What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-08 · 212 added, 128 removed, 411 unchanged (45% of the section changed)

38 unchanged sentences

Preferred stock, $ .01 par value, authorized 25,000,000 shares, none issued

Common stock, $ .01 par value, authorized 125,000,000 share, issued

Common stock, $ .01 par value, authorized 125,000,000 shares, issued

117,499,079 and 117,190,883 shares, respectively

12 unchanged sentences

Three Months Ended

Six Months Ended

Revenues from services

Cost of services

Selling and administrative expenses, excluding goodwill impairment charges

Goodwill impairment charges

Selling and administrative expenses

Operating profit

Interest and other expenses

Earnings before income taxes

Operating (loss) profit

Interest and other expenses (income), net

(Loss) earnings before income taxes

Provision for income taxes

Net earnings per share – basic

Net earnings per share – diluted

Net (loss) earnings

Net (loss) earnings per share – basic

Net (loss) earnings per share – diluted

Weighted average shares – basic

5 unchanged sentences

Three Months Ended

Other comprehensive loss:

Six Months Ended

Net (loss) earnings

Other comprehensive income (loss):

Foreign currency translation adjustments

Reclassification of currency translation adjustment to income related to disposition of partially held equity interest

Translation adjustments on derivative instruments, net of income taxes of $( 5.3 ), $( 3.1 ), $ 0.1 and $ 2.0 , respectively

3 unchanged sentences

plan, net of income taxes of $( 3.9 )

Total other comprehensive loss

Total other comprehensive income (loss)

Comprehensive (loss) income

3 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

Cash Flows from Operating Activities:

Adjustments to reconcile net earnings to net cash provided by operating activities:

Net (loss) earnings

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

Depreciation and amortization

Noncash gain on disposition of previously held equity interest

Noncash goodwill and other impairment charges

Deferred income taxes

7 unchanged sentences

Capital expenditures

Acquisition of businesses, net of cash acquired

Proceeds from the sale of subsidiaries, investments, property and equipment

Cash used in investing activities

Cash (used in) provided by investing activities

Cash Flows from Financing Activities:

3 unchanged sentences

Payments of contingent consideration for acquisitions

Proceeds from share-based awards

Proceeds from share-based awards and sale of subsidiaries

Payments to noncontrolling interest

Other share-based award transactions

Repurchases of common stock

Dividends paid

Cash used in financing activities

21 unchanged sentences

Balance, March 31, 2020

Other comprehensive income

Issuances under equity plans

Share-based compensation expense

Noncontrolling interest transactions

Balance, June 30, 2020

ManpowerGroup Shareholders

7 unchanged sentences

Balance, March 31, 2019

Other comprehensive loss

Issuances under equity plans

Share-based compensation expense

Repurchases of common stock

Noncontrolling interest transactions

Balance, June 30, 2019

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Notes to Consolidated Financ ial Statements (Unaudited)

For the three months ended March 31, 2020 and 2019

For the three and six months ended June 30, 2020 and 2019

(in millions, except share and per share data)

6 unchanged sentences

The global spread of COVID-19, which was declared a global pandemic by the World Health Organization in March 2020, has created significant volatility, uncertainty and global macroeconomic disruption.

Our business, operations and consolidated financial statements for the three months ended March 31, 2020 were significantly negatively impacted by the COVID-19 crisis, especially in the last few weeks of March as market conditions rapidly deteriorated.

Our business, operations and consolidated financial statements for the three and six months ended June 30, 2020 were significantly negatively impacted by the COVID-19 crisis.

By the end of March, significant lockdown measures had been implemented in our main markets in Europe and North America, as well as in certain other countries.

There is considerable uncertainty as to when governmental restrictions in different countries may be lifted, and to what degree individuals and businesses will be permitted to resume economic activity, including the re-opening of workplaces that are restricted.

As of the date these unaudited consolidated financial statements are issued, governments in some of our key markets such as France, the United States, Italy, the United Kingdom and Germany still had work-related restrictions in place.

As the second quarter of 2020 drew to a close, indications were that the impact of the COVID-19 crisis had been contained in many parts of the world, and economies had begun to slowly reopen.

However, some countries in Latin America and parts of the United States continue to deal with the COVID-19 crisis at elevated levels.

Continued uncertainty remains as to the future impact of the pandemic on global and local economies.

We are continuing to monitor and assess the impacts of the COVID-19 pandemic and we expect that our financial condition, liquidity and future results of operations will continue to be adversely affected.

However, we cannot predict with certainty what these impacts will be to the remaining quarters of 2020.

However, we cannot predict with certainty what the impact will be on future periods.

For further information on the impacts of COVID-19 on our business, operations and financial results, see Part I, Item 2:

2 unchanged sentences

We have an allowance for doubtful accounts recorded as an estimate of the accounts receivable that may not be collected.

This allowance is calculated on an entity-by-entity basis with consideration of historical write-off experience, receivables, market conditions, and a specific review for potential bad debts.

This allowance is calculated on an entity-by-entity basis with consideration of historical write-off experience, age of receivables, market conditions, and a specific review for potential bad debts.

Items that affect this balance mainly include bad debt expense and the write-off of accounts receivable balances.

A rollforward of our allowance for doubtful accounts is shown below:

3 Months Ended March 31, 2020

Six Months Ended June 30, 2020

Balance, December 31, 2019

2 unchanged sentences

Reclassifications and other

Balance, March 31, 2020

Balance, June 30, 2020

We determine whether a contract is or contains a lease at contract inception.

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As the rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate.

We determine our incremental borrowing rate at the commencement date using our unsecured borrowing rate, adjusted for collaterization, lease term, economic environment, currency and other factors.

We determine our incremental borrowing rate at the commencement date using our unsecured borrowing rate, adjusted for collateralization , lease term, economic environment, currency and other factors.

ROU assets are recognized at commencement date at the value of the related lease liabilities, adjusted for any prepayments, lease incentives received, and initial direct costs incurred.

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expected future revenue growth rates, operating unit profit margins, working capital levels, discount rates, and a terminal value multiple.

As of the date of our last annual impairment test, performed during the third quarter of 2019, the fair value of each reporting unit was at least 20 % in excess of the respective reporting unit’s carrying value with the exception of the Germany reporting unit.

During the second quarter of 2019, we determined that it was more likely than not that the fair value of the Germany reporting unit was below its carrying amount and performed an interim goodwill impairment test.

As a result of the interim test, we wrote down the carrying value of the Germany reporting unit to its estimated fair value and recognized a non-cash impairment charge loss of $ 60.2 million during the second quarter of 2019.

Key assumptions included in the Germany discounted cash flow valuation performed during the third quarter of 2019 included a discount rate of 10.8 % and a terminal value revenue growth rate of 2 %.

Should the operations of the business incur significant declines in profitability and cash flow due to significant and long-term deterioration in macroeconomic, industry and market conditions, including the impact of the COVID-19 pandemic, some or all of the recorded goodwill, which was $ 65.6 million as of March 31, 2020, could be subject to impairment.

We have experienced declines in the operating results of our reporting units in addition to our Germany reporting unit during the three months ended March 31, 2020 as a result of the impact from the COVID-19 pandemic on the global economy;

however, as of the end of the quarter and the date of this filing, we do not believe that it is more likely than not that the fair value of our reporting units are below their carrying value.

However, given the uncertainty of the financial impacts from the COVID-19 pandemic, there may be further decreases in the operating results of our reporting units for a sustained period and we may be required to perform an interim goodwill impairment assessment, which may result in a recognition of goodwill impairment that could be material to the Consolidated Financial Statements.

For the second quarter of 2020, in connection with the preparation of our quarterly financial statements, we assessed the changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair value of any reporting unit was below its carrying amount.

We identified several factors related to our Germany reporting unit that led us to conclude that it was more likely than not that the fair value of the reporting unit was below its carrying amount.

These factors included sustained operating losses resulted from the ongoing decline and increased uncertainty in the outlook of the manufacturing sector, particularly the automotive sector in Germany, coupled with the significant implications of COVID-19.

Our German business has not experienced the improvement in the rate of revenue decline as the second quarter progressed that many of our other European markets have experienced, and if we continue to experience sustained revenue declines and operating losses we may have to consider further actions to optimize our business structure.

As we determined that it was more likely than not that the fair value of the Germany reporting unit was below its carrying amount, we performed an interim impairment test on this reporting unit as of June 30, 2020.

As a result of our interim test, we recognized a non-cash impairment loss of $ 66.8 .

The Germany reporting unit is included in the Northern Europe segment.

The goodwill impairment charge resulted from reductions in the estimated fair value for our Germany reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2019 annual goodwill impairment test and our quarterly assessments in the intervening periods due to the factors discussed above.

W e determined the fair value of the Germany reporting unit by utilizing an income approach derived from a discounted cash flow methodology.

The income approach is developed from management’s forecasted cash flow data.

Significant assumptions used in our interim goodwill impairment test included:

future expected revenue growth rates, operating unit profit margins, working capital levels, discount rate, and a terminal value multiple.

We have also experienced declines in the operating results of our reporting units apart from our Germany reporting unit during the six months ended June 30, 2020 as a result of the impact from the COVID-19 pandemic on the global economy;

however, as of the end of the first half of 2020 and the date of this filing, we do not believe that it is more likely than not that the fair value of our reporting units are below their carrying value.

However, given the uncertainty of the financial impacts from the COVID-19 pandemic, there may be further decreases in the operating results of our reporting units for a sustained period, which may result in a recognition of goodwill impairment that could be material to the Consolidated Financial Statements.

(2) Recent Accounting Standards

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The new guidance requires application of an impairment model known as the current expected credit loss (“CECL”) model to certain financial instruments.

Using the CECL model, an entity recognizes an allowance for expected credit losses based on historical experience, current conditions, and forecasted information rather than the current methodology of delaying recognition of credit losses until it is probable loss has been incurred.

Using the CECL model, an entity recognizes an allowance for expected credit losses based on historical experience, current conditions, and forecasted information rather than the previous methodology of delaying recognition of credit losses until it is probable that loss has been incurred.

The new guidance was effective for us as of January 1, 2020.

The adoption of this guidance had no material impact on our Consolidated Financial Statements.

The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued new guidance on disclosures related to fair value measurements.

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We do not disclose the amount of unsatisfied performance obligations for client contracts with an original expected length of one year or less and those client contracts for which we recognize revenues at the amount to which we have the right to invoice for services performed.

We have other contracts with revenues expected to be recognized subsequent to March 31, 2020, related to remaining performance obligations, which are not material.

We have other contracts with revenues expected to be recognized subsequent to June 30, 2020 , related to remaining performance obligations, which are not material.

We record accounts receivable when our right to consideration becomes unconditional.

3 unchanged sentences

We do not have any material contract assets or long-term contract liabilities.

Our deferred revenue was $ 38.3 at March 31, 2020 and $ 44.5 at December 31, 2019.

Our deferred revenue was $ 37.3 at June 30, 2020 and $ 44.5 at December 31, 2019.

In the following table, revenue is disaggregated by service types for each of our reportable segments.

See Note 3 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for descriptions of revenue service types.

3 Months Ended March 31,

3 Months Ended June 30,

United States

3 unchanged sentences

Northern Europe

6 Months Ended June 30,

United States

Other Americas

Southern Europe:

Other Southern Europe

Northern Europe

In the following table, revenue is disaggregated by timing of revenue recognition for each of our reportable segments:

3 Months Ended March 31,

3 Months Ended June 30,

United States

3 unchanged sentences

Northern Europe

6 Months Ended June 30,

United States

Other Americas

Southern Europe:

Other Southern Europe

Northern Europe

(4) Share-Based Compensation Plans

We recognized share-based compensation expense of $ 4.6 for both the three months ended March 31, 2020 and 2019.

During the three months ended June 30, 2020 and 2019, we recognized share-based compensation expense of $ 6.9 and $ 8.3 , respectively, and $ 11.5 and $ 12.9 for the six months ended June 30, 2020 and 2019, respectively.

The expense relates to stock options, deferred stock, restricted stock and performance share units.

We recognize share-based compensation expense in selling and administrative expenses on a straight-line basis over the service period of each award.

Consideration received from share-based awards was $ 10.0 and $ 0.9 for the three months ended March 31, 2020 and 2019, respectively.

Our annual grant of share-based compensation generally takes place during the first quarter of each fiscal year.

The number of shares granted to employees and members of our Board of Directors, and the weighted-average fair value per share for shares granted during the first quarter of 2020 and 2019 are presented in the table below:

For the Three Months Ended March 31,

Stock Options

Deferred Stock Units

Restricted Stock Units

Performance Share Units

Total Shares Granted

Consideration received from share-based awards was $ 6.8 and $ 5.3 for the six months ended June 30, 2020 and 2019, respectively.

(5) Acquisitions

From time to time, we acquire and invest in companies throughout the world, including franchises.

No cash consideration was paid for acquisitions for the three months ended March 31, 2020.

For the three months ended March 31, 2019, the total cash consideration paid for acquisitions, net of cash acquired, was $ 0.6 , which represents contingent consideration payments related to previous acquisitions.

For the six months ended June 30, 2020, the total cash consideration paid for acquisitions, net of cash acquired, was $ 1.7 , which represents a deferred consideration payment related to a previous acquisition.

On April 3, 2019, we acquired the remaining 51 % controlling interest in our Swiss franchise (“Manpower Switzerland”) to obtain full ownership of the entity.

Additionally, as part of the purchase agreement we acquired the remaining 20 % interest in Experis AG.

Manpower Switzerland provides contingent staffing services under our Manpower brand in the four main language regions in Switzerland.

Both Manpower Switzerland and Experis AG are reported in our Southern Europe segment.

The aggregate cash consideration paid was $ 212.7 as of June 30, 2019 and was funded through cash on hand.

Of the total consideration paid, $ 58.3 was for the acquired interests and the remaining $ 154.4 was for cash and cash equivalents.

The total cash impact of the acquisition was an

inflow of $ 104.8 , net of cash acquired of $ 317.5 .

The acquisition of the remaining interest of Experis AG was accounted for as an equity transaction as we previously consolidated the entity.

In connection with the business combination, we recognized a one-time, non-cash gain on the disposition of our previously held equity interest in Manpower Switzerland of $ 80.4 , which is included within interest and other expenses (income), net on the Consolidated Statements of Operations.

Of the $ 80.4 , $ 32.5 represented the reclassification of foreign currency translation adjustments related to the previously held equity interest, from accumulated other comprehensive income.

Excluding Manpower Switzerland and Experis AG, the total cash consideration paid for acquisitions, net of cash acquired, was $ 17.7 for the six months ended June 30, 2019.

This balance represents contingent consideration payments related to previous acquisitions, of which $ 13.0 had been recognized as a liability at the acquisition date.

(6) Restructuring Costs

We recorded net restructuring costs of $ 48.2 and $ 39.8 during the three months ended March 31, 2020 and 2019, respectively, in selling and administrative expenses, primarily related to severances and office closures and consolidations in multiple countries and territories.

As a result of the adoption of the new accounting guidance on leases as of January 1, 2019, the office closure costs of $ 8.2 in the first quarter of 2020 were recorded as an impairment to the operating lease right-of-use asset and, thus, are not included in the restructuring reserve balance as of March 31, 2020.

The costs paid, utilized or transferred out of our restructuring reserve were $ 20.4 during the three months ended March 31, 2020.

We recorded net restructuring costs of $ 48.2 and $ 41.4 during the six months ended June 30, 2020 and 2019, respectively, in selling and administrative expenses, primarily related to severances and office closures and consolidations in multiple countries and territories.

As a result of the adoption of the new accounting guidance on leases as of January 1, 2019, the office closure costs of $ 8.2 during the six months ended June 30, 2020 were recorded as an impairment to the operating lease right-of-use asset and, thus, are not included in the restructuring reserve balance as of June 30, 2020.

The costs paid, utilized or transferred out of our restructuring reserve were $ 32.1 during the six months ended June 30, 2020.

We expect a majority of the remaining $ 23.4 reserve will be paid by the end of 2020.

4 unchanged sentences

Costs paid, utilized or transferred out

Balance, March 31, 2020

Balances related to the United States were $ 0.3 and $ 4.2 as of December 31, 2019 and March 31, 2020, respectively.

France had no restructuring reserve as of both December 31, 2019 and March 31, 2020.

Balances related to Italy were $ 0.3 and $ 1.7 as of December 31, 2019 and March 31, 2020, respectively.

Balance, June 30, 2020

Balances related to the United States were $ 0.3 and $ 2.1 as of December 31, 2019 and June 30, 2020, respectively.

France had no restructuring reserve as of both December 31, 2019 and June 30, 2020.

Balances related to Italy were $ 0.3 and $ 0.6 as of December 31, 2019 and June 30, 2020, respectively.

(7) Income Taxes

We recorded income tax expense at an effective rate of 90.2 % for three months ended March 31, 2020, as compared to an effective rate of 42.8 % for the three months ended March 31, 2019.

The 2020 rate was unfavorably impacted by low pre-tax earnings due partly to restructuring costs recorded in the first quarter of 2020.

In certain countries in which we recorded restructuring costs, we did no t recognize a corresponding tax benefit due to the recognition of valuation allowances against anticipated tax losses.

In addition, the French business tax had a more significant unfavorable impact in the quarter due to French pre-tax earnings decreasing at a greater rate than revenues, which is the primary basis for the tax calculation.

These unfavorable impacts were partially offset by a discrete favorable benefit in the quarter resulting from the successful appeal of a non-United States tax ruling.

The 90.2 % effective tax rate in the first quarter of 2020 was higher than the United States Federal statutory rate of 21 % primarily due to the restructuring costs recorded in the first quarter of 2020, the French business tax and overall mix of earnings.

As of March 31, 2020, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 70.0 that would favorably impact the effective tax rate if recognized.

We recorded income tax expense on a pre-tax loss resulting in a negative effective rate of 15.4 % for the three months ended June 30, 2020, as compared to an income tax expense on pre-tax earnings resulting in an effective rate of 36.7 % for the three months ended June 30, 2019.

The 2020 rate was negative due to a pre-tax loss that primarily resulted from the impact from the goodwill impairment charge, related to our Germany reporting unit, which was non-deductible.

The 2020 rate was also unfavorably impacted by the relatively low level and mix of pre-tax (losses) earnings, tax losses in certain countries for which we did no t recognize a corresponding tax benefit due to valuation allowances, and the French business tax.

The French business tax had a more significant unfavorable impact in the quarter due to French pre-tax earnings decreasing at a greater rate than revenues, which is the primary basis for the tax calculation.

The negative effective tax rate of 15.4 % for the three months ended June 30, 2020 was significantly different than the United States Federal statutory rate of 21 % primarily due to the factors noted above.

We recorded income tax expense on a pre-tax loss resulting in a negative effective rate of 62.4 % for the six months ended June 30, 2020, as compared to an income tax expense on pre-tax earnings resulting in an effective rate of 38.6 % for the six months ended June 30, 2019.

The 2020 rate was negative due to a pre-tax loss that primarily resulted from the impact from the goodwill impairment charge, related to our Germany reporting unit, which was non-deductible.

The 2020 rate was also unfavorably impacted by the relatively low level and mix of pre-tax earnings, restructuring costs and tax losses in certain countries for which we did no t recognize a corresponding tax benefit due to valuation allowances, and the French business tax.

The negative effective tax rate of 62.4 % for the

six months ended June 30, 2020 was significantly different than the United States Federal statutory rate of 21 % primarily due to the factors noted above, partially offset by a discrete favorable benefit for the successful appeal of a non-United States tax ruling.

As of June 30, 2020, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 70.3 that would favorably impact the effective tax rate if recognized.

As of December 31, 2019, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 69.5 .

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Generally, the tax years that could be subject to examination are 2013 through 2020 for our major operations in France, Germany, Japan, the United Kingdom and the United States.

As of March 31, 2020, we are subject to tax audits in Austria, Belgium, Canada, Denmark, Germany, Israel and the United States.

As of June 30, 2020, we are subject to tax audits in Austria, Belgium, Canada, Denmark, Germany, Israel and the United States.

We believe that the resolution of these audits will not have a material impact on earnings.

(8) Net Earnings Per Share

The calculations of net earnings per share – basic and net earnings per share – diluted were as follows:

(8) Net (Loss) Earnings Per Share

The calculations of net (loss) earnings per share - basic and net earnings per share - diluted were as follows:

3 Months Ended

Net earnings available to common shareholders

6 Months Ended

Net (loss) earnings available to common shareholders

Weighted-average common shares outstanding (in millions)

3 unchanged sentences

Weighted-average common shares outstanding - diluted

Net earnings per share - basic

Net earnings per share - diluted

There were 0.6 million share-based awards excluded from the calculation of net earnings per share – diluted for both the three months ended March 31, 2020 and 2019, because their impact was anti-dilutive.

Net (loss) earnings per share - basic

Net (loss) earnings per share - diluted

Due to the net loss for the three months and six months ended June 30, 2020, the assumed exercise of share-based awards had an anti-dilutive effect and therefore was not included in the calculations of net loss per share – diluted for the three months and six months ended June 30, 2020.

There were 1.1 million and 0.4 million share-based awards excluded from the calculation of net (loss) earnings per share - diluted for the three months ended June 30, 2020 and 2019, respectively, and 0.9 million and 0.4 million share-based awards excluded from the calculation of net (loss) earnings per share - diluted for the six months ended June 30, 2020 and 2019, respectively, because their impact was anti-dilutive.

(9) Goodwill and Other Intangible Assets

We have goodwill, finite-lived intangible assets and indefinite-lived intangible assets as follows:

March 31, 2020

June 30, 2020

December 31, 2019

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Total intangible assets

(1) Balances were net of accumulated impairment loss of $ 577.4 as of both March 31, 2020 and December 31, 2019.

(2) Balances were net of accumulated impairment loss of $ 139.5 as of both March 31, 2020 and December 31, 2019.

(1) Balances were net of accumulated impairment loss of $ 644.2 and $ 577.4 as of June 30, 2020 and December 31, 2019, respectively.

(2) Balances were net of accumulated impairment loss of $ 139.5 as of both June 30, 2020 and December 31, 2019.

Total consolidated amortization expense related to intangible assets for the remainder of 2020 is expected to be $ 12.9 and in each of the next five years as follows:

1 unchanged sentence

Changes in the carrying value of goodwill by reportable segment and Corporate were as follows:

Europe (2)(3 )

Corporate (4)

1 unchanged sentence

Currency impact

Balance, March 31, 2020

(1) Balances related to the United States were $ 490.3 and $ 490.2 as of December 31, 2019 and March 31, 2020, respectively.

Balances related to France were $ 67.3 and $ 66.2 as of December 31, 2019 and March 31, 2020, respectively.

Balances related to Italy were $ 4.6 as of both December 31, 2019 and March 31, 2020.

Impairment Charge

Balance, June 30, 2020

(1) Balances related to the United States were $ 490.3 and $ 490.2 as of December 31, 2019 and June 30, 2020, respectively.

(2) Balances related to France were $ 67.3 and $ 67.4 as of December 31, 2019 and June 30, 2020, respectively.

Balances related to Italy were $ 4.6 and $ 3.8 as of December 31, 2019 and June 30, 2020.

(3) The impairment charge of $ 66.8 relates to our Germany reporting unit, which was recorded during the second quarter of 2020.

See Note 1 to the Consolidated Financial Statements for further information.

(4) The majority of the Corporate balance relates to goodwill attributable to our acquisitions of Right Management ($ 62.1 ) and Jefferson Wells ($ 55.5 ).

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The components of the net periodic benefit cost (credit) for our plans were as follows:

3 Months Ended March 31,

Defined Benefit Pension Plans

Retiree Health Care Plan

Defined Benefit Pension Plan

3 Months Ended

6 Months Ended

Interest cost

1 unchanged sentence

Settlement loss

Total benefit cost (credit)

During the three months ended March 31, 2020, contributions made to our pension plans were $ 6.0 and contributions made to our retiree health care plan were $ 0.3 .

Total benefit cost

Retiree Health Care Plan

3 Months Ended

6 Months Ended

Interest cost

Prior service credit

Total benefit credit

During the three and six months ended June 30, 2020, contributions made to our pension plans were $ 5.0 and $ 11.0 , respectively, and contributions made to our retiree health care plan were $ 0.3 and $ 0.6 , respectively.

During 2020, we expect to make total contributions of approximately $ 17.0 to our pension plans and to fund our retiree health care payments as incurred.

Pension Settlement

During the three months ended March 31, 2020, we fully settled our United States Qualified Retirement Plan liability.

We purchased annuities of $ 19.2 and settled lump sum payments of $ 3.2 from our United States Qualified Retirement Plan in January and February 2020, respectively.

During the six months ended June 30, 2020, we fully settled our United States Qualified Retirement Plan (the “Plan”) liability.

We purchased annuities of $ 19.2 and settled lump sum payments of $ 3.2 from the Plan in January and February 2020, respectively.

The completion of lump sum payments in February and transfer of remaining participants to the Pension Benefit Guarantee Corporation (PBGC) in March triggered final settlement of the plan.

Upon settlement of the pension liability, we

reclassified the related pension losses of $ 6.6 , net of tax, recorded in accumulated other comprehensive loss to the consolidated statements of comprehensive income.

Upon settlement of the pension liability, we reclassified the related pension losses of $ 6.6 , net of tax, recorded in accumulated other comprehensive loss to the Consolidated Statements of Comprehensive (Loss) Income.

The total amount of the required payout to plan participants was determined based on employee elections and market conditions at the time of settlement.

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Net earnings attributable to these noncontrolling interests are recorded in interest and other expenses in our Consolidated Statements of Operations.

We recorded expenses of $ 0.6 and $ 1.0 for the three months ended March 31, 2020 and 2019, respectively.

We recorded a benefit of $ 0.4 and an expense of $ 0.1 for the three months ended June 30, 2020 and 2019, respectively, and a benefit of $ 1.0 and an expense of $ 1.1 for the six months ended June 30, 2020 and 2019, respectively.

The Board of Directors declared a semi-annual dividend of $ 1.09 per share on both May 8, 2020 and May 10, 2019 .

The 2020 dividends were paid on June 15, 2020 to shareholders of record as of June 1, 2020 .

The 2019 dividends were paid on June 14, 2019 to shareholders of record on June 3, 2019 .

Share Repurchases

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Share repurchases may be made from time to time through a variety of methods, including open market purchases, block transactions, privately negotiated transactions or similar facilities.

During the first quarter of 2020, we repurchased a total of 0.9 million shares comprised of 0.8 million shares under the 2018 authorization and 0.1 million shares under the 2019 authorization, at a total cost of $ 63.8 .

During the first quarter of 2019, we repurchased a total of 1.2 million shares at a cost of $ 101.0 under the 2018 authorization.

As of March 31, 2020, there were 5.9 million shares remaining authorized for repurchase under the 2019 authorization and no shares remaining authorized for repurchase under the 2018 authorization.

(12) Interest and Other Expenses

Interest and other expenses consisted of the following:

During the first six months of 2020, we repurchased a total of 0.9 million shares comprised of 0.8 million shares under the 2018 authorization and 0.1 million shares under the 2019 authorization, at a total cost of $ 63.8 .

The repurchases in the first half of 2020 all occurred within the first quarter of 2020.

During the first six months of 2019, we repurchased a total of 1.2 million shares at a cost of $ 101.0 under the 2018 authorization.

As of June 30, 2020, there were 5.9 million shares remaining authorized for repurchase under the 2019 authorization and no shares remaining authorized for repurchase under the 2018 authorization.

(12) Interest and Other Expenses (Income), Net

Interest and other expenses (income), net consisted of the following:

3 Months Ended

6 Months Ended

Interest expense

Interest income

Foreign exchange loss

Miscellaneous expense, net (1)

Interest and other expenses

Miscellaneous expense, net for the three months ended March 31, 2020 includes a $ 10.2 pension settlement loss related to one of our United States plans.

Foreign exchange loss (gain)

Miscellaneous (income) expense, net (1)

Interest and other expenses (income), net

Miscellaneous (income) expense, net for the six months ended June 30, 2020 includes a $ 10.2 pension settlement loss related to one of our United States plans.

See Note 10 to the Consolidated Financial Statements for further information.

Miscellaneous (income) expense, net for the three and six months ended June 30, 2019 includes an $ 80.4 gain related to our acquisition of the remaining controlling interest in Manpower Switzerland.

See Note 5 to the Consolidated Financial Statements for further information.

(13) Derivative Financial Instruments and Fair Value Measurements

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For non-derivative financial instruments that are designated and qualify as hedges of net investments in foreign operations, the change in the carrying value of the designated portion of the non-derivative financial instrument due to changes in foreign currency exchange rates is recorded in foreign currency translation adjustments.

The € 400.0 ($ 440.0 ) notes due September 2022 and the € 500.0 ($ 546.9 ) notes due June 2026 were designated as a hedge of our net investment in our foreign subsidiaries with a Euro-functional currency as of March 31, 2020.

The € 400.0 ($ 448.2 ) notes due September 2022 and the € 500.0 ($ 557.3 ) notes due June 2026 were designated as a hedge of our net investment in our foreign subsidiaries with a Euro-functional currency as of June 30, 2020.

In September 2019, we entered into a cross-currency swap agreement that net converts fixed-rate Swiss franc (“CHF”) payments to fixed-rate United States dollar payments.

This swap was designated as a net investment hedge of our foreign subsidiary with CHF functional currency.

The effect of our net investment hedges on AOCI for the three months ended March 31, 2020 and 2019 was as follows:

The effect of our net investment hedges on AOCI for the three and six months ended June 30, 2020 and 2019 was as follows:

Gain (Loss) Recognized in Other Comprehensive Income

3 Months Ended March 31,

3 Months Ended June 30,

6 Months Ended June 30,

Cross-currency swaps

13 unchanged sentences

We use the hypothetical derivative method in conjunction with regression analysis using a third-party valuation to measure effectiveness of our cross-currency swap agreement.

The following tables present the impact that changes in the fair values of derivatives designated as cash flow hedges had on other comprehensive income (“OCI”), AOCI and earnings for the three months ended March 31, 2020 and 2019:

(Gain) Reclassified

Gain Recognized in OCI

(Loss) Gain Reclassified

(Loss) Gain Recognized in OCI

from AOCI into Income

3 Months Ended March 31,

Location of (Gain) Reclassified

3 Months Ended March 31,

3 Months Ended June 30,

Location of (Loss) Gain Reclassified

3 Months Ended June 30,

from AOCI into Income

1 unchanged sentence

Interest and other expenses (income), net

We expect the net amount of pre-tax derivative gains included in AOCI at March 31, 2020 to be reclassified into earnings within the next twelve months will not be significant.

The actual amount that will be reclassified to earnings over the next twelve months will vary due to future currency exchange rates.

(Loss) Gain Reclassified

(Loss) Gain Recognized in OCI

from AOCI into Income

6 Months Ended June 30,

Location of (Loss) Gain Reclassified

6 Months Ended June 30,

from AOCI into Income

Cross-currency swaps

Interest and other expenses (income), net

We expect the net amount of pre-tax derivative gains included in AOCI at June 30, 2020 to be reclassified into earnings within the next 12 months will not be significant.

The actual amount that will be reclassified to earnings over the next 12 months will vary due to future currency exchange rates.

Non-designated instruments

2 unchanged sentences

These gains or losses are offset by the exposure related to receivables and payables with our foreign subsidiaries and to interest due on our Euro-denominated notes, which is paid annually in June and September.

The effect of our forward contracts that are not designated as hedging instruments on the consolidated statements of operations for the three months ended March 31, 2020 was as follows:

Location of Loss

Amount of Loss Recognized in Income

The effect of our forward contracts that are not designated as hedging instruments on the consolidated statements of operations for the three and six months ended June 30, 2020 was as follows:

Location of Gain

Amount of Gain Recognized in Income

Recognized in Income

3 Months Ended March 31,

3 Months Ended June 30,

6 Months Ended June 30,

Foreign currency forward contracts

Interest and other expenses (income), net

The following tables present the fair value of derivative and non-derivative assets and liabilities on the Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019:

The following tables present the fair value of derivative and non-derivative assets and liabilities on the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019:

Balance Sheet Location

2 unchanged sentences

Prepaid expenses and other assets

Instruments designated as net investment hedges:

Cross-currency swaps

Prepaid expenses and other assets

Total instruments

7 unchanged sentences

The carrying value of the long-term debt approximates fair value, except for the Euro-denominated notes, because the interest rates are variable and reflect current market rates.

The fair value of the Euro-denominated notes, as observable at commonly quoted intervals (Level 2 inputs), was $ 1,015.8 and $ 1,062.5 as of March 31, 2020 and December 31, 2019, respectively, compared to a carrying value of $ 986.9 and $ 1,002.9 , respectively.

Our deferred compensation plan assets were $ 89.9 and $ 107.3 as of March 31, 2020 and December 31, 2019 respectively.

The fair value of the Euro-denominated notes, as observable at commonly quoted intervals (Level 2 inputs), was $ 1,033.2 and $ 1,062.5 as of June 30, 2020 and December 31, 2019, respectively, compared to a carrying value of $ 1,005.5 and $ 1,002.9 , respectively.

Our deferred compensation plan assets were $ 103.8 and $ 107.3 as of June 30, 2020 and December 31, 2019 respectively.

We determine the fair value of these assets, comprised of publicly traded securities, by using market quotes as of the last day of the period (Level 1 inputs).

1 unchanged sentence

The components of lease expense were as follows:

3 Months Ended March 31,

Three Months Ended June 30,

6 Months Ended June 30,

Operating lease expense

4 unchanged sentences

Other information related to leases was as follows:

3 Months Ended March 31,

6 Months Ended June 30,

Supplemental Cash Flow Information

12 unchanged sentences

Operating leases

Maturities of operating lease liabilities as of March 31, 2020 were as follows:

Maturities of operating lease liabilities as of June 30, 2020 were as follows:

(In millions)

Period Ending March 31, 2020

Period Ending June 30, 2020

Operating Leases

17 unchanged sentences

The remaining revenues within these segments are derived from our outcome-based solutions and consulting services, permanent recruitment services, outplacement services, talent management services, and other services.

Segment revenues represent sales to external clients.

revenues represent sales to external clients.

We provide services to a wide variety of clients, none of which individually comprise a significant portion of revenues for us as a whole.

Due to the nature of our business, we generally do not have export sales.

3 Months Ended March 31,

3 Months Ended June 30,

6 Months Ended June 30,

Revenues from services:

5 unchanged sentences

Consolidated (b)

Operating unit profit:

Operating unit profit (loss):

United States

4 unchanged sentences

Corporate expenses

Goodwill impairment charges

Intangible asset amortization expense

Operating profit

Interest and other expenses

Earnings before income taxes

In the United States, revenues from services included fees received from the related franchise offices of $ 3.0 and $ 3.6 for the three months ended March 31, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 76.5 and $ 156.9 for the three months ended March 31, 2020 and 2019, respectively.

Our consolidated revenues from services include fees received from our franchise offices of $ 3.3 and $ 5.6 for the three months ended March 31, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 82.3 and $ 243.0 for the three months ended March 31, 2020 and 2019, respectively.

Operating (loss) profit

Interest and other (expenses) income, net

(Loss) earnings before income taxes

In the United States, revenues from services included fees received from the related franchise offices of $ 2.4 and $ 3.7 for the three months ended June 30, 2020 and 2019, respectively, and $ 5.4 and $ 7.3 for the six months ended June 30, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 122.3 and $ 154.3 for the three months ended June 30, 2020 and 2019, respectively, and $ 198.8 and $ 311.2 for the six months ended June 30, 2020 and 2019, respectively.

Our consolidated revenues from services include fees received from our franchise offices of $ 2.8 and $ 4.1 for the three months ended June 30, 2020 and 2019, respectively, and $ 6.1 and $ 9.7 for the six months ended June 30, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 128.1 and $ 163.2 for the three months ended June 30, 2020 and 2019, respectively, and $ 210.4 and $ 406.2 for the six months ended June 30, 2020 and 2019, respectively.

We evaluate segment performance based on operating unit profit (“OUP”), which is equal to segment revenues less cost of services and branch and national headquarters operating costs.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements