Company: KELYB
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000055135-25-000080
Chunk: 27

Company: KELLY SERVICES INC
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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 cumulative losses in recent years, which were driven by goodwill impairment charges. Cumulative losses are a significant piece of negative evidence that limits the ability to consider other evidence, such as projections for future growth. The Company will continue to evaluate the need for the valuation allowances against deferred tax assets on a quarterly basis and may adjust the allowance as circumstances change.The work opportunity credit program is a temporary provision in the U.S. tax law and expires for employees hired after 2025. While the work opportunity credit has routinely been extended, it is uncertain whether it will again be extended. In the event the program is not renewed, we will continue to receive credits for qualified employees hired prior to 2026.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing multiple changes to the U.S. tax code. The OBBBA did not have any material impact on the Company’s consolidated financial statements and related disclosures. 

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

15. ContingenciesThe Company is continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of its business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes, and tax-related matters, which could result in a material adverse outcome.  The Company records accruals for loss contingencies when the Company believes it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.  Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.  At third quarter-end 2025 and year-end 2024, the gross accrual for litigation costs amounted to $2.5 million and $1.5 million, respectively.The Company maintains insurance coverage which may cover certain losses.  When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet.  At third quarter-end 2025 and year-end 2024, there were no related insurance receivables.The Company estimates the aggregate range of reasonably possible losses, in excess of amounts