Company: KELYB
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000055135-25-000080
Chunk: 14

Company: KELLY SERVICES INC
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 potential outcomes and the facts and circumstances involved in the agreement.  Management believes the risk of material exposure is remote. The initial valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital.  The valuation, which represents the fair value, is considered a level 3 liability and is measured on a recurring basis.As of third quarter-end 2025, the Company has an indemnification liability totaling $1.0 million in other long-term liabilities, and $1.7 million at year-end 2024, with $0.9 million in accounts payable and accrued liabilities and $0.8 million in other long-term liabilities in the consolidated balance sheet related to the 2020 sale of the Brazil operations.  As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences initiated within a six-year period after closing.  The aggregate losses for which the Company will provide indemnification shall not exceed $8.8 million.  The valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital.  The valuation, which represents the fair value, is considered a level 3 liability, and is being measured on a recurring basis.

16 

KELLY SERVICES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(UNAUDITED)

Earnout LiabilitiesIn the second quarter of 2024, the Company recorded an earnout liability relating to the 2024 acquisition of MRP totaling $3.4 million (see Acquisitions and Disposition footnote).  The valuation of the earnout liability was initially established using the Monte Carlo simulation model and represented the fair value and is considered a level 3 liability.  The maximum total cash payment related to the earnout liability was $60.0 million.  In the fourth quarter of 2024, the liability was reassessed and the fair value was determined to be zero.  The earnout period concluded in the first quarter of 2025 and no further liability will be recognized.Equity Investment Without Readily Determinable Fair ValueIn 2022, the Company invested in equity securities with an initial investment of $0.4 million, which was included in other assets in the consolidated balance sheet.  This investment is measured using the measurement alternative for equity investments without a