What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-13 compared with 2024-02-20 · 665 added, 753 removed, 1176 unchanged (55% of the section changed)

13 unchanged sentences

Not applicable.

Information required by Part III with respect to Directors, Executive Officers and Corporate Governance (Item 10), Executive Compensation (Item 11), Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (Item 12), Certain Relationships and Related Transactions, and Director Independence (Item 13) and Principal Accounting Fees and Services (Item 14), except as set forth under the titles “Executive Officers of the Registrant,” which is included on pages 39-40, and “Code of Business Conduct and Ethics,” which is included on page 41, (Item 10), and except as set forth under the title “Equity Compensation Plan Information,” which is included on page 41, (Item 12), is to be included in a definitive proxy statement filed not later than 120 days after the close of our fiscal year and the proxy statement, when filed, is incorporated in this report by reference.

EXECUTIVE OFFICERS OF THE REGISTRANT.

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

President and

Chief Executive Officer

62 2004 Served as officer of the Company.

Executive Vice President

and Chief Financial Officer

62 2008 Served as officer of the Company.

Senior Vice President

Chief People Officer 54 2020 September 2020 - Present

Served as officer of the Company.

January 2016 - August 2020

Executive Director - Talent Management -

Ally Financial, Detroit Michigan

Senior Vice President

President, KellyOCG

50 2018 October 2018 - Present

Served as officer of the Company.

October 2010 - April 2018

SVP Global Operations - Yoh

Senior Vice President

President, Kelly Professional &

47 2014 Served as officer of the Company.

Dinette Koolhaas

Senior Vice President

President, Kelly International

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)

Name/Office Age Served as an

Officer Since

Business Experience

During Last 5 Years

Daniel Hugo Malan

Senior Vice President

President, Kelly Science,

Engineering & Technology

54 2020 March 2020 - Present

Served as officer of the Company.

December 2019 - February 2020

Managing Partner - Talent Capital Advisors

August 2018 - November 2019

Chief Operating Officer - Employbridge

December 2016 - July 2018

President, Commercial Business -

Senior Vice President

President, Kelly Education

55 2011 Served as officer of the Company.

Senior Vice President

General Counsel

Corporate Secretary

52 2020 October 2020 - Present

Served as officer of the Company.

February 2020 - September 2020

SVP, Division General Counsel -

Transportation and Third Party

Risk Management and Compliance -

December 2016 - February 2020

VP, Division General Counsel -

Transportation - IHS Markit

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Insider Trading Policy

The Company has an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all Company personnel, including directors, officers, employees, and other covered persons.

The Company also follows procedures for the repurchase of its securities.

The Company believes that its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company.

A copy of the Company’s insider trading policy is filed as Exhibit 19 to this Form 10-K.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller or persons performing similar functions.

The Code of Business Conduct and Ethics is included as Exhibit 14 in the Index to Exhibits on page 99.

The Code of Business Conduct and Ethics is included as Exhibit 14 to this Form 10-K.

We have posted our Code of Business Conduct and Ethics on our website at www.kellyservices.com .

We intend to post any changes in or waivers from our Code of Business Conduct and Ethics applicable to any of these officers on our website.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

Equity Compensation Plan Information

The following table shows the number of shares of our Class A common stock that may be issued upon the exercise of outstanding options, warrants and rights, the weighted-average exercise price of outstanding options, warrants and rights, and the number of securities remaining available for future issuance under our equity compensation plans as of the fiscal year end for 2023.

Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)

Equity compensation plans approved by security holders - Fixed Share provision (1),(2)

— $ — 1,956,085

Equity compensation plans not approved by security holders (3)

Total — $ — 1,956,085

(1) The equity compensation plan approved by our stockholders is our Equity Incentive Plan.

(2) The Fixed Share provision applies to shares granted on and after May 10, 2017, and the amended Equity Incentive Plan provides that the maximum number of shares available for grants is 4,700,000.

The number of shares to be issued upon exercise of outstanding options, warrants and rights under the Fixed Share provision excludes:

784,132 shares of restricted stock;

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 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.

This plan provides non-employee directors with the opportunity to defer all or a portion of the fees they receive.

Participants may elect to have director fees that are paid in either cash or common stock, deferred into the plan.

Participants choose from a list of investment funds as determined by the Company for their deferrals of cash.

Deferrals of common stock must remain in common stock.

Amounts deferred under the plan are subject to applicable tax withholding.

The plan is intended to be a non-qualified deferred compensation arrangement in compliance with Section 409A of the Code.

Shares acquired by participants in this plan will be issued from the share reserve stated in the Equity Incentive Plan.

The remaining information required by this Item will be included in the Company's definitive proxy statement to be filed with the SEC within 120 days after December 29, 2024, in connection with the solicitation of proxies for the Company's 2025 Annual Meeting of Stockholders (the "2025 Proxy Statement"), and is incorporated herein by reference.

EXECUTIVE COMPENSATION.

The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

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Consolidated Statements of Comprehensive Income for the three fiscal years ended December 29, 2024

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

Consolidated Balance Sheets at December 29, 2024 and December 31, 2023

Consolidated Statements of Stockholders’ Equity for the three fiscal years ended December 29, 2024

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Consolidated Statements of Comprehensive Income for the three fiscal years ended December 29, 2024

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

Consolidated Balance Sheets at December 29 , 202 4 and December 3 1, 2023

Consolidated Statements of Stockholders' Equity for the three fiscal years ended December 29, 2024

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Notes to Consolidated Financial Statements

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

Financial Statement Schedule - Schedule II - Valuation Reserves at December 29, 2024, December 31, 2023 and January 1, 2023

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.

On May 31, 2024, we completed the acquisition of MRP.

Given the significance of the MRP acquisition and the complexity of systems and business processes, we have excluded the acquired MRP business from our assessment of the effectiveness of internal control over financial reporting for the year ending December 29, 2024.

MRP accounted for approximately 4% of the Company's total assets as of December 29, 2024 and approximately 7% of the Company's total revenue for the year ended 2024.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 29, 2024.

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

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”).

and its subsidiaries (the "Company") as of December 29, 2024 and December 31, 2023, and the related consolidated statements of earnings, of comprehensive income, of stockholders’ equity and of cash flows for the years ended December 29, 2024, December 31, 2023 and January 1, 2023 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 29, 2024, 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.

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 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for the years in the period ended December 29, 2024, December 31, 2023 and January 1, 2024 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 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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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 Motion Recruitment Partners, LLC (MRP) from its assessment of internal control over financial reporting as of December 29, 2024, because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Motion Recruitment Partners from our audit of internal control over financial reporting.

Motion Recruitment Partners is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 4% and 7%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 29, 2024.

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

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 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.

Goodwill Impairment Assessments – Softworld and Motion Recruitment Partners Reporting Units

As described in Notes 1, 4 and 9 to the consolidated financial statements, the Company’s goodwill balance was $304.2 million as of December 29, 2024, and the goodwill associated with the Softworld and Motion Recruitment Partners reporting units was $38.5 million and $222.9 million, respectively.

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;

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.

Based on the results of the Company’s annual goodwill impairment test, management recorded an impairment charge of $72.8 million to write-off a portion of the Softworld reporting unit’s goodwill.

Management determines the fair value of reporting units using the 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 estimated future cash flows for the Softworld and Motion Recruitment Partners reporting units included significant assumptions relating to expected future revenue growth rates, profit margins and discount rates .

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

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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.

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 Softworld reporting unit;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Softworld and Motion Recruitment Partners reporting units.

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

(ii) evaluating the appropriateness of the discounted cash flow model used by management;

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

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

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

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

As described in Note 1 to the consolidated financial statements, in the U.S., the Company has a combination of insurance and self-insurance contracts under which they effectively bear the first $1.0 million of risk per single accident.

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.

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.

When claims exceed the applicable loss limit or self-insured retention and realization of recovery of the claim from existing insurance policies is deemed probable, management records a receivable from the insurance company for the excess amount.

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

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;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s actuarial methods and significant assumptions related to the loss development factors and loss rates;

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate assumptions.

Acquisition of MRP – Valuation of Customer Relationships and A Certain Trade Name

As described in Notes 1 and 4 to the consolidated financial statements, on May 31, 2024, the Company indirectly acquired 100% of the equity interests in MRP for total consideration of $444.8 million.

Included in the assets purchased in the MRP

acquisition was $88.1 million of customer relationships and $56.5 million of trade names, of which a majority related to a certain trade name.

The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about expected future revenue growth rates, customer attrition rates, profit margins and discount rates.

The fair value of trade name intangibles is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about expected future revenue growth rates, royalty rates and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of customer relationships and a certain trade name acquired in the acquisition of MRP is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships and certain trade name acquired;

(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, customer attrition rates, profit margins and discount rate for the customer relationships and expected future revenue growth rates and royalty rate for a certain trade name;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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 accrual for workers’ compensation claims, including controls over the actuarial methods and development of significant assumptions.

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 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.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over the valuation of the customer relationships and certain trade name acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the customer relationships and certain trade name acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings and relief-from-royalty methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and relief-from-royalty methods;

and (v) evaluating the reasonableness of the significant assumptions used by management related to expected future revenue growth rates, customer attrition rates, profit margins and discount rate for the customer relationships and expected future revenue growth rates and royalty rate for a certain trade name.

Evaluating management’s assumptions related to expected future revenue growth rates and profit margins for the customer relationships and expected future revenue growth rates for a certain trade name involved considering (i) the current and past performance of the MRP business;

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

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

Evaluating management's assumption related to customer attrition rates for the customer relationships involved considering (i) the historical customer attrition rates of MRP and (ii) whether the assumption was consistent with evidence obtained in other areas of the audit and previous acquisitions.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings and relief-from-royalty methods and (ii) the reasonableness of the discount rate assumption for the customer relationships and the royalty rate assumption for a certain trade name.

/s/ PricewaterhouseCoopers LLP

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Goodwill impairment charge 72.8 — 41.0

Gain on sale of EMEA staffing operations ( 1.6 ) — —

Gain on sale of assets ( 5.4 ) — ( 6.2 )

Loss on disposal — — 18.7

Earnings from operations 24.3 14.8 48.6

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

Gain on insurance settlement — — 19.0

Earnings (loss) from operations ( 15.1 ) 24.3 14.8

Loss on investment in Persol Holdings — — ( 67.2 )

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

Unrealized loss on forward contract ( 3.6 ) — —

Other income (expense), net ( 6.8 ) 0.6 1.6

Earnings (loss) before taxes and equity in net earnings of affiliate ( 21.9 ) 24.9 ( 71.2 )

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

Income tax benefit ( 21.3 ) ( 11.5 ) ( 7.9 )

Net earnings (loss) before equity in net earnings of affiliate ( 0.6 ) 36.4 ( 63.3 )

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Other comprehensive income (loss), net of tax:

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 )

Foreign currency translation adjustments, net of tax benefit of $0.2 million, $0.0 million and $0.2 million, respectively ( 6.9 ) 8.0 ( 7.5 )

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

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Foreign currency translation adjustments ( 7.5 ) 8.0 17.6

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

Pension liability adjustments, net of tax benefit of $0.4 million, and net of tax expense of $0.2 million and $0.5 million, respectively — 0.6 1.5

Reclassification adjustments included in net earnings 0.4 0.1 0.1

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Cash and equivalents $ 39.0 $ 125.8

Trade accounts receivable, less allowances of $8.4 million and $11.2 million, respectively 1,160.6 1,491.6

Trade accounts receivable, less allowances of $8.4 for both years 1,255.5 1,160.6

Prepaid expenses and other current assets 71.0 48.9

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Deferred taxes 330.1 321.1

Retirement plan assets 258.1 230.3

Goodwill, net 304.2 151.1

Intangibles, net 256.3 137.7

Other assets 45.3 43.1

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Current Liabilities

Short-term borrowings $ — $ 0.7

Accounts payable and accrued liabilities $ 613.8 $ 646.1

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Noncurrent Liabilities

Long-term debt 239.4 —

Operating lease liabilities 50.9 42.9

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Class A common stock, 100.0 million shares authorized;

35.2 million shares issued at 2023 and 35.1 million shares issued at 2022 35.2 35.1

35.2 million shares issued at 2024 and 2023 35.2 35.2

Class B common stock, 10.0 million shares authorized;

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

3.3 million shares issued at 2024 and 2023 3.3 3.3

Treasury stock, at cost

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Gain on sale of equity securities ( 0.6 ) ( 2.0 ) —

Unrealized loss on forward contract 3.6 — —

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

(Gain) loss on forward contract ( 1.2 ) 3.6 —

Gain on sale of EMEA staffing operations ( 1.6 ) — —

Gain on sale of assets ( 5.4 ) — ( 6.2 )

Loss on investment in Persol Holdings — — 67.2

Loss on currency translation from liquidation of subsidiary — — 20.4

Gain on foreign currency remeasurement — — ( 5.5 )

Gain on insurance settlement — — ( 19.0 )

Gain on sale of assets — ( 6.2 ) —

Equity in net earnings of PersolKelly Pte.

— ( 0.8 ) ( 5.4 )

Other, net ( 7.6 ) 1.8 3.3

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Capital expenditures ( 11.1 ) ( 15.3 ) ( 12.0 )

Proceeds from sale of EMEA staffing operations, net of cash disposed 77.1 — —

Proceeds from sale of assets 4.3 — 10.1

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Proceeds from sale of equity method investment — — 119.5

Proceeds from company-owned life insurance — 1.5 12.2

Proceeds from insurance settlement — — 19.0

Proceeds from loans to equity affiliate — — 5.9

Proceeds from equity securities 2.0 — 5.0

Other investing activities — 1.2 2.1

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Net change in short-term borrowings — ( 0.7 ) 0.8

Proceeds from long-term debt 1,340.2 — —

Payments on long-term debt ( 1,100.8 ) — —

Financing lease payments — ( 1.2 ) ( 1.4 )

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Other financing activities ( 1.2 ) ( 0.2 ) ( 0.2 )

Net cash used in financing activities ( 59.6 ) ( 50.6 ) ( 8.1 )

Net cash from (used in) financing activities 214.8 ( 59.6 ) ( 50.6 )

Effect of exchange rates on cash, cash equivalents and restricted cash ( 2.1 ) 2.2 2.3

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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 December 31, 2023 (2023), January 1, 2023 (2022) and January 2, 2022 (2021), all of which contained 52 weeks.

The three most recent years ended on December 29, 2024 (2024), December 31, 2023 (2023) and January 1, 2023 (2022), all of which contained 52 weeks.

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

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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 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.

All intercompany accounts and transactions have been eliminated.

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

Specifically, as discussed in the Segment Disclosures footnote, the Company has made a change to its reportable segments during the first quarter of 2024.

We have also reclassified the presentation of our retirement plan assets, which represents our investment in life insurance contracts, and intangibles, net from the other assets line item to separate line items within our consolidated balance sheet.

Investment in Persol Holdings The Company’s previous investment in Persol Holdings, as further described in the Investment in Persol Holdings footnote, was carried at fair value with the changes in fair value recognized in net earnings.

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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.

Foreign Currency Forward Contracts The Company is exposed to foreign currency fluctuations and enters into foreign currency forward contracts to manage foreign currency risk.

Forward contracts may be designated as a fair value hedge, while other forward contracts are not designated as hedging instruments.

Both are used to reduce the exposure to variability in certain expected future cash flows.

The Company records designated and non-designated derivatives at mark-to-market with gains and losses recognized in earnings according to their designation on the consolidated statements of earnings.

See the Fair Value Measurements footnote for further detail on specific forward contracts including each respective line item in which gains and losses are recorded.

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.

Interest Rate Swap Contract The Company is exposed to interest rate fluctuation and enters into interest rate swap contracts that are not designated as hedging instruments to manage fluctuations on our securitization facility due to Secured Overnight Financing Rate ("SOFR") variances (see Fair Value Measurements footnote).

The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in other income (expense), net on the consolidated statements of earnings.

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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We generate revenue from:

the hourly sales of services by our temporary employees to customers (“staffing services” revenue), the recruiting of permanent employees for our customers (“permanent placement” revenue), and through our talent fulfillment and outcome-based activities (“talent solutions” and “outcome-based services” revenue).

We record revenues from sales of services and the related direct costs in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent.

When Kelly is the principal, we demonstrate control over the service by being primarily responsible to our customers for fulfilling the contractual promise to provide the service.

When Kelly does not demonstrate control over the service, which may be evident through the arrangement of other contingent labor suppliers and/or service providers to perform services for the customer or by Kelly not holding primary responsibility for the fulfillment of the contractual promise to provide services to the customer, the amounts billed to our customers are net of the amounts paid to the secondary suppliers/service providers and the net amount is recorded as revenues.

the hourly sales of

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

services by our temporary employees to customers ("staffing services" revenue), the recruiting of permanent employees for our customers ("permanent placement" revenue), and through our talent fulfillment and outcome-based activities ("talent solutions" and "outcome-based services" revenue).

We record revenues from sales of services and the related direct costs in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent.

When Kelly is the principal, we demonstrate control over the service by being primarily responsible to our customers for fulfilling the contractual promise to provide the service.

Staffing Services Revenue

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At this time, the balance of the contract liability as well as the amount of revenue recognized in the reporting period that was included in the deferred revenue balance at the beginning of the period is not material.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Costs

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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

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

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

Allowance for Credit Losses - Trade Accounts Receivable The Company records an allowance for uncollectible accounts receivable, billed and unbilled, based on historical loss experience, customer payment patterns, current economic trends, and reasonable and supportable forecasts, as applicable.

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Total property and equipment $ 140.0 $ 165.9

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 property and equipment at cost for 2023 in the table above includes $ 27.8 million of assets held for sale (see Acquisitions and Dispositions 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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Amortization expense was $ 11.6 million for 2024, $ 6.9 million for 2023, and $ 4.2 million for 2022.

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.

The related accumulated amortization totaled $ 23.5 million in 2024 and $ 14.2 million in 2023, of which $ 2.3 million was 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 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).

The Company had $ 4.5 million as of year-end 2024 and $ 4.9 million, of which $ 0.1 million was held for sale, as of year-end 2023 recorded in prepaid expenses and other current assets in the consolidated balance sheet.

The Company had $ 41.4 million as of year-end 2024 and $ 27.3 million, of which $ 3.4 million was held for sale, as of year-end 2023 recorded in non-current other assets in the consolidated balance sheet related to capitalized cloud computing arrangements (see Other Assets).

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 are primarily comprised of acquired trade names and customer relationships that are recorded at fair value at the date of acquisition.

The fair value of trade name intangibles is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about projected revenue growth rates, royalty rates and discount rates.

The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about projected revenue growth rates, customer attrition rates, profit margins and discount rates.

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

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Impairment of Long-Lived Assets, Intangible Assets, Goodwill, Equity Method Investments and Equity Securities The Company evaluates long-lived assets and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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For segments with a goodwill balance, we have determined that our reporting units are the same as our operating and reportable segments based on our organizational structure or one level below our operating segments (the component level).

We may first use a qualitative assessment ("step zero test") for the annual impairment test if we have determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value.

The step zero test includes making judgments and assessments to determine whether any events or circumstances have occurred that makes it more likely than not that the fair value of a reporting unit is less than its carrying amount.

We may first use a qualitative assessment ("step zero") for the annual impairment test if we have determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value.

The step zero analysis includes making judgments and assessments to determine whether any events or circumstances have occurred that makes it more likely than not that the fair value of a reporting unit is less than its carrying amount.

In conducting the qualitative assessment, we assess the totality of relevant events and circumstances that affect the fair value or carrying value of the reporting unit.

Such events and circumstances may include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, entity-specific events and events affecting a reporting unit.

If 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 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").

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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Our analysis used the following significant assumptions:

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

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

Prior to the sale of the majority of our investment in our equity affiliate, we evaluated our equity method investment on a quarterly basis or whenever events or circumstances indicated the carrying amount may be other-than-temporarily impaired.

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

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

Under this method, deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts.

Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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.

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

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The Company utilizes the market price on the date of grant as the fair value for restricted stock and the market price on the date of grant less the present value of the expected dividends not received during the vesting period for performance awards.

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

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

Earnings Per Share Restricted stock that entitle their holders to receive nonforfeitable dividends before vesting are considered participating securities and, therefore, are included in the calculation of earnings per share using the two-class method.

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Revenue Disaggregated by Service Type

Kelly has five operating segments:

Professional & Industrial (“P&I”), Science, Engineering & Technology (“SET”), Education, Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG") and International.

Kelly has four operating segments:

Professional & Industrial ("P&I"), Science, Engineering & Technology ("SET"), Education, and Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG").

Prior to 2024, the Company also had an International operating segment (see Segment Disclosures footnote).

Following the sale of the Company's EMEA staffing operations in January 2024 (see Acquisitions and Dispositions footnote), the Mexico operations, which were previously in our International segment, are now included in our P&I segment.

The 2023 and 2022 P&I segment information has been recast to conform to the new structure.

Other than OCG, each segment delivers talent through staffing services, permanent placement or outcome-based services.

Our OCG segment delivers talent solutions including managed service provider ("MSP"), payroll process outsourcing ("PPO"), recruitment process outsourcing ("RPO"), and talent advisory services.

International also delivers RPO talent solutions within its local markets.

Our SET segment also offers talent solutions resulting from the acquisition of Motion Recruitment Partners, LLC, which is included in the SET segment (see Acquisitions and Dispositions footnote).

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

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Outcome-based services 421.5 380.3 366.7

Talent solutions 26.5 — —

Total Science, Engineering & Technology 1,422.8 1,190.8 1,265.4

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Our operations are subject to different economic and regulatory environments depending on geographic location.

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 Mexico operations, which are included in the Americas region.

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

In 2023 and 2022, our International segment included our staffing operations in Europe as well as Mexico, which is included in the Americas region.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The below table presents our SET, OCG and International segment revenues disaggregated by geographic region (in millions of dollars):

The below table presents revenue from our SET, OCG and former International segment, which previously included our Mexico operations, disaggregated by geographic region (in millions of dollars):

December Year to Date

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International

Americas $ 72.7 $ 45.2 $ 91.5

Europe $ — $ 812.1 $ 887.0

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Currency exchange effects ( 0.3 ) 0.3 ( 0.2 )

Disposition of EMEA staffing operations ( 2.4 ) — —

Write-offs ( 1.0 ) ( 2.1 ) ( 2.8 )

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Write-offs are presented net of recoveries, which were not material for December year-to-date 2024, 2023 and 2022.

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 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.

The unreserved portion was recorded in SG&A expenses in the consolidated statements of earnings.

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

Allowance for credit losses:

Beginning balance $ 10.9

Current period provision 0.6

Write-offs ( 11.5 )

Ending Balance $ —

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

As of year-end 2024, the Company has a receivable of $ 16.4 million related to the sale of our EMEA staffing operations (see Acquisitions and Dispositions footnote).

The Company has determined that no credit loss provision is required on this receivable as it is considered collectible.

There were no long-term customer receivables in 2024, 2023 and 2022 .

No allowances related to other receivables were material for December year-to-date 2024, 2023 and 2022 .

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.

In the first quarter of 2022, the Company acquired Rocket Power Holdings LLC and Rocket Power Ops LLC (collectively, "RocketPower"), as detailed below.

In the second quarter of 2021, the Company acquired Softworld, Inc.

("Softworld"), as detailed below.

Pediatric Therapeutic Services

On May 2, 2022, KSU acquired 100 % of the membership interests of PTS for a purchase price of $ 82.1 million.

PTS is a specialty firm that provides and manages various state and federally mandated in-school therapy services.

This acquisition expands Education's K-12 solution offering in the education staffing market and serves as an entry point into the therapeutic services market.

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 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

Additional consideration payable 1.1

Total consideration $ 86.8

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

Prepaid expenses and other current assets 1.6

Net property and equipment 0.4

Goodwill 36.3

Intangibles 40.3

Accounts payable and accrued liabilities, current ( 2.6 )

Accrued payroll and related taxes, current ( 0.1 )

Total consideration, including working capital adjustments $ 86.8

The fair value of the acquired receivables represents the contractual value.

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 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).

All of the goodwill is expected to be deductible for tax purposes.

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

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 provider of RPO solutions to U.S.

high-tech companies.

This acquisition expands OCG's RPO solution and delivery offering and enhances the specialty RPO strategy and expertise within the high-tech industry.

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 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

Additional consideration payable 1.1

Contingent consideration 0.6

Total consideration $ 63.5

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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):

Trade accounts receivable 6.9

Prepaid expenses and other current assets 1.8

Net property and equipment 0.1

Goodwill 41.0

Intangibles 15.8

Accounts payable and accrued liabilities, current ( 2.9 )

Accrued payroll and related taxes, current ( 1.5 )

Other long-term liabilities ( 1.2 )

Total consideration, including working capital adjustments $ 63.5

The fair value of the acquired receivables represents the contractual value.

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 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.

The amount of goodwill expected to be deductible for tax purposes is approximately $ 27.3 million.

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.

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.

Acquisitions and Dispositions

Children's Therapy Center

On November 13, 2024, Kelly Services USA, LLC ("KSU"), a wholly owned subsidiary of the Company, acquired 100 % of the issued and outstanding limited liability company interests of Children's Therapy Center ("CTC").

CTC specializes in occupational, physical, and speech therapy for children and will expand the Company's growth opportunities in therapeutic services.

Under terms of the purchase agreement, the purchase price of $ 3.3 million was adjusted for cash held by CTC at the closing date and estimated working capital adjustments, resulting in the company paying cash of $ 3.1 million.

Goodwill generated from the acquisition of $ 3.0 million was primarily attributable to expanding market potential and was assigned to the Education operating segment (see Goodwill and Intangible Assets footnote).

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

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 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, financial services, retail and IT consulting.

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

Under terms of the purchase agreement, the purchase price was adjusted for cash held by Softworld at the closing date and estimated working capital adjustments resulting in the Company paying cash of $ 220.4 million.

Total consideration included $ 2.6 million of additional consideration that was paid to the seller in the fourth quarter of 2022.

In the third quarter of 2021, the Company received cash for a post-close working capital adjustment of $ 6.0 million.

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

Motion Recruitment Partners

On May 31, 2024, the Company indirectly acquired 100 % of the equity interests in Motion Recruitment Partners, LLC ("MRP") by way of a merger with MRP Merger Sub, Inc.

("Merger Sub"), a newly-formed, wholly owned subsidiary of the Company, with and into MRP Topco ("Topco"), the indirect parent company of MRP and Littlejohn Fund V, L.P.

("Littlejohn"), with Topco surviving the merger (the "Merger").

MRP is a parent company to a group of leading global talent solutions providers and the acquisition is expected to strengthen the scale and capabilities of Kelly's solutions portfolio.

Under terms of the merger agreement, the $ 425.0 million purchase price was adjusted for estimated cash held by MRP at the closing date and estimated working capital adjustments, resulting in the Company paying cash of $ 440.0 million.

The acquisition was funded with cash on hand and available credit facilities (see Debt footnote).

Total consideration included $ 3.4 million of contingent consideration related to an earnout payment with a maximum potential cash payment of $ 60.0 million in the event certain financial metrics are met per the terms of the agreement.

The earnout payment is based upon a multiple of gross profit in excess of an agreed-upon amount during the earnout period, defined as the 12 months ending March 31, 2025, and any necessary payment is due to the seller in the second quarter of 2025.

The initial fair value of the earnout was established using a Monte Carlo simulation model, reassessed quarterly, and was written down to zero in the fourth quarter of 2024 (see Fair Value Measurements footnote).

In the fourth quarter of 2024, the Company paid a post-close net working capital adjustment of $ 1.4 million.

The merger agreement contains representations and warranties and covenants customary for a transaction of this nature.

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

Cash consideration paid $ 425.0

Estimated cash acquired 13.6

Estimated net working capital adjustment 1.4

Total cash consideration 440.0

Additional consideration payable 3.4

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Total consideration $ 444.8

As of first quarter-end 2022, the purchase price allocation for this acquisition was final.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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):

Cash and equivalents $ 12.6

Trade accounts receivable 89.1

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Operating lease right-of-use assets 11.9

Non-current deferred tax 5.9

Goodwill 222.9

Intangibles 79.4

Intangibles, net 145.9

Other assets, noncurrent 10.6

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Operating lease liabilities, noncurrent ( 9.0 )

Other long-term liabilities ( 18.3 )

Total consideration, including working capital adjustments $ 444.8

The fair value of the acquired receivables represents the contractual value.

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 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).

All of the goodwill is expected to be deductible for tax purposes.

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

The claim asserted 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.

In the fourth quarter of 2021, the Company reached a settlement with the insurer for $ 19.0 million and received the payment.

The payment was recorded entirely in gain on insurance settlement in the consolidated statements of earnings and included within cash flows from investing activities in the consolidated statements of cash flows.

Softworld's results of operations are included in the SET segment.

For the year ended 2021, our consolidated revenues and net earnings included $ 98.0 million and $ 4.7 million from Softworld, respectively.

The date of the acquisition was the first day of our second quarter, therefore, our first quarter results of 2021 do not include any revenue or earnings from Softworld.

The fair value of the acquired receivables represents the contractual value net of the allowance for potentially uncollectible accounts.

Included in the assets purchased in the MRP acquisition was $ 145.9 million of intangible assets, made up of $ 88.1 million in customer relationships, $ 56.5 million associated with MRP's trade names, and $ 1.3 million for non-compete agreements.

The customer relationships are amortized over 15 years with no residual value, the trade names are amortized over 10 - 15 years with no residual value, and the non-compete agreements are amortized over four years with no residual value.

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

None of the goodwill generated from the acquisition is expected to be deductible for tax purposes.

MRP's results of operations are included in the SET segment.

For year-end 2024, our consolidated revenues and net earnings (loss) include $ 285.8 million and $ 4.2 million of earnings from MRP, respectively.

Pro Forma Information

The following unaudited pro forma information presents a summary of the operating results as if the Softworld acquisition had been completed as of December 30, 2019 (in millions of dollars):

December Year to Date

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

Pro forma revenues $ 4,552.2 $ 5,389.8

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

Pro forma net earnings (loss) $ ( 4.9 ) $ 30.8

The pro forma results for the periods above include adjustments to amortization expense for the intangible assets, reversal of MRP's interest expense on credit facilities that were settled upon completion of the acquisition, interest expense and associated amortization of debt issuance costs for financing the acquisition, reclassification of transaction expenses to the appropriate period, and applicable taxes.

The unaudited pro forma information presented has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisition occurred on the assumed date, nor is it necessarily an indication of future operating results.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 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 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.

Pediatric Therapeutic Services

In the second quarter of 2022, KSU, a wholly owned subsidiary of the Company, acquired 100 % of the membership interests of Pediatric Therapeutic Services ("PTS") for a purchase price of $ 82.1 million.

PTS is a specialty firm that provides and manages various state and federally mandated in-school therapy services.

This acquisition expanded Education's K-12 solution offering in the education staffing market and served as an entry point into the therapeutic services market.

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

In the first quarter of 2022, the Company acquired Rocket Power Holdings LLC and Rocket Power Ops LLC (collectively, "RocketPower") and acquired 100 % of the issued and outstanding membership interests of RocketPower for a purchase price of $ 59.3 million.

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

high-tech companies.

This acquisition expanded OCG's RPO solution and delivery offering and enhanced the specialty RPO strategy and expertise within the high-tech industry.

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

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.

In 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).

Disposition of EMEA Staffing Operations

On January 2, 2024, the Company completed the sale of its EMEA staffing operations ("disposal group"), which was included in the Company's International operating segment, to Gi Group Holdings S.P.A.

Upon closing, the Company received cash proceeds of $ 110.6 million, or $ 77.1 million net of cash disposed, which is included in investing activities in the consolidated statements of cash flows.

The Company expects to receive additional net cash proceeds to reflect the cash-free, debt-free transaction basis, as well as working capital and other adjustments.

The Company will not receive any proceeds from the contingent consideration opportunity associated with the transaction.

In the first quarter of 2024, the Company recorded a euro-denominated receivable from Gi of $ 26.9 million representing the adjustments that were determinable and expected to be received.

In the second quarter of 2024, the Company recorded negative working capital and other adjustments of $ 10.1 million, which reduced the net receivable from Gi to $ 16.8 million.

As of year-end 2024, the net receivable is $ 16.4 million, with the change of $ 0.4 million from the second quarter reflecting foreign currency remeasurements.

The Company is actively reconciling the receivable in accordance with the purchase agreement and expects it to be settled upon completion of this process.

The receivable is included in prepaid expenses and other current assets in the consolidated balance sheet and included in the gain on the transaction.

The total gain on the transaction at year-end 2024 is $ 1.6 million, which is recorded in the gain on sale of EMEA staffing operations in the consolidated statements of earnings.

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.

As of December 31, 2023, the disposal group was classified as held for sale and held at its carrying value.

Our consolidated earnings from operations in 2023 included earnings of $ 4.3 million from the EMEA staffing operations.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

4 unchanged sentences

Property and equipment, net 4.2

Operating lease right-of-use assets 14.2

Deferred taxes 4.1

3 unchanged sentences

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 divested ( 169.9 )

Disposal group, net $ 123.3

Disposition of Russia Operations

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

The transaction resulted in a loss on the sale of $ 18.7 million, which was recorded in loss on disposal in the consolidated statements of earnings.

The Russia operations 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 year ended 2022 included $ 63.4 million from the Russia operations and our consolidated earnings before taxes for the year ended 2022 included $ 1.4 million from the Russia operations.

Investment in Persol Holdings

12 unchanged sentences

sold the investment in the common stock of Persol Holdings in an open-market transaction for proceeds of $ 196.9 million, net of transaction fees.

As our investment was a noncontrolling interest in Persol Holdings, the investment was recorded at fair value based on the quoted market price of Persol Holdings stock on the Tokyo Stock Exchange through the date of the transaction (see Fair Value Measurements footnote).

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

The $ 67.2 million loss in the first quarter of 2022 recorded in 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.

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

subsidiary, which was considered substantially liquidated as of first quarter-end 2022.

As a result, the Company recognized a $ 20.4 million cumulative translation adjustment loss in the first quarter of 2022, which is recorded in loss on currency translation from liquidation of subsidiary in the consolidated statements of earnings.

As a result, the Company recognized a $ 20.4 million cumulative translation adjustment loss in the first quarter of 2022, which was recorded in loss on currency translation from liquidation of subsidiary in the consolidated statements of earnings.

The Company also recognized a $ 5.5 million foreign exchange gain related to U.S.-denominated cash equivalents held by Kelly Services Japan, Inc.

following the sale of the Persol Holdings shares and prior to a dividend payment to the Company in the first quarter of 2022.

The foreign exchange gain is recorded in other income (expense), net in the consolidated statements of earnings.

The foreign exchange gain was recorded in other income (expense), net in the consolidated statements of earnings.

The dissolution of the Kelly Services Japan, Inc.

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The equity investment, included in other assets on the Company's consolidated balance sheet, totaled $ 6.4 million as of year-end 2024 and year-end 2023.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair Value Measurements

Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes approximate their fair values due to the short-term maturities of these assets and liabilities.

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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There were no transfers between Level 1, Level 2 and Level 3 assets or liabilities in 2024 or 2023.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair Value Measurements on a Recurring Basis As of Year-End 2023

As of Year-End 2024

Description Total Level 1 Level 2 Level 3

2 unchanged sentences

Total assets at fair value $ 6.4 $ 6.4 $ — $ —

Interest rate swaps $ ( 0.4 ) $ — $ ( 0.4 ) $ —

EMEA staffing indemnification ( 2.0 ) — — ( 2.0 )

Brazil indemnification ( 1.7 ) — — ( 1.7 )

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

Total liabilities at fair value $ ( 4.1 ) $ — $ ( 0.4 ) $ ( 3.7 )

Fair Value Measurements on a Recurring Basis As of Year-End 2022

As of Year-End 2023

Description Total Level 1 Level 2 Level 3

3 unchanged sentences

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

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

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

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

Money market funds

Money market funds represent investments in money market funds that hold government securities, of which $ 6.4 million as of year-end 2024 and $ 8.0 million as of year-end 2023 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 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 remaining money market funds as of year-end 2023 are included in cash and equivalents in the consolidated balance sheet.

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.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Forward contracts

On February 8, 2024, the Company entered into a foreign currency forward contract with a notional amount of € 17.0 million to manage the foreign currency risk associated with expected additional proceeds related to the sale of our EMEA staffing operations (see Acquisitions and Dispositions footnote).

The expected proceeds are recorded as a euro-denominated receivable which is remeasured quarterly.

The forward contract was designated as a fair value hedge, with the mark-to-market changes of the forward contract offsetting the mark-to-market changes of the receivable in the gain on sale of EMEA staffing operations in the consolidated statements of earnings.

The contract was valued using observable inputs, such as foreign currency exchange rates, and was considered a level 2 liability.

In the fourth quarter of 2024, the Company settled the contract with a $ 0.4 million cash payment and recognized a corresponding loss of $ 0.4 million on the contract.

As of year-end 2024, there is no asset or liability related to the forward contract.

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

This contract was not designated as a hedging instrument;

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

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

The Company recorded an unrealized loss of $ 3.6 million for the year ended 2023 and had a net liability associated with the forward contract of $ 3.6 million as of year-end 2023.

The Company settled the forward contract on January 5, 2024 for $ 2.4 million of cash.

Accordingly, the Company recognized a gain of $ 1.2 million in the first quarter of 2024 in other income (expense), net on the consolidated statements of earnings, which partially offsets the $ 3.6 million loss recognized in 2023, for a total loss of $ 2.4 million on the contract.

Interest rate swaps

On July 17, 2024, the Company entered into two interest rate swaps with a notional value of $ 50.0 million each to manage fluctuations on our securitization facility due to SOFR variances (see Debt footnote).

These contracts were not designated as hedging instruments;

therefore, the mark-to-market fair value changes and the cash settlements on the swaps are recognized in earnings.

The Company's interest rate swaps were valued with assistance from a third party based on pricing models using observable inputs, such as SOFR forward rates, and are considered level 2 liabilities, which will be remeasured quarterly.

As of year-end 2024, the Company recorded a liability totaling $ 0.4 million related to the mark-to-market fair value change of the interest rate swaps in accounts payable and accrued liabilities in the consolidated balance sheet.

In 2024, the Company recorded a total loss of $ 0.2 million.

This loss includes $ 0.4 million related to mark-to-market changes in fair value, which was partially offset by the impact of cash settlements of $ 0.2 million, in other income (expense), net in the consolidated statements of earnings.

Indemnification liabilities

As of year-end 2024, the Company has an indemnification liability totaling $ 2.0 million related to the sale of the EMEA staffing operations in January 2024.

The liability is included in other long-term liabilities in the consolidated balance sheet and the associated expense is included in the gain on sale of EMEA staffing operations in the consolidated statements of earnings.

As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences for an indefinite term.

The Company's maximum exposure under these indemnifications is not estimable at this time due to uncertainties to potential outcomes and the facts and circumstances involved in the agreement.

Management believes the risk of material exposure is remote.

The initial valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital.

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

During 2024, the Company recognized a decrease of $ 0.1 million to the indemnification liability related to exchange rate fluctuations in other income (expense), net in the consolidated statements of earnings.

As year-end 2024, the Company has an indemnification liability related to the 2020 sale of the Brazil operations totaling $ 1.7 million with $ 0.9 million in accounts payable and accrued liabilities and $ 0.8 million in other long-term liabilities, and $ 3.0 million as of year-end 2023 with $ 0.1 million in accounts payable and accrued liabilities and $ 2.9 million in other long-term liabilities on the consolidated balance sheet.

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.

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

In 2024, the Company recognized a decrease of $ 0.7 million to the

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

indemnification liability related to exchange rate fluctuations and was also reduced by $ 0.7 million as a result of the fourth quarter reassessment of the liability, both of which are recorded in other income (expense), net in the consolidated statements of earnings.

Earnout liabilities

The Company recorded an initial earnout liability relating to the 2024 acquisition of MRP totaling $ 3.4 million in accounts payable and accrued liabilities in the consolidated balance sheet (see Acquisitions and Dispositions footnote).

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

The maximum total cash payment which may be due related to the earnout liability is $ 60.0 million.

In the fourth quarter 2024, the liability was reassessed and the fair value was determined to be zero .

As such, there is no liability recorded related to the earnout as of year-end 2024.

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.

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 the year two portion of the earnout.

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

There was 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 as of second quarter-end 2022 (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 .

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 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.

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.

During 2021, the Company recognized $ 0.1 million of expenses related to the earnout liability within SG&A expenses in the consolidated statements of earnings.

During the third quarter of 2021, the Company paid the earnout totaling $ 1.8 million.

Equity Investments Without Readily Determinable Fair Value

On March 1, 2022, the Company sold the majority of its investment in the JV (see Investment in PersolKelly Pte.

footnote), with the remaining 2.5 % interest now being measured using the measurement alternative for equity investments without a readily determinable fair value.

In 2022, the Company invested in equity securities with an initial investment of $ 0.4 million which was included in other assets in the consolidated balance sheet.

This investment is measured using the measurement alternative for equity investments without a readily determinable fair value.

The measurement alternative represents cost, less impairment, plus or minus observable price changes.

The sale of the shares of the JV represented an observable transaction requiring the Company to calculate the current fair value based on the purchase price of the shares, in which the resulting adjustment was not material.

The investment totaled $ 6.4 million as of year-end 2023, representing total cost plus observable price changes to date.

Prior to April 2021, the Company had a minority investment in Business Talent Group, LLC, which was included in other assets in the consolidated balance sheet.

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 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.

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

On March 8, 2021, Kenzie entered into a transaction to sell its assets.

As of the date of the sale, the investment had a carrying value of $ 1.4 million, representing total cost plus observable price changes to date.

In the first quarter of 2021, the asset was written down as a result of the sale and the loss of $ 1.4 million was recorded in other income (expense), net in the consolidated statements of earnings.

In the fourth quarter of 2024, the Company entered into a transaction to sell a portion of its shares with a carrying value of $ 0.1 million, representing total cost plus observable price changes to date.

As a result of the sale, the Company recorded a gain of $ 0.6 million in other income (expense), net in the consolidated statements of earnings.

Additionally, as a result of the sale, the value of the remaining investment was remeasured to $ 3.5 million based on observable prices changes and an unrealized gain of $ 3.2 million was recorded in other income (expense), net in the consolidated statements of earnings.

The Company holds a 2.5 % interest in PersolKelly Pte.

(see Investment in PersolKelly Pte.

footnote) which is measured using the measurement alternative for equity investments without a readily determinable fair value.

The investment totaled $ 6.4 million as of year-end 2024 and 2023, representing total cost plus observable price changes to date.

Assets Measured at Fair Value on a Nonrecurring Basis

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 assessments, 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 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 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 was expected to last through much of 2023, directly impacting RocketPower and the demand for RocketPower's

In addition to assets that are recorded at fair value on a recurring basis, annual and interim impairment tests may subject our reporting units with goodwill and long-lived assets to nonrecurring fair value measurement.

We performed our annual impairment test for goodwill in the fourth quarter of each year and for long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Refer to the Goodwill and Intangible Assets footnote for additional details on impairment charges related to years-ended 2024 and 2022.

There were no goodwill or intangible asset impairment charges recorded in 2023.

The various inputs to the fair value models are considered level 3.

Refer to the Significant Accounting Policies footnote for additional details on the valuation methodologies and inputs used to measure fair value.

Restructuring and Transformation Activities

Restructuring and transformation charges for the year-ended 2024 were $ 6.1 million as a continuation of the actions that were announced in the second quarter of 2023 as part of the comprehensive transformation initiative.

The transformation activities

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

services in this vertical.

These changes in market conditions caused another triggering event requiring interim impairment tests 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 as of third quarter-end and year-end 2022.

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 as of third quarter-end and year-end 2022.

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 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.

consisted of $ 3.0 million of severance charges and $ 3.1 million of costs to execute the transformation.

The severance and transformation costs are recorded in SG&A expenses in the consolidated statements of earnings.

Additionally, in 2024, the Company recognized an impairment charge of $ 13.5 million primarily for certain ROU assets related to our leased headquarters facility reflecting adjustments as to how we are utilizing the building as a part of our ongoing transformation efforts.

The impairment charges related to the ROU assets are recorded in the asset impairment charge in the consolidated statements of earnings.

The restructuring and transformation costs included in SG&A are detailed below for December year-to-date 2024 (in millions of dollars):

Costs Transformation Costs Total

Professional & Industrial $ 0.3 $ — $ 0.3

Science, Engineering & Technology 0.3 — 0.3

Outsourcing & Consulting 0.4 — 0.4

Corporate 2.0 3.1 5.1

Total $ 3.0 $ 3.1 $ 6.1

In the first quarter of 2023, the Company undertook restructuring actions to further our cost management efforts in response to the demand levels and to 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 SG&A expenses in the consolidated statements of earnings.

In the second quarter of 2023, the Company announced a comprehensive transformation initiative that included actions to further streamline the Company's operating model to enhance organizational efficiency and effectiveness.

The total costs incurred related to these transformation activities in 2023 totaled $ 32.2 million.

The transformation activities included $ 17.7 million of costs to execute the transformation initiatives through the use of an external consultant, severance of $ 11.6 million, a $ 2.4 million impairment charge for 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 transformation activities included $ 17.7 million of costs to execute the transformation initiatives through the use of an external consultant, severance of $ 11.6 million, a $ 2.4 million impairment charge for ROU assets related to an unoccupied office space lease and $ 0.5 million of lease termination costs.

The impairment charge related to the ROU assets was recorded in the asset impairment charge in the consolidated statements of earnings.

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

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

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

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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 provided centralized support to our operating units.

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 2022 $ 0.3

Accruals 40.6

Reductions for cash payments ( 23.8 )

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Balance as of year-end 2023 15.1

Accruals 40.6

Reductions for cash payments ( 19.4 )

Disposition of EMEA staffing operations ( 1.5 )

Accrual adjustments ( 0.5 )

Balance as of year-end 2024 $ 0.3

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.

The remaining balance of $ 0.3 million as of year-end 2024 primarily represents severance costs and the majority is expected to be paid by first quarter-end 2025.

No material adjustments are expected to be recorded.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal years 2024 and 2023 are included in the table below (in millions of dollars):

Science, Engineering & Technology Education Total

Balance as of year-end 2022 $ 111.3 $ 39.8 $ 151.1

Additions — — —

Impairment adjustments — — —

Balance as of year-end 2023 111.3 39.8 151.1

Additions 222.9 3.0 225.9

Impairment adjustments ( 72.8 ) — ( 72.8 )

Balance as of year-end 2024 $ 261.4 $ 42.8 $ 304.2

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal years 2023 and 2022 are included in the tables below (in millions of dollars):

As of Year-End 2022 Additions to Goodwill Impairment Adjustments As of Year-End 2023

Science, Engineering & Technology $ 111.3 $ — $ — $ 111.3

Education 39.8 — — 39.8

Outsourcing & Consulting — — — —

Total $ 151.1 $ — $ — $ 151.1

As of Year-End 2021 Additions to Goodwill Impairment Adjustments As of Year-End 2022

Science, Engineering & Technology $ 111.3 $ — $ — $ 111.3

Education 3.5 36.3 — 39.8

Outsourcing & Consulting — 41.0 ( 41.0 ) —

Total $ 114.8 $ 77.3 $ ( 41.0 ) $ 151.1

The goodwill resulting from the acquisition of RocketPower during the first quarter of 2022 was allocated to the OCG reportable segment and RocketPower was deemed to be a separate reporting unit.

The goodwill resulting from the acquisition of PTS during the second quarter of 2022 was allocated to the Education reportable segment and PTS was deemed to be a separate reporting unit.

The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit.

(See Additions to Goodwill column in the 2022 table above and the Acquisitions and Dispositions footnote for more details regarding each acquisition.)

Our SET reportable segment includes goodwill acquired in the second quarter of 2021 and 2024, related to our Softworld and MRP reporting units, respectively.

Our Education reportable segment includes goodwill acquired in the fourth quarter of 2020, second quarter of 2022 and fourth quarter of 2024, related to our Education and PTS reporting units, respectively.

(See the Acquisitions and Dispositions footnote for more details regarding each acquisition.)

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.

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2024 Goodwill Impairment Assessment

In the fourth quarter of 2024, we performed our annual goodwill impairment testing.

For the PTS and Education reporting units, we performed step zero qualitative analyses and have concluded that there are no indications that the fair values of the PTS and Education reporting units are less than their respective carrying values and therefore no further testing was required.

For the Softworld and MRP reporting units, our annual goodwill impairment testing included step one quantitative tests.

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

The estimated fair value of the MRP reporting unit exceeded the carrying value by less than 10 %.

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, then the goodwill of the MRP reporting unit may be impaired in the future, resulting in goodwill impairment charges.

As a result of the Softworld quantitative assessment, the Company determined that Softworld's estimated fair value of the reporting unit no longer exceeded the carrying value.

Softworld's 2024 financial performance was lower than internal projections due to continued challenging market conditions.

As a result, management’s expectation for near-term financial performance and projected long-term growth rates were revised accordingly.

These changes in circumstances were also indicators that the respective long-lived assets may not be recoverable.

Softworld has definite-lived intangible assets, consisting of trade names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives.

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

Based on the result of our annual goodwill impairment test, we recorded an impairment charge of $ 72.8 million, which was included in goodwill impairment charge in the consolidated statements of earnings for the year ended 2024, to write-off a portion of Softworld's goodwill balance.

Included in the impairment charge was an $ 18.4 million tax benefit associated with the impairment.

The remaining goodwill balance for the Softworld reporting unit was $ 38.5 million as of year-end 2024.

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, then the goodwill of the Softworld reporting unit may be further impaired in the future, resulting in goodwill impairment charges.

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.

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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.

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.

As of year-end 2023, the estimated fair value of the Softworld reporting unit exceeded the carrying value by less than 10 %.

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.

RocketPower has definite-lived intangible assets, consisting of trades names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives.

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

RocketPower was acquired during the first quarter of 2022 was allocated to the OCG reportable segment and was deemed to be a separate reporting unit.

During the second half 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 triggering events requiring interim impairment tests for both long-lived assets and goodwill as of the third and fourth quarters of 2022.

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

We performed interim step one quantitative tests for RocketPower’s goodwill and determined that the estimated fair value of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

In the fourth quarter of 2022, 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 and RocketPower reporting units to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary at that time.

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 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 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.)

reporting unit no longer exceeded the carrying value.

Based on the result of our interim goodwill impairment tests, we recorded a total goodwill impairment charge of $ 41.0 million as of year-end 2022 to write-off all of RocketPower's goodwill balance.

Intangible Assets

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Total $ 347.7 $ 91.4 $ 256.3 $ 201.8 $ 64.1 $ 137.7

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible amortization expense, which is included in SG&A expenses in the consolidated statements of earnings, was $ 27.3 million, $ 20.9 million and $ 19.4 million in 2024, 2023 and 2022 , respectively.

The amortization expense is expected to be $ 30.1 million in 2025, $ 29.4 million in 2026, $ 28.8 million in 2027, $ 27.4 million in 2028 and $ 24.8 million in 2029.

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

Life insurance cash surrender value (see Retirement Benefits footnote) $ 230.3 $ 194.3

Intangibles, net of accumulated amortization of $76.6 million in 2023 and $55.5 million in 2022 (1)

Long-term hosted software, net of accumulated amortization of $23.5 million in 2024 and $14.2 million in 2023 (1)

$ 17.9 $ 13.1

Noncurrent restricted cash 6.4 8.0

Workers' compensation and other claims receivable (2)

Equity securities (3)

Other 5.1 7.8

Total other assets (4)

$ 45.3 $ 48.5

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

(1) Long-term hosted software represents cloud computing arrangements that are comprised of internal-use software platforms that are accounted for as service contracts (see Summary of Significant Accounting Policies footnote).

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

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

(3) Equity securities includes $ 6.4 million related to our equity investment in the JV (see Investment in PersolKelly Pte.

Ltd footnote).

(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.

(4) Total other assets in 2023 includes $ 5.4 million of assets held for sale in connection with the sale of our EMEA staffing operations (see Acquisitions and Dispositions footnote).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Our leases generally have remaining lease terms of one year to 10 years.

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Total lease cost $ 19.0 $ 29.7 $ 31.1

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Operating - current Operating lease liabilities, current $ 12.3 $ 14.0 (2)

Financing - current Accounts payable and accrued liabilities — 1.2

Operating - noncurrent Operating lease liabilities, noncurrent 50.9 51.9 (2)

Financing - noncurrent Other long-term liabilities — —

Total lease liabilities $ 63.2 $ 65.9

(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:

(1) ROU operating assets reflect an impairment charge of $ 12.1 million, related to our leased headquarters facility reflecting adjustments as to how we are utilizing the building as a part of our ongoing transformation efforts.

The impairment charges related to the ROU assets are recorded in the asset impairment charge in the consolidated statements of earnings (see Restructuring and Transformation Activities footnote).

(2) ROU operating assets and liabilities, current and non-current, include held for sale leases (see Acquisitions and Dispositions footnote).

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

December Year to Date

Weighted average remaining lease term (years):

Operating leases 7.3 7.9

Financing leases 0 1.3

Weighted average discount rate:

Operating leases 5.4 % 5.1 %

Financing leases N/A 5.4 %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Operating leases $ 10.4 $ 12.6 $ 10.7

Financing leases — — —

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Maturities of lease liabilities as of year-end 2024 are as follows (in millions of dollars):

Operating Leases Financing Leases

2024 $ 17.1 $ —

Operating Leases

Thereafter 23.5

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Imputed interest 12.9

Total $ 65.9 (2)

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revolving Credit Facility

On May 29, 2024, 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 May 29, 2029.

The amendment (i) decreased the current borrowing capacity to $ 150.0 million, (ii) added the ability to increase the borrowing capacity to an aggregate of $ 300.0 million and (iii) changed certain of the terms and conditions.

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

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trade accounts receivable.

At year-end 2023 and 2022, there were no borrowings under the Facility and a remaining borrowing capacity of $ 200.0 million.

At year-end 2024, there were $ 40.0 million of long-term borrowings on the term benchmark line under the Facility and a remaining borrowing capacity of $ 110.0 million.

The rate for these borrowings, which varies based on the Company's leverage ratio as defined in the agreement, includes either (i) the Prime rate plus the applicable margin for the floating line or (ii) a term SOFR for 1-, 3-, or 6-months dependent on the interest election plus a 0.10 % margin and the applicable margin for the term benchmark line.

At year-end 2023, there were no borrowings under the Facility and a remaining borrowing capacity of $ 200.0 million.

To maintain availability of the funds, we pay a facility fee on the full amount of the Facility, regardless of usage.

The facility fee varies based on the Company’s leverage ratio as defined in the agreement.

The Facility, which contains a cross-default clause that could result in termination if defaults occur under our other loan agreements, had a facility fee of 15.0 basis points at year-end 2023 and 2022.

The Facility, which contains a cross-default clause that could result in termination if defaults occur under our other loan agreements, had a facility fee of 20.0 basis points at year-end 2024 and 15.0 basis points at year-end 2023.

The Facility’s financial covenants and restrictions are described below, all of which were met at year-end 2024:

• 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.

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

• 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.

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.

Securitization Facility

On May 29, 2024, 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 (i) increased the current borrowing capacity to $ 250.0 million, (ii) includes the ability to increase the borrowing capacity to an aggregate of $ 350.0 million, (iii) changed certain of the terms and conditions and (iv) has a termination date of May 28, 2027.

Under the Securitization Facility, the Company will sell certain trade receivables and related rights ("Receivables"), on a revolving basis, to the Receivables Entity.

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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.

At year-end 2024, the Securitization Facility had $ 199.4 million of long-term borrowings, SBLCs of $ 46.1 million related to workers’ compensation and a remaining capacity of $ 4.5 million.

The rate for these borrowings includes the adjusted daily SOFR plus a 0.10 % margin and a 1.10 % utilization rate on the amount of our borrowings.

The rate for the SBLCs of 1.10 % represents a utilization rate on the outstanding balance.

In addition, we pay a commitment fee of 40.0 basis points on the unused capacity.

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

In addition, we paid a commitment fee of 40.0 basis points on the unused capacity in 2023.

On July 17, 2024, we entered into a $ 50.0 million 12-month interest rate swap and a $ 50.0 million 18-month interest rate swap that effectively locked in the variable SOFR component of our interest rate for a portion of the long-term borrowings on the Securitization Facility at a fixed rate of 4.772 % and 4.468 % from the effective date through July 17, 2025 and January 17, 2026, respectively.

As of year-end 2024, the Company recorded a loss of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

As of year-end 2022, the Securitization Facility had no short-term borrowings, SBLCs of $ 49.5 million related to workers’ compensation at a rate of 0.90 % and a remaining capacity of $ 100.5 million.

The rate for short-term borrowings includes the Bloomberg Short-Term Bank Yield Index rate and a utilization rate on the amount of our borrowings.

The rates for the SBLCs represent a utilization rate on the outstanding amount of the SBLCs.

In addition, we pay a commitment fee of 40 basis points on the unused capacity.

$ 0.2 million and a corresponding liability of $ 0.4 million related to mark-to-market changes in fair value of the interest rate swaps (see Fair Value Measurements footnote).

The Receivables Entity’s sole business consists of the purchase or acceptance through capital contributions of trade accounts receivable and related rights from the Company.

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The assets and liabilities of the Receivables Entity are included in the consolidated financial statements of the Company.

Local Credit Facilities

The Company had total unsecured, uncommitted short-term local credit facilities of $ 3.1 million as of year-end 2024.

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.

There were no borrowings under these lines at year-end 2024 and 2023.

Retirement Benefits

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

The liability for the nonqualified plans was $ 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 earnings of $ 32.9 million in 2023, loss of $ 36.3 million in 2022 and earnings of $ 27.0 million in 2021.

The liability for the nonqualified plans was $ 260.5 million and $ 233.8 million as of year-end 2024 and 2023, respectively, the current portion of which is included in current accrued payroll and related taxes in the consolidated balance sheet.

The cost of participants’ earnings or loss on this liability, which were included in SG&A expenses in the consolidated statements of earnings, was earnings of $ 29.8 million in 2024, earnings of $ 32.9 million in 2023 and a loss of $ 36.3 million in 2022.

In connection with the administration of these plans, the Company has purchased company-owned variable universal life insurance policies insuring the lives of certain current and former officers and key employees.

The cash surrender value of these policies, which is based primarily on investments in mutual funds and can only be used for payment of the Company’s obligations related to the nonqualified deferred compensation plan noted above, was $ 230.3 million and $ 194.3 million at year-end 2023 and 2022, respectively.

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

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 cash surrender value of these policies, which is based primarily on investments in mutual funds and can only be used for payment of the Company’s obligations related to the nonqualified deferred compensation plan noted above, was $ 258.1 million and $ 230.3 million at year-end 2024 and 2023, respectively, and is reflected as a discrete line item in the consolidated balance sheet.

During 2024, there were proceeds of $ 1.7 million in connection with these policies.

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

In 2022, proceeds of $ 1.5 million 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 $ 30.9 million in 2024, earnings of $ 32.2 million in 2023 and a loss of $ 36.0 million in 2022.

The net expense for retirement benefits for the qualified and nonqualified plans, including Company-matching contributions for full-time employees, totaled $ 8.6 million in 2024, $ 10.9 million in 2023 and $ 9.4 million in 2022, and is included in total SG&A expenses in the consolidated statements of earnings.

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

International Defined Benefit Plans

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

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 were included as held for sale (see Acquisitions and Dispositions footnote).

Total pension expense for these plans was $ 0.2 million in 2023 and $ 0.4 million in 2022.

These plans are no longer effective in 2024.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 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.

Total pension expense for these plans was $ 0.2 million in 2023, $ 0.4 million in 2022 and $ 0.5 million in 2021.

Pension contributions and the amount of accumulated other comprehensive income expected to be recognized in 2024 are not significant.

Stockholders’ Equity

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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.

In November 2024, the Company's board of directors authorized a $ 50.0 million Class A share repurchase program that expires on December 2, 2026.

During December 2024, the Company repurchased 742,163 Class A shares for $ 10.0 million at an average price of $ 13.49 per share.

A total of $ 40.0 million remains available under the share repurchase program as of year-end 2024.

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.

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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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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accumulated Other Comprehensive Income (Loss)

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(1) Amount was recorded in the loss on currency translation from liquidation of subsidiary in the consolidated statements of earnings.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(2) Of the amount included in this line item $ 1.9 million in 2022 was recorded in the other income (expense), net line item in the consolidated statements of earnings related to the investment in PersolKelly Pte.

Ltd., (see Investment in PersolKelly Pte.

(see Investment in PersolKelly Pte.

footnote for more details).

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Earnings (Loss) Per Share

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Diluted earnings (loss) per share $ ( 0.02 ) $ 0.98 $ ( 1.64 )

Due to our net loss in 2024, potentially dilutive shares outstanding, primarily related to deferred common stock associated with the non-employee directors deferred compensation plan and performance shares, of 0.4 million shares in 2024, had an anti-dilutive effect on diluted earnings per share and were excluded from the computation.

Potentially dilutive shares outstanding for 2023 are primarily related to deferred common stock 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.

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

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Each class has participated equally in all dividends declared since 1987.

In addition, Class B shares are convertible, at the option of the holder, into Class A shares on a one-for-one basis.

As a result, Class B shares can participate equally in any dividends declared on the Class A shares by exercising their conversion rights.

Dividends paid per share for Class A and Class B common stock were $ 0.30 for 2023, $ 0.275 for 2022 and $ 0.10 for 2021.

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In addition, Class B shares are convertible, at the option of the holder, into Class A shares on a one-for-one basis.

As a result, Class B shares can participate equally in any dividends declared on the Class A shares by exercising their conversion rights.

Dividends paid per share for Class A and Class B common stock were $ 0.30 for 2024, $ 0.30 for 2023 and $ 0.275 for 2022.

Stock-Based Compensation

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Performance Shares

During 2023, 2022 and 2021, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers.

The payment of performance awards, which will be satisfied with the issuance of shares out of treasury stock, is contingent upon the achievement of specific performance goals unique to each grant ("financial measure performance awards") over a stated period of time.

Additionally, the Company also granted single financial measure performance shares to certain senior officers, which will be satisfied with the issuance of shares out of treasury stock, and is contingent upon the achievement of one performance measure with a one-year performance period.

These single financial measure performance shares vest over four years and earn dividends, which are not paid until the awards vest.

On May 18, 2021, the Compensation Committee approved a modification to the performance goals of our 2021 and 2020 financial measure performance awards to increase the goals to reflect the results of the acquisition of Softworld.

We accounted for this change as a Type I modification under ASC 718 as the expectation of the achievement of certain performance conditions related to these awards 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.

All service-based vesting conditions were unaffected by the modification.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The annual 2023 performance share grant ("2023 grant") consisted of 246,000 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:

2023, 2024 and 2025, 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 2026 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 2023 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 2023 grant.

Actual performance resulted in participants achieving 50 % of target.

All of the shares earned for the 2023 performance period will vest in 2026 after the approval of the Compensation Committee, if not forfeited by the recipient.

The 2023 financial measure performance awards have a weighted average grant date fair value of $ 15.18 , 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 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.

During 2024, 2023 and 2022, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers, which are contingent upon achievement of specific revenue growth and EBITDA margin performance goals over a stated period of time ("performance awards").

The maximum number of performance shares that may be earned is 200 % of the target shares originally granted.

These awards have three one-year performance periods:

2021, 2022 and 2023, 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.

For the 2021 and 2022 performance periods, half of the shares earned in each respective performance period will vest after achievement of the respective performance goals for the year and approval of the financial results by the Compensation Committee, in early 2022 and 2023, respectively, if not forfeited by the recipient.

The remaining half of the shares earned for the 2021 and 2022 performance periods will vest in early 2024, based on continuous employment.

For the 2023 performance period, any shares earned will vest after achievement of the 2023 performance goals for the year and approval of the financial results by the Compensation Committee in early 2024, if not forfeited by the recipient.

These awards have three one-year performance periods with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods.

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

No dividends are paid on these performance shares.

On February 11, 2025, the Compensation Committee approved the actual performance achievement of 76 % of target for the 2024 performance period of the annual 2024, 2023 and 2022 annual grants.

All of the shares earned for the 2024 performance period will cliff vest in February 2027, 2026 and 2025, respectively, if not forfeited by the recipient.

KELLY SERVICES, INC.

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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.

On February 13, 2024, the Compensation Committee approved the actual performance achievement for the 2023 performance period of the annual 2021 grant.

Actual performance resulted in participants achieving 50 % of target.

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.

The 2024, 2023 and 2022 performance awards have a weighted average grant date fair value of $ 19.96 , $ 16.87 and $ 19.07 , respectively, which was determined by the market price on the date of grant less the present value of the expected dividends not received during the vesting period.

The total nonvested shares related to 2024, 2023 and 2022 performance awards at year-end 2024 is 170,000 , 211,000 and 165,000 , respectively.

In December 2021, the Compensation Committee approved a retention-based grant of 308,000 performance awards to certain senior officers which 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.

Each goal can be earned independent of the other two goals.

A goal is considered earned once it is achieved and maintained for two consecutive quarters at any point during the performance period.

Any goal not achieved within one year of projected achievement date, will result in that portion of the award being forfeited.

Any shares earned during the performance period will cliff-vest three years after achievement of the respective performance goals and approval of the financial results by the Compensation Committee.

These awards earn dividends once the goal is achieved, but are not paid until the awards vest.

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 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 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.

The 2021 financial measure performance awards have a weighted average grant date fair value of $ 17.66 , 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 2021 financial measure performance awards at year-end 2023 is 224,000 .

The 2020 performance share grant ("2020 grant") consisted of 115,000 single financial measure performance shares, which have a one-year performance period based on a specific operating earnings performance goal.

The 2020 single financial measure performance awards have a weighted average grant date fair value of $ 22.59 per share, which was determined by the market price on the date of grant.

On February 15, 2022, the Compensation Committee approved the actual performance achievement of the 2020 single financial measure performance award.

These awards will vest over the next four years , if not forfeited by the recipient.

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).

Financial Measure

On May 7, 2024, the Compensation Committee confirmed the actual performance achievement for the final financial goal related to the 2021 retention-based grant, which was not achieved before the end of the performance period and resulted in no payout.

In December 2020, the Company granted 115,000 performance shares to certain senior officers, which were contingent upon the achievement of a specific operating earnings performance goal with a one-year performance period.

These performance shares vest over four years and earn dividends, which are not paid until the awards vest, if not forfeited by the recipient.

The 2020 performance awards had a weighted average grant date fair value of $ 22.59 per share, which was determined by the market price on the date of grant.

On February 15, 2022, the Compensation Committee approved the actual performance achievement of these performance awards.

The total nonvested shares related to 2020 performance awards at year-end 2024 is 22,000 .

A summary of the status of nonvested performance shares at target as of year-end 2024 and changes during this period is presented as follows below (in thousands of shares except per share data).

The vesting adjustment in the table below represents 2021 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.

Performance Shares

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Forfeited ( 33 ) 17.99

Vesting Adjustment ( 107 ) 16.52

Nonvested at year-end 2024 568 $ 18.66

As of year-end 2023, unrecognized compensation cost related to all unvested financial measure performance shares totaled $ 3.7 million.

The weighted average period over which the costs are expected to be recognized is approximately 1.4 years for financial measure performance shares.

The total fair value of financial measure performance shares, which vested during 2023, 2022 and 2021, was $ 3.4 million, $ 0.9 million and $ 0.3 million, respectively.

As of year-end 2024, unrecognized compensation cost related to all unvested performance shares totaled $ 3.4 million.

The weighted average period over which the costs are expected to be recognized is approximately 1.3 years for performance shares.

The total fair value of performance shares, which vested during 2024, 2023 and 2022, was $ 2.6 million, $ 3.4 million and $ 0.9 million, respectively.

Sale of Assets

On June 10, 2024, the Company sold Ayers Group, a division of our OCG segment, for a purchase price of $ 7.5 million, subject to final closing adjustments.

The Company received cash proceeds of $ 4.5 million in the second quarter of 2024 for assets sold with a net carrying value of $ 1.0 million.

In the third quarter of 2024, a post-close net working capital adjustment of $ 0.1 million was recorded in gain on sale of assets in the consolidated statements of earnings.

A gain of $ 5.4 million was recorded in gain on sale of assets for the year-ended 2024 in the consolidated statements of earnings.

The sale was a part of the Company's ongoing strategy to further optimize its operating model.

In October 2022, Kelly Properties, LLC, a wholly owned subsidiary of the Company, sold real property located in Troy, Michigan for a purchase price of $ 6.0 million, subject to final closing adjustments.

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 was recorded in gain on sale of assets in the consolidated statements of earnings.

As of the date of the sale, the property

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Interest expense ( 10.9 ) ( 3.2 ) ( 2.1 )

Dividend income — — 2.7

Foreign exchange gains (losses) 0.5 ( 1.5 ) 4.8

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Other income (expense), net $ ( 6.8 ) $ 0.6 $ 1.6

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.

Included in foreign exchange gains (losses) for 2022 is a $ 5.5 million foreign exchange gain on a U.S.

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 Disposition footnote).

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):

Included in interest income is interest from the Company's money market investments of $ 3.0 million in 2024 and 2023.

The increase in interest expense for 2024 reflects the increase in the Company's long-term debt (see Debt footnote).

Included in foreign exchange gains (losses) for 2022 was a $ 5.5 million foreign exchange gain on a U.S.

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

Included in Other for 2024 is $ 8.6 million of transaction costs primarily related to the acquisition of MRP and net of the $ 3.4 million MRP earnout liability write-off, partially offset by a $ 3.8 million gain on equity securities, and a $ 0.7 million reduction in the Brazil indemnification liability (see Fair Value Measurements footnote).

Included in Other for 2023 was a gain of $ 2.0 million for the receipt of final proceeds in connection with 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 and expense related to the remeasurement of the Brazil indemnification liability (see Fair Value Measurements footnote).

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Earnings (loss) before taxes and equity in net earnings of affiliate for the years 2024, 2023 and 2022 were taxed under the following jurisdictions (in millions of dollars):

2024 2023 2022

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Total provision $ ( 21.3 ) $ ( 11.5 ) $ ( 7.9 )

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.

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Operating lease liabilities 17.7 18.3

Loss carryforwards 36.7 33.4

Net operating loss carryforwards 10.9 36.7

Capital loss carryforward 19.6 —

Credit carryforwards 230.6 208.7

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Net deferred tax assets $ 330.1 $ 324.8

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.

As of year-end 2024, the net deferred tax asset balance totaled $ 330.1 million which is fully recorded in deferred taxes in the consolidated balance sheet.

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 Acquisitions and Dispositions footnote), and $ 0.4 million in other long-term liabilities in the consolidated balance sheet.

The Company has U.S.

general business credit carryforwards of $ 197.3 million which will expire from 2034 to 2044, foreign tax credit carryforwards of $ 33.2 million which will expire from 2026 to 2034 and minimal state and foreign credit carryforwards which are either indefinite or will expire from 2025 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 net tax effect of federal, state and foreign loss carryforwards at year-end 2024 totaled $ 30.5 million, comprised of $ 19.6 million of capital loss carryforwards that expire in

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2029, and $ 10.9 million of net operating loss carryforwards of which $ 9.1 million have no expiration and $ 1.8 million expire between 2025 and 2044.

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 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 decrease in valuation allowance during 2024 was primarily due to the Company’s sale of its EMEA staffing operations which included companies with $ 24.4 million of valuation allowances.

The outside basis difference included in the 2023 deferred balance was for held for sale assets at the end of 2023 which were sold during the first quarter of 2024 when the Company completed the sale of its EMEA staffing operations.

This transaction generated a capital loss, $ 19.6 million of which is carried forward.

A valuation allowance of $ 21.4 million was recorded against the outside basis difference at year-end 2023, and $ 19.2 million against the capital loss carryforward at year-end 2024.

The foreign tax credit valuation allowance is $ 15.0 million at year-end 2024 and $ 14.5 million at year-end 2023 and will continue to be monitored.

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 jurisdictions, uncertainty of the ability to create future capital gains, and its recent lack of adequate U.S.

The Company’s uncertainty in 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Foreign tax rate differential 0.9 4.6 1.6

General business credits ( 8.5 ) ( 10.7 ) ( 9.7 )

work opportunity credits ( 7.8 ) ( 8.5 ) ( 10.7 )

Life insurance cash surrender value ( 6.2 ) ( 6.5 ) 7.8

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Foreign business taxes — 1.1 1.8

Tax law change — — ( 5.2 )

Change in deferred tax realizability ( 0.4 ) 4.4 —

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

MRP earnout liability revaluation ( 0.7 ) — —

Non-deductible goodwill impairment — — 2.7

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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.

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

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

2024 benefited from

lower pretax earnings, which included an $ 18.5 million benefit from the impairment of tax-deductible goodwill and a $ 6.2 million benefit from tax-exempt life insurance cash surrender value gains.

2023 benefited from recording a $ 15.0 million federal and state benefit on the outside basis difference in held for sale assets, and a $ 6.5 million benefit from tax-exempt life insurance cash surrender value gains.

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.

2022 benefited from lower pretax earnings, which included 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.

These benefits were offset by a $ 7.8 million charge from tax exempt life insurance cash surrender value losses.

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.

General business credits primarily represent U.S.

work opportunity credits.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Foreign items include foreign tax credits, foreign non-deductible expenses and non-taxable income.

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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 $ 4.7 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

This did not have a material impact to the Company in 2024.

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

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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 Company recognized an insignificant benefit in 2024 and $ 0.1 million of expense in 2023, for interest and penalties.

The benefit recognized in 2022 was not significant.

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 2024 and $ 0.2 million at year-end 2023.

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The tax periods open to examination by the major taxing jurisdictions to which the Company is subject include the U.S.

for fiscal years 2020 forward, Canada for fiscal years 2016 forward, France for fiscal years 2014 forward, Netherlands for fiscal years 2017 forward, Portugal for fiscal years 2020 forward, Puerto Rico for fiscal years 2019 forward and Switzerland for fiscal years 2019 forward.

for fiscal years 2021 forward, Canada for fiscal years 2017 forward, Puerto Rico for fiscal years 2020 forward and Mexico for fiscal years 2019 forward.

The Company and its subsidiaries have various income tax returns in the process of examination.

The unrecognized tax benefit and related interest and penalty balances include approximately $ 0.3 million for 2023, related to tax positions which are reasonably possible to change within the next twelve months due to income tax audits, settlements and statute expirations.

The unrecognized tax benefit and related interest and penalty balances include an insignificant amount for 2024, related to tax positions which are reasonably possible to change within the next twelve months due to income tax audits, settlements and statute expirations.

Supplemental Cash Flow Information

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Total changes in operating assets and liabilities, net of acquisitions $ ( 77.2 ) $ ( 2.0 ) $ ( 141.0 )

The Company paid interest of $ 2.8 million in 2023, $ 1.3 million in 2022 and $ 1.7 million in 2021.

The Company paid income taxes of $ 8.9 million in 2023, $ 61.2 million in 2022 and $ 14.1 million in 2021.

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

KELLY SERVICES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 $ 61.2 million, of which $ 1.3 million is held for sale.

The Company paid interest of $ 10.0 million in 2024, $ 2.8 million in 2023 and $ 1.3 million in 2022.

The Company paid income taxes of $ 10.9 million in 2024, $ 8.9 million in 2023 and $ 61.2 million in 2022.

Non-cash capital accruals totaled $ 1.6 million, $ 0.4 million and $ 1.2 million at year-end 2024, 2023 and 2022, respectively.

In addition to lease agreements (see Leases footnote) and the indemnification agreements related to the sale of our EMEA staffing and Brazil operations (see Acquisitions and Dispositions footnote), the Company has entered into non-cancelable purchase obligations totaling $ 72.5 million.

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.

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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 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.

At year-end 2024 and 2023, the gross accrual for litigation costs amounted to $ 1.5 million and $ 6.4 million, of which $ 1.5 million was held for sale (see Acquisitions and Dispositions footnote), 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 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.

At year-end 2024, there were no related insurance receivables.

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

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is $ 0.1 million to $ 1.2 million.

This range includes matters where a liability has been accrued but it is reasonably possible that the ultimate loss may exceed the amount accrued and for matters where a loss is believed to be reasonably possible, but a liability has not been accrued.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Segment Disclosures

The Company’s operating segments, which also represent its reporting segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker ("CODM", the Company’s CEO) to determine resource allocation and assess performance.

The Company’s five reportable segments, (1) Professional & Industrial, (2) Science, Engineering & Technology, (3) Education, (4) Outsourcing & Consulting, and (5) International, reflect the specialty services the Company provides to customers and represent how the business is organized internally.

The Company’s operating segments, which also represent its reportable segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker ("CODM", the Company’s CEO) to determine resource allocation and assess performance.

The Company’s four reportable segments in 2024, (1) Professional & Industrial (P&I), (2) Science, Engineering & Technology (SET), (3) Education (EDU), and (4) Outsourcing & Consulting (OCG), reflect the specialty services the Company provides to customers and represent how the business is organized internally.

Prior to 2024, the Company also had an International operating segment.

Beginning in the first quarter of 2024, the Company's organizational structure no longer includes the International segment following the sale of the EMEA staffing operations in January 2024.

Our Mexico operations, which were previously in our International segment, are now included in the Professional & Industrial segment.

Professional & Industrial segment information for the prior years has been recast to conform to the new structure.

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 providing administrative, accounting and finance, light industrial and contact center staffing and other workforce solutions in the U.S.

P&I 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 provides highly specialized skills to a variety of industries through staffing, outcome-based and permanent placement services.

SET provides highly specialized skills to a variety of industries through staffing, outcome-based, talent solutions, 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 Canada and includes MRP, Softworld, NextGen and Global Technology Associates ("GTA") brands.

EDU 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

OCG 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.

The Company utilizes a shared services approach for certain enterprise functions including IT, human resources, legal and finance support in the US and Canada.

Expenses incurred to directly support the operating units have been allocated to 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.

Certain expenses related to incentive compensation, law and risk management, certain finance and accounting functions, executive management and corporate campus facilities do not directly benefit a specific operating segment and are not included in the segment results.

These costs, as well as costs related to acquisition integration and transformation activities and disposition transition expenses, are included in Corporate expenses in the following tables.

In addition to the change in our segment structure in the first quarter of 2024, we reassessed the allocation of corporate expenses to the operating segments and allocated additional costs which are attributable to the business from corporate.

In the first quarter of 2024, the Company changed the segment profitability measure from earnings from operations to a business unit profit measure that excludes depreciation and amortization.

This change provides management with greater visibility into the financial performance of the segments and how they contribute to the Company's overall performance.

The CODM leverages the business unit profit measure during the annual budgeting and forecasting processes, as well as to assess segment profitability, guide resource allocation, and evaluate the alignment of compensation plans with strategic goals.

The following tables present information about the reported revenue from services of the Company by reportable segment, along with a reconciliation to earnings (loss) before taxes and equity in net earnings of affiliate, for 2024, 2023 and 2022.

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.

Prior periods have been recast to reflect the current period allocation method and new segment profitability measurement.

The update had no impact on the consolidated financial information.

KELLY SERVICES, INC.

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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.

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 of affiliate, for 2023, 2022 and 2021.

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.

2023 2022 2021

(In millions of dollars)

Fiscal Year Ended December 29, 2024

(In millions of dollars) P&I SET EDU OCG Inter-Segment Consolidated

Revenue from services $ 1,470.7 $ 1,422.8 $ 972.3 $ 468.3 $ ( 2.3 ) $ 4,331.8

Professional & Industrial $ 1,483.1 $ 1,666.2 $ 1,837.4

Science, Engineering & Technology 1,190.8 1,265.4 1,156.8

Education 841.9 636.2 416.5

Outsourcing & Consulting 454.7 468.0 432.1

International 884.8 932.2 1,067.8

Intersegment revenue ( 19.6 ) ( 2.6 ) ( 0.9 )

Consolidated Total $ 4,835.7 $ 4,965.4 $ 4,909.7

Cost of services (1)

1,209.4 1,087.2 832.5 322.4 ( 2.3 ) 3,449.2

Direct salaries (2)

141.2 170.5 60.5 104.3

Other segment expenses (3)

85.4 75.3 35.4 35.9

SG&A expenses 226.6 245.8 95.9 140.2 — 708.5

Goodwill impairment charge — 72.8 — — — 72.8

Business unit profit (loss) $ 34.7 $ 17.0 $ 43.9 $ 5.7 $ — $ 101.3

Corporate SG&A ( 58.4 )

Asset impairment charge ( 13.5 )

Gain on sale of assets 5.4

Gain on sale of EMEA staffing operations 1.6

Depreciation and amortization (4)

Consolidated earnings from operations ( 15.1 )

Other income (expense), net ( 6.8 )

Earnings before taxes $ ( 21.9 )

(1) Cost of services are those costs directly associated with the earning of revenue.

The primary examples of these types of costs are temporary employee wages, along with other employee related costs, including associated payroll taxes, temporary employee benefits, such as service bonus and holiday pay and health insurance, and workers’ compensation costs.

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

(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery.

These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees.

(3) For each reportable segment, the other segment expense category includes:

• P&I - Shared services costs for IT, human resources, legal and finance support, facilities and equipment-related costs, other professional services and overhead expenses, and operational software licenses.

• SET - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs, and operational software licenses.

• EDU - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs, and operational software licenses.

• OCG - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, operational software licenses, and facilities and equipment-related costs.

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

KELLY SERVICES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Year Ended December 31, 2023

(In millions of dollars) P&I SET EDU OCG International Inter-Segment Consolidated

Revenue from services $ 1,539.5 $ 1,190.8 $ 841.9 $ 454.7 $ 812.1 $ ( 3.3 ) $ 4,835.7

Cost of services (1)

1,262.4 918.8 713.2 291.2 692.0 ( 3.3 ) 3,874.3

(In millions of dollars)

Earnings from Operations:

Professional & Industrial gross profit $ 263.9 $ 302.5 $ 310.0

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

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 )

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 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 )

Direct salaries (2)

163.5 127.1 59.6 116.6 83.6

Other segment expenses (3)

97.3 69.8 32.8 42.7 38.4

SG&A expenses 260.8 196.9 92.4 159.3 122.0 — 831.4

Asset impairment charge 0.3 0.1 — 2.0 — — 2.4

Business unit profit (loss) $ 16.0 $ 75.0 $ 36.3 $ 2.2 $ ( 1.9 ) $ — $ 127.6

Corporate SG&A ( 63.2 )

Depreciation and amortization (4)

Consolidated earnings from operations 24.3

Other income (expense), net 0.6

Earnings before taxes $ 24.9

(1) Cost of services are those costs directly associated with the earning of revenue.

(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery.

These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees.

In the International segment, this includes costs related to IT, human resources, legal and finance costs incurred in the foreign subsidiaries.

(3) For each reportable segment, the other segment expense category includes:

• International - Facilities and equipment-related costs, other professional services and overhead expenses, shared services costs for IT, human resources, legal and finance support, and operational software licenses.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Year Ended January 1, 2023

(In millions of dollars) P&I SET EDU OCG International Inter-Segment Consolidated

Revenue from services $ 1,709.9 $ 1,265.4 $ 636.2 $ 468.0 $ 887.0 $ ( 1.1 ) $ 4,965.4

Cost of services (1)

1,396.8 968.4 535.9 298.4 755.2 ( 1.1 ) 3,953.6

Direct salaries (2)

185.1 141.7 50.8 114.8 85.1

Other segment expenses (3)

108.4 76.3 30.7 39.8 41.4

SG&A expenses 293.5 218.0 81.5 154.6 126.5 — 874.1

Goodwill impairment charge — — — 41.0 — — 41.0

Outsourcing & Consulting earnings (loss) from operations 6.9 ( 21.2 ) 18.7

International gross profit 133.3 142.4 148.8

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

International earnings from operations 2.1 9.9 9.9

Corporate ( 121.9 ) ( 94.0 ) ( 88.1 )

Business unit profit (loss) $ 19.6 $ 79.0 $ 18.8 $ ( 26.0 ) $ 5.3 $ — $ 96.7

Corporate SG&A ( 32.3 )

Loss on disposal ( 18.7 )

Gain on sale of assets 6.2

Consolidated Total 24.3 14.8 48.6

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

Depreciation and amortization (4)

Consolidated earnings from operations 14.8

Loss on investment in Persol Holdings ( 67.2 )

Loss on currency translation from liquidation of subsidiary ( 20.4 )

Other income (expense), net 1.6

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:

Loss before taxes and equity in net earnings of affiliate $ ( 71.2 )

(1) Cost of services are those costs directly associated with the earning of revenue.

(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery.

These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees.

In the International segment, this includes costs related to IT, human resources, legal and finance costs incurred in the foreign subsidiaries.

(3) For each reportable segment, the other segment expense category includes:

• SET - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, and facilities and equipment-related costs.

• EDU - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, and facilities and equipment-related costs.

• OCG - Shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs, and operational software licenses.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Depreciation and amortization expense is included in SG&A expenses in our consolidated statements of earnings.

Depreciation and amortization expense amounts below include amortization of hosted software, which are excluded in the presentation of depreciation and amortization in our consolidated statements of cash flows.

The depreciation and amortization amounts by segment are as follows:

2024 2023 2022

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International — 2.4 2.7

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of revenue from services by geographic area for 2024, 2023 and 2022 follows:

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Total $ 72.9 $ 90.0

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

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

In 2023 the amount 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.

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Recently Adopted

In October 2021, the FASB issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805):

In November 2023, the FASB issued Accounting Standards Update ("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, 2023, including interim reporting periods within those annual periods, with early adoption permitted.

We adopted this guidance effective December 29, 2024.

See Segment Disclosures footnote for the updated segment disclosures in accordance with this standard, which did not have a material impact to our consolidated financial statements.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

2 unchanged sentences

We early adopted this standard in the first quarter of 2022 and the adoption did not have a material impact to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this update apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

ASU 2020-04 was effective for the Company in the first quarter of fiscal 2021.

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.

The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative.

The ASU was effective for annual reporting periods beginning after December 15, 2020, 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.

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

The guidance removes exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The ASU was effective for annual reporting periods beginning after December 15, 2020, 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.

In November 2024, the FASB issued ASU 2024-03, Comprehensive income (Topic 220):

Disaggregation of Income Statement Expenses.

This ASU requires additional information about certain expense categories in the notes to financial statements.

The new guidance will be effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted.

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

3 unchanged sentences

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

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

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

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

4 unchanged sentences

There were no material transactions between the Company and Trust K or its trustees in 2024, 2023 or 2022.

See Investment in PersolKelly Pte.

footnote for a description of related party activity with PersolKelly Pte.

KELLY SERVICES, INC.

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

4 unchanged sentences

Deferred tax assets valuation allowance $ 60.5 0.6 ( 24.4 ) — ( 2.5 ) $ 34.2

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 -

5 unchanged sentences

REQUIRED BY ITEM 601

REGULATIONS S-K

REGULATION 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.

(Reference is made to Exhibit 2.1 to the Form 10-K filed with the Commission on February 20, 2024, which is incorporated herein by reference).

Amended and Restated Agreement and Plan of Merger by and among MRP Topco Inc., Kelly Services, Inc., MRP Merger Sub, Inc.

and Littlejohn Fund V, L.P., as the securityholders' representative dated as of May 30, 2024 (Reference is made to Exhibit 2.2 to the Form 10-Q filed with the Commission on August 8, 2024, which is incorporated herein by reference).

Amended and Restated Certificate of Incorporation, effective May 14, 2024 (Reference is made to Exhibit 3.1 to the Form 8-K filed with the Commission on May 14, 2024, which is incorporated herein by reference).

By-laws, effective November 6, 2018 (Reference is made to Exhibit 3.1 to the Form 8-K filed with the Commission on November 7, 2018, which is incorporated herein by reference).

By-laws, effective November 6, 2018 (Reference is made to Exhibit 3.1 to the Form 8-K/A filed with the Commission on April 17, 2019, which is incorporated herein by reference).

Description of Securities (Reference is made to Exhibit 4 to the Form 10-K filed with the Commission on February 13, 2020, which is incorporated herein by reference).

9 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).

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.

Third Amendment to Third Amended and Restated Credit Agreement, dated May 29, 2024 (Reference is made to Exhibit 10.6 to the Form 8-K filed with the Commission on June 3, 2024, 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-K filed with the Commission on February 20, 2024, which is incorporated herein by reference).

Termination Agreement dated as of September 18, 2024 between Kelly Services Outsourcing and Consulting Group Sàrl and Olivier Thirot (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on September 20, 2024, which is incorporated herein by reference).

INDEX TO EXHIBITS

2 unchanged sentences

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).

Termination Agreement dated as of January 2, 2024 between Kelly Services Outsourcing and Consulting Group Sàrl and Dinette Koolhaas (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on January 8, 2024, which is incorporated herein by reference.

Offer Letter between Kelly Services, Inc.

Anderson (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on September 12, 2024, 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).

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).

Amendment to Amended and Restated Pledge and Security Agreement, dated May 29, 2024 (Reference is made to Exhibit 10.14 to the Form 8-K filed with the Commission on June 3, 2024, which is incorporated herein by reference).

First Amended and Restated Receivables Purchase Agreement Amendment No.

2, dated December 30, 2021 (Reference is made to Exhibit 10.15 to the Form 8-K filed with the Commission on January 5, 2022, which is incorporated herein by reference).

4, dated May 29, 2024 (Reference is made to Exhibit 10.15 to the Form 8-K filed with the Commission on June 3, 2024, which is incorporated herein by reference).

First Amended and Restated Receivables Purchase Agreement Amendment No.

3, dated September 21, 2022 (Reference is made to Exhibit 10.16 to the Form 10-Q filed with the Commission on November 10, 2022, which is incorporated herein by reference).

Code of Business Conduct and Ethics, revised August 2023 (Reference is made to Exhibit 14 to the Form 10-Q filed with the commission on November 9, 2023, which is incorporated herein by reference).

Code of Business Conduct and Ethics, revised August 2024.

Kelly Services, Inc.

Insider Trading Compliance Policy & Section 16 Compliance Procedures.

Subsidiaries of Registrant.

7 unchanged sentences

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

INDEX TO EXHIBITS

REQUIRED BY ITEM 601

REGULATION S-K (continued)

Kelly Services, Inc.

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

Incentive Compensation Recovery ("Clawback") Policy as amended and restated effective as of October 2, 2023 (Reference is made to Exhibit 97 to the Form 10-K filed with the Commission on February 20, 2024, which is incorporated herein by reference).

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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February 13, 2025 KELLY SERVICES, INC.

By /s/ Olivier G.

By /s/ Troy R.

Executive Vice President and Chief Financial Officer

13 unchanged sentences

SIGNATURES (continued)

February 20, 2024 /s/ O.

February 13, 2025 /s/ T.

Executive Vice President and Chief Financial Officer

3 unchanged sentences

(Principal Accounting Officer)

February 20, 2024 *By /s/ O.G.

February 13, 2025 *By /s/ T.

Attorney-in-Fact

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