Company: KELYB
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000055135-25-000080
Chunk: 19

Company: KELLY SERVICES INC
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 19
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 and Softworld’s estimated fair value of the reporting units no longer exceeded the carrying value.  The Company recorded an impairment charge of $63.5 million and $38.5 million for MRP and Softworld, respectively, for a total goodwill impairment charge of $102.0 million, which was included in goodwill impairment charge in the consolidated statements of earnings at third quarter-end 2025.  Included in the impairment charges were $8.6 million and $9.8 million of tax benefits for MRP and Softworld, respectively, associated with the impairment.In performing the step one quantitative tests and consistent with the Company’s prior practice, we determined the fair value of the MRP and Softworld reporting units using the income approach.  Under the income approach, estimated fair value is determined based on estimated future cash flows discounted by an estimated market participant weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit being measured.  Estimated future cash flows are based on the Company’s internal projection model and reflects management’s outlook for the reporting unit.  Assumptions and estimates about future cash flows and discount rates are complex and often subjective.  The analysis used the following significant assumptions: expected future revenue growth rates, profit margins and discount rate.

19 

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

These changes in circumstances were also indicators that the respective long-lived assets may not be recoverable.  MRP and Softworld have definite-lived intangible assets, consisting of trade names, customer relationships and non-compete agreements, which are amortized over their estimated useful lives.  The Company performed long-lived asset recoverability tests for MRP and Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset groups and were recoverable.

As of the third quarter 2025, following the interim triggering event and post-combination of MRP and Softworld reporting units with the legacy SET operations, the Company performed a step one quantitative test for the combined SET reporting unit and noted no goodwill adjustments were needed as the estimated fair value of the SET reporting unit exceeded the carrying value with a headroom greater than 10%. 

8. DebtRevolving Credit FacilityThe Company has a $150.0 million, five-year revolving credit facility (the “Facility”), with a termination date of May 29, 2029.