Company: KELYB
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000055135-25-000052
Chunk: 14

Company: KELLY SERVICES INC
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 a notional value of $50.0 million each to manage Secured Overnight Financing Rate (“SOFR”) fluctuations on the securitization facility (see Debt footnote).  These contracts were not designated as hedging instruments; therefore, the mark-to-market fair value changes and the cash settlements on the swaps are recognized in earnings.  The Company's interest rate swaps were valued with assistance from a third party based on pricing models using observable inputs, such as SOFR forward rates, and are considered level 2 liabilities, which are remeasured quarterly.  The 12-month interest rate swap was settled in the second quarter of 2025 (see Debt footnote).  As of second quarter-end 2025 and year-end 2024, the Company recorded a liability totaling $0.1 million and $0.4 million, respectively, related to the mark-to-market fair value of the interest rate swaps in accounts payable and accrued liabilities in the consolidated balance sheet.  The net gains and losses recorded in other income (expense), net in the consolidated statements of earnings related to these swaps were not significant as of the second quarter-end 2025.Indemnification LiabilitiesAs of second quarter-end 2025 and year-end 2024, the Company had an indemnification liability totaling $2.2 million and $2.0 million, respectively, relating to the sale of the EMEA staffing operations in January 2024, with the increase attributable to exchange rate fluctuations.  The liability is included in other long-term liabilities in the consolidated balance sheet and the associated expense is included in the gain on sale of EMEA staffing operations in the consolidated statements of earnings.  As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences for an indefinite term.  The Company's maximum exposure under these indemnifications is not estimable at this time due to uncertainties to potential outcomes and the facts and circumstances involved in the agreement.  Management believes the risk of material exposure is remote. The initial valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital.  The valuation, which represents the fair value, is considered a level 3 liability and is measured on a recurring basis.As of second quarter-end 2025, the Company has an indemnification liability totaling $0.9 million in other long-term liabilities, and $1.7 million at year-end 2024,