Company: KELYB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000055135-25-000016
Chunk: 63

Company: KELLY SERVICES INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 63
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  The Company's foreign currency forward contract was valued using observable inputs, such as foreign currency exchange rates, and was considered a level 2 liability.  The Company recorded an unrealized loss of $3.6 million for the year ended 2023 and settled the forward contract on January 5, 2024 for $2.4 million of cash.  Accordingly, the Company recognized a gain of $1.2 million in the first quarter of 2024 in gain on forward contract on the consolidated statements of earnings, which partially offsets the $3.6 million loss recognized in 2023, for a total loss of $2.4 million on the contract.

16 

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

Interest Rate SwapsOn July 17, 2024, the Company entered into two interest rate swaps with 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.  As of first quarter-end 2025 and year-end 2024, the Company recorded a liability totaling $0.3 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 for the first quarter of 2025.Indemnification LiabilitiesAs of first quarter-end 2025 and year-end 2024, the Company had an indemnification liability totaling $2.1 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