KELLY SERVICES INCKELYA
KELLY SERVICES INC Goodwill & Intangibles Disclosure
9. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by operating segment were as follows:
| Science, Engineering & Technology | Education | ETM | Total | |||||||||||
| Balance as of year-end 2023 | $ | 111.3 | $ | 39.8 | $ | — | $ | 151.1 | ||||||
| Additions | 222.9 | 3.0 | — | 225.9 | ||||||||||
| Impairment adjustments | (72.8) | — | — | (72.8) | ||||||||||
Balance as of year-end 2024(1) | 261.4 | 42.8 | — | 304.2 | ||||||||||
| Adjustments | — | (0.1) | — | (0.1) | ||||||||||
| Reallocation | (22.3) | — | 22.3 | — | ||||||||||
| Impairment adjustments | (102.0) | — | — | (102.0) | ||||||||||
Balance as of year-end 2025(1) | $ | 137.1 | $ | 42.7 | $ | 22.3 | $ | 202.1 | ||||||
(1) Gross amounts of $376.9 million and $377.0 million are net of impairment losses of $174.8 million and $72.8 million as of year-end of 2025 and 2024, respectively.
Our SET reportable segment contains goodwill from the 2024 acquisition of MRP which has a remaining balance of $137.1 million as of the year ended 2025. During the first quarter 2025 the company reallocated $22.3 million of goodwill related to the Sevenstep business from SET to the ETM reportable segment using a relative fair value approach. The Education reportable segment is comprised of goodwill related to the 2020 acquisition of Greenwood/Asher & Associates, $3.5 million; the 2022 acquisition of Pediatric Therapeutic Services (“PTS”), $36.3 million, and the 2024 acquisition of CTC of $3.0 million.
During the third quarter of 2025, the Company assessed the ongoing integration of the MRP and Softworld reporting units, noting that the discrete financial data regularly reviewed by management had changed. As such, the Company combined the MRP and Softworld reporting units with the other legacy SET operations into one SET reporting unit. During the assessment, but before the combination, we concluded that there was a triggering event due to declines in the business performance and revised projected growth rates as a result of dynamic macroeconomic conditions. Therefore, it was necessary to perform step one quantitative tests utilizing the income approach for both the MRP and Softworld reporting units that comprised the total goodwill balance in the SET reportable segment. As a result of the MRP and Softworld quantitative assessments, the Company determined that both MRP 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.
The 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%.
The Company performs its annual goodwill impairment testing in the fourth quarter each year and regularly assesses whenever events or circumstances make it more likely than not that an impairment may have occurred. The Company also performs a qualitative review on a quarterly basis of the Company's long-lived assets, comprised of net property and equipment and definite-lived intangible assets, to determine whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
2025 Goodwill Impairment Assessment
We completed our annual impairment test for all reporting units with goodwill in the fourth quarter of 2025. Pursuant to the segment changes in first quarter of 2025 (see the Segment Disclosures footnote), the goodwill reporting units were reassessed. As of year-end 2025, the Company determined that there are four reporting units for goodwill impairment testing purposes, three of which have associated goodwill. Our annual goodwill impairment testing included a step one quantitative analysis for each reporting unit prepared by a third party valuation specialist. As a result of the quantitative assessments, we determined that the estimated fair value of the each reporting unit exceeded its carrying value with headroom greater than 10%; therefore, goodwill was not impaired as of year-end 2025. If current expectations of future revenue and profit margins are not met, or if market factors outside of the Company's control change significantly, including discount rate, then the goodwill of our reporting units may be impaired in the future, resulting in goodwill impairment charges. As a measure of sensitivity of the fair value for the three reporting units tested in 2025, while holding all other assumptions constant, an increase in the discount rate of 100 basis points or a decrease of 100 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.
2024 Goodwill Impairment Assessment
In the fourth quarter of 2024, the Company performed the annual goodwill impairment testing. For the PTS and Education reporting units, the Company performed step zero qualitative analyses and have concluded that there are no indications that the fair values of the PTS and Education reporting units are less than their respective carrying values and therefore no further testing was required. For the Softworld and MRP reporting units, the Company's annual goodwill impairment testing included step one quantitative tests. As a result of the MRP quantitative assessment, the Company determined that the estimated fair value of the MRP reporting unit was more than its carrying value. The estimated fair value of the MRP reporting unit exceeded the carrying value by less than 10%.
As a result of the Softworld quantitative assessment, the Company determined that Softworld's estimated fair value of the reporting unit no longer exceeded the carrying value. Softworld's 2024 financial performance was lower than internal projections due to continued challenging market conditions. As a result, management’s expectation for near-term financial performance and projected long-term growth rates were revised accordingly. These changes in circumstances were also indicators that the respective long-lived assets may not be recoverable. Softworld has 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 a long-lived asset recoverability test for Softworld and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable. Based on the result of the Company's annual goodwill impairment test, the Company recorded an impairment charge of $72.8 million, which was included in goodwill impairment charge in the consolidated statements of earnings for the year ended 2024, to write-off a portion of Softworld's goodwill balance. Included in the impairment charge was an $18.4 million tax benefit associated with the impairment. The remaining goodwill balance for the Softworld reporting unit was $38.5 million as of year-end 2024.
Intangible Assets
Intangible assets, excluding fully-amortized intangibles, are included in intangibles, net on the Company's consolidated balance sheet and consist of the following:
| 2025 | 2024 | ||||||||||||||||||||||
| Useful Lives | Gross Carrying Amount | Less: Accumulated Amortization | Net | Gross Carrying Amount | Less: Accumulated Amortization | Net | |||||||||||||||||
| Customer relationships | 10-15 years | $ | 221.7 | $ | 77.1 | $ | 144.6 | $ | 229.2 | $ | 65.9 | $ | 163.3 | ||||||||||
| Trade names | 10-15 years | 108.1 | 30.2 | 77.9 | 108.1 | 20.4 | 87.7 | ||||||||||||||||
| Non-compete agreements | 5 years | 5.6 | 3.8 | 1.8 | 5.6 | 2.7 | 2.9 | ||||||||||||||||
| Trademarks | 10 years | 4.8 | 2.9 | 1.9 | 4.8 | 2.4 | 2.4 | ||||||||||||||||
| Total | $ | 340.2 | $ | 114.0 | $ | 226.2 | $ | 347.7 | $ | 91.4 | $ | 256.3 | |||||||||||
Intangible amortization expense, which is included in SG&A expenses in the consolidated statements of earnings, was $30.1 million, $27.3 million and $20.9 million in 2025, 2024 and 2023, respectively. The amortization expense is expected to be $29.4 million in 2026, $28.8 million in 2027, $27.4 million in 2028, $24.8 million in 2029, and $23.3 million in 2030.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 17, 2022 | |
| 2021 | Feb 18, 2021 | |
| 2019 | Feb 13, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 18, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.