU acquired 100 % of the membership interests of Greenwood/Asher, a premier specialty education executive search firm in the U.S., for a purchase price of $ 3.5 million.

Under terms of the purchase agreement, the purchase price was adjusted for cash held by Greenwood/Asher at the closing date and estimated working capital adjustments resulting in the Company paying cash of $ 5.2 million.

The purchase price of the acquisition also includes contingent consideration with an initial estimated fair value of $ 2.1 million related to an earnout payment in the event certain conditions are met per the terms of the agreement.

The initial fair value of the earnout was established using a Black Scholes model and it is revalued quarterly, resulting in a net increase of $ 2.5 million to the liability in 2021, and an increase of $ 1.0 million to the liability in 2022 (see Fair Value Measurements footnote).

During the first quarter of 2022, the Company paid the first year earnout payment of $ 2.3 million.

The earnout liability as of year-end 2022 is $ 3.3 million, which is recorded in accounts payable and accrued liabilities in the consolidated balance sheet, and is expected to be paid in the first quarter of 2023 pursuant to the terms of the purchase agreement.

As of third quarter-end 2021, the purchase price allocation for this acquisition was final.

This acquisition is intended to expand our revenue opportunities in the education industry in the U.S.

Greenwood/Asher's results of operations are included in the Education segment.

Pro forma results of operations for this acquisition have not been presented as they are not material to the consolidated statements of earnings.

On January 14, 2020, KSU acquired 100 % of the membership interests of Insight, an educational staffing company in the U.S., for a purchase price of $ 34.5 million.

Under terms of the purchase agreement, the purchase price was adjusted for cash held by Insight at the closing date and estimated working capital adjustments resulting in the Company paying cash of $ 38.1 million.

The purchase price of the acquisition also included contingent consideration with an estimated fair value of $ 1.6 million related to an earnout payment in the event certain conditions were met per the terms of the agreement.

The initial fair value of the earnout was established using a Monte Carlo simulation and the liability was recorded in accounts payable and accrued liabilities in the consolidated balance sheet (see Fair Value Measurements footnote).

Subsequently, the earnout was revalued, resulting in a net increase to the liability of $ 0.1 million in 2020 and a further increase of $ 0.1 million in 2021.

In the third quarter of 2021, the Company paid the final earnout amount of $ 1.8 million in cash.

In our consolidated statements of cash flows, $ 1.6 million of the payment is reflected as a financing activity representing the initial fair value of the earnout, with the remainder flowing through operating activities.

There was no remaining liability for the earnout as of year-end 2022 or 2021.

In the second quarter of 2020, the Company paid a working capital adjustment of $ 0.1 million.

As of year-end 2020, the purchase price allocation was final.

This acquisition is intended to increase our market share in the education staffing market in the U.S.

Insight's results of operations are included in the Education segment.

Pro forma and actual results of operations for this acquisition have not been presented as it is not material to the consolidated statements of earnings.

Russia operations

indicative of the results of operations as they would have been had the acquisitions occurred on the assumed date, nor is it necessarily an indication of future operating results.

On July 20, 2022, the Company completed the sale of its Russia operations ("disposal group"), which was included in the Company's International operating segment.

The Company received cash proceeds of $ 7.4 million, which is less than the cash disposed of in the sale, resulting in investing cash outflows of $ 6.0 million in the consolidated statements of cash flows.

The Company received cash proceeds of $ 7.4 million, which was less than the cash disposed of in the sale, resulting in investing cash outflows of $ 6.0 million in the consolidated statements of cash flows.

The disposal group was previously reported as held for sale as of our second quarter-end 2022 with an $ 18.5 million impairment charge associated with the transaction.

The total loss on the sale is $ 18.7 million, resulting from an additional $ 0.2 million loss on the transaction in the third quarter of 2022, which is recorded in loss on disposal in the consolidated statements of earnings.

The total loss on the sale is $ 18.7 million, resulting from an additional $ 0.2 million loss on the transaction in the third quarter of 2022, which was recorded in loss on disposal in the consolidated statements of earnings.

The loss on disposal includes the liquidation of the cumulative translation adjustment of $ 1.4 million.

The disposal group does not meet the requirements to be classified as discontinued operations as the sale does not have a material effect on the Company's operations and does not represent a strategic shift in the Company's strategy.

Our consolidated revenue for the year ended 2022, 2021 and 2020 includes $ 63.4 million, $ 132.2 million, and $ 118.5 million, respectively, from the Russia operations and our consolidated earnings before taxes for the year ended 2022, 2021 and 2020 includes $ 1.4 million, $ 3.2 million and $ 2.4 million, respectively, from the Russia operations.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

Our consolidated revenue for the years ended 2022 and 2021 included $ 63.4 million and $ 132.2 million, respectively, from the Russia operations and our consolidated earnings before taxes for the year ended 2022 and 2021 included $ 1.4 million and $ 3.2 million, respectively, from the Russia operations.

The major classes of divested assets and liabilities were as follows (in millions of dollars):

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Disposal group, net $ 24.7

Brazil operations

On August 18, 2020, the Company sold its Brazil operations for a purchase price of $ 1.4 million.

The Company received cash proceeds of $ 1.2 million, net of cash disposed.

As a part of the transaction, the Company has agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences initiated within a six-year period after closing.

The aggregate losses for which the Company will provide indemnification shall not exceed $ 8.8 million.

Accordingly, the Company recorded an indemnification liability of $ 2.5 million, which represented the fair value of the liability at the time of disposition and completely offset the gain on the sale.

The indemnification liability is revalued on a quarterly basis (see Fair Value Measurements footnote).

Investment in Persol Holdings

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In accordance with the Company's policy, the amount paid to repurchase the shares in excess of par value of $ 25.6 million was recorded to earnings invested in the business in the consolidated balance sheet at the time of the share retirement.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On February 15, 2022, Kelly Services Japan, Inc.

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The $ 67.2 million loss in the first quarter of 2022 recorded in gain (loss) on investment in Persol Holdings in the consolidated statements of earnings included $ 52.4 million for losses related to changes in fair value up to the date of the transaction and $ 14.8 million for the discount from the market price on the date of the sale and transaction costs.

A gain on the investment of $ 121.8 million and a loss on the investment of $ 16.6 million for the years ended 2021 and 2020, respectively, was recorded in gain (loss) on investment in Persol Holdings in the consolidated statements of earnings.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A gain on the investment of $ 121.8 million for the year ended 2021 was recorded in gain (loss) on investment in Persol Holdings in the consolidated statements of earnings.

Subsequent to the transaction discussed above, the Company commenced the dissolution process of its Kelly Services Japan, Inc.

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In addition, the Company had $ 1.9 million of accumulated other comprehensive income representing the Company's share of the JV's other comprehensive income over time related to the shares sold that was realized upon the sale, offsetting the $ 1.9 million gain that resulted from the proceeds in excess of the carrying value.

The operating results of the Company’s interest in the JV were accounted for on a one-quarter lag under the equity method and were reported in equity in net earnings (loss) of affiliate in the consolidated statements of earnings through the date of the sale.

Such amounts were earnings of $ 0.8 million in 2022 representing the results through the date of the sale, $ 5.4 million in 2021 and $ 0.8 million in 2020.

The operating results of the Company’s interest in the JV were accounted for on a one-quarter lag under the equity method and were reported in equity in net earnings of affiliate in the consolidated statements of earnings through the date of the sale.

Such amounts were earnings of $ 0.8 million in the first quarter of 2022, representing the results through the date of the sale.

After the sale, the Company has a 2.5 % ownership interest in the JV and discontinued its use of equity method accounting.

The remaining investment is accounted for as an equity investment without a readily determinable fair value (see Fair Value Measurements footnote).

The equity investment, included in other assets on the Company's consolidated balance sheet, totaled $ 6.4 million as of year-end 2022 and the investment in equity affiliate on the Company’s consolidated balance sheet totaled $ 123.4 million as of year-end 2021.

The Company made loans to the JV in prior years, proportionate to its 49 % ownership, to fund working capital requirements as a result of their sustained revenue growth.

In the fourth quarter of 2020, the JV repaid $ 5.6 million of the outstanding loan balance and in the second quarter of 2021, the JV repaid the remaining $ 5.8 million of the loan balance.

As of year-end 2022, there is no outstanding loan balance or accrued interest receivable relating to the loan.

The net amount due to the JV, a related party, was not material as of year-end 2022 or 2021.

Prior to receiving full repayment of the loans in 2021, the expected credit losses were estimated over the contractual term of the loans.

The required allowance was based on current and projected financial information from the JV, market-specific information and other relevant data available to the Company, as applicable.

The allowance was not material at year-end 2021.

The JV is a supplier to certain MSP programs in the region and the amounts for services provided to the Company, which are included in accounts payable and accrued liabilities in the consolidated balance sheet, are not material.

On April 1, 2020, 100 % of the shares of Kelly Services Australia Pty Ltd and Kelly Services (New Zealand) Limited, both subsidiaries of the JV, were sold to an affiliate of Persol Holdings.

The JV received proceeds of $ 17.5 million upon the sale and the Company received a direct royalty payment of $ 0.7 million.

The equity investment, included in other assets on the Company's consolidated balance sheet, totaled $ 6.4 million as of year-end 2023 and year-end 2022.

Fair Value Measurements

5 unchanged sentences

Level 3 measurements include significant unobservable inputs.

There were no transfers between Level 1, Level 2 and Level 3 assets or liabilities in 2023 or 2022.

KELLY SERVICES, INC.

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Money market funds $ 42.5 $ 42.5 $ — $ —

Investment in Persol Holdings — — — —

Total assets at fair value $ 42.5 $ 42.5 $ — $ —

Brazil indemnification $ ( 3.0 ) $ — $ — $ ( 3.0 )

Greenwood/Asher earnout ( 3.3 ) — — ( 3.3 )

RocketPower earnout — — — —

Foreign currency forward contract, net ( 3.6 ) — ( 3.6 ) —

Total liabilities at fair value $ ( 6.6 ) $ — $ ( 3.6 ) $ ( 3.0 )

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Money market funds $ 108.3 $ 108.3 $ — $ —

Investment in Persol Holdings 264.3 264.3 — —

Total assets at fair value $ 108.3 $ 108.3 $ — $ —

3 unchanged sentences

Money market funds represent investments in money market funds that hold government securities, of which $ 8.0 million as of year-end 2023 and $ 6.5 million as of year-end 2022 are restricted as to use and are included in other assets in the consolidated balance sheet.

The money market funds that are restricted as to use account for the majority of our restricted cash balances and represents cash balances that are required to be maintained to fund disability claims in California.

The money market funds that are restricted as to use account for the majority of our restricted cash balance and represents cash balances that are required to be maintained to fund disability claims in California.

The remaining money market funds as of year-end 2023 and year-end 2022 are included in cash and equivalents in the consolidated balance sheet.

The valuations of money market funds were based on quoted market prices of those accounts as of the respective period end.

On February 15, 2022, Kelly Services Japan, Inc.

sold the investment in the common stock of Persol Holdings in an open-market transaction.

The valuation of the investment was based on the quoted market price of Persol Holdings stock on the Tokyo Stock Exchange as of year-end 2021, and the related changes in fair value were recorded in the consolidated statements of earnings (See Investments in Persol Holdings footnote).

The cost of this yen-denominated investment, which fluctuated based on foreign exchange rates, was $ 18.0 million as of year-end 2021.

As of year-end 2022, the Company had an indemnification liability totaling $ 3.4 million with $ 0.3 million in accounts payable and accrued liabilities and $ 3.1 million in other long-term liabilities, and $ 2.4 million at year-end 2021 in other long-term liabilities on the consolidated balance sheet related to the sale of the Brazil operations.

The valuations of money market funds are based on quoted market prices of those accounts as of the respective period end.

As of year-end 2023, the Company had an indemnification liability totaling $ 3.0 million with $ 0.1 million in accounts payable and accrued liabilities and $ 2.9 million in other long-term liabilities, and $ 3.4 million at year-end 2022 with $ 0.3 million in accounts payable and accrued liabilities and $ 3.1 million in other long-term liabilities on the consolidated balance sheet related to the sale of the Brazil operations.

As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences initiated within a six-year period after closing.

2 unchanged sentences

The valuation, which represents the fair value, is considered a level 3 liability, and is being measured on a recurring basis.

During 2022, the Company reassessed the value of the indemnification liability and determined it was necessary to record an increase to the liability of $ 0.8 million.

Additionally, in 2022, the Company recognized an increase of $ 0.2 million to the indemnification liability related to exchange rate fluctuations in other income (expense), net in the consolidated statements of earnings.

The Company recorded an earnout liability relating to the 2020 acquisition of Greenwood/Asher, totaling $ 3.3 million at year-end 2022 in accounts payable and accrued liabilities and $ 4.6 million at year-end 2021 with $ 2.3 million in accounts payable and accrued liabilities and $ 2.3 million in other long-term liabilities in the consolidated balance sheet.

The initial valuation of

The Company made a $ 0.4 million payment to settle various indemnification claims in the second quarter of 2023.

Additionally, during 2023, the Company recognized an increase of $ 0.3 million to the indemnification liability related to exchange rate fluctuations in other income (expense), net in the consolidated statements of earnings.

On November 2, 2023, the Company entered into a foreign currency forward contract with a notional amount of € 90.0 million which matures at the end of January 2024 to manage the foreign currency risk associated with the sale of our EMEA staffing operations, which was completed on January 2, 2024.

This contract is not designated as a hedging instrument;

therefore, it is marked-to-market and the changes in fair value are recognized in earnings.

The Company's foreign currency forward contract is valued using observable inputs, such as foreign currency exchange rates, and is considered a level 2 liability.

The Company recorded an unrealized loss of $ 3.6 million for the year ended 2023 in unrealized loss on forward contract on the consolidated statements of earnings.

As of year-end 2023, the Company has a net liability associated with the forward contract of $ 3.6 million recorded in accounts payable and accrued liabilities on the consolidated balance sheet.

The Company recorded an earnout liability relating to the 2020 acquisition of Greenwood/Asher, with a remaining liability of $ 3.3 million at year-end 2022 in accounts payable and accrued liabilities in the consolidated balance sheet.

The initial valuation of the earnout liability was established using a Black Scholes model and represented the fair value and was considered a level 3 liability.

During the first quarter of 2023, the Company paid the remaining earnout liability totaling $ 3.3 million, representing

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

the earnout liability was established using a Black Scholes model and represents the fair value and is considered a level 3 liability.

During the first quarter of 2022, the Company paid the one year portion of the earnout totaling $ 2.3 million.

In the consolidated statements of cash flows, $ 0.7 million is reflected as a financing activity representing the initial fair value of the investment, with the remainder flowing through operating activities.

the year two portion of the earnout.

In the consolidated statements of cash flows, $ 1.4 million of the payment is reflected as a financing activity representing the initial fair value of the earnout, with the remainder flowing through operating activities.

There is no remaining earnout liability as of year-end 2023.

During the first quarter of 2022, the Company paid the year one portion of the earnout totaling $ 2.3 million.

In the consolidated statements of cash flows, $ 0.7 million is reflected as a financing activity representing the initial fair value of the earnout, with the remainder flowing through operating activities.

During 2022, the Company reassessed the value of the earnout liability and determined that it was necessary to record an increase to the liability of $ 1.0 million.

The company recorded an initial earnout liability relating to the 2022 acquisition of RocketPower, totaling $ 0.6 million, with $ 0.5 million in accounts payable and accrued liabilities and $ 0.1 million in other long-term liabilities in the consolidated balance sheet (see Acquisitions and Dispositions footnote).

The initial valuation of the earnout liability was established using a Black Scholes model and represented the fair value and was considered a level 3 liability.

In the third quarter of 2022, we reassessed the value and determined that the fair value was zero .

The maximum total cash payments which may be due related to the earnout liability is $ 31.8 million.

The Company recorded an earnout liability relating to the 2020 acquisition of Insight, totaling $ 1.7 million as of year-end 2020 in accounts payable and accrued liabilities in the consolidated balance sheet (see Acquisitions and Dispositions footnote).

There have been no changes to the value as a result of year-end 2023 assessments and there is no related liability as of year-end 2023.

The valuation of the earnout liability was initially established using a Monte Carlo simulation and represented the fair value and was considered a level 3 liability.

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This investment was measured using the measurement alternative for equity investments without a readily determinable fair value as described above.

In the second quarter of 2021, BTG entered into a merger agreement which resulted in all of the Company's shares of BTG being automatically canceled upon approval of the merger and resulted in the receipt of $ 5.0 million in cash, which was equal to the carrying value and purchase price of the BTG investment.

In the second quarter of 2021, BTG entered into a merger agreement which resulted in all of the Company's shares of BTG being automatically cancelled upon approval of the merger and resulted in the receipt of $ 5.0 million in cash, which was equal to the carrying value and purchase price of the BTG investment.

Prior to March 2021, the Company had a minority investment in Kenzie Academy Inc., which was included in other assets in the consolidated balance sheet.

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As a result of the quantitative and qualitative assessments, the Company determined goodwill related to these reporting units was not impaired as of year-end 2023.

During 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower's services, and on-going economic uncertainty has more broadly impacted the growth in demand for RPO in the near-term.

During 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower's services, and on-going economic uncertainty had more broadly impacted the growth in demand for RPO in the near-term.

These changes in market conditions therefore caused a triggering event requiring interim impairment tests for both long-lived assets and goodwill as of third quarter of 2022.

Job eliminations in the high-tech industry vertical continued during the fourth quarter of 2022, indicating a broad, sustained reduction in hiring was likely and is now expected to last through much of 2023, directly impacting RocketPower and the demand for RocketPower's

Job eliminations in the high-tech industry vertical continued during the fourth quarter of 2022, indicating a broad, sustained reduction in hiring was likely and was expected to last through much of 2023, directly impacting RocketPower and the demand for RocketPower's

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Based on the results of our interim goodwill impairment tests, we recorded a goodwill impairment charge of $ 30.7 million in the third quarter of 2022 and we recorded an additional goodwill impairment charge of $ 10.3 million in the fourth quarter of 2022 to write off the remaining balance of RocketPower’s goodwill as of year-end, for a total goodwill impairment charge of $ 41.0 million as of year-end 2022 (see Goodwill and Intangible Assets footnote).

Restructuring

In the first quarter of 2022, the Company took restructuring actions designed to increase efficiency.

Restructuring costs incurred in 2022 totaled $ 1.7 million and were recorded entirely in SG&A expenses in the consolidated statements of earnings, as detailed below (in millions of dollars):

Severance Costs Lease Termination Costs Total

Restructuring and Transformation Activities

In the first quarter of 2023, the Company undertook restructuring actions to further our cost management efforts in response to the current demand levels and reflect a repositioning of our P&I 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 entirely in selling, general and administrative ("SG&A") expenses in the consolidated statements of earnings.

In the second quarter of 2023, the Company announced a comprehensive transformation initiative that includes actions that will 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 right-of-use assets related to an unoccupied office space lease and $ 0.5 million of lease termination costs.

The impairment charge related to the right-of-use assets is recorded in the asset impairment charge in the consolidated statements of earnings.

The costs to execute, the severance, and lease termination costs are recorded in SG&A expenses in the consolidated statements of earnings, as detailed further below.

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

The restructuring and transformation costs incurred in 2023 and included in SG&A are detailed below (in millions of dollars):

Severance Costs Lease Termination Costs, Transformation and Other Total

Professional & Industrial $ 6.0 $ 0.7 $ 6.7

Science, Engineering & Technology 1.3 0.3 1.6

Education 1.0 — 1.0

Outsourcing & Consulting 3.0 — 3.0

Corporate 0.8 — 0.8

Total $ 1.5 $ 0.2 $ 1.7

In the fourth quarter of 2021, the Company initiated a series of cost management actions designed to increase operational efficiencies within enterprise functions that provide centralized support to our operating units.

The actions are designed to align expenses with current expectations for top-line growth.

Restructuring costs incurred in 2021 totaled $ 4.0 million and are recorded entirely in SG&A expenses in the consolidated statements of earnings, as detailed below (in millions of dollars):

Severance Costs

International 3.3 — 3.3

Corporate 4.7 18.3 23.0

In the first quarter of 2020, the Company took restructuring actions to align costs with expected revenues, position the organization to adopt a new operating model later in 2020 and to align the U.S.

field office facilities footprint with a more technology-enabled service delivery methodology.

In the fourth quarter of 2020, the Company took several restructuring actions with a goal to provide sustainable cost reductions as a result of the continuing COVID-19 demand disruption.

The restructuring actions included involuntary terminations, a Voluntary Separation Plan ("VSP") and a Voluntary Retirement Plan ("VRP").

Employees were included in the VSP based on the functions that were being reorganized, and not by age or years of service.

For the VRP, eligible employees were selected based on their age and years of service.

Restructuring costs incurred in 2020 totaled $ 12.8 million and were recorded entirely in SG&A expenses in the consolidated statements of earnings, as detailed below (in millions of dollars):

Total $ 19.3 $ 19.3 $ 38.6

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Lease Termination Costs Severance Costs Total

In the first quarter of 2022, the Company took restructuring actions designed to increase efficiency.

Restructuring costs incurred in 2022 totaled $ 1.7 million and were recorded entirely in SG&A expenses in the consolidated statements of earnings, as detailed below (in millions of dollars):

Severance Costs Lease Termination Costs Total

Professional & Industrial $ 0.1 $ 0.2 $ 0.3

Science, Engineering & Technology 0.5 0.1 0.6

Education 0.4 — 0.4

Outsourcing & Consulting 0.2 — 0.2

International 0.7 0.7 1.4

Corporate 0.8 — 0.8

Total $ 1.5 $ 0.2 $ 1.7

The actions were designed to align expenses with current expectations for top-line growth.

Restructuring costs incurred in 2021 totaled $ 4.0 million and are recorded entirely in SG&A expenses in the consolidated statements of earnings, as detailed below (in millions of dollars):

Severance Costs

International $ 1.2

Corporate 2.8

Accrual Summary

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Balance as of year-end 2021 $ 2.9

Additions charged to International 1.2

Additions charged to Corporate 2.8

Reductions for cash payments related to all restructuring activities ( 4.6 )

Reductions for cash payments ( 4.0 )

Accrual adjustments ( 0.3 )

Balance as of year-end 2022 0.3

Additions charged to Professional & Industrial 0.3

Additions charged to Outsourcing & Consulting 0.2

Additions charged to Education 0.4

Additions charged to Corporate 0.8

Reductions for cash payments related to all restructuring activities ( 4.0 )

Accruals 40.6

Reductions for cash payments ( 23.8 )

Accrual adjustments ( 2.0 )

Balance as of year-end 2023 $ 15.1

The remaining balance of $ 0.3 million as of year-end 2022 primarily represents severance costs and the majority is expected to be paid by the first quarter-end 2023.

The remaining balance of $ 15.1 million as of year-end 2023 primarily represents the costs to execute the transformation initiatives and severance costs and the majority is expected to be paid by second quarter-end 2024.

No material adjustments are expected to be recorded.

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Education 3.5 36.3 — 39.8

Outsourcing & Consulting — 41.0 ( 41.0 ) —

Total $ 114.8 $ 77.3 $ ( 41.0 ) $ 151.1

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We also perform a qualitative review on a quarterly basis of our long-lived assets, comprised of net property and equipment and definite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

During the third quarter of 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower’s services, and on-going economic uncertainty has more broadly impacted the growth in demand for RPO in the near-term.

We also perform a qualitative review on a quarterly basis of our 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.

2023 Goodwill Impairment Assessment

In the fourth quarter of 2023, we performed our annual goodwill impairment testing, which included a step one quantitative test for the Softworld and PTS reporting units.

As a result of the quantitative assessment, we determined that the estimated fair value of the Softworld and PTS reporting units was more than its carrying value.

Additionally, we performed a step zero qualitative analysis for the Education reporting unit to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary.

As a result of the quantitative and qualitative assessments, the Company determined goodwill related to these reporting units was not impaired.

The estimated fair value of the Softworld reporting unit exceeds the carrying value by less than 10 %.

If current expectations of future revenue and profit margins are not met, or if market factors outside of our control change significantly, including discount rate, and other market factors, then the goodwill of the Softworld reporting unit may be impaired in the future, resulting in goodwill impairment charges.

2022 Goodwill Impairment

During the third quarter of 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower’s services, and on-going economic uncertainty had more broadly impacted the growth in demand for RPO in the near-term.

These changes in market conditions therefore caused a triggering event requiring an interim impairment test for both long-lived assets and goodwill.

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We performed a long-lived asset recoverability test for RocketPower and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable.

We performed an interim step one quantitative test for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value.

We performed an

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interim step one quantitative test for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value.

Based on the result of our interim goodwill impairment test as of third quarter-end 2022, we recorded a goodwill impairment charge of $ 30.7 million to write off a portion of RocketPower’s goodwill, with $ 10.3 million goodwill remaining in the OCG reportable segment as of third quarter-end 2022.

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As a result of the quantitative and qualitative assessments, the Company determined goodwill related to these reporting units was not impaired at that time.

Subsequent to our annual goodwill impairment testing, job eliminations in the high-tech industry vertical continued, indicating a broad, sustained reduction in hiring was likely and is now expected to last through much of 2023, directly impacting RocketPower and the demand for RocketPower's services in this vertical.

Subsequent to our annual goodwill impairment testing, job eliminations in the high-tech industry vertical continued, indicating a broad, sustained reduction in hiring was likely and was expected to last through much of 2023, directly impacting RocketPower and the demand for RocketPower's services in this vertical.

These changes in market conditions caused a triggering event requiring another interim impairment test for both long-lived assets and goodwill as of year-end 2022.

We performed a long-lived asset recoverability test for RocketPower and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable.

We performed an interim step one quantitative test for

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RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value.

We performed an interim step one quantitative test for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value.

Based on the result of our interim goodwill impairment test as of year-end 2022, we recorded an additional goodwill impairment charge of $ 10.3 million in the fourth quarter of 2022 to write off the remaining balance of RocketPower’s goodwill, for a total goodwill impairment charge of $ 41.0 million as of year-end 2022.

(See Impairment Adjustments column in the 2022 table above.)

If current expectations of future revenue and profit margins are not met, or if market factors outside of our control change significantly, including discount rate, it could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet.

Intangible Assets

Intangible assets, excluding fully-amortized intangibles, are included within other assets on our consolidated balance sheet and consist of the following (in millions of dollars):

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Total $ 201.8 $ 64.1 $ 137.7 $ 203.6 $ 44.9 $ 158.7

The year-over-year change in total intangible assets was due to the intangibles purchased in connection with the RocketPower and PTS acquisitions (see Acquisitions and Dispositions footnote).

Intangible amortization expense, which is included in SG&A expense in the consolidated statements of earnings, was $ 20.9 million, $ 19.4 million and $ 13.0 million in 2023, 2022 and 2021 , respectively.

The amortization expense will be $ 20.6 million in 2024, $ 18.5 million in 2025, $ 17.9 million in 2026, $ 17.3 million in 2027 and $ 16.1 million in 2028.

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Included in other assets are the following (in millions of dollars):

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Workers' compensation and other claims receivable (3)

Other assets $ 403.2 $ 389.1

Total other assets (5)

$ 416.5 $ 403.2

(1) See Goodwill and Intangible Assets footnote for a detailed listing of intangible assets and related accumulated amortization.

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workers’ compensation and automobile liability claims in excess of the applicable loss limits.

(4) Other in 2022 includes $ 6.4 million related to our equity investment in the JV (see Investment in PersolKelly Pte.

(4) Other includes $ 6.4 million related to our equity investment in the JV (see Investment in PersolKelly Pte.

Ltd footnote).

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(5) Total other assets includes $ 5.4 million of assets held for sale in connection with the sale of our EMEA staffing operations (see Held for Sale footnote).

The Company has operating and financing leases for headquarters and field offices and various equipment.

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Total lease cost $ 29.7 $ 31.1 $ 35.7

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Supplemental consolidated balance sheet information related to leases is as follows (in millions of dollars):

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Operating Operating lease right-of-use assets $ 61.3 (1)

Financing Property and equipment 5.0 6.3

Financing Net property and equipment 0.3 1.3

Total lease assets $ 61.6 $ 68.1

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Total lease liabilities $ 65.9 $ 70.9

(1) ROU operating assets and liabilities, current and non-current, include held for sale leases (see Held for Sale footnote).

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

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Operating leases 5.4 % 5.1 %

Financing leases 5.4 % 5.3 %

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Financing leases N/A 5.4 %

Other information related to leases is as follows (in millions of dollars):

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Financing leases — — —

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Maturities of lease liabilities as of year-end 2023 are as follows (in millions of dollars):

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Total $ 65.9 (2)

During the first quarter of 2020, the Company sold three of four headquarters properties and entered into a leaseback agreement, which is accounted for as an operating lease (see Sale of Assets footnote).

As of first quarter-end 2020, we recognized $ 37.6 million of ROU assets within operating lease right-of-use assets, $ 1.2 million of current lease liabilities within operating lease liabilities, current and $ 36.1 million of noncurrent lease liabilities within operating lease liabilities, noncurrent in the consolidated balance sheet, with a discount rate of 4.8 % over a 15 -year lease term related to this lease.

(2) Maturities of lease liabilities includes future lease payments for held for sale leases (see Held for Sale footnote).

Short-Term Debt

On November 2, 2023, the Company entered into an agreement with its lenders to amend and restate its existing $ 200.0 million, five-year revolving credit facility (the "Facility"), with a termination date of December 5, 2024.

The amendment increased the limit on restricted payments from $ 50.0 million to $ 115.0 million and changed certain of the terms and conditions.

The amendment changed certain terms and conditions related to the sale of assets to allow for the sale of the EMEA staffing operations.

The Facility is available to be used to fund working capital, acquisitions and general corporate needs.

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• We must maintain a certain minimum 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 (“Interest Coverage Ratio”) as of the end of any fiscal quarter.

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

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• We 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.

On September 21, 2022, the Company and Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company (the “Receivables Entity”), amended the Receivables Purchase Agreement related to its $ 150.0 million, three-year , securitization facility (the “Securitization Facility”).

The amendment changed certain of the terms and conditions, including extending the DSO terms from 65 days to 70 days.

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 $ 150.0 million, three-year , securitization facility (the “Securitization Facility”).

The Receivables Purchase Agreement will terminate December 5, 2024, unless terminated earlier pursuant to its terms.

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The Securitization Facility, which contains a cross-default clause that could result in termination if defaults occur under our 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.

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As of year-end 2023, the Securitization Facility had no short-term borrowings, SBLCs of $ 49.4 million related to workers’ compensation at a rate of 0.90 % and a remaining capacity of $ 100.6 million.

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The Company had total unsecured, uncommitted short-term local credit facilities of $ 11.5 million as of year-end 2023.

There were $ 0.7 million borrowings under these lines at year-end 2022, compared to no borrowings under these lines at year-end 2021.

There were no borrowings under these lines at year-end 2023, as compared to $ 0.7 million borrowings under these lines at year-end 2022.

The weighted average interest rate for these borrowings, which was related to India, was 8.50 % at year-end 2022.

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The liability for the nonqualified plans was $ 233.8 million and $ 196.6 million as of year-end 2023 and 2022, 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 a loss of $ 36.3 million in 2022, earnings of $ 27.0 million in 2021 and earnings of $ 23.0 million in 2020.

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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 $ 32.9 million in 2023, loss of $ 36.3 million in 2022 and earnings of $ 27.0 million in 2021.

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.

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The cash surrender value of these insurance policies is included in other assets in the consolidated balance sheet.

During 2022, 2021 and 2020, proceeds of $ 1.5 million, $ 12.2 million and $ 2.3 million, respectively, were received 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 a loss of $ 36.0 million in 2022, earnings of $ 26.0 million in 2021 and earnings of $ 23.1 million in 2020.

During 2023, there were no proceeds in connection with these policies.

In 2022 and 2021, proceeds of $ 1.5 million and $ 12.2 million, respectively, were received 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 $ 32.2 million in 2023, loss of $ 36.0 million in 2022 and earnings of $ 26.0 million in 2021.

The net expense for retirement benefits for the qualified and nonqualified plans, including Company-matching contributions for full-time employees, totaled $ 10.9 million in 2023, $ 9.4 million in 2022 and $ 10.0 million in 2021, and is included in total SG&A expenses in the consolidated statements of earnings.

The 2020 expense reflects the temporary suspension of Company-matching contributions from April to December 2020 to mitigate the impact of the COVID-19 pandemic on the results of our operations.

The expense related to retirement plan contributions for temporary employees, which is included in cost of services, is reimbursed by our customers.

The expense related to retirement plan contributions for temporary employees is included in cost of services in the consolidated statements of earnings.

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International Defined Benefit Plans

The Company has several defined benefit pension plans in locations outside of the United States.

The total projected benefit obligation, assets and unfunded liability for these plans as of year-end 2022 were $ 10.4 million, $ 7.5 million and $ 2.9 million, respectively.

The total projected benefit obligation, assets and unfunded liability for these plans as of year-end 2023 were $ 9.7 million, $ 8.0 million and $ 1.7 million, respectively, all of which are included as held for sale (see Held for Sale footnote).

The total projected benefit obligation, assets and unfunded liability for these plans as of year-end 2022 were $ 10.4 million, $ 7.5 million and $ 2.9 million, respectively.

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As a result, a cash dividend may be declared on the Class A shares without declaring a cash dividend on the Class B shares.

On November 9, 2022, the Company's board of directors approved a plan for the Company to repurchase shares of its Class A common stock with a market value not to exceed $ 50.0 million through transactions executed in the open market within one year.

During 2022, the Company repurchased 474,644 Class A shares for $ 7.8 million.

A total of $ 42.2 million remains available under the share repurchase program as of year-end 2022.

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 were no remaining shares available under the share repurchase program as of year-end 2023 as compared to $ 42.2 million remaining shares available under the share repurchase 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.

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In addition, $ 1.4 million in 2022 was recorded in the other income (expense), net line item in the consolidated statements of earnings related to other activities and $ 1.4 million in 2022 was recorded in loss on disposal line item in the consolidated statements of earnings related to the liquidation of the cumulative translation adjustment for the sale of our Russia operations, (see Acquisitions and Dispositions footnote for more details).

All amounts in prior years were recorded in the other income (expense), net line item in the consolidated statements of earnings.

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

All amounts in prior years were recorded in other income (expense), net in the consolidated statements of earnings.

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

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Diluted earnings (loss) per share $ 0.98 $ ( 1.64 ) $ 3.91

Potentially dilutive shares outstanding for 2023 are primarily related to deferred common stock related to the non-employee directors deferred compensation plan and performance shares (see Stock-Based Compensation footnote for a description of performance shares).

Due to our net loss in 2022, potentially dilutive shares outstanding, primarily related to deferred common stock associated with the non-employee directors deferred compensation plan, of 0.2 million shares in 2022, had an anti-dilutive effect on diluted earnings per share and were excluded from the computation.

Potentially dilutive shares outstanding for 2021 are primarily related to deferred common stock related to the non-employee directors deferred compensation plan.

Due to our net loss in 2022 and 2020, potentially dilutive shares outstanding, primarily related to deferred common stock associated with the non-employee directors deferred compensation plan, of 0.2 million shares in 2022 and 0.1 million shares in 2020, had an anti-dilutive effect on diluted earnings per share and were excluded from the computation.

We have presented earnings per share for our two classes of common stock on a combined basis.

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In applying the two-class method, we have 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 our history of paying dividends equally to each class of common stock on a per share basis.

The Company’s Restated 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.

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.

Class B shares’ voting and conversion rights, however, effectively allow the Class B shares to participate in dividends equally with Class A shares on a per share basis.

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Restricted Stock

Restricted stock, which typically vests pro-rata over four years , is issued to certain key employees and is subject to forfeiture until the end of an established restriction period.

Restricted stock, which typically vests pro-rata over three or four 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.

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The total nonvested shares related to 2023 financial measure performance awards at year-end 2023 is 224,000 .

The annual 2022 performance share grant ("2022 grant") consisted of 186,000 financial measure performance awards, which are contingent upon achievement of specific revenue growth and EBITDA margin performance goals.

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:

2022, 2023 and 2024, with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods.

Earned shares during each performance period will cliff vest in February 2025 after approval of the financial results by the Compensation Committee, if not forfeited by the recipient.

No dividends are paid on these performance shares.

Based upon the level of achievement of specific financial performance goals for the 2022 annual grant, participants had the ability to receive up to 200 % of the target number of shares originally granted.

On February 13, 2024, the Compensation Committee approved the actual performance achievement for the 2023 performance period of the annual 2022 grant.

Actual performance resulted in participants achieving 50 % of target.

All of the shares earned for the 2023 performance period will vest in 2025 after the approval of the Compensation Committee, if not forfeited by the recipient.

The 2022 financial measure performance awards have a weighted average grant date fair value of $ 19.29 , 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 2022 financial measure performance awards at year-end 2023 is 178,000 .

The annual 2021 performance share grant ("2021 grant") consisted of 180,000 financial measure performance awards, which are contingent upon the achievement of specific revenue growth and EBITDA margin performance goals.

6 unchanged sentences

No dividends are paid on these performance shares.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Based upon the level of achievement of specific financial performance goals for the 2021 annual grant, participants had the ability to receive up to 200 % of the target number of shares originally granted.

1 unchanged sentence

Actual performance resulted in participants achieving 50 % of target.

Half of the shares earned for the 2022 performance period will vest in 2023 after the approval of the Compensation Committee and the remaining half of the shares earned will vest in early 2024, if not forfeited by the recipient.

All of the shares earned for the 2023 performance period will vest in 2024 after the approval of the Compensation Committee, if not forfeited by the recipient.

In December 2021, the Compensation Committee approved an additional retention-based grant of 308,000 financial measure performance awards to certain senior officers and may be earned upon achievement of three financial goals over a performance period beginning in fiscal 2022 through the third quarter of 2024, with each goal having a unique projected achievement date.

5 unchanged sentences

On February 14, 2023, the Compensation Committee approved the actual performance achievement of one of the financial goals related to the 2021 retention-based grant.

At the same meeting, the Compensation Committee approved a modification to accelerate the vesting for the goal earned, where half of these awards will vest immediately upon approval of the results and the remaining half will vest in August 2023, if not forfeited by the recipient.

We will account for this change as a Type I modification under ASC 718 as the expectation of vesting remained probable-to-probable post-modification.

The Company did

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

not record any incremental stock compensation expense since the fair value of the modified awards immediately after the modification was not greater than the fair value of the original awards immediately before the modification.

At the same meeting, the Compensation Committee approved a modification to accelerate the vesting for the goal earned, where half of these awards vested immediately upon approval of the results and the remaining half vested in August 2023, if not forfeited by the recipient.

We accounted for this change as a Type I modification under ASC 718 as the expectation of vesting remained probable-to-probable post modification.

The Company did not record any incremental stock compensation expense since the fair value of the modified awards immediately after the modification was not greater than the fair value of the original awards immediately before the modification.

The Company recognized the remaining stock compensation expense over the remaining portion of the modified service requisite period.

On August 9, 2023, the Compensation Committee approved the actual performance achievement of one of the financial goals related to the 2021 retention-based grant.

At the same meeting, the Compensation Committee approved a modification to accelerate the vesting for the goal earned, where half of these awards vested immediately upon approval of the results and the remaining half will vest in February 2024, if not forfeited by the recipient.

We accounted for this change as a Type I modification under ASC 718 as the expectation of vesting remained probable-to-probable post modification.

The Company will recognize the remaining stock compensation expense over the remaining portion of the modified service requisite period.

6 unchanged sentences

The total nonvested shares related to 2020 single financial performance awards at year-end 2023 is 48,000 .

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of the status of all nonvested performance shares at target for 2023 is presented as follows below (in thousands of shares except per share data).

The vesting adjustment in the table below represents the 2019 and a portion of the 2021 performance period of the 2021 financial measure performance shares that did not vest because actual achievement was below the threshold level and resulted in no payout.

Financial Measure

5 unchanged sentences

Forfeited ( 65 ) 17.03

Vesting Adjustment ( 142 ) 24.45

Nonvested at year-end 2023 674 $ 17.49

5 unchanged sentences

The Company received cash proceeds of $ 5.6 million in the fourth quarter of 2022, net of commissions and transaction expenses.

As of the date of the sale, the property had a carrying value of $ 4.7 million, resulting in a $ 0.9 million gain on the sale, which is recorded in gain on sale of assets in the consolidated statements of earnings.

As of the date of the sale, the property had a carrying value of $ 4.7 million, resulting in a $ 0.9 million gain on the sale, which was recorded in gain on sale of assets in the consolidated statements of earnings.

In June 2022, the Company sold an under-utilized real property for a purchase price of $ 4.5 million, subject to final closing adjustments.

1 unchanged sentence

As of the date of the sale, the land had insignificant carrying value;

as such, the resulting gain on the sale was $ 4.4 million, which is recorded in gain on sale of assets in the consolidated statements of earnings.

as such, the resulting gain on the sale was $ 4.4 million, which was recorded in gain on sale of assets in the consolidated statements of earnings.

In January 2022, the Company sold a property for a purchase price of $ 0.9 million, subject to final closing adjustments.

1 unchanged sentence

As of the date of the sale, the property had an immaterial carrying value;

as such, the resulting gain on the sale of the property was $ 0.9 million, which is recorded in gain on sale of assets in the consolidated statements of earnings.

as such, the resulting gain on the sale of the property was $ 0.9 million, which was recorded in gain on sale of assets in the consolidated statements of earnings.

Held for Sale

On November 2, 2023, the Company announced that it had entered into a definitive agreement to sell its EMEA staffing operations ("disposal group"), which is included in the Company's International operating segment.

As of year-end 2023, the disposal group is classified as held for sale and measured at the lower of its carrying amount or fair value less estimated costs to sell.

On January 2, 2024, subsequent to the year ended 2023, the sale was completed and the Company received initial cash proceeds of $ 110.6 million.

Subject to the terms of the purchase agreement, the Company expects to receive additional cash proceeds to reflect the cash-free, debt-free transaction basis, as well as working capital and other adjustments.

Inclusive of the adjustments, the Company expects to record a pre-tax gain on the sale in the first quarter of 2024.

As a result, the disposal group continues to be held at carrying value as of December 31, 2023.

The disposal group did not meet the requirements to be classified as discontinued operations as the sale will not have a material effect on the Company's operations and does not represent a strategic shift in the Company's strategy.

The Company will continue to provide MSP, RPO and Functional Service Provider solutions in the EMEA region.

Our consolidated earnings from operations for the years-ended 2023, 2022 and 2021 included $ 1.5 million, $ 9.3 million, and $ 8.2 million, respectively, from the EMEA staffing operations.

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In the second quarter of 2020, the Company monetized wage subsidy receivables outside the U.S.

for $ 16.9 million, net of fees and 5 % retainer.

The sale of these receivables was accounted for as a sale of financial assets with certain recourse provisions in which we derecognized the receivables.

Although the sale of receivables is with recourse, the Company did not record a recourse obligation as the Company concluded the receivables were collectible.

The net cash proceeds related to the sale were included in operating activities in the consolidated statements of cash flows and the fees related to the sale were included in SG&A expenses in the consolidated statements of earnings.

On March 20, 2020, the Company sold three of our four headquarters properties for a purchase price of $ 58.5 million as a part of a sale and leaseback transaction.

The properties included the parcels of land, together with all rights and easements, in addition to all improvements located on the land, including buildings.

The Company received cash proceeds of $ 55.5 million, which was net of transaction expenses.

As of the date of the sale, the properties had a combined net carrying amount of $ 23.4 million.

The resulting gain on the sale of the assets was $ 32.1 million which was recorded in gain on sale of assets in the consolidated statements of earnings.

The Company leased back the main headquarters building on the same date;

see the Leases footnote for discussion of the sale and leaseback transaction.

The major classes of assets and liabilities of the disposal group that have met the classification of held for sale as of December 31, 2023 are as follows (in millions of dollars):

December 31, 2023

Assets held for sale

Cash and equivalents $ 33.5

Trade accounts receivable, net 200.9

Prepaid expenses and other current assets 29.0

Property and equipment, net 4.2

Operating lease right-of-use assets 14.2

Deferred taxes 4.1

Other assets 5.4

Assets held for sale 291.3

Liabilities held for sale

Accounts payable and accrued liabilities ( 24.5 )

Operating lease liabilities, current ( 5.7 )

Accrued payroll and related taxes ( 91.6 )

Income and other taxes ( 32.9 )

Operating lease liabilities, noncurrent ( 8.9 )

Accrued retirement benefits ( 1.7 )

Other long-term liabilities ( 4.6 )

Liabilities held for sale ( 169.9 )

Disposal group, net $ 121.4

Cash and equivalents in the consolidated statements of cash flows as of year-end 2023 includes $ 33.5 million of cash that is included in the disposal group.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other Income (Expense), Net

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

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

2023 2022 2021

(In millions of dollars)

Interest income $ 6.7 $ 2.3 $ 0.2

4 unchanged sentences

Other income (expense), net $ 4.2 $ 1.6 $ ( 3.6 )

Included in interest income for 2023 is $ 3.0 million of interest from the Company's money market investments.

The decrease in dividend income in 2022 reflects the sale of the investment in the common stock of Persol Holdings during the first quarter of 2022.

1 unchanged sentence

dollar-denominated cash balance held by the Company's Japan entity (see Investment in Persol Holdings footnote).

Included in Other for 2023 is a gain of $ 2.0 million for the receipt of final proceeds in connection with our investment in Business Talent Group, LLC that was sold in 2021.

Included in Other for 2022 are transaction-related expenses for the 2022 acquisitions of RocketPower and PTS and sale of our Russia operations (see Acquisitions and Dispositions footnote) and expense related to the remeasurement of the Brazil indemnification liability (see Fair Value Measurements footnote).

Included in Other for 2021 is a loss from the sale of the assets related to our minority investment in Kenzie Academy (see Fair Value Measurements footnote) and transaction-related expenses for the April 2021 acquisition of Softworld (see Acquisitions and Dispositions footnote).

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate for the years 2022, 2021 and 2020 were taxed under the following jurisdictions:

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate for the years 2023, 2022 and 2021 were taxed under the following jurisdictions (in millions of dollars):

2023 2022 2021

(In millions of dollars)

Domestic $ 29.9 $ ( 39.4 ) $ 27.5

1 unchanged sentence

Total $ 24.9 $ ( 71.2 ) $ 185.8

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The provision for income taxes was as follows:

The provision for income taxes was as follows (in millions of dollars):

2023 2022 2021

(In millions of dollars)

Current tax expense:

9 unchanged sentences

Total provision $ ( 11.5 ) $ ( 7.9 ) $ 35.1

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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:

(In millions of dollars)

The deferred tax assets and liabilities are comprised of the following (in millions of dollars):

Fixed assets and right-of-use assets $ ( 19.0 ) $ ( 21.8 )

1 unchanged sentence

Employee compensation and benefit plans 71.5 62.0

Accrued payroll and related taxes — 22.1

Accrued workers’ compensation 10.2 11.7

Investment in Persol Holdings — ( 70.9 )

Investment in equity affiliate ( 0.7 ) ( 13.3 )

Outside basis difference on held for sale assets 34.7 —

Operating lease liabilities 18.3 19.3

4 unchanged sentences

Net deferred tax assets $ 324.8 $ 299.2

The deferred tax balance is classified in the consolidated balance sheet as:

(In millions of dollars)

Deferred tax asset $ 299.7 $ 302.8

Other long-term liabilities ( 0.5 ) ( 71.6 )

$ 299.2 $ 231.2

As of year-end 2023, the net deferred tax asset balance totaled $ 324.8 million with $ 321.1 million in deferred taxes, $ 4.1 million in assets held for sale (see Held for Sale footnote), and $ 0.4 million in other long-term liabilities in the consolidated balance sheet.

As of year-end 2022, the net deferred tax asset balance totaled $ 299.2 million, with $ 299.7 million in deferred taxes and $ 0.5 million in other long-term liabilities in the consolidated balance sheet.

The Company has U.S.

general business credit carryforwards of $ 177.1 million which will expire from 2034 to 2042, foreign tax credit carryforwards of $ 23.6 million which will expire from 2023 to 2032 and minimal state carryforwards which will expire from 2026 to 2042.

The net tax effect of state and foreign loss carryforwards at year-end 2022 totaled $ 33.4 million, $ 2.7 million of which expires between 2023 to 2042, and $ 30.7 million of which have no expiration.

The Company has established a valuation allowance for loss carryforwards and future deductible items in certain foreign jurisdictions, and for U.S.

general business credit carryforwards of $ 185.0 million which will expire from 2034 to 2043, foreign tax credit carryforwards of $ 23.5 million which will expire from 2026 to 2033 and minimal state and foreign credit carryforwards which are either indefinite or will expire from 2024 to 2043.

The net tax effect of federal, state and foreign loss carryforwards at year-end 2023 totaled $ 36.7 million, which expire as follows (in millions of dollars):

2024 - 2029 4.9

2030 - 2039 1.1

2040 - 2049 0.1

No expiration 30.6

The Company has established a valuation allowance for certain loss carryforwards, future deductible items, outside basis differences, and for a portion of its U.S.

foreign tax credit carryforwards.

The increase in the valuation allowance in 2022 was primarily due to foreign tax credits generated from the sale of the Company's investment in Persol Holdings.

The increase in the valuation allowance in 2023 was primarily due to establishing a $ 19.1 million valuation allowance in the United Kingdom, establishing an $ 19.8 million valuation allowance on outside basis differences in held for sale assets, releasing a $ 5.6 million valuation allowance in Germany, and releasing $ 9.0 million of the valuation allowance on U.S.

foreign tax credits.

The United Kingdom valuation allowance resulted from restructuring the business in preparation for sale and will increase the gain on the transaction in the first quarter of 2024.

The outside basis difference is on held for sale assets that will create a capital loss in the first quarter of 2024 and a valuation allowance has been established for the carry-forward portion.

The partial release of the foreign tax credit valuation allowance is based on current information, which will continue to be monitored.

A $ 14.5 million foreign tax credit valuation allowance will remain after the partial release.

The valuation allowance is determined in accordance with the provisions of ASC 740, "Income Taxes," which requires an assessment of both negative and positive evidence when measuring the need for a valuation allowance.

The Company’s recent losses in these foreign

The Company’s recent losses in these jurisdictions, uncertainty of the ability to create future capital gains, and its recent lack of adequate U.S.

foreign source income to fully utilize foreign tax credit carryforwards, represented sufficient negative evidence to require a valuation allowance under ASC 740.

The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support realization of the deferred tax assets.

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

jurisdictions, and its recent lack of adequate U.S.

foreign source income to fully utilize foreign tax credit carryforwards, represented sufficient negative evidence to require a valuation allowance under ASC 740.

The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support realization of the foreign deferred tax assets.

The differences between income taxes from continuing operations for financial reporting purposes and the U.S.

statutory rate of 21 % in 2022, 2021, and 2020 are as follows:

statutory rate of 21 % in 2023, 2022, and 2021 are as follows (in millions of dollars):

2023 2022 2021

(In millions of dollars)

Income tax based on statutory rate $ 5.2 $ ( 14.9 ) $ 39.0

4 unchanged sentences

Foreign items 3.0 0.1 1.5

Foreign-derived intangible income deduction ( 2.3 ) ( 2.3 ) ( 0.6 )

Sale of foreign subsidiaries — 3.9 —

1 unchanged sentence

Tax law change — — ( 5.2 )

Change in deferred tax realizability 4.4 — ( 0.7 )

Non-deductible expenses 0.7 — 0.1

Uncertain tax positions ( 0.3 ) 0.1 0.2

Stock compensation 0.7 0.6 ( 0.4 )

Outside basis difference on held for sale assets ( 13.1 ) — —

Non-deductible goodwill impairment — 2.7 —

4 unchanged sentences

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.

Changes in the fair value of the Company’s investment in Persol Holdings were recognized in the consolidated statements of earnings.

Gains and losses from this investment, which was sold in the first quarter of 2022, were treated as discrete since they could not be estimated.

Several items have contributed to the variance in our income tax benefit or expense over the last three years.

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.

2022 benefited from lower pretax earnings, benefits of $ 16.9 million from changes in the fair value of the Company's investment in Persol Holdings and $ 7.1 million from the impairment of tax-deductible goodwill.

1 unchanged sentence

Income tax expense for 2021 included charges of $ 37.3 million from changes in the fair value of the Company's investment in Persol Holdings and $ 4.8 million from the gain on insurance settlement, offset by benefits of $ 5.2 million from a change in tax rate in the United Kingdom and $ 5.2 million from tax exempt life insurance cash surrender value gains.

The 2020 income tax benefited from lower pretax earnings and benefits of $ 5.1 million from the loss on our investment in Persol Holdings, $ 6.6 million from the sale of Brazil operations, $ 23 million from the impairment of tax deductible goodwill and $ 4.6 million from tax exempt life insurance cash surrender value gains.

General business credits primarily represent U.S.

4 unchanged sentences

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 $ 4.0 million.

The new Organization for Economic Cooperation and Development (OECD) Pillar Two global minimum tax rules become effective in 2024 in several jurisdictions in which the Company does business.

We do not expect a material impact to the Company based on current law and will continue to evaluate developments.

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions of dollars):

2023 2022 2021

(In millions of dollars)

Balance at beginning of the year $ 0.5 $ 0.6 $ 0.5

7 unchanged sentences

The Company recognizes both interest and penalties as part of the income tax provision.

The Company recognized expense of $ 0.1 million in 2023 for interest and penalties.

The benefit recognized in 2022 was not significant.

The Company recognized expense of $ 0.1 million in 2021 and a benefit of $ 0.1 million in 2020 for interest and penalties.

The Company recognized expense of $ 0.1 million in 2021 for interest and penalties.

Accrued interest and penalties were $ 0.2 million at year-end 2023 and $ 0.1 million at year-end 2022.

21 unchanged sentences

Non-cash capital accruals totaled $ 0.4 million, $ 1.2 million and $ 1.0 million at year-end 2023, 2022 and 2021, respectively.

In addition to lease agreements (see Leases footnote) and the indemnification agreement related to the sale of our Brazil operations (see Acquisitions and Dispositions footnote), the Company has entered into noncancelable purchase obligations totaling $ 53.0 million.

These obligations relate primarily to technology services and online tools which the Company expects

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

to utilize generally within the next three fiscal years, in the ordinary course of business.

These obligations relate primarily to technology services and online tools which the Company expects to utilize generally within the next three fiscal years, in the ordinary course of business.

The Company has no material unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities.

4 unchanged sentences

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 2022 and 2021, the gross accrual for litigation costs amounted to $ 2.3 million and $ 1.4 million, respectively.

At year-end 2023 and 2022, the gross accrual for litigation costs amounted to $ 6.4 million, of which $ 1.5 million is held for sale (see Held for Sale footnote), and $ 2.3 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 2022 and 2021, the related insurance receivables amounted to $ 0.6 million and zero , respectively.

During the third quarter of 2021, the Company filed a claim under a representations and warranties insurance policy purchased by the Company in connection with the acquisition of Softworld.

The claim asserts damages arising out of alleged breaches by the sellers of Softworld of certain representations and warranties contained in the purchase agreement relating to periods prior to the closing of the acquisition.

During the fourth quarter of 2021, the Company entered into a settlement agreement and mutual release with the insurer resolving all claims under the policy in exchange for a payment of $ 19.0 million, which was received prior to year-end 2021.

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is zero to $ 5.6 million as of year-end 2022.

At year-end 2023 and 2022, the related insurance receivables amounted to $ 0.2 million and $ 0.6 million, respectively.

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is $ 0.1 million to $ 7.3 million, which includes amounts held for sale, as of year-end 2023.

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.

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Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.

Professional & Industrial delivers staffing, outcome-based and permanent placement services focused on office, professional, light industrial and contact center specialties in the U.S.

Professional & Industrial 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 our KellyConnect and Skilled Professional Solutions products.

Science, Engineering & Technology delivers staffing, outcome-based and permanent placement services focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S.

Education delivers staffing, permanent placement and executive search services across the full education spectrum from early childhood to higher education in the U.S.

Outsourcing & Consulting is focused on providing MSP, RPO, PPO and Talent Advisory Services to customers on a global basis.

International delivers staffing, RPO and permanent placement services in Europe, as well as services in Mexico in accordance with recent changes in labor market regulations and, prior to August 2020, Brazil (see Acquisitions and Dispositions footnote).

Science, Engineering & Technology 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 Softworld, NextGen and GTA 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.

Outsourcing & Consulting provides global talent supply chain and workforce solutions, including MSP, RPO, PPO and executive coaching programs to customers on a global basis and includes our RocketPower brand.

International delivers staffing, local RPO and permanent

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

placement services in 14 countries in Europe, as well as services in Mexico.

Our EMEA staffing operations were sold on January 2, 2024.

Corporate expenses that directly support the operating units have been allocated to Professional & Industrial, Science, Engineering & Technology, Education, Outsourcing & Consulting and International based on work effort, volume or, in the absence of a readily available measurement process, proportionately based on gross profit realized.

Unallocated corporate expenses include those related to incentive compensation, law and risk management, certain finance and accounting functions, executive management, corporate campus facilities, IT production support, certain legal costs and expenses related to corporate initiatives that do not directly benefit a specific operating segment.

Consistent with the information provided to and evaluated by the CODM, the goodwill impairment charge in the first quarter of 2020 is included in Corporate expenses.

The following tables present information about the reported revenue from services and gross profit of the Company by reportable segment, along with a reconciliation to earnings (loss) before taxes and equity in net earnings (loss) of affiliate, for 2022, 2021 and 2020.

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.

14 unchanged sentences

(In millions of dollars)

Earnings (Loss) from Operations:

Earnings from Operations:

Professional & Industrial gross profit $ 263.9 $ 302.5 $ 310.0

Professional & Industrial SG&A expenses ( 237.0 ) ( 270.5 ) ( 278.6 )

Professional & Industrial earnings (loss) from operations 32.0 31.4 41.6

Asset impairment charge ( 0.3 ) — —

Professional & Industrial earnings from operations 26.6 32.0 31.4

Science, Engineering & Technology gross profit 272.0 297.0 253.9

Science, Engineering & Technology SG&A expenses ( 197.6 ) ( 214.9 ) ( 180.2 )

Science, Engineering & Technology earnings (loss) from operations 82.1 73.7 75.0

Asset impairment charge ( 0.1 ) — —

Science, Engineering & Technology earnings from operations 74.3 82.1 73.7

Education gross profit 128.7 100.3 65.1

Education SG&A expenses ( 92.4 ) ( 81.8 ) ( 62.1 )

Education earnings (loss) from operations 18.5 3.0 ( 9.0 )

Education earnings from operations 36.3 18.5 3.0

Outsourcing & Consulting gross profit 163.5 169.6 141.4

Outsourcing & Consulting SG&A expenses ( 154.6 ) ( 149.8 ) ( 122.7 )

Asset impairment charge ( 2.0 ) — —

Goodwill impairment charge — ( 41.0 ) —

2 unchanged sentences

International SG&A expenses ( 131.2 ) ( 132.5 ) ( 138.9 )

International earnings (loss) from operations 9.9 9.9 ( 8.9 )

International earnings from operations 2.1 9.9 9.9

Corporate ( 121.9 ) ( 94.0 ) ( 88.1 )

5 unchanged sentences

Other income (expense), net 0.6 1.6 15.4

Earnings (loss) before taxes and equity in net earnings (loss) of affiliate $ ( 71.2 ) $ 185.8 $ ( 106.8 )

Earnings (loss) before taxes and equity in net earnings of affiliate $ 24.9 $ ( 71.2 ) $ 185.8

Depreciation and amortization expense included in SG&A expenses by segment above are as follows:

26 unchanged sentences

Total $ 90.0 $ 94.6

Long-lived assets represent property and equipment and ROU assets.

Long-lived assets represent property and equipment and ROU assets and includes $ 18.4 million of held for sale assets.

No single foreign country’s long-lived assets represented more than 10% of the consolidated long-lived assets of the Company.

11 unchanged sentences

The adoption of this standard did not have a material impact to our consolidated financial statements.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In January 2020, the FASB issued ASU 2020-01 which clarifies the interaction of rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities.

2 unchanged sentences

The adoption of this standard did not have a material impact to our consolidated financial statements.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In December 2019, the FASB issued ASU 2019-12 simplifying various aspects related to the accounting for income taxes.

2 unchanged sentences

The adoption of this standard did not have a material impact to our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The ASU was effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual periods, with early adoption permitted.

Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively.

We adopted this guidance prospectively effective December 30, 2019.

In accordance with the standard, we present capitalized implementation costs incurred in a hosting arrangement that is a service contract as other assets on our consolidated balance sheet.

This presentation is consistent with the presentation of the prepayment of fees for the hosting arrangement.

We recognized $ 1.0 million of amortization expense for capitalized implementation costs incurred in hosting arrangements for the year ended 2020 as a component of SG&A expenses in our consolidated statements of earnings.

We recognized $ 5.1 million of payments for capitalized implementation costs for the year ended 2020 in the same manner as payments made for fees associated with the related hosting arrangements as a component of net cash from operating activities in our consolidated statements of cash flows.

The Company's cloud computing arrangements are comprised of internal-use software platforms accounted for as service contracts.

The Company does not have the ability to take possession of the software without significant penalty nor can the Company run the software on its own hardware or contract with another party unrelated to the vendor to host the software.

See Summary of Significant Accounting Policies footnote.

In June 2016, the FASB issued ASU 2016-13 (ASC Topic 326), as clarified in ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2018-19, amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses.

Under this model, an entity recognizes an allowance for expected credit losses based on historical experience, current conditions and forecasted information rather than the prior methodology of delaying recognition of credit losses until it is probable a loss has been incurred.

The standard also requires additional quantitative and qualitative disclosures regarding credit risk inherent in a reporting entity's portfolio, how management monitors this risk, management's estimate of expected credit losses, and the changes in the estimate that has taken place during the period.

This ASU was effective for interim and annual reporting periods beginning after December 15, 2019 with early adoption permitted for annual reporting periods beginning after December 15, 2018.

We adopted this ASU using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures, as applicable.

Results for reporting periods beginning after December 30, 2019 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

We recorded a decrease to retained earnings of $ 0.7 million, net of tax, in the first quarter 2020 for the cumulative effect of adopting ASC 326.

See Credit Losses footnote for the impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 which eliminates, adds and modifies certain fair value measurement disclosures.

The ASU was effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual periods, with early adoption permitted.

The adoption of this standard did not have a material impact to our consolidated financial statements.

Not Yet Adopted

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.

We do not expect this update to have a material impact to our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires all public companies to provide more enhanced disclosures for significant segment expenses.

This ASU is effective for annual reporting periods beginning after December 15, 2024, including interim reporting periods within those annual periods, with early adoption permitted.

We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.

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.

We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Related Party Transactions

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent Events

On January 2, 2024, the Company completed the sale of its EMEA staffing operations to Gi Group Holdings S.P.A.

and received cash proceeds of $ 110.6 million.

The transaction includes a contingent consideration opportunity and certain working capital and other adjustments to reflect the cash-free, debt-free transaction basis which are expected to be settled by the third quarter of 2024.

Inclusive of the adjustments, the Company expects to record a pre-tax gain on the sale in the first quarter of 2024.

The foreign currency forward contract that the Company entered into on November 2, 2023 to manage the foreign currency risk associated with the transaction was settled on January 5, 2024.

A total loss of $ 2.4 million was realized upon settlement.

An unrealized loss of $ 3.6 million associated with the forward contract was recorded as of December 31, 2023;

therefore, the Company will record a gain of $ 1.2 million in the first quarter of 2024.

KELLY SERVICES, INC.

AND SUBSIDIARIES

SCHEDULE II - VALUATION RESERVES

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Balance at beginning of year Charged to costs and expenses Charged to other accounts Currency exchange effects Deductions from reserves Balance at end of year

Fiscal year ended January 1, 2023

Fiscal year ended December 31, 2023

Reserve deducted in the balance sheet from the assets to which it applies -

9 unchanged sentences

REGULATIONS S-K

Agreement for the Sale and Purchase of the Entire Issued Share Capital of Kelly Services Management Sarl, dated as of November 2, 2023, by the Company, Gi Group Holdings S.P.A.

and Familia S.R.L.

Amended and Restated Certificate of Incorporation, effective May 9, 2018 (Reference is made to Exhibit 3.1 to the Form 8-K filed with the Commission on May 11, 2018, which is incorporated herein by reference).

11 unchanged sentences

Non-Employee Directors Deferred Compensation Plan (Reference is made to Exhibit 10.5 to the Form 10-K filed with the Commission on February 13, 2020, which is incorporated herein by reference).

First Amendment to Third Amended and Restated Credit Agreement, dated November 4, 2022 (Reference is made to Exhibit 10.8 to the Form 8-K filed with the Commission on November 10, 2022, which is incorporated herein by reference).

Second Amendment to Third Amended and Restated Credit Agreement, dated November 2, 2023 (Reference is made to Exhibit 10.6 to the Form 10-Q filed with the Commission on November 9, 2023, which is incorporated herein by reference).

Agreement of Purchase and Sale, A.F.J.

Development Company and Kelly Properties, LLC (Reference is made to Exhibit 10.7 to the Form 10-K filed with the Commission on February 13, 2020, which is incorporated herein by reference).

Employment Agreement between Kelly Services Management Sarl and Olivier Thirot (Reference is made to Exhibit 10.8 to the Form 10-Q filed with the Commission on May 12, 2022, which is incorporated herein by reference).

Second Addendum to Employment Agreement between Kelly Services Management Sarl and Berendina Maria Bekhuis Koolhaas (Reference is made to Exhibit 10.9 to the Form 10-Q filed with the Commission on August 11, 2022, which is incorporated herein by reference).

Kelly Services, Inc.

Management Retirement Plan as amended and restated January 1, 2020 (Reference is made to Exhibit 10.12 to the Form 10-K filed with the Commission on February 18, 2021, which is incorporated herein by reference).

Employment Agreement between Kelly Services Management Sarl and Olivier Thirot.

INDEX TO EXHIBITS

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REGULATION S-K (continued)

Kelly Services, Inc.

Amended and Restated Pledge and Security Agreement, dated December 5, 2019 (Reference is made to Exhibit 10.14 to the Form 8-K filed with the Commission on December 9, 2019, which is incorporated herein by reference).

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Kelly Services, Inc.

Incentive Compensation Recovery ("Clawback") Policy as amended and restated effective as of October 2, 2023.

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

1 unchanged sentence

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.

INDEX TO EXHIBITS

REQUIRED BY ITEM 601

REGULATION S-K (continued)

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.

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(Principal Executive Officer)

February 16, 2023 * /s/ D.

February 20, 2024 * /s/ T.

Chairman of the Board and Director

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February 20, 2024 * /s/ I.

February 16, 2023 * /s/ T.

February 20, 2024 * /s/ D.

February 20, 2024 * /s/ L.

9 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 9A. Controls and Procedures