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What changed in KELLY SERVICES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KELLY SERVICES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+213 added−285 removedSource: 10-K (2023-02-16) vs 10-K (2022-02-17)

Top changes in KELLY SERVICES INC's 2023 10-K

213 paragraphs added · 285 removed · 165 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

33 edited+1 added−3 removed15 unchanged
Biggest changeThis structure enables us to focus on specialties with robust demand, promising growth opportunities and areas in which we excel at attracting and placing talent. • Professional & Industrial – delivers staffing, outcome-based and direct-hire services focused on office, professional, light industrial and contact center specialties in the U.S. and Canada, including our KellyConnect and Skilled Professional Solutions products • Science, Engineering & Technology – delivers staffing, outcome-based and direct-hire services focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S. and Canada and includes our Softworld, NextGen and Global Technology Associates subsidiaries • Education – delivers staffing, direct-hire and executive search services across the full education spectrum from early childhood to higher education in the U.S. and includes Teachers On Call, Insight Workforce Solutions and Greenwood/Asher • Outsourcing & Consulting – delivers Managed Service Provider ("MSP"), Recruitment Process Outsourcing ("RPO"), Payroll Process Outsourcing ("PPO") and Talent Advisory Services to customers on a global basis 3 • International – delivers staffing, RPO and direct-hire services in 15 countries in Europe, as well as services in Mexico delivered in accordance with recent changes in labor market regulations In addition, PersolKelly Pte.
Biggest changeThis structure enables us to focus on specialties with robust demand, promising growth opportunities and areas in which we excel at attracting and placing talent. • Professional & Industrial – delivers staffing, outcome-based and permanent placement services focused on office, professional, light industrial and contact center specialties in the U.S. and Canada, including our KellyConnect and Skilled Professional Solutions products • Science, Engineering & Technology ("SET") – delivers staffing, outcome-based and permanent placement services focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S. and Canada and includes our Softworld, NextGen and Global Technology Associates subsidiaries • Education – delivers staffing, permanent placement and executive search services across the full education spectrum from early childhood to higher education in the U.S. and includes Teachers On Call, Insight Workforce Solutions, Greenwood/Asher and Pediatric Therapeutic Services ("PTS") 3 • Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG") – delivers Managed Service Provider ("MSP"), Recruitment Process Outsourcing ("RPO"), Payroll Process Outsourcing ("PPO") and Talent Advisory Services to customers on a global basis and includes RocketPower • International – delivers staffing, RPO and permanent placement services in 14 countries in Europe, as well as services in Mexico delivered in accordance with changes in labor market regulations Financial information regarding our reportable segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report.
Description of Business Segments Kelly is a specialty talent solutions company organized into five specialty businesses, which are also our reportable segments, serving clients of all sizes across a variety of industries.
Description of Business Segments Kelly is a talent solutions company organized into five specialty businesses, which are also our reportable segments, serving clients of all sizes across a variety of industries.
Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows decrease substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease and operating cash flows increase. Such increases dissipate over time if the economic downturn continues for an extended period.
Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows may decrease substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease and operating cash flows increase. Such increases dissipate over time if the economic downturn continues for an extended period.
The success of our business is fundamentally connected to the well-being of our people. Accordingly, we seek to implement policies and practices that align with applicable laws and regulations and are in the best interest of our employees and talent, and the communities in which we operate.
The success of our business is fundamentally connected to the well-being of our people. Accordingly, we seek to implement policies and practices that align with applicable laws and regulations and are in the best interest of our employees, talent and the communities in which we operate.
Companies increasingly seek a single supplier to manage all of their demand for contingent talent. To provide the breadth of service required, clients may need us to manage staffing suppliers and independent workers on their behalf. Kelly seeks to address this requirement for our clients, enabling us to deliver talent wherever and whenever they need it around the world.
Companies may seek a single supplier to manage all of their demand for contingent talent. To provide the breadth of service required, clients may need us to manage staffing suppliers and independent workers on their behalf. Kelly seeks to address this requirement for our clients, enabling us to deliver talent wherever and whenever they need it around the world.
Key factors that influence our success are quality of service, price and breadth of service. Quality of service is highly dependent on the availability of qualified talent, and our ability to promptly and effectively recruit, screen, train, retain and manage a pool of employees who match the skills required by our customers.
Key factors that influence our success are quality of service, price and breadth of service. Quality of service is highly dependent on the availability of qualified talent, and our ability to promptly and effectively recruit, screen, retain and manage a pool of employees who match the skills required by our customers.
We provide employees with competitive compensation opportunities, with strong pay for performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards. We believe that our programs provide fair and competitive opportunities that align employee and stockholder interests.
We provide employees with competitive compensation opportunities, with strong pay-for-performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards. Our programs provide fair and competitive opportunities that align employee and stockholder interests.
We make available, free of charge, through our website, and by responding to requests addressed to our senior vice president of investor relations, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.
We make available, free of charge, through our website, and by responding to requests addressed to our senior vice president of investor relations, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all 6 amendments to those reports.
These services complement our expertise in professional office services, contact center and light industrial staffing. As work has evolved and talent management has become more complex, we have also developed innovative solutions to help many of the world’s largest companies plan for and manage their workforce through recruitment outsourcing, payroll processing, talent advisory, career transition and supplier management services.
These services complement our expertise in professional office services, contact center and light industrial staffing. As work has evolved and talent management has become more complex, we have also developed innovative solutions to help many of the world’s largest employers plan for and manage their workforce through recruitment outsourcing, payroll processing, talent advisory, career transition and supplier management services.
Kelly remains the employer of record for all employees working at our customer locations. This means that we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employers’ share of applicable payroll taxes as well as the administration of the employees' share of these taxes.
Kelly remains the employer of record for our employees working at our customer locations. This means that we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employers’ share of applicable payroll taxes as well as the administration of the employee's share of these taxes.
Designed on the concept of social investment and creating shared values, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy.
Designed on the concept of social investment and nurturing shared values, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy.
As part of these efforts, we strive to offer competitive total rewards programs, promote employee development, foster an inclusive and diverse environment and give employees the opportunity to give back to their communities and make a social impact. We are committed to the health, safety and wellness of our employees and talent.
As part of these efforts, we strive to offer competitive total rewards programs, promote employee development, foster an inclusive and diverse environment and allow employees to give back to their communities and make a social impact. We are committed to the health, safety and wellness of our employees and talent.
These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Our website address is: www.kellyservices.com . The information contained on our website, or on other websites linked to our website, is not part of this report. 6
These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Our website address is: www.kellyservices.com . The information contained on our website, or on other websites linked to our website, is not part of this report. 7
With each advance, Kelly met the needs of the marketplace; empowering our people to reach their personal goals and enabling our clients to access skilled talent to move their businesses forward. As work has evolved so has Kelly's range of solutions, growing over the years to reflect the changing needs of businesses and the desires and lifestyles of talent.
With each advance, Kelly met the needs of the marketplace; empowering our people to reach their personal goals and enabling our clients to access skilled talent to move their organizations forward. As work has evolved so has Kelly's range of solutions, growing over the years to reflect the changing needs of employers and the desires and lifestyles of talent.
We rank as one of the world’s largest scientific and clinical research staffing providers and place talent at various levels in engineering, IT and telecommunications specialties. We are also a leading education staffing provider in the U.S., as well as providing talent across the full education spectrum from early childhood education to higher education.
We rank as one of the world’s largest scientific and clinical research staffing providers and place talent at various levels in engineering, IT and telecommunications specialties. We are also a leading education staffing provider in the U.S., placing talent across the full education spectrum from early childhood education to higher education.
We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services and presents Kelly as a workplace leader, aiding our ability to attract and retain key talent.
We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services, and presents Kelly as a workplace leader, aiding our ability to attract and retain high-performing talent.
Since 1947, our founder fought to increase access to work for women and we’ve long been an outspoken advocate for the value temporary and independent workers bring to the workplace. We are committed to fostering an inclusive and diverse workforce. For example, a significant majority of Kelly's U.S. workforce is female, including a majority of director and above roles.
Since 1947, our founder fought to increase women's access to work, and we’ve long been an outspoken advocate for the value temporary and independent workers bring to the workplace. We are committed to fostering an inclusive and diverse workforce. For example, most of Kelly's U.S. workforce is female, including a majority of director and above roles.
In the United States, we compete with other firms that operate nationally and offer a breadth of service similar to ours, and with thousands of smaller regional or specialized companies that compete in varying degrees. Outside the United States, we face similar competition. In 2021, our largest competitors were Randstad, Adecco Group, ManpowerGroup Inc., Recruit Holdings and Allegis Group.
In the United States, we compete with other firms that operate nationally and offer a breadth of service similar to ours, and with thousands of smaller regional or specialized companies that compete in varying degrees. Outside the United States, we face similar competition. In 2022, our largest competitors were Randstad, Adecco Group, ManpowerGroup Inc. and Allegis Group.
Over the next 75 years, as work evolved, Kelly equipped people with skills to master the technologies of the day: launching the first-of-its-kind online learning center for scientists; creating testing and training packages for breakthrough office programs; and launching skill builders that aligned with new light industrial protocols.
Over the next 76 years, as work evolved, Kelly equipped people with skills to master new technologies as they emerged: launching the first-of-its-kind online learning center for scientists; creating testing and training packages for breakthrough office programs; and launching skill builders that aligned with new light industrial protocols.
In addition to cash and equity compensation, we also offer employees competitive benefits such as life and health (medical, dental and vision) 5 insurance, paid time off, wellness benefits and defined contribution retirement plans. We review our compensation and benefit programs regularly and respond to changes in market practice.
In addition to cash and equity compensation, we offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits and defined contribution retirement plans. We review our compensation and benefits programs annually and respond to changes in market practice.
Geographic Breadth of Services Headquartered in the United States, Kelly provides workforce solutions to a diverse group of local, regional and global clients in the Americas, Europe and the Asia-Pacific regions across a variety of industries. In 2021, we assigned more than 350,000 temporary employees to a variety of customers around the globe.
Geographic Breadth of Services Headquartered in the United States, Kelly provides workforce solutions to a diverse group of local, regional and global clients in the Americas, Europe and the Asia-Pacific region across a variety of industries. In 2022, we assigned more than 300,000 temporary employees to a variety of customers around the globe.
Working Capital Our working capital requirements are primarily generated from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods, with days sales outstanding ("DSO") of 60 days as of January 2, 2022.
Working Capital Our working capital requirements are primarily generated from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods, with days sales outstanding ("DSO") of 61 days as of January 1, 2023.
For more information on our diversity and inclusion and community involvement initiatives, please see our Sustainability Report - Growing with Purpose , which is available at kellyservices.com. Talent In addition to our internal employees, Kelly recruits talent on behalf of our customers on a global basis. In 2021, we placed more than 350,000 individuals in positions with our customers.
For more information on our diversity and inclusion and community involvement initiatives, please see our Sustainability Report - Growing with Purpose , which is available at kellyservices.com. Talent In addition to our internal employees, Kelly recruits talent on behalf of our customers globally. In 2022, we placed more than 300,000 individuals in positions with our customers.
To succeed in our highly competitive and rapidly evolving market, it is crucial that we attract and retain experienced internal employees, as well as the talent we put to work for our customers.
To succeed in our highly competitive and rapidly evolving market, we must attract and retain experienced internal employees, as well as talent we put to work for our customers.
Government Contracts Although we conduct business under various federal, state and local government contracts, no one contract represents more than three percent of total company revenue in 2021. 4 Competition The worldwide workforce solutions industry is competitive and highly fragmented.
Our largest single customer accounted for approximately seven percent of total revenue in 2022. 4 Government Contracts Although we conduct business under various federal, state and local government contracts, no one contract represents more than three percent of total company revenue in 2022. Competition The worldwide workforce solutions industry is competitive and highly fragmented.
We consider sustainability to be a guiding principle in strengthening the relationship with our global workforce, suppliers and customers. Through our programs and initiatives, we seek to contribute to improving the quality of life of our employees, their families, as well as the communities in which they operate.
We consider sustainability a guiding principle in strengthening the relationship with our global workforce, suppliers and customers. Through our programs and initiatives, we seek to improve the quality of life of our employees, their families and the communities in which they live and serve.
Customers Kelly’s client portfolio spans companies of all sizes, ranging from local and mid-sized businesses to the Fortune 500. In 2021, an estimated 56% of total company revenue was attributed to our largest 100 customers. Our largest single customer accounted for approximately five percent of total revenue in 2021.
Customers Kelly’s client portfolio spans employers of all sizes, ranging from local and mid-sized businesses to the Fortune 500. In 2022, an estimated 54% of total company revenue was attributed to our largest 100 customers.
Internal Employees As of January 2, 2022, we employed approximately 4,500 staff members in the United States and an additional 2,900 in our international locations. Kelly retention rates for employees identified as High Performing and High Potential align with our comparable external benchmark. Compensation and Benefits.
Internal Employees As of January 1, 2023, we employed approximately 4,800 staff members in the United States and an additional 2,700 in our international locations. Kelly retention rates for high performing and high potential employees align with our comparable benchmark. Compensation and Benefits. Kelly is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees.
Through our Equity@Work initiative, we are living our commitment to ensure equitable access to work and growth for all by creating alliances with like-minded companies, policy groups and institutions to positively impact the way companies hire, advance and help more people thrive.
In 2022, we achieved over 7,800 hours of volunteering (for the U.S. and Canada), engaging over 1,000 employees. Through our Equity@Work efforts, we are living our commitment to ensure equitable access to work and growth by creating alliances with like-minded companies, policy groups and institutions to positively impact how companies hire, advance and help more people thrive.
Kelly is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees. Our compensation programs are designed to attract, retain and reward talented individuals who possess the skills necessary to achieve our strategic goals and create long-term value for our shareholders.
Our compensation programs are designed to attract, retain and reward talented individuals 5 with the skills necessary to achieve our strategic goals and create long-term value for our shareholders.
As a destination for top talent and a strategic business partner for our clients, we continue to adopt innovative business practices and forward-looking technologies that drive success in a dynamic market.
Business Objectives By connecting our clients with qualified talent in an ever-evolving world of work, Kelly has a positive impact on the people, clients and communities we serve. As a destination for top talent and a strategic business partner for our clients, we continue to adopt innovative business practices and forward-looking technologies that drive success in a dynamic market.
Our Education operating segment generally has its lowest revenue in the third quarter in line with schools’ summer break.
Conversely, our revenue from services decreases when the economy declines and customer demand for our services also declines. Our business also experiences seasonal fluctuations, particularly in our Education operating segment. Revenue in Education is generally lowest in the third quarter in line with schools’ summer break.
Recent changes have included enhancements to our U.S. paid time off for mental health and well-being, voting and family and parental support. Pay and benefits programs provided to our international employees are in line with competitive local practice. Inclusion and Diversity .
For example, recent enhancements to our U.S. benefits program include additional time off for significant life events, a financial advisor program, support programs for certain chronic health conditions and introduction of a well-being app globally. In addition, pay and benefits programs for our international employees align with competitive local practices. Inclusion and Diversity .
Removed
Ltd., our joint venture with Persol Asia Pacific Pte. Ltd., a wholly owned subsidiary of Persol Holdings Co., Ltd., a leading provider of HR solutions in Japan, provides staffing and direct hire services to customers in the Asia Pacific region.
Added
Seasonality and Economic Cycles Our operating results have historically been affected by the cyclical response to both economic downturns and upswings. Customers tend to use our services to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase. As a consequence, our revenue from services tends to increase when the economy grows.
Removed
Financial information regarding our reportable segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report. Business Objectives By connecting our clients with qualified talent in an ever-evolving world of work, Kelly has a positive impact on the people, businesses and communities we serve.
Removed
Seasonality Our quarterly operating results are affected by the seasonality of our customers’ businesses which impact the demand for our services. With the exception of our Education operating segment, demand for our services historically has been lower during the first quarter, and typically increases during the remainder of the year.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnexpected changes in claim trends on our workers’ compensation, unemployment, disability and medical benefit plans may negatively impact our financial condition. We self-insure, or otherwise bear financial responsibility for, a significant portion of expected losses under our workers’ compensation program, disability and medical benefits claims.
Biggest changeWe self-insure, or otherwise bear financial responsibility for, a significant portion of expected losses under our workers’ compensation program, disability and medical benefits claims. Unexpected changes in claim trends, including the severity and frequency of claims, actuarial estimates and medical cost inflation, could result in costs that are significantly different than initially reported.
Under our certificate of incorporation, the holders of shares of our Class A common stock are not entitled to voting rights, except as otherwise required by Delaware law.
The holders of shares of our Class A common stock are not entitled to voting rights. Under our certificate of incorporation, the holders of shares of our Class A common stock are not entitled to voting rights, except as otherwise required by Delaware law.
An event involving the destruction, modification, accidental or unauthorized release, or theft of sensitive information from systems related to our business, or an attack that results in damage to or unavailability of our key technology systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely affect our operations or financial condition.
An event involving the destruction, modification, accidental or unauthorized release, or theft of sensitive information from systems related to our business, or an attack that results in damage to or unavailability of our key technology 14 systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely affect our operations or financial condition.
These include: • actual or anticipated variations in our quarterly operating results; • announcements of new services by us or our competitors; • announcements relating to strategic relationships or acquisitions; • changes in financial estimates by securities analysts; • changes in general economic conditions; • actual or anticipated changes in laws and government regulations; • commencement of, or involvement in, litigation; • any major change in our board or management; • changes in industry trends or conditions; and • sales of significant amounts of our common stock or other securities in the market.
These include: • actual or anticipated variations in our quarterly operating results; • announcements of new services by us or our competitors; • announcements relating to strategic relationships, acquisitions or divestitures; • changes in financial estimates by securities analysts; • changes in general economic conditions; • actual or anticipated changes in laws and government regulations; • commencement of, or involvement in, litigation; • any major change in our board or management; • changes in industry trends or conditions; and • sales of significant amounts of our common stock or other securities in the market.
Our insurance coverage may 13 not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms. Cyberattacks or other breaches of network or information technology security could have an adverse effect on our systems, services, reputation and financial results.
Our insurance coverage may not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms. Cyberattacks or other breaches of network or information technology security could have an adverse effect on our systems, services, reputation and financial results.
Director nominees are not required to be selected or recommended for the board’s selection by a majority of independent directors or a nominations committee comprised solely of independent directors, 14 nor do the NASDAQ Global Market listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process.
Director nominees are not required to be selected or recommended for the board’s selection by a majority of independent directors or a nominations committee comprised solely of independent directors, nor do the NASDAQ Global Market listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process.
Additionally, the emergence of online staffing platforms or other forms of disintermediation may pose a competitive threat to our services, which operate under a more traditional staffing business model. Price competition in the staffing industry is intense, particularly for the provision of office clerical, light industrial and education personnel.
Additionally, the emergence of online staffing platforms or other forms of disintermediation may pose a 8 competitive threat to our services, which operate under a more traditional staffing business model. Price competition in the staffing industry is intense, particularly for the provision of office clerical, light industrial and education personnel.
In such event, the price of our common stock may decline. 7 Risks Related to our Industry Segment We operate in a highly competitive industry with low barriers to entry and may be unable to compete successfully against existing or new competitors. The worldwide staffing services market is highly competitive with limited barriers to entry.
In such event, the price of our common stock may decline. Risks Related to our Industry Segment We operate in a highly competitive industry with low barriers to entry and may be unable to compete successfully against existing or new competitors. The worldwide staffing services market is highly competitive with limited barriers to entry.
In particular, we are subject to state unemployment taxes in the U.S., which typically increase during periods of increased levels of unemployment. We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire 8 and may not be reinstated.
In particular, we are subject to state unemployment taxes in the U.S., which typically increase during periods of increased levels of unemployment. We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire and may not be reinstated.
Many business processes critical to our continued operation are hosted in outsourced facilities in America and Europe. Certain other processes are hosted at our corporate headquarters complex or occur in cloud-based computer environments. These critical processes include, but are not limited to, payroll, customer reporting, and order management.
Many business processes critical to our continued operation are hosted in outsourced facilities in America, Europe and Asia. Certain other processes are hosted at our corporate headquarters complex or occur in cloud-based computer environments. These critical processes include, but are not limited to, payroll, customer reporting, and order management.
If we default under this or any other of these requirements, the lenders could declare all outstanding borrowings, 15 accrued interest and fees to be due and payable or significantly increase the cost of the facility. Additionally, our credit facilities contain cross-default provisions.
If we default under this or any other of these requirements, the lenders could declare all outstanding borrowings, accrued interest and fees to be due and payable or significantly increase the cost of the facility. Additionally, our credit facilities contain cross-default provisions.
We attempt to mitigate and transfer such risks through contractual arrangements with our customers; however, these services may give rise to liability claims and litigation.
We attempt to mitigate and transfer such risks through contractual arrangements with our customers and suppliers; however, these services may give rise to liability claims and litigation.
We participate, or may participate in the future, in certain investments in equity affiliates, such as joint ventures or other equity method investments with strategic partners, including PersolKelly Pte. Ltd.
We participate, or may participate in the future, in certain investments in equity affiliates, such as joint ventures or other investments with strategic partners, including PersolKelly Pte. Ltd.
In addition, such laws and regulations are arising with increasing frequency at the state and local level in the U.S. and the resulting inconsistency in such laws and regulations results in additional complexity.
In addition, such laws and regulations are arising 13 with increasing frequency at the state and local level in the U.S. and the resulting inconsistency in such laws and regulations results in additional complexity.
Additionally, improper, illegal or unethical actions by the venture management could have a negative impact on the reputation of the venture and our Company.
Additionally, improper, illegal or unethical actions by the investment or venture management could have a negative impact on the reputation of the investment or venture and our Company.
Our operations outside the United States are subject to risks inherent in international business activities, including: • fluctuations in currency exchange rates; • restrictions or limitations on the transfer of funds; • government intrusions including asset seizures, expropriations or de facto control; • varying economic and political conditions; • differences in cultures and business practices; • differences in employment and tax laws and regulations; • differences in accounting and reporting requirements; • differences in labor and market conditions; • compliance with trade sanctions; • changing and, in some cases, complex or ambiguous laws and regulations; and 11 • litigation, investigations and claims.
Our operations outside the United States are subject to risks inherent in international business activities, including: • fluctuations in currency exchange rates; • restrictions or limitations on the transfer of funds; • government intrusions including asset seizures, expropriations or de facto control; • varying economic and geopolitical conditions; • differences in cultures and business practices; • differences in employment and tax laws and regulations; • differences in accounting and reporting requirements; • differences in labor and market conditions; • compliance with trade sanctions; • changing and, in some cases, complex or ambiguous laws and regulations; and • litigation, investigations and claims.
Such change could occur due to factors in our customers' control but also could occur due to economic, 9 social, climate, or political factors outside of our customers' control.
Such change could occur due to factors in our customers' control but also could occur due to economic, social, climate, or political factors outside of our customers' control.
These arrangements expose us to a number of risks, including the risk that the management of the combined venture may not be able to fulfill their performance obligations under the management agreements or that the joint venture parties may be incapable of providing the required financial support.
These investments or arrangements expose us to a number of risks, including the risk that the management of the investment or combined venture may not be able to fulfill their performance obligations under the management agreements or that the joint venture parties may be incapable of providing the required financial support.
We compete in global, national, regional and local markets with full-service and specialized temporary staffing and consulting companies. Randstad, Adecco Group, ManpowerGroup Inc., Recruit Holdings and Allegis Group are considerably larger than we are and have more substantial marketing and financial resources.
We compete in global, national, regional and local markets with full-service and specialized temporary staffing and consulting companies. Randstad, Adecco Group, ManpowerGroup Inc. and Allegis Group are considerably larger than we are and have more substantial marketing and financial resources.
During 2021, we met all of the covenant requirements. Our ability to continue to meet these financial covenants, particularly with respect to interest coverage (see Debt footnote in the notes to our consolidated financial statements), cannot be assured.
During 2022, we met all of the covenant requirements. Our ability to continue to meet these financial covenants, particularly with respect to interest coverage (see Debt footnote in the notes to our consolidated financial statements), cannot be assured.
The risks of these activities include possible claims relating to: • discrimination and harassment; • wrongful termination or retaliation; • violations of employment rights related to employment screening or privacy issues; • apportionment between us and our customer of legal obligations as an employer of temporary employees; • classification of workers as employees or independent contractors; • employment of unauthorized workers; • violations of wage and hour requirements; • retroactive entitlement to employee benefits, including health insurance; • failure to comply with leave policy requirements; and • errors and omissions by our temporary employees, particularly for the actions of professionals such as attorneys, accountants, teachers and scientists.
The risks of these activities include possible claims relating to: • discrimination and harassment; • wrongful termination or retaliation; • violations of employment rights related to employment screening or privacy issues; • apportionment between us and our customer of legal obligations as an employer of temporary employees; • classification of workers as employees or independent contractors; • employment of unauthorized workers; • violations of wage and hour requirements; • entitlement to employee benefits, including health insurance and retroactive benefits; • failure to comply with leave policy and other labor requirements; and • errors and omissions by our temporary employees, particularly for the actions of professionals such as engineers, therapists, accountants, teachers and scientists.
The performance of the Company’s business is dependent on our ability to effectively execute our growth strategy. Our strategy includes targeted investments in select specialty areas, focusing on growth platforms and implementation of a robust operating model to bridge our strategy to execution.
The performance of the Company’s business is dependent on our ability to effectively execute our growth strategy. Our strategy includes targeted investments in select specialty areas, focusing on growth platforms and implementation of a cost-effective operating model to bridge our strategy to execution.
Competition for individuals with proven professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future. Social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the staffing requirements of our customers.
Competition for individuals with proven professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future. Low unemployment, as well as social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the staffing requirements of our customers.
The trustees, acting by majority vote, have sole investment and voting power over the shares of Class B common stock held by Trust K, which represent approximately 91.6% of the outstanding Class B shares.
The trustees, acting by majority vote, have sole investment and voting power over the shares of Class B common stock held by Trust K, which represent approximately 93.5% of the outstanding Class B shares.
The emergence of new strain(s) of COVID-19 that are more deadly, contagious, or vaccine resistant, or a decline in the effectiveness of vaccines or treatment regimens could result in another economic downtown or a decline in demand for our services.
The emergence of new strain(s) of COVID-19 that are more deadly, contagious, or vaccine resistant, or a decline in the effectiveness of vaccines or treatment regimens could result in another economic downturn, a decline in demand for our services, or increased worker absenteeism.
If we fail to successfully develop new service offerings, we may be unable to retain and acquire customers, resulting in a decline in revenues. The Company’s successful execution of our growth strategy requires that we match evolving customer expectations with evolving service offerings. The development of new service offerings requires accurate anticipation of customer needs and emerging technology trends.
If we fail to successfully develop new service offerings, we may be unable to retain and acquire customers, resulting in a decline in revenues. The Company’s successful execution of our growth strategy requires that we match evolving customer expectations with evolving service offerings.
The market price of our common stock may be subject to significant volatility. We believe that many factors, including several which are beyond our control, have a significant effect on the market price of our common stock.
We believe that many factors, including several which are beyond our control, have a significant effect on the market price of our common stock.
We must make long-term investments in our information technology infrastructure and commit resources to development efforts before knowing whether these investments will result in service offerings that achieve customer acceptance and generate the revenues required to provide desired returns.
The development of new service offerings requires accurate anticipation of customer needs and emerging technology and workforce trends. We must make long-term investments in our information technology infrastructure and commit resources to development efforts before knowing whether these investments will result in service offerings that achieve customer acceptance and generate the revenues required to provide desired returns.
Our information technology strategy may not yield its intended results. Our information technology strategy includes improvements to our applicant onboarding and tracking systems, order management, and improvements to financial processes such as billing and accounts payable through system consolidation and upgrades.
Our information technology strategy includes improvements to our applicant onboarding and tracking systems, order management, and improvements to financial processes such as billing and accounts payable through system consolidation and 11 upgrades.
Our success is substantially dependent on our ability to recruit and retain qualified temporary personnel. 12 We may be exposed to employment-related claims and losses, including class action lawsuits and collective actions, which could have a material adverse effect on our business. We employ and assign personnel in the workplaces of other businesses.
We may be exposed to employment-related claims and losses, including class action lawsuits and collective actions, which could have a material adverse effect on our business. We employ and assign personnel in the workplaces of other businesses.
Any future changes in laws or government regulations, or interpretations thereof, including additional laws and regulations enacted at a local level may make it more difficult or expensive for us to provide staffing services and could have a material adverse effect on our business, financial condition and results of operations.
Any future changes in laws or government regulations, or interpretations thereof, including additional laws and regulations enacted at a local level may make it more difficult or expensive for us to provide staffing services and could have a material adverse effect on our business, financial condition and results of operations. 9 Unexpected changes in claim trends on our workers’ compensation, unemployment, disability and medical benefit plans may negatively impact our financial condition.
In the event that we determine that there is an impairment, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations. Investments in equity affiliates expose us to additional risks and uncertainties.
In the event that we determine that there is an impairment, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.
The acquirer would also be required to provide advance notice of its proposal to replace directors at any annual meeting and would not be able to cumulate votes at a meeting, which would require the acquirer to hold more shares to gain representation on the board of directors than if cumulative voting were permitted.
The acquirer would also be required to provide advance notice of its proposal to replace directors at any annual meeting and would not be able to cumulate votes at a meeting, which would require the acquirer to hold more shares to gain representation on the board of directors than if cumulative voting were permitted. 15 Our board of directors also has the ability to issue additional shares of common stock which could significantly dilute the ownership of a hostile acquirer.
There can be no assurance that qualified personnel will continue to be available in sufficient numbers and on terms of employment acceptable to us and our customers.
There can be no assurance that qualified personnel will continue to be available in sufficient numbers and on terms of employment acceptable to us and our customers. Our success is substantially dependent on our ability to recruit and retain qualified temporary personnel.
Although we have internal vetting processes intended to control such risks, there is no assurance that these processes will be effective or that we will be able to identify these potential risks in a timely manner. Our specialties also include professional engineering services where design, construction or systems failures and project delays can result in substantial injury or damages.
Although we have internal vetting processes intended to control such risks, there is no assurance that these processes will be effective or that we will be able to identify these potential risks in a timely manner. Our specialties also include professional services where errors or omissions by employees or independent contractors can result in substantial injury or damages.
Likewise, the financial viability of third parties on which we rely to provide staffing services or manage critical business functions could also be impacted by further negative COVID-19 developments.
Likewise, the financial viability of third parties on which we rely to provide staffing services or manage critical business functions could also be impacted by further negative COVID-19 developments. Our stock price may be subject to significant volatility and could suffer a decline in value. The market price of our common stock may be subject to significant volatility.
Our tax expense could be materially impacted by changes in tax laws in these jurisdictions, changes in the valuation of deferred tax assets and liabilities or changes in the mix of income by country.
We are subject to a multitude of federal, state, local, and foreign taxes in the jurisdictions in which we operate. Our tax expense could be materially impacted by changes in tax laws in these jurisdictions, changes in the valuation of deferred tax assets and liabilities or changes in the mix of income by country.
Exchange rates for currencies of these countries may fluctuate in relation to the U.S. dollar and these fluctuations may have an adverse or favorable effect on our operating results when translating foreign currencies into U.S. dollars. Our investment in Persol Holdings exposes us to potential market and currency exchange risks.
Exchange rates for currencies of these countries may fluctuate in relation to the U.S. dollar and these fluctuations may have an adverse or favorable effect on our operating results when translating foreign currencies into U.S. dollars. 12 Our international operations subject us to potential liability under anti-corruption, trade protection, and other laws and regulations.
This creates uncertainty with respect to the revenues and earnings we may recognize with respect to our customer contracts. Our business with large customer accounts reflects a market-driven shift in buying behaviors in which reliance on a small number of staffing partners has shifted to reliance upon a network of talent providers.
Our business with large customer accounts reflects a market-driven shift in buying behaviors in which reliance on a small number of staffing partners has shifted to reliance upon a network of talent providers. The movement from single-sourced to competitively sourced staffing contracts may also substantially reduce our future revenues from such customers.
If an acquirer is discouraged from offering to acquire us or prevented from successfully completing a hostile acquisition by these or other measures, our shareholders could lose the opportunity to sell their shares at a favorable price. The holders of shares of our Class A common stock are not entitled to voting rights.
Our board of directors could choose not to negotiate with an acquirer that it did not believe was in our strategic interests. If an acquirer is discouraged from offering to acquire us or prevented from successfully completing a hostile acquisition by these or other measures, our shareholders could lose the opportunity to sell their shares at a favorable price.
This may result in a material decrease in the revenue we derive from providing staffing services to such customers. In addition, revenues may be materially impacted from our decision to exit customers due to pricing pressure or other business factors. Our business with the federal government and government contractors presents additional risk considerations.
In addition, revenues may be materially impacted from our decision to exit customers due to pricing pressure or other business factors. Our business with the federal government and government contractors presents additional risk considerations. We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts.
The movement from single-sourced to competitively sourced staffing contracts may also substantially reduce our future revenues from such customers. While Kelly has sought to address this trend, including providing Managed Service Provider ("MSP") services within our Outsourcing & Consulting ("OCG") segment, we may not be selected or retained as the MSP by our large customers.
While Kelly has sought to address this trend, including providing MSP services within our OCG segment, we may not be selected or retained as the MSP by our large customers. This may result in a material decrease in the revenue we derive from providing staffing services to such customers.
Since receipts from customers generally lag payroll to temporary employees, the bankruptcy of a major customer could have a material adverse impact on our ability to meet our working capital requirements. Additionally, most of our customer contracts can be terminated by the customer on short notice without penalty.
Since receipts from customers generally lag payroll to temporary employees, the bankruptcy of a major customer could have a material adverse impact on our ability to meet our working capital requirements. The expansion of payment terms may extend our working capital requirements and reduce available capital for 10 investment.
Our board of directors also has the ability to issue additional shares of common stock which could significantly dilute the ownership of a hostile acquirer. In addition, Section 203 of the Delaware General Corporation Law limits mergers and other business combination transactions involving 15 percent or greater stockholders of Delaware corporations unless certain board or stockholder approval requirements are satisfied.
In addition, Section 203 of the Delaware General Corporation Law limits mergers and other business combination transactions involving 15 percent or greater stockholders of Delaware corporations unless certain board or stockholder approval requirements are satisfied. These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation.
We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts. Failure to meet these obligations could result in civil penalties, fines, suspension of payments, reputational damage, disqualification from doing business with government agencies and other sanctions or adverse consequences.
Failure to meet these obligations could result in civil penalties, fines, suspension of payments, reputational damage, disqualification from doing business with government agencies and other sanctions or adverse consequences. Government procurement practices may change in ways that impose additional costs or risks upon us or pose a competitive disadvantage.
Government procurement practices may change in ways that impose additional costs or risks upon us or pose a competitive disadvantage. Our employees may be unable to obtain or retain the security clearances necessary to conduct business under certain contracts, or we could lose or be unable to secure or retain a necessary facility clearance.
Our employees may be unable to obtain or retain the security clearances necessary to conduct business under certain contracts, or we could lose or be unable to secure or retain a necessary facility clearance. Government agencies may temporarily or permanently lose funding for awarded contracts, or there could be delays in the start-up of projects already awarded and funded.
In addition, unemployment insurance costs are dependent on benefit claims experience from employees which may vary from current levels and result in increased costs.
If future claims-related liabilities increase due to unforeseen circumstances, or if we must make unfavorable adjustments to accruals for prior accident years, our costs could increase significantly. In addition, unemployment insurance costs are dependent on benefit claims experience from employees which may vary from current levels and result in increased costs.
Our business has been adversely impacted by the novel coronavirus (COVID-19) outbreak and could be impacted by future outbreaks. The COVID-19 outbreak and related containment and mitigation efforts negatively impacted the economies and general welfare in the countries in which we operate, as well as in the countries where our customers provide goods and services.
Our business has been adversely impacted by the novel coronavirus (COVID-19) outbreak and could be impacted by future outbreaks.
For example, in the Asia-Pacific region, we rely on third parties and partners to provide certain back office and administrative services to our operations 10 in that region. The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs.
The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs. Our information technology strategy may not yield its intended results.
Government agencies may temporarily or permanently lose funding for awarded contracts, or there could be delays in the start-up of projects already awarded and funded. We are at risk of damage to our brand, which is important to our success. Our success depends, in part, on the goodwill associated with our brand.
We are at risk of damage to our brands, which are important to our success. Our success depends, in part, on the value associated with our brands.
Removed
This resulted in a decline in demand for our services. The overall threat of COVID-19 in the countries in which we operate has been reduced with the advent of health and safety measures, effective vaccines, and treatment regimens to combat current known strains of COVID-19 and demand for our services has increased.
Added
Additionally, most of our customer contracts can be terminated by the customer on short notice without penalty. This creates uncertainty with respect to the revenues and earnings we may recognize with respect to our customer contracts.
Removed
Future government actions or business decisions by customers made in response to the COVID-19 pandemic, including automation, social distancing and remote work, and vaccination and testing programs could negatively impact customer demand for our services. Our stock price may be subject to significant volatility and could suffer a decline in value.
Added
In 2022, changes in market conditions related to demand in hiring in the high-tech industry and slowing growth in RPO more broadly, resulted in a goodwill impairment charge of $41.0 million. Certain equity investments may expose us to additional risks and uncertainties.
Removed
Unexpected changes in claim trends, including the severity and frequency of claims, actuarial estimates and medical cost inflation, could result in costs that are significantly different than initially reported. If future claims-related liabilities increase due to unforeseen circumstances, or if we must make unfavorable adjustments to accruals for prior accident years, our costs could increase significantly.
Removed
We are subject to a multitude of federal, state, local, and foreign taxes in the jurisdictions we operate in, including the tax provisions of the U.S. Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.
Removed
We are exposed to market and currency risks on our investment in Persol Holdings. The investment is stated at fair value and is marked to market through net earnings. Changes in the market price are based on the Persol Holdings stock price as listed in the Tokyo stock exchange, and such changes may be material.
Removed
Foreign currency fluctuations on this yen-denominated investment are reflected as a component of other comprehensive income and, accordingly, the exchange rate fluctuations may have a material adverse or favorable effect on our financial statements. Our international operations subject us to potential liability under anti-corruption, trade protection, and other laws and regulations.
Removed
These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation. Our board of directors could choose not to negotiate with an acquirer that it did not believe was in our strategic interests.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our headquarters is located in Troy, Michigan where we both own and lease facilities and where our corporate, subsidiary and divisional employees work. Our remaining business operations in the U.S., as well as our international locations, are conducted in leased facilities.
Biggest changeITEM 2. PROPERTIES. Our headquarters is a leased facility located in Troy, Michigan and is available to our corporate, subsidiary and divisional employees. We also conduct business operations in both the U.S. and international locations in additional leased facilities. Since 2020, the majority of our internal employees have also conducted business remotely as part of our flexible work policy. 16
Removed
Since 2020, as the result of COVID-19, the majority of our internal employees have also conducted business remotely as the result of governmental orders or our internal policies designed to protect the health and safety of our employees.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhen claims exceed the applicable policy deductible and realization of recovery of the claim from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets in the consolidated balance sheet.
Biggest changeWhen claims exceed the applicable policy deductible and realization of recovery of the claim from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet.
In January 2018, the Hungarian Competition Authority initiated proceedings against a local industry trade association and its members, due to alleged infringement of national competition regulations. The Authority announced its decision on December 18, 2020, levying a fine against the trade association with joint and several secondary liabilities placed on the 20 member companies.
In January 2018, the Hungarian Competition Authority initiated proceedings against a local industry trade association and its members, due to alleged infringement of national competition regulations. The Authority announced its decision on December 18, 2020, levying a fine against the trade association with joint and several secondary liability placed on the 20 member companies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities None. 17 Issuer Purchases of Equity Securities During the fourth quarter of 2021, we reacquired shares of our Class A common stock as follows: Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions of dollars) October 4, 2021 through November 7, 2021 62 $ 19.68 — $ — November 8, 2021 through December 5, 2021 210 18.29 — — December 6, 2021 through January 2, 2022 1,589 17.50 — — Total 1,861 $ 17.66 — We may reacquire shares sold to cover employee tax withholdings due upon the vesting of restricted stock held by employees.
Biggest changeRecent Sales of Unregistered Securities None. 18 Issuer Purchases of Equity Securities During the fourth quarter of 2022, we reacquired shares of our Class A common stock as follows: Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions of dollars) October 3, 2022 through November 6, 2022 143 $ 14.53 — $ — November 7, 2022 through December 4, 2022 68,238 16.90 68,114 48.8 December 5, 2022 through January 1, 2023 408,607 16.41 406,530 42.2 Total 476,988 $ 16.48 474,644 On November 9, 2022, the Company's board of directors approved a plan for the Company to repurchase shares of its Class A common stock with a market value not to exceed $50.0 million through transactions executed in the open market within one year.
The graph assumes an investment of $100 on December 31, 2016 and that all dividends were reinvested.
The graph assumes an investment of $100 on December 31, 2017 and that all dividends were reinvested.
Per share amounts (in dollars) First Quarter Second Quarter Third Quarter Fourth Quarter Year 2021 Class A common High $ 23.90 $ 26.98 $ 25.00 $ 20.87 $ 26.98 Low 19.13 22.51 18.58 15.88 15.88 Class B common High 57.46 60.00 24.70 21.27 60.00 Low 18.00 22.15 17.95 16.63 16.63 Dividends — — 0.05 0.05 0.10 2020 Class A common High $ 22.77 $ 18.18 $ 19.89 $ 23.00 $ 23.00 Low 10.13 11.01 13.55 15.56 10.13 Class B common High 21.78 18.14 90.36 22.70 90.36 Low 10.52 10.35 14.04 15.50 10.35 Dividends 0.075 — — — 0.075 Holders The number of holders of record of our Class A and Class B common stock were approximately 8,800 and 600, respectively, as of January 29, 2022.
Per share amounts (in dollars) First Quarter Second Quarter Third Quarter Fourth Quarter Year 2022 Class A common High $ 23.00 $ 21.69 $ 22.56 $ 18.78 $ 23.00 Low 16.22 16.73 13.41 13.64 13.41 Class B common High 22.30 21.77 26.64 18.63 26.64 Low 16.74 17.01 13.64 14.04 13.64 Dividends 0.05 0.075 0.075 0.075 0.275 2021 Class A common High $ 23.90 $ 26.98 $ 25.00 $ 20.87 $ 26.98 Low 19.13 22.51 18.58 15.88 15.88 Class B common High 57.46 60.00 24.70 21.27 60.00 Low 18.00 22.15 17.95 16.63 16.63 Dividends — — 0.05 0.05 0.10 Holders The number of holders of record of our Class A and Class B common stock were approximately 10,500 and 700, respectively, as of January 30, 2023.
Accordingly, 1,861 shares were reacquired during the Company’s fourth quarter. 18 Performance Graph The following graph compares the cumulative total return of our Class A common stock with that of the S&P SmallCap 600 Index and the S&P 1500 Human Resources and Employment Services Index for the five years ended December 31, 2021.
Accordingly, 2,344 shares were reacquired in transactions outside the repurchase program during the Company’s fourth quarter. 19 Performance Graph The following graph compares the cumulative total return of our Class A common stock with that of the S&P SmallCap 600 Index and the S&P 1500 Human Resources and Employment Services Index for the five years ended December 31, 2022.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 December 31, 2016 – December 31, 2021 2016 2017 2018 2019 2020 2021 Kelly Services, Inc. $ 100.00 $ 120.58 $ 91.65 $ 102.30 $ 93.56 $ 76.67 S&P SmallCap 600 Index $ 100.00 $ 113.23 $ 103.63 $ 127.24 $ 141.60 $ 179.58 S&P 1500 Human Resources and Employment Services Index $ 100.00 $ 127.28 $ 106.57 $ 130.86 $ 131.97 $ 199.47
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 December 31, 2017 – December 31, 2022 2017 2018 2019 2020 2021 2022 Kelly Services, Inc. $ 100.00 $ 76.01 $ 84.84 $ 77.59 $ 63.59 $ 65.03 S&P SmallCap 600 Index $ 100.00 $ 91.52 $ 112.37 $ 125.05 $ 158.59 $ 133.06 S&P 1500 Human Resources and Employment Services Index $ 100.00 $ 83.73 $ 102.81 $ 103.69 $ 156.71 $ 117.07
Added
We may also reacquire shares outside the program in connection with shares sold to cover employee tax withholdings due upon the vesting of restricted stock held by employees.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe International gross profit rate decreased primarily due to lower permanent placement revenue. 29 Operating Results By Segment (continued) (Dollars in millions) 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) % Change 2020 (53 Weeks) 2019 (52 Weeks) % Change SG&A Expenses: Professional & Industrial $ 278.6 $ 288.6 (3.5) % $ 288.6 $ 326.0 (11.5) % Science, Engineering & Technology 180.2 134.4 34.1 134.4 146.7 (8.4) Education 62.1 51.2 21.1 51.2 56.2 (8.8) Outsourcing & Consulting 122.7 108.3 13.3 108.3 119.3 (9.2) International 138.9 134.9 2.9 134.9 140.8 (4.2) Corporate expenses 88.1 88.2 (0.1) 88.2 94.1 (6.3) Consolidated Total $ 870.6 $ 805.6 8.1 % $ 805.6 $ 883.1 (8.8) % 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) % Change 2020 (53 Weeks) 2019 (52 Weeks) % Change Restructuring Charges Included in SG&A Expenses: Professional & Industrial $ — $ 6.0 NM % $ 6.0 $ 5.1 16.8 % Science, Engineering & Technology — 0.6 NM 0.6 0.4 74.1 Education — 1.0 NM 1.0 — NM Outsourcing & Consulting — 0.3 NM 0.3 — NM International 1.2 1.4 (10.2) 1.4 — NM Corporate expenses 2.8 3.5 (18.4) 3.5 — NM Consolidated Total $ 4.0 $ 12.8 (69.0) % $ 12.8 $ 5.5 131.5 % 2021 vs. 2020 Total SG&A expenses in Professional & Industrial decreased 3.5% and decreased 1.4% excluding restructuring charges.
Biggest changeIn comparison to the prior year, the gross profit rate increased 140 basis points, primarily due to improved business mix and higher permanent placement income. 26 Operating Results By Segment (continued) (Dollars in millions) 2022 2021 % Change SG&A Expenses: Professional & Industrial $ 270.5 $ 278.6 (2.9) % Science, Engineering & Technology 214.9 180.2 19.2 Education 81.8 62.1 31.7 Outsourcing & Consulting 149.8 122.7 22.1 International 132.5 138.9 (4.6) Corporate expenses 94.0 88.1 6.6 Consolidated Total $ 943.5 $ 870.6 8.4 % 2022 vs. 2021 Total SG&A expenses in Professional & Industrial decreased 2.9%, primarily due to lower expenses to support lower volumes in our staffing and outcome-based call center specialties, partially offset by higher performance-based incentive compensation expense.
CC measures are non-GAAP (Generally Accepted Accounting Principles) measures and are used to supplement measures in accordance with GAAP. Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
CC measures are non-GAAP measures and are used to supplement measures in accordance with GAAP (Generally Accepted Accounting Principles). Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
The consulting actuary establishes loss development factors, based on our historical claims experience as well as industry experience, and applies those factors to current claims information to derive an estimate of our ultimate claims liability.
The consulting actuary establishes loss development factors and loss rates, based on our historical claims experience as well as industry experience, and applies those factors to current claims information to derive an estimate of our ultimate claims liability.
NEW ACCOUNTING PRONOUNCEMENTS See New Accounting Pronouncements footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report for a description of new accounting pronouncements. 39 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained herein and in our investor conference call related to these results are “forward-looking” statements within the meaning of the applicable securities laws and regulations.
NEW ACCOUNTING PRONOUNCEMENTS See New Accounting Pronouncements footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report for a description of new accounting pronouncements. 35 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained herein and in our investor conference call related to these results are “forward-looking” statements within the meaning of the applicable securities laws and regulations.
While we believe these facilities will cover our working capital needs over the short term, if economic conditions or operating results change significantly from our current expectations, we may need to seek additional sources of funds. Throughout 2021 and as of the 2021 year end, we met the debt covenants related to our revolving credit facility and securitization facility.
While we believe these facilities will cover our working capital needs over the short term, if economic conditions or operating results change significantly from our current expectations, we may need to seek additional sources of funds. Throughout 2022 and as of the 2022 year end, we met the debt covenants related to our revolving credit facility and securitization facility.
We have no material, unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities. 35 Liquidity We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities.
We have no material, unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities. 30 Liquidity We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities.
There is a measurement period of up to one year in which to finalize the fair value determinations and preliminary fair value estimates may be revised if new information is obtained during this period. 37 Income Taxes Income tax expense is based on expected income and statutory tax rates in the various jurisdictions in which we operate.
There is a measurement period of up to one year in which to finalize the fair value determinations and preliminary fair value estimates may be revised if new information is obtained during this period. 32 Income Taxes Income tax expense is based on expected income and statutory tax rates in the various jurisdictions in which we operate.
We also review the ratings and holdings of our money market funds and other investment vehicles regularly to ensure high credit quality and access to our invested cash. 36 Critical Accounting Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.
We also review the ratings and holdings of our money market funds and other investment vehicles regularly to ensure high credit quality and access to our invested cash. 31 Critical Accounting Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.
Different assumptions of the anticipated future results and growth from our business could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet. The estimated fair value of the Softworld reporting unit exceeds the carrying value by more than 10%.
Different assumptions of the anticipated future results and growth from our business could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet. The estimated fair value of the Softworld and PTS reporting units exceeds the carrying value by more than 10%.
Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 0.0% at year-end 2021 and 2020.
Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 0.1% at year-end 2022 and 0.0% at year-end 2021.
Additional funding sources could include asset-based lending, additional bank facilities or sale of non-core assets. To meet significant cash requirements related to our nonqualified retirement plan, we may utilize proceeds from Company-owned life insurance policies.
Additional funding sources could include additional bank facilities or sale of non-core assets. To meet significant cash requirements related to our nonqualified retirement plan, we may utilize proceeds from Company-owned life insurance policies.
This was partially offset by cash used for the acquisitions of Insight in January 2020 and Greenwood/Asher in November 2020. Cash used for the acquisition of Insight totaled $36.4 million, net of the cash received and including working capital adjustments. Cash used for the acquisition of Greenwood/Asher totaled $2.8 million, net of the cash received and including working capital adjustments.
This was partially offset by cash used for the acquisitions of 29 Insight in January 2020 and Greenwood/Asher in November 2020. Cash used for the acquisition of Insight totaled $36.4 million, net of the cash received and including working capital adjustments.
In 2021, 2020 and 2019 the net change in short-term borrowings was primarily due to payments on local lines of credit.
In 2022, the net change in short-term borrowings was primarily due to borrowings on local lines of credit. In 2021 and 2020, the net change in short-term borrowings was primarily due to payments on local lines of credit.
The securitization facility carried no short-term borrowings and $53.0 million of standby letters of credit related to workers’ compensation. Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.
The securitization facility carried no short-term borrowings and $49.5 million of standby letters of credit related to workers’ compensation. Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.
It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, the tax effects of stock compensation, and changes in the fair value of the Company’s investment in Persol Holdings, which are treated as discrete since they cannot be estimated.
It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, the tax effects of stock compensation and, prior to February 2022, changes in the fair value of the Company’s investment in Persol Holdings which were treated as discrete since they could not be estimated.
As a measure of sensitivity of the fair value of the reporting unit, 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.
As a measure of sensitivity of the fair value for the Softworld and PTS reporting units, 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 both reporting units would not result in an impairment of goodwill.
Capital expenditures in 2020 primarily related to the Company's headquarters leasehold improvements, IT infrastructure and technology programs. Capital expenditures in 2019 primarily related to the Company’s technology programs. Financing Activities In both 2021 and 2020, we used $8.1 million of cash for financing activities, as compared to using $16.1 million in 2019.
Capital expenditures in 2020 primarily related to the Company's headquarters leasehold improvements, IT infrastructure and technology programs. Financing Activities In 2022, we used $50.6 million of cash for financing activities, as compared to using $8.1 million in both 2021 and 2020.
This allows countries with excess cash to invest and countries with cash needs to utilize the excess cash. At year-end 2021, we had $200.0 million of available capacity on our $200.0 million revolving credit facility and $97.0 million of available capacity on our $150.0 million securitization facility.
This allows countries with excess cash to invest and countries with cash needs to utilize the excess cash. At year-end 2022, we had $200.0 million of available capacity on our $200.0 million revolving credit facility and $100.5 million of available capacity on our $150.0 million securitization facility.
The accrual for workers’ compensation, net of related receivables which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet, was $48.4 million and $54.6 million at year-end 2021 and 2020, respectively.
The accrual for workers’ compensation, net of related receivables which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet, was $43.3 million and $48.4 million at year-end 2022 and 2021, respectively.
At both year-end 2021 and 2020, the gross accrual for litigation costs amounted to $1.4 million which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.
At year-end 2022 and 2021, the gross accrual for litigation costs amounted to $2.3 million and $1.4 million, respectively, which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.
The gross profit rate increased 140 basis points due to increased permanent placement income and improved specialty mix, including the acquisition of Softworld in April 2021, partially offset by higher employee-related costs. Gross profit for the Education segment increased on higher revenue volume and an increase in the gross profit rate.
The gross profit rate increased 160 basis points due to improved specialty mix, including the acquisition of Softworld which generates higher gross profit margins, and increased permanent placement income, partially offset by higher employee-related costs. Gross profit for the Education segment increased on higher revenue volume and an increase in the gross profit rate.
As of the 2021 year end, these reviews have not resulted in plans to repatriate foreign subsidiary cash. We expect much of our international cash will be needed to fund working capital growth in our local operations as working capital needs, primarily trade accounts receivable, increase during periods of growth.
As of the 2022 year end, these reviews have not resulted in specific plans to repatriate a majority of our international cash balances. We expect much of our international cash will be needed to fund working capital growth in our local operations as working capital needs, primarily trade accounts receivable, increase during periods of growth.
In February 2022, we entered into transactions to monetize a portion of our assets in the Asia-Pacific region which will allow us to strategically redeploy resources to accelerate our growth. Specifically, we are unwinding our cross-shareholding arrangement with Persol Holdings and reducing our ownership interest in PersolKelly, our APAC joint venture.
In February 2022, we completed transactions to monetize a substantial portion of our assets in the Asia-Pacific region which will allow us to strategically redeploy resources to accelerate our growth. Specifically, we concluded our cross-shareholding arrangement with Persol Holdings and reduced our ownership interest in PersolKelly, our APAC joint venture.
Goodwill We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. Generally accepted accounting principles require that goodwill be tested for impairment at a reporting unit level.
Goodwill We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. GAAP requires that goodwill be tested for impairment at a reporting unit level.
Our analysis used significant assumptions by reporting unit, including: expected future revenue growth rates, profit margins and discount rate. The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit.
Our analysis used significant assumptions by reporting unit, including: expected future revenue growth rates, profit margins and discount rate. 33 The goodwill resulting from the acquisition of RocketPower during the first quarter of 2022 was allocated to the OCG reportable segment and RocketPower was deemed to be a separate reporting unit.
At year-end 2021, we also had additional unsecured, uncommitted short-term credit facilities totaling $8.1 million, under which we had no borrowings. Details of our debt facilities as of the 2021 year end are contained in the Debt footnote in the notes to our consolidated financial statements.
At year-end 2022, we also had additional unsecured, uncommitted short-term credit facilities totaling $5.9 million, under which we had $0.7 million of borrowings. Details of our debt facilities as of the 2022 year end are contained in the Debt footnote in the notes to our consolidated financial statements.
This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period. The impact of the COVID-19 crisis on our business began in March 2020.
This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period.
Science, Engineering & Technology 21.9 20.5 1.4 20.5 20.0 0.5 Education 15.6 14.7 0.9 14.7 16.0 (1.3) Outsourcing & Consulting 32.7 33.0 (0.3) 33.0 32.4 0.6 International 13.9 12.7 1.2 12.7 13.5 (0.8) Consolidated Total 18.7 % 18.3 % 0.4 pts. 18.3 % 18.1 % 0.2 pts. 2021 vs. 2020 Gross profit for the Professional & Industrial segment decreased due to a decrease in the gross profit rate, combined with lower revenue volume.
Science, Engineering & Technology 23.5 21.9 1.6 Education 15.8 15.6 0.2 Outsourcing & Consulting 36.3 32.7 3.6 International 15.3 13.9 1.4 Consolidated Total 20.4 % 18.7 % 1.7 pts. 2022 vs. 2021 Gross profit for the Professional & Industrial segment decreased due to lower revenue volume, partially offset by an increase in the gross profit rate.
The goodwill resulting from the acquisition of Greenwood/ 38 Asher during the fourth quarter of 2020 was allocated to the Education reportable segment, which was deemed to be a reporting unit. See the Acquisitions and Disposition footnote in the notes to our consolidated financial statements for more information.
The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit. See the Acquisitions and Dispositions footnote in the notes to our consolidated financial statements for more information.
Contractual Obligations and Commercial Commitments Summarized below are our obligations and commitments to make future payments as of year-end 2021: Payment due by period Total Less than 1 year 1-3 Years 3-5 Years More than 5 years (In millions of dollars) Leases $ 99.6 $ 23.4 $ 26.7 $ 14.6 $ 34.9 Short-term borrowings — — — — — Accrued workers’ compensation 57.8 20.8 17.4 7.5 12.1 Accrued retirement benefits 241.3 21.4 42.9 43.0 134.0 Accrued payroll taxes 87.1 29.5 57.6 — — Other liabilities 8.6 1.4 2.5 2.3 2.4 Uncertain income tax positions 0.8 0.2 0.5 — 0.1 Purchase obligations 69.7 28.1 41.5 0.1 — Total $ 564.9 $ 124.8 $ 189.1 $ 67.5 $ 183.5 Purchase obligations above represent unconditional commitments relating primarily to technology services and online tools which we expect to utilize generally within the next three fiscal years, in the ordinary course of business.
Contractual Obligations and Commercial Commitments Summarized below are our obligations and commitments to make future payments as of year-end 2022: Payment due by period Total Less than 1 year 1-3 Years 3-5 Years More than 5 years (In millions of dollars) Leases $ 85.9 $ 19.1 $ 23.3 $ 13.2 $ 30.3 Short-term borrowings 0.7 0.7 — — — Accrued workers’ compensation 63.6 22.9 19.1 8.3 13.3 Accrued retirement benefits 197.5 23.4 46.7 46.9 80.5 Other liabilities 7.4 2.2 4.2 0.6 0.4 Uncertain income tax positions 0.6 0.2 0.3 0.1 — Purchase obligations 53.0 32.9 20.1 — — Total $ 408.7 $ 101.4 $ 113.7 $ 69.1 $ 124.5 Purchase obligations above represent unconditional commitments relating primarily to technology services and online tools which we expect to utilize generally within the next three fiscal years, in the ordinary course of business.
If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference. To derive the estimated fair value of a reporting unit, we primarily relied on an income approach.
If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference. For the step one quantitative test, we determine the fair value of our reporting units using the income approach.
Investing Activities In 2021, we used $180.7 million of net cash for investing activities, compared to generating $9.8 million in 2020 and using $94.3 million in 2019. Included in cash used for investing activities in 2021 is $213.0 million of cash used for the acquisition of Softworld in April 2021, net of cash received and including working capital adjustments.
Included in cash used for investing activities in 2021 is $213.0 million of cash used for the acquisition of Softworld in April 2021, net of cash received and including working capital adjustments.
Although secondary supplier revenues are recorded on a net basis (net of secondary supplier expense), secondary supplier revenue is included in the daily sales calculation in order to properly reflect the gross revenue amounts billed to the customer. 22 Results of Operations Total Company (Dollars in millions) 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) Change 2020 (53 Weeks) 2019 (52 Weeks) Change Revenue from services $ 4,909.7 $ 4,516.0 8.7 % $ 4,516.0 $ 5,355.6 (15.7) % Gross profit 919.2 827.6 11.1 827.6 968.4 (14.5) SG&A expenses excluding restructuring charges 866.6 792.8 9.3 792.8 877.6 (9.7) Restructuring charges 4.0 12.8 (69.0) 12.8 5.5 131.5 Total SG&A expenses 870.6 805.6 8.1 805.6 883.1 (8.8) Goodwill impairment charge — 147.7 NM 147.7 — NM Gain on sale of assets — 32.1 NM 32.1 12.3 161.6 Asset impairment charge — — NM — 15.8 NM Earnings (loss) from operations 48.6 (93.6) NM (93.6) 81.8 NM Gain (loss) on investment in Persol Holdings 121.8 (16.6) NM (16.6) 35.8 NM Gain on insurance settlement 19.0 — NM — — NM Other income (expense), net (3.6) 3.4 (206.5) 3.4 (1.2) 369.5 Earnings (loss) before taxes and equity in net earnings (loss) of affiliate 185.8 (106.8) NM (106.8) 116.4 NM Income tax expense (benefit) 35.1 (34.0) 203.4 (34.0) 0.4 NM Equity in net earnings (loss) of affiliate 5.4 0.8 NM 0.8 (3.6) NM Net earnings (loss) $ 156.1 $ (72.0) NM % $ (72.0) $ 112.4 NM % Gross profit rate 18.7 % 18.3 % 0.4 pts. 18.3 % 18.1 % 0.2 pts.
Although secondary supplier revenues are recorded on a net basis (net of secondary supplier expense), secondary supplier revenue is included in the daily sales calculation in order to properly reflect the gross revenue amounts billed to the customer. 22 Results of Operations Total Company (Dollars in millions) 2022 2021 Change Revenue from services $ 4,965.4 $ 4,909.7 1.1 % Gross profit 1,011.8 919.2 10.1 SG&A expenses excluding restructuring charges 943.5 866.6 8.9 Restructuring charges — 4.0 NM Total SG&A expenses 943.5 870.6 8.4 Goodwill impairment charge (41.0) — NM Loss on disposal (18.7) — NM Gain on sale of assets 6.2 — NM Earnings (loss) from operations 14.8 48.6 (69.7) Gain (loss) on investment in Persol Holdings (67.2) 121.8 NM Loss on currency translation from liquidation of subsidiary (20.4) — NM Gain on insurance settlement — 19.0 NM Other income (expense), net 1.6 (3.6) 146.4 Earnings (loss) before taxes and equity in net earnings (loss) of affiliate (71.2) 185.8 NM Income tax expense (benefit) (7.9) 35.1 (122.6) Equity in net earnings (loss) of affiliate 0.8 5.4 (85.9) Net earnings (loss) $ (62.5) $ 156.1 NM % Gross profit rate 20.4 % 18.7 % 1.7 pts.
The principal important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changing market and economic conditions, the impact of the novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brand, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, exposure to risks associated with investments in equity affiliates including PersolKelly Pte.
The principal important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changing market and economic conditions, the impact of the novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brands, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, exposure to risks associated with certain equity investments, including with strategic partners, risks associated with conducting business in foreign countries, including foreign currency fluctuations, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, our ability to sustain critical business applications through our key data centers, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyberattacks or other breaches of network or information technology security, our ability to realize value from our tax credit and net operating loss carryforwards, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this report and in our other filings with the Securities and Exchange Commission.
SG&A expenses related to Softworld, including amortization of intangibles and other operating expenses, accounted for approximately 350 basis points to the year-over-year increase. The increase in SG&A expenses also reflects increases in performance-based incentive compensation expenses and the impact of 23 temporary expense mitigation efforts in 2020.
Approximately 320 basis points of the year-over-year increase is attributable to the first quarter SG&A expenses for Softworld and the SG&A expenses for RocketPower and PTS, including amortization of intangibles and other operating expenses. The increase in SG&A 23 expenses also reflects increases in salary and related costs and increases in performance-based incentive compensation expenses.
Financial Measures The constant currency (“CC”) change amounts in the following tables refer to the year-over-year percentage changes resulting from translating 2021 financial data into U.S. dollars using the same foreign currency exchange rates used to translate financial data for 2020.
Together, these actions will ensure that we continue to move forward on our strategic journey in pursuit of profitable, specialty growth. 21 Financial Measures The constant currency (“CC”) change amounts in the following tables refer to the year-over-year percentage changes resulting from translating 2022 financial data into U.S. dollars using the same foreign currency exchange rates used to translate financial data for 2021.
We will sell almost all of our ownership interest in PersolKelly to our joint venture partner. The transactions will be complete in the first quarter of 2022. We monitor the credit ratings of our major banking partners on a regular basis and have regular discussions with them.
We sold almost all of our ownership interest in PersolKelly to our joint venture partner. In 2022, the Company paid $48.4 million in taxes resulting from the sale of the Persol Holdings shares. We monitor the credit ratings of our major banking partners on a regular basis and have regular discussions with them.
The gross profit rate decreased 30 basis points primarily due to a change in product mix within this segment, as revenues increased in our PPO product, which generates lower profit margins. International gross profit increased on higher revenue volume and an increase in the gross profit rate.
The gross profit rate increased 360 basis points, primarily due to a change in product mix within this segment. Growth in RPO, including the acquisition of RocketPower, and MSP with higher margins, was coupled with decreased revenues in our PPO product, which generates lower profit margins.
Changes in net cash from 2019 financing activities were primarily related to dividend payments. Dividends paid per common share were $0.10 in 2021, $0.075 in 2020 and $0.30 in 2019. Payments of dividends are restricted by the financial covenants contained in our debt facilities.
Dividends paid per common share were $0.275 in 2022, $0.10 in 2021 and $0.075 in 2020. Payments of dividends are restricted by the financial covenants contained in our debt facilities. Details of this restriction are contained in the Debt footnote in the notes to our consolidated financial statements.
The 2021 income tax expense was impacted by higher pretax earnings and changes in the fair value of the Company's investment in Persol Holdings. Income taxes for 2021 also includes a charge for gain on insurance settlement and a benefit from a United Kingdom tax rate change.
Income tax expense for 2021 included charges from changes in the fair value of the Company’s investment in Persol Holdings and the gain on insurance settlement. These amounts were offset by benefits from a change in tax rate in the United Kingdom and tax exempt life insurance cash surrender value gains.
The required accruals may change in the future due to new developments in each matter. For further discussion, see the Contingencies footnote in the notes to our consolidated financial statements.
Development of the analysis includes consideration of many factors including: potential exposure, the status of proceedings, negotiations, discussions with our outside counsel and results of similar litigation. The required accruals may change in the future due to new developments in each matter. For further discussion, see the Contingencies footnote in the notes to our consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash totaled $119.5 million at year-end 2021, compared to $228.1 million at year-end 2020. As further described below, during 2021, we generated $85.0 million of cash from operating activities, used $180.7 million of cash for investing activities and used $8.1 million of cash for financing activities.
As further described below, during 2022, we used $76.3 million of cash for operating activities, generated $167.5 million of cash from investing activities and used $50.6 million of cash for financing activities. Operating Activities In 2022, we used $76.3 million of net cash for operating activities, as compared to generating $85.0 million in 2021 and generating $186.0 million in 2020.
Excluding the decrease in cash, working capital decreased $20.2 million from year-end 2020. The current ratio (total current assets divided by total current liabilities) was 1.5 at year-end 2021 and 1.7 at year-end 2020.
Excluding the increase in cash, working capital increased $51.9 million from year-end 2021. The current ratio (total current assets divided by total current liabilities) was 1.5 at year-end 2022 and 2021. Investing Activities In 2022, we generated $167.5 million of net cash from investing activities, compared to using $180.7 million in 2021 and generating $9.8 million in 2020.
During 2020, cash generated from operations was supplemented by the deferral of payments of the Company's U.S. social security taxes as allowed by the Coronavirus Aid, Relief, and Economic Security Act. Such remaining deferrals are required to be repaid by January 3, 2023.
During 2020, cash generated from operations was supplemented by the deferral of payments of the Company's U.S. social security taxes as allowed by the Coronavirus Aid, Relief, and Economic Security Act. We have repaid the $117.0 million deferred payroll tax balances, including $29.5 million in the first quarter of 2022 and $57.3 million in the fourth quarter of 2022.
The gross profit rate increased 40 basis points in comparison to 2020, primarily due to the impact of higher permanent placement income and the acquisition of Softworld, which generates higher gross profit rates, partially offset by unfavorable product mix and higher employee-related costs. Gross profit rate improved approximately 30 basis points as a result of the acquisition of Softworld.
The gross profit rate increased 170 basis points due primarily to favorable product mix, lower employee-related costs, higher permanent placement income and the impact of the acquisitions of Softworld, RocketPower and PTS, which generate higher gross profit rates. The gross profit rate increased in all operating segments.
Gain (loss) on investment in Persol Holdings represented the noncash gain or loss resulting from changes in the market price of our investment in the common stock of Persol Holdings. The gains or losses fluctuate based on the quoted market price of the Persol Holdings common stock at period end.
The gain on the investment in Persol Holdings in 2021 resulted from changes in the quoted market price of the Persol Holdings common stock.
Based on the result of our interim goodwill impairment test as of the first quarter of 2020, we recorded a goodwill impairment charge of $147.7 million to write off the entire goodwill balance.
Based on the result of our interim goodwill impairment test, we recorded a goodwill impairment charge of $30.7 million in the third quarter of 2022 and we recorded an additional goodwill impairment charge of $10.3 million to write off the remaining balance of RocketPower’s goodwill in the fourth quarter of 2022, for a total goodwill impairment charge of $41.0 million as of year-end 2022.
Corporate expenses decreased as a result of lower performance-based compensation expense and lower professional fees, partially offset by restructuring charges incurred during 2020. 31 Operating Results By Segment (continued) (Dollars in millions) 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) % Change 2020 (53 Weeks) 2019 (52 Weeks) % Change Earnings (Loss) from Operations: Professional & Industrial $ 31.4 $ 41.6 (24.4) % $ 41.6 $ 62.4 (33.4) % Science, Engineering & Technology 73.7 75.0 (1.7) 75.0 79.5 (5.8) Education 3.0 (9.0) NM (9.0) 15.8 NM Outsourcing & Consulting 18.7 11.5 62.7 11.5 3.0 291.3 International 9.9 (8.9) NM (8.9) 18.7 NM Corporate (88.1) (203.8) 56.7 (203.8) (97.6) (108.6) Consolidated Total $ 48.6 $ (93.6) NM % $ (93.6) $ 81.8 NM % 2021 vs. 2020 Professional & Industrial reported earnings of $31.4 million, a 24.4% decrease from 2020.
Corporate expenses increased 6.6%, primarily due to higher performance-based incentive compensation expense. 27 Operating Results By Segment (continued) (Dollars in millions) 2022 2021 % Change Earnings (Loss) from Operations: Professional & Industrial $ 32.0 $ 31.4 1.8 % Science, Engineering & Technology 82.1 73.7 11.4 Education 18.5 3.0 NM Outsourcing & Consulting (21.2) 18.7 NM International 9.9 9.9 (0.5) Corporate (94.0) (88.1) (6.6) Loss on disposal (18.7) — NM Gain on sale of assets 6.2 — NM Consolidated Total $ 14.8 $ 48.6 (69.7) % 2022 vs. 2021 Professional & Industrial reported earnings of $32.0 million, a 1.8% increase from 2021.
While we have yet to return to pre-crisis revenue levels, we have experienced improving demand for our services and expect a sustained recovery throughout 2022. As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash, cash equivalents and restricted cash, operating activities, investing activities and financing activities.
As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash, cash equivalents and restricted cash, operating activities, investing activities and financing activities. Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash totaled $162.4 million at year-end 2022, compared to $119.5 million at year-end 2021.
Details of this restriction are contained in the Debt footnote in the notes to our consolidated financial statements. Changes in net cash from financing activities are also impacted by short-term borrowing activities. There was no debt at year-end 2021 and debt was $0.3 million at year-end 2020.
Changes in net cash from financing activities are also impacted by short-term borrowing activities. Debt totaled $0.7 million at year-end 2022, which represented local borrowings, compared to no debt at year-end 2021.
Earnings from operations declined as a result of the goodwill impairment charge and lower gross profit as a result of the impact of COVID-19 on demand, partially offset by lower expenses due to cost reduction efforts and higher gain on sale of assets.
The decline is due primarily to the goodwill impairment charge and the loss on disposal, partially offset by higher gross profit, net of increased SG&A expenses and gain on sale of assets.
The change from 2019 to 2020 was primarily due to the deferral of payroll tax payments, partially offset by the impact of higher global DSO. Trade accounts receivable totaled $1.4 billion at year-end 2021 and $1.3 billion at year-end 2020. Global DSO for the fourth quarter was 60 days for 2021, compared to 64 days for 2020.
Trade accounts receivable totaled $1.5 billion at year-end 2022 and $1.4 billion at year-end 2021. Global DSO for the fourth quarter was 61 days for 2022, compared to 60 days for 2021. Accounts payable and accrued liabilities was $723.3 million and increased from year-end 2021 as a result of increased MSP supplier payables.
The gross profit rate increased 90 basis points due primarily to higher permanent placement income from Greenwood/Asher, our acquisition in late 2020. This increase was partially offset by the unfavorable year-over-year impact of government wage subsidies. The Outsourcing & Consulting gross profit increased on higher revenue volume, partially offset by a decrease in the gross profit rate.
The gross profit rate increased 20 basis points, due primarily to the acquisition of PTS which generates higher margins, and higher permanent placement income at Greenwood/Asher. Outsourcing & Consulting gross profit increased on higher revenue volume, combined with an increase in the gross profit rate.
The 53rd week added approximately 1% to 2020 reported revenue. Compared to 2020, revenue from staffing services increased 6.6%, revenue from outcome-based services increased 7.3%, and permanent placement income increased 89.7%. Gross profit increased 11.1% on higher revenue volume and an improving gross profit rate.
Compared to 2021, revenue from staffing services decreased 1.2% and revenue from outcome-based services increased 6.3%. Permanent placement revenue, which is included in revenue from services, increased 18.9% from 2021. Gross profit increased 10.1% on a reported basis and 12.1% on a constant currency basis on higher revenue volume, combined with an increase in the gross profit rate.
As a result of this qualitative assessment, a step one quantitative analysis was not deemed necessary and the goodwill was not impaired. At year-end 2021 and 2020, total goodwill amounted to $114.8 million and $3.5 million, respectively. See the Goodwill and Intangible Assets footnote in the notes to our consolidated financial statements for more information.
At year-end 2022 and 2021, total goodwill amounted to $151.1 million and $114.8 million, respectively. See the Goodwill and Intangible Assets footnote in the notes to our consolidated financial statements for more information. 34 Litigation Kelly is subject to legal proceedings, investigations and claims arising out of the normal course of business.
The 53rd week added approximately 1% to 2020 reported and CC revenue from services in International. 27 Operating Results By Segment (continued) (Dollars in millions) 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) Change 2020 (53 Weeks) 2019 (52 Weeks) Change Gross Profit: Professional & Industrial $ 310.0 $ 330.2 (6.1) % $ 330.2 $ 388.4 (15.0) % Science, Engineering & Technology 253.9 209.4 21.3 209.4 226.2 (7.5) Education 65.1 42.2 54.1 42.2 72.0 (41.3) Outsourcing & Consulting 141.4 119.8 18.0 119.8 122.3 (2.0) International 148.8 126.0 18.1 126.0 159.5 (21.0) Consolidated Total $ 919.2 $ 827.6 11.1 % $ 827.6 $ 968.4 (14.5) % Gross Profit Rate: Professional & Industrial 16.9 % 17.8 % (0.9) pts. 17.8 % 17.5 % 0.3 pts.
Revenue in Europe decreased 9.2% on a reported basis and decreased 0.3% in constant currency, with the impact of the sale of our Russian operations nearly offset by growth in most geographies. 25 Operating Results By Segment (continued) (Dollars in millions) 2022 2021 Change Gross Profit: Professional & Industrial $ 302.5 $ 310.0 (2.4) % Science, Engineering & Technology 297.0 253.9 17.0 Education 100.3 65.1 54.0 Outsourcing & Consulting 169.6 141.4 20.0 International 142.4 148.8 (4.3) Consolidated Total $ 1,011.8 $ 919.2 10.1 % Gross Profit Rate: Professional & Industrial 18.2 % 16.9 % 1.3 pts.
Litigation Kelly is subject to legal proceedings, investigations and claims arising out of the normal course of business. Kelly routinely assesses the likelihood of any adverse judgments or outcomes to these matters, as well as ranges of probable losses.
Kelly routinely assesses the likelihood of any adverse judgments or outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the accruals required, if any, for these contingencies is made after analysis of each known issue.
The net loss for 2020 of $72.0 million, a decrease from net earnings of $112.4 million in 2019, was due primarily to lower earnings from operations due to the goodwill impairment charge taken in the first quarter of 2020, combined with losses of Persol Holdings common stock, partially offset by the impact of an income tax benefit in comparison to income tax expense in 2019. 25 Operating Results By Segment (Dollars in millions) 2021 vs. 2020 2020 vs. 2019 2021 (52 Weeks) 2020 (53 Weeks) % Change 2020 (53 Weeks) 2019 (52 Weeks) % Change Revenue From Services: Professional & Industrial $ 1,837.4 $ 1,858.4 (1.1) % $ 1,858.4 $ 2,213.4 (16.0) % Science, Engineering & Technology 1,156.8 1,019.1 13.5 1,019.1 1,131.8 (9.9) Education 416.5 286.9 45.2 286.9 450.7 (36.3) Outsourcing & Consulting 432.1 363.5 18.9 363.5 377.7 (3.8) International 1,067.8 988.6 8.0 988.6 1,182.5 (16.4) Less: Intersegment revenue (0.9) (0.5) 97.0 (0.5) (0.5) (16.6) Consolidated Total $ 4,909.7 $ 4,516.0 8.7 % $ 4,516.0 $ 5,355.6 (15.7) % 2021 vs. 2020 Professional & Industrial revenue from services decreased 1.1% due primarily to lower demand from our outcome-based call center specialty.
This change was due to the Persol Holdings investment, including the first quarter 2022 sale and related impacts, the goodwill impairment charge, the loss on disposal related to the sale of our Russian operations, partially offset by improved gross profit in 2022 and the gain on sale of under-utilized real property in the United States. 24 Operating Results By Segment (Dollars in millions) 2022 2021 % Change Revenue From Services: Professional & Industrial $ 1,666.2 $ 1,837.4 (9.3) % Science, Engineering & Technology 1,265.4 1,156.8 9.4 Education 636.2 416.5 52.7 Outsourcing & Consulting 468.0 432.1 8.3 International 932.2 1,067.8 (12.7) Less: Intersegment revenue (2.6) (0.9) 182.8 Consolidated Total $ 4,965.4 $ 4,909.7 1.1 % 2022 vs. 2021 Professional & Industrial revenue from services decreased 9.3%.
These uses of cash were partially offset by proceeds of $13.8 million primarily from the sale of unused land during the second quarter of 2019. Capital expenditures totaled $11.2 million in 2021, $15.5 million in 2020 and $20.0 million in 2019. Capital expenditures in 2021 primarily related to the Company's IT infrastructure, technology programs and headquarters building improvements.
Cash used for the acquisition of Greenwood/Asher totaled $2.8 million, net of the cash received and including working capital adjustments. Capital expenditures totaled $12.0 million in 2022, $11.2 million in 2021 and $15.5 million in 2020. Capital expenditures in both 2022 and 2021 primarily related to the Company's IT infrastructure, technology programs and headquarters furniture and fixtures.
Operating Activities In 2021, we generated $85.0 million of net cash from operating activities, as compared to generating $186.0 million in 2020 and generating $102.2 million in 2019. Net cash from operating activities in 2020 benefited from a deferral of $117.0 million of U.S. federal payroll taxes.
Net cash used for operating activities in 2022 and 2021 included $86.8 million and $29.7 million, respectively, of cash outflows related to the repayment of U.S. payroll taxes originally deferred in 2020. Net cash from operating activities in 2020 benefited from the deferral of $117.0 million of U.S. payroll taxes.
This increase was primarily due to higher performance-based compensation and higher salary-related expenses driven by an increase in headcount, reflecting improving revenue in Europe. Corporate expenses decreased $0.1 million from 2020.
The increase in constant currency was primarily due to higher salary-related expenses driven by an increase in headcount, reflecting improving revenue in Europe, partially offset by the impact of the sale of our Russian operations in July 2022.
Corporate loss from operations of $203.8 million for 2020 includes the goodwill impairment charge of $147.7 million and gain on sale of assets of $32.1 million. 33 Results of Operations Financial Condition Historically, we have financed our operations through cash generated by operating activities and access to credit markets.
The decline in earnings due to the sale of operations in Russia was nearly offset by growth in most geographies. 28 Results of Operations Financial Condition Historically, we have financed our operations through cash generated by operating activities and access to credit markets.
Therefore, we performed an interim step one quantitative test for our previous reporting units with goodwill, Americas Staffing and GTS, and determined that the estimated fair values of both reporting units no longer exceeded their carrying values.
These changes in market conditions caused another triggering event requiring an interim impairment test for goodwill as of year-end 2022. We performed an interim step one quantitative test for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value as of third quarter-end and year-end 2022.
This was partially offset by earnings from Softworld, which was acquired in April 2021. Education reported earnings of $3.0 million, compared to a loss of $9.0 million from 2020. The change was primarily due to an increase in revenue, reflecting the return to in-school instruction by many schools, resulting in increased demand for our services as compared to 2020.
The change was primarily due to the increase in revenue resulting from improved demand for our services as compared to 2021, coupled with operating leverage. 2022 results also include earnings of $3.8 million from PTS acquired in May 2022.
Income tax benefit was $34.0 million and expense was $0.4 million for 2020 and 2019, respectively. The 2020 income tax benefited from lower pretax earnings and included the impairment of goodwill, a decline in the fair value of the Company's investment in Persol Holdings, and a tax loss on the sale of our Brazil operations.
Income tax benefit was $7.9 million for 2022 and income tax expense was $35.1 million for 2021. 2022 benefited from lower pretax earnings, changes in the fair value of the Company’s investment in Persol Holdings, and the impairment of tax deductible goodwill. These benefits were offset by the charge associated with tax exempt life insurance cash surrender value losses.
On an organic basis, revenue growth was 3.9%, which was driven by hours increases in our staffing business across most specialties, coupled with an increase in outcome-based revenue and permanent placement income. The 53rd week added approximately 1% to 2020 reported revenue from services in Science, Engineering & Technology.
Excluding the impact of the addition of Softworld revenue in the first quarter of 2022, the revenue growth was 6.1%, which was driven by increases in our outcome-based services as well as an increase in revenue in our staffing business coming from increases in bill rates and permanent placement income, partially offset by a decline in hours.
In the fourth quarter of 2020, the Company elected to perform a step zero qualitative analysis to determine whether a further quantitative assessment was necessary for the reporting unit with goodwill.
Additionally, we performed a step zero qualitative analysis for the Education and RocketPower reporting units to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary at that time.
The Outsourcing & Consulting gross profit rate increased 60 basis points due to improved customer mix in the RPO product, coupled with lower employee-related costs in the PPO product. International gross profit declined as a result of lower revenue volume and a decline in the gross profit rate.
In comparison to the prior year, the gross profit rate increased 130 basis points. This increase reflects improved business mix, higher permanent placement income, including conversion fees related to a large customer and lower employee-related costs. Science, Engineering & Technology gross profit increased on higher revenue volume, combined with an increase in the gross profit rate.
Net cash from operating activities in 2021 included $29.7 million of cash outflows related to the repayment of the payroll tax deferral. The change from 2020 to 2021 was primarily due to the impact of changes in the payroll tax deferral, partially offset by the favorable impact of improving global DSO.
The change from 2020 to 2021 was primarily due to the deferral of payroll tax payments, partially offset by the impact of higher global DSO. Our working capital position (total current assets less total current liabilities) was $586.4 million at year-end 2022, an increase of $92.9 million from year-end 2021.
Our acquisition of Softworld, a technology staffing and solutions firm, in early April 2021 added approximately 220 basis points to the revenue growth rate. The 2020 fiscal year included a 53rd week. This fiscal leap year occurs every five or six years and is necessary to align the fiscal and calendar periods.
Our first quarter 2021 acquisition of Softworld, a technology staffing and solutions firm, and our first quarter 2022 acquisition of RocketPower, an RPO solutions provider, and our second quarter 2022 acquisition of PTS, a specialty firm that provides in-school therapy services, added approximately 180 basis points to the revenue growth rate.
The 53rd week added approximately 1% to 2020 reported revenue from services in Professional & Industrial. Science, Engineering & Technology revenue from services increased 13.5% on a reported basis, which includes revenues from the acquisition of Softworld.
Revenue from outcome-based services declined 0.3% due to lower demand for our call center specialty, partially offset by growth in other specialties. Science, Engineering & Technology revenue from services increased 9.4% on a reported basis, which includes revenue from the acquisition of Softworld in the second quarter of 2021.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Executive Overview In 2022, Kelly moved forward on its strategic growth journey amid a dynamic macroeconomic environment in the first half of the year.
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Executive Overview Kelly’s strategy and actions are guided by our simple yet powerful Noble Purpose: “We connect people to work in ways that enrich their lives.” We are committed to being a leading talent solutions provider among the talent with whom we choose to specialize and in the global markets in which we choose to compete.
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As the year progressed, a mixed pattern of revenue growth and deceleration emerged and persisted through the balance of 2022 driven by rising inflation, increasing interest rates and heightened economic uncertainty.
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As we navigate the post-pandemic landscape, we will continue to demonstrate our expected behaviors and actions: • Employ a talent-first mentality • Relentlessly deliver for customers • Grow through discipline and focus • Deliver efficiency and effectiveness in everything we do By aligning ourselves with our Noble Purpose and executing against these behaviors, we are becoming a more agile and focused organization, prepared to achieve new levels of growth and profitability as we develop and reshape our portfolio of businesses.
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Consequently, a growing number of employers scaled back or paused hiring – and in some cases reduced the size of their workforces – to align their costs with declining growth. Notwithstanding these dynamics, the labor market remained tight.
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The Talent Solutions Industry Even before the COVID-19 pandemic, labor markets were in the midst of change due to automation, secular shifts in labor supply and demand and skills gaps.
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The economy continued to add jobs – albeit at a slightly slower pace to end the year – and unemployment remained at historically low levels, which contributed to ongoing challenges with sourcing talent.
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Global demographic trends are reshaping and redefining the way in which companies find and use talent, and the COVID-19 pandemic changed where and how companies expect work to be performed—a shift we expect will carry over into the future. In response, the talent solutions industry is adjusting how it sources, recruits, trains and places talent.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Fair Value Measurements footnote in the notes to our consolidated financial statements of this Annual Report on Form 10-K for further discussion. We are exposed to market risk as a result of our obligation to pay benefits under our nonqualified deferred compensation plan and our related investments in company-owned variable universal life insurance policies.
Biggest changeWe are exposed to market risk as a result of our obligation to pay benefits under our nonqualified deferred compensation plan and our related investments in company-owned variable universal life insurance policies. The obligation to employees increases and decreases based on movements in the equity and debt markets.
Intercompany transactions which create transactional foreign currency risk include services, royalties, loans, contributions and distributions. In addition, we are exposed to interest rate risks through our use of the multi-currency line of credit and other borrowings. A hypothetical fluctuation of 10% of market interest rates would not have had a material impact on 2021 earnings.
Intercompany transactions which create transactional foreign currency risk include services, royalties, loans, contributions and distributions. In addition, we are exposed to interest rate risks through our use of the multi-currency line of credit and other borrowings. A hypothetical fluctuation of 10% of market interest rates would not have had a material impact on 2022 earnings.
The obligation to employees increases and decreases based on movements in the equity and debt markets. The investments in mutual funds, as part of the company-owned variable universal life insurance policies, are designed to mitigate, but not eliminate, this risk with offsetting gains and losses.
The investments in mutual funds, as part of the 36 company-owned variable universal life insurance policies, are designed to mitigate, but not eliminate, this risk with offsetting gains and losses.
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We are exposed to market and currency risks on our investment in Persol Holdings, which may be material. The investment is stated at fair value and is marked to market through net earnings. Foreign currency fluctuations on this yen-denominated 40 investment are reflected as a component of other comprehensive income.

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