What changed in this filing

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Item 9A. Controls and Procedures

2026-02-12 compared with 2025-02-13 · 701 added, 902 removed, 939 unchanged (63% of the section changed)

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KELLY SERVICES, INC.

AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND

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Notes to Consolidated Financial Statements

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

Financial Statement Schedule - Schedule II - Valuation Reserves at December 28, 2025, December 29, 2024 and December 31, 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 28, 2025.

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

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").

and its subsidiaries (the "Company") as of December 28, 2025 and December 29, 2024, and the related consolidated statements of earnings, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 28, 2025, 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 28, 2025, 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 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.

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 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025 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 28, 2025, 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 company;

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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 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.

Interim Goodwill Impairment Assessments of the Motion Recruitment Partners and Softworld Reporting Units and the Annual Goodwill Impairment Assessment of the Science, Engineering and Technology Reporting Unit

As described in Notes 1 and 9 to the consolidated financial statements, as of December 28, 2025, the Company’s goodwill balance was $202.1 million, which included $137.1 million related to the Science, Engineering and Technology (SET) reporting unit.

Management performs the annual goodwill impairment testing in the fourth quarter each year and regularly assesses whenever events or circumstances make it more likely than not that an impairment may have occurred.

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.

During the third quarter of 2025, the Company combined the Motion Recruitment Partners (MRP) and Softworld reporting units with the other legacy SET operations into one SET reporting unit.

During the assessment, but before the combination, management concluded that there was a triggering event.

Therefore, it was necessary to perform step one quantitative tests utilizing the income approach for both the MRP and Softworld reporting units, resulting in management determining that both MRP and Softworld’s estimated fair value of the reporting units no longer exceeded carrying value.

Management recorded an impairment charge of $63.5 million and $38.5 million for MRP and Softworld, respectively.

Management completed the annual impairment test for all reporting units with goodwill in the fourth quarter of 2025 primarily using the income approach combined with a market approach.

As a result of the quantitative assessment, management determined that the estimated fair value of the SET reporting unit exceeded its carrying value;

therefore goodwill was not impaired.

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;

Estimated future cash flows for the reporting units used significant assumptions relating to expected future revenue growth rates, profit margins, and discount rates.

Under the market approach, the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of each reporting unit was used.

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

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

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

These procedures included testing the effectiveness of controls relating to management’s interim and annual goodwill impairment assessments, including controls over the valuation of the MRP, Softworld and SET reporting units.

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

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

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

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

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 and Motion Recruitment Partners reporting units;

(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 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.

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

Income Taxes - Valuation of Deferred Tax Assets Related to United States (U.S.) General Business Credit Carryforwards

As described in Notes 1 and 17 to the consolidated financial statements, as of December 28, 2025, the Company’s net deferred tax assets balance was $163.2 million, inclusive of a valuation allowance totaling $230.2 million.

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.

During 2025, management recorded a charge of $197.6 million to establish a valuation allowance for the Company’s U.S.

general business credit carryforwards and to increase the allowance for its foreign tax credit carryforwards, certain state loss carryforwards, and future deductible items.

The valuation allowance against the U.S.

general business credit carryforwards as of December 28, 2025 was $161.8 million after considering the future deductibility of the credits upon expiration.

The principal considerations for our determination that performing procedures relating to the valuation of deferred tax assets related to U.S.

general business credit carryforwards is a critical audit matter are (i) the significant judgment by management when determining whether the deferred tax assets related to U.S.

general business credit carryforwards are more likely than not to be realized in the future and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management's assessment of the realizability of deferred tax assets related to U.S.

general business credit carryforwards.

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 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;

These procedures included testing the effectiveness of controls relating to management’s assessment of the realizability of deferred tax assets related to U.S.

general business credit carryforwards.

These procedures also included, among others (i) evaluating the positive and negative evidence available to support management’s assessment of the realizability of deferred tax assets related to U.S.

general business credit carryforwards;

(ii) testing the completeness and accuracy of underlying data used in management’s assessment;

and (iii) evaluating the reasonableness of management’s projections of future profitability by year of the U.S.

Evaluating the reasonableness of management’s projections of future profitability by year of the U.S.

business involved considering (i) the current and past performance of the U.S.

(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.

(iii) whether tax planning strategies are prudent and feasible;

and (iv) the consistency with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

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CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share data)

2025 2024 2023

(In millions of dollars except per share items)

Revenue from services $ 4,250.9 $ 4,331.8 $ 4,835.7

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Selling, general and administrative expenses 825.9 818.4 934.7

Asset impairment charge 13.5 2.4 —

Goodwill impairment charge 102.0 72.8 —

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

Asset impairment charge — 13.5 2.4

Gain on sale of assets ( 1.0 ) ( 5.4 ) —

Loss on disposal — — 18.7

Gain on sale of EMEA staffing operations ( 4.1 ) ( 1.6 ) —

Earnings (loss) from operations ( 69.8 ) ( 15.1 ) 24.3

Loss on investment in Persol Holdings — — ( 67.2 )

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

Other income (expense), net ( 9.0 ) ( 6.8 ) 0.6

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

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 )

Equity in net earnings of affiliate — — 0.8

Earnings (loss) before taxes ( 78.8 ) ( 21.9 ) 24.9

Income tax expense (benefit) 175.3 ( 21.3 ) ( 11.5 )

Net earnings (loss) $ ( 254.1 ) $ ( 0.6 ) $ 36.4

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Diluted earnings (loss) per share $ ( 7.24 ) $ ( 0.02 ) $ 0.98

Average shares outstanding (millions):

Average shares outstanding:

Basic 35.1 35.5 35.9

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

2025 2024 2023

(In millions of dollars)

Net earnings (loss) $ ( 254.1 ) $ ( 0.6 ) $ 36.4

Other comprehensive income (loss), net of tax:

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

Foreign currency translation adjustments, net of tax expense of $ 0.5 , and net of tax benefits of $ 0.2 and $ 0.0 , respectively

7.2 ( 6.9 ) 8.0

Reclassification adjustments included in net earnings (loss) - equity method investment and other — ( 0.6 ) —

Foreign currency translation adjustments 7.2 ( 7.5 ) 8.0

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

Pension liability adjustments, net of tax benefit $ 0.4 and net of tax expense of $ 0.2 , respectively

Reclassification adjustments included in net earnings — 0.4 0.1

Pension liability adjustments — 0.4 0.7

Other comprehensive income (loss), net of tax ( 7.1 ) 8.7 19.2

Other comprehensive income (loss) 7.2 ( 7.1 ) 8.7

Comprehensive income (loss) $ ( 246.9 ) $ ( 7.7 ) $ 45.1

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CONSOLIDATED BALANCE SHEETS

(In millions of dollars)

(in millions)

Current Assets

Cash and equivalents $ 33.0 $ 39.0

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

Trade accounts receivable, less allowances of $ 10.0 and $ 8.4 , respectively

1,188.7 1,255.5

Prepaid expenses and other current assets 46.6 71.0

Assets held for sale — 291.3

Total current assets 1,268.3 1,365.5

Noncurrent Assets

Property and equipment:

Property and equipment 140.0 138.1

Accumulated depreciation ( 114.2 ) ( 113.5 )

Net property and equipment 25.8 24.6

Property and equipment, net 20.5 25.8

Operating lease right-of-use assets 42.9 47.0

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Total Assets $ 2,250.6 $ 2,632.3

See accompanying Notes to Consolidated Financial Statements.

KELLY SERVICES, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions of dollars)

Liabilities and Stockholders' Equity

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Income and other taxes 16.3 17.5

Liabilities held for sale — 169.9

Total current liabilities 821.8 826.5

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Total noncurrent liabilities 452.3 571.2

Commitments and contingencies (See Commitments and Contingencies footnotes)

Commitments and contingencies

Stockholders' Equity

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Class A common stock, 100.0 million shares authorized;

35.2 million shares issued at 2024 and 2023 35.2 35.2

35.2 million shares issued and outstanding at 2025 and 2024

Class B common stock, 10.0 million shares authorized;

3.3 million shares issued at 2024 and 2023 3.3 3.3

3.3 million shares issued and outstanding at 2025 and 2024

Treasury stock, at cost

Class A common stock, 4.3 million shares at 2025 and 3.6 million shares at 2024

( 63.1 ) ( 60.8 )

Class B common stock ( 0.6 ) ( 0.6 )

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

2024 2023 2022

(In millions of dollars)

Capital Stock

Class A common stock

Balance at beginning of year $ 35.2 $ 35.1 $ 36.7

Conversions from Class B — 0.1 —

Share retirement — — ( 1.6 )

Balance at end of year 35.2 35.2 35.1

Class B common stock

Balance at beginning of year 3.3 3.4 3.4

Conversions to Class A — ( 0.1 ) —

Balance at end of year 3.3 3.3 3.4

Treasury Stock

Class A common stock

Balance at beginning of year ( 56.7 ) ( 19.5 ) ( 14.5 )

Net issuance of stock awards and other 5.9 5.0 2.8

(in millions)

Earnings Invested in the Business Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Common Stock Treasury Stock Paid-in Capital

Class A Class B Class A Class B

Balance at January 1, 2023 $ 35.1 $ 3.4 $ ( 19.5 ) $ ( 0.6 ) $ 28.0 $ 1,216.3 $ ( 8.5 ) $ 1,254.2

Conversion of Class B stock into Class A stock 0.1 ( 0.1 ) — — — — — —

Net issuance of stock awards — — 5.0 — 2.6 — — 7.6

Purchase of treasury stock — — ( 42.2 ) — — — — ( 42.2 )

Balance at end of year ( 60.8 ) ( 56.7 ) ( 19.5 )

Class B common stock

Balance at beginning of year ( 0.6 ) ( 0.6 ) ( 0.6 )

Net income (loss) — — — — — 36.4 — 36.4

Dividends — — — — — ( 11.0 ) — ( 11.0 )

Other comprehensive income (loss), net of tax — — — — — — 8.7 8.7

Balance at December 31, 2023 35.2 3.3 ( 56.7 ) ( 0.6 ) 30.6 1,241.7 0.2 1,253.7

Net issuance of stock awards — — 5.9 — 3.6 — — 9.5

Balance at end of year ( 0.6 ) ( 0.6 ) ( 0.6 )

Paid-in Capital

Balance at beginning of year 30.6 28.0 23.9

Purchase of treasury stock — — ( 10.0 ) — — — — ( 10.0 )

Net income (loss) — — — — — ( 0.6 ) — ( 0.6 )

Dividends — — — — — ( 10.9 ) — ( 10.9 )

Other comprehensive income (loss), net of tax — — — — — — ( 7.1 ) ( 7.1 )

Balance at December 29, 2024 35.2 3.3 ( 60.8 ) ( 0.6 ) 34.2 1,230.2 ( 6.9 ) 1,234.6

Net issuance of stock awards — — 7.7 — 2.1 — — 9.8

Balance at end of year 34.2 30.6 28.0

Earnings Invested in the Business

Balance at beginning of year 1,241.7 1,216.3 1,315.0

Net earnings (loss) ( 0.6 ) 36.4 ( 62.5 )

Purchase of treasury stock — — ( 10.0 ) — — — — ( 10.0 )

Net income (loss) — — — — — ( 254.1 ) — ( 254.1 )

Dividends — — — — — ( 11.0 ) — ( 11.0 )

Share retirement — — ( 25.6 )

Balance at end of year 1,230.2 1,241.7 1,216.3

Accumulated Other Comprehensive Income (Loss)

Balance at beginning of year 0.2 ( 8.5 ) ( 27.7 )

Other comprehensive income (loss), net of tax — — — — — — 7.2 7.2

Balance at end of year ( 6.9 ) 0.2 ( 8.5 )

Stockholders’ Equity at end of year $ 1,234.6 $ 1,253.7 $ 1,254.2

Balance at December 28, 2025 $ 35.2 $ 3.3 $ ( 63.1 ) $ ( 0.6 ) $ 36.3 $ 965.1 $ 0.3 $ 976.5

See accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

2025 2024 2023

(In millions of dollars)

Cash flows from operating activities:

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

Asset impairment charge 13.5 2.4 —

Goodwill impairment charge 102.0 72.8 —

Asset impairment charge — 13.5 2.4

Deferred income taxes 168.5 ( 27.8 ) ( 24.9 )

Loss on disposal — — 18.7

Depreciation and amortization 42.4 40.2 33.9

Operating lease asset amortization 10.9 10.7 16.2

Provision for credit losses and sales allowances ( 0.1 ) 1.6 1.5

Stock-based compensation 12.3 11.8 9.7

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

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

Provision for credit losses and sales allowances 3.3 ( 0.1 ) 1.6

Gain on sale of EMEA staffing operations ( 4.1 ) ( 1.6 ) —

Gain on sale of assets ( 1.0 ) ( 5.4 ) —

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 )

Equity in net earnings of PersolKelly Pte.

Other, net 0.3 ( 9.4 ) 3.4

Changes in operating assets and liabilities, net of acquisitions

Accounts receivable 94.6 ( 20.9 ) 147.2

Other assets 4.9 3.0 ( 12.9 )

Accounts payable ( 10.5 ) ( 31.1 ) ( 62.5 )

Other liabilities ( 46.9 ) ( 28.2 ) ( 73.8 )

Net cash from (used in) operating activities 122.6 26.9 76.7

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Proceeds from sale of EMEA staffing operations, net of cash disposed 21.8 77.1 —

Proceeds from sale of PersolKelly investment 6.4 — —

Proceeds from sale of assets 1.0 4.3 —

Acquisition of companies, net of cash received — ( 431.9 ) —

Cash disposed from sale of Russia, net of proceeds — — ( 6.0 )

Proceeds from sale of Persol Holdings investment — — 196.9

Proceeds from sale of equity method investment — — 119.5

Other investing activities 1.6 — 1.2

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Payments of tax withholding for stock awards ( 2.3 ) ( 2.5 ) ( 1.8 )

Buyback of common shares — — ( 27.2 )

Purchase of treasury stock ( 10.0 ) ( 10.0 ) ( 42.2 )

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2025 2024 2023

(In millions of dollars)

Reconciliation of cash, cash equivalents and restricted cash:

Current assets:

Cash and equivalents $ 39.0 $ 125.8 $ 153.7

Cash and cash equivalents $ 33.0 $ 39.0 $ 125.8

Cash included in assets held for sale — — 33.5

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Restricted cash included in other assets 4.7 6.4 8.0

Cash, cash equivalents and restricted cash at end of year $ 45.6 $ 167.6 $ 162.4

Cash, cash equivalents and restricted cash at end of period $ 37.7 $ 45.6 $ 167.6

Supplemental cash flow information 2025 2024 2023

Cash paid during the period for:

Interest $ 12.2 $ 10.0 $ 2.8

Income taxes, net 4.5 10.9 8.9

Non-cash capital accrual 0.3 1.6 0.4

See accompanying Notes to Consolidated Financial Statements.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data)

Summary of Significant Accounting Policies

Nature of Operations Kelly Services, Inc.

is a specialty talent and workforce solutions provider operating throughout the world.

(the “Company”) is a specialty talent and workforce solutions provider operating throughout the world.

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

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

The three most recent years ended on December 28, 2025 (2025), December 29, 2024 (2024) and December 31, 2023 (2023), all of which contained 52 weeks.

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

The Company’s equity method investment in PersolKelly Pte.

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

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

Principles of Consolidation The consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries.

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Specifically, as discussed in the Segment Disclosures footnote, the Company has made a change to its reportable segments during the first quarter of 2025.

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.

The fair value of the investment was based on the quoted market price until the sale of the investment in the first quarter of 2022.

Investment in PersolKelly Pte.

The Company had a 49 % ownership interest in its equity affiliate, PersolKelly Pte.

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

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

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

Foreign Currency Translation All of the Company’s international subsidiaries use their local currency as their functional currency, which is the currency in which they transact the majority of their activities.

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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 is permitted to net the fair values of derivative assets and liabilities for financial reporting purposes, if such assets and liabilities are with the same counterparty and subject to a master netting arrangement.

Since these conditions have been met, the Company elected to employ net presentation of derivative assets and liabilities.

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

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

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.

Our revenues are recorded net of any sales, value added, or similar taxes collected from our customers.

We generate revenue from:

the hourly sales of

Since these conditions have been met, the Company elected to employ net presentation of derivative assets and liabilities.

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

The Company's revenues are recorded net of any sales, value added, or similar taxes collected from the Company's customers.

The Company generates revenue from:

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

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

When Kelly is the principal, the Company demonstrates control over the service by being primarily responsible to the Company's customers for fulfilling the contractual promise to provide the service.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

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.

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.

Staffing Services Revenue

Staffing services contracts are generally negotiated and invoiced on a per-hour or per-unit basis as the temporary staffing services are transferred to the customer.

Revenue from the majority of our staffing services continues to be recognized over time as the customer simultaneously receives and consumes the services we provide.

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

Revenue from the majority of the Company's staffing services continues to be recognized over time as the customer simultaneously receives and consumes the services the Company provides.

The Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Permanent Placement Revenue

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On the candidate start date, the customer accepts the candidate and can direct the use of the candidate as well as obtains the significant risk and rewards of the candidate.

We consider this the point the control transfers to the customer.

The Company considers this the point the control transfers to the customer.

Outcome-Based Services Revenue

Billings are generally negotiated and invoiced on a measure of time (hours, weeks, months) or per-unit basis for our services performed.

We continue to recognize revenue from the majority of our outcome-based services over time as the customer simultaneously receives and consumes the services we provide.

For the majority of our outcome-based services, we have applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount we have the right to invoice the customer.

Billings are generally negotiated and invoiced on a measure of time (hours, weeks, months) or per-unit basis for the Company's services performed.

The Company recognizes revenue from the majority of the Company's outcome-based services over time as the customer simultaneously receives and consumes the services the Company provides.

For the majority of the Company's outcome-based services, the Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Talent Solutions Revenue

Talent Solutions services include:

overall program management of our client’s contingent workforce, external vendors and/or independent contractors, end-to-end talent acquisition, and payroll outsourcing.

Billings are generally negotiated and invoiced as a fee-based commission contingent on the amount of services managed through the program, a monthly management fee, measure of time (hours), or a per-unit basis for our services performed.

We continue to recognize revenue for talent solution services over time as the customer simultaneously receives and consumes the services we provide.

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

overall program management of the Company's customer’s contingent workforce, external vendors and/or independent contractors, end-to-end talent acquisition and payroll outsourcing.

The Company continues to recognize revenue for talent solution services over time as the customer simultaneously receives and consumes the services the Company provides.

The Company has applied the practical expedient to recognize revenue for these services over the term of the agreement in proportion to the amount the Company has the right to invoice the customer.

Variable Consideration

Certain customers may receive cash-based incentives or credits, which are accounted for as a form of variable consideration.

We estimate these amounts based on the expected or likely amount to be provided to customers and reduce revenues recognized to the extent that it is probable that a significant reversal of such adjustment will not occur.

The Company estimates these amounts based on the expected or likely amount to be provided to customers and reduce revenues recognized to the extent that it is probable that a significant reversal of such adjustment will not occur.

Provisions for sales allowances (billing adjustments related to errors, service issues and compromises on billing disputes), based on historical experience, are recognized at the time the related sale is recognized as a reduction in revenue from services.

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Management does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the services to the customer will be less than one year.

We do not have any significant financing components or extended payment terms.

The Company does not have any significant financing components or extended payment terms.

Deferred 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

Occasionally, fulfillment costs are incurred after obtaining a contract in order to generate a resource that will be used to provide our services.

These costs are considered incremental and recoverable costs to fulfill our contract with the customer.

These costs to fulfill a contract are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be the average length of assignment of the employees.

We determined the period of benefit by taking into consideration our customer contracts, attrition rates and other relevant factors.

Occasionally, fulfillment costs are incurred after obtaining a contract in order to generate a resource that will be used to provide the Company's services.

These costs are considered incremental and recoverable costs to fulfill the Company's contract with the customer.

These costs to fulfill a contract are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be the average length of assignment of the employees.

The Company determined the period of benefit by taking into consideration the Company's customer contracts, attrition rates and other relevant factors.

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

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Unsatisfied Performance Obligations

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

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

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The Company reviews the adequacy of the allowance for uncollectible accounts receivable on a quarterly basis and, if necessary, increases or decreases the balance by recording a charge or credit to SG&A expenses for the portion of the adjustment relating to uncollectible accounts receivable and a charge or credit to revenue from services for the portion of the adjustment relating to sales allowances.

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

We establish an allowance for estimated credit losses in the current period resulting from the failure of our customers to make required payments on their trade accounts receivable in future periods.

We pool such assets by geography and other similar risk characteristics, such as accounts in collection, and apply an aging method to estimate future credit losses utilizing inputs such as historical write-off experience, customer payment patterns, current collection data, and reasonable and supportable forecasts, as applicable.

The Company is exposed to credit losses primarily through the Company's sales of workforce solution services to customers.

The Company established an allowance for estimated credit losses in the current period resulting from the failure of the Company's customers to make required payments on their trade accounts receivable in future periods.

The Company pools such assets by geography and other similar risk characteristics, such as accounts in collection and apply an aging method to estimate future credit losses utilizing inputs such as historical write-off experience, customer payment patterns, current collection data and reasonable and supportable forecasts, as applicable.

Credit risk with respect to accounts receivable is limited due to short payment terms.

The Company also performs ongoing credit evaluations using applicable credit ratings of its customers to help analyze credit risk.

We monitor ongoing credit exposure thr ough frequent review of past due accounts (based on the payment terms of the contract) and follow-up with customers, as appropriate.

We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

The Company monitors ongoing credit exposure thr ough frequent review of past due accounts (based on the payment terms of the contract) and follow-up with customers, as appropriate.

T he Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

Allowance for Credit Losses - Other Financial Assets The Company measures expected credit losses on qualified financial assets that do not result from revenue transactions using a probability of default method by type of financing receivable.

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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.

Advertising Expenses Advertising expenses, which are expensed as incurred and are included in SG&A expenses, were $ 9.6 million in 2024, $ 7.8 million in 2023 and $ 6.4 million in 2022.

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

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

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes.

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

Property and Equipment Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives ranging from 5 to 30 years.

Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or their respective lease terms.

The Company capitalizes external costs and internal payroll costs directly incurred in the development of software for internal use and amortizes these costs on a straight-line basis over the software’s estimated useful life 3 to 12 years.

Upon sale or disposition of property and equipment, the difference between the unamortized cost and the proceeds is recorded as either a gain or a loss and is included in the Company's consolidated statements of earnings.

Long-lived assets are evaluated for impairment in accordance with the provisions of the accounting guidance on the impairment or disposal of long-lived assets (see the Property and Equipment footnote).

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

Category 2024 2023 Useful Life

Land $ — $ — —

Work in process 2.3 6.7 —

Buildings and improvements 0.4 0.4 30 years

Computer hardware and software 119.9 123.1 3 to 12 years

Equipment, furniture and fixtures 10.9 22.6 5 years

Leasehold improvements 6.5 13.1 HQ:

Lesser of the lease or 5 years

Total property and equipment $ 140.0 $ 165.9

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").

Work in process represents capitalized costs for internal-use software not yet in service.

Depreciation expense was $ 12.5 million for 2024, $ 12.4 million for 2023 and $ 13.6 million for 2022.

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

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Implementation costs associated with these cloud computing arrangements are capitalized when incurred during the application development phase.

Amortization is calculated on a straight-line basis and is a component of SG&A expenses in our consolidated statements of earnings.

Amortization is calculated on a straight-line basis over the life of the contract and is a component of SG&A expenses in the Company's consolidated statements of earnings.

Amortization expense was $ 9.1 million for 2025, $ 11.6 million for 2024 and $ 6.9 million for 2023.

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

The related accumulated amortization totaled $ 31.0 million in 2025 and $ 23.5 million in 2024.

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

The Company had $ 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.

The Company had $ 5.2 million as of year-end 2025 and $ 4.5 million as of year-end 2024 recorded in prepaid expenses and other current assets in the consolidated balance sheet.

The Company had $ 49.5 million as of year-end 2025 and $ 41.4 million as of year-end 2024 recorded in non-current other assets in the consolidated balance sheet related to capitalized cloud computing arrangements.

Leases Right-of-use (“ROU”) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Since most of the Company’s leases do not have an implicit borrowing rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Our leases may include options allowing us in our sole discretion to extend or terminate the lease, and when it is reasonably certain that we will exercise those options, we will include those periods in our lease term.

Variable costs, such as payments for insurance and tax payments, are expensed when the obligation for those payments is incurred.

Since most of the Company’s leases do not have an implicit borrowing rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The Company's leases may include options that allow, at the Company's sole discretion, for the lease to be extended or terminated, and when it is reasonably certain that the Company will exercise those options, the Company will include those periods in the lease term.

Variable costs, such as payments for insurance and tax payments, are expensed when the obligation for those payments is incurred (see the Leases footnote).

Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the acquisition date fair value of net assets acquired.

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KELLY SERVICES, INC.

AND SUBSIDIARIES

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.

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Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or estimated fair value less cost to sell.

We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.

The Company tests goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.

Generally accepted accounting principles require that goodwill be tested for impairment at a reporting unit level.

For segments with a goodwill balance, 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") 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.

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

The Company may first use a qualitative assessment (“step zero”) for the annual impairment test if the Company has determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value.

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

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

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

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

If 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.

If the Company elects to forgo the qualitative assessment for a reporting unit, goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value (“step one”).

If the estimated fair value of a reporting unit exceeds the carrying value of the net assets assigned to a reporting unit, goodwill is not considered impaired and no further

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

testing is required.

If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference.

For the step one quantitative test, we determine the fair value of our reporting units using the income approach.

For the step one quantitative test, the Company determines the fair value of the Company's reporting units primarily using the income approach combined with a market approach.

Under the income approach, estimated fair value is determined based on estimated future cash flows discounted by an estimated market participant weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit being measured.

Estimated future cash flows are based on our internal projection model and reflects management’s outlook for the reporting unit.

Assumptions and estimates about future cash flows and discount rates are complex and often subjective.

They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.

Our analysis used the following significant assumptions:

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.

If we had concluded that there was an other-than-temporary impairment of our equity method investment, we would have adjusted our carrying amount of our investment to the adjusted fair value.

We evaluate our equity securities measured under the measurement alternative for indicators of impairment on a quarterly basis and whenever observable price changes occur.

Estimated future cash flows are based on our internal projection model and reflects management’s outlook for the reporting units.

Our income approach analysis used significant assumptions by reporting unit, including, expected future revenue growth rates, profit margins and discount rates.

The assumptions under both the income approach and market approach can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in our business strategy and our internal forecasts.

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

If the Company had concluded that there was an other-than-temporary impairment of the Company's equity method investment, the Company would have adjusted the Company's carrying amount of the Company's investment to the adjusted fair value.

The Company evaluates equity securities measured under the measurement alternative for indicators of impairment on a quarterly basis and whenever observable price changes occur.

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

Quarterly, we also confirm the securities still qualify to be measured in accordance with the measurement alternative.

Quarterly, the Company also confirm the securities still qualify to be measured in accordance with the measurement alternative.

The value of the securities will be adjusted for any increases or decreases as a result of an observable price change.

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Such amounts totaled $ 0.6 million and $ 11.4 million at year-end 2025 and 2024, respectively.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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As these events often occur after the period the wages are earned, judgment is required in determining the amount of work opportunity credits accrued for in each period.

We evaluate the accrual regularly throughout the year and make adjustments as needed.

The Company evaluates the accrual regularly throughout the year and make adjustments as needed.

Uncertain tax positions that are taken or expected to be taken in a tax return are recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information.

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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.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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The calculation of diluted earnings per share includes the effect of potential common shares outstanding in the average weighted shares outstanding.

Workers’ Compensation In the U.S., the Company has a combination of insurance and self-insurance contracts under which we effectively bear the first $ 1.0 million of risk per single accident.

Workers’ Compensation In the U.S., the Company has a combination of insurance and self-insurance contracts under which the Company effectively bears the first $ 1.0 million of risk per single accident.

The Company establishes accruals for workers’ compensation claims utilizing actuarial methods to estimate the undiscounted future cash payments that will be made to satisfy the claims, including an allowance for incurred-but-not-reported claims.

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KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Disaggregated by Service Type

Kelly has four operating segments:

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

Kelly has three operating segments:

Enterprise Talent Management (“ETM”), Science, Engineering & Technology (“SET”) and Education.

The ETM segment combines two former reportable segments, Professional & Industrial (“P&I”) and Outsourcing & Consulting Group (“OCG”), along with the transfer of certain customers from the SET segment to better align delivery models and improve go-to-market strategies (see Segment Disclosures footnote).

In the first quarter of 2025, the Company also integrated the Sevenstep business—acquired as part of the Motion Recruitment Partners, LLC (“MRP”) acquisition and which had previously been included in the SET segment—into the ETM segment as part of the broader MRP integration strategy.

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

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.

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):

The Company's segments deliver talent through staffing services, permanent placement or outcome-based services.

The Company's ETM segment also delivers talent solutions including managed service provider (“MSP”), payroll process outsourcing (“PPO”) and recruitment process outsourcing (“RPO”).

The 2023 and 2024 ETM and SET segment information has been recast to conform to the new structure.

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

December Year-to-Date 2025

2024 2023 2022

Professional & Industrial

Staffing services $ 956.9 $ 1,014.2 $ 1,229.5

Permanent placement 9.7 14.0 30.3

Outcome-based services 504.1 511.3 450.1

Total Professional & Industrial 1,470.7 1,539.5 1,709.9

Staffing Services Outcome-

Services Talent

Solutions Permanent Placement Total

Enterprise Talent Management $ 1,038.1 $ 466.1 $ 492.4 $ 8.9 $ 2,005.5

Science, Engineering & Technology 778.7 427.1 — 34.6 1,240.4

Staffing services 945.3 792.7 869.0

Permanent placement 29.5 17.8 29.7

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

Staffing services 966.0 834.9 627.8

Permanent placement 6.3 7.0 8.4

Total Education 972.3 841.9 636.2

Outsourcing & Consulting

Talent solutions 468.3 454.7 468.0

Total Outsourcing & Consulting 468.3 454.7 468.0

Education 1,004.4 — — 6.3 1,010.7

Total Segment Revenue $ 2,821.2 $ 893.2 $ 492.4 $ 49.8 $ 4,256.6

Intersegment ( 5.7 )

Total Revenue from Services $ 4,250.9

December Year-to-Date 2024

Staffing Services Outcome-

Services Talent

Solutions Permanent Placement Total

Enterprise Talent Management $ 1,175.5 $ 530.0 $ 480.8 $ 9.8 $ 2,196.1

Science, Engineering & Technology 725.0 411.2 — 29.5 1,165.7

Education 966.0 — — 6.3 972.3

Total Segment Revenue $ 2,866.5 $ 941.2 $ 480.8 $ 45.6 $ 4,334.1

Intersegment ( 2.3 )

Total Revenue from Services $ 4,331.8

December Year-to-Date 2023

Staffing Services Outcome-

Services Talent

Solutions Permanent Placement Total

Enterprise Talent Management $ 1,223.2 $ 534.6 $ 442.2 $ 14.4 $ 2,214.4

Science, Engineering & Technology 580.2 372.6 — 17.8 970.6

Education 834.9 — — 7.0 841.9

International 790.0 — 1.4 20.7 812.1

Staffing services — 790.0 851.4

Permanent placement — 20.7 21.2

Talent solutions — 1.4 14.4

Total International — 812.1 887.0

Total Intersegment ( 2.3 ) ( 3.3 ) ( 1.1 )

Total Segment Revenue $ 3,428.3 $ 907.2 $ 443.6 $ 59.9 $ 4,839.0

Intersegment ( 3.3 )

Total Revenue from Services $ 4,835.7

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Disaggregated by Geography

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 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).

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

The Company's operations are subject to different economic and regulatory environments depending on geographic location.

The Company's Education segment operates in the Americas region, the SET segment operates in the Americas and Europe regions and the ETM segment operates in the Americas, Europe and Asia-Pacific regions.

In 2023, the Company's International segment included the Company's staffing operations in Europe as well as Mexico, which is included in the Americas region.

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

December Year-to-Date

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United States $ 3,807.9 $ 3,876.9 $ 3,555.8

Canada 188.6 189.8 168.2

Puerto Rico 108.0 107.0 112.4

Mexico 60.7 75.7 46.5

Total Americas Region 4,234.2 3,928.3 3,998.6

Switzerland 4.0 224.2 222.8

France 0.4 194.4 199.4

Portugal — 189.4 169.5

Italy — 63.9 69.3

Russia — — 63.4

Other 332.4 357.3 372.5

Total Americas Region 4,140.3 4,234.2 3,928.3

Total Europe Region 45.6 41.9 863.7

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$ 4,250.9 $ 4,331.8 $ 4,835.7

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2024 2023 2022

Science, Engineering & Technology

Americas $ 1,412.1 $ 1,175.2 $ 1,250.3

Europe 10.7 15.6 15.1

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

Outsourcing & Consulting

Americas $ 381.4 $ 375.0 $ 403.3

Europe 31.2 36.0 22.6

Asia-Pacific 55.7 43.7 42.1

Total Outsourcing & Consulting $ 468.3 $ 454.7 $ 468.0

International

Europe $ — $ 812.1 $ 887.0

Total International $ — $ 812.1 $ 887.0

Deferred Costs

Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were $ 1.8 million as of year-end 2024 and $ 3.4 million as of 2023.

Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were zero as of year-end 2025 and $ 1.8 million as of 2024.

Amortization expense for the deferred costs was $ 1.9 million for 2025, $ 6.7 million for 2024 and $ 7.7 million for 2023.

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Credit Losses

The rollforward of our allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheet, is as follows (in millions of dollars):

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

December Year-to-Date

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Write-offs are presented net of recoveries, which were not material, for December year-to-date 2025, 2024 and 2023.

As of year-end 2024, the Company 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.

As of year-end 2024, the Company had a receivable of $ 16.4 million related to the sale of the Company's EMEA staffing operations.

The receivable was settled in the second quarter of 2025 (see the Acquisitions and Dispositions footnote).

There were no long-term customer receivables in 2025, 2024 and 2023 .

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KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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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).

In the first quarter of 2025, the Company received a post-close net working capital adjustment of $ 0.1 million.

Goodwill generated from the acquisition of $ 2.9 million, net of the net working capital adjustment, was primarily attributable to expanding market potential and was assigned to the Education operating segment (see the Goodwill and Intangible Assets footnote).

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

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.

As of November 2025, the purchase price allocation for this acquisition is final.

Motion Recruitment Partners

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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).

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

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

The earnout 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).

The earnout period concluded in the first quarter of 2025 and no further liability was recognized.

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

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

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

The total consideration was as follows:

Cash consideration paid $ 425.0

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KELLY SERVICES, INC.

AND SUBSIDIARIES

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):

As of May 2025, the purchase price allocation for this acquisition is final.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition:

Cash and equivalents $ 12.6

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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.

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

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

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

MRP's results of operations are included in the ETM and SET segments, with MRP’s Sevenstep business included in ETM and the remaining operations in SET.

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

Pro Forma Information

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

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:

Pro forma revenues $ 4,552.2 $ 5,389.8

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KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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.

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.

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.

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

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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.

1 unchanged sentence

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.

In the second quarter of 2025, the Company received proceeds of $ 21.8 million in connection with this receivable.

The proceeds exceeded the amount previously recorded due to favorable resolution of certain reconciliations under the terms of the purchase agreement.

As a result, $ 4.8 million was recognized in the consolidated statements of earnings in the second quarter of 2025, with $ 4.0 million recorded in gain on sale of EMEA staffing operations and $ 0.8 million recorded in other income (expense), net reflecting foreign currency remeasurements up to the date of settlement.

The proceeds are included in investing activities in the consolidated statements of cash flows.

The receivable from Gi was fully settled and there was no remaining receivable as of the second quarter-end 2025.

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

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

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):

The Company's consolidated earnings from operations in 2023 included earnings of $ 4.3 million from the EMEA staffing operations.

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

Assets divested

17 unchanged sentences

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 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 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

Prior to February 2022, the Company had a yen-denominated investment through the Company's subsidiary, Kelly Services Japan, Inc., in the common stock of Persol Holdings Co., Ltd.

("Persol Holdings"), the 100 % owner of Persol Asia Pacific Pte.

Ltd., the Company’s joint venture partner in PersolKelly Pte.

In February 2022, the Company's board approved a series of transactions that ended the cross-shareholding agreement with Persol Holdings.

On February 14, 2022, the Company repurchased 1,576,169 Class A and 1,475 Class B common shares held by Persol Holdings for $ 27.2 million.

The purchase price was based on the average closing price of the last five business days prior to the transaction.

The shares were subsequently retired and returned to an authorized, unissued status.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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.

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

The dissolution of the Kelly Services Japan, Inc.

subsidiary was completed in the fourth quarter of 2022.

Investment in PersolKelly Pte.

Prior to February 2022, the Company had a 49 % ownership interest in the JV (see Investment in Persol Holdings footnote above), a staffing services business operating in ten geographies in the Asia-Pacific region.

On February 14, 2022, the Company entered into an agreement to sell 95 % of the Company's shares in the JV to Persol Asia Pacific Pte.

On March 1, 2022, the Company received cash proceeds of $ 119.5 million.

The carrying value of the shares sold was $ 117.6 million.

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

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

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

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

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

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

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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Description Total Level 1 Level 2 Level 3

(In millions of dollars)

Money market funds $ 4.7 $ 4.7 $ — $ —

Total assets at fair value $ 4.7 $ 4.7 $ — $ —

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

EMEA staffing indemnification $ ( 1.4 ) $ — $ — $ ( 1.4 )

3 unchanged sentences

Description Total Level 1 Level 2 Level 3

(In millions of dollars)

Money market funds $ 6.4 $ 6.4 $ — $ —

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 )

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 are included in cash and equivalents in the consolidated balance sheet.

Money market funds represent investments in money market funds that hold government securities, all of which are restricted as of year-end 2025 and year-end 2024 and are included in other assets in the consolidated balance sheet.

These restricted funds represent cash balances that are required to be maintained to fund disability claims in California.

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

Forward contracts

In fiscal 2024 and 2023, the Company entered into and settled a € 17.0 million and € 90.0 million, respectively, foreign currency forward contracts related to the sale of the Company’s EMEA staffing operations.

The settlements resulted in a net gain of $ 1.2 million and net loss of $ 3.6 million for 2024 and 2023, respectively.

There were no forward contracts outstanding as of fiscal year-end 2025.

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.

On July 17, 2024, the Company entered into a $ 50.0 million 12-month interest rate swap and a $ 50.0 million 18-month interest rate swap to manage interest risk exposure on the Company’s securitization facility.

The swaps were not designated as hedges and are marked to market through earnings.

The swaps are valued using observable market inputs and are classified as level 2 liabilities.

As of year-end 2024, the Company recorded a liability $ 0.4 million liability in accounts payable and accrued liabilities and recognized a net loss of $ 0.2 million in other income (expense), net in the consolidated statements of earnings during 2024.

The 12-month contract matured in the second quarter of 2025 and the results to the consolidated balance sheet and statements of earnings were not significant.

As of year-end 2025, the liability related to the 18-month interest rate swap was not significant.

Indemnification liabilities

As of year-end 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.

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

The 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 being measured on a recurring basis.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

As of year-end 2024, the indemnification liability totaled $ 2.0 million for the EMEA staffing operations and $ 1.7 million for the Brazil sale.

For the EMEA staffing sale, the Company agreed to indemnify the buyer for certain losses and costs for an indefinite term.

The maximum exposure is not estimable due to uncertainties in potential outcomes;

however, the Company believes the risk of exposure is remote.

During 2025, the Company made payments of $ 0.5 million and recorded a $ 0.1 million remeasurement adjustment to the liability in gain on sale of EMEA staffing operations in the consolidated statements of earnings.

Exchange rate impacts recorded in other income (expense), net in the consolidated statements of earnings were not significant.

For the Brazil sale, indemnification claims may be initiated within six years after closing, with aggregate losses capped at $ 8.8 million.

During 2025, the Company made a $ 0.9 million payment, with the remaining change in the liability primarily attributable to exchange rate fluctuations recorded in other income (expense), net in the consolidated statements of earnings.

The indemnification liabilities were initially measured at fair value using discounted probability-weighted cash flows and are classified as Level 3 liabilities, remeasured on a recurring basis.

Changes in fair value related to reassessments and foreign currency movements are recognized in earnings.

Earnout liabilities

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).

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

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

1 unchanged sentence

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.

The earnout period concluded in the first quarter of 2025 and no further liability will be recognized.

Equity Investments Without 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.

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.

The Company previously held a 49 % ownership interest in PersolKelly Pte.

Ltd., which was accounted for under the equity method until the Company sold a majority interest in the first quarter of 2022.

The remaining 2.5 % interest was subsequently accounted for as an equity investment without readily determinable fair value using the measurement alternative (cost, less impairment, plus or minus observable price changes) in other assets in the consolidated balance sheet.

In the first quarter of 2025, the Company sold its remaining interest in PersolKelly Pte.

for cash proceeds of $ 6.4 million.

The investment had a carrying value of $ 6.4 million as of year-end 2024 and at the time of the sale, and therefore no gain or loss was recognized.

In 2022, the Company invested in equity securities with an initial investment of $ 0.4 million, classified in other assets in the consolidated balance sheet and measured using the measurement alternative.

In fiscal year 2024, the Company sold a portion of this investment with a carrying value of $ 0.1 million and recognized a $ 0.6 million gain in other income (expense), net in the consolidated statements of earnings.

The investment was remeasured using the observable prices to $ 3.5 million, resulting in an unrealized gain of $ 3.2 million recorded in other income (expense), net in the consolidated statements of earnings.

As of year-end 2025, the carrying value of the investment was $ 3.5 million.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Assets Measured at Fair Value on a Nonrecurring Basis

In addition to assets that are recorded at fair value on a recurring basis, annual and interim impairment tests may subject 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.

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

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

During the third quarter of 2025, the Company concluded that there was a triggering event due to declines in the business performance related to the MRP and Softworld reporting units as a result of dynamic macroeconomic conditions and projected growth rates were revised accordingly.

As a result of the MRP and Softworld quantitative assessments, the Company determined that both MRP and Softworld’s estimated fair value of the reporting units no longer exceeded the carrying value.

The Company recorded goodwill impairment charges of $ 102.0 million.

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

The Company performed long-lived asset recoverability test for MRP and Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset groups and were recoverable.

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

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

The Company engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management.

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

Refer to the Goodwill and Intangible Assets footnote for additional details on impairment charges related to years-ended 2025 and 2024 as well as the valuation methodologies and inputs used to measure fair value.

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

Integration, Realignment and Restructuring

In the first quarter of 2025, the Company put in place various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments and further aligning processes and technology across the Company.

The costs incurred related to these integration and realignment initiatives totaled $ 28.7 million for the year-ended 2025.

The integration and realignment costs consisted of $ 10.1 million of severance, $ 11.5 million of IT-related charges and $ 7.1 million of fees and other costs to execute the initiatives.

The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits.

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

December Year-to-Date 2025

Severance IT-related Charges Fees and Other Total

Enterprise Talent Management $ 6.9 $ — $ 0.7 $ 7.6

Science, Engineering & Technology 2.0 0.9 0.2 3.1

Education 0.2 — 0.1 0.3

Corporate 1.0 10.6 6.1 17.7

Total $ 10.1 $ 11.5 $ 7.1 $ 28.7

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

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

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

Additionally, in 2024, the Company recognized an impairment charge of $ 13.5 million primarily for certain ROU assets related to the Company's leased headquarters facility reflecting adjustments as to how the Company is utilizing the building as a part of

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 Company's ongoing transformation efforts.

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

The 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

The 2024 table was restated to include integration and realignment costs incurred in 2024 of $ 10.0 million.

These costs are associated with various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments and further aligning processes and technology across the Company that were initiated in the fourth quarter of 2024.

December Year-to-Date 2024

Severance Transformation Costs Fees and Other Total

Enterprise Talent Management $ 0.7 $ — $ — $ 0.7

Science, Engineering & Technology 0.3 — 0.2 0.5

Outsourcing & Consulting 0.4 — 0.4

Corporate 2.0 3.1 9.8 14.9

Total $ 3.0 $ 3.1 $ 10.0 $ 16.1

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 2023, the Company undertook restructuring actions to further the Company's cost management efforts in response to the demand levels and to reflect a repositioning of the Company's ETM staffing business to better capitalize on opportunities in local markets.

Restructuring costs incurred in the first quarter of 2023 related to these efforts totaled $ 5.7 million, which included $ 4.6 million of severance and $ 1.1 million of lease termination and other expenses and were recorded in SG&A expenses in the consolidated statements of earnings.

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

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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):

Severance Costs Lease Termination Costs, Transformation and Other Total

Professional & Industrial $ 6.0 $ 0.7 $ 6.7

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

December Year-to-Date 2023

Severance Lease Termination Costs, Transformation and Other Total

Enterprise Talent Management $ 9.0 $ 0.7 $ 9.7

Science, Engineering & Technology 1.3 0.3 1.6

Education 1.0 — 1.0

Outsourcing & Consulting 3.0 — 3.0

International 3.3 — 3.3

2 unchanged sentences

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

Severance Costs Lease Termination Costs Total

Professional & Industrial $ 0.1 $ 0.2 $ 0.3

Education 0.4 — 0.4

Outsourcing & Consulting 0.2 — 0.2

Corporate 0.8 — 0.8

Total $ 1.5 $ 0.2 $ 1.7

Accrual Summary

A summary of our global restructuring balance sheet accrual, included in accrued payroll and related taxes and accounts payable and accrued liabilities in the consolidated balance sheet, is detailed below (in millions of dollars):

Balance as of year-end 2022 $ 0.3

Accruals 40.6

Reductions for cash payments ( 23.8 )

Accrual adjustments ( 2.0 )

A summary of the Company's global restructuring balance sheet accrual, included in accrued payroll and related taxes and accounts payable and accrued liabilities in the consolidated balance sheet, is detailed below:

Balance as of year-end 2023 $ 15.1

3 unchanged sentences

Balance as of year-end 2024 0.3

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 )

Reductions for cash payments ( 0.3 )

Balance as of year-end 2025 $ —

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

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.

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

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

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

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

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

Useful Lives Gross Carrying Amount Less:

Accumulated Amortization Net Gross Carrying Amount Less:

Accumulated Amortization Net

Customer relationships 10-15 years $ 229.2 $ 65.9 $ 163.3 $ 141.1 $ 47.7 $ 93.4

Trade names 10-15 years 108.1 20.4 87.7 51.6 12.8 38.8

Non-compete agreements 5 years 5.6 2.7 2.9 4.3 1.7 2.6

Trademarks 10 years 4.8 2.4 2.4 4.8 1.9 2.9

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

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):

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) 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).

(2) Workers’ compensation and other claims receivable represents receivables from the insurance company for U.S.

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

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

Ltd footnote).

(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).

There was no remaining liability for global restructuring and no material adjustments were recorded as of year-end 2025.

The balance of $ 0.3 million as of year-end 2024 primarily represented severance costs which were paid in the first quarter of 2025.

Property and Equipment

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

Category 2025 2024 Estimated Useful Life

Buildings and improvements $ — $ 0.4 30 years

Computer hardware and software 110.9 119.9 3 years to 12 years

Equipment, furniture and fixtures 6.5 10.9 5 years

Leasehold improvements (1)

6.8 6.5 15 years

Work in process (2)

Total property and equipment 125.1 140.0

Accumulated depreciation ( 104.6 ) ( 114.2 )

Net property and equipment $ 20.5 $ 25.8

(1) For leasehold improvements within the Company’s headquarters, the estimated useful life is 15 years.

The estimated useful life for branches is the lesser of the life of the lease or 5 years.

(2) Work in process represents capitalized costs for internal-use software not yet in service.

Depreciation expense was $ 11.9 million for 2025, $ 12.5 million for 2024 and $ 12.4 million for 2023.

KELLY SERVICES, INC.

AND SUBSIDIARIES

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.

We determine if an arrangement is a lease at inception.

The components of lease expense are as follows (in millions of dollars):

The Company's leases generally have remaining lease terms of one year to 10 years.

The Company determines if an arrangement is a lease at inception.

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

December Year-to-Date

Description Statements of Earnings Location 2024 2023 2022

Operating lease cost Selling, general and administrative expenses $ 14.6 $ 21.0 $ 22.8

Short-term lease cost Selling, general and administrative expenses 0.6 2.0 2.4

Variable lease cost Selling, general and administrative expenses 3.5 6.1 5.2

Amortization of ROU assets Selling, general and administrative expenses 0.3 0.6 0.6

Interest on lease liabilities Other income (expense), net — — 0.1

Description 2025 2024 2023

Operating lease cost $ 15.2 $ 14.6 $ 21.0

Short-term lease cost 0.5 0.6 2.0

Variable lease cost 3.5 3.5 6.1

Amortization of ROU assets — 0.3 0.6

Total lease cost $ 19.2 $ 19.0 $ 29.7

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

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

Description Balance Sheet Location As of Year-End 2025 As of Year-End 2024

Operating Operating lease right-of-use assets $ 42.9 $ 47.0 (1)

Financing Net property and equipment — 0.3

Total lease assets $ 42.9 $ 47.0

3 unchanged sentences

Total lease liabilities $ 57.2 $ 63.2

(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).

(1) 2024 ROU operating assets reflect an impairment charge of $ 12.1 million, related to the Company's leased headquarters facility reflecting adjustments as to how the Company is utilizing the building as a part of the Company's transformation efforts.

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

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

3 unchanged sentences

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Other information related to leases were as follows:

December Year-to-Date

5 unchanged sentences

Operating leases $ 6.6 $ 10.4 $ 12.6

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

Operating Leases

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

Thereafter 17.5

1 unchanged sentence

Imputed interest 10.5

Goodwill and Intangible Assets

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

Science, Engineering & Technology Education ETM Total

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 (1)

261.4 42.8 — 304.2

Adjustments — ( 0.1 ) — ( 0.1 )

Reallocation ( 22.3 ) — 22.3 —

Impairment adjustments ( 102.0 ) — — ( 102.0 )

Balance as of year-end 2025 (1)

$ 137.1 $ 42.7 $ 22.3 $ 202.1

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

Our SET reportable segment contains goodwill from the 2024 acquisition of MRP which has a remaining balance of $ 137.1 million as of the year ended 2025.

During the first quarter 2025 the company reallocated $ 22.3 million of goodwill related to the Sevenstep business from SET to the ETM reportable segment using a relative fair value approach.

The Education reportable segment is comprised of goodwill related to the 2020 acquisition of Greenwood/Asher & Associates, $ 3.5 million;

the 2022 acquisition of Pediatric Therapeutic Services (“PTS”), $ 36.3 million, and the 2024 acquisition of CTC of $ 3.0 million.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the third quarter of 2025, the Company assessed the ongoing integration of the MRP and Softworld reporting units, noting that the discrete financial data regularly reviewed by management had changed.

As such, the Company combined the MRP and Softworld reporting units with the other legacy SET operations into one SET reporting unit.

During the assessment, but before the combination, we concluded that there was a triggering event due to declines in the business performance and revised projected growth rates as a result of dynamic macroeconomic conditions.

Therefore, it was necessary to perform step one quantitative tests utilizing the income approach for both the MRP and Softworld reporting units that comprised the total goodwill balance in the SET reportable segment.

The Company recorded an impairment charge of $ 63.5 million and $ 38.5 million for MRP and Softworld, respectively, for a total goodwill impairment charge of $ 102.0 million, which was included in goodwill impairment charge in the consolidated statements of earnings at third quarter-end 2025.

Included in the impairment charges were $ 8.6 million and $ 9.8 million of tax benefits for MRP and Softworld, respectively, associated with the impairment.

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

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

The Company performed long-lived asset recoverability tests for MRP and Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset groups and were recoverable.

As of the third quarter 2025, following the interim triggering event and post-combination of MRP and Softworld reporting units with the legacy SET operations, the Company performed a step one quantitative test for the combined SET reporting unit and noted no goodwill adjustments were needed as the estimated fair value of the SET reporting unit exceeded the carrying value with a headroom greater than 10 %.

The Company also performs a qualitative review on a quarterly basis of the Company's long-lived assets, comprised of net property and equipment and definite-lived intangible assets, to determine whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

2025 Goodwill Impairment Assessment

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter of 2025.

Pursuant to the segment changes in first quarter of 2025 (see the Segment Disclosures footnote), the goodwill reporting units were reassessed.

As of year-end 2025, the Company determined that there are four reporting units for goodwill impairment testing purposes, three of which have associated goodwill.

Our annual goodwill impairment testing included a step one quantitative analysis for each reporting unit prepared by a third party valuation specialist.

As a result of the quantitative assessments, we determined that the estimated fair value of the each reporting unit exceeded its carrying value with headroom greater than 10 %;

therefore, goodwill was not impaired as of year-end 2025.

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

As a measure of sensitivity of the fair value for the three reporting units tested in 2025, while holding all other assumptions constant, an increase in the discount rate of 100 basis points or a decrease of 100 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.

2024 Goodwill Impairment Assessment

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

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

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

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

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

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

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

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

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

Softworld has definite-lived intangible assets, consisting

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

of trade names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives.

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

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

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

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

Intangible Assets

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

Useful Lives Gross Carrying Amount Less:

Accumulated Amortization Net Gross Carrying Amount Less:

Accumulated Amortization Net

Customer relationships 10 - 15 years

$ 221.7 $ 77.1 $ 144.6 $ 229.2 $ 65.9 $ 163.3

Trade names 10 - 15 years

108.1 30.2 77.9 108.1 20.4 87.7

Non-compete agreements 5 years 5.6 3.8 1.8 5.6 2.7 2.9

Trademarks 10 years 4.8 2.9 1.9 4.8 2.4 2.4

Total $ 340.2 $ 114.0 $ 226.2 $ 347.7 $ 91.4 $ 256.3

Intangible amortization expense, which is included in SG&A expenses in the consolidated statements of earnings, was $ 30.1 million, $ 27.3 million and $ 20.9 million in 2025, 2024 and 2023 , respectively.

The amortization expense is expected to be $ 29.4 million in 2026, $ 28.8 million in 2027, $ 27.4 million in 2028, $ 24.8 million in 2029, and $ 23.3 million in 2030.

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 Company has a $ 150.0 million, five-year revolving credit facility (the “Facility”), with a termination date of May 29, 2029.

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

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trade accounts receivable.

At year-end 2025, there were no long-term borrowings under the Facility and a remaining borrowing capacity of $ 150.0 million.

The rates for the Facility, which vary based on the Company's leverage ratio as defined in the agreement, include either (i) the Prime rate plus the applicable margin for the floating line or (ii) a term Secured Overnight Financing Rate (“SOFR”) for 1-, 3-, or 6-months dependent on the interest election plus a 0.10 % margin and the applicable margin for the term benchmark line.

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

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.

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

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

The Facility, which contains a cross-default clause that could result in termination if defaults occur under 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, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, had a facility fee of 15.0 basis points at year-end 2025 and 20.0 basis points at year-end 2024.

The Facility’s financial covenants and restrictions are described below, all of which were met at year-end 2025:

• 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.

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

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

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

• 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 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.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

The Receivables Purchase Agreement will terminate May 28, 2027, unless terminated earlier pursuant to its terms.

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

The Receivables Entity may from time to time sell an undivided variable percentage ownership interest in the Receivables.

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

The Securitization Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, also allows for the issuance of standby letters of credit (“SBLC”) and contains certain restrictions based on the performance of the Receivables.

At year-end 2025, the Securitization Facility had $ 101.9 million of long-term borrowings, SBLCs of $ 42.6 million related to workers’ compensation and a remaining capacity of $ 105.5 million.

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

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

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

In addition, 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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ 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).

In addition, the Company pays a commitment fee of 40.0 basis points on the unused capacity.

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

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

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The Company had total unsecured, uncommitted short-term local credit facilities of $ 3.2 million as of year-end 2025.

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

The Company had no borrowings under these lines at year-end 2025 and 2024.

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 $ 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.

The liability for the nonqualified plans was $ 289.3 million and $ 260.5 million as of year-end 2025 and 2024, respectively, and is included in current accrued payroll and related taxes and noncurrent accrued retirement benefits in the consolidated balance sheet.

The cost of participants’ earnings or loss on this liability, which were included in SG&A expenses in the consolidated statements of earnings, was earnings of $ 36.4 million, $ 29.8 million, and $ 32.9 million for fiscal year-end 2025, 2024 and 2023, respectively.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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During 2025, there were proceeds of $ 2.7 million in connection with these policies.

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

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

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.

Tax-free earnings or loss on these assets, which were included in SG&A expenses in the consolidated statements of earnings and which offset the related earnings or loss on the liability, were earnings of $ 35.7 million in 2025, earnings of $ 30.9 million in 2024 and earnings of $ 32.2 million in 2023.

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

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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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

These plans are no longer effective following the sale of our EMEA staffing operations in 2024.

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.

Share Repurchase Programs

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

During 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.

During 2025 and 2024, the Company repurchased 1,158,628 Class A shares for $ 10.0 million and 742,163 Class A shares for $ 10.0 million, respectively.

At year-end 2025, $ 30.0 million of share repurchases remained authorized under the program as compared to $ 40.0 million at year-end 2024.

A total of 1,900,791 shares have been repurchased under the share repurchase program at an average price of $ 10.54 per share.

In November 2022, the Company's board of directors authorized a $ 50.0 million Class A share repurchase program, which was completed in August 2023.

During 2023 and 2022, the Company repurchased 2,496,827 Class A shares for $ 42.2 million and 474,644 Class A shares for $ 7.8 million, respectively.

There were no remaining shares available under the share repurchase program as of year-end 2023 as compared to $ 42.2 million remaining shares available under the share repurchase program as of year-end 2022.

There were no authorized share repurchases remaining as of year-end 2023 as compared to $ 42.2 million of share repurchases that remained authorized under the program as of year-end 2022.

A total of 2,971,471 shares were repurchased under the share repurchase program at an average price of $ 16.83 per share.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component, net of tax, during 2024, 2023 and 2022 are included in the table below (in millions of dollars).

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

Amounts in parentheses indicate debits.

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Other comprehensive income (loss) before classifications 7.2 ( 6.9 ) 8.0

Amounts reclassified from accumulated other comprehensive income (loss) - liquidation of Japan subsidiary — — 20.4 (1)

Amounts reclassified from accumulated other comprehensive income (loss) - equity method investment and other (1)

8 unchanged sentences

Total accumulated other comprehensive income (loss) $ 0.3 $ ( 6.9 ) $ 0.2

(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.

(see Investment in PersolKelly Pte.

footnote for more details).

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

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

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

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

Earnings (Loss) Per Share

The reconciliation of basic earnings (loss) per share on common stock for 2024, 2023 and 2022 follows (in millions of dollars except per share data):

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

2025 2024 2023

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Diluted earnings (loss) per share $ ( 7.24 ) $ ( 0.02 ) $ 0.98

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.

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

This presentation is consistent with the earnings per share computations that result for each class of common stock utilizing the two-class method as described in ASC Topic 260, “Earnings Per Share.” The two-class method is an earnings allocation formula which determines earnings per share for each class of common stock according to the dividends declared (or accumulated) and participation rights in the undistributed earnings.

In applying the two-class method, we have determined that the undistributed earnings should be allocated to each class on a pro rata basis after consideration of all of the participation rights of the Class B shares (including voting and conversion rights) and our history of paying dividends equally to each class of common stock on a per share basis.

The Company’s certificate of incorporation allows the board of directors to declare a cash dividend to Class A shares without declaring equal dividends to the Class B shares.

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

The Class B shares are the only shares with voting rights.

The Class B shareholders are therefore able to exercise voting control with respect to all matters requiring stockholder approval, including the election of or removal of directors.

The board of directors has historically declared and the Company historically has paid equal per share dividends on both the Class A and Class B shares.

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

Due to the Company's net loss in 2025 and 2024, potentially dilutive shares outstanding, primarily related to deferred common stock associated with the non-employee directors deferred compensation plan and performance shares, of 0.5 million shares and 0.4 million shares in 2025 and 2024, respectively, had an anti-dilutive effect on diluted earnings per share and were excluded from the computation.

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

The Company presents earnings per share for the Company's two classes of common stock on a combined basis.

This presentation is consistent with the earnings per share computations that result for each class of common stock utilizing the two-

KELLY SERVICES, INC.

AND SUBSIDIARIES

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.

class method, which is an earnings allocation formula that determines earnings per share for each class of common stock according to the dividends declared (or accumulated) and participation rights in the undistributed earnings.

In applying the two-class method, the Company has determined that the undistributed earnings should be allocated to each class on a pro rata basis after consideration of all of the participation rights of the Class B shares (including voting and conversion rights) and the Company's history of paying dividends equally to each class of common stock on a per share basis.

The Company’s certificate of incorporation allows the board of directors to declare a cash dividend to Class A shares without declaring equal dividends to the Class B shares.

However, the board of directors has historically declared and the Company has historically paid equal per share dividends on both the Class A and Class B shares.

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

Class B shares are the only shares with voting rights and are convertible, at the option of the holder, into Class A shares on a one-for-one basis.

Class B shareholders are therefore able to exercise voting control with respect to all matters requiring stockholder approval, including the election of or removal of directors.

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

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

Stock-Based Compensation

Under the Equity Incentive Plan, amended and restated February 15, 2017 and approved by the stockholders of the Company on May 10, 2017 (the “EIP”), the Company may grant to key employees restricted stock and performance awards associated with the Company’s Class A stock.

The amended EIP provides that the maximum number of shares available for grants is 4.7 million.

On May 8, 2025 (the “Effective Date”), the Company’s stockholders approved the Kelly Services, Inc.

2025 Equity Incentive Plan (the “EIP”).

Upon approval of the EIP, the Company’s Equity Incentive Plan, as amended and restated February 15, 2017, (the “Prior Plan”) terminated in its entirety and no further awards may be granted under the Prior Plan.

All outstanding awards under the Prior Plan as of the Effective Date, shall remain outstanding and shall be administered and settled in accordance with their terms and the provisions of the Prior Plan.

Under the EIP, the Company may grant key employees restricted stock and performance awards associated with the Company’s Class A stock.

The EIP provides that the maximum number of shares available for grants is 4.0 million, plus 0.8 million shares that were available to be granted under the Prior Plan immediately prior to the Effective Date.

Shares available for future grants at year-end 2025 are 4.6 million.

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Restricted Stock

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

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

The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.

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

Restricted Stock

Shares Weighted

Nonvested at year-end 2024 1,061 $ 19.79

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The weighted average grant date fair value per share of restricted stock granted during 2025, 2024 and 2023 was $ 13.50 , $ 20.70 and $ 17.33 , respectively.

The total fair value of restricted stock, which vested during 2024, 2023 and 2022, was $ 6.5 million, $ 3.3 million and $ 2.3 million, respectively.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

total fair value of restricted stock, which vested during 2025, 2024 and 2023, was $ 6.4 million, $ 6.5 million and $ 3.3 million, respectively.

Performance Shares

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All of the shares earned for the 2025 performance period will cliff vest in February 2028, 2027 and 2026, respectively, if not forfeited by the recipient.

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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.

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.

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 2025 and changes during this period is presented as follows below (in thousands of shares except per share data).

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

The vesting adjustment in the table below represents a portion of the 2022 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.

Performance Shares

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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

In December 2025, Kelly Services sold a property, receiving cash proceeds in the fourth quarter and recognizing a gain of $ 1.0 million on the sale, as the property had an immaterial carrying value.

Additionally, on June 10, 2024, the Company sold Ayers Group, a division of its ETM segment, and received cash proceeds, recording a gain of $ 5.4 million in the 2024 consolidated statements of earnings after final working capital adjustments.

Both asset sales were part of Kelly’s ongoing strategy to further optimize its operating model.

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.

The Company received cash proceeds of $ 3.6 million in the second quarter of 2022 and previously received cash proceeds of $ 0.8 million as a deposit in 2021 when the contract was first executed.

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

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

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

The Company received cash proceeds of $ 0.9 million in the first quarter of 2022.

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

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

Other Income (Expense), Net

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

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

2025 2024 2023

1 unchanged sentence

Interest expense ( 12.4 ) ( 10.9 ) ( 3.2 )

Foreign exchange gains (losses) 0.5 ( 1.5 ) 4.8

Other ( 0.3 ) ( 2.7 ) ( 2.9 )

1 unchanged sentence

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).

The increase in interest expense for 2025 and 2024 reflects the increase in the Company's long-term debt (see Debt footnote).

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

Included in Other for 2023 was a gain of $ 2.0 million for the receipt of final proceeds in connection with 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):

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

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

2025 2024 2023

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Total $ ( 78.8 ) $ ( 21.9 ) $ 24.9

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

2024 2023 2022

The provision for income taxes was as follows:

Current tax expense:

2025 2024 2023

federal $ ( 0.6 ) $ ( 0.7 ) $ 1.0

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Total provision $ 175.3 $ ( 21.3 ) $ ( 11.5 )

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred income taxes reflect the temporary differences between the asset and liability basis for financial reporting purposes and the amounts used for income tax purposes, at the relevant tax rate.

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

The deferred tax assets and liabilities are comprised of the following:

Fixed assets and right-of-use assets $ ( 12.2 ) $ ( 15.2 )

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Employee compensation and benefit plans 82.6 77.0

Outside basis difference on held for sale assets — 34.7

Operating lease liabilities 16.0 17.7

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Net deferred tax assets $ 163.2 $ 330.1

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 2024 totaled $ 30.5 million, comprised of $ 19.6 million of capital loss carryforwards that expire in

work opportunity credit and other general business credit carryforwards of $ 207.3 million which will expire from 2034 to 2045, foreign tax credit carryforwards of $ 32.7 million which will expire from 2026 to 2035 and minimal state and foreign credit carryforwards which are either indefinite or will expire from 2026 to 2043.

The net tax effect of federal, state and foreign loss carryforwards at year-end 2025 totaled $ 28.5 million, comprised of $ 18.2 million of capital loss carryforwards that expire in 2029 and $ 10.3 million of net operating loss carryforwards of which $ 8.3 million have no expiration and $ 2.0 million expire between 2026 and 2045.

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

During 2025, the Company recorded a charge of $ 197.6 million to establish a valuation allowance for its U.S.

general business credit carryforwards and to increase the allowance for its foreign tax credit carryforwards, certain state loss carryforwards, and future deductible items.

The allowance on attributes with a limited life was principally due to cumulative losses in recent years, which were driven by goodwill impairment charges.

Cumulative losses are a significant piece of negative evidence that limits the ability to consider other evidence, such as projections for future growth.

The valuation allowance against U.S.

general business credit carryforwards at year-end 2025 is $ 161.8 million after considering the future deductibility of the credits upon expiration.

The foreign tax credit carryforward valuation allowance is $ 32.7 million at year-end 2025 and $ 15.0 million at year-end 2024.

During 2024, the Company generated a capital loss carryforward as a result of the sale of its EMEA staffing operations.

A valuation allowance of $ 18.2 million is recorded against the capital loss carryforward at year-end 2025 and $ 19.2 million is recorded at year-end 2024.

As of year-end 2024, the Company’s uncertainty in the ability to create future capital gains and its lack of adequate U.S.

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

The Company will continue to evaluate the need for valuation allowances against deferred tax assets on a quarterly basis and may adjust the allowance as circumstances change.

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

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 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 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

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

statutory rate of 21 % in 2024, 2023, and 2022 are as follows (in millions of dollars):

2024 2023 2022

At year-end 2025, we adopted ASU 2023-09 “Income Taxes (Topic 740):

Improvements To Income Tax Disclosures” on a prospective basis.

As required by the ASU, the following table presents the differences between income taxes from continuing operations for financial reporting purposes and the U.S.

statutory rate of 21 % in 2025:

Pretax book income $ ( 78.8 ) —

federal statutory tax rate ( 16.5 ) 21.0 %

Domestic state and local income taxes, net of federal income tax effect 12.4 ( 15.7 )

Foreign tax effects 4.7 ( 6.0 )

Cross-border tax laws 0.7 ( 0.9 )

Work opportunity credits ( 7.4 ) 9.3

Changes in valuation allowance 181.2 ( 229.9 )

Nontaxable and nondeductible items

Life insurance cash surrender value (gain) loss ( 7.2 ) 9.1

Goodwill impairment 6.2 ( 7.8 )

Other 1.1 ( 1.4 )

Unrecognized tax benefits 0.1 ( 0.1 )

Total $ 175.3 ( 222.4 )%

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

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

statutory rate of 21 % in 2024 and 2023:

Income tax based on statutory rate $ ( 4.6 ) $ 5.2

11 unchanged sentences

Stock compensation 0.4 0.7

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

Outside basis difference — ( 13.1 )

MRP earnout liability revaluation ( 0.7 ) —

Non-deductible goodwill impairment — — 2.7

Other — 0.4 ( 0.2 )

Total $ ( 21.3 ) $ ( 11.5 )

Our tax benefit or expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S.

The Company's tax benefit or expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S.

work opportunity credits and the change in cash surrender value of non-taxable investments in life insurance policies.

It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes or changes in judgment regarding the realizability of deferred tax assets.

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, 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.

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.

As noted in the rate reconciliation tables above, several items have contributed to the variance in the Company's income tax expense/benefit over the last three years.

2025 was impacted by $ 197.6 million of federal and state valuation allowances against U.S.

general business credit carryforwards and other deferred tax assets, and a $ 6.2 million impact from a non-tax deductible goodwill impairment charge.

This was offset by a pretax loss, which included an $ 18.4 million benefit from the impairment of tax-deductible goodwill and a $ 7.2 million benefit from tax-exempt life insurance cash surrender value gains.

2024 benefited from a pretax loss, which included an $ 18.4 million benefit from the impairment of tax-deductible goodwill and a $ 6.2 million benefit from tax-exempt life insurance cash surrender value gains.

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

In 2024 and 2023, Foreign items include foreign tax credits, foreign non-deductible expenses and non-taxable income.

Foreign business taxes include the French business tax and other taxes based on revenue less certain expenses and are classified as income taxes under ASC 740.

Provision has not been made for additional income taxes on an estimated $ 65.6 million of foreign subsidiary undistributed earnings which are indefinitely reinvested.

A provision has not been made for additional income taxes on foreign subsidiary undistributed earnings which are indefinitely reinvested.

If these earnings were to be repatriated, the Company could be subject to foreign withholding tax, federal and state income tax, net of federal benefit and income taxes on foreign exchange gains or losses, of $ 5.1 million.

work opportunity tax credit program is a temporary provision in the U.S.

tax law and expires for employees hired after 2025.

While the credit has routinely been extended, it is uncertain whether it will again be extended.

In the event the program is not renewed, we will continue to receive credits for qualified employees hired prior to 2026.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing multiple changes to the U.S.

The OBBBA did not have any material impact on the Company’s consolidated financial statements and related disclosures.

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

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

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

2024 2023 2022

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

Additions for prior years’ tax positions — 0.3 —

Reductions for prior years’ tax positions — — —

Additions for settlements — — —

Reductions for settlements — — —

Reductions for expiration of statutes ( 0.1 ) ( 0.2 ) ( 0.1 )

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

If the $ 0.5 million in 2024, $ 0.6 million in 2023 and $ 0.5 million in 2022 of unrecognized tax benefits were recognized, they would have a favorable effect of $ 0.4 million in 2024, $ 0.5 million in 2023 and $ 0.4 million in 2022 on income tax expense.

This did not have a material impact to the Company in 2025 or 2024.

The unrecognized tax benefit is $ 0.5 million in 2025, $ 0.5 million in 2024 and $ 0.6 million in 2023 with immaterial additions and reductions during each period.

If recognized, they would have a favorable effect of $ 0.4 million in 2025, $ 0.4 million in 2024 and $ 0.5 million in 2023 on income tax expense.

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

The Company recognized 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 $ 0.1 million of expense in 2023, no significant expenses or benefits in 2024, and $ 0.1 million of expense in 2025 for interest and penalties.

Accrued interest and penalties were $ 0.3 million at year-end 2025 and $ 0.2 million at year-end 2024.

2 unchanged sentences

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

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.

for fiscal years 2022 forward, Canada for fiscal years 2018 forward, Puerto Rico for fiscal years 2021 forward, Mexico for fiscal years 2020 forward, and Germany for fiscal years 2010 forward.

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

The unrecognized tax benefit and related interest and penalty balances include an insignificant amount for 2025, related to tax positions which are reasonably possible to change within the next twelve months due to income tax audits, settlements and statute expirations.

Supplemental Cash Flow Information

Changes in operating assets and liabilities, net of acquisitions, as disclosed in the statements of cash flows, for the fiscal years 2024, 2023 and 2022, respectively, were as follows:

2024 2023 2022

(In millions of dollars)

(Increase) decrease in trade accounts receivable $ ( 20.9 ) $ 147.2 $ ( 99.3 )

(Increase) decrease in prepaid expenses and other assets 2.8 ( 10.7 ) ( 24.6 )

(Increase) decrease in ROU assets 0.2 ( 2.2 ) ( 0.1 )

Increase (decrease) in accounts payable and accrued liabilities ( 31.1 ) ( 62.5 ) 44.3

Increase (decrease) in operating lease liabilities ( 12.1 ) ( 14.3 ) ( 18.7 )

Increase (decrease) in accrued payroll and related taxes ( 13.6 ) ( 59.8 ) ( 59.3 )

Increase (decrease) in accrued workers’ compensation and other claims 0.7 0.3 ( 5.2 )

Increase (decrease) in income and other taxes ( 3.2 ) — 21.9

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

Income taxes paid (net of refunds received) for the years 2025, 2024 and 2023 were $ 4.5 million, $ 10.9 million and $ 8.9 million, respectively.

For 2025, the specific cash taxes paid are as follows, with each state, local and foreign jurisdiction being immaterial:

Federal $ ( 1.2 )

State and local 0.6

Total income taxes paid $ 4.5

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

See the Debt and Retirement Benefits footnotes for commitments related to debt and pension obligations.

Contingencies

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

We record accruals for loss contingencies when we believe it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

The Company records accruals for loss contingencies when the Company believes it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.

At year-end 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.

At year-end 2025 and 2024, the gross accrual for litigation costs amounted to $ 2.8 million and $ 1.5 million, respectively.

The Company maintains insurance coverage which may cover certain losses.

When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet.

At year-end 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.

At year-end 2025 and 2024, there were no related insurance receivables.

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is zero to $ 1.8 million.

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

The aggregate range only represents matters in which we are currently able to estimate a range of loss and does not represent our maximum loss exposure.

The aggregate range only represents matters in which the Company is currently able to estimate a range of loss and does not represent the Company's maximum loss exposure.

The estimated range is subject to significant judgment and a variety of assumptions and only based upon currently available information.

For other matters, we are currently not able to estimate the reasonably possible loss or range of loss.

While the ultimate outcome of these matters cannot be predicted with certainty, 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.

For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss.

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

KELLY SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1 unchanged sentence

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.

In the first quarter of 2025, the Company modified its reportable segments.

The Company’s three reportable segments:

(1) ETM, (2) SET and (3) Education, reflect the specialty services the Company provides to customers and represent how the business is organized internally.

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

The Company combined its former P&I and OCG segments into the ETM segment in the first quarter of 2025, responding to a shift in customer demand toward integrated workforce solutions and enabling a more streamlined and efficient go-to-market approach.

The Company also realigned certain customers from the SET segment to the ETM segment to support this integrated strategy.

Also in the first quarter of 2025, the Company moved MRP's Sevenstep business from the SET segment to the ETM segment as part of the broader integration of MRP.

The 2024 and 2023 ETM and SET segment information has been recast to conform to the new structure.

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

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

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.

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.

SET provides highly specialized skills to a variety of industries through staffing, outcome-based, talent solutions, and permanent placement services.

The Company's Mexico operations, which were previously in the Company's International segment, were included in P&I before the first quarter of 2025 and are now included in the ETM segment.

ETM delivers staffing, outcome-based and permanent placement services, providing administrative, accounting and finance, light industrial and contact center staffing and other workforce solutions in the U.S.

and Canada, including the Company's KellyConnect and Skilled Professional Solutions products.

ETM also provides global talent supply chain and workforce solutions, including MSP, RPO, PPO and executive coaching programs to customers on a global basis and includes the Company's RocketPower and Sevenstep brands.

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

SET is focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S.

and Canada and includes MRP, Softworld, NextGen and Global Technology Associates ("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 Canada and includes MRP, Softworld, NextGen and Global Technology Associates brands.

Education delivers high quality education and therapy services talent through staffing, permanent placement and executive search services to Pre-K-12 school districts and education organizations across the U.S.

and includes Teachers On Call, Greenwood/Asher and PTS brands.

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.

Expenses incurred to directly support the operating units have been allocated to ETM, SET and Education based on work effort, volume or, in the absence of a readily available measurement process, proportionately based on gross profit realized.

Certain expenses related to incentive compensation, law and risk management, certain finance and accounting functions, executive management and corporate campus facilities do not directly benefit a specific operating 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 addition to the change in the Company's segment structure in the first quarter of 2025, the Company reassessed the allocation of corporate expenses to the operating segments and allocated additional costs which are attributable to the business from corporate.

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

1 unchanged sentence

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Year Ended December 29, 2024

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

December Year-to-Date 2025

ETM SET Education Inter-Segment Total

Revenue from services $ 2,005.5 $ 1,240.4 $ 1,010.7 $ ( 5.7 ) $ 4,250.9

9 unchanged sentences

Corporate SG&A ( 53.8 )

Asset impairment charge ( 13.5 )

Gain on sale of assets 1.0

1 unchanged sentence

Depreciation and amortization (4)

Consolidated earnings from operations ( 15.1 )

Consolidated earnings (loss) from operations ( 69.8 )

Other income (expense), net ( 9.0 )

Earnings before taxes $ ( 21.9 )

(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.

(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.

AND SUBSIDIARIES

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

Earnings (loss) before taxes $ ( 78.8 )

December Year-to-Date 2024

ETM SET Education Inter-Segment Total

Revenue from services $ 2,196.1 $ 1,165.7 $ 972.3 $ ( 2.3 ) $ 4,331.8

6 unchanged sentences

SG&A expenses 385.9 226.7 95.9 708.5

Asset impairment charge 0.3 0.1 — 2.0 — — 2.4

Goodwill impairment charge — 72.8 — 72.8

Business unit profit (loss) $ 59.0 $ ( 1.6 ) $ 43.9 $ 101.3

Corporate SG&A ( 58.4 )

Asset impairment charge ( 13.5 )

Gain on sale of EMEA staffing operations 1.6

Gain on sale of assets 5.4

Depreciation and amortization (4)

Consolidated earnings from operations 24.3

Consolidated earnings (loss) from operations ( 15.1 )

Other income (expense), net ( 6.8 )

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.

Earnings (loss) before taxes $ ( 21.9 )

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

December Year-to-Date 2023

ETM SET Education International Inter-Segment Total

Revenue from services $ 2,214.4 $ 970.6 $ 841.9 $ 812.1 $ ( 3.3 ) $ 4,835.7

6 unchanged sentences

SG&A expenses 432.2 184.8 92.4 122.0 831.4

Goodwill impairment charge — — — 41.0 — — 41.0

Asset impairment charge 2.3 0.1 — — 2.4

Business unit profit (loss) $ 31.2 $ 62.0 $ 36.3 $ ( 1.9 ) $ 127.6

Corporate SG&A ( 63.2 )

Loss on disposal ( 18.7 )

Gain on sale of assets 6.2

Depreciation and amortization (4)

Consolidated earnings from operations 24.3

Loss on investment in Persol Holdings ( 67.2 )

Loss on currency translation from liquidation of subsidiary ( 20.4 )

Other income (expense), net 0.6

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

Earnings before taxes $ 24.9

(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, holiday pay, health insurance and workers’ compensation costs.

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

1 unchanged sentence

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.

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

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

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.

Depreciation and amortization expense is included in SG&A expenses in the Company's consolidated statements of earnings.

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

The depreciation and amortization amounts by segment are as follows:

2025 2024 2023

(In millions of dollars)

Depreciation and amortization:

Professional & Industrial $ 9.5 $ 8.0 $ 7.7

Enterprise Talent Management $ 11.4 $ 17.6 $ 14.3

Science, Engineering & Technology 31.2 25.6 15.7

Education 8.4 8.3 7.7

Outsourcing & Consulting 7.6 5.9 4.8

International — — 2.4

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

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

2025 2024 2023

(In millions of dollars)

Revenue from Services:

5 unchanged sentences

No single customer represented more than 10% of the consolidated revenues of the Company.

A summary of long-lived assets information by geographic area as of year-end 2024 and 2023 follows:

(In millions of dollars)

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

Long-Lived Assets:

3 unchanged sentences

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.

1 unchanged sentence

Recently Adopted

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.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which includes amendments to enhance income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information.

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

The Company adopted this guidance for fiscal year 2025 and the adoption did not have a material impact to the Company's consolidated financial statements.

Not Yet Adopted

In December 2025, the FASB issued ASU 2025-11, Interim Reporting, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies.

The amendment specifies when an entity is subject to ASC 270, and addresses the form and content of financial statements and interim disclosures requirements.

The ASU clarifies that an entity must disclose events since the end of the last annual reporting period that have a material impact.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted.

The Company does not expect this update to have a material impact to the Company's consolidated financial statements.

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.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively to business combinations that occur after the effective date.

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.

Not Yet Adopted

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40).

This ASU simplifies and modernizes guidance for internal-use software by clarifying capitalization thresholds, improving comparability and reducing judgment diversity across all software development methodologies.

This ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

This ASU allows for a practical expedient to be used when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606.

The new guidance will be effective for annual periods beginning after December 15, 2025, with early adoption permitted.

This ASU applies to trade accounts receivable and may have an impact on the calculation of the allowance for uncollectible accounts receivable.

The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

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

2 unchanged sentences

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.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which includes amendments to enhance income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information.

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

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

The Company is currently evaluating the impact of the new guidance on the Company's consolidated financial statements and related disclosures.

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

2 unchanged sentences

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.

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.

The Company does not expect this update to have a material impact to the Company's consolidated financial statements.

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

Related Party Transactions

1 unchanged sentence

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

Adderley (the former Chairman of the Company's board of directors) on October 9, 2018, controls approximately 95.3 % of the outstanding shares of Kelly Class B common stock.

Adderley (the former Chairman of the Company's board of directors) on October 9, 2018, controls approximately 92.2 % of the outstanding shares of Kelly Class B common stock as of December 28, 2025.

There were no material transactions between the Company and Trust K or its trustees in 2025, 2024 or 2023.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent Event

On January 9, 2026, Trust K notified the Board that it has entered into a definitive share purchase agreement (“Purchase Agreement”) to sell its entire holding, which constitutes 92.2 % of the voting Class B common stock, to Hunt Equity Opportunities, LLC (“Hunt Equity”) for a purchase price of $ 106.0 million.

This Purchase Agreement also includes an additional cash payment, by Hunt Equity, of $ 15.2 million if the Company achieves a market capitalization of at least $ 1.2 billion within the 48-month period following the closing.

The Company's Class B common stock is the only class of stock entitled to voting rights.

As of December 28, 2025, Trust K represented voting control of the Company.

Upon completion of the transaction, Hunt Equity will acquire voting control of the Company.

On January 11, 2026, the Board of Directors (“Board”) of the Company approved the adoption of a shareholders rights plan (“Rights Plan”).

The Rights Plan was adopted to provide the Board sufficient time to evaluate the terms of the proposed transaction and the plans or proposals of the purchaser, and to consider the best interests of all stockholders.

On January 29, 2026, the Board approved Amendment No.

1 to the Rights Plan, effective January 30, 2026.

The Amendment, among other things, exempts the Hunt Equity purchase of shares from Trust K as a triggering event under the Rights Plan and provides that the Rights Plan expires immediately prior to the close of the transaction.

On January 30, 2026, the Company entered into a letter agreement (the “Agreement”) with Hunt Equity to provide for the amendment and expiration of the previously announced Rights Plan, and for certain conduct and approval covenants related to Kelly’s governance and transaction evaluation processes.

Thereafter, Trust K closed a transaction with Hunt Equity, pursuant to which Hunt Equity acquired 3,039,940 shares of Class B Common Stock of the Company from Trust K, causing Hunt Equity to become the controlling stockholder of the Company with 92.2 % of the Class B Common Stock.

Also pursuant to the Agreement, the Company announced changes to the composition of the Board.

Effective January 30, 2026, and until the Company’s 2026 Annual Meeting of Stockholders, the Board is composed of four designees from Hunt Equity, Chris Hunt, Angela Brock-Kyle, Edward Escudero, and James K.

Chris Layden, the Company’s Chief Executive Officer;

and three directors serving on the Board as of the Agreement date, Robert S.

Cubbin, Amala Duggirala, and Leslie A.

Chris Hunt serves as Chairman of the Board.

In connection with these changes, Terrence B.

Larkin, Gerald S.

Adolph, George S.

Corona, InaMarie F.

Johnson, and Peter W.

Quigley resigned from the Board, effective January 30, 2026.

In connection with the transaction above, on January 27, 2026, the Company entered into an agreement with its lenders to amend and restate the Facility.

Additionally, the Company and the Receivables Entity amended the Receivables Purchase Agreement related to the Securitization Facility.

Both amendments modified the credit agreements so that the closing of the transaction pursuant to the Purchase Agreement will not, in and of itself, constitute a Change in Control under the Credit Agreement.

Except as expressly modified by the amendments, the terms of the credit agreements remain unchanged and in full force and effect.

On February 10, 2026, the Company’s Board declared a dividend of $ 0.075 per share.

The dividend is payable on March 11, 2026, to stockholders of record as of the close of business on February 25, 2026.

KELLY SERVICES, INC.

AND SUBSIDIARIES

SCHEDULE II - VALUATION RESERVES

(In millions of dollars)

Valuation allowance for deferred tax assets for the years-ended 2025, 2024 and 2023:

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

Fiscal year ended December 29, 2024

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

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

Fiscal year ended December 31, 2023

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

Deferred tax assets valuation allowance $ 34.0 40.9 — 0.6 ( 15.0 ) $ 60.5

Fiscal year ended January 1, 2023

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

Deferred tax assets valuation allowance $ 19.0 15.8 — ( 0.7 ) ( 0.1 ) $ 34.0

2025 $ 34.2 $ 197.0 $ — $ — $ ( 1.0 ) $ 230.2

2024 60.5 0.6 ( 24.4 ) — ( 2.5 ) 34.2

2023 34.0 40.9 — 0.6 ( 15.0 ) 60.5

INDEX TO EXHIBITS

1 unchanged sentence

REGULATION S-K

Stockholder Rights Plan, dated as of January 11, 2026, by Kelly Services, Inc.

(Reference is made to Exhibit 4.1 to the Form 8-A filed with the Commission on January 12, 2026, which is incorporated herein by reference).

Amendment No.

1 to Stockholder Rights Plan, dated as of January 30, 2026, by Kelly Services, Inc.

(Reference is made to Exhibit 4.1 to the Form 8-K filed with the Commission on January 30, 2026, which is incorporated herein by reference).

Letter Agreement, dated as of January 30, 2026, by and between Kelly Services, Inc.

and Hunt Equity Opportunities, LLC (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on January 30, 2026, which is incorporated herein by reference).

Severance Agreement and Release between Kelly Services, Inc.

and Daniel H.

Malan (Reference is made to Exhibit 10.1 to the Form 8-K/A filed with the Commission on December 12, 2025, which is incorporated herein by reference).

Separation and Transition Advisory Services Agreement between Kelly Services, Inc.

and Peter Quigley (Reference is made to Exhibit 10.1 to the Form 8-K/A filed with the Commission on November 14, 2025, which is incorporated herein by reference).

Offer Letter between Kelly Services, Inc.

and Christopher Layden (Reference is made to Exhibit 10.1 to the Form 8-K/A filed with the Commission on August 7, 2025, which is incorporated herein by reference).

Kelly Services, Inc.

2025 Equity Incentive Plan (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on May 9, 2025, which is incorporated herein by reference).

Registration Rights Agreement, dated as of January 30, 2026, by and between Kelly Services, Inc.

and Hunt Equity Opportunities, LLC (Reference is made to Exhibit 10.2 to the Form 8-K filed with the Commission on January 30, 2026, which is incorporated herein by reference).

Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of January 27, 2026, among Kelly Services, Inc., the Subsidiary Guarantors party thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (Reference is made to Exhibit 10.3 to the Form 8-K filed with the Commission on January 30, 2026, which is incorporated herein by reference).

First Amended and Restated Receivables Purchase Agreement Amendment No.

5, dated as of January 27, 2026, among Kelly Receivables Funding, LLC, as Seller, Kelly Services, Inc., as Servicer, and PNC Bank, National Association, as Administrator for each Purchaser Group, as Purchaser Agent for the PNC Purchaser Group, as a Related Committed Purchaser, as LC Bank, and as an LC Participant (Reference is made to Exhibit 10.4 to the Form 8-K filed with the Commission on January 30, 2026, which is incorporated herein by reference).

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.

3 unchanged sentences

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).

INDEX TO EXHIBITS

REQUIRED BY ITEM 601

REGULATION S-K (continued)

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).

4 unchanged sentences

Kelly Services, Inc.

Equity Incentive Plan (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on May 12, 2017, which is incorporated herein by reference).

Kelly Services, Inc.

Amended and Restated Senior Executive Severance Plan (Reference is made to Exhibit 10.1 to the Form 8-K filed with the Commission on May 4, 2021, which is incorporated herein by reference).

6 unchanged sentences

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

REQUIRED BY ITEM 601

REGULATION S-K (continued)

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.

5 unchanged sentences

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 2025.

INDEX TO EXHIBITS

REQUIRED BY ITEM 601

REGULATION S-K (continued)

Kelly Services, Inc.

9 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.

13 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

February 13, 2025 * /s/ P.

February 12, 2026 * /s/ C.

President, Chief Executive Officer and Director

(Principal Executive Officer)

February 13, 2025 * /s/ T.

February 12, 2026 * /s/ J.

Chairman of the Board and Director

February 13, 2025 * /s/ G.

February 12, 2026 * /s/ A.

February 12, 2026 * /s/ R.

February 12, 2026 * /s/ A.

February 13, 2025 * /s/ I.

February 13, 2025 * /s/ D.

February 12, 2026 * /s/ E.

February 12, 2026 * /s/ J.

February 12, 2026 * /s/ L.

3 unchanged sentences

(Principal Financial Officer)

February 13, 2025 /s/ L.

February 12, 2026 /s/ N.

Vice President, Corporate Controller and Chief Accounting Officer

3 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures