KFORCE INC (KFRC)

CIK: 0000930420. SIC: 7363 Services-Help Supply Services. Latest 10-K as of: 2026-02-20.

SIC breadcrumb: Services > Business Services > SIC 7363 Services-Help Supply Services

SEC company page: https://www.sec.gov/edgar/browse/?CIK=930420. Latest filing source: 0000930420-26-000007.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-20. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000930420.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000930420.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0000930420-26-000041.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-04-29. Report date: 2026-03-31.

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

EXECUTIVE SUMMARY

The following is an executive summary of what Kforce believes are highlights as of and for the three months ended March 31, 2026, which should be considered in the context of the additional discussions herein and in conjunction with the unaudited condensed consolidated financial statements and notes thereto.

•Revenue for the three months ended March 31, 2026 increased 0.1% to nearly $330.4 million from $330.0 million in the comparable period in 2025. Revenue decreased 0.1% for Technology and increased 2.8% for FA.

•Flex revenue for the three months ended March 31, 2026 increased 0.5% to $324.2 million from $322.6 million in the comparable period in 2025. Flex revenue increased 0.2% and 5.7% for Technology and FA, respectively, primarily driven by an increase in consultants on assignment.

•Direct Hire revenue for the three months ended March 31, 2026 decreased 17.7% to $6.1 million from $7.5 million in the comparable period in 2025.

•Gross profit margin for the three months ended March 31, 2026 increased 60 basis points to 27.3% from 26.7% in the comparable period in 2025 primarily driven by an increase in Flex gross profit margins, which was partially offset by a decline in Direct Hire revenue.

•Flex gross profit margin for the three months ended March 31, 2026 increased 90 basis points to 25.9% from 25.0% in the comparable period in 2025 primarily driven by improved bill and pay spreads and lower healthcare costs.

•SG&A expenses as a percentage of revenue for the three months ended March 31, 2026 increased to 23.2% from 22.8% in the comparable period in 2025 primarily driven by higher performance-based compensation costs due to improved financial performance.

•Net income for the three months ended March 31, 2026 decreased 2.7% to $7.9 million, or $0.46 diluted earnings per share, from $8.1 million, or $0.45 diluted earnings per share, for the three months ended March 31, 2025.

•The Firm returned $18.6 million of capital to our shareholders in the form of open market repurchases totaling $11.8 million and quarterly dividends totaling $6.8 million during the three months ended March 31, 2026.

•Cash used in operating activities was $4.1 million during the three months ended March 31, 2026, as compared to cash provided by operating activities of $0.2 million for the three months ended March 31, 2025. The change was primarily driven by lower collections on trade receivables, partially offset by the timing of payments.

12

Table of Contents

RESULTS OF OPERATIONS

Business Overview

Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. At March 31, 2026, Kforce employed over 1,600 associates and had nearly 8,000 consultants on assignment. Kforce serves clients across a diverse set of industries and organizations of all sizes, but we place a particular focus on serving Fortune 500 and other leading companies.

Recent economic data continues to point to a softer labor market, particularly in professionally oriented roles. Heightened geopolitical uncertainty, including the conflict involving Iran, has contributed to significant volatility in global energy markets, resulting in sharp increases across oil, gasoline, natural gas and electricity. In this environment, discussions with our clients indicate they are focused on agility. We believe uncertainty is reinforcing the value of flexible workforce solutions as organizations seek to advance a significant backlog of high-priority technology initiatives while they gain greater clarity around geopolitical developments and the longer-term impact of emerging technologies on their businesses and talent strategies.

Against this backdrop, we experienced year‑over‑year revenue growth in the first quarter of 2026 for the first time in over three years, which we expect to further improve in the second quarter of 2026. Supported by our integrated go‑to‑market approach and the continued focus of our teams operating as One Kforce - our integrated operating model where our teams work together across service lines - we believe we are well positioned to support clients as they advance their technology roadmaps amid an evolving economic environment.

Based on data published by the Staffing Industry Analysts (“SIA”), temporary employment figures and trends are important indicators of staffing demand from an economic standpoint. The national U.S. unemployment rate declined to 4.3% in March 2026 as compared to 4.4% in December 2025. In the latest U.S. staffing industry forecast published by SIA in March 2026, the technology temporary staffing industry is estimated to grow 1% in 2026.

Operating Results - Three Months Ended March 31, 2026 and 2025

The following table presents certain items in our Unaudited Condensed Consolidated Statements of Operations as a percentage of revenue:

Three Months Ended March 31,

2026

2025

Revenue by segment:

Technology

92.6 

%

92.8 

%

FA

7.4 

7.2 

Total Revenue

100.0 

%

100.0 

%

Revenue by type:

Flex

98.1 

%

97.7 

%

Direct Hire

1.9 

2.3 

Total Revenue

100.0 

%

100.0 

%

Gross profit

27.3 

%

26.7 

%

Selling, general and administrative expenses

23.2 

%

22.8 

%

Depreciation and amortization

0.4 

%

0.4 

%

Income from operations

3.6 

%

3.5 

%

Income before income taxes

3.4 

%

3.4 

%

Net income

2.4 

%

2.5 

%

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Table of Contents

Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period:

Three Months Ended March 31,

(in thousands)

2026

Increase

(Decrease)

2025

Technology

Flex revenue

$

302,955 

0.2 

%

$

302,435 

Direct Hire revenue

3,008 

(21.8)

%

3,849 

Total Technology revenue

$

305,963 

(0.1)

%

$

306,284 

FA

Flex revenue

$

21,273 

5.7 

%

$

20,135 

Direct Hire revenue

3,128 

(13.3)

%

3,609 

Total FA revenue

$

24,401 

2.8 

%

$

23,744 

Total Flex revenue

$

324,228 

0.5 

%

$

322,570 

Total Direct Hire revenue

6,136 

(17.7)

%

7,458 

Total Revenue

$

330,364 

0.1 

%

$

330,028 

Flex Revenue. The key drivers of Flex revenue are the number of consultants on assignment, billable hours, the bill rate per hour and, to a limited extent, the amount of billable expenses incurred by Kforce.

Flex revenue for our Technology business increased 0.2% during the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in consultants on assignment, which was partially offset by a slight decrease in our average bill rate. In the second quarter, we expect Technology Flex revenue to increase in the low to mid single digits sequentially, on a billing day basis, and year over year.

Our FA business experienced an increase in Flex revenue of 5.7% during the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in consultants on assignment. Additionally, our average FA bill rates improved by nearly 1% for the three months ended March 31, 2026, as compared to the same period in 2025, which continues to reflect the higher-skilled assignments that we have been strategically pursuing. In the second quarter, we expect FA Flex revenue to increase in the mid to high single digits sequentially, on a billing day basis, and increase in the high single digits year over year.

The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):

Three Months Ended

March 31, 2026 vs. March 31, 2025

Key Drivers - Increase (Decrease)

Technology

FA

Volume - hours billed

$

2,478 

$

946 

Bill rate

(1,848)

198 

Billable expenses

(110)

(6)

Total change in Flex revenue

$

520 

$

1,138 

The following table presents total Flex hours billed by segment and percentage change over the prior period:

Three Months Ended March 31,

(in thousands)

2026

Increase

(Decrease)

2025

Technology

3,365 

0.8 

%

3,337 

FA

407 

4.6 

%

389 

Total Flex hours billed

3,772 

1.2 

%

3,726 

Direct Hire Revenue. The key drivers of Direct Hire revenue are the number of placements and the associated placement fee. Direct Hire revenue also includes conversion revenue, which may occur when a consultant initially assigned to a client on a temporary basis is later converted to a permanent placement for a fee.

Direct Hire revenue decreased 17.7% during the three months ended March 31, 2026, as compared to the same period in 2025, which was primarily driven by a decrease in placements.

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Table of Contents

Gross Profit. Gross profit is determined by deducting direct costs (primarily consultant compensation, payroll taxes and certain fringe benefits, as well as independent contractor costs) from total revenue. In addition, there are no consultant payroll costs associated with Direct Hire placements; thus, all Direct Hire revenue increases gross profit by the full amount of the placement fee.

The following table presents gross profit (gross profit as a percentage of total revenue) by segment and percentage change over the prior period:

Three Months Ended March 31,

2026

Increase

(Decrease)

2025

Technology

26.5 

%

2.3 

%

25.9 

%

FA

37.1 

%

(2.9)

%

38.2 

%

Total gross profit percentage

27.3 

%

2.2 

%

26.7 

%

Total gross profit percentage increased 60 basis points for the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by an increase in Flex gross profit margins, offsetting a decline in Direct Hire revenue.

Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insights into the other drivers of total gross profit percentage driven by our Flex business, such as changes in the spread between the consultants’ bill rate and pay rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.

The following table presents the Flex gross profit percentage by segment and percentage change over the prior period:

Three Months Ended March 31,

2026

Increase

(Decrease)

2025

Technology

25.7 

%

3.2 

%

24.9 

%

FA

27.9 

%

2.6 

%

27.2 

%

Total Flex gross profit percentage

25.9 

%

3.6 

%

25.0 

%

Our Flex gross profit percentage increased 90 basis points for the three months ended March 31, 2026, as compared to the same period in 2025.

•Technology Flex gross profit margins increased 80 basis points for the three months ended March 31, 2026, as compared to the same period in 2025. The increase for the three months ended March 31, 2026 was primarily driven by improved bill and pay spreads and lower healthcare costs. In the second quarter, we expect Technology Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes and for bill and pay spreads to be stable sequentially.

•FA Flex gross profit margins increased 70 basis points for the three months ended March 31, 2026, as compared to the same period in 2025. The increase for the three months ended March 31, 2026 was primarily driven by improved bill and pay spreads and lower healthcare costs. In the second quarter, we expect FA Flex gross profit margins to increase sequentially due to lower seasonal payroll taxes and for bill and pay spreads to be stable sequentially.

The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):

Three Months Ended

March 31, 2026 vs. March 31, 2025

Key Drivers - Increase (Decrease)

Technology

FA

Revenue impact (volume)

$

129 

$

309 

Profitability impact (bill rate)

2,537 

154 

Total change in Flex gross profit

$

2,666 

$

463 

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-20. Report date: 2025-12-31.

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes thereto contained in Item 8. Financial Statements and Supplementary Data of this report, as well as Item 1. Business of this report, for an overview of our operations and business environment.

EXECUTIVE SUMMARY

The following is an executive summary of what Kforce believes are highlights for the year ended December 31, 2025, which should be considered in the context of the additional discussions herein and in conjunction with the consolidated financial statements and notes thereto.

•Revenue for the year ended December 31, 2025 decreased 5.4% (5.1% on a billing day basis) to $1.33 billion in 2025 from $1.41 billion in 2024. Revenue decreased 4.8% (4.5% on a billing day basis) and 12.3% (11.9% on a billing day basis) for Technology and FA, respectively, in 2025, primarily driven by decreases in consultants on assignment. We believe these decreases are primarily related to macroeconomic uncertainties and the natural impacts of the early phases of significant technology evolutions (such as AI) as companies assess the implications on their businesses and their investment strategies.

•Flex revenue decreased 5.3% (4.9% on a billing day basis) to $1.30 billion in 2025 from $1.38 billion in 2024. In 2025, Flex revenue decreased 4.7% (4.4% on a billing day basis) for Technology and 12.8% (12.5% on a billing day basis) for FA. Notably, Tech Flex revenue decreased 0.2% sequentially (increased 3.0% on a billing day basis), and FA Flex revenue improved sequentially 2.4% (5.7% on a billing day basis) in the fourth quarter 2025. For our FA business, this represented the third consecutive quarter of sequential improvement, primarily due to, in our opinion, the benefits of a realignment in early 2025 intended to bring a greater intensity and focus on our FA business.

•Direct Hire revenue decreased 11.1% to $25.7 million in 2025 from $28.9 million in 2024.

•Gross profit margin decreased 20 basis points to 27.2% in 2025 from 27.4% in 2024, primarily driven by a decline in the mix of Direct Hire revenue.

•Flex gross profit margin decreased 10 basis points to 25.8% for 2025 from 25.9% in 2024. Flex gross profit margin decreased 10 basis points for Technology and 80 basis points for FA in 2025 as compared to 2024. Notably, our Flex gross profit margin increased 40 basis points in our Technology business in the fourth quarter of 2025 as compared to the same period in 2024.

•Selling, General and Administrative (“SG&A”) expenses as a percentage of revenue for the year ended December 31, 2025, increased to 23.0% from 22.0% in 2024, primarily driven by the declines in revenue and gross profit. In the fourth quarter of 2025, we recognized charges of $3.4 million related to refinements in our organizational structure and other non-recurring costs, which negatively impacted earnings per share for the fourth quarter of 2025 and fiscal 2025 by $0.13, net of the related tax effect.

•Net income for the year ended December 31, 2025, decreased 30.9% to $34.8 million, or $1.96 diluted earnings per share, from $50.4 million, or $2.68 diluted earnings per share, in 2024.

•The Firm returned $76.0 million of capital to our shareholders in the form of open market repurchases totaling $48.5 million, or 1.2 million shares, and quarterly dividends totaling $27.5 million during the year ended December 31, 2025. The total capital returned to shareholders in 2025 represented over 100% of operating cash flows.

•Cash provided by operating activities was $61.6 million during the year ended December 31, 2025, as compared to $86.9 million for 2024. The decrease was primarily related to lower profitability levels, higher capitalized implementation costs related to cloud computing arrangements for Workday, and the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance.

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Table of Contents

RESULTS OF OPERATIONS

Certain discussions of the changes in our results of operations from the year ended December 31, 2024, as compared to the year ended December 31, 2023, have been omitted from this Form 10-K, and may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 21, 2025.

While early 2025 began with optimism around U.S. economic growth and increased investment in technology initiatives, the macro environment remained challenging throughout the year, with significant disruption beginning in April 2025 as a result of global trade policy negotiations and the labor market data continuing to reflect a persistently weak and largely frozen hiring landscape characterized by prolonged stagnation in job gains. We believe the relative impact of AI on revenue trends and the effects of a fairly soft economy and weak labor market has created uncertainty, leading many organizations to proceed cautiously in their strategic planning and near‑term technology investments. Despite these conditions, our recent operating trends, combined with our historical experience, give us confidence that companies typically turn to flexible talent solutions as an initial step prior to making permanent hires while they assess the durability of the macro environment. The potential use of flexible talent solutions may be further influenced by the growing belief that the returns that will be generated from continuing AI investments may take longer to realize and may be more specific in nature to unique business problems rather than an overarching solution to all technology challenges. Although client conversations and broader market signals reaffirm that we are still operating in a demand‑constrained environment, our results in the fourth quarter of 2025 and the relatively stronger start to 2026 suggest greater confidence in the operating environment heading into 2026. We believe clients have maintained a meaningful backlog of strategically essential technology initiatives that they expect to advance once confidence in the macroeconomic outlook improves and their technology roadmaps are better defined.

The following table presents certain items in our Consolidated Statements of Operations as a percentage of revenue for the years ended:

December 31,

2025

2024

2023

Revenue by segment:

Technology

92.6 

%

92.0 

%

90.4 

%

FA

7.4 

8.0 

9.6 

Total Revenue

100.0 

%

100.0 

%

100.0 

%

Revenue by type:

Flex

98.1 

%

97.9 

%

97.5 

%

Direct Hire

1.9 

2.1 

2.5 

Total Revenue

100.0 

%

100.0 

%

100.0 

%

Gross profit

27.2 

%

27.4 

%

27.9 

%

Selling, general and administrative expenses

23.0 

%

22.0 

%

21.9 

%

Depreciation and amortization

0.4 

%

0.4 

%

0.3 

%

Income from operations

3.8 

%

5.0 

%

5.7 

%

Income before income taxes

3.5 

%

4.8 

%

5.6 

%

Net income

2.6 

%

3.6 

%

4.0 

%

19

Table of Contents

Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period for the years ended December 31:

(in thousands)

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Technology

Flex revenue

$

1,218,117 

(4.7)

%

$

1,278,715 

(6.4)

%

$

1,366,095 

Direct Hire revenue

12,154 

(13.4)

%

14,028 

(24.0)

%

18,458 

Total Technology revenue

$

1,230,271 

(4.8)

%

$

1,292,743 

(6.6)

%

$

1,384,553 

FA

Flex revenue

$

85,220 

(12.8)

%

$

97,729 

(23.5)

%

$

127,679 

Direct Hire revenue

13,516 

(8.9)

%

14,836 

(24.0)

%

19,524 

Total FA revenue

$

98,736 

(12.3)

%

$

112,565 

(23.5)

%

$

147,203 

Total Flex revenue

$

1,303,337 

(5.3)

%

$

1,376,444 

(7.9)

%

$

1,493,774 

Total Direct Hire revenue

25,670 

(11.1)

%

28,864 

(24.0)

%

37,982 

Total Revenue

$

1,329,007 

(5.4)

%

$

1,405,308 

(8.3)

%

$

1,531,756 

Flex Revenue. The key drivers of Flex revenue are the number of consultants on assignment, billable hours, the bill rate per hour and, to a limited extent, the amount of billable expenses incurred by Kforce.

Flex revenue for our Technology business decreased 4.7% (4.4% on a billing day basis) during the year ended December 31, 2025, as compared to the same period in 2024, primarily due to a decrease in consultants on assignment, which we believe is primarily related to macroeconomic uncertainties. Our average Technology bill rate was approximately $90 per hour for the year ended December 31, 2025, which remained flat as compared to 2024. Notably, Flex revenues in our Technology business in the fourth quarter of 2025 improved 3.0% sequentially on a billing day basis. In the first quarter of 2026, we expect Technology Flex revenue to decrease on a sequential billing day basis in the low single digits due to normal seasonality and slightly decline on a year over year basis.

Our FA business experienced a decrease in Flex revenue of 12.8% (12.5% on a billing day basis) during the year ended December 31, 2025, as compared to the same period in 2024, primarily driven by a decrease in consultants on assignment, which we believe is primarily related to macroeconomic uncertainties. Notably, FA Flex revenue improved sequentially 2.4% (5.7% on a billing day basis) in the fourth quarter, representing the third consecutive quarter of sequential improvement, primarily due to more consultants on assignment. Our average FA bill rate was approximately $53 per hour for the year ended December 31, 2025, which improved 3.9% as compared to 2024. In the first quarter of 2026, we expect FA Flex revenue to decline sequentially on a billing day basis in the mid-single digits and to increase in the mid to high single digits year over year.

The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):

Year Ended December 31,

Year Ended December 31,

2025 vs. 2024

2024 vs. 2023

Key Drivers - Increase (Decrease)

Technology

FA

Technology

FA

Volume - hours billed

$

(59,777)

$

(14,926)

$

(90,372)

$

(32,440)

Bill rate

(971)

2,436 

3,092 

2,469 

Billable expenses

150 

(19)

(100)

21 

Total change in Flex revenue

$

(60,598)

$

(12,509)

$

(87,380)

$

(29,950)

The following table presents total Flex hours billed by segment and the percentage change over the prior period for the years ended December 31:

(in thousands)

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Technology

13,506 

(4.7)

%

14,171 

(6.6)

%

15,178 

FA

1,611 

(15.3)

%

1,902 

(25.4)

%

2,550 

Total Flex hours billed

15,117 

(5.9)

%

16,073 

(9.3)

%

17,728 

Direct Hire Revenue. The key drivers of Direct Hire revenue are the number of placements and the associated placement fee. Direct Hire revenue also includes conversion revenue, which may occur when a consultant initially assigned to a client on a temporary basis is later converted to a permanent placement for a fee.

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Direct Hire revenue decreased 11.1% during the year ended December 31, 2025, as compared to the same period in 2024, primarily driven by a decrease in placements, partially offset by an increase in placement fees. In the first quarter of 2026, we expect Direct Hire revenue to remain stable sequentially.

Gross Profit. Gross profit is determined by deducting direct costs (primarily consultant compensation, payroll taxes and certain fringe benefits, as well as independent contractor costs) from total revenue. In addition, there are no consultant payroll costs associated with Direct Hire placements; thus, all Direct Hire revenue increases gross profit by the full amount of the placement fee.

The following table presents gross profit (gross profit as a percentage of total revenue) by segment and percentage change over the prior period:

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Technology

26.3 

%

(0.8)

%

26.5 

%

(0.7)

%

26.7 

%

FA

38.1 

%

(1.0)

%

38.5 

%

(1.8)

%

39.2 

%

Total gross profit percentage

27.2 

%

(0.7)

%

27.4 

%

(1.8)

%

27.9 

%

Total gross profit percentage decreased 20 basis points for the year ended December 31, 2025, as compared to the same period in 2024, primarily driven by a decline in the mix of Direct Hire revenue.

The Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insight into the other drivers of total gross profit percentage driven by our Flex business, such as changes in the spread between the consultants’ bill rate and pay rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.

The following table presents the Flex gross profit percentage for each segment and the percentage change over the prior period for the years ended December 31:

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Technology

25.6 

%

(0.4)

%

25.7 

%

— 

%

25.7 

%

FA

28.3 

%

(2.7)

%

29.1 

%

(2.7)

%

29.9 

%

Total Flex gross profit percentage

25.8 

%

(0.4)

%

25.9 

%

(0.4)

%

26.0 

%

Our Flex gross profit percentage decreased 10 basis points for the year ended December 31, 2025, as compared to the same period in 2024.

•Technology Flex gross profit margins decreased 10 basis points for the year ended December 31, 2025, as compared to the same period in 2024. Notably, Technology Flex gross profit margins improved 40 basis points in the fourth quarter of 2025 on a year-over-year basis. In the first quarter of 2026, we expect Technology Flex gross profit margins to decline sequentially as a result of seasonal payroll tax resets.

•FA Flex gross profit margins decreased 80 basis points for the year ended December 31, 2025, as compared to the same period in 2024, primarily driven by changes in our client portfolio mix. In the first quarter of 2026, we expect FA Flex gross profit margins to decline sequentially as a result of seasonal payroll tax resets.

The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):

Year Ended December 31,

Year Ended December 31,

2025 vs. 2024

2024 vs. 2023

Key Drivers - Increase (Decrease)

Technology

FA

Technology

FA

Revenue impact (volume)

$

(15,550)

$

(3,642)

$

(22,448)

$

(8,948)

Profitability impact (bill rate)

(971)

(715)

(364)

(743)

Total change in Flex gross profit

$

(16,521)

$

(4,357)

$

(22,812)

$

(9,691)

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.0%, 84.2% and 84.3% of SG&A for the years ended December 31, 2025, 2024 and 2023, respectively. Commissions and other bonus incentives are variable costs driven primarily by revenue and gross profit levels. Therefore, as those levels change, these expenses would also generally be anticipated to change.

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The following table presents certain components of SG&A as a percentage of total revenue for the years ended December 31:

(in thousands)

2025

% of

Revenue

2024

% of

Revenue

2023

% of

Revenue

Compensation, commissions, payroll taxes and benefits costs

$

256,842 

19.3 

%

$

260,839 

18.6 

%

$

282,439 

18.4 

%

Other (1)

48,906 

3.7 

%

48,963 

3.4 

%

52,494 

3.5 

%

Total SG&A

$

305,748 

23.0 

%

$

309,802 

22.0 

%

$

334,933 

21.9 

%

(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office-related expense, and certain other expenses.

SG&A as a percentage of revenue increased 100 basis points for the year ended December 31, 2025, as compared to the same period in 2024.

For compensation and related expenses, we have been experiencing a degree of SG&A deleveraging as we continue to make investments in our strategic priorities and also retain our most productive associates to strategically position the Firm to capture an increased market share when the demand environment improves. To mitigate the pressure on our profitability levels from the revenue and gross profit declines, we continue to take actions to align our costs with revenue levels and productivity expectations and also continue to exercise tight discretionary spend control.

We continue to prioritize investments in our strategic initiatives, including the implementation of Workday as part of our back-office transformation program, integrated strategy efforts, the evolution of our nearshore and offshore delivery capabilities, and driving our strategy through leverage of AI.

Depreciation and Amortization. The following table presents depreciation and amortization expense and percentage change over the prior period by major category for the years ended December 31:

(in thousands)

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Fixed asset depreciation

$

2,646 

(16.7)

%

$

3,178 

1.1 

%

$

3,142 

Capitalized software amortization

2,902 

5.8 

%

2,744 

46.7 

%

1,870 

Total Depreciation and amortization

$

5,548 

(6.3)

%

$

5,922 

18.2 

%

$

5,012 

Other Expense, Net. Other expense, net was $3.1 million, $2.1 million and $1.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. Other expense, net consists of interest expense related to outstanding borrowings under our credit facility.

During the year ended December 31, 2023, we recognized $0.8 million in Other expense, net related to our proportionate share of losses for our joint venture. Refer to Note 1 – “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report, for a more detailed discussion on the sale of our equity method investment in February 2023.

Income Tax Expense. Income tax expense as a percentage of income before income taxes (our “effective tax rate”) were 25.8%, 25.4% and 28.4% for the years ended December 31, 2025, 2024 and 2023, respectively.

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Non-GAAP Financial Measures

Revenue Growth Rates. “Revenue growth rates,” a non-GAAP financial measure, is defined by Kforce as revenue growth after removing the impacts on reported revenues from the changes in the number of billing days. Management believes this data is particularly useful because it aids in evaluating revenue trends over time. The impact of billing days is calculated by dividing each comparative period’s reported revenues by the number of billing days for the respective period to arrive at a per billing day amount for each quarter. Growth rates are then calculated using the per billing day amounts as a percentage change compared to the respective period. Management calculates the number of billing days for each reporting period based on the number of holidays and business days in the quarter.

Sequential Growth Rates (GAAP)

2025

2024

Q4

Q3

Q2

Q1

Q4

Technology Flex

(0.2)%

(1.2)%

1.8%

(3.7)%

(2.5)%

FA Flex

2.4%

6.9%

2.1%

(12.8)%

(2.7)%

Total Flex revenue

(0.1)%

(0.7)%

1.8%

(4.3)%

(2.5)%

Sequential Growth Rates (Non-GAAP)

2025

2024

Q4

Q3

Q2

Q1

Q4

Billing Days

62

64

64

63

62

Technology Flex

3.0%

(1.2)%

0.2%

(5.2)%

0.6%

FA Flex

5.7%

6.9%

0.5%

(14.2)%

0.5%

Total Flex revenue

3.2%

(0.7)%

0.2%

(5.8)%

0.6%

Year-Over-Year Growth Rates (GAAP)

2025

2024

YTD

Q4

Q3

Q2

Q1

YTD

Q4

Q3

Q2

Q1

Technology Flex

(4.7)%

(3.3)%

(5.5)%

(5.0)%

(5.0)%

(6.4)%

(3.7)%

(3.6)%

(6.4)%

(11.4)%

FA Flex

(12.8)%

(2.4)%

(7.3)%

(16.8)%

(23.2)%

(23.5)%

(22.1)%

(20.7)%

(23.1)%

(27.2)%

Total Flex revenue

(5.3)%

(3.3)%

(5.7)%

(5.8)%

(6.4)%

(7.9)%

(5.2)%

(5.0)%

(7.8)%

(12.8)%

Year-Over-Year Growth Rates (Non-GAAP)

2025

2024

YTD

Q4

Q3

Q2

Q1

YTD

Q4

Q3

Q2

Q1

Billing Days

253

62

64

64

63

254

62

64

64

64

Technology Flex

(4.4)%

(3.3)%

(5.5)%

(5.0)%

(3.5)%

(7.1)%

(5.2)%

(5.1)%

(6.4)%

(11.4)%

FA Flex

(12.5)%

(2.4)%

(7.3)%

(16.8)%

(22.0)%

(24.1)%

(23.3)%

(21.9)%

(23.1)%

(27.2)%

Total Flex revenue

(4.9)%

(3.3)%

(5.7)%

(5.8)%

(4.9)%

(8.6)%

(6.7)%

(6.5)%

(7.8)%

(12.8)%

Free Cash Flow. “Free Cash Flow,” a non-GAAP financial measure, is defined by Kforce as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities, including investing in our business, repurchasing common stock, paying dividends or making acquisitions. Free Cash Flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view Free Cash Flow as a complement to, but not as a replacement of, our Consolidated Statements of Cash Flows.

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The following table presents Free Cash Flow:

Years Ended December 31,

(in thousands)

2025

2024

2023

Net cash provided by operating activities

$

61,645 

$

86,874 

$

91,465 

Capital expenditures

(14,840)

(7,573)

(7,763)

Free cash flow

46,805 

79,301 

83,702 

Change in debt

33,700 

(8,900)

16,000 

Repurchases of common stock

(50,886)

(41,938)

(75,024)

Cash dividends

(27,493)

(28,236)

(27,562)

Proceeds from company-owned life insurance

1,383 

2,377 

— 

Premiums paid for company-owned life insurance

(686)

(2,368)

(1,408)

Proceeds from the sale of our joint venture interest

— 

— 

5,059 

Note receivable issued to our joint venture

— 

— 

(750)

Other

(1,030)

(6)

(19)

Change in cash and cash equivalents

$

1,793 

$

230 

$

(2)

Adjusted EBITDA. “Adjusted EBITDA,” a non-GAAP financial measure, is defined by Kforce as net income before depreciation and amortization; stock-based compensation expense; interest expense, net; income tax expense; organizational realignment activities; legal settlement expense; loss from equity method investment; and other non-recurring expenses. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations, and management believes it provides a good metric of our core profitability in comparing our performance to our competitors, as well as our performance over different time periods. Consequently, management believes it is useful information to investors. The measure should not be considered in isolation or as an alternative to net income, cash flows or other financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. Also, Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

The following table presents Adjusted EBITDA and includes a reconciliation of Net income to Adjusted EBITDA:

Years Ended December 31,

 (in thousands)

2025

2024

2023

Net income

$

34,825 

$

50,414 

$

61,075 

Depreciation and amortization

5,548 

5,922 

5,012 

Stock-based compensation expense

13,742 

14,044 

17,747 

Interest expense, net

3,122 

2,097 

1,122 

Income tax expense

12,120 

17,210 

24,175 

Organizational realignment activities

1,200 

— 

3,662 

Legal settlement expense

— 

— 

2,175 

Loss from equity method investment

— 

— 

750 

Other (1)

2,233 

— 

— 

Adjusted EBITDA

$

72,790 

$

89,687 

$

115,718 

(1) Other includes non-recurring expenses to further streamline our operating costs, including the write-off of previously capitalized software.

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LIQUIDITY AND CAPITAL RESOURCES

To meet our capital and liquidity requirements, we primarily rely on operating cash flows, as well as borrowings under our Credit Facility (as defined below). At December 31, 2025 and 2024, we had $66.4 million and $32.7 million outstanding under our Credit Facility, respectively, and the borrowing availability was $132.5 million and $166.3 million, respectively, subject to certain covenants. At December 31, 2025, Kforce had $88.5 million in working capital compared to $112.9 million at December 31, 2024.

Cash Flows

Our business has historically generated a significant amount of operating cash flows, which allows us to balance deploying available capital towards: (i) investing in our strategic priorities that we expect will accelerate future revenue growth and profitability levels; (ii) our dividend and share repurchase programs; and (iii) maintaining sufficient liquidity for potential acquisitions or other strategic investments.

The following table presents a summary of our net cash flows from operating, investing and financing activities (in thousands):

Years Ended December 31,

Cash provided by (used in):

2025

2024

2023

Operating activities

$

61,645 

$

86,874 

$

91,465 

Investing activities

(14,143)

(7,564)

(4,862)

Financing activities

(45,709)

(79,080)

(86,605)

Change in cash and cash equivalents

$

1,793 

$

230 

$

(2)

Operating Activities

Cash provided by operating activities was $61.6 million during the year ended December 31, 2025, as compared to $86.9 million during the year ended December 31, 2024. Our largest source of operating cash flows is the collection of trade receivables, and our largest use of operating cash flows is the payment of our associate and consultant compensation. The year-over-year decrease in cash provided by operating activities was primarily driven by lower profitability levels, higher capitalized implementation costs related to cloud computing arrangements for Workday, and the payment of 2024 federal income taxes that were deferred pursuant to IRS guidance.

Investing Activities

Cash used in investing activities was $14.1 million during the year ended December 31, 2025, which primarily consisted of cash used for capital expenditures of $14.8 million. Cash used in investing activities was $7.6 million during the year ended December 31, 2024, which primarily consisted of cash used for capital expenditures of $7.6 million. The increase in capital expenditures relates to continued investments in the implementation of Workday.

Financing Activities

Cash used in financing activities was $45.7 million during the year ended December 31, 2025, as compared to $79.1 million during the year ended December 31, 2024. This increase was primarily driven by the net proceeds from our Credit Facility resulting from the extent of our share repurchase activity in 2025 relative to the level of operating cash flows.

The following table presents the cash flow impact of the common stock repurchase activity for the years ended December 31:

(in thousands)

2025

2024

2023

Open market repurchases

$

48,612 

$

37,162 

$

67,178 

Repurchased shares withheld for tax upon vesting of restricted stock

2,273 

4,776 

7,846 

Total cash flow impact from Repurchases of common stock

$

50,885 

$

41,938 

$

75,024 

Cash paid in current year for settlement of prior year repurchases

$

260 

$

920 

$

974 

The Board declared and paid dividends of $27.5 million ($1.56 per share), $28.2 million ($1.52 per share) and $27.6 million ($1.44 per share) for the years ended December 31, 2025, 2024 and 2023, respectively.

In January 2026, the Board approved an increase to the Company's dividend from $1.56 per share to $1.60 per share, which is the seventh consecutive annual increase. The declaration, payment and amount of future dividends are discretionary and will be subject to determination by our Board each quarter following its review of, among other things, the Firm’s current and expected financial performance as well as the ability to pay dividends under applicable law.

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We believe that existing cash and cash equivalents, operating cash flows and available borrowings under our Credit Facility will be adequate to meet the capital expenditure and working capital requirements of our operations for at least the next 12 months, and the foreseeable future, which we believe will provide us the flexibility to continue returning significant capital to our shareholders. However, a material deterioration in the macroeconomic environment or market conditions, among other things, could adversely affect operating results and liquidity, as well as the ability of our lenders to fund borrowings. Actual results could also differ materially from those indicated as a result of a number of factors, including the use of currently available resources for capital expenditures, investments, additional common stock repurchases or dividends.

Credit Facility

On November 5, 2025, the Firm entered into a senior secured credit facility with Bank of America, N.A., as administrative and collateral agent, BofA Securities, Inc. and PNC Capital Markets LLC as joint lead arrangers, BofA Securities, Inc. as bookrunner and the lenders referred to therein (the “Credit Facility”). Under the Credit Facility, the Firm has a maximum borrowing capacity of $200.0 million, which includes a $10.0 million sublimit for the issuance of standby and commercial letters and $10.0 million sublimit for swingline loans, and may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million. At December 31, 2025, $66.4 million was outstanding and $132.5 million, net of $1.1 million in letters of credit outstanding, was available under our Credit Facility. At December 31, 2024, $32.7 million was outstanding under our prior credit facility. At December 31, 2025, we were in compliance with all of our financial covenants under the Credit Facility. Refer to Note 12 – “Credit Facility” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for further details on the Credit Facility.

Stock Repurchases

The following table presents the open market repurchase activity under the Board-authorized common stock repurchase program for the years ended December 31:

2025

2024

(in thousands)

Shares

$

Shares

$

Open market repurchases

1,205 

$

48,552 

609 

$

36,502 

In October 2025, the Board approved a change to the stock repurchase program, increasing the total authorization to $100 million. At December 31, 2025, $97.2 million remained available for future repurchases under the Board-authorized common stock repurchase program.

Contractual Obligations

In addition to our discussion and analysis surrounding our liquidity and capital resources, consideration should also be given to significant contractual obligations:

•We lease certain facilities and other properties under non-cancellable operating lease arrangements that expire at various dates through 2033. At December 31, 2025, the total amount of our obligations under operating leases was $18.5 million. Refer to Note 10 – “Operating Leases” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for additional information regarding our lease obligations and the timing of expected future payments, including a five-year maturity schedule.

•We maintain various non-qualified deferred compensation plans pursuant to which eligible management and highly-compensated key employees may elect to defer all or part of their compensation to later years. At December 31, 2025, the total amount of our obligations under these plans was $57.7 million. These amounts are included in the accompanying Consolidated Balance Sheets and classified as Accounts payable and other accrued liabilities and Other long-term liabilities, as appropriate, and are payable based upon the elections of the plan participants (e.g., retirement, termination of employment, change-in-control, etc.). Amounts may become payable during the next five years if a covered employee retires, terminates, or schedules an in-service distribution. Kforce maintains a Rabbi Trust and holds life insurance policies on certain individuals to assist in the funding of the deferred compensation liability. Refer to Note 11 – “Employee Benefit Plans” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for additional information on our deferred compensation plans.

•The Credit Facility matures on November 5, 2030, and at December 31, 2025, our outstanding debt balance under the credit facility was $66.4 million. Total payments, however, are inherently uncertain as the interest rates related to this outstanding balance are variable and the outstanding borrowings that will occur over the remaining term of the Credit Facility are unknown. Refer to Note 12 – “Credit Facility” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for further details on the Credit Facility.

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•Our purchase commitments consist of agreements to purchase goods and services entered into in the ordinary course of business. At December 31, 2025, the value of our unconditional purchase obligations with a remaining term in excess of one year was $33.7 million. Refer to Note 15 – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for additional information regarding our purchase commitments.

•We have employment agreements with certain executives that provide for minimum compensation, salary and continuation of certain benefits for a one-year to a three-year period after their employment ends under certain circumstances. At December 31, 2025, our liability would be approximately $29.6 million for terminations related to a change in control and $11.1 million related to terminations in the absence of cause. Refer to Note 15 – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data for additional information regarding our commitments related to employment agreements.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements that have or are reasonably likely to have a material impact on our liquidity or capital resources.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Management believes that the following accounting policies and estimates are critical to understanding and evaluating our financial results. Management uses significant judgment and complexity related to these estimates and are required to make assumptions related to inherently uncertain factors that could have a material impact on reported amounts.

Accounting for Income Taxes

Our effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we conduct business. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions, including those that may be uncertain.

We are also required to exercise judgment with respect to the realization of our net deferred tax assets. Management evaluates positive and negative evidence and exercises judgment regarding past and future events to determine if it is more likely than not that all or some portion of the deferred tax assets may not be realized. If appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may not be realized. A 0.5% change in our effective tax rate would have impacted our net income by approximately $0.2 million in 2025.

Refer to Note 7 – “Income Taxes” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report, for a complete discussion of the components of our income tax expense, as well as the temporary differences that exist at December 31, 2025.

Goodwill Impairment

Goodwill is tested at the reporting unit level, which is generally an operating segment or one level below the operating segment level, where a business operates and for which discrete financial information is available and reviewed by segment management. We evaluate goodwill for impairment annually or more frequently whenever events or circumstances indicate that the fair value of a reporting unit is below its carrying value. We monitor the existence of potential impairment indicators throughout the year. It is our policy to conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations.

When performing a quantitative assessment, we determine the fair value of our reporting units using widely accepted valuation techniques, including the discounted cash flow, guideline transaction and guideline company methods. These types of analyses contain uncertainties because the inputs require management to make significant assumptions and judgments including: (1) an appropriate rate to discount the expected future cash flows; (2) the inherent risk in achieving forecasted operating results; (3) long-term growth rates; (4) expectations for future economic cycles; (5) market comparable companies and appropriate adjustments thereto; and (6) market multiples. When performing a qualitative assessment, we assess qualitative factors to determine whether the existence of events or circumstances indicated that it was more likely than not that the fair value of the reporting unit was less than its carrying amount.

Refer to Note 8 – “Goodwill” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report, for a complete discussion of the valuation methodologies employed.

NEW ACCOUNTING STANDARDS

Refer to Note 1 – “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report, for a discussion of new accounting standards.

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