Acquisition and Disposition

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Acquisition and Disposition

Acquisition and Disposition

Acquisition

On September 5, 2017, Kelly Services USA, LLC, a wholly owned subsidiary of the Company, acquired 100% of the issued and outstanding shares of Teachers On Call, Inc. (“TOC”), an educational staffing firm in the U.S. for a purchase price of $41.0 million. Under terms of the purchase agreement, the purchase price was adjusted for cash held by TOC at the closing date less an estimated working capital adjustment resulting in the Company paying cash of $39.0 million at closing. In the first quarter of 2018, the Company paid a working capital adjustment of $0.2 million, resulting in an increase of goodwill (see Goodwill footnote).

Goodwill generated from this acquisition is primarily attributable to expected synergies from combining operations and expanding market potential, and is assigned to the Americas Staffing reporting unit. The amount of goodwill expected to be deductible for tax purposes is approximately $18.8 million as of the third quarter-end 2018. An indemnification asset of $2.8 million was recognized as of the acquisition date related to pre-acquisition tax liabilities. As of the third quarter-end 2018, the indemnification asset is $0.1 million with the change driven by cash received from the seller to pay pre-acquisition tax liabilities.

Disposition

On September 21, 2018, Kelly Services entered into an agreement with TrustPoint International, LLC to sell the assets related to the Company’s legal staffing and legal management services business. The transaction is expected to close in the fourth quarter of 2018. The assets related to the sale that are included on the consolidated balance sheet are immaterial for held for sale disclosure.