Company: KELYB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000055135-25-000016
Chunk: 64

Company: KELLY SERVICES INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 64
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.  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 first 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, 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.  During the first quarter of 2025, the Company made a payment in the amount of $0.9 million with the remainder of the change in the balance attributable to exchange rate fluctuations.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.  As of first quarter-end 2025, the value remained at zero and no further liability will