What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-15 · 234 added, 131 removed, 895 unchanged (29% of the section changed)

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

and subsidiaries (the “Company”) as of December 25, 2022 and December 26, 2021, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 25, 2022 and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2023 and December 25, 2022, the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 25, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matters

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.

Workers’ Compensation Claims Reserves - Refer to Note 1 and Note 6 to the Financial Statements

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Workers’ Compensation Claims Reserves - Refer to Notes 1 and 6 to the Financial Statements

Critical Audit Matter Description

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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 undiscounted workers’ compensation reserve and compared our estimates to the Company’s undiscounted workers’ compensation reserve.

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

Goodwill - PeopleScout MSP Reporting Unit - Refer to Notes 1, 2, and 5 to the Financial Statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The fair value of each reporting unit was estimated using a weighting of the income and market valuation approaches, except for the PeopleScout MSP reporting unit (“MSP”) which relied only on the income approach.

The income approach applied a fair value methodology to each reporting unit based on discounted cash flows, which requires management to make significant judgments related to the estimation of future revenue and profitability, and determination of the risk-adjusted weighted average cost of capital (“discount rate”).

Changes in these assumptions could have a significant impact on either the fair value of MSP and the related amount of the goodwill impairment charge.

The goodwill balance was $84.1 million as of December 31, 2023, of which $0.8 million was allocated to MSP.

A goodwill impairment charge of $8.9 million was recorded within MSP during the year ended December 31, 2023.

The MSP goodwill impairment recorded during the year ended December 31, 2023 was due to management’s revised internal revenue projections.

These projections were updated based on management’s current macroeconomic outlook and industry analysis, which indicates that MSP will underperform due to a strategic lack of investment in technology within an increasingly competitive market.

We identified goodwill for the MSP reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair value of MSP.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate and forecasts of future revenue and profitability.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rate and forecasts of future revenue and profitability used by management to estimate the fair value of MSP included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of MSP, such as controls related to management’s selection of the discount rate and forecasts of future revenues and profitability.

• We evaluated management’s ability to accurately forecast future revenues and profitability by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s revenue and profitability forecasts by comparing the forecasts to:

◦ Historical revenues and profitability.

◦ Internal communications to management and the Board of Directors, including related to strategic decisions that could impact MSP’s future revenues.

◦ Industry reports containing analyses of expected trends and the competitive environment in the industry in which MSP operates.

• With the assistance of our fair value specialists, we evaluated the reasonableness of (1) valuation methodology and (2) the discount rate by:

◦ Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

◦ Developing an independent estimate of the discount rate and comparing that estimate to the discount rate selected by management.

/s/ Deloitte & Touche, LLP

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CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data) December 25,

(in thousands, except par value and share count data)

2023 December 25,

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Income (loss) from operations ( 23,850 ) 72,185 68,442

Interest expense and other income, net 1,231 5,408 1,620

Interest and other income (expense), net 3,205 1,231 5,408

Income (loss) before tax expense (benefit) ( 20,645 ) 73,416 73,850

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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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Common stock repurchases for taxes upon vesting of restricted stock ( 4,161 ) ( 4,480 ) ( 3,238 )

Net change in revolving credit facility — — ( 37,100 )

Other ( 100 ) ( 253 ) ( 345 )

Net cash used in financing activities ( 37,583 ) ( 64,692 ) ( 19,126 )

Change in cash, cash equivalents and restricted cash reclassified to assets held-for-sale

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 874 ) ( 2,420 ) ( 521 )

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(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.

We serve clients in a wide variety of industries through our PeopleReady segment which offers general, industrial and skilled trade contingent 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”), managed service provider (“MSP”) and talent advisory solutions.

Basis of presentation

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The financial statements are presented on a 52/53-week fiscal year-end basis, with the last day of the fiscal year ending on the Sunday closest to the last day of December.

In fiscal years consisting of 53 weeks, the final quarter will consist of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters will consist of 13 weeks.

All years presented include 52 weeks.

In fiscal years consisting of 53 weeks, the final quarter consists of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters consist of 13 weeks.

Our 2023 fiscal year contained 53 weeks, with the 53rd week falling in the fiscal fourth quarter, while our 2022 and 2021 fiscal years contained 52 weeks.

Use of estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

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.

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 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 due to risks and uncertainties, including uncertainty in the current economic environment.

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The client simultaneously receives and consumes the benefits of the services as they are provided.

We recognize revenue using an output method, generally based on the number of hires made during each month multiplied by the agreed-upon rate per hire.

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

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We determine the fair value of these restricted investments based on comparisons to similar financial instruments or financial models based on observable inputs to arrive at consensus pricing.

Certain items such as goodwill and other intangible assets are recognized or disclosed at fair value on a non-recurring basis.

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.

Annual and interim impairment tests may subject our reporting units with goodwill and other intangible assets to nonrecurring fair value measurement.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated.

Costs associated with the acquisition or development of software for internal use are capitalized and amortized over the expected useful life of the software, from three to eight years .

Costs associated with the acquisition or development of software for internal use, including internal and external labor costs, are capitalized and amortized over the expected useful life of the software, from three to eight years .

Capitalization of costs begins when the preliminary project stage is complete, when management authorizes and commits to funding the project, and it is probable the project will be completed for the intended use.

Capitalization of costs ends when the project is substantially complete and ready for its intended use.

A subsequent addition, modification or upgrade to internal-use software is capitalized to the extent that it enhances the software’s functionality or extends its useful life.

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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.

Many leases require variable payments for common area maintenance, sales tax, and repairs and maintenance, and insurance coverage, in addition to base rent.

The variable portion of these lease payments is not included in our right-of-use assets or lease liabilities.

Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Rather, variable payments, other than those dependent upon an index or rate, along with any non-lease components of a contract, are expensed when the obligation for those payments is incurred and are included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

We determine if an arrangement meets the definition of a lease at inception, at which time we also perform an analysis to determine whether the lease qualifies as operating or financing.

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

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.

We performed our annual impairment test for goodwill as of the first day of our fiscal second quarter of 2023.

Refer to Note 5:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

Indefinite-lived intangible assets

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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.

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 asset 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.

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.

We performed our annual impairment test for indefinite-lived intangible assets as of the first day of our fiscal second quarter of 2023.

Refer to Note 5:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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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.

There were no material other long-lived asset impairment charges recorded during the fiscal year ended December 31, 2023.

Workers’ compensation claims reserves

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Treasury instruments available during the year in which the liability was incurred.

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

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).

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

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• positive or adverse development of claims.

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

Legal contingency reserves and regulatory liabilities

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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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These expected future tax consequences are measured based on provisions of tax law as currently enacted;

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

the effects of future changes in tax

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

laws are not anticipated.

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

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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).

We recognize interest and penalties related to unrecognized tax benefits within income tax expense (benefit) 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”).

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

WOTC is designed to encourage hiring of workers from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve month period up to worker maximum by targeted category.

Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year.

However, the estimate is subject to variation because 1) a small percentage of our associates qualify for one or more of the many targeted categories;

However, the estimate is subject to variation because:

1) a small percentage of our associates qualify for one or more of the many targeted categories;

2) the targeted categories are subject to different incentive credit rates and limitations;

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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).

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).

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

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

Prior to fiscal 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 and other income (expense), 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 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”).

Compensation expense for stock-based awards is generally recognized on a straight-line basis over the vesting period, based on our stock’s fair market value on the grant date.

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.

Compensation expense for restricted stock-based awards is generally recognized on a straight-line basis over the vesting period, based on our stock’s fair market value on the grant date.

For restricted stock-based awards with non-market performance conditions, compensation expense is recognized over each vesting period based on assessment of the likelihood of meeting these conditions.

Compensation expense for our employee stock purchase plan (“ESPP”) is based on the estimated fair value on the date of grant, using the Black-Scholes valuation model, and is recognized on a straight-line basis over the offering period, which is over a calendar month.

We recognize forfeitures as they occur.

In the event that there are changes to an employee’s requisite service period based on terms existing in the original award agreement, any unrecognized compensation expense is recognized prospectively over the updated remaining requisite service period.

In the case that terms of an existing stock award agreement are modified, the sum of any unrecognized compensation expense as of the modification date and the modification charge will be expensed on a straight-line basis over the new requisite service period.

The modification charge is the incremental amount of the fair value of the award before the modification and the fair value after the modification.

Foreign currency

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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).

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

Purchases and retirement of our common stock

We purchase our common stock under a program authorized by our Board.

We purchase our common stock under a program authorized by our Board of Directors (“Board”).

Under applicable Washington State law, shares purchased are not displayed separately as treasury stock on the Consolidated Balance Sheets and are treated as authorized but unissued shares.

It is our accounting policy to first record these purchases as a reduction to our common stock account.

It is our accounting policy to first record these purchases and the related excise tax as a reduction to our common stock account.

Once the common stock account has been reduced to a nominal balance, remaining purchases are recorded as a reduction to our retained earnings.

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.

Net income per share

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.

Diluted net income per share is calculated by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period.

Net income (loss) per share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding during the period.

Potential common shares include the dilutive effects of vested and non-vested restricted stock, performance share units, and shares issued under the ESPP, except where their inclusion would be anti-dilutive.

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Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment.

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 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.

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 client.

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.

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On March 27, 2020, the U.S.

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 $ 27.6 million and $ 21.8 million as of December 31, 2023 and December 25, 2022, respectively until recognition becomes probable, and we have included these amounts in accrued wages and benefits on our Consolidated Balance Sheets.

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Recently issued accounting pronouncements not yet adopted

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.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which requires disclosure of incremental segment information on an interim and annual basis, primarily regarding significant segment expenses and information used to assess segment performance.

This ASU is effective for fiscal years beginning after December 15, 2023 (2024 for TrueBlue), and interim periods beginning after December 15, 2024 (Q1 2025 for TrueBlue).

Retrospective application is required for all periods presented.

We are currently evaluating the impact of this ASU on our required disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures,” which requires enhancements and further transparency to certain income tax disclosures, primarily to the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 (2025 for TrueBlue), on a prospective basis with retrospective application permitted.

We are currently evaluating the impact of this ASU on our required disclosures.

There are no other 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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Restricted investments classified as held-to-maturity (2) $ 120,913 $ — $ 120,913 $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 25, 2022

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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.

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 other intangible assets to nonrecurring fair value measurement.

We performed our annual impairment tests for goodwill and indefinite-lived intangible assets as of the first day of our fiscal second quarter of 2023.

Refer to Note 5:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

For our 2023 annual goodwill impairment test, the fair value of each reporting unit was estimated using a weighting of the income and market approaches, except for PeopleScout MSP, which relied only on the income approach.

The various inputs to these fair value models are considered Level 3.

As a result of the test, goodwill with a carrying value of $ 9.7 million associated with the PeopleScout MSP reporting unit was impaired, and an impairment charge of $ 8.9 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

For our 2023 annual indefinite-lived intangible asset impairment test, the fair value of our trade names/trademarks were estimated utilizing the relief from royalty method.

The various inputs to this fair value model are considered Level 3.

As a result of the test, one of our trade names/trademarks with a carrying value of $ 3.9 million was written down to its fair value, and an impairment charge of $ 0.6 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Refer to Note 5:

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

The impairment was comprised as follows:

March 29, 2020

(in thousands) Total fair value Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Total impairment charge

Goodwill $ 31,705 $ — $ — $ 31,705 $ ( 140,489 )

Client relationships 14,700 — — 14,700 ( 34,700 )

Total $ 46,405 $ — $ — $ 46,405 $ ( 175,189 )

RESTRICTED CASH AND INVESTMENTS

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Total restricted cash and investments $ 192,985 $ 213,734

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Held-to-maturity

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Due after one year through five years 82,847 81,146

Due after five years through ten years 5,818 5,922

Due after ten years

Total held-to-maturity investments $ 122,659 $ 120,913

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Actual maturities may differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without penalty.

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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.

During 2021, we also held mutual funds and money market funds, which were converted into company-owned life insurance policies by the end of fiscal 2021.

During the fiscal year ended December 31, 2023, we received proceeds from company-owned life insurance policies of $ 1.7 million, of which $ 1.4 million was in excess of the cash surrender value of the related policies and recognized in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The unrealized gains and losses related to investments still held at December 31, 2023, December 25, 2022 and December 26, 2021, included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:

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Unrealized gains (losses) $ 4,383 $ ( 5,841 ) $ 1,061

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUPPLEMENTAL BALANCE SHEET INFORMATION

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Beginning balance $ 3,212 $ 6,687 $ 2,921

Cumulative-effect adjustment (1) — — 524

Current period provision 4,972 4,462 6,493

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Ending balance $ 2,005 $ 3,212 $ 6,687

(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.

Prepaid expenses and other current assets

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Other prepaid expenses 9,355 9,455

Assets held-for-sale

Other current assets 6,259 13,081

Prepaid expenses and other current assets $ 28,894 $ 32,530

Other current liabilities

(in thousands) December 31,

2023 December 25,

Contract liabilities

$ 1,844 $ 3,812

Liabilities held-for-sale

Other current liabilities

$ 10,371 $ 10,889

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment

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Depreciation expense of property and equipment totaled $ 20.6 million, $ 23.5 million and $ 20.9 million for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, respectively.

Assets and liabilities held-for-sale

During fiscal 2023, as part of our strategic initiative to simplify our organizational structure and sharpen our focus on core operations, management, with approval from the Board, began actively marketing Labour Ready Temporary Services, Ltd.

LRTS is a wholly-owned subsidiary of the company, and provides contingent staffing solutions to clients in Canada under the PeopleReady brand.

The operational results of LRTS are included as part of our PeopleReady operating segment and reportable segment for all years presented.

LRTS is not an individually significant component of the company.

As of December 31, 2023, all criteria for classifying this entity as held-for-sale were met, and did not result in recognition of a loss on our Consolidated Statements of Operations and Comprehensive Income (Loss) for fiscal 2023.

The assets and liabilities classified as held-for-sale as of December 31, 2023 are presented within other current assets and other current liabilities, respectively, on our Consolidated Balance Sheets.

The following represents the carrying amounts of the major classes of assets and liabilities included as part of the disposal group classified as held-for-sale:

(in thousands) December 31,

Current assets held-for-sale:

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Income tax receivable

Property and equipment, net

Deferred income taxes, net

Operating lease right-of-use assets, net

Total current assets held-for-sale

Current liabilities held-for-sale:

Accounts payable and other accrued expenses

Accrued wages and benefits

Operating lease liabilities

Other current liabilities 102

Total current liabilities held-for-sale

(1) Goodwill was allocated based on the relative fair value of LRTS to the total PeopleReady reporting unit prior to being reclassified as held-for-sale.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expected divestiture of our PeopleReady operations in Canada does not represent a strategic shift, nor do we expect it to have a major effect on the company’s operations and financial results and, therefore will not be reported as discontinued operations in our Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income (Loss).

A sale is expected to be finalized during the fiscal first quarter of 2024.

Subsequent event

On February 20, 2024, the company entered into a definitive share purchase agreement to sell LRTS to Vertical Staffing Resources.

The transaction is expected to close during the fiscal first quarter of 2024, subject to customary closing conditions.

GOODWILL AND INTANGIBLE ASSETS

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Goodwill, net 60,094 32,199 1,491 93,784

Goodwill reclassified as held-for-sale (1)

( 1,020 ) — — ( 1,020 )

Impairment charge — ( 8,885 ) — ( 8,885 )

Foreign currency translation — 235 — 235

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Goodwill, net $ 59,074 $ 23,549 $ 1,491 $ 84,114

(1) Refer to Note 4:

Supplemental Balance Sheet Information for further discussion.

We performed our annual impairment test as of the first day of our fiscal second quarter of 2023, for our reporting segments with remaining goodwill:

PeopleManagement Centerline;

PeopleScout RPO;

and PeopleScout MSP.

The fair value of each reporting unit was estimated using a weighting of the income and market valuation approaches.

The income approach applied a fair value methodology to each reporting unit based on discounted cash flows.

This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability, 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.

The weighted average cost of capital used in our most recent impairment test ranged from 13.0 % to 13.5 %.

We also applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, 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.

The income and market approaches were equally weighted in our most recent annual impairment test, except for PeopleScout MSP which relied only on the income approach.

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.

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

Based on our most recent impairment test, all of our reporting units’ fair values were substantially in excess of their respective carrying values, except for PeopleScout MSP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of our 2023 annual impairment test, we concluded that the carrying amount of the PeopleScout MSP reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $ 8.9 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 31, 2023.

The PeopleScout MSP goodwill impairment was related to our revised internal revenue projections, which anticipated the current year declining trends would continue into future periods.

These projections were updated based on our then-current outlook and recent industry analysis, which indicated that our business would underperform due to a strategic lack of investment in technology within an increasingly competitive market.

The remaining goodwill balance for the PeopleScout MSP reporting unit was $ 0.8 million as of December 31, 2023.

Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred.

Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.

Intangible assets

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Amortization expense of our finite-lived intangible assets was $ 5.2 million, $ 5.7 million and $ 6.7 million for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the estimated future amortization of finite-lived intangible assets as of December 31, 2023:

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Total future amortization $ 5,125

We did not identify any events or conditions that make it more likely than not that an impairment of our finite-lived intangible assets may have occurred for the fiscal year ended December 31, 2023.

Indefinite-lived intangible assets

We also held indefinite-lived trade names/trademarks of $ 6.0 million as of December 25, 2022 and December 26, 2021.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions to evaluate the impact of operating and macroeconomic changes on each reporting unit.

The fair value of each reporting unit is estimated using a combination of a discounted cash flow methodology and the market valuation approach using publicly traded company multiples in similar businesses.

This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows would 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.

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

2020 impairments

During the fiscal year ended December 27, 2020, we recorded a non-cash impairment charge of $ 140.5 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The goodwill carrying value of $ 45.9 million for our PeopleManagement On-Site reporting unit was fully impaired.

The goodwill impairment charge for PeopleScout RPO and PeopleScout MSP was $ 92.2 million and $ 2.4 million, respectively.

The charge was primarily the result of expected continued weakness in pricing and demand for our staffing services in a volatile economic climate, which resulted in a decline in our stock price.

The decline in stock price pushed our market capitalization significantly below the recorded value of our consolidated net assets.

This was further impacted by COVID-19, which created a significant drop in client demand.

The weighted average cost of capital used ranged from 11.5 % to 12.0 %.

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

During the fiscal year ended December 27, 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) .

The charge was primarily due to the decrease in demand for our services associated with government and societal actions taken to address the impact of COVID-19, which resulted in lower future expectations.

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 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 %.

We held indefinite-lived trade names/trademarks of $ 5.4 million and $ 6.0 million as of December 31, 2023 and December 25, 2022, respectively, related to businesses within our PeopleScout and PeopleManagement segments.

As a result of our 2023 annual impairment test, we concluded that the carrying amount of a trade name/trademark related to the PeopleManagement segment exceeded its estimated fair value and recorded a non-cash impairment charge of $ 0.6 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 31, 2023.

The charge was primarily the result of an increase in the discount rate, as well as lower projected revenues given our then-current outlook.

The remaining balance for this trade name/trademark was $ 3.3 million as of December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, following performance of the annual impairment test, we did not identify any additional events or conditions that make it more likely than not that an additional impairment may have occurred.

Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.

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

WORKERS' COMPENSATION INSURANCE AND RESERVES

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 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.

The majority of our current workers’ compensation insurance policies cover claims for a particular event above our $ 5.0 million deductible limit, on a “per occurrence” basis.

This results in our being substantially self-insured.

Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value using discount rates based on average returns of “risk-free” U.S.

Treasury instruments available during the year in which the liability was incurred.

The weighted average discount rate was 2.0 % and 1.6 % at December 25, 2022 and December 26, 2021, respectively.

Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value.

The discount rates used to estimate net present value are based on average returns of “risk-free” U.S.

Treasury instruments available during the year in which the liability was incurred and the weighted average duration of the payments against the self-insured claims.

Payments made against self-insured claims are made over a weighted average period of approximately 5.5 years as of December 31, 2023.

The weighted average discount rate was 2.4 % and 2.0 % at December 31, 2023 and December 25, 2022, respectively.

The following table presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented:

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We discount this reserve and corresponding receivable to its estimated net present value using the discount rates based on average returns of “risk-free” U.S.

Treasury instruments available during the year in which the liability was incurred.

The rates used to discount excess claims incurred during the fiscal years ended December 25, 2022 and December 26, 2021 were 3.0 % and 1.8 %, respectively.

Treasury instruments available during the year in which the liability was incurred and the weighted average duration of the payments against the excess claims.

The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 18 years.

The rates used to discount excess claims incurred during the fiscal years ended December 31, 2023 and December 25, 2022 were 4.1 % and 3.0 %, respectively.

The discounted workers’ compensation reserve for excess claims were $ 54.9 million and $ 76.7 million, as of December 31, 2023 and December 25, 2022, respectively.

The discounted receivables from insurance companies, net of valuation allowance, were $ 53.8 million and $ 75.2 million as of December 31, 2023 and December 25, 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 31, 2023:

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(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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We have a revolving credit agreement with Bank of America, N.A., Wells Fargo Bank, N.A., PNC Bank, N.A., KeyBank, N.A.

and HSBC Bank USA, N.A., which provides for a revolving line of credit of up to $ 300.0 million, and currently set to mature on March 16, 2025 (“Revolving Credit Facility”).

and HSBC Bank USA, N.A., which provides for a revolving line of credit of up to $ 300.0 million, and matures on March 16, 2025 (“Revolving Credit Facility”).

We have an option to increase the amount to $ 450.0 million, subject to lender approval.

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 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 31, 2023, $ 6.2 million was utilized by outstanding standby letters of credit, leaving $ 293.8 million unused under the Revolving Credit Facility, which is constrained by our most restrictive covenant making $ 85.9 million available for additional borrowing.

At December 25, 2022, $ 7.2 million was utilized by outstanding standby letters of credit.

Under the terms of the Revolving Credit Facility, we pay a variable rate of interest on funds borrowed under the revolving line of credit in excess of the Swingline loans, based on the U.S.

Dollar London Interbank Offered Rate (“LIBOR”) plus an applicable spread between 1.25 % and 3.50 %.

Under the terms of the Revolving Credit Facility, we pay a variable rate of interest on funds borrowed under the revolving line of credit in excess of the Swingline loans, based on the Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 0.10 %, plus an applicable spread between 1.25 % and 3.50 %.

Alternatively, at our option, we may pay interest based on a base rate plus an applicable spread between 0.25 % and 1.50 %.

11 unchanged sentences

As of December 31, 2023, our consolidated leverage ratio was 0.20 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Consolidated fixed charge coverage ratio greater than 1.25 , defined as the trailing twelve months bank-adjusted cash flow divided by cash interest expense.

1 unchanged sentence

As of December 31, 2023, and throughout fiscal 2023, we were in compliance with all effective covenants related to the Revolving Credit Facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent event

On February 9, 2024, we entered into an amended and restated revolving credit agreement with Bank of America, N.A., PNC Bank, N.A., HSBC Bank USA, N.A., Wells Fargo Bank, N.A., and Key Bank, N.A.

dated as of February 9, 2024 (the “2024 Revolving Credit Facility”).

The 2024 Revolving Credit Facility provides for a revolving line of credit of up to $ 255.0 million, and matures on February 9, 2029.

We have an option to increase the amount to $ 405.0 million, subject to lender approval.

Included in the 2024 Revolving Credit Facility is a $ 25.0 million sub-limit for “Swingline” loans and a $ 25.0 million sub-limit for letters of credit.

COMMITMENTS AND CONTINGENCIES

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$ 25,373 $ 26,982

(1) Other lease costs include variable lease costs, net of sublease income.

(1) Excludes expenses related to leases with a lease term of less than one month.

(2) Other lease costs include variable lease costs, net of rental and sublease income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other information related to our operating leases was as follows:

2 unchanged sentences

Weighted average discount rate 4.9 % 4.9 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future non-cancelable minimum lease payments under our operating lease commitments as of December 31, 2023, are as follows for each of the next five years and thereafter:

3 unchanged sentences

Imputed interest (2)

Present value of operating lease liabilities held-for-sale

Present value of lease liabilities

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

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 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

Under the 2019 authorization, we repurchased shares during fiscal 2021 using $ 16.7 million, and during fiscal 2022 using the remaining $ 50.0 million.

The 2019 authorization was fully utilized as of April 2022.

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 .

Under the 2022 authorization we repurchased shares using $ 33.9 million during fiscal 2023 and $ 11.0 million during fiscal 2022.

The details of shares repurchased in the open market as part of the authorizations described above are as follows:

Shares repurchased

(in thousands)

Authorization

Amount authorized (in millions)

Remaining available

(in millions)

2019 Authorization

$ 100.0 $ — — 1,800 620

2022 Authorization

$ 100.0 $ 55.1 1,877 434 —

1,877 2,234 620

Preferred stock

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

Additionally, effective May 11, 2023, an additional 0.7 million shares were authorized under the Incentive Plan.

Stock-based awards

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-based award activity for the fiscal year ended December 31, 2023, was as follows:

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Non-vested at the end of the period 1,576 $ 19.88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Weighted-average grant-date fair value $ 17.77

As of December 25, 2022, total unrecognized stock-based compensation expense was approximately $ 18.8 million, which is estimated to be recognized over a weighted average remaining period of 1.9 years.

As of December 31, 2023, total estimated unrecognized stock-based compensation expense was $ 14.2 million.

We expect to recognize this expense over a weighted average remaining period of 1.7 years.

The total fair value of stock-based awards that vested during fiscal 2023, 2022 and 2021 was $ 12.2 million, $ 13.9 million and $ 20.6 million, respectively.

Employee Stock Purchase Plan

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

At the time of adoption in 2010, there was 1.0 million shares of common stock authorized for purchase under our ESPP.

Effective May 11, 2023, an additional 1.0 million shares of common stock were authorized for purchase under our ESPP.

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 liability for the non-qualified plan was $ 41.0 million and $ 31.3 million as of December 31, 2023 and December 25, 2022, respectively, of which $ 5.8 million and $ 5.1 million have been included in accrued wages and benefits on our Consolidated Balance Sheets.

The expense for our qualified and non-qualified deferred compensation plans, including our discretionary matching contributions, totaled $ 5.1 million, $ 6.5 million and $ 3.7 million for fiscal 2022, 2021 and 2020, respectively, and is recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The net expense related to our qualified and non-qualified deferred compensation plans totaled $ 4.1 million, $ 5.1 million and $ 6.5 million for fiscal 2023, 2022 and 2021, respectively, and is recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The net expense includes changes in cash surrender value of the company-owned life insurance policies held to support the deferred compensation liability, premiums incurred for and proceeds received from company-owned life insurance, unrealized gains (losses) on deferred compensation liabilities, as well as our discretionary matching contributions.

Refer to Note 3:

Restricted Cash and Investments for additional details on deferred compensation assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Non-deductible and non-taxable items

1,178 ( 5.7 ) 1,377 1.9 589 0.8

Foreign taxes 587 ( 2.9 ) 654 0.9 211 0.3

Other, net 398 ( 1.9 ) ( 66 ) ( 0.1 ) 801 1.0

Total tax expense (benefit) $ 11,143 15.2 % $ 12,216 16.5 % $ ( 31,421 ) 18.1 %

Total income tax expense (benefit)

$ ( 6,472 ) 31.3 % $ 11,143 15.2 % $ 12,216 16.5 %

Our effective tax rate for fiscal 2023 was 31.3 %.

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, 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.

The difference between the statutory federal income tax rate of 21.0 % and our effective income tax rate results primarily from tax benefits from hiring tax credits and state income taxes, partially offset by the non-deductible goodwill impairment charge and other non-deductible and non-taxable items.

Of the total goodwill and intangible asset impairment charge of $ 9.5 million recorded during fiscal 2023, $ 8.9 million (tax effect of $ 2.3 million) related to goodwill from a stock acquisition, and accordingly was not deductible for tax purposes.

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

9 unchanged sentences

Allowance for credit losses $ 590 $ 869

Workers’ compensation — 1,653

Accounts payable and other accrued expenses 11,242 9,641

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Deferred income taxes, net $ 35,122 $ 25,374

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.

Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, a deferred tax liability of $ 0.3 million is included in other long-term liabilities on our Consolidated Balance Sheets as of December 31, 2023.

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 31, 2023 and December 25, 2022.

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State NOLs 2,808 ( 834 ) 1,974 Various

California Enterprise Zone credits 1,259 ( 1,259 ) — 2023

Federal NOLs 4,727 — 4,727 Indefinite

Foreign alternative minimum tax credits 287 — 287 2033

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PeopleReady technology upgrade costs ( 1,342 ) ( 7,935 ) ( 1,300 )

Executive leadership transition costs ( 5,788 ) 1,422 ( 232 )

COVID-19 government assistance, net ( 525 ) — 4,222

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

Other benefits (costs) ( 5,503 ) ( 5,449 ) ( 4,172 )

Depreciation and amortization ( 25,821 ) ( 29,273 ) ( 27,556 )

Income (loss) from operations ( 23,850 ) 72,185 68,442

Interest expense and other income, net 1,231 5,408 1,620

Interest and other income (expense), net 3,205 1,231 5,408

Income (loss) before tax expense (benefit) $ ( 20,645 ) $ 73,416 $ 73,850

19 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 8. Financial Statements and Supplementary Data