What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-15 compared with 2022-02-16 · 171 added, 199 removed, 855 unchanged (30% of the section changed)

19 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below is a matters arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

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The determination of the undiscounted reserve requires significant estimates and assumptions related to the future cost of claims and related expenses for claims that have been reported but not settled, as well as those that have been incurred but not reported.

The undiscounted workers’ compensation obligation was $ 273.0 million as of December 26, 2021.

The undiscounted workers’ compensation reserve was $270.5 million as of December 25, 2022.

Given the fact that changes in actuarial assumptions could have a significant impact on the reserve, auditing management judgments regarding the workers’ compensation reserve, including estimates of the future cost of claims and related expenses, involved a high degree of auditor judgment, including the need to involve our actuarial specialists.

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◦ Comparing management’s prior-year assumptions of expected future cost of claims and related expenses to actuals incurred during the current year to identify potential bias in the determination of the workers’ compensation reserve.

• With the assistance of our actuarial specialists, we developed independent estimates of the reserve and compared our estimates to the Company’s recorded reserve.

• With the assistance of our actuarial specialists, we developed independent estimates of the undiscounted workers’ compensation reserve and compared our estimates to the Company’s undiscounted workers’ compensation reserve.

/s/ Deloitte & Touche, LLP

26 unchanged sentences

Accrued wages and benefits 92,237 100,173

Income tax payable 1,137 —

Current portion of workers’ compensation claims reserve 50,005 61,596

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Stock-based compensation 28 — 9,113 — 9,113

Change in accounting standard cumulative-effect adjustment — — ( 602 ) — ( 602 )

Balances, December 27, 2020

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Stock-based compensation — — 13,943 — 13,943

Change in accounting standard cumulative-effect adjustment — — ( 602 ) — ( 602 )

Balances, December 26, 2021

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Accounts receivable 34,765 ( 81,616 ) 57,146

Income tax receivable 1,602 ( 1,122 ) ( 6,480 )

Income taxes receivable and payable ( 2,665 ) 1,602 ( 1,122 )

Operating lease right-of-use asset 118 8,080 —

42 unchanged sentences

(the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that help clients achieve business growth and improve productivity.

We serve clients in a wide variety of industries through our PeopleReady segment which offers general, industrial and skilled trade staffing, our PeopleManagement segment which offers contingent, on-site industrial staffing and commercial driver services, and our PeopleScout segment which offers recruitment process outsourcing (“RPO”) and managed service provider (“MSP”) solutions to a wide variety of industries.

We are headquartered in Tacoma, Washington.

Basis of presentation

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The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Reclassifications

Certain previously reported immaterial prior year amounts have been reclassified within current liabilities on our Consolidated Balance Sheets to conform to current year presentation.

Additionally, we have separately presented deferred employer payroll taxes from prior period reported amounts within operating activities on our Consolidated Statements of Cash Flows.

Fiscal period end

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Estimates in our financial statements include, but are not limited to, acquisition method of accounting, allowance for credit losses, estimates for asset and goodwill impairments, stock-based performance awards, assumptions underlying self-insurance reserves, contingent legal, regulatory and government incentive liabilities, and the potential outcome of future tax consequences of events that have been recognized in the financial statements.

Actual results and outcomes may differ from these estimates and assumptions.

We also considered the coronavirus pandemic (“COVID-19”) related impacts to our estimates, as appropriate, within our financial statements and there may be changes to those estimates in future periods.

However, we believe that the accounting estimates used are appropriate after considering the increased uncertainties surrounding the severity and duration of COVID-19.

These estimates and assumptions are subject to inherent uncertainties, which may result in actual future amounts differing from reported estimated amounts.

Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment.

Revenue recognition

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Revenue includes billable travel and other reimbursable costs and are reported net of sales, use or other transaction taxes collected from clients and remitted to taxing authorities.

Payment terms vary by client and the services

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

offered, however we do not extend payment terms beyond one year.

Payment terms vary by client and the services offered, however we do not extend payment terms beyond one year.

Substantially all of our contracts include payment terms of 90 days or less.

We primarily record revenue on a gross basis as a principal versus on a net basis as an agent on the Consolidated Statements of Operations and Comprehensive Income (Loss).

We have determined that gross reporting as a principal is the appropriate treatment based upon the following key factors:

We primarily record revenue on a gross basis as a principal on the Consolidated Statements of Operations and Comprehensive Income (Loss) based upon the following key factors:

• We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.

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• We establish our billing rates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingent staffing

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We incur immaterial costs to obtain our contingent staffing contracts.

We have concluded that the amortization period for these costs would be less than one year and have elected to use the practical expedient to expense as incurred.

We have concluded that the amortization period for these costs would be less than one year and have elected to use the practical expedient to expense these costs as incurred.

Also, we incur immaterial costs to fulfill some contingent staffing contracts, which are expensed as incurred.

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We incur immaterial costs to obtain our outsourced recruitment of permanent employee contracts.

We have concluded that the amortization period for these costs would be less than one year and have elected to use the practical expedient to expense as incurred.

We have concluded that the amortization period for these costs would be less than one year and have elected to use the practical expedient to expense these costs as incurred.

Also, we incur immaterial costs to fulfill these contracts, which are expensed as incurred.

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Cost of services

Cost of services refers to costs directly associated with the earning of revenue and primarily includes wages and related payroll taxes and workers’ compensation expenses.

Cost of services also includes billable travel as well as other reimbursable and non-reimbursable expenses.

Cost of services refers to costs directly associated with the earning of revenue and primarily includes wages, payroll taxes, benefits, and workers’ compensation expenses for our associates and employees involved with the delivery of our services.

These costs differ fundamentally from selling, general and administrative ("SG&A") expenses in that they arise specifically from the action of providing services to clients, whereas SG&A costs are incurred regardless of whether or not we provide service to our clients.

Advertising costs

Advertising costs consist primarily of print and other promotional activities.

Advertising costs consist primarily of print, digital and other promotional activities.

We expense advertisements as of the first date the advertisements take place.

Advertising expenses included in selling, general and administrative (“SG&A”) were $ 9.7 million, $ 5.5 million and $ 6.8 million in fiscal 2021, 2020 and 2019, respectively.

Advertising expenses included in SG&A were $ 12.5 million, $ 9.7 million and $ 5.5 million in fiscal 2022, 2021 and 2020, respectively.

Cash, cash equivalents and marketable securities

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We manage our cash equivalents and marketable securities as a single portfolio of highly liquid securities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have not experienced any losses related to these balances, and we believe credit risk to be minimal.

Accounts receivable and allowance for credit losses

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• PeopleReady and Centerline Drivers (“Centerline”) have a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work we perform.

This results in high turnover in accounts receivable and lower rates of non-payment.

This results in high turnover in accounts receivable.

• PeopleManagement On-Site has a smaller number of clients, and follows a contractual billing schedule.

The invoice amounts are higher than that of PeopleReady and Centerline, with longer payment terms.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• PeopleScout has a smaller number of clients, and generally sends invoices on a consolidated basis for a client.

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Changes in the allowance for credit losses are recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

As a result of our adoption of the accounting standard for current expected credit losses (“CECL”) on the first day of fiscal 2020, we recognized a cumulative-effect adjustment to our accounts receivable allowance of $ 0.5 million as of that date.

Restricted cash and investments

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We establish an allowance for credit loss for our held-to-maturity debt securities using a discounted cash flow method including a probability of default rate based on the issuer’s credit rating.

The cumulative-effect adjustment to our held-to-maturity debt securities as a result of adopting CECL as of the beginning of the first quarter of 2020 was immaterial, as was the allowance as of December 26, 2021.

We have an agreement with American International Group, Inc.

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Assets and liabilities with unobservable inputs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying value of our cash and cash equivalents and restricted cash approximates fair value because of the short-term maturity of those instruments.

We hold money market funds to support our workers’ compensation program and have historically held mutual funds and money market funds to support our deferred compensation liability, which are carried at fair value based on quoted market prices in active markets for identical assets.

We hold money market funds to support our workers’ compensation program, which are carried at fair value based on quoted market prices in active markets for identical assets.

There are inherent limitations when estimating the fair value of financial instruments, and the fair values reported are not necessarily indicative of the amounts that would be realized in current market transactions.

The carrying value of our accounts receivable, accounts payable and other accrued expenses, and accrued wages and benefits approximates fair value due to their short-term nature.

We have company-owned life insurance policies that fund our deferred compensation liability.

We hold company-owned life insurance policies that fund our deferred compensation liability.

Company-owned life insurance policies are carried at cash surrender value, which approximates fair value.

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We typically determine the fair value of these items using internal estimates and assumptions that market participants would use in pricing the asset or liability.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment

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Software maintenance and training costs are expensed in the period incurred.

We conduct our branch operations primarily from leased locations.

We also lease office spaces for our centralized support functions, office equipment, and machinery for use at client sites.

We conduct our PeopleReady branch operations primarily from leased locations.

We also lease office spaces for our other operations, centralized support functions, office equipment, and machinery for use at client sites.

Many leases require variable payments of property taxes, insurance, and common area maintenance, in addition to base rent.

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Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease right-of-use assets and lease liabilities are measured using the present value of future minimum lease payments over the lease term at commencement date.

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In addition, for those leases where the right to cancel the lease is available to both TrueBlue (as the lessee) and the lessor, the lease term is the initial non-cancelable period plus the notice period, which is typically 90 days, and not greater than one year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and indefinite-lived intangible assets

We evaluate goodwill for impairment on an annual basis as of the first day of our fiscal second quarter, and whenever events or circumstances make it more likely than not that an impairment may have occurred.

These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, client engagement, or sale or disposition of a significant portion of a reporting unit.

We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred.

These events or circumstances could include a significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, changes in the carrying amount of net assets, sale or disposition of a significant portion of a reporting unit, or a sustained decrease in share price.

We monitor the existence of potential impairment indicators throughout the fiscal year.

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We consider our operating segments to be our reporting units for goodwill impairment testing.

Our operating segments are PeopleReady, PeopleManagement On-Site, PeopleManagement Centerline, PeopleScout RPO, and PeopleScout MSP.

The impairment test involves comparing the fair value of each reporting unit to its carrying value, including goodwill.

Our operating segments with remaining goodwill are PeopleReady, PeopleManagement Centerline, PeopleScout RPO and PeopleScout MSP.

When evaluating goodwill for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount.

Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial performance.

If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the reporting unit is greater than its carrying amount, the quantitative impairment test is unnecessary.

The quantitative impairment test, if necessary, involves comparing the fair value of each reporting unit to its carrying value, including goodwill.

Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit.

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If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the goodwill.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions to evaluate the impact of operational and macroeconomic changes on each reporting unit.

We estimate the fair value of each reporting unit using a weighted average of the income and market valuation approaches.

The income approach applies a fair value methodology based on discounted cash flows.

This analysis requires significant estimates and judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested.

We also apply a market approach, which identifies similar publicly traded companies and develops a correlation, referred to as a multiple, to apply to the operating results of the reporting units.

The primary market multiples to which we compare are revenue and earnings before interest, taxes, depreciation, and amortization.

We base fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain.

Actual future results may differ from those estimates.

We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20 % premium or greater.

There were no goodwill impairment charges recorded during fiscal 2021 or 2019.

Refer to Note 5:

Goodwill and Intangible Assets for further details regarding the goodwill impairment charge recorded during fiscal 2020.

We have indefinite-lived intangible assets related to our Staff Management | SMX and PeopleScout trade names.

We test our trade names annually for impairment, and when indications of potential impairment exist.

We utilize the relief from royalty method to determine the fair value of each of our trade names.

We performed our annual goodwill impairment test as of the first day of our fiscal second quarter of 2022.

Based on our assessment of qualitative factors, we concluded it was more likely than not that the fair value of each reporting unit exceeded its carrying value, and the goodwill associated with each reporting unit was not impaired.

As such, it was not necessary to perform a quantitative impairment analysis.

Additionally, we did not identify any events or conditions that make it more likely than not that an impairment may have occurred during the period from March 28, 2022 to December 25, 2022.

Accordingly, no impairment loss was recognized for the fiscal year ended December 25, 2022.

Indefinite-lived intangible assets

We have indefinite-lived intangible assets related to our Staff Management and PeopleScout trade names.

We evaluate our indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred.

These events or circumstances could include significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, or sale or disposition of a significant portion of the business.

We monitor the existence of potential impairment indicators throughout the fiscal year.

When evaluating indefinite-lived intangible assets for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of the indefinite-lived intangible is less than its carrying amount.

Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial performance.

If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the indefinite-lived intangible is greater than its carrying amount, the quantitative impairment test is unnecessary.

The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names.

If the carrying value exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value.

Management uses considerable judgment to determine key assumptions, including projected revenue, royalty rates and appropriate discount rates.

There were no indefinite-lived intangible asset impairment charges recorded during fiscal 2021, 2020 or 2019.

Other long-lived assets

Other long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

Other long-lived assets include property and equipment, lease right-of-use assets, finite-lived intangible assets and capitalized implementation costs for cloud computing arrangements that are service contracts.

We performed our annual impairment test as of the first day of our fiscal second quarter of 2022.

Based on our assessment of qualitative factors, we concluded it was more likely than not that the fair value of our indefinite-lived intangible assets exceeded their carrying value and were not impaired.

As such, it was not necessary to perform a quantitative impairment analysis.

Additionally, we did not identify any events or conditions that make it more likely than not that an impairment may have occurred during the period from March 28, 2022 to December 25, 2022.

Accordingly, no impairment loss was recognized for the fiscal year ended December 25, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other long-lived assets

We have finite-lived intangible assets related to acquired company customers, trade names/trademarks, and technology, as well as purchased trade names/trademarks.

During fiscal 2020, we recorded a non-cash impairment charge for our PeopleScout RPO and PeopleManagement On-Site client relationship intangible assets of $ 34.7 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 27, 2020.

Refer to Note 5:

Goodwill and Intangible Assets for further details.

There were no long-lived asset impairment charges recorded during fiscal 2021 or 2019.

There were no long-lived asset impairment charges recorded during the fiscal year ended December 25, 2022.

We capitalize implementation costs incurred in a cloud computing arrangement that is a service contract.

Capitalized implementation costs are recorded as a prepaid asset in other assets, net on our Consolidated Balance Sheets, with the related amortization recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) on a straight-line basis over the fixed, non-cancelable term of the associated arrangement plus any reasonably certain renewal periods.

Software license fees incurred during the development period are expensed as incurred.

Capitalized implementation costs are recorded in both prepaid expenses and other current assets, and in other assets, net on our Consolidated Balance Sheets, depending on the timing of future amortization.

The related amortization expense is recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) on a straight-line basis over the fixed, non-cancelable term of the associated arrangement plus any reasonably certain renewal periods.

License fees incurred during the development period are expensed as incurred.

Other long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

Workers’ compensation claims reserves

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When appropriate, based on our best estimate, we record a valuation allowance against the insurance receivable to reflect amounts that may not be realized.

Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment.

Factors considered in establishing and adjusting these reserves include, among other things:

• changes in medical and time loss (“indemnity”) costs;

• changes in mix between medical only and indemnity claims;

• regulatory and legislative developments impacting benefits and settlement requirements;

• type and location of work performed;

• impact of safety initiatives;

• positive or adverse development of claims.

We also establish an allowance for credit loss for our insurance receivables using a probability of default and losses expected upon default method, with the probability of default rate based on the third-party insurance carrier’s credit rating.

Changes in the allowance for credit losses are recorded in cost of services on the Consolidated Statements of Operations and Comprehensive Income (Loss).

The cumulative-effect adjustment to our workers’ compensation insurance receivables as a result of adopting CECL as of the beginning of the first quarter of 2020 was immaterial, as was the allowance as of December 26, 2021.

Legal contingency reserves and regulatory liabilities

From time to time we are subject to compliance audits by federal, state and local authorities relating to a variety of regulations including wage and hour laws, taxes, workers’ compensation, immigration, and safety.

We are subject to compliance audits by federal, state, local and international authorities relating to a variety of regulations including wage and hour laws, taxes, workers’ compensation, immigration, and safety.

In addition, we are subject to legal proceedings in the ordinary course of our operations.

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

If the actual outcome of these matters is different than expected, an adjustment is charged or credited to expense in the period the outcome occurs or the period in which the estimate changes.

If the actual outcome of these matters is different than expected, an adjustment is charged or credited to expense in the period the outcome occurs or the estimate changes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income taxes and related valuation allowance

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the effects of future changes in tax laws are not anticipated.

Future tax law changes, such as changes to the federal and state corporate tax rates and the mix of states and their taxable income, could have a material impact on our financial condition or results of operations.

When appropriate, we record a valuation allowance against deferred tax assets to offset future tax benefits that may not be realized.

In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results.

Based on that analysis, we have determined that a valuation allowance is appropriate for certain net

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operating losses (“NOLs”) and tax credits that we expect will not be utilized within the permitted carryforward periods as of December 26, 2021 and December 27, 2020.

We recognize deferred tax assets to the extent we believe it is more likely than not the asset will be realized.

We consider available positive and negative evidence when making such determination, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted, and results of recent operations.

When appropriate, we record a valuation allowance against deferred tax assets to reduce deferred tax assets to the amount that is more likely than not to be realized.

Our liability for unrecognized tax benefits is recorded in other long-term liabilities on our Consolidated Balance Sheets.

We recognize interest and penalties related to unrecognized tax benefits within income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).

Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets.

A significant driver of fluctuations in our effective income tax rate is the Work Opportunity Tax Credit (“WOTC”).

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We recognize an adjustment to prior year hiring credits if credits certified by government offices differ from original estimates.

The WOTC program has been approved through the end of 2025.

Deferred compensation plan

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The current portion of the deferred compensation liability is included in accrued wages and benefits on our Consolidated Balance Sheets.

The total deferred compensation liability is largely funded through company-owned life insurance policies, mutual funds and money market funds recorded in restricted cash and investments on our Consolidated Balance Sheets.

The total deferred compensation liability is funded through company-owned life insurance policies recorded in restricted cash and investments on our Consolidated Balance Sheets.

The carrying value of company-owned life insurance policies is based on the cash surrender value of the policies and, accordingly, approximates fair value.

Changes in the cash surrender value of the company-owned life insurance policies are recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The deferred compensation mutual funds and money market funds are measured at fair value, with unrealized gains and losses recognized in SG&A expense, while realized gains and losses are recorded in other income on our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 26, 2021, all of the mutual funds and money market funds have been converted into company-owned life insurance policies.

Prior to 2022, we also held mutual funds and money market funds to support the deferred compensation liability, which were measured at fair value, with unrealized gains and losses recognized in SG&A expense, while realized gains and losses were recorded in interest expense and other income, net on our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 26, 2021, all of the mutual funds and money market funds had been converted into company-owned life insurance policies.

Stock-based compensation

Under various plans, our Board of Directors (the “Board”), executive officers and key employees have received or may receive grants of restricted stock awards, restricted stock units or performance share units (collectively, “stock-based awards”).

Under various plans, our Board of Directors (the “Board”), executive officers and key employees may receive grants of nonqualified and incentive stock options, restricted stock awards, performance share units, restricted stock units or stock appreciation rights (collectively, “stock-based awards”).

We also have an employee stock purchase plan (“ESPP”).

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For performance share unit grants issued with performance conditions, compensation expense is recognized over each vesting period based on assessment of the likelihood of meeting these conditions.

We recognize compensation expense for only the portion of stock-based awards that are expected to vest.

If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

We recognize forfeitures as they occur.

Foreign currency

Our financial statements are reported in U.S.

Assets and liabilities of international subsidiaries with non-U.S.

Assets and liabilities of foreign subsidiaries with non-U.S.

dollar functional currencies are translated to U.S.

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dollars using a weighted average rate for the relevant reporting period.

Translation adjustments resulting from this process are included, net of tax, in other comprehensive income, when applicable.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Translation adjustments resulting from this process are included, net of tax, in accumulated other comprehensive loss on our Consolidated Statements of Operations and Comprehensive Income (Loss), when applicable.

Revenue and expense transactions denominated in a currency other than our functional currency are converted to our functional currency using the exchange rate on the transaction date.

Gains or losses resulting from these transactions are included in interest expense and other income, net on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Purchases and retirement of our common stock

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Furthermore, activity in our common stock account related to stock-based compensation is also recorded to retained earnings until such time as the reduction to retained earnings due to stock repurchases has been recovered.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net income per share

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Segment profit excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest expense, other income and expense, income taxes, and other adjustments not considered to be ongoing.

Government incentives

Government assistance

There is limited U.S.

GAAP accounting guidance for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer.

We are permitted to utilize other accounting standards, and have elected to analogize to International Financial Reporting Standards (“IFRS”), specifically International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosures of Government Assistance.

Following IAS 20, we recognize government assistance on a systematic basis over the periods in which we recognize the related costs for which the grant is intended to compensate, but only when there is reasonable assurance we will comply with all conditions attached to the grant and there is reasonable assurance the assistance will be received.

We have interpreted “reasonable assurance” to mean “probable,” as defined in loss contingencies guidance in U.S.

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), which among other things, provided employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak.

Also during fiscal 2020, the Canadian and Australian governments enacted subsidy programs to help employers offset a portion of their employee wages and rent for a limited period.

We elected to treat qualified government incentives from the U.S., Canadian and Australian governments as offsets to the related operating expenses.

During fiscal 2021, Canadian subsidies reduced our operating expenses by $ 3.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss).

During 2020, U.S., Canadian and Australian subsidies reduced our operating expenses by $ 9.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss).

government enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), which among other things, provided payroll tax credits to eligible employers to address the negative economic impacts of the COVID-19 outbreak.

Also during fiscal 2020, the Canadian and Australian governments enacted subsidy programs to help employers offset a portion of wage and rent expenses for a limited period.

During fiscal 2021, Canadian subsidies reduced operating expenses by $ 3.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss).

During 2020, U.S., Canadian and Australian government assistance reduced operating expenses by $ 9.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss).

Based on the reasonable assurance criteria, we have deferred recognition of certain benefits of $ 21.8 million and $ 15.0 million as of December 25, 2022 and December 26, 2021, respectively until recognition becomes probable, and we have included these amounts in accrued wages and benefits on our Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, under the CARES Act, we were allowed to delay payments for the employer portion of social security taxes (6.2% of taxable wages) incurred between March 27, 2020 and December 31, 2020, for both our temporary associates and permanent employees.

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There are no new accounting pronouncements, issued or effective during the fiscal year, that are expected to have a significant impact on our financial statements and related disclosures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENT

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Cash, cash equivalents and restricted cash (1) $ 135,631 $ 135,631 $ — $ —

$ 103,185 $ 103,185 $ — $ —

Municipal debt securities $ 42,431 $ — $ 42,431 $ —

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Restricted investments classified as held-to-maturity (2) $ 119,525 $ — $ 119,525 $ —

Deferred compensation investments (3) $ — $ — $ — $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 26, 2021

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Cash, cash equivalents and restricted cash (1) $ 103,185 $ 103,185 $ — $ —

$ 118,612 $ 118,612 $ — $ —

Municipal debt securities $ 58,505 $ — $ 58,505 $ —

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Restricted investments classified as held-to-maturity (2) $ 138,084 $ — $ 138,084 $ —

Deferred compensation investments (3) $ 5,915 $ 5,915 $ — $ —

(1) Cash, cash equivalents and restricted cash include money market funds and deposits.

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Restricted Cash and Investments for additional details on our held-to-maturity debt securities.

(3) Deferred compensation investments include mutual funds and money market funds.

Refer to Note 3:

Restricted Cash and Investments for additional details on these investments.

As of December 26, 2021, all of the mutual funds and money market funds supporting the deferred compensation liability have been converted into company-owned life insurance policies.

Assets measured at fair value on a nonrecurring basis

We measure the fair value of certain non-financial assets on a non-recurring basis, including goodwill and certain intangible assets.

There were no goodwill or intangible asset impairment charges recorded during fiscal 2022 or 2021.

During the first quarter of 2020, we performed an interim impairment test as of the last day of our first fiscal quarter (March 29, 2020).

As a result of the test, goodwill and client relationship intangible assets with a total carrying value of $ 221.6 million were written down to their fair value, and an impairment charge of $ 175.2 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 27, 2020.

There were no goodwill or intangible asset impairment charges recorded during fiscal 2021 or 2019.

Refer to Note 5:

Goodwill and Intangible Assets for additional details on the impairment charge and valuation methodologies.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The impairment was comprised as follows:

11 unchanged sentences

Investments held in Trust 123,678 135,419

Deferred compensation investments — 5,915

Company-owned life insurance policies 26,479 32,318

1 unchanged sentence

Total restricted cash and investments $ 213,734 $ 221,026

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Held-to-maturity

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Total held-to-maturity investments $ 135,419 $ 3,228 $ ( 563 ) $ 138,084

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost and fair value by contractual maturity of our held-to-maturity investments are as follows:

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Due after one year through five years 90,891 87,001

Due after five years through ten years 2,019 2,051

Total held-to-maturity investments $ 123,678 $ 119,525

2 unchanged sentences

Deferred compensation investments and company-owned life insurance policies

We hold company-owned life insurance policies, mutual funds and money market funds to support our deferred compensation liability.

As of December 26, 2021, all of the mutual funds and money market funds were converted into company-owned life insurance policies.

Unrealized gains and losses related to these investments held at December 26, 2021, December 27, 2020 and December 29, 2019, included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:

We hold company-owned life insurance policies to support our deferred compensation liability.

Before December 26, 2021, we also held mutual funds and money market funds, which have since been converted into company-owned life insurance policies.

The unrealized gains and losses related to investments still held at December 25, 2022, December 26, 2021 and December 27, 2020, included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:

(in thousands) 2022 2021 2020

Unrealized gains (losses) $ ( 5,841 ) $ 1,061 $ 723

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUPPLEMENTAL BALANCE SHEET INFORMATION

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(1) As a result of our adoption of the accounting standard for credit losses, we recognized a cumulative-effect adjustment to our accounts receivable allowance of $ 0.5 million as of the beginning of the first quarter of 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prepaid expenses and other current assets

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The following table reflects changes in the carrying amount of goodwill during the period by reportable segments:

(in thousands) PeopleReady PeopleManagement PeopleScout Total company

(in thousands) PeopleReady PeopleScout PeopleManagement Total company

Balance at December 27, 2020

2 unchanged sentences

Goodwill, net 60,094 33,288 1,491 94,873

Impairment charge — ( 45,901 ) ( 94,588 ) ( 140,489 )

Foreign currency translation — ( 335 ) — ( 335 )

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(1) Excludes assets that are fully amortized.

Balances at December 27, 2020 are net of impairment charge of $ 34.7 million.

Amortization expense of our finite-lived intangible assets was $ 5.7 million, $ 6.7 million and $ 10.1 million for the fiscal years ended December 25, 2022, December 26, 2021 and December 27, 2020, respectively.

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The combined fair values for all reporting units were then reconciled to our aggregate market value of our shares of common stock on the date of valuation, while considering a reasonable control premium.

The remaining goodwill balances for PeopleScout RPO and PeopleScout MSP was $ 23.6 million and $ 9.7 million , respectively, as of December 27, 2020.

The remaining goodwill balances for PeopleScout RPO and PeopleScout MSP were $ 23.6 million and $ 9.7 million , respectively, as of December 27, 2020.

Finite-lived intangible assets

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The impairment charge for PeopleScout RPO and PeopleManagement On-Site client relationship intangible assets was $ 25.0 million and $ 9.7 million, respectively.

The remaining client relationship intangible asset balances related to assets impaired for PeopleScout RPO and PeopleManagement On-Site was $ 5.1 million and $ 7.2 million, respectively, as of December 27, 2020.

The remaining client relationship intangible asset balances related to assets impaired for PeopleScout RPO and PeopleManagement On-Site were $ 5.1 million and $ 7.2 million, respectively, as of December 27, 2020.

Considerable management judgment was necessary to determine key assumptions, including projected revenue of acquired clients and an appropriate discount rate of 12.0 %.

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We provide workers’ compensation insurance for our associates and permanent employees.

The majority of our current workers’ compensation insurance policies cover claims for a particular event above a $ 2.0 million deductible limit, on a “per occurrence” basis.

The majority of our current workers’ compensation insurance policies cover claims for a particular event above our deductible limit, on a “per occurrence” basis.

Effective July 1, 2022, we increased our deductible limit from $ 2.0 million to $ 5.0 million, on a “per occurrence” basis.

This results in our being substantially self-insured.

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The discounted receivables from insurance companies, net of valuation allowance, were $ 75.2 million and $ 61.4 million as of December 25, 2022 and December 26, 2021, respectively.

The activity related to the insurance receivable allowance for credit losses was as follows:

(in thousands) 2021 2020 2019

Beginning balance $ 85 $ 629 $ 3,314

Cumulative-effect adjustment (1) — 72 —

Charged to expense 13 13 120

Release of allowance — ( 629 ) ( 2,805 )

Ending balance $ 98 $ 85 $ 629

(1) As a result of our adoption of the accounting standard for credit losses, we recognized a cumulative-effect adjustment to our insurance receivable valuation allowance of $ 0.1 million as of the beginning of the first quarter of 2020.

Refer to Note 1:

Summary of Significant Accounting Policies for further details.

Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment.

Factors considered in establishing and adjusting these reserves include, among other things:

• changes in medical and time loss (“indemnity”) costs;

• changes in mix between medical only and indemnity claims;

• regulatory and legislative developments impacting benefits and settlement requirements;

• type and location of work performed;

• impact of safety initiatives;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• positive or adverse development of claims, which considers the potential impact of COVID-19.

The table below presents the estimated future payout of our discounted workers’ compensation claims reserve for the next five years and thereafter as of December 25, 2022:

6 unchanged sentences

(1) Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Workers’ compensation cost consists primarily of changes in self-insurance reserves net of changes in discount, monopolistic jurisdictions’ premiums, insurance premiums and other miscellaneous expenses.

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Included in the Revolving Credit Facility is a $ 30.0 million sub-limit for “Swingline” loans and a $ 125.0 million sub-limit for letters of credit.

At December 26, 2021, $ 6.2 million was utilized by outstanding standby letters of credit, leaving $ 293.8 million unused and available under the Revolving Credit Facility.

At December 25, 2022, $ 7.2 million was utilized by outstanding standby letters of credit, leaving $ 292.8 million unused under the Revolving Credit Facility.

At December 26, 2021, $ 6.2 million was utilized by outstanding standby letters of credit.

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The second amendment to our credit agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including, among others, financial covenants.

The following financial covenants, as defined in the second amendment to our credit agreement, were in effect starting the third quarter of 2021 and remained as of December 26, 2021:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Consolidated leverage ratio less than 4.00 for the third and fourth quarters of 2021 and less than 3.00 thereafter, defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the second amendment to our credit agreement.

The following financial covenants, as defined in the second amendment to our credit agreement, were in effect as of December 25, 2022:

• Consolidated leverage ratio less than 3.00 , defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the second amendment to our credit agreement.

As of December 25, 2022, our consolidated leverage ratio was 0.06 .

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As of December 25, 2022, and throughout fiscal 2022, we were in compliance with all effective covenants related to the Revolving Credit Facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

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Purchase obligations do not include agreements that are cancellable without significant penalty.

We had $ 33.3 million of purchase obligations as of December 26, 2021, of which $ 20.2 million are expected to be paid in 2022, $ 11.4 million in 2023, $ 1.6 million in 2024, and the remaining $ 0.1 million in 2025.

We had $ 32.5 million of purchase obligations as of December 25, 2022, of which $ 18.0 million are expected to be paid in 2023, $ 8.2 million in 2024, and the remaining $ 6.3 million in 2025.

Legal contingencies and developments

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Unvested restricted stock included in reportable shares outstanding was 0.2 million and 0.5 million shares as of December 25, 2022 and December 26, 2021, respectively.

On September 15, 2017, our Board authorized a $ 100.0 million addition to our share repurchase program for our outstanding common stock (“2017 authorization”).

On October 16, 2019, our Board authorized a $ 100.0 million addition to our share repurchase program for our outstanding common stock (“2019 authorization”).

On January 31, 2022, our Board authorized a $ 100.0 million addition to our share repurchase program for our outstanding common stock (“2022 authorization”).

The share repurchase program does not obligate us to acquire any particular amount of common stock and does not have an expiration date.

We may choose to purchase shares in the open market, from individual holders, through an accelerated share repurchase agreement or otherwise.

Refer to Note 15:

Subsequent Event for further details regarding an additional authorization.

During fiscal 2020, we repurchased shares using the remaining $ 19.0 million available under the 2017 authorization.

Under this authorization, we repurchased and retired 4.7 million shares of our common stock at an average share price of $ 21.14 , which excludes commissions.

As of December 27, 2020, $ 66.7 million remained available for repurchase of common stock under the 2019 authorization.

During fiscal 2021, we repurchased shares using $ 16.7 million under the 2019 authorization.

During fiscal 2022, we repurchased shares using the remaining $ 50.0 million under the 2019 authorization.

Under the 2019 authorization, we repurchased and retired a total of 4.7 million shares of our common stock over three fiscal years, at an average share price of $ 21.09 , which excludes commissions.

During fiscal 2022, we repurchased shares using $ 11.0 million under the 2022 authorization.

As of December 25, 2022, $ 89.0 million remains available for repurchase of common stock under the 2022 authorization.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The details of shares repurchased as part of our existing share repurchase authorizations are as follows:

The details of shares repurchased in the open market as part of our existing share repurchase authorizations are as follows:

Fiscal year Number of shares repurchased Average price per share Amount

(in thousands)

Open market purchases 620,280 $ 26.90 $ 16,678

Open market purchases 779,068 $ 15.85 $ 12,346

ASR (1) 2,777,486 $ 14.40 $ 40,000

Total 2020 3,556,554 $ 14.72 $ 52,346

(1) On February 28, 2020, we entered into an accelerated share repurchase (“ASR”) agreement with a third-party financial institution to repurchase our common stock.

On July 2, 2020, we settled our ASR agreement, resulting in the receipt of a total of 2,777,486 shares over the term of the ASR agreement with a volume weighted average price of $ 14.40 .

2022 2,234,006 $ 27.34 $ 60,939

2021 620,280 $ 26.90 $ 16,678

Preferred stock

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Our 2016 Omnibus Incentive Plan (“Incentive Plan”), effective May 11, 2016, applies to directors, officers, employees and consultants of the Company and permits the granting of nonqualified and incentive stock options, restricted stock awards, performance share units, restricted stock units and stock appreciation rights.

Upon adoption, the Incentive Plan provided for the issuance or delivery of up to 1.5 million shares of our common stock.

At the time of adoption, there were 1.5 million shares available for issuance.

Effective May 9, 2018, an additional 1.8 million shares were authorized under the Incentive Plan.

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Stock-based awards granted to executive officers and key employees generally vest annually over three or four years .

Beginning in fiscal 2020, stock-based awards granted to members of our Board vest over an eight month period.

Prior to fiscal 2020, stock-based awards granted to members of our Board vested immediately.

Restricted stock units granted to members of our Board vest in the fourth quarter of the same fiscal year in which the shares are granted.

Receipt of the vested shares may be deferred until after a director leaves the Board.

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We recognize compensation expense on a straight-line basis over the vesting period, net of forfeitures.

Beginning in fiscal 2020, performance share units are only granted to certain executive officers.

Prior to fiscal 2020, performance share units were also granted to certain employees.

Vesting of performance share units is contingent upon the achievement of return on equity, profitability, or individual performance goals at the end of each three-year performance period.

Performance share units are only granted to certain executive officers.

Vesting of performance share units is contingent upon the achievement of return on equity, profitability, or individual performance goals at the end of each performance period, which is generally three years.

Each performance share unit is equivalent to one share of common stock.

1 unchanged sentence

Our estimate of the performance units expected to vest is reviewed and adjusted as appropriate each quarter.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

S tock-based award activity for the fiscal year ended December 26, 2021, was as follows:

Stock-based award activity for the fiscal year ended December 25, 2022, was as follows:

(shares in thousands) Shares Weighted-average grant-date fair value

4 unchanged sentences

Non-vested at the end of the period 1,436 21.93

The following table summarizes the weighted-average grant-date fair value per share for stock-based awards granted during fiscal 2021, 2020 and 2019:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the weighted-average grant-date fair value per share for stock-based awards granted:

2022 2021 2020

3 unchanged sentences

Employee Stock Purchase Plan

Our ESPP reserves 1.0 million shares of common stock for purchase.

Our ESPP reserved 1.0 million shares of common stock for purchase.

The plan allows eligible employees to contribute up to 10 % of their earnings toward the monthly purchase of the company’s common stock.

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The requisite service period begins on the enrollment date and ends on the purchase date, the duration of which is one month .

The following table summarizes transactions under our ESPP during fiscal 2021, 2020 and 2019:

The following table summarizes transactions under our ESPP:

(shares in thousands) 2022 2021 2020

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CARES Act — — ( 468 ) ( 0.6 ) ( 2,939 ) 1.7

Uncertain tax positions ( 1,336 ) ( 1.8 ) ( 391 ) ( 0.5 ) ( 51 ) —

Non-deductible goodwill impairment charge — — — — 21,849 ( 12.6 )

Non-deductible/non-taxable items 589 0.8 124 ( 0.1 ) 1,559 2.2

Non-deductible and non-taxable items 1,377 1.9 589 0.8 124 ( 0.1 )

Foreign taxes 654 0.9 211 0.3 ( 977 ) 0.5

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The difference between the statutory federal income tax rate of 21.0 % and our effective income tax rate results primarily from WOTC.

Other differences result from state and foreign income tax, certain non-taxable income and non-deductible expenses, CARES Act and tax effects of stock-based compensation.

The non-deductible goodwill and intangible asset impairment charge relates to an impairment charge of the carrying amounts of goodwill and other intangible assets of $ 175.2 million, recorded in the first quarter of 2020.

Other differences result from state and foreign income tax, certain non-taxable income and non-deductible expenses, changes in uncertain tax positions and tax effects of stock-based compensation.

The CARES Act provided certain changes to tax laws, including the ability to carry back current year losses to obtain refunds related to prior year tax returns with a higher federal tax rate of 35%.

The non-deductible goodwill and intangible asset impairment charge related to an impairment charge of the carrying amounts of goodwill and other intangible assets of $ 175.2 million, recorded in the first quarter of 2020.

Of the total impairment loss, $ 84.7 million (tax-effect $ 21.8 million) related to reporting units from stock acquisitions and accordingly were not deductible for tax purposes.

The remaining impairment loss of $ 90.5 million (tax-effect $ 23.3 million) related to reporting units from asset acquisitions and accordingly were deductible for tax purposes.

and international components of income (loss) before tax expense (benefit) was as follows:

and foreign components of income (loss) before tax expense (benefit) was as follows:

(in thousands) 2022 2021 2020

$ 56,964 $ 61,433 $ ( 148,492 )

International 12,417 ( 24,770 ) 8,434

Foreign 16,452 12,417 ( 24,770 )

Income (loss) before tax expense (benefit) $ 73,416 $ 73,850 $ ( 173,262 )

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Deferred income taxes, net $ 25,374 $ 29,330

Deferred taxes related to our foreign currency translation were immaterial for fiscal 2021, 2020 and 2019.

The activity related to the income tax valuation allowance was as follows:

(in thousands) 2021 2020 2019

Beginning balance $ 3,072 $ 1,780 $ 2,079

Charged to expense 26 1,292 —

Release of allowance ( 730 ) — ( 299 )

Ending balance $ 2,368 $ 3,072 $ 1,780

The following table summarizes our NOLs and credit carryforwards along with their respective valuation allowance as of December 26, 2021:

The deferred tax balance is reported net by jurisdiction on our Consolidated Balance Sheets, resulting in a deferred tax liability of $ 0.5 million, included in Other long-term liabilities as of December 25, 2022.

Based on our deferred tax asset realizability analysis, we have determined that a valuation allowance is appropriate for certain tax credits and net operating losses (“NOLs”) that we expect will not be utilized within the permitted carryforward periods as of December 25, 2022 and December 26, 2021.

Changes to deferred taxes related to foreign currency translation were immaterial for fiscal 2022, 2021 and 2020.

The following table summarizes our credit carryforwards and NOLs along with their respective valuation allowance as of December 25, 2022:

(in thousands) Carryover tax benefit Valuation allowance Expected

6 unchanged sentences

Total $ 11,355 $ ( 2,152 ) $ 9,203

As of December 26, 2021, our liability for unrecognized tax benefits was $ 1.9 million.

If recognized, $ 1.5 million would impact our effective tax rate.

We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the fiscal year ended December 26, 2021.

This liability is recorded in other long-term liabilities on our Consolidated Balance Sheets.

In general, the tax years 2018 through 2020 remain open to examination by the major taxing jurisdictions where we conduct business.

The activity related to the income tax valuation allowance was as follows:

(in thousands) 2022 2021 2020

Beginning balance $ 2,368 $ 3,072 $ 1,780

Charged to expense ( 216 ) 26 1,292

Release of allowance — ( 730 ) —

Ending balance $ 2,152 $ 2,368 $ 3,072

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 unchanged sentences

Ending balance $ 830 $ 1,881 $ 1,930

We recognize interest and penalties related to unrecognized tax benefits within income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).

Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets.

Related to the unrecognized tax benefits noted above, we accrued an immaterial amount for interest and penalties during fiscal 2021 and, in total, as of December 26, 2021, have recognized a liability for penalties of $ 0.1 million and interest of $ 0.6 million.

As of December 25, 2022, our liability for unrecognized tax benefits was $ 0.8 million.

If recognized, $ 0.7 million would impact our effective tax rate.

We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the fiscal year ended December 25, 2022.

In general, the tax years 2019 through 2021 remain open to examination by the major taxing jurisdictions where we conduct business.

Interest and penalties accrued related to the unrecognized tax benefits noted above were immaterial as of December 25, 2022.

NET INCOME (LOSS) PER SHARE

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SEGMENT INFORMATION

Segment information

Our operating segments and reportable segments are described below:

Our PeopleReady reportable segment provides blue-collar, contingent staffing through the PeopleReady operating segment.

PeopleReady provides on-demand and skilled labor in a broad range of industries that include construction, manufacturing and logistics, warehousing and distribution, retail, waste and recycling, energy, hospitality and general labor.

Our PeopleManagement reportable segment provides contingent labor and outsourced industrial workforce solutions, primarily on-site at the client’s facility, through the following operating segments, which we have aggregated into one reportable segment in accordance with U.S.

• PeopleManagement On-Site :

On-site management and recruitment for the contingent industrial workforce of manufacturing, warehousing and distribution facilities;

• PeopleManagement Centerline :

Recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PeopleReady provides on-demand and skilled labor in a broad range of industries that include construction, transportation, manufacturing, retail, hospitality and renewable energy.

Our PeopleScout reportable segment provides high-volume, permanent employee recruitment process outsourcing, employer branding services and management of outsourced labor service providers through the following operating segments, which we have aggregated into one reportable segment in accordance with U.S.

3 unchanged sentences

Management of multiple third-party staffing vendors on behalf of clients.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• PeopleManagement On-Site :

On-site management and recruitment for the contingent industrial workforce of manufacturing, warehousing and distribution facilities;

• PeopleManagement Centerline :

Recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries.

The following table presents our revenue disaggregated by major source and segment and a reconciliation of segment revenue from services to total company revenue:

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Amortization of software as a service assets ( 2,985 ) ( 2,709 ) ( 2,307 )

Acquisition/integration costs — — ( 1,562 )

Goodwill and intangible asset impairment charge — — ( 175,189 )

Gain on deferred compensation assets — ( 2,897 ) ( 1,725 )

Workforce reduction costs ( 1,993 ) ( 12,570 ) ( 3,301 )

COVID-19 government subsidies, net 4,222 6,211 —

Other benefits (costs) ( 3,711 ) 4,496 1,010

PeopleReady technology upgrade costs ( 7,935 ) ( 1,300 ) —

COVID-19 government assistance, net — 4,222 6,211

Other costs ( 4,027 ) ( 4,404 ) ( 8,074 )

Depreciation and amortization ( 29,273 ) ( 27,556 ) ( 32,031 )

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Asset information by reportable segment is not presented since we do not manage our segments on a balance sheet basis.

Our international operations are primarily in Canada, Australia and the United Kingdom.

Domestic and international revenue

Our international operations are primarily in Canada, the United Kingdom, and Australia.

Revenue by region was as follows:

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of client risk

No single client represented more than 10.0% of total company revenue for fiscal 2022, 2021 or 2020.

1 unchanged sentence

• No single client represented 10.0% or more of our PeopleReady reportable segment revenue for fiscal 2022, 2021, or 2020.

• No single client represented 10.0 % or more of our PeopleManagement reportable segment revenue for fiscal 2021.

One client represented 10.1 % and 10.0% of our PeopleManagement reportable segment revenue for fiscal 2020 and 2019, respectively.

• One client represented 13.1 %, 10.9 % and 10.1 % of our PeopleScout reportable segment revenue for fiscal 2022, 2021 and 2020, respectively.

• One client represented 10.6 % and 10.1 % of our PeopleManagement reportable segment revenue for fiscal 2022 and 2020, respectively.

No single client represented 10.0% or more of our PeopleManagement reportable segment revenue for fiscal 2021.

Property and equipment located in international operations was approximately 4.6 % and 5.6 % of total property and equipment, net as of December 25, 2022 and December 26, 2021, respectively.

SUBSEQUENT EVENT

On January 31, 2022, our Board of Directors authorized a $ 100 million addition to our share repurchase program for our outstanding common stock.

The share repurchase program does not obligate us to acquire any particular amount of common stock and does not have an expiration date.

We evaluated events and transactions occurring after the balance sheet date through the date the financial statements were issued, and identified no other events that were subject to recognition or disclosure.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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 8. Financial Statements and Supplementary Data