Company: KELYB
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000055135-25-000007
Chunk: 24

Company: KELLY SERVICES INC
Filing Date: 2025-02-13
Form: 10-K
Item: Item 8
Chunk 24
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On July 17, 2024, the Company entered into two interest rate swaps with a notional value of $50.0 million each to manage fluctuations on our securitization facility due to SOFR variances (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 will be remeasured quarterly.  As of year-end 2024, the Company recorded a liability totaling $0.4 million related to the mark-to-market fair value change of the interest rate swaps in accounts payable and accrued liabilities in the consolidated balance sheet.  In 2024, the Company recorded a total loss of $0.2 million.  This loss includes $0.4 million related to mark-to-market changes in fair value, which was partially offset by the impact of cash settlements of $0.2 million, in other income (expense), net in the consolidated statements of earnings.Indemnification liabilitiesAs of year-end 2024, the Company has an indemnification liability totaling $2.0 million related to the sale of the EMEA staffing operations in January 2024.  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.  During 2024, the Company recognized a decrease of $0.1 million to the indemnification liability related to exchange rate fluctuations in other income (expense), net in the consolidated statements of earnings.As year-end 2024, the Company has an indemn